Soluna Holdings, Inc

Previous wording

Depreciation and Amortization associated with general and administrative expenses: Depreciation and amortization expense was comparable for the year ended December 31, 2024 and the year ended December 31, 2023 in which the balances totaled approximately $9.6 million and $9.5 million, respectively. The balances mainly related to amortization expense related to the strategic pipeline contract that was acquired in October 2021.

Current wording

Depreciation and Amortization associated with general and administrative expenses: Depreciation and amortization expense was comparable for the year ended December 31, 2025 and the year ended December 31, 2024 in which the balances totaled approximately $9.6 million and $9.6 million, respectively. The balances mainly related to amortization expense related to the strategic pipeline contract that was acquired in October 2021.

Previous wording

***Loss on contract:***Due to CloudCo’s termination of the HPE Agreement on March 24, 2025, and HPE’s subsequent termination of the HPE Agreement on March 26, 2025, and the acceleration of the remaining unpaid amounts of the contract in accordance with Section 8(h)(ii) of the HPE Agreement, a Type 1 Subsequent Event, we have recognized a liability for the remainder of the HPE Agreement on the consolidated balance sheet of our subsidiary CloudCo, and corresponding loss on contract on our consolidated income statement, in line with the terms and conditions of the HPE Agreement and relevant accounting standards. We have also recognized a loss on the termination of the HPE Agreement for $28.6 million representing the remaining obligations, and a contract liability in the same amount. In addition, the outstanding balance of the prepaid deposit of $8.6 million was offset to the liability, leaving a net liability balance of $20.0 million as of December 31, 2024.

Current wording

Loss on contract: Due to CloudCo’s termination of the HPE Agreement on March 24, 2025, and HPE’s subsequent termination of the HPE Agreement on March 26, 2025, and the acceleration of the remaining unpaid amounts of the contract in accordance with Section 8(h)(ii) of the HPE Agreement, a Type 1 Subsequent Event for the year ended December 31, 2024, we have recognized a liability for the remainder of the HPE Agreement on the consolidated balance sheet of our subsidiary CloudCo, and corresponding loss on contract on our consolidated income statement, in line with the terms and conditions of the HPE Agreement and relevant accounting standards. CloudCo also recognized a loss on the termination of the HPE Agreement for $28.6 million representing the remaining obligations for the year ended December 31, 2024, and a contract liability in the same amount. In addition, the outstanding balance of the prepaid deposit of $8.6 million was offset to the liability, leaving a net liability balance of $20.0 million as of December 31, 2024, in which another $0.7 million was paid, leaving an outstanding balance of $19.3 million as of December 31, 2025.

Previous wording

***Other expense, net:***For the year ended December 31, 2024, other expense, net was approximately $3.4 million respectively, compared to $1.5 million for the year ended December 31, 2023. The increase in other expense, net, for the year ended December 31, 2024 was primarily as a result of $1.0 million general release agreement with our former placement agent; approximately $1.9 million in consent fees, waiver fees, and other financing expenses in relation to the SEPA and related consents for the SEPA on October 1, 2024; a conversion debt inducement expense of approximately $388 thousand; and an extension fee expense of approximately $325 thousand, partially offset by a gain on settlement of litigation with Atlas of approximately $254 thousand. For the year ended December 31, 2023, other expense, net was approximately $1.5 million, consisting of primarily an approximate $1.0 million penalty charge in relation to moving further in the settlement litigation with NYDIG and a $250 thousand expense in relation to an extension fee for the Noteholders when the Second Amendment was signed on May 11, 2023, in addition to the prepayment penalty for the notes payable in the third quarter of fiscal 2023.

Current wording

For the year ended December 31, 2024, other financing expense totaled approximately $3.7 million which was comprised primarily of a $1.0 million general release agreement with our former placement agent; approximately $1.9 million in consent fees, waiver fees, and other financing expenses in relation to the SEPA and related consents for the SEPA on October 1, 2024; a conversion debt inducement expense of approximately $388 thousand; and an extension fee expense of approximately $325 thousand.

