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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
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.”
![](https://www.sec.gov/Archives/edgar/data/64463/000149315224028932/ex99_001.jpg)
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
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