Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 148

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 148
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 procurement,
and labor associated with the Company’s Project Dorothy 2 and Project Kati datacenters. These capital expenditures are expected
to occur over the current year.

Contingencies:

Spring Lane Capital Contingency

The
Company has a potential contingency associated with an agreement with Spring Lane of up to $250 thousand which would be reduced by a proportion
of funding received from Spring Lane up to the $45.0 million aggregate contribution cap. The Company considers the probability of a payment
for the contingency to be remote.

Bonus Contingency

During the year ended December 31, 2024, the Company’s
Board of Directors approved a discretionary bonus program with an aggregate payout of approximately $2.1 million, including associated
payroll taxes. The bonus is subject to achievement of specific conditions. As of March 31, 2025, management evaluated the likelihood of
meeting the requisite conditions for payout and determined that it is not probable that conditions will be satisfied. Accordingly, no
liability has been recorded in the accompanying condensed consolidated financial statements as of March 31, 2025 and December 31, 2024.
The Company will continue to monitor the status of the conditions and will recognize a liability in future periods if and when it becomes
probable that the bonus will be paid.

Legal

We are subject to legal proceedings, claims and liabilities
which arise in the ordinary course of business. When applicable, we accrue for losses associated with legal claims when such losses are
probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change.
Legal fees are charged to expense as they are incurred.

On December 29, 2022, NYDIG filed a complaint against
Soluna MC Borrowings, LLC 2021- 1, a subsidiary of Soluna MC, LLC, a subsidiary of Soluna Digital, a subsidiary of the Company (“Borrower”)
and Soluna MC, LLC (“Guarantor”, and together with Borrower, “NYDIG Defendants”) in Marshall Circuit Court of
the Commonwealth of Kentucky regarding a series of loans (the “NYDIG Loans”) made by NYDIG to Borrower pursuant to a Master
Equipment Finance Agreement (“MEFA”) that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant
to a written guaranty agreement executed by Guarantor. On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing
the ME