Company: SLNH
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023503
Chunk: 76

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 76
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.5% being distributed
to the Class B members on a pro-rata basis. After the Target Return Date is met, 50% of distributable cash will be allocated to the Class
A members and 50% allocated to the Class B members in accordance with their membership interests.

Project
Dorothy 2 allows the Developer to invest in DVSL II, with the total ownership of the Developer and its affiliates capped at 49% of the
Class B Membership Interests. This investment can occur within 30 days after the Effective Date (treated equally to the initial Investor),
from day 31 to 180 days after the Effective Date (subject to a purchase price formula with a 20% discount rate), or after 180 days with
the initial Investor’s approval.

On
May 16, 2024, the Company secured $1.0 million in financing from SLC for equipment and machinery for Project Dorothy 2 through an Equipment
Loan Agreement (the “ELA”) between SDI SL Borrowing - 1, LLC (the “Borrower”) and SLC. On that date, SLC lent
the Borrower $720,000 to purchase medium voltage cables and low voltage switchboards. This debt was later assigned to DVSL II on the
Effective Date. Subsequently, the borrowing amount was paid in full by issuing SLC Class B Membership Interests in the Dorothy 2 project
valued at three times the borrowing amount (i.e., $2.16 million).

On
April 4, 2025, the Company transferred its Class B Membership to SLC, resulting in 0% Class B Membership Interests held by the Company.
SDI still retains 100% Class A Membership Interests in DVSL II as of September 30, 2025. Based on evaluation, the Company would be able
to consolidate this entity.

The
Company evaluated this legal entity under ASC 810, Consolidations and determined that this entity is a VIE, as the equity holders
as a group do not have the characteristics of a controlling financial interest. Even though SLC has all of the Class B membership, the
Company holds all the Class A membership, which gives them the ability to control the significant decisions made in the ordinary course
of business. The Company has the right to receive benefits that could potentially be significant to the VIE through its Class A membership
interest, as it is eligible to receive 50% of distributions upon SLC