Previous wording

Loss on Debt Extinguishment and Revaluation, net: For the year ended December 31, 2024, we recorded a loss on debt extinguishment and revaluation of approximately $7.3 million. On February 28, 2024, we entered into the Fourth Amendment Agreement with the Noteholders, dated February 28, 2024 (the “Fourth Amendment”), and lowered the conversion price of the Convertible Notes as well as issued new warrants and repriced additional warrants with certain exercise features. The issuance and reprice of warrants created a loss on extinguishment of debt of approximately $5.8 million, which was partially offset by a gain on debt revaluation of the convertible debt of approximately $1.3 million as of February 28, 2024 (date of the Fourth Amendment) and March 31, 2024 due to several factors including assumptions on conversions and payouts, annual volatility, and stock price conditions on the dates of revaluations. In addition, there was a revaluation of the warrant liability, as a result of which we recorded a gain on revaluation of approximately $1.5 million. We also performed a fair value assessment of the Convertible Notes as of June 30, 2024, as a result of which we recorded a loss on revaluation of approximately $4.0 million due to factors including assumptions on conversions and payouts, annual volatility, and stock price conditions on the dates of revaluations compared to what the noteholders could convert at as of June 30, 2024. The Convertible Notes were revalued again on September 30, 2024, as a result of which we recorded a gain of approximately $2.3 million due mainly to the change in the price or our common stock offsetting the previous quarter assessments. In the fourth quarter of 2024, we had additional conversions and ultimately fully converted the Convertible Notes payable creating an additional $247 thousand gain on debt extinguishment. As of December 31, 2024, no Convertible Notes remain outstanding. In addition, in the second quarter of fiscal year 2024, we performed a revaluation of the warrants through May 30, 2024, the date of Annual Shareholder approval to approve the repricing of the existing warrants, as a result of which we recorded a loss on revaluation of approximately $1.6 million. In addition to the revaluation of the Convertible Notes and warrants, we also recorded an additional loss on debt extinguishment of approximately $1.4 million due to the satisfaction and redemption of the Dorothy 2 equipment loan through issuance of Class B Membership interests in the Dorothy 2 project valued at three times the borrowing amount (i.e., $2.16 million).

Current wording

For the year ended December 31, 2024, we recognized a net loss on debt extinguishment and revaluation of approximately $1.6 million. On February 28, 2024, we entered into the Fourth Amendment, which reduced the conversion price and resulted in the issuance of new warrants and the repricing of existing warrants with revised exercise features. As a result, the Company recorded a gain on revaluation of convertible notes of approximately $1.3 million during the first quarter of 2024 (as of February 28 and March 31, 2024), primarily driven by changes in conversion assumptions, payout features, annualized volatility, and stock price conditions at the respective valuation dates. A subsequent fair value assessment as of June 30, 2024 resulted in a loss on revaluation of approximately $4.0 million, reflecting changes in conversion and payout assumptions and stock price volatility compared to conversion terms available to noteholders at that date. The convertible notes were remeasured again as of September 30, 2024, resulting in a gain of approximately $2.3 million, primarily due to the decline in the Company’s stock price, which offset prior-quarter fair value losses. In the fourth quarter of 2024, we had additional conversions and ultimately fully converted the convertible notes payable creating an additional $247 thousand gain on debt extinguishment. As of December 31, 2024, no convertible notes remain outstanding. In addition to these fair value adjustments, we recognized a loss on debt extinguishment of approximately $1.4 million related to the satisfaction and redemption of the D2 equipment loan through the issuance of Class B Membership Interests in the D2 project, which were valued at approximately three times the original borrowing amount.

Previous wording

Income Tax Benefit: Income tax benefit for the year ended December 31, 2024 was approximately $2.5 million, compared to approximately $1.1 million thousand for the year ended December 321, 2023. The balances were mainly related to deferred tax amortization impact of acquiring an asset in a transaction that is not a business combination when the amount paid exceeds the tax basis on the acquisition date. As such, we are required to adjust the value of the strategic contract pipeline by approximately $10.9 million at inception date (October 29, 2021), in which was recorded as a deferred tax liability and this amount will be amortized over the life of the asset. For the year ended December 31, 2024 and 2023, we amortized approximately $2.2 million in each year, respectively. In addition, for the year ended December 31, 2023, there were timing differences due to significant increase for in-service capital assets for the year ended December 31, 2023 which created an offset of approximately $1.1 million in deferred income tax expense.

