Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 171

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 171
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 financial interest based on either the Variable Interest
Entity (“VIE”) model or the Voting Interest Entity (“VOE”) model.

VIEs
are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities independently, or (ii)
have equity holders that do not have the power to direct the activities of the entity that most significantly impact its economic performance,
the obligation to absorb the entity’s expected losses, or the right to receive the entity’s expected residual returns. The
Company consolidates a VIE when it is the primary beneficiary, which is the party that has both (i) the power to direct the activities
that most significantly impact the VIE’s economic performance and (ii) through its interests in the VIE, the obligation to absorb
expected losses or the right to receive expected benefits from the VIE that could potentially be significant to the VIE.

To
assess whether Soluna has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance,
Soluna considers all the facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities.
This assessment includes identifying the activities that most significantly impact the VIE’s economic performance and identifying
which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the
VIE (management and representation on the Board of Directors) and have the right to unilaterally remove those decision-makers are deemed
to have the power to direct the activities of a VIE.

To
assess whether Soluna has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially
be significant to the VIE, Soluna considers all of its economic interests, which primarily include equity investments in the entity that
are deemed to be variable interests in the VIE. This assessment requires Soluna to apply judgment in determining whether these interests,
in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing the significance include: the design
of the VIE, including its capitalization structure; subordination of interests; payment priority; and who handles the day-to-day activities.

At
the VIE’s inception Soluna determines whether it is the primary beneficiary and if the VIE should be consolidated based on the
facts and circumstances. Soluna then performs on-going reassessments of the VIE based on reconsideration events and reevaluates