S-1/A: Soluna Holdings Launches Public Offering to Fuel Renewable Computing Expansion Amidst Strategic Shifts and Nasdaq Compliance Challenges

Sentiment:

Amendment to Registration Statement 16 June 2025 8:00 AM

Soluna Holdings, Inc. is conducting a public offering of common stock and warrants to raise approximately $4.3 million for working capital and project development, while navigating a significant liability from a terminated AI/HPC partnership and addressing Nasdaq listing requirements.

Delay expectedProject Kati is awaiting required amendments to Las Majadas Wind Farm's agreement with the transmission service provider to be completed, which is necessary for it to exit planning.The expected release timelines for NVIDIA's H200 Blackwell architecture were impacted by design issues, contributing to customer hesitancy in NVIDIA H100 GPU acquisition, which affected Soluna Cloud's business progression.

Capital raiseThe company is conducting a public offering of up to 7,754,342 shares of common stock, pre-funded warrants, Series A warrants, and Series B warrants, aiming to raise approximately $4.3 million in net proceeds.An At the Market Offering Agreement (ATM Agreement) was entered into on April 29, 2025, allowing the company to sell up to $3.75 million of common stock through a placement agent.A Standby Equity Purchase Agreement (SEPA) with YA II PN, LTD. was signed on August 12, 2024, enabling the company to sell up to $25 million of common stock, with approximately $2.0 million already raised.A $5.0 million term loan facility with Galaxy Digital LLC was secured on March 12, 2025.The company is obligated to pay a consent fee of 10% of the gross proceeds from the current offering to the holder of its Series B Preferred Stock.

Worse than expectedThe company incurred a significant liability of approximately $19.3 million due to the termination of its GPU-as-a-Service agreement with HPE, which was terminated for cause by HPE due to payment defaults.Soluna Holdings received a notice of non-compliance with Nasdaq's minimum bid price requirement, indicating a risk of delisting.A major Bitcoin Hosting customer, which accounted for 28% of the company's total revenue in 2024, terminated its agreement, although the company states it has replaced the lost capacity.

Summary

Soluna Holdings, Inc. (SLNH) is offering up to 7,754,342 shares of common stock, along with an equal number of Series A and Series B warrants, and pre-funded warrants.
The assumed combined public offering price is $0.6448 per share and accompanying Common Warrants, or $0.6438 per Pre-Funded Warrant and accompanying Common Warrants.
The offering is a 'best efforts' endeavor with no minimum amount, aiming to generate approximately $4.3 million in net proceeds for working capital, project-level equity, and general corporate purposes.
The company's core business, 'Renewable Computing,' focuses on developing and operating digital infrastructure co-located with renewable energy plants for High-Performance Computing (HPC), AI, and Bitcoin mining.
In 2024, revenue distribution was approximately 45% from Bitcoin Mining, 50% from Bitcoin Hosting, and 6% from Demand Response, with minimal revenue from the HPC business.
A key Bitcoin Hosting customer, responsible for 56% of hosting revenue and 28% of total revenue in 2024, terminated its agreement in Q4 2024, though Soluna states it replaced 100% of the lost capacity by March 2025.
Soluna terminated its GPU-as-a-Service agreement with Hewlett Packard Enterprise Company (HPE) on March 24, 2025, due to market shifts, leading to HPE terminating for cause and a remaining payment stream liability of approximately $19.3 million as of March 31, 2025.
The company entered into a Standby Equity Purchase Agreement (SEPA) with YA II PN, LTD. on August 12, 2024, to sell up to $25 million of common stock, having already sold approximately 1.5 million shares for $2.0 million.
A $5.0 million term loan facility with Galaxy Digital LLC was secured on March 12, 2025, bearing 15.0% interest per annum.
Project Dorothy 2, a 48MW Bitcoin Hosting expansion, is expected to energize in Q2 2025, with commissioning phases from May to October 2025 and full operation by November 2025.
Other projects in development include Project Rosa (187MW AI/Bitcoin hosting), Project Kati (166MW AI/ML/Bitcoin hosting), Project Grace (2MW AI/HPC), Project Hedy (120 MW), and Project Ellen (100 MW).
The company is a 'smaller reporting company' and has received a notice of non-compliance with Nasdaq's minimum bid price requirement, posing a delisting risk.

