Company: SLNH
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-024045
Chunk: 16

Company: Soluna Holdings, Inc
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 16
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 should be treated as a warrant
liability and based on valuation, the Company booked a warrant liability of approximately $314 thousand and a related debt discount which
will be amortized over the life of the loan. Further evaluation of the Warrants under ASC 815-10 was required to determine if the warrants
meet the definition of a derivative. The warrants are classified as a liability that are required to be adjusted to fair market value.
The Company applied a discounted cash flow method in relation to the valuation of Cloud in which assumptions from forecasted projected
cash flow data and other key operating assumptions such as working cash flow were used to determine an enterprise value less any current
debt in order to determine an equity value for Cloud. As of June 30, 2025 and December 31, 2024, the warrants were fair valued, and deemed
to not have any further value, as such the Company wrote down the liability balance to $0.

For
the three  and six months ended June 30, 2025, the Company incurred approximately $354 thousand and $744 thousand in interest expense
in relation to the June SPA, which includes interest paid on the note and amortization of deferred financing costs.

June
SPA Modification

On
March 21, 2025, the Note Parties entered into a Modification Agreement (the “Modification Agreement”) to, among other things:

    (i)
    provide
    for the deposit of 1,000,000 shares (the “Escrow Shares”) of the Company’s common stock, into an escrow account
    maintained by Northland Securities, Inc., pursuant to an escrow agreement (as further described below),

    (ii)
    provide
    for the issuance to the Investor of penny warrants to purchase shares of the Company’s common stock. The number of penny warrants
    (exercise price at $0.01) shall equal $1.25 million divided by the 5-day VWAP of the Company’s common stock at time of issuance.
    The warrants will be issued at the time the Investor removes its lien on the property of the Company. As of August 14, 2025, the
    lien has not yet been removed and the warrants have not been issued,

    (iii)
    amend
    the payment schedule of the Note to provide (a) for each of the six scheduled payments occurring after the earlier of the effectiveness
    of a registration statement for the resale of the Escrow Shares and the Conversion Shares (