Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 66

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 66
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 which formulate gross profit (loss), as well as total
general and administrative expenses of the reporting segments to assess the performance of the business of our reportable operating segments
and allocate resources. Operating profit (loss) is used to evaluate actual results against expectations,
which are based on comparable prior results, current budget, and current forecast. Non-cash items of depreciation and amortization
are included within both costs of sales and general and administrative expenses, however only depreciation through the Company’s
site levels are evaluated for segment performance.

In the adoption of ASU 2023-07, the
most significant provision was for the Company to disclose significant segment expenses (ie: costs of revenue) that are regularly provided
to the CODM. Utility costs, wages and benefit related costs, facility and equipment costs, and depreciation costs at the site level were
determined to be significant segment expenses. The CODM only reviews general and administrative expenses by site level as a whole,
and not by significant expenses. No operating segments have been aggregated to form the reportable segments. The Company does not allocate
all assets to the reporting segments as these are managed on an entity-wide basis. Therefore, the Company does not separately disclose
the total assets of its reportable operating segments.

The Cryptocurrency Mining segment generates revenue
from the cryptocurrency the Company earns through its Bitcoin mining activities, which is currently generated from Project Dorothy, and
previously from Project Sophie and Marie. The Data Center Hosting segment generated revenue from hosting services provided to third-party
Bitcoin mining customers at the Company’s data centers, which were previously at Project Marie and are currently from Project Sophie
and Project Dorothy. The High-Performance Computing Services segment may generate revenue from either the sale or lease of HPC assets
(such as Project Ada which leased GPUs), or from HPC/AI data centers to be leased to third-party HPC/AI customers. This segment began
generating revenue in December 2024, as Project Ada worked to build its customer base. With the termination of the HPE Agreement, revenue
was minimal for the three months ended March 31, 2025 and a majority of the costs associated with the termination of approximately $28.6
million were included in the December 31, 2024 financial statements.

The Company includes demand response revenue as a
reconciling item of revenue and is not included within the three reportable segments. The Company utilizes its data centers to deliver
demand response services to grid operators or utilities. Under these