Sentiment

Score: 4

Explanation: The company is actively pursuing growth and has a pipeline of projects in a high-growth sector. However, the significant financial liability from the terminated HPE partnership, ongoing capital raises (suggesting a need for funds), and Nasdaq listing compliance issues indicate considerable financial and operational challenges, leading to a cautious outlook.

Positives

Strategic focus on 'Renewable Computing' by co-locating data centers with renewable energy sources to utilize curtailed energy, improving power economics and accelerating time-to-market.
Development and use of proprietary MaestroOS operating system to optimize performance, manage power consumption, and increase operational efficiency.
Successful replacement of 100% of lost Bitcoin hosting capacity by March 2025 with minimal operational disruption, demonstrating operational resilience.
Active and growing pipeline of new projects, including Project Dorothy 2 (48MW), Project Rosa (187MW), Project Kati (166MW), Project Grace (2MW), Project Hedy (120 MW), and Project Ellen (100 MW).
Secured a $5.0 million term loan facility with Galaxy Digital LLC, providing additional capital.
Ability to provide demand response services to grid operators, generating additional revenue streams and enhancing grid resilience.

Negatives

Termination of the GPU-as-a-Service agreement with HPE resulted in a significant remaining payment stream liability of approximately $19.3 million as of March 31, 2025.
Received a notice of non-compliance with Nasdaq's minimum bid price requirement, which could lead to delisting of the common stock.
High revenue concentration in the Bitcoin Hosting Business, with one customer accounting for 28% of total revenue in 2024, whose agreement was terminated.
The current offering is a 'best efforts' offering with no minimum amount, meaning the company may not raise the full estimated net proceeds of $4.3 million.
Common Warrants are not exercisable until 'Warrant Stockholder Approval' is obtained, which is not guaranteed, potentially rendering them valueless if approval is not met and pricing conditions are not satisfied.
The company is required to pay a consent fee equal to 10% of the gross proceeds from this offering to the holder of its Series B Preferred Stock.

Risks

Management has broad discretion in the use of the net proceeds from this offering, and funds may not be used effectively.
Future issuance of additional equity or convertible debt securities may result in significant dilution to existing investors.
There is no established public trading market for the Common Warrants or Pre-Funded Warrants, which will limit their liquidity.
The Common Warrants and Pre-Funded Warrants are speculative in nature, and there is no assurance their market value will equal or exceed their public offering prices, or that the common stock price will exceed their exercise prices.
Holders of Common Warrants and Pre-Funded Warrants have no rights as common stockholders until exercise, except for certain distribution or dividend rights.
Failure to obtain 'Warrant Stockholder Approval' for the Common Warrants could render them valueless.
Purchasers who enter into a securities purchase agreement may have rights not available to other purchasers, potentially creating an uneven playing field.
Failure to maintain compliance with Nasdaq continued listing requirements could result in the delisting of the company's securities, decreasing trading, adversely affecting market liquidity, hindering financing, and eroding investor confidence.
The company's economic performance is dependent on regulated terms of service and electricity rates.
The technology sector, in which the company operates, is speculative and highly competitive.
The company's ability to attract and retain hosted customers for its hosting operations is crucial for revenue generation.
Continued growth in blockchain and cryptocurrency usage is essential for the profitability of the Bitcoin mining and hosting businesses.
The company faces risks from lawsuits and other legal proceedings and challenges.
Potential conflicts of interest may arise with directors and management.
The company is subject to various government regulations that could impact its operations.
The company's ability to construct and complete the anticipated expansion of its data centers is subject to various factors and uncertainties.
Global economic and market conditions, political developments (e.g., tariffs, rising inflation, capital market disruptions, economic sanctions, bank failures, regional conflicts, economic slowdowns or recessions), could harm the company's research and development efforts, the value of its common stock, and its ability to access capital markets.

Future Outlook

Soluna Holdings intends to use the net proceeds from this offering for working capital, project-level equity, and general corporate purposes, with a strategic focus on expanding its 'Renewable Computing' infrastructure for AI, HPC, and Bitcoin hosting. The company plans to continue leveraging its Standby Equity Purchase Agreement (SEPA) for future capital, and is actively developing several new large-scale data center projects (Dorothy 2, Rosa, Kati, Grace, Hedy, Ellen). The company will also seek necessary stockholder approval for the exercisability of Common Warrants if certain pricing conditions are not met and will monitor its Nasdaq listing compliance.

