Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 262

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1A
Chunk 262
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 with the expansion of a business and operating a business in a competitive industry. There
can be no assurance that we will ever operate profitably, and if we do, there can be no assurance that we would be able to maintain profitability.
If we cannot achieve or maintain profitability, our stockholders could lose all or a part of their investment.

18

Our
level of existing debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities,
and increase our vulnerability to adverse economic and industry conditions.

We
currently use debt as part of our capital structure and may take on more debt in the future.

On
June 20, 2024, we issued a $12.5 million secured promissory note, with approximately $11.8 million of principal outstanding as of December
31, 2024. This note, along with accrued interest, is due on June 20, 2027.

On
December 20, 2022, Soluna MC Borrowings, LLC 2021-1 (“Borrower”), a subsidiary of Soluna MC, LLC, a subsidiary of Soluna
Digital, a subsidiary of the Company, defaulted on equipment loans from NYDIG, made under a Master Equipment Finance Agreement dated
December 30, 2021 (the “MEFA”). The loans were secured by borrower assets and guaranteed by Soluna MC, LLC (“Guarantor”). We are currently in litigation with NYDIG, which foreclosed on the
collateral on February 23, 2023. As of December 31, 2024, the Borrower owes $9.2 million in principal plus approximately $2.3
million in interest and penalties.

On
March 12, 2025, Soluna SW, LLC, a subsidiary of Soluna Digital, Inc. (“SSW”), entered into a $5 million term loan with Galaxy
Digital LLC under a loan agreement that matures on March 12, 2030.

Our
current level of debt could limit our flexibility and pose risks to our business. It may:

●Restrict
                                            our ability to raise new financing or make strategic investments;

●Require
                                            significant cash flows to cover interest and principal payments;

●Impose
                                            covenants that limit our ability to pay dividends, repurchase shares, make acquisitions,
                                            incur additional debt, or create liens;

●Make
                                            us more vulnerable to downturns or limit our ability to pursue growth opportunities.

Our
ability to