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Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>CEO John Belizaire joined WTR’s Tim Regan and Graham Mattison to talk about Soluna’s impressive business turnaround in 2023, including the projects that are online today and their growing adjusted EBITDA contributions.</li><li>Belizaire also talked about new projects under development, incremental revenue sources, and the company’s recently announced AI pilot at Project Dorothy</li><li>2023 – the turnaround of Soluna. Belizaire talked about the transformation of the company in 2023, coming from the depths of the crypto winter and regulatory delays, to bringing the company’s flagship Project Dorothy online, securing partners at the project level, and then being selected for the 166-MW Project Kati.</li></ul>

CEO John Belizaire joined WTR’s Tim Regan and Graham Mattison to talk about Soluna’s impressive business turnaround in 2023, including the projects that are online today and their growing adjusted EBITDA contributions.Belizaire also talked about new projects under development, incremental revenue sources, and the company’s recently announced AI pilot at Project Dorothy2023 – the turnaround of Soluna. Belizaire talked about the transformation of the company in 2023, coming from the depths of the crypto winter and regulatory delays, to bringing the company’s flagship Project Dorothy online, securing partners at the project level, and then being selected for the 166-MW Project Kati.

Soluna Holdings, Inc. - Soluna Positioned for Revenue/EBITDA Growth in 2024 as New Projects Ramp

<ul>
<li>Reports 3Q23 revenues of $5.8 million and positive adjusted EBITDA of $405K, up from $2.1 million and negative ~$2 million, respectively, in 2Q23.</li>
<li>The improved results reflect additional contributions from new projects that began ramping up in 2Q23, along with lower SG&amp;A that reflects the cost-cutting efforts enacted earlier in 2023.</li>
<li>We note that comparisons to 3Q22 are not meaningful given the company’s pivot to mostly hosting contracts at its data centers rather than proprietary Bitcoin mining where it recognized both higher revenues and costs.</li>
</ul>


Reports 3Q23 revenues of $5.8 million and positive adjusted EBITDA of $405K, up from $2.1 million and negative ~$2 million, respectively, in 2Q23.
The improved results reflect additional contributions from new projects that began ramping up in 2Q23, along with lower SG&amp;A that reflects the cost-cutting efforts enacted earlier in 2023.
We note that comparisons to 3Q22 are not meaningful given the company’s pivot to mostly hosting contracts at its data centers rather than proprietary Bitcoin mining where it recognized both higher revenues and costs.


Soluna Holdings, Inc. - 3Q Results Show Turnaround Is Complete

<div><div><div><div><ul style="list-style-type: disc;"><li><p>Reported in-line 2Q results. As expected, revenues of $2.1 million were down from 1Q23 and 2Q22, as the company shifted to hosting contracts at its data centers rather than proprietary Bitcoin mining where it recognized both higher revenues and costs.</p></li><li><p>G&amp;A expenses declined sequentially and Y/Y from ongoing cost structure rationalization efforts.</p></li><li><p>We note that 2Q23 did include higher legal costs related to the multiple project signings in the quarter.</p></li></ul></div></div></div></div>

Reported in-line 2Q results. As expected, revenues of $2.1 million were down from 1Q23 and 2Q22, as the company shifted to hosting contracts at its data centers rather than proprietary Bitcoin mining where it recognized both higher revenues and costs.G&amp;A expenses declined sequentially and Y/Y from ongoing cost structure rationalization efforts.We note that 2Q23 did include higher legal costs related to the multiple project signings in the quarter.

<ul><li>Current market valuation only gives credit for existing projects, making the project pipeline a free option.</li><li>Earlier this year, Spring Lane Capital and Navitas Global bought their project stakes at an implied valuation of $566K and $941K per MW of capacity.</li><li>Using the average price paid gives a $31.3 million value for Soluna’s 100% share of Project Sophie and a 15% and 51% share of Project Dorothy 1A and 1B, about equal to the current $31.9 million enterprise value (Source: YCharts).</li></ul>

Current market valuation only gives credit for existing projects, making the project pipeline a free option.Earlier this year, Spring Lane Capital and Navitas Global bought their project stakes at an implied valuation of $566K and $941K per MW of capacity.Using the average price paid gives a $31.3 million value for Soluna’s 100% share of Project Sophie and a 15% and 51% share of Project Dorothy 1A and 1B, about equal to the current $31.9 million enterprise value (Source: YCharts).

Recent Outside Investments in Existing Projects Imply SLNH's Valuation Well Above Current Levels

<ul><li>Turnaround complete. In recent weeks, Soluna has received interconnection approval for all 100 MW at its flagship Project Dorothy, secured contracts and is energizing the first 50 MW (1A and 1B), reached a 14-month extension on its October convertible notes, and now sees itself being operating cash flow positive in 2H23.</li><li>We expect these accomplishments will allow investors to see the value of its existing assets and its pipeline rather than focus on near-term liquidity concerns and regulatory approvals.</li><li>Project Dorothy 1A and 1B are now fully booked. Soluna announced the closing of a $14 million partnership with Navitas Global for the 25 MW at Project Dorothy 1B</li></ul>

Turnaround complete. In recent weeks, Soluna has received interconnection approval for all 100 MW at its flagship Project Dorothy, secured contracts and is energizing the first 50 MW (1A and 1B), reached a 14-month extension on its October convertible notes, and now sees itself being operating cash flow positive in 2H23.We expect these accomplishments will allow investors to see the value of its existing assets and its pipeline rather than focus on near-term liquidity concerns and regulatory approvals.Project Dorothy 1A and 1B are now fully booked. Soluna announced the closing of a $14 million partnership with Navitas Global for the 25 MW at Project Dorothy 1B

Soluna Holdings, Inc. -Soluna Has Turned the Corner

United States

Soluna Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, builds, owns, and operates modular data centers that eliminate wasted energy and deliver revenue to renewable energy producers. Soluna Holdings serves customers worldwide.

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Soluna Holdings (SLNH US)

Soluna Holdings, Inc. - Soluna Positioned for Revenue/EBITDA Growth in 2024 as New Projects Ramp

CEO John Belizaire joined WTR’s Tim Regan and Graham Mattison to talk about Soluna’s impressive business turnaround in 2023, including the projects...

Water Tower Research

Soluna Holdings, Inc. - 3Q Results Show Turnaround Is Complete

Reports 3Q23 revenues of $5.8 million and positive adjusted EBITDA of $405K, up from $2.1 million and negative ~$2 million, respectively, in 2Q23.

Water Tower Research

Soluna Holdings, Inc. - In-Line 2Q

As expected, revenues of $2.1 million were down from 1Q23 and 2Q22, as the company shifted to hosting contracts at its data centers rather than...

Water Tower Research

Recent Outside Investments in Existing Projects Imply SLNH's Valuation Well Above Current Levels

Earlier this year, Spring Lane Capital and Navitas Global bought their project stakes at an implied valuation of $566K and $941K per MW of capacity.

Water Tower Research

Soluna Holdings, Inc. -Soluna Has Turned the Corner

In recent weeks, Soluna has received interconnection approval for all 100 MW at its flagship Project Dorothy, secured contracts and is energizing...

Water Tower Research

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