Management Comments

"Our mission is to make renewable energy a global superpower using computing as a catalyst."
"Renewable Computing bridges this gap-unlocking stranded renewable energy and turning it into scalable computing power."
"Our proprietary data center operating system, MaestroOS, is used to optimize performance, manage power consumption, and increase operational efficiency."
"A key strategic advantage is our model of co-locating data centers directly with renewable power generation assets. By building behind the meter, we are able to bypass long interconnection queues and source electricity directly from the plant or the grid, while also providing demand response services-reducing costs and enhancing grid resilience."
"With a repeatable strategy and a growing pipeline of projects, we are scaling a new category of digital infrastructure-one that energizes the grid, lowers computing costs, and advances a more sustainable future."
Regarding the HPE Agreement termination: "refocusing on our core strength creating, developing, financing and operating our extensive pipeline of potential bitcoin and AI hosting facilities will create far more value for us and our shareholders."
"We intend to actively monitor the closing bid price of our common stock and may, if appropriate, consider implementing available strategies to regain compliance with the minimum bid price requirement under the Nasdaq Rules."

Industry Context

Soluna Holdings operates at the convergence of renewable energy and high-performance computing (HPC), including AI and Bitcoin mining. This positions the company to address the increasing energy demands of these compute-intensive industries by utilizing curtailed renewable energy. The company's 'behind-the-meter' co-location strategy aims to provide a competitive advantage through lower power costs and faster time-to-market. The termination of the HPE agreement highlights the dynamic nature of the GPU market, characterized by fluctuating supply, evolving demand for larger GPU clusters, and the impact of new hardware releases (e.g., NVIDIA's H200 Blackwell architecture) and competitive pressures from alternative GPU vendors.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Structure	The Board is divided into three classes, with staggered three-year terms, requiring at least two successive annual meetings to replace a majority of directors.	NA	Designed to deter hostile takeovers and promote board stability.
Director Removal	Directors can only be removed for cause by an affirmative vote of 75% or more of outstanding voting shares.	NA	Increases the difficulty of removing directors, enhancing board stability but potentially reducing shareholder influence over board composition.
Board Vacancies	Vacancies on the Board may be filled by a majority vote of remaining directors then in office, even if less than a quorum.	NA	Allows the existing board to fill its own vacancies, potentially limiting shareholder input on new director appointments.
Anti-Takeover Provisions (Nevada Law)	The company has elected to opt out of Nevada's combinations with interested stockholders statutes (NRS 78.411-78.444).	Original articles of incorporation	Removes certain statutory protections against business combinations with interested stockholders, potentially making the company more susceptible to certain types of takeovers.
Anti-Takeover Provisions (Nevada Law)	Nevada's acquisition of controlling interest statutes (NRS 78.378-78.3793) may apply if the company meets certain stockholder thresholds and does business in Nevada, potentially denying voting rights to acquirers unless approved by disinterested stockholders.	NA	Could have a chilling effect on certain transactions and make it more difficult to accomplish transactions that stockholders may see as beneficial, such as hostile takeovers.
Director Discretion	NRS 78.139 provides that directors may resist a change or potential change in control of a corporation if the board determines that the change or potential change in control is opposed to or not in the best interest of the corporation.	NA	Grants the board significant power to resist changes in control, potentially discouraging transactions not approved by the board.
Internal Controls	The company and its subsidiaries are in compliance in all material respects with applicable requirements of the Sarbanes-Oxley Act of 2002 and maintain internal accounting controls and disclosure controls and procedures.	NA	Indicates adherence to regulatory standards for financial reporting and internal governance, enhancing investor confidence in financial integrity.
Lock-up Agreements	The company and its officers and directors have agreed to a lock-up period of forty-five (45) days following the closing date of the offering, restricting the sale of common stock or convertible securities.	Closing Date of Offering	Aims to stabilize the stock price post-offering by preventing immediate sales by insiders, but limits liquidity for those individuals.
Financing Restrictions	The company has agreed not to issue any securities subject to a price reset or enter into variable rate financings for six (6) months following the closing date, with certain exceptions.	Closing Date of Offering	Protects investors in the current offering from immediate dilution or unfavorable pricing from certain future capital raises.
Equity Financing Restrictions	The company has agreed not to enter into any equity financings for forty-five (45) days from closing, subject to certain exceptions.	Closing Date of Offering	Provides a short-term window of stability for the stock price post-offering by limiting immediate additional equity issuance.