Current wording

Income Tax Benefit: Income tax benefit for the year ended December 31, 2025 was approximately $2.3 million, compared to approximately $2.5 million for the year ended December 31, 2024. The balances were mainly related to deferred tax amortization impact of acquiring an asset in a transaction that is not a business combination when the amount paid exceeds the tax basis on the acquisition date. As such, we are required to adjust the value of the strategic contract pipeline by approximately $10.9 million at inception date (October 29, 2021), which was recorded as a deferred tax liability and this amount will be amortized over the life of the asset. For the years ended December 31, 2025 and 2024, we amortized approximately $2.2 million in each year, respectively.

Previous wording

In addition to financial measures calculated in accordance with GAAP, we also use “EBITDA” and “Adjusted EBITDA.” “EBITDA” is defined as earnings before interest, taxes, and depreciation and amortization.“Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation costs, loss on sale of fixed assets, loss on debt extinguishment and revaluation, placement agent release expense, loss on contract, provision for credit losses, convertible note inducement expense and impairment on fixed assets. Management believes that EBITDA and Adjusted EBITDA results in a performance measurement that represents a key indicator of our business operations of cryptocurrency mining, hosting customers engaged in cryptocurrency mining, demand service revenue, and high-performance computing services.

Current wording

In addition to financial measures calculated in accordance with GAAP, we also use “EBITDA” and “Adjusted EBITDA.” “EBITDA” is defined as earnings before interest, taxes, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation costs, loss on sale of fixed assets and credit on deposit, loss on debt extinguishment and revaluation, fair value adjustments, placement agent release expense, loss on contract, provision for credit losses, convertible note inducement expense and impairment on fixed assets. Management believes that EBITDA and Adjusted EBITDA results in a performance measurement that represents a key indicator of our business operations of cryptocurrency mining, hosting customers engaged in cryptocurrency mining, demand service revenue, and high-performance computing services.

Previous wording

As of December 31, 2024, we had a consolidated accumulated deficit of approximately $314.3 million and we had negative working capital of approximately $34.4 million. As of December 31, 2024, we had total debt outstanding of approximately $21.5 million as summarized further below in the Debt table. In addition, we had outstanding commitments related to Soluna Digital Inc. (“SDI”) of approximately $8.5 million in capital expenditures related to Project Dorothy 2. In addition, due to CloudCo’s termination of the HPE Agreement on March 24, 2025, and HPE’s termination of the HPE Agreement on March 26, 2025, and the acceleration of the remaining unpaid amounts of the contract in accordance with Section 8(h)(ii) of the HPE Agreement, a Type 1 Subsequent Event, we have recognized a liability for the remainder of the HPE Agreement on the balance sheet of our subsidiary, CloudCo, of approximately $20.0 million , net of a prepaid deposit of $8.6 million. As of December 31, 2024, we had $7.8 million of cash available to fund our operations.

Current wording

As of December 31, 2025, we had a consolidated accumulated deficit of approximately $367.7 million and we had positive working capital of approximately $42.9 million. As of December 31, 2025, we had total debt outstanding of approximately $26.8 million as summarized further below in the Debt table. In addition, we had outstanding commitments related to Soluna Digital Inc. (“SDI”) of approximately $27.0 million in capital expenditures related to Project Kati. In addition, due to CloudCo’s termination of the HPE Agreement on March 24, 2025, and HPE’s termination of the HPE Agreement on March 26, 2025, and the acceleration of the remaining unpaid amounts of the contract in accordance with Section 8(h)(ii) of the HPE Agreement, we have recognized a liability for the remainder of the HPE Agreement on the balance sheet of our subsidiary, CloudCo, of approximately $19.3 million. As of December 31, 2025, we had $76.4 million of cash available to fund our operations.

Previous wording

Based on business developments, including changes in production levels, staffing requirements, and network infrastructure improvements, we will require additional capital equipment in the foreseeable future. We are focused on developing and monetizing green, zero-carbon computing and cryptocurrency mining facilities, as well as facilities capable of hosting customers engaged in cryptocurrency mining, and data centers to provide specialized AI Cloud and colocation services.

Current wording

Based on business developments, including changes in production levels, staffing requirements, and network infrastructure improvements, we will require additional capital equipment in the foreseeable future. We are focused on developing and monetizing green cryptocurrency mining facilities, as well as facilities capable of hosting customers engaged in cryptocurrency mining, and data centers to provide specialized AI Cloud and colocation services.

Previous wording

We plan to continue funding operations, including working capital and operating deficits, from operating cash flows and cash flow debt and equity financings, including the YA SEPA and others to be closed as needed consistent with management’s plans.

