Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 28

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 28
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 Borrowing – 1, LLC, an affiliate of the Company. (the “SDI Borrower”) entered into a loan agreement (the “Equipment
Loan Agreement” or the “Loan”) with Soluna2 SLC Fund II Project Holdco LLC (the “Lender”, and collectively,
the “Parties”). As further amended on February 28, 2025, the Equipment Loan Agreement provides for the Company to borrow,
from time to time, up 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 will bear interest at a rate of 15%
per annum. The Equipment Loan Agreement includes customary covenants for loans of this nature including financial reporting, monthly
updates, event reporting, as well as conduct of business. In addition, the Equipment Loan Agreement contains a multiple on invested capital (“MOIC”) provision, which requires the Company 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 May 17, 2024, the SDI
Borrower drew down $720 thousand of the Loan with the Lender. On July 22, 2024, the SDI Borrower satisfied and repaid the borrowing amount
in full by issuing the Investor 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.

On March 21, 2025, the SDI
Borrower drew down $250 thousand of the Loan with the Lender, in relation to Project Kati. The amount is outstanding as of March 31, 2025.
The SDI Borrower shall repay the Loan under this Borrowing Request with a different MOIC