Company: SLNH
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023503
Chunk: 245

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 245
---
4. This increase was primarily
driven by the initial energization of the Dorothy 2 facility during the second quarter of 2025 and the subsequent increase in MWs capacity
and associated operating costs in the third quarter of 2025. This cost increase was partially offset by a favorable change in the hosting
contract mix, specifically the replacement of certain fixed-rate volume contracts with new agreements that include an electricity cost
passthrough provision.

Cost of High-Performance Computing Services:
Cost of High-Performance Computing Services represents the direct production expenses associated with providing AI and HPC processing
capabilities. For the three months ended September 30, 2024, this cost totaled approximately $2.9 million, which was related to the agreement
executed with HPE effective July 1, 2024, to acquire access to essential datacenter and cloud services necessary for supporting our AI
and HPC processes. We did not incur any cost of High-Performance Computing Services the three months ended September 30, 2025.

In connection with the termination of the HPE Agreement on March 24, 2025, we recognized a loss of approximately $28.6
million for the year ended December 31, 2024. This loss represented the remaining contractual obligations under the agreement.

General
and Administrative Expenses, exclusive of depreciation and amortization: General and administrative expenses, exclusive of depreciation
and amortization include cash and non-cash compensation, benefits, and related costs in support of our general corporate operations,
including general management, finance and accounting, human resources, marketing, information technology, corporate development, and
legal services.

    ●
    Stock-based
    compensation expense was approximately $1.9 million for the three months ended September 30, 2025, compared to $1.2 million for the
    three months ended September 30, 2024, representing an increase of approximately $0.7 million. The increase primarily reflects additional
    equity awards granted to directors and officers in June and September 2025, and September and December 2024, as well as a reduction
    in the estimated forfeiture rate from 10% to 5%. These increases were partially offset by the cessation of vesting for certain prior-year
    grants during the 2025 quarter, and the impact of awards with portions that immediately vested during the 2024 period.

    ●
    Salaries
    and benefits expense increased approximately $1.4 million for the three months ended September