Current wording

We plan to continue funding operations, including working capital and operating deficits, from operating cash flows and cash flow debt and equity financings, including the ATM Agreement, SEPA, July 2025 financing, December 2025 financing, and others to be closed as needed consistent with management’s plans.

Previous wording

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. In the near term, management is evaluating and implementing different strategies to obtain financing to fund the Company’s expenses and growth to achieve a level of revenue adequate to support the Company’s current cost structure. Financing strategies may include, but are not limited to, stock issuances, project level equity, debt borrowings, partnerships and/or collaborations. If the Company is unable to meet its financial obligations, it could be forced to restructure or refinance, seek additional equity capital or sell its assets. The Company might then be unable to obtain such financing or capital or sell its assets on satisfactory terms. There can be no assurance that additional financing will be available to the Company when needed or, if available, that it can be obtained on commercially reasonable terms. If the Company is not able to obtain the additional financing on a timely basis, if and when it is needed, it will be forced to delay or scale down some or all of its development activities or perhaps even cease the operation of its business.

Current wording

The Company is dependent on generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. In the near term, management is evaluating and implementing different strategies to obtain financing to fund the Company’s expenses and growth to achieve a level of revenue adequate to support the Company’s current cost structure. Financing strategies may include, but are not limited to, stock issuances, project level equity, debt borrowings, partnerships and/or collaborations. If the Company is unable to meet its financial obligations, it could be forced to restructure or refinance, seek additional equity capital or sell its assets. The Company might then be unable to obtain such financing or capital or sell its assets on satisfactory terms. There can be no assurance that additional financing will be available to the Company when needed or, if available, that it can be obtained on commercially reasonable terms. If the Company is not able to obtain the additional financing on a timely basis, if and when it is needed, it will be forced to delay or scale down some or all of its development activities or perhaps even cease the operation of its business.

Previous wording

Net cash used in operations was approximately $5.1 million during the year ended December 31, 2024. We had a net loss for the year ended December 31, 2024 of approximately $58.3 million. Results included cost of revenue in connection with the HPE Agreement for $5.7 million. Non-cash items included approximately $6.2 million of depreciation expense and $9.5 million of amortization expenses, approximately $28.6 million on loss on contract, $5.3 million of stock compensation expenses, $7.3 million of loss on debt extinguishment and revaluation, $2.1 million in debt issuance costs, $760 thousand in provision for credit losses, and $351 thousand amortized deferred financing costs. These non-cash items were offset with a deferred tax benefit of $2.5 million. The change in assets and liabilities is mainly due to an increase in prepaid expenses and other long term assets by $8.1 million due to a prepayment of an arrangement with HPE of $10.3 million that was being amortized over the life of the agreement and a decrease in customer deposits of $1.4 million due to timing of deposits applied in December 2024, offset by an increase in accrued expenses and accounts payable of approximately $5.5 million in relation to NYDIG interest, and related bills associated with Project Dorothy 2 and Project Kati. The other changes in assets and liabilities were not material.

Current wording

Net cash used in operations was approximately $5.1 million during the year ended December 31, 2024. We had a net loss for the year ended December 31, 2024 of approximately $58.3 million. Results included cost of revenue in connection with the HPE Agreement for $5.7 million. Non-cash items included approximately $6.2 million of depreciation expense and $9.5 million of amortization expenses, approximately $28.6 million on loss on contract, $5.3 million of stock compensation expenses, $1.6 million of loss on debt extinguishment and revaluation, $5.7 million in fair value adjustment losses, $2.0 million in debt issuance costs, $760 thousand in provision for credit losses, and $351 thousand amortized deferred financing costs. These non-cash items were offset with a deferred tax benefit of $2.5 million. The change in assets and liabilities is mainly due to an increase in prepaid expenses and other long term assets by $8.1 million due to a prepayment of an arrangement with HPE of $10.3 million that was being amortized over the life of the agreement and a decrease in customer deposits and other liabilities of $1.7 million due to timing of deposits applied in December 2024, offset by an increase in accrued expenses and accounts payable of approximately $5.5 million in relation to NYDIG interest, and related bills associated with D2 and Project Kati. The other changes in assets and liabilities were not material.

