Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 3145

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 10
Chunk 3145
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 Holdings, Inc. (the “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”). The Equipment Loan Agreement provides for the Company to borrow, from time to time, up
to $1.0 million, and further amended on February 28, 2025 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, as well
as 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 Borrower drew down $720
thousand of the equipment loan with the Lender.
On July 22, 2024, the 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. Per ASC 835-30-S45-1, debt issuance costs related to line of credits should be recorded as an asset and amortized over the
life of the line of credit agreement. As such, the Company recorded $53
thousand within Prepaid expenses and other current
assets and $75
thousand within Other assets on the consolidated
balance sheet as of December 31, 2024, of which $35
thousand has