Company: SLNH
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023503
Chunk: 79

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 79
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 MW facility located in Willacy County, Texas, in which is expected
to be delivered in two phases at 83 MW each. This project involves SDI as the Developer, Soluna KKSL JVCo LLC (the “KKSL JVCo”),
a special purpose vehicle initially owned solely by SDI, and Soluna2 Kati Project Holdco LLC (“Spring Lane”). This facility
is owned by KKSL JVCo, and operated by Soluna US Services, LLC, and may engage in cryptocurrency, batch processing, and other non-crypto
related activities.

Currently
Project Kati 1 is financed by Soluna2 Kati Project Holdco LLC, an investment vehicle of Spring Lane Capital (“SLC”) with
a capital contribution of up to $48.98 million. In exchange for contributions to KKSL JVCo, SDI was issued 100% of Class A Membership
Units and SLC were initially issued 100% of the Class B Membership Interests in KKSL JVCo, respectively, and were admitted as Class B
members of KKSL JVCo. Further, SDI and Spring Lane entered into a Developer Investment Side Letter in which allows SDI to invest into
KKSL JVCo up to 49% of ownership in the Class B Membership Interests for a period of six months after August 1, 2025.

In
relation to distributions, until the Target Achievement Date (date at which Class B members achieve 16% of IRR), the Distributable Cash
received by the Company shall be distributed ninety-two and five tenths percent (92.5%) to the Class B Members on a pro rata basis, and
seven and five tenths percent (7.5%) to the Class A Member, until each of the Class B Members has received its Target Return; (ii) second,
after the Target Achievement Date, the portion of Distributable Cash received by the Company shall be distributed fifty percent (50%)
to the Class A Member (or its respective assigns), and fifty percent (50%) to the Class B Members (or their respective assigns), pro
rata in accordance with their Membership Interests.

The
Company evaluated this legal entity under ASC 810, Consolidations and determined that this entity is a VIE, as the equity holders
as a group do not have the characteristics of a controlling financial interest. Even though SLC has all of the Class B membership, SDI
holds all the Class A membership, which gives them the ability