Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 185

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 185
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2023 to 8–12
weeks by the end of 2024, easing supply constraints and reducing urgency among buyers. At the same time, market demand shifted toward
larger GPU clusters than those available under the HPE Agreement, making it difficult to secure long-term, reserved contracts at profitable
rates. The expected release of NVIDIA’s H200 Blackwell architecture also caused some customers to delay purchases. Although release
timelines were impacted by design issues, the prospect of next-generation technology contributed to hesitancy in NVIDIA H100 GPU acquisition.
Competitive pressure from alternative GPU vendors further softened demand and market pricing. As a result, Soluna Cloud’s business
progressed more slowly than anticipated. Revenues were first recognized in December 2024, with modest growth in early 2025. During the
last six months, our engagement with potential financing and operating partners for AI/HPC confirmed that rather than continuing the effort
to lease and resell GPU/HPC chips, refocusing on our core strength - creating, developing, financing and operating our extensive pipeline
of potential bitcoin and AI hosting facilities - will create far more value for us and our shareholders.

In light of these developments, on March 24, 2025,
CloudCo sent notice of its termination of the HPE Agreement for convenience. Subsequently, on March 26, 2025, HPE sent notice of its termination
of the HPE Agreement for cause, effective immediately, due to CloudCo’s material breach of its payment obligations that remained
uncured for more than thirty (30) days. In accordance with the terms of the HPE Agreement, upon a termination for cause by HPE, CloudCo
must pay HPE the remaining payment stream under the term of the HPE Agreement of approximately $19.3 million as of March 31, 2025, including
all upfront payments and monthly charges, plus any fees incurred for the terminated Services (as defined in the HPE Agreement).

41

June SPA Modification

On June 20, 2024, pursuant to the terms and subject
to the conditions of a Note Purchase Agreement (the “June SPA”) by and among (i) CloudCo, (ii) Soluna Cloud, (iii) the Company
and (iv) the accredited investor named therein (the “Investor” and collectively, the “Note Parties), CloudCo issued
to the Investor a secured promissory note in a principal amount equal to $12.5 million (the