Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 162

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 162
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 absorbing operational risk that the entity was
created to create and distribute, resulting in the Company having a variable interest in DVSL.

On March 10, 2023, the Company along with Devco,
and DVSL, a Delaware limited liability company (the “Project Company”) entered into a Purchase and Sale Agreement (the “Purchase
and Sale Agreement”) with Soluna SLC Fund I Projects Holdco, LLC, a Delaware limited liability company (“Spring Lane”)
that is wholly owned indirectly by Spring Lane Management LLC. The Project Company was constructing a modular data center with a peak
demand of 25 MW (the “Dorothy Phase 1A Facility”).

Under a series of transactions in February 2023 and
March 2023, culminating in the March 10, 2023 Purchase and Sale Agreement, the Company sold to Spring Lane certain Class B Membership
Interests for a purchase price of $7.5 million (the “Sale”). After giving effect to the Sale, the Company owned 6,790,537
Class B Membership Interests (constituting 14.6% of the Class B Membership Interests) and Spring Lane owns 39,791,988 Class B Membership
Interests (constituting 85.4% of the Class B Membership Interests). The cash portion of the purchase price paid by Spring Lane to the
Company was approximately $5.8 million, which represented the purchase price of $7.5 million less the Company’s pro rata share of
certain contributions funded entirely by Spring Lane in the earlier portion of this series of transactions occurring during February 2023
and March 2023. As a further part of these transactions, the parties agreed that from January 1, 2023 onwards, the Company would bear
only 14.6% of the costs relating to the construction and operation of the Dorothy Phase 1A Facility, compared to its 67.8% share until
that time, including during the calendar year 2022. After Spring Lane Capital realizes an 16% Internal Rate of Return hurdle on its investments,
the Company retains the right to 50% of the profits on DVSL. In connection with the Spring Lane transactions and agreements, Soluna DV
Services, LLC. will be providing the operations and maintenance services to DVSL. DVCC expects to receive a margin of 20% for services
rendered on certain expenses.

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Concurrently with the Sale