Previous wording

Net cash used in investing activities during the year ended December 31, 2024 was approximately $13.2 million consisting mainly of capital expenditures of $9.2 million and increase in deposits on equipment of $4.1 million, primarily related to the development build of Project Dorothy 2. Net cash used in investing activities during the year ended December 31, 2023 was approximately $10.3 million consisting mainly of capital expenditures of $12.7 million, primarily related to the completion of the build of Project Dorothy 1A and 1B, less cash proceeds from sale of equipment of $2.3 million, primarily from the sale of miners located at Project Sophie in connection with the decision to convert to a hosting facility.

Current wording

Net cash used in investing activities during the year ended December 31, 2025 was approximately $31.9 million consisting mainly of capital expenditures of $28.1 million, which consist of additions to property, plant, and equipment offset with transfers from deposits on equipment, and $3.7 million deposit on equipment purchases. Net cash used in investing activities during the year ended December 31, 2024 was approximately $13.2 million consisting mainly of capital expenditures of $8.9 million and increase in deposits on equipment of $4.4 million, primarily related to the development of D2.

Previous wording

For fiscal year 2024, funds from financing activities were used to fund an initial deposit for the HPE Agreement, fund construction of D2, continued project pipeline development and general operating cash. Net cash provided by financing activities was approximately $18.3 million consisting mainly of proceeds from financing of approximately $14.5 million in which $13.75 million was from 2024 secured loan financing in June and July, and $720 thousand was drawn down for equipment financing. In addition, there was $2.3 million in warrants exercised, as well as $14.7 million in contributions of non-controlling membership interest. Offsetting the net cash provided by financing activities was $8.3 million in cash distributions to non-controlling interest members, and payments of $4.9 million relation to Navitas loan, the June and July 2024 note agreements, and payments in relation to the convertible holders. Net cash provided by financing activities was approximately $21.8 million during the year ended December 31, 2023, which consisted of cash contributions for noncontrolling interest of approximately $20.4 million, offset with distributions for non-controlling interest of $1.0 million. We also received net proceeds of approximately $817 thousand from the subsequent SPA offerings, in addition to proceeds from debt issuances of $3.1 million less debt payment costs of $1.1 million on promissory notes and the Navitas loan, and $350 thousand for payment on the Company’s line of credit.

Current wording

For the year ended December 31, 2024, funds from financing activities were used to fund an initial deposit for the HPE Agreement, fund construction of D2, continued project pipeline development and general operating cash. Net cash provided by financing activities was approximately $18.3 million consisting mainly of proceeds from financing of approximately $14.5 million in which $13.75 million was from 2024 secured loan financing in June and July, and $720 thousand was drawn down for equipment financing. In addition, there was $2.3 million in warrants exercised, as well as $14.7 million in contributions of non-controlling membership interest. Offsetting the net cash provided by financing activities was $8.3 million in cash distributions to non-controlling interest members, and payments of $4.9 million relation to Navitas loan, the June and July 2024 note agreements, and payments in relation to the convertible holders.

Previous wording

On March 12, 2025, Soluna SW LLC (the “SW Borrower”), a Delaware limited liability company and a subsidiary of Soluna SW Holdings LLC (“SW Holdings”), a Delaware limited liability company and a subsidiary of Soluna Digital, Inc. (“SDI”), a Nevada corporation and a subsidiary of Soluna Holdings, Inc. (the “Company”), entered into a Loan Agreement (the “Galaxy Loan Agreement”) with SW Holdings and Galaxy Digital LLC (the “Lender”). The Galaxy Loan Agreement comprises a term loan facility in the principal amount of $5.0 million (the “Term Loan Facility”). The Term Loan Facility bears interest at 15.0% per annum, unless an Event of Default (as defined therein) has occurred and is continuing, in which case the Galaxy Term Loan Facility shall bear interest at a rate of 5% above the then applicable interest rate. The Term Loan Facility will mature on March 12, 2030 and will be paid over a five-year term.

Current wording

On March 12, 2025, the SW Borrower, a Delaware limited liability company and subsidiary of SW Holdings, itself a subsidiary of SDI, a Nevada corporation and wholly owned subsidiary of the Company, entered into the Galaxy Loan Agreement with SW Holdings and Galaxy Digital LLC. The Galaxy Loan Agreement provides for a term loan facility in the principal amount of$5.0 million (the “Term Loan Facility”). The Term Loan Facility bears interest at a rate of 15.0% per annum, subject to an increase of 5.0% (for a total of 20.0%) in the event an Event of Default has occurred and is continuing. The Term Loan Facility matures on March 12, 2030 and includes scheduled payments over a five-year term. As of December 31, 2025, the outstanding principal balance is approximately$4.6 million as we were compliant with all debt covenants.