Related Party Transactions

Assignment and assumption agreements were entered into on October 1, 2024, with one of the accredited investors (from October 25, 2021) and two other parties introduced by that Purchaser, regarding an aggregate of $1.25 million of notes issued by CloudCo. The company purchased these notes for $750,000.
An Amendment No. 1 to Securities Purchase Agreement, dated October 3, 2024, between the Company and the holder of its Series B Preferred Stock, requires the company to pay a consent fee equaling 10% of the gross proceeds from this offering to the Series B Preferred Stock holder.
On April 29, 2025, the company issued 1,000,000 shares of common stock directly to the Investor as part of the Modification Agreement related to the June SPA Note.

Stakeholder Impact

Shareholders: Face potential dilution from the current offering and future equity issuances, risk of delisting from Nasdaq due to minimum bid price non-compliance, and the speculative nature of the warrants. However, they may benefit from the company's strategic focus on renewable computing and the development of new projects.
Employees: No direct impact on employment is explicitly mentioned, but continued operations and project development imply ongoing employment opportunities.
Customers: Existing Bitcoin Hosting customers continue to receive services, and new HPC/AI customers are targeted with the development of new data centers.
Suppliers: The company's ongoing project development (e.g., new data centers) suggests continued engagement with power partners and other suppliers.
Creditors: The company has incurred new debt obligations, including a $19.3 million liability to HPE and a $5.0 million term loan with Galaxy Digital LLC. The success of the capital raise will impact the company's ability to service these and other existing debts.

Next Steps

Seek 'Warrant Stockholder Approval' for the issuance of shares upon exercise of Common Warrants if Pricing Conditions are not met; if not obtained at the first meeting, call a meeting every 90 days thereafter until approval or warrants expire.
Continue issuing shares of common stock to YA pursuant to the SEPA in future periods.
Energize Project Dorothy 2 in Q2 2025, with commissioning phases between May and October 2025, and full operation by November 2025.
Continue developing Project Rosa, Project Kati, Project Grace, Project Hedy, and Project Ellen.
Actively monitor the Nasdaq bid price and consider implementing available strategies to regain compliance with minimum bid price requirements.
Register for resale the Investor Shares and Conversion Shares as promptly as commercially practicable.
Register for resale the shares of common stock issuable upon exercise of the Warrant as promptly as commercially practicable after its issuance.

