Company: SLNH
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023503
Chunk: 15

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 15
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 The Company recorded a loss on the credit deposit of approximately $780
thousand which was included in Loss on sale of fixed assets and credit on equipment deposit on the condensed financial statements for
the three and nine months ended September 30, 2025.

Debt
Issuance Costs

Debt
issuance costs consist of costs incurred in obtaining long-term financing. These costs are classified on the condensed consolidated balance
sheet as a direct deduction from the carrying amount of the related debt liability and subsequently amortized as interest expense in
the condensed consolidated statement of operations using the effective interest rate method.

The
Company evaluates amendments to its debt instruments in accordance with ASC 470-50, Debt - Modifications and Extinguishments (“ASC
470”) to determine whether the amendment should be accounted for as a modification or an extinguishment. An amendment may be considered
modified when the terms of the new debt and original instrument are not “substantially different” (as defined in the debt
modification guidance in ASC 470). Amendments that are considered modifications are accounted for prospectively as yield adjustments,
based on the revised terms, and lender fees and costs directly incurred with third parties, to the extent material, are recorded as debt
discount and amortized to interest expense using the effective interest rate method.

Loan Commitment assets

The
Company’s Generate Credit Agreement (see Note 8) contained a commitment from the lender for an additional tranche of debt under
certain conditions. The Company incurred costs and fees to obtain a nonrevolving loan commitment. The accounting for warrants issued
and fees paid to lenders in connection with a nonrevolving loan commitment are initially treated as an asset. As discussed in Generate
Credit Agreement in Note 8, the Company can draw up to $35.5 million between the first three tranches and can draw an additional $64.5
million upon subsequent approval by the lenders. The Company allocated the warrants issued and fees paid to the lenders in connection
the nonrevolving loan commitment between the initial draw of $12.6 million and the remaining $22.9 million between debt issuance costs
and loan commitment assets. As the $22.9 million remaining commitment gets drawn upon, the Company will reclassify a portion of the
loan commitment asset as a debt discount. 

Warrant
Liability

Under
the guidance in ASC 480: Distinguishing Liabilities from Equity (“ASC 480”), and then further in ASC 815, Derivatives
and