SLNHP Soluna Holdings Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) July 24, 2024 (July 22, 2024)

 

SOLUNA HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		001-40261		14-1462255
(State or other jurisdiction of		(Commission		(IRS Employer
incorporation)		File Number)		Identification No.)

 

325 Washington Avenue Extension, Albany, NY		12205
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code (518) 218-2500

 

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.001 per share		SLNH		The Nasdaq Stock Market LLC
9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share		SLNHP		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b -2 of this chapter).

 

Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01

Entry into a Material Definitive Agreement.

 

On July 22, 2024 (the “Effective Date”) Soluna Holdings,Inc. (the “Company”) closed the financing on the Dorothy 2 project, where Soluna Digital, Inc. (as the “Developer”) and Soluna DVSL II ComputeCo, LLC (as the special purpose vehicle initially owned solely by the Developer, the “ComputeCo”) are collaborating on the development, design, procurement and construction of a 48 MW modular data center, owned by ComputeCo and operated by Soluna US Services, LLC, located in Briscoe County, TX at 9981 Co Rd F, Silverton TX 79257, and such data center may engage in cryptocurrency, batch processing, and other non-crypto related activities (the “DVSL II Facility”). The DVSL II Facility will be adjacent to two other Soluna modular data center projects co-located at the same site. The DVSL II Facility is financed by Soluna2 SLC Fund II Project Holdco LLC (the “Investor”), which will make a capital contribution up to US $29,979,940, and the Company (the parent company of ComputeCo), which will make a capital contribution up to US $4,599,968, and as of the Effective Date became co-owners of ComputeCo with the Developer.

 

The Dorothy 2 project also allows for a developer investment where the Developer can invest into ComputeCo up until the total ownership of Developer and its affiliates equals 49% ownership of the Class B Membership Interests. The terms of such developer investment are limited by the Developer investing within 30 days after the Effective Date (to be treated equal to the initial Investor), from day 31 to 180 days after the Effective Date (to be subject to a purchase price formula with a 20% discount rate), or 180 days after the Effective Date (where the Developer needs the initial Investor’s approval to invest).

 

On May 16, 2024 the Company closed on a US $1,000,000 financing of equipment and machinery to be purchased for the DVSL II Facility, pursuant to the terms of an Equipment Loan Agreement (the “ELA”) between SDI SL Borrowing - 1, LLC (the “Borrower”) and Investor. On such date, the Investor lent the Borrower US $720,000 (“Borrowing Amount”) to purchase medium voltage cables and low voltage switchboards. The Borrower’s debt under the ELA was later assigned to ComputeCo on the Effective Date. Subsequently, on the Effective Date, the Borrower satisfied and repaid the Borrowing Amount in full by issuing the Investor Class B Membership Interests in the Dorothy 2 project at three times the value of the Borrowing Amount (i.e., US $2,160,000).

 

The foregoing descriptions of the transaction documents do not purport to be complete and are qualified in their entirety by reference to the full text of the agreements, copies of which will be filed with the Company’s next applicable periodic period in accordance with the rules and regulations of the Securities and Exchange Commission.

 

Item 7.01

Regulation FD Disclosure.

 

On July 24, 2024, the Company issued a press release announcing the closing of the transaction described in Section 1.01 above. A copy of the press release is furnished as Exhibit 99 to this Form 8-K.

 

The information in Item 7.01 and Exhibit 99 will not be treated as “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or into another filing under the Exchange Act, unless that filing expressly incorporates this information by reference.

 

ITEM 9.01.

Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.		Description
99		Press Release announcing theclosing of the financing for the Dorothy 2 project
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Soluna Holdings, Inc.
By:	/s/ John Tunison
Name:	John Tunison
Title:	CFO
Date:	July 24, 2024

 

 

 

Exhibit 99

 

Soluna Closes $30M Funding from Spring Lane Capital for Project Dorothy 2

 

This Milestone Mobilizes Construction for Bitcoin Mining Hosting and Paves the Way for an AI Data Center

__

 

ALBANY, NY, July 24, 2024 – Soluna Holdings, Inc. (“Soluna” or the “Company”), (NASDAQ: SLNH), a developer of green data centers for intensive computing applications including Bitcoin mining and AI, announced today it has closed its latest round of financing from Spring Lane Capital (“SLC”) for a 48 MW expansion of Soluna’s flagship behind-the-meter data center, Project Dorothy, (“Dorothy 2”) facility. SLC, a private equity firm providing hybrid project capital for sustainability solutions, has agreed to lead the financing round of $30 million.

 

John Belizaire, CEO of Soluna, stated, “This significant investment from Spring Lane Capital propels our mission to scale our operational assets under management. Project Dorothy, our premier Bitcoin Hosting site, will double in size through this partnership with SLC. We look forward to working with the industry’s top Bitcoin miners to deliver sustainable hosting and best in class services.”

 

“We are excited about Soluna’s continued momentum over the last two years and, in particular, Project Dorothy 2’s progress. The expansion comes at a time when solutions for the Texas electricity grid are gravely needed while simultaneously we are at an inflection point with AI and its effect on climate,” said Robert Day, Co-founding Partner at Spring Lane Capital. “We believe the success of Soluna’s model reflects the first truly positive solution when it comes to AI, computing and climate and we are proud to continue to support their breakthrough developments in the green data center sector.”