Key Dates

Date	Description
1961	Mechanical Technology, Incorporated (predecessor to Soluna Holdings, Inc.) originally incorporated in the State of New York.
March 23, 2021	Soluna Holdings, Inc. common stock commenced trading on Nasdaq.
March 29, 2021	Soluna Holdings, Inc. reincorporated in the State of Nevada.
August 11, 2021	Agreement and Plan of Merger dated by and among Soluna Holdings, Inc., SCI Merger Sub, Inc., and Soluna Callisto Holdings Inc.
October 25, 2021	Securities Purchase Agreement and Registration Rights Agreement entered into with accredited investors.
November 2, 2021	Company changed its name from Mechanical Technology, Incorporated to Soluna Holdings, Inc.
April 11, 2022	MTI Instruments, Inc., a subsidiary of SHI, was sold.
July 19, 2022	Issued 62,500 shares of Series B Preferred Stock and warrants to purchase up to 1,000,000 common shares to an accredited investor.
September 13, 2022	Addendum Amendment with October 2021 Purchasers, issuing 430,564 common shares and new warrants.
December 2, 2022	Entered into a placement agency agreement with Univest Securities, LLC.
May 23, 2023	Sold one share of Series X Preferred Stock to David Michaels, the company's Secretary.
July 28, 2023	Paid a mandatory dividend on outstanding Series B Preferred Stock ($657,223.64) through the issuance of 44,000 common shares and 70,300 pre-funded warrants.
December 27, 2023	Formed a wholly owned subsidiary, SDI.
December 31, 2023	SCI transferred substantially all of its assets to SHI or its subsidiaries, including SDI.
March 1, 2024	Fourth Amendment Agreement with holders of the Company's Convertible Notes.
April 3, 2024	Employment agreement with John Tunison.
June 18, 2024	Soluna AL CloudCo, LLC entered into the HPC & AI Cloud Services Agreement and HPE Greenlake Services Custom Statement of Work with HPE.
June 20, 2024	CloudCo issued a secured promissory note in a principal amount equal to $12.5 million to an investor (June SPA).
July 12, 2024	First Amendment to Note Purchase Agreement (June SPA Amendment) to permit CloudCo to issue additional secured promissory notes in an aggregate principal amount equal to $1,250,000.
August 12, 2024	Entered into a Standby Equity Purchase Agreement (SEPA) with YA II PN, LTD. to sell up to $25 million of common stock.
October 1, 2024	CloudCo, Soluna Cloud, and the Company entered into assignment and assumption agreements for an aggregate of $1.25 million of notes (Additional Notes).
October 1, 2024	Consent, Waiver, and Mutual Release Agreement signed.
October 1, 2024	Form of Payment Agreement signed with Alpha Capital Anstalt, 3i, LP, and Supereight Capital Holdings Ltd.
October 1, 2024	Amendment No. 1 to the Securities Purchase Agreement with the Series B Holder signed.
October 1, 2024	General Release Agreement signed with Univest Securities, LLC.
November 2024	Soluna launched Project Ada, its GPU-as-a-Service business, via Soluna Cloud, Inc.
November 12, 2024	Filed a registration statement on Form S-1 (File No. 333-282559) with the SEC for the resale by YA of 3,000,000 SEPA Shares.
December 2024	Revenues were first recognized from Soluna Cloud.
December 12, 2024	Conversion Agreement between the Company and the Noteholders.
December 31, 2024	End of fiscal year for the company's Annual Report on Form 10-K.
February 5, 2025	Registration statement on Form S-1 (File No. 333-282559) declared effective by the SEC.
March 12, 2025	Soluna SW LLC entered into a Loan Agreement with Galaxy Digital LLC for a $5.0 million term loan facility.
March 14, 2025	The Company fulfilled the agreement and assumed the assignment and assumption of the Additional Notes for the remaining outstanding balance.
March 23, 2025	The Note Parties entered into a Modification Agreement for the $12.5 million note, amending the payment schedule and making the Company a direct co-obligor.
March 24, 2025	CloudCo sent notice of its termination of the HPE Agreement for convenience.
March 26, 2025	HPE sent notice of its termination of the HPE Agreement for cause, effective immediately.
March 31, 2025	End of period for the company's Quarterly Report on Form 10-Q.
April 18, 2025	Filed shelf registration statement on Form S-3 (File No. 333-286638).
April 29, 2025	Entered into an At the Market Offering Agreement (ATM Agreement) with H.C. Wainwright & Co., LLC for up to $3.75 million of common stock.
April 29, 2025	Shelf registration statement on Form S-3 declared effective by the SEC.
April 29, 2025	Issued 1,000,000 shares of common stock to the Investor (from June SPA Modification).
May 15, 2025	Quarterly Report on Form 10-Q for the period ended March 31, 2025, filed with the SEC.
June 12, 2025	Closing price of the company's common stock on Nasdaq was $0.6448 per share.
June 16, 2025	Date of this Amendment No. 1 to Form S-1 Registration Statement filing.
July 16, 2025	Offering termination date (unless terminated earlier by the company).
May-October 2025	Commissioning of the first of 3 phases (each 16MW) of Project Dorothy 2.
November 2025	Project Dorothy 2 expected to be fully operational.
March 12, 2030	Maturity date of the Galaxy Loan Agreement.
Five-year anniversary of Initial Exercise Date	Series A Warrants expire.
Twenty-four-month anniversary of Initial Exercise Date	Series B Warrants expire.
Five years from commencement of sales under this offering	Placement Agent Warrants expire.
61st day after notice	Any increase in the Beneficial Ownership Limitation becomes effective.
45 days following the Closing Date	Lock-up period for company officers and directors ends.
Six (6) months following the Closing Date	Prohibition on Variable Rate Transactions ends.
18 months following termination or expiration of engagement agreement	Right of first refusal for the placement agent ends.
February 5, 2026	Lock-up provision for Chuntao Zhou ends.

Recommendation

hold

Keywords

Soluna Holdings, SLNH, SEC filing, S-1/A, public offering, common stock, warrants, pre-funded warrants, Series A warrants, Series B warrants, capital raise, renewable energy, high-performance computing, HPC, AI, Bitcoin mining, data centers, demand response, MaestroOS, Project Dorothy 2, Project Rosa, Project Kati, Project Grace, Project Hedy, Project Ellen, Nasdaq, delisting risk, corporate finance, financial reporting, corporate governance, risk management, strategic business analysis

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