Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 165

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 165
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Membership Interests of DVCC. On June 2, 2023, Soluna and Navitas amended and restated the Existing LLCA to (a) reflect (i) Navitas’s
additional capital contribution of approximately $7.6 million and receipt of an additional 7,597 Membership Interests, for a total of
12,097 Membership Interests and 49% ownership of DVCC, and (ii) Soluna’s additional capital contribution of $1.34 million and receipt
of an additional 1,340 Membership Interests, for a total of 12,590 Membership Interests and 51% ownership of DVCC, and (b) describe the
respective rights and obligations of the Members and the management of DVCC. As of March 31, 2025, Navitas owns 49% and Soluna owns 51%
of DVCC.

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The Company evaluated this legal entity under ASC
810, Consolidations and determined that DVCC is a VIE that should be consolidated into the Company, with a non-controlling interest
recorded to account for Navitas’ equity ownership of DVCC. The Company has a variable interest in DVCC. The entity was designed
by the Company to create an entity for outside investors to invest in specific projects. The creation of this entity resulted in the Company,
through its equity interest in DVCC, absorbing operational risk that the entity was created to create and distribute, resulting in the
Company having a variable interest in DVCC.

DVCC is a VIE of the Company due to DVCC being structured
with non-substantive voting rights. This is due to the following two factors being met as outlined in ASC 810-10-15-14 that require
the VIE model to be followed.

    a.
    The voting rights of the Company are not proportional to their obligation to absorb the expected losses of the legal entity. The Company gave Navitas veto rights over significant decisions, which resulted in Soluna having fewer voting rights relative to their obligation to absorb the expected losses of the legal entity.

    b.
    Substantially all of DVCC’s activities are conducted on behalf of the Company, which has disproportionally fewer voting rights.

Also,
the Company is the primary beneficiary due to having the power to direct the activities of DVCC that most significantly impact the performance
of DVCC due to its role as the manager handling the day-to-day activities of DVCC as well as majority ownership