Company: SLNH
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-024045
Chunk: 55

Company: Soluna Holdings, Inc
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 55
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 Class B Membership Interests in ComputeCo, respectively, and
were admitted as Class B members of ComputeCo. Further, ComputeCo issued 100% of its Class A Membership Interests to SDI. In relation
to distributions, once ERCOT Achievement Date has been met ( date on which SLC and the Company have mutually agreed upon the parameters
for power trading or demand response program in the ERCOT market) until the Target Return Date (last day of quarter in which the Class
B members achieve an 18% internal rate of return, the Class A members will obtain 7.5% of the distributable cash with the remaining 92.5%
being distributed to the Class B members on a pro-rata basis. After the Target Return Date is met, 50% of distributable cash will be
allocated to the Class A members and 50% allocated to the Class B members in accordance with their membership interests.

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 was paid in full by issuing SLC Class B Membership Interests in the Dorothy 2 project
valued at three times the borrowing amount (i.e., $2.16 million).

On
April 4, 2025, the Company transferred its Class B Membership to SLC, resulting in 0% Class B Membership Interests held by the Company.
SDI still retains 100% Class A Membership Interests in ComputeCo as of June 30, 2025. Based on evaluation, the Company would be able