Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 1294

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 4
Chunk 1294
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AI”)
and supercomputing applications, utilizing NVIDIA H100 Graphic Processing Units (“GPUs”).

At the time of launch, the market for NVIDIA H100 GPUs was characterized by constrained supply and strong pricing,
which aligned with the economics of the fixed-cost HPE Agreement. However, by the end of 2024, the GPU market shifted significantly.
Lead times for NVIDIA H100 GPUs shortened from over 50 weeks in 2023 to 8–12 weeks by the end of 2024, easing supply constraints
and reducing urgency among buyers. At the same time, market demand shifted toward larger GPU clusters than those available under the
HPE Agreement, making it difficult to secure long-term, reserved contracts at profitable rates. The expected release of NVIDIA’s
H200 Blackwell architecture also caused some customers to delay purchases. Although release timelines were impacted by design issues,
the prospect of next-generation technology contributed to hesitancy in NVIDIA H100 GPU acquisition. Competitive pressure from alternative
GPU vendors further softened demand and market pricing. As a result, Soluna Cloud’s business progressed more slowly than anticipated.
Revenues were first recognized in December 2024, with modest growth in early 2025. During the last six months, our engagement with potential
financing and operating partners for AI/HPC confirmed that rather than continuing the effort to lease and resell GPU/HPC chips, refocusing
on our core strength - creating, developing, financing and operating our extensive pipeline of potential bitcoin and AI hosting facilities
- will create far more value for us and our shareholders.

In
light of these developments, on March 24, 2025, CloudCo sent notice of its termination of the HPE Agreement for convenience.
Subsequently, on March 26, 2025, HPE sent notice of its termination of the HPE Agreement for cause, effective immediately, due to
CloudCo’s material breach of its payment obligations that remained uncured for more than thirty (30) days. In accordance with
the terms of the HPE Agreement, upon a termination for cause by HPE, CloudCo must pay HPE the remaining payment stream under the
term of the HPE Agreement of approximately $19.3 million as of March 31, 2025 (approximately $20.0 million as of December 31, 2024), including all upfront payments and monthly charges, plus
any fees incurred for the terminated Services (as defined in the HPE Agreement).

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