Soluna Holdings, Inc

Current report

We have concluded that non-compliance with the forward-looking financial covenant under our project-level credit facility is probable at upcoming measurement dates, and the relief we have obtained is limited and temporary.

Current report

Soluna DVSL ComputeCo, LLC, Soluna DVSL II ComputeCo, LLC, Soluna KK I ComputeCo, LLC, and, following the Briscoe Project Acquisition, the Tranche C Borrower (collectively, the “Borrowers”) are parties to a Credit and Guaranty Agreement with Generate Lending, LLC, as administrative and collateral agent, and Generate Strategic Credit Master Fund I-A, L.P., as lender (as amended, the “Amended Credit Agreement”), which requires the Borrowers to maintain (i) a minimum trailing Debt Service Coverage Ratio of 1.60:1.00 and (ii) a minimum Forward Contracted DSCR of 1.20:1.00. The Forward Contracted DSCR gives credit only to revenue under executed customer contracts; merchant revenue and other revenue we anticipate but have not yet contracted — including revenue we may reasonably expect from prospective or pipeline customers — is assigned no value in the calculation. Because of this design, we concluded that it is probable the Borrowers will fail to satisfy the Forward Contracted DSCR at one or more measurement dates during the twelve months following June 30, 2026, absent new customer contracts or a further amendment to the Amended Credit Agreement.

Current report

On August 7, 2026, the Borrowers entered into a limited waiver, consent and amendment (the “August 2026 Amendment”) under which the DSCR and Forward Contracted DSCR were not required to be calculated for the June 30, 2026 measurement date. This relief is narrow: it applies only to that single test date, does not extend for more than one year from the balance sheet date, and covenant testing resumes at the September 30, 2026 measurement date. The effectiveness of the August 2026 Amendment was conditioned on our prepaying in full the Tranche A-1 and Tranche A-3 Loans, which we did on August 10, 2026 for an aggregate amount of approximately $19.1 million, including a $3.9 million prepayment premium. Following that prepayment, the Forward Contracted DSCR no longer applies to the Dorothy 1A and Dorothy 2 borrowers. However, the Forward Contracted DSCR continues to apply to the Tranche C Loan, which financed our April 1, 2026 acquisition of the Briscoe Wind Farm and had approximately $9.6 million outstanding, net of debt discount and issuance costs, immediately following the prepayment.

Current report

A failure to satisfy the Forward Contracted DSCR that is not remedied within five days constitutes an event of default under the Amended Credit Agreement. Following an uncured event of default, the lender may declare all outstanding principal and accrued interest immediately due and payable and exercise other remedies, including foreclosing on the first-priority liens securing the facility. Such a default could also trigger cross-default provisions under our other financing arrangements. We can provide no assurance that we will obtain sufficient new contracted revenue before the September 30, 2026 measurement date, that our lender will grant a further waiver, or that we will be able to negotiate an amendment on acceptable terms or at all. Because we concluded that future compliance was not probable, we classified the entire $27.5 million of gross principal outstanding under the Amended Credit Agreement as a current liability on our condensed consolidated balance sheet as of June 30, 2026, which may affect how investors, analysts and counterparties assess our financial condition and liquidity.

Current report

Our acquisition of the Briscoe Wind Farm has introduced a new merchant power generation business that exposes us to operating and market risks that are not present in, and are not addressed by the risk factors applicable to, our historical Bitcoin mining and data center hosting businesses.

Current report

On April 1, 2026, we acquired 100% of the membership interests in Briscoe Wind Farm, LLC, an approximately 150 MW, 81-turbine wind generation facility located in Briscoe and Floyd Counties, Texas, which exposes us to the following risks:

Current report

•Wholesale power price and curtailment risk. Briscoe sells power into the wholesale market at its nodal settlement point and, for a portion of output, under a Power Purchase Agreement with Golden Spread Electric Cooperative, Inc. The balance of Briscoe’s output is exposed to merchant ERCOT prices, which are volatile and can be negative. Briscoe has experienced negative nodal pricing as a result of severe congestion on transmission lines within the ERCOT West Hub region, meaning that at times we may be required to pay to deliver power rather than being paid for it, or may curtail generation, either of which would reduce Wind Energy Generation revenue.

Current report

•Wind resource variability. Revenue from this business depends on wind conditions at a single site. Wind resource varies seasonally and from year to year in ways that are difficult to predict, and periods of below-average wind would reduce generation and revenue with no offsetting contractual protection.

Current report

•Turbine operations and maintenance cost volatility. At closing, 10 of the facility’s 81 turbines were not operating, and we initiated gearbox and main bearing repairs that continued into the third quarter of 2026. We recognized approximately $1.5 million of scheduled and unscheduled turbine and facility maintenance costs during the period, and operations and maintenance costs at Briscoe may vary significantly and unpredictably from period to period, including as a result of unplanned equipment failures.

Current report

•Single-asset operational concentration. Unlike our data center portfolio, which is diversified across multiple sites, our wind energy generation business is concentrated entirely in the Briscoe facility. Any operational disruption, casualty loss, transmission outage, adverse weather event, or unfavorable regulatory development affecting that single facility would affect the entirety of this revenue stream, with no diversification across other generating assets to offset it.

Current report

•Decommissioning obligations. We are contractually obligated to remove the wind energy facility and restore the leased sites upon expiration of the underlying land leases. We recorded an asset retirement obligation of approximately $3.6 million at acquisition (approximately $3.7 million as of June 30, 2026, after accretion), representing management’s current estimate of future removal and restoration costs based on an independent decommissioning study. Actual decommissioning costs may differ materially from this estimate as a result of changes in regulation, engineering or technology, permitting requirements, inflation, or other factors, and could be higher than currently estimated.