Previous wording

On June 20, 2024, pursuant to the terms and subject to the conditions of the June SPA by and among (i) CloudCo, (ii) Soluna Cloud, (iii) the Company and (iv) the Investor, CloudCo issued to the Investor a secured promissory note in a principal amount equal to $12.5 million (the “Soluna CloudCo Secured Note”). The Soluna CloudCo Secured Note accrues interest at a rate 9.0% per annum, subject to adjustment upon an event of default. The Soluna CloudCo Secured Note matures on June 20, 2027. On July 12, 2024, the Company, CloudCo, Soluna Cloud, and the Existing Investor entered into a First Amendment to the Note Purchase Agreement. Additional Notes were issued for $1,250,000 (“Soluna CloudCo Additional Secured Note”) on July 12, 2024 and are subject to the same terms and conditions as the June SPA financing. On October 1, 2024, CloudCo, Soluna Cloud and the Company entered into assignment and assumption agreements (the “Assignment Agreements”) with the Additional Investors with respect to an aggregate of $1.25 million of notes issued by CloudCo. Pursuant to the Assignment Agreements, the Company will be able to purchase such notes for a purchase price of $750 thousand, or 60% of face value. The assignment and assumption will be effective once all conditions of the agreement are met including fulfilling the purchase price. As of December 31, 2024, the Company has an outstanding principal balance of approximately $13.0 million in relation to the Soluna CloudCo Secured Note and Soluna CloudCo Additional Secured Note.

Current wording

On June 20, 2024, pursuant to the terms and subject to the conditions of a Note Purchase Agreement (the "June SPA") by and among (i)Soluna AL CloudCo, LLC, a Delaware limited liability company ("CloudCo") and indirect wholly owned subsidiary of the Company, (ii) Soluna Cloud, Inc., a Nevada corporation, indirect wholly owned subsidiary of the Company, and parent of CloudCo ("Soluna Cloud"), (iii) the Company and (iv) the accredited investor named therein (the "Investor"), CloudCo issued to the Investor a secured promissory note in a principal amount equal to$12.5 million (the “Green Cloud Secured Note”). The Green Cloud Secured Note accrues interest at a rate 9.0% per annum, subject to adjustment upon an event of default. The Green Cloud Secured Note matures on June 20, 2027. On July 12, 2024, the Company, CloudCo, Soluna Cloud, and the Investor entered into a First Amendment to the Note Purchase Agreement. Additional Notes were issued to additional accredited investors (the “Additional Investors”) for$1.25 million (“Soluna CloudCo Additional Secured Note”) on July 12, 2024 and are subject to the same terms and conditions as the June SPA financing. On October 1, 2024, CloudCo, Soluna Cloud and the Company entered into assignment and assumption agreements (the “Assignment Agreements”) with the Additional Investors with respect to an aggregate of$1.25 million of notes issued by CloudCo. Pursuant to the Assignment Agreements, the Company will be able to purchase such notes for a purchase price of$750 thousand, or 60% of face value. The assignment and assumption will be effective once all conditions of the agreement are met including fulfilling the purchase price. The assignment and assumption occurred on March 14, 2025, therefore we extinguished the remaining third-party outstanding debt on the Additional Note, and a gain on extinguishment of the debt of approximately$551 thousand was recorded. In relation to the Green Cloud Secured Note, as of December 31, 2025, the Company had an outstanding principal balance of approximately$7.8 million.

