Recording in progress. I'm happy to have with us John Belizaire, the CEO of Soluna Holdings. We will be taking questions, which you can submit via the chat function. Hopefully, we'll get to all of them, but our apologies if time does not allow. One last reminder, please refer to any disclosures on our website. With that, John, thank you for joining us again. Welcome back. This is your second time, and when we had you on before, you were, I think, just about or had just taken over the CEO chair. Actually, I'm sorry. Let me give a quick background for John, for anyone who. I apologize. For anyone who doesn't know, John is the CEO. He's been a successful entrepreneur. He's founded multiple companies, one in insurance software, another in the e-commerce space, both of which were bought out by large corporations. He's a thought leader in the renewable energy and renewable computing and Bitcoin spaces and has testified in front of US Congress. Also, he was just featured, I think, yesterday in CEO Magazine, so I encourage you to check out that article. With that, John, thank you for joining us. As I said, it's been a few months since you've taken over. Can you talk about how things have gone and your strategy from where you are now and where you're going forward? Graham, thanks for inviting me back. I've really been looking forward to this and the opportunity to share our story. Before we begin, my lawyer has asked me to point out that our discussions here today are subject to the usual caveats and forward-looking statements, which are described in our SEC filings. I think your opening question is a great question. Earlier this year, I put out a letter to our shareholders, outlining a three-pronged strategy for execution this year. The first is focused on energizing and commercializing Dorothy, our flagship project, and Sophie, our project in Kentucky. I'm proud to say we've made a lot of progress in the last two months, since I've taken the helm. We've signed two strategic hosting partnerships, one joint venture at Dorothy. We have fully ramped the hosting customers now, and we've already started ramping the joint venture portion, that prop mining portion. Dorothy is now operating over 30 MW now, and we add more megawatt capacity each week as we energize and finalize buildings on the 1B side. MaestroOS, which is our proprietary product and software platform, has been performing really well. It's been hot down there, Graham. We were down there, and it was over 108 degrees. I think all of our forecast data analysis showed, like, the maximum temperature down there has been sort of the 90, 800 range, and it's breaking all the records. What's exciting is that our system does what it's supposed to do. It senses all of that information, the power prices in the area, and optimizes the size of the facility to maximize the price and cost of energy at that location. That's been great. We've rolled in over 10,000 machines at Dorothy. That's like a full 747 worth of equipment that we've rolled in. I think we did some back of the envelope calculation. That's probably about 350,000 pounds of equipment or something like that. To accomplish all of that, we've raised $21.5 million at the project level, project-level equity to accomplish this. We've done that through our partnership with Spring Lane Capital, a fantastic partner to date, and our new partner, Navitas Global. Sophie has rolled in a full 25 MW as well, and so the earnings power of those two sites has grown significantly. We've put them in a position to produce great earnings power for us. In our earnings presentation that we've put out, the combined revenue for those two facilities is over 37 MW on an annualized basis, and, you know, we're talking about, you know, on a consolidated basis, about $10 million. On top of that, the customers are happy. You know, the folks that we're working with, we've been great communicating to them and so forth. That's leg one of the three-legged approach to our execution. Leg two is focusing on operating cash flow, and we have put in a series of initiatives this year to implement cost reductions, execution optimizations, all focused on improving our profitability. We've also focused on, as you can see, building out earnings power. That really puts us in a stronger cash position, this, at this time, this year, relative to where we were before. You'll see that detailed in our 10-Q when it comes out. We have highly profitable projects. You know, every 25 MW we roll in adds significant project-level EBITDA. By the way, when I reference Graham business project level EBITDA, I'm talking about essentially operating cash flow at these SPVs. You know, EBITDA at the SPV level is equivalent to operating cash flow. Every 25 MW gets us somewhere around 6-7 MW of earnings power. I'm sorry, $6 million-$7 million of earnings power. You know, we're pretty excited about the progress that we've made there. That's leg one and leg two, right? Three-part strategy. Part three is measured growth. We're being very thoughtful about how we turn our pipeline into mature projects that are investable projects. That has a sort of multi-strategy as well. Our first is Dorothy Two. We aim to develop about 50 MW of that. You know, remember, Dorothy is a 100 MW project, and if we can get project-level partnerships to invest in Dorothy Two, that would allow us to build out that footprint. The nice thing is we can leverage existing infrastructure and equipment we bought last year, we've found ways to optimize the cost of construction for the facility from learnings from part one, that sets us up pretty well. The next is just pipeline maturity. We have a pretty sizable pipeline, about 700 MW of projects. Our strategy is to advance a number of those projects to a point where we've got signed term sheets, get those projects into the ERCOT process and push them