Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 2225

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 7A
Chunk 2225
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 the Effective Date, the Company and the Developer became co-owners of ComputeCo.

Project
Dorothy 2 allows the Developer to invest in ComputeCo, with the total ownership of the Developer and its affiliates capped at 49% of
the Class B Membership Interests. This investment can occur within 30 days after the Effective Date (treated equally to the initial Investor),
from day 31 to 180 days after the Effective Date (subject to a purchase price formula with a 20% discount rate), or after 180 days with
the initial Investor’s approval.

On
May 16, 2024, the Company secured $1.0 million in financing from SLC for equipment and machinery for Project Dorothy 2 through an Equipment
Loan Agreement (the “ELA”) between SDI SL Borrowing - 1, LLC (the “Borrower”) and SLC. On that date, SLC lent
the Borrower $720,000 to purchase medium voltage cables and low voltage switchboards. This debt was later assigned to ComputeCo on the
Effective Date. Subsequently, 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
Company evaluated this legal entity under ASC 810, Consolidations and determined that this is not a VIE. This entity is a VOE
primarily due to there being sufficient equity at risk to finance its activities, the equity holders as a group having the characteristics
of a controlling financial interest and the entity is not structured with non-substantive voting rights. The Company’s consolidation
model is based on the concept of power. Given the Company’s Class A membership interest, the Company has the ability to control
the significant decisions made in the ordinary course of the business of ComputeCo. Even though SLC has a majority of the Class B membership,
the Company holds all the Class A membership, which gives them the ability to control the significant decisions made in the ordinary
course of business. The non-controlling shareholders do not hold substantive participating rights, voting rights or liquidation rights.
As of December 31, 2024, SLC owns 85% and SDI owns 15% of ComputeCo.

The
carrying amount of the assets and liabilities was as follows for ComputeCo:

 Schedule of Variable Interest Entities of Assets and Liabilities

    (Dollars in thousands)