 

 

 

Key Details:

 

	●	Financing Plan for Dorothy 2 Secured: The financing will facilitate the construction of the Dorothy 2 facility, which expands Soluna’s Texas flagship data center by 48 MW in Bitcoin Hosting.
	●	AI data center: The remaining 2 MW of the site’s wind power will be reserved for Soluna’s planned Helix AI data center.
	●	Construction Timeline: Now that the parties have completed definitive documentation, Dorothy 2 construction will commence in Q3 2024, with the goal of achieving initial energization and ramp-up by Q1 2025.
	●	Capacity and Technology: The new facility will accommodate approximately 13,700 next-generation Bitcoin mining rigs, each with a power consumption of around 3.5 kW, totaling 48,000 kW (48 MW).
	●	SLC’s Expanded Financial Support: SLC is deploying capital from its second private equity fund, Spring Lane Capital Fund II, which is approximately twice the size of its initial fund. The $1 million Development Expenditure financing was repaid as part of the closing. Long lead equipment orders have been placed for Dorothy 2.

 

 

●

Financial Structure and Equity Ownership: Soluna will secure up to $30 million from SLC, fully covering the project’s funding needs, including working capital. Dorothy 2 features a superior waterfall structure that includes:

 

	○	Early Profit Participation – Soluna will enjoy a percentage of the cash flows from the start of the project.
	○	Carried Interest – Soluna will continue to receive 50% of the cash flows after the equity hurdle rate is achieved.
	○	Developer Profit – Soluna will receive a $1.2M payment for developing the project, payable after certain milestones have been met.
	○	O&M and Admin Services – Soluna will be the operator of the site and provide O&M and administrative services for a fee.
	○	Equity Investment – Soluna will have the right to invest and own up to 49% of the equity of the project.
	○	Soluna Equity Carry Items - Soluna may elect to roll certain fees and prepaid expenses into the project as equity.

 

	●	Energy and Capacity Enhancements: The new combined sites (Dorothy 1 and Dorothy 2) will consume up to double the amount of curtailed energy as before.
	●	Project Approvals: Dorothy 2 is fully shovel ready. It already has all the necessary ERCOT approvals, including the planning phase. The wind project and local utilities have also approved the expansion of the project.

 

“SLC’s innovative financing approach and robust project design supports Soluna’s commitment to expanding its footprint in the renewable energy sector and advancing the scale of its Bitcoin Hosting services,” John Belizaire continued.

 

More information about the financing can be found in the Company’s upcoming 8-K.

 

The Dorothy Name

 

Soluna continues its tradition of naming its data centers after women scientists who help(ed) catalyze major innovation. Project Dorothy is named after Dorothy Vaughan, an African American mathematician and “human computer” who worked for the National Advisory Committee for Aeronautics and NASA in 1939. Learn more about Project Dorothy here.

 

About Spring Lane Capital:

 

Spring Lane Capital is a private equity firm based in Boston, MA and Montreal, QC focused on providing hybrid project capital for sustainability solutions in the energy, food, water, waste, and transportation industries. The firm’s structured financial model seeks to tap into some of the fastest-growing segments of these markets that more traditional forms of project capital cannot access due to their scale and the limitations of existing investment models – the so-called ‘Missing Middle’. Spring Lane’s pioneering “Developer U” is a first of its kind effort to build the ecosystem of developers of sustainable infrastructure projects. For more information, please visit www.springlanecapital.com.

 

About Soluna Holdings, Inc (SLNH)

 

Soluna is on a mission to make renewable energy a global superpower using computing as a catalyst. The company designs, develops, and operates digital infrastructure that transforms surplus renewable energy into global computing resources. Soluna’s pioneering data centers are strategically co-located with wind, solar, or hydroelectric power plants to support high-performance computing applications including Bitcoin Mining, Generative AI, and other compute-intensive applications. Soluna’s proprietary software MaestroOS(™) helps energize a greener grid while delivering cost-effective and sustainable computing solutions, and superior returns. To learn more visit solunacomputing.com. Follow us on X (formerly Twitter) at @SolunaHoldings. 

 

Contact Information

 

Sam Sova

Partner and CEO

SOVA

Sam@letsgosova.com

 

 

v3.24.2

Cover	Jul. 24, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 24, 2024
Entity File Number	001-40261
Entity Registrant Name	SOLUNA HOLDINGS, INC.
Entity Central Index Key	0000064463
Entity Tax Identification Number	14-1462255
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	325 Washington Avenue Extension
Entity Address, City or Town	Albany
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	12205
City Area Code	(518)
Local Phone Number	218-2500
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock Par Value 0. 001 Per Share [Member]
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	SLNH
Security Exchange Name	NASDAQ
Sec 9. 0 Series Cumulative Perpetual Preferred Stock Par Value 0. 001 Per Share [Member]
Title of 12(b) Security	9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share
Trading Symbol	SLNHP
Security Exchange Name	NASDAQ

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