Company: SLNH
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-024045
Chunk: 39

Company: Soluna Holdings, Inc
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 39
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 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
June 30, 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 June 30, 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 MEFA, and repossessed the collateralized assets. Subsequently, NYDIG
filed its Motion for Summary Judgment seeking entry of a judgment against the NYDIG Defendants in the approximate amount of $10.3 million,
and NYDIG and the NYDIG Defendants consensually resolved the motion in the form of a Stipulation and Agreed Judgment, which the Circuit
Court approved on February 23, 2024.

On
March 13, 2024, NYDIG served the NYDIG Defendants with a post-judgment discovery seeking information regarding the NYDIG Defendants’
assets and liabilities. The NYDIG Defendants completed responding to