Previous wording

On May 16, 2024, SDI SL Borrowing – 1, LLC, an affiliate of Soluna Holdings, Inc. (the “Borrower”), entered into a loan agreement (the “Equipment Loan Agreement” or the “Loan”) with Soluna2 SLC Fund II Project Holdco LLC (the “Lender”). The Equipment Loan Agreement provides for Borrower to borrow, from time to time, up to $1.0 million, and further amended on February 28, 2025 to $4.0 million to be used to purchase necessary equipment for the progression of Project Dorothy 2 and Project Kati. Any loans made under the Equipment Loan Agreement have a maturity date of May 16, 2027 and bear interest at a rate of 15% per annum. The Equipment Loan Agreement includes customary covenants for loans of this nature, as well as a multiple on invested capital provision, which requires us to pay, in addition to principal and interest, an amount equal to the difference of (i) the greater of (a) the principal amount of the Loan being repaidplus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan, and (b) the principal amount of the Loan being repaid multiplied by three,minus (ii) the sum of the principal amount of the Loan being repaidplus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan. On May 17, 2024, the Borrower drew down $720 thousand of the Loan. On July 22, 2024, Borrower satisfied and repaid the borrowing amount in full by issuing the Lender Class B Membership Interests in the Dorothy 2 project valued at three times the borrowing amount (i.e., $2.16 million). The redemption of debt through equity created approximately a $1.4 million loss on debt extinguishment for the year ended December 31, 2024. In addition, the Borrower deferred financing costs associated with the Loan of approximately $163 thousand.

Current wording

On May 16, 2024, the SL Borrowing – 1, LLC, an affiliate of the Company (the “SDI Borrower"), entered into a loan (the "Equipment Loan Agreement" and the "Loan") with Soluna2 SLC Fund II Project Holdco LLC (the "Lender"). The Equipment Loan Agreement provides for the SDI Borrower to borrow, from time to time, up to$4.0 million, as further amended on February 28, 2025, to be used to purchase necessary equipment for the progression of D2 and Project Kati. Any loans made under the Equipment Loan Agreement have a maturity date of May 16, 2027 and bear interest at a rate of 15% per annum. The Equipment Loan Agreement includes customary covenants for loans of this nature, as well as a multiple on invested capital provision, which requires us to pay, in addition to principal and interest, an amount equal to the difference of (i) the greater of (a) the principal amount of the Loan being repaid plus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan, and (b) the principal amount of the Loan being repaid multiplied by three, minus (ii) the sum of the principal amount of the Loan being repaid plus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan. On March 21, 2025, the SDI Borrower drew down$250 thousand of the Loan with the Lender, in relation to Project Kati. In addition, on June 11, 2025 and July 16th, the SDI Borrower drew down an additional$269.2 thousand and$291.4 thousand of the Loan with the Lender, in relation to Project Kati. The total amount of equipment loans of$810.6 thousand was outstanding prior to the assignment of equipment and payoff of the loan. The SDI Borrower shall repay the Loans under these Borrowing Requests with a different MOIC Payment than as defined in the Equipment Loan Agreement. The MOIC Payment for these Borrowing Requests only, shall be an amount equal to the difference of (i) the greater of (a) the principal amount of the Loan being repaid plus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan, and (b) the principal amount of the Loan being repaid multiplied by three and three tenths (3.3), minus (ii) the sum of the principal amount of the Loan being repaid plus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan. As of the date prior to the payoff, the Company had approximately $180.6 thousand in Accrued interest payable in relation to the MOIC and 15% interest accruing on the Loan that was outstanding. On August 1, 2025, the SDI Borrower satisfied and repaid the Borrowing amount in full by issuing the SLC Class B Membership Interests in Soluna KKSL JVCo LLC (“Kati”) project for 3.3 times the membership units($810.6 thousand payoff equal to fair value of approximately $2.7 million for Class B membership units issued to SLC), as part of the contribution agreement between the parties. Through i…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

On May 9, 2023, DVCC and Navitas West Texas Investments SPV, LLC entered into a 2-year Loan Agreement for $2,050,000. The unpaid principal balance of the Term Loan shall bear interest at per annum rate equal to 15%. As of December 31, 2024, the Company has an outstanding principal balance of approximately $137 thousand. As of the date of these consolidated financial statements, the Navitas loan has been fully paid off.

Current wording

On May 9, 2023, Soluna DV ComputeCo, LLC ("DVCC") and Navitas West Texas Investments SPV, LLC entered into a 2-year Loan Agreement for $2.05 million. The unpaid principal balance of the Term Loan shall bear interest at per annum rate equal to 15%. As of December 31, 2025, the Navitas loan has been fully paid off.