through that process until they become shovel-ready. In June, we announced Project Kati. It's a 166 megawatt project that will be built in 2 phases. That's an example of the maturity process we're talking about, and we want to do more of those in the pipeline. The last piece on the measured growth side is just opportunistic opportunities. There are a number of assets out there. There are some projects that are partially developed that are ideal for our model, and we'd like to look at, you know, exploring asset acquisitions or other types of structures using project-level capital to enhance the footprint of our earnings power. That's our, that's our approach to execution this year, Graham. All right, great. You mentioned capital a couple of times. I've had this question come in a few times, so let me like, squeeze it in here. Can you share where you stand with capitalization structure of Soluna and how you plan to handle the preferred dividends? I can discuss that, Graham. We've had lots of questions about our capitalization and our plans for the preferred dividend. We take our fiduciary responsibility to our common and preferred shareholders very seriously, and we believe the best and most shareholder-friendly way to restructure our cap structure or our cap stack, is to really grow our business, grow cash flows, and through those cash flows, we can pay our obligations, including preferred share dividends. As our cash flow grows, if you think about it, right, our business operations and opportunities will grow. We'll be able to prove that we can execute. We'll demonstrate how strong of a business that we have inside of Soluna in our model. That will increase our ability to pursue, you know, non-dilutive ways to rebuild our capital structure from one that restricts us from growth, to one that provides a solid foundation from which to grow our business and overall shareholder value. You know, we're also exploring other ways and means for restructuring our cap table, and we will consider lots of alternatives that come our way, but we'll focus on the ones that really improve our ability to grow and enhance our growth strategy and can really, truly add shareholder value. I want our valued shareholders to consider this simple framework, as I mentioned it a bit earlier when I was talking about our execution. If you think about it, every 25 MW we add to our business can drive somewhere about $6 million-$7 million in earnings power or operating cash. Let's say we added Dorothy Two, right? We own 100% of that project right now, and if we added that to the mix, let's say, that could add considerable earnings power to help us deal with capitalization. If we build out the whole project, do the math, that's $14 million of earning cash flow, right? If we only owned half of it, that would be $6 million-$7 million. If we owned 100%, you start to do the math. That allows us to deal with a lot of capitalization-related challenges, including, you know, returning to paying dividends. Now, let's say we add Kati. You start to get the picture, right? Divide 166 by 25 MW, it gives you the potential earnings power. You know, once we start to do these types of things, we'll begin to prove that we have a strong business and can execute the way. The sure way to is really the sure way to attract investors, right? If we prove through the execution on Dorothy and Sophie that these projects can return capital at the speed that we've stated, and if you look at my letter, I've commented on the fact that, you know, on average, our projects return their capital in two years. That's very attractive to investors looking for yield, looking for asset-based investments. That's where we're focused right now. We're focused right now on execution, building the business, growing our cash flow capabilities, enhancing our earnings power, using the assets we have, which is our strong pipeline, our business model, and technology, to generate cash that will allow us to solve a lot of our challenges. I know we've lost some trust with investors, and we're working to build that back, Graham, by executing. You know, we don't have all the answers, but we are certainly sincerely working on it, and I want to thank our investors for their patience and continued support. Makes sense, and you made it this far, which is more than a lot of other companies in this space can say. Can you talk a little bit more about Project Kati and what the next steps are and how investors should think about that? Absolutely. We're really excited about Kati or Kati, however you'd like to pronounce it. The project name is named after Katalin Karikó. She's a badass catalyzer who was instrumental in the development of mRNA-based protein therapies. Her decades of relentless work have helped form today's modern mRNA vaccines. you know, we've all experienced, some of us, you know, jabs in the arm of that technology, and she helped to create that. We always name our facilities, for those of you who don't know, after incredible women who have shaped innovation in a host of different industries. Dorothy was named after Dorothy Vaughan, the famous human computer of the team that was involved in getting the Apollo mission up. You know, we've learned so much at Sophie that we've implemented at Dorothy. Now after energizing Dorothy and standing up a mix of prop and hosted mining, we're learning even more. We've got a great IPP in the Kati Project, very serious player with huge assets in the U.S. and beyond. Did I mention that they selected us out of, like, 25 companies? They took the process of selecting a partner very seriously, put us through the paces and put a number of other companies, to our surprise, through the same paces, and chose us over and above them. I'll comment, they came to visit our site at the Dorothy site recently, you know, I'd love to tell you about some of the things they said. You know, I think that they're just super excited about working with us. You know, we've been collaborating to move things along quickly in our process and to get agreements in place and the interconnection process started. The site has a potential, as I mentioned earlier, 166 MW, and we're going to use Sophie and Dorothy as blueprints to implement it better and more efficiently. I want to leave you with, I guess, a couple of just highlights on Kati. The wind farm that we're interconnecting to, so we always build our facilities right on site there, experiences somewhere upwards of 43% curtailment on an annual basis. It's a huge farm, so you can, you know, do the math. They're losing millions of dollars. Our 166 MW data center will consume over 75% of that curtailment. We are a direct, immediate solution to a pain point that they have, which is a core tenet to our business model. Project development is moving fast, thanks to our previous experience with Dorothy and our relationships with ERCOT and some of the transmission service providers now. Overall cost of energy will be equal to or better than Dorothy. These are exciting projects that we have in our pipeline, we're looking forward to it. How important was it having Dorothy when you were, bidding, competing against the other 24 players? How important was it to have Dorothy in there? Yeah, to be honest with you, having Dorothy energized and, you know, having a running facility took us from sort of this potential, you know, capabilities to actual capabilities. It really does shift the perspective of the partner, right? We're a proven partner now that we have a facility up and running. They came out to see the site and, you know, saw our technology in practice. That changes your perspective completely. It essentially makes risk go down, right? As risk reduces, the interest in partnering goes up. These are large infrastructure players who are used to project finance structures, and their model is to build long, long-running, long-valued projects that are low risk, firm, solid returns on investment. They're looking for a partner that has proven technology, understands, the energy business and can partner with them. It's the energy business where there's no tolerance for risk. Exactly. Simply the people who worked in this space, like, anything other than perfection is a complete fail. There's. 100%. You know, either you're up or not. Yeah. So- That's why when they're 43% curtailed, that's not a good thing. How should investors think about expectations around timing or I guess I'll leave it at that. Just sort of like... How do you want to set investors or what mark should they look for? As I said, Kati is moving along fairly quickly, but it's still a development project, so I won't comment right now on timing. I will say that, you know, we will get her shovel ready, and with strong paybacks that we're seeing on our projects, you know, we will be able to formally submit the project to our investors, once we reach that notice to proceed status, which would include the ERCOT approvals. Our focus is to take a very measured approach, make sure we have everything in place and the project is ready to build, we will pull investors in. We'll keep our investors and our shareholders posted on the progress, and once she reaches that point, you know, we'll get her ready to go. Got it. another question we have here. we talked about having Dorothy there for the potential partners. What type of feedback are you hearing about the Maestro system, at that location? How important was that in terms of getting you this last project? Yeah, it's pretty. You know, I think the easiest way to give you a sense is, you know, I kept these notes of what people were saying as they were visiting the site. I was. You know, I was really interested in sort of what visitors to the site would say, some feedback is always helpful. The project-level investors came to visit last month. We had power partners recently come visit. The project-level investors or investors interested in investing in Dorothy 2 and some of our future projects like Kati. Our power partners are the ones that are looking to partner with us on Kati and beyond. You know, a visit from a potential investor remarked, you know, they said, "Thanks again for the time yesterday. I came away super impressed with the team and how much you guys have accomplished. I shared a summary with my partner, who was also very positively inclined, they're taking back some positive news. One of the power partners came to visit with us. Just read my notes here. "The MDCs were surprising to me. I think they're a very unique design. I've never seen anything like that before, and I've been in a lot of data centers, but never in an open air data center like this. I'm impressed how well you put that together and this sort of simple way of controlling heat and cooling." They were remarked on sort of the way we move large volumes of heat, et cetera. My favorite is, "Your controllability was impressive to me." That came from a power partner, and that was a key thing. They didn't understand how powerful the Maestro software is and its involvement in just about every aspect of the site. The control and management of power, control of the facility itself, being able to ramp it up and ramp it down, being able to optimize different elements of the site. That impressed folks. One person called it the price API. You know, they didn't remember the Maestro name. If I replaced the quote, it'd be quote, you know, Maestro, for me, that's a significant thing to make note of, because the redundancy, you know, between your retail electric provider and Soluna, really owning the control, controlling of curtailment, is a little bit more peace of mind than I would have originally expected, and that was a significant finding on my side. Again, they were shocked and impressed in terms of that. The last one, which is my all-time favorite, this came from the investor. You know, we sat with them, went through the project. It was clear from them, this team knows how to do construction, build out sites, operation. I said, "How are you going to manage this, you know, this site control, all of that?" We opened the kimono, showed them the MaestroOS platform, the UI, the control system, the dashboards. He turned to us and says, "This is the kind of software systems that you expect a 5 gigawatt IPP to be running, you know, not a young company that's growing and building out an infrastructure." They were very impressed. You know, I think we see that our implementation of our software is working as planned. As I mentioned, the high heats this summer, the software is really being tested and our site design is running at a super low PUE, so power usage effectiveness for our audience. You know, how much power is being converted to computing, right? If you, a number that is close to 1 tells you that most of the energy goes to computing. We are running at a 1.01 level, which is one of our best across our fleet, and our Maestro OS is working as planned. It's a proprietary platform that we've built ourselves. It's a big differentiator for us. Like I said, with all the crazy weather and droughts, you know, our site, you know, also doesn't use any water because we're using this advanced cooling approach. It just uses physics to move large volumes of air at a constant speed to enhance the, you know, the experience at the site. We believe this makes us best stewards in the industry, and it just doubles down on our view to make renewable energy a superpower, to be a sustainable, sustainability focused company and to use technology to do that. Great. Well, after what you guys have endured over the last few years, it's great to hear those things. Makes sense that given the, what you've been through, that you keep those quotes handy, in front of you. Yeah. Just for investors, as a reminder, we, on a fireside chat earlier this year with Dipan Patel, the CTO, we did a lot, sort of a deep dive talking about the Modular Data Centers. I'd point investors to that. Speaking of the last year, overall, What are you seeing in the market, both in the project investor side and utility side? How is that different from a year ago, 12 months ago, or maybe even three months ago? Yeah, we're seeing some interesting things in the market right now. I'd first start by, you know, the market is less noisy. A lot of the bad actors, crypto bad actors, have been flushed out. That's been very helpful to us. You know, our message is clear and straightforward. You know, just a quick anecdote. Last year, around this time, we were talking to some big IPPs and, you know, we take a very thoughtful approach to, you know, how we form partnerships, the data we provide, what we ask for, because we do a lot of analytics and do a lot of sort of number crunching to determine whether a project fits our model and whether we can help the IPP, et cetera. There was one IPP that said to us, point blank, I quote, "Why do you guys ask so many questions? You know, the other guys, they just say, you know, when I say jump, they say, How high?" You know, "You guys say, you know, Well, wait, why do you want us to jump?" You know? We're saying, "Well, if you talk to the other guys and they're not asking any questions, you should be worried." You know? Yeah. That's telling you a lot about them, that they're not being thoughtful about the design of the architecture and really value the partnership. They're just chasing cheap power, and they don't care what it takes. You know, as a result, the power partners have a much better decision rubric for selecting partners, and that's really favoring us, right? I talked about, you know, being chosen out of 25 participants. Our responses to questions are much more thoughtful, and it sort of expresses the depth of our knowledge in the energy space and so forth. We're seeing more activity from investors in 2023 than we did in 2022. You know, 2022 was a different year, especially the latter half of the year. There is a willingness to look at crypto again, especially Bitcoin investments, and especially sites that could do more than Bitcoin, like AI, in the future. The world is moving toward more intensive computing, our sites are industry agnostic, that gives us a platform to expand into a number of markets. That's creating some magnetism toward the company. We've had some interesting strategic discussions around things beyond Bitcoin that can be done at our sites. We have, you know, we now have our flagship to point to. You touched on it earlier, you know, Graham, that we can do site visits, and the feedback is extremely positive, and our sites are built for, you know, revenue potential now, right? Bitcoin mining and beyond, and just long-term revenue opportunities in other compute environments have really created a way for us to reposition in the space. The other thing I'm finding that's fascinating is how quickly the IRA is affecting the market. You've already seen massive amounts of more capital coming into the space. They've now provided clarity around this concept of moving your tax credits between projects. You can actually move it to anything. That safe harbor is huge. That's huge. Having worked at a company where we were waiting for IRS, that is game changing. That's game changing. In terms of the number of people who can do it. The fear of that is that you invested it, and then the IRS challenges it. Right. without that, That's a game-changing. It's a game changer. Sorry to interrupt. No, no worries. you know, you Lived the pain. We're on the same page. Other side of it. Yeah, you're picking up what I'm putting down, that that's gonna create a massive amount of capital to come in. So much so that, you know, companies in the space need to consolidate the platforms, right? You have development platforms, you know, there's so much capital to put to work, finding projects is a challenge, and because there's gonna be a lot more build-out, curtailment is gonna continue to be a challenge for IPPs. You know, I don't know if I've ever talked to you about the, you know, McDonald's and Burger King problem, but there's this whole concept, I learned many years ago around economics and sort of optimizing for real estate location. They're two big real estate companies, right? They're trying to optimize for the best location, and as a result, you get a McDonald's and Burger King, across the street from each other, right? Renewable energy is very similar. They optimize around certain factors that accelerate capital deployment, you end up getting, you know, lots of wind farms built in West Texas, right? You get lots of wind farms built in Oklahoma area, SPP. That is going to create lots of opportunity. We have a great solution for that problem because, you know, as you build more projects, it puts more power on the network. Transmission doesn't get built that fast, as fast as projects. That's created a lot of inbound opportunities now that more projects are going online, and we've had probably some of the largest IPPs, post, you know, consolidation, reach out to us and say, "We're ready for you now," you know, "Let's talk about you guys reviewing our portfolio and identifying some projects to work on." That's given us some nice opportunities for more geographic areas, some geographic diversity around our projects. Some folks have talked about, you know, Texas concentration, that sort of thing. That's gonna change here because we're starting to see projects beyond that state, and some of our IPPs are well positioned in those other locations in the US. they probably pick up local tax or local incentives, too, which are- Exactly. it makes sense that you go to the best places. I mean, That's right. Burger King, McDonald's, it's like, why are all the gas stations and it's a gateway thing. That's right. Like, you could move to the other side of town, but that means the other guy's just going to eat your lunch, so. Exactly. Exactly. Um. The power is, right? Yeah. Yeah, exactly. It's a commodity. Mm-hmm. Mm-hmm. Running up on the end of time, and thank you for making the time today. I I appreciate it. Mm-hmm. A final question: As we sit here today, what are investors missing or misunderstanding about Soluna today and going forward? I think the key point that people miss is we have a strong underlying business. You know, we're on a mission to better the world by making renewable energy the primary source of power, using computing as a catalyst. That's always been our core business. You know, last year we had a bump in the road for a number of reasons, but the underlying business strategy, the thesis is still strong. Why is it strong? Because number one, we've established ourselves as a leading curtailment solutions provider to the renewable energy industry. Soluna's brand is almost becoming synonymous with that. We own our data centers and our proprietary software, we build, design, and operate those facilities to serve a very specific purpose. In that design are proprietary approaches to the implementation of our business model, and that gives us a unique structure that differentiates us in the space. Our approach and our approach to structuring the projects. You know, we do behind the meter projects specifically because they're hard to do, there's lots of complexity, and it plays to our strengths as a company. You know, the most successful companies in the world make really hard, complex things seem simple, and we accomplish that by investing in capabilities, team members, et cetera. The most important thing, the last piece is, you know, I had one investor tell me that at the end of the day, people want to make money, John. That's what matters, right? Why they buy the stock? That's why they buy the stock. We deliver strong return on invested capital. If you look at our projects, they're very, you know, healthy and have tremendous earnings power once they are mature and we can bring in capital. You know, I, if you look at our valuation today, you know, I think our true valuation is above current levels. In fact, you guys wrote a great paper that talks about the current market valuation, you know, the fact that. You get credit for nothing. Yeah, nobody's giving us credit for anything but our existing projects, where we have 700 MW. We're maturing them. You know, there's another 50 MW in Dorothy Two. People are sort of missing that, right? We've gone through a major turnaround as a company over the last year, we're well-positioned to continue to grow and ramp up the earnings power of our facilities and to add more facilities as well. I'll keep beating on this drum. We solve a problem. Companies that solve a problem and do it really well consistently build value over time. IPP has won our solution for curtailment. In fact, they need it. You know, it has a shorter payback than other solutions, like batteries. It's an innovative solution that has long-term potential, right? Compute, we're just getting started with what we can do with our data centers. You know, we can build these faster now that we have our blueprint at Dorothy, we can rinse and repeat. As we convince capital that we're the right company to invest in, and we prove that we can execute, more of that capital will come our way. Well, great. Well, we look forward to it. I guess we have earnings coming up in a few weeks and look forward to some more announcements. John, thank you so much. Thanks, Graham, for having me on, thanks to our valued shareholders for listening in, and appreciate your patience and support. Thanks, everyone.