Previous wording

On January 14, 2022, the Company effected an initial drawdown under the Master Equipment Finance Agreement (“MEFA”) with NYDIG in the aggregate principal amount of approximately $4.6 million that bore interest at 14%. On January 26, 2022, the Company had a subsequent drawdown of $9.6 million. On December 20, 2022, Soluna MC Borrowing 2021-1 LLC (“Borrower”) received a Notice of Acceleration and Repossession (the “NYDIG Notice”) from NYDIG with respect to the MEFA, by and between Borrower, a subsidiary of Soluna MC, LLC, a subsidiary of Soluna Digital, a subsidiary of the Company, and NYDIG. The obligations of Borrower under the MEFA and reflected in the NYDIG Notice are ring-fenced to Borrower and its direct parent company, Soluna MC LLC. The Company is not a party to any guaranty, collateral agreement, or other support agreement with or for the benefit of NYDIG. As such, the principal balance of $10.5 million as of December 31, 2022 became due immediately and the Borrower shall bear interest, at a rate per annum equal to 2.0% plus the rate per annum otherwise applicable to such obligations set forth in the MEFA. On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA, and repossessed the collateralized assets that totaled approximately $3.4 million, in which approximately $560 thousand was first used to pay off accrued interest and penalty to date. On September 5, 2023, NYDIG provided a letter finalizing the accounting for the repossessed collateralized assets totaling proceeds of approximately $3.4 million. A summary judgment motion was performed on February 13, 2024 and was agreed upon by both NYDIG and the Borrower, that the total outstanding loan principal balance would be approximately $9.2 million, in which a penalty fee was applied of approximately $1.0 million to the repossessed collateralized assets, and outstanding interest and penalty balance would be approximately $936 thousand as of December 31, 2023. As of December 31, 2024, the Company still has an outstanding loan principal of approximately $9.2 million and outstanding interest and penalty balance of approximately $2.3 million.

Current wording

On January 14, 2022, the Company effected an initial drawdown under the Master Equipment Finance Agreement (“MEFA”) with NYDIG in the aggregate principal amount of approximately $4.6 million at 14% interest, followed by an additional drawdown of $9.8 million on January 26, 2022. On December 20, 2022, Soluna MC Borrowing 2021-1 LLC (“Borrower”), an indirect subsidiary of the Company, received a Notice of Acceleration and Repossession (the “NYDIG Notice”) from NYDIG with respect to the MEFA Obligations under the MEFA were ring-fenced to the Borrower and its direct parent, Soluna MC LLC, and the Company was not party to any guaranty or other support agreement. On February 23, 2023, NYDIG foreclosed on the collateral, repossessing assets valued at approximately $3.4 million, of which approximately $560 thousand was first used to pay off accrued interest and penalties. On December 7, 2023, NYDIG filed a motion for summary judgment seeking approximately $10.3 million for unpaid principal, interest, and penalties. Following court proceedings, the parties agreed that the total outstanding loan principal balance would be approximately $9.2 million (the "Agreed Judgment Amount"). On September 29, 2025, the Borrower, Soluna MC, LLC (together with Borrower, the “NYDIG Defendants”) and NYDIG entered into a Settlement Agreement (the “Settlement Agreement”), pursuant to which the NYDIG Defendants and NYDIG agreed to fully settle and resolve the Agreed Judgment Amount and all other matters relating to the NYDIG loans in exchange for the NYDIG Defendant's agreement to make certain settlement payments to NYDIG in accordance with the Settlement Agreement. Upon payment, NYDIG agreed to release the NYDIG Defendants and their affiliates from all related claims, other than obligations under the Settlement Agreement. The Company has recorded a gain on extinguishment of debt for the outstanding principal and accrued interest and penalties. As of December 31, 2025, the Settlement Agreement amount has been fully paid and satisfied.

Previous wording

We had Warrants included within the SPA agreement as noted in Note 8. The Warrants are considered freestanding equity-classified instruments due to their detachable and separately exercisable features and meet the indexation criteria within derivative accounting. Accordingly, the Warrants are presented as a component of Stockholders’ Equity in accordance with derivative accounting.

Current wording

We had warrants issued during 2024 and 2025 for purposes of equity financing and debt exchanges. Some of the warrants were considered freestanding equity-classified instruments due to their detachable and separately exercisable features and meet the indexation criteria within derivative accounting. Accordingly, those warrants were presented as a component of Stockholders’ Equity in accordance with derivative accounting. Other warrants did not meet equity classification and were recorded as a liability until such warrants were exercised or an amendment to the warrant agreement occurred. We used a Black-Scholes simulation module in performing its fair value assumptions in relation to warrants issued during the course of the year. Inherent in a Black-Scholes simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield.