Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 263

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1A
Chunk 263
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 manage our debt depends on our financial performance, which is subject to business and market conditions. If we fail to meet
our debt obligations or violate covenants, lenders could declare defaults and accelerate repayment. This could trigger defaults on other
obligations and, in the case of secured debt, lead to foreclosure on our assets.

We
also provide guarantees for certain subsidiary debts. If called upon, we may need to cover those obligations, which could impact our
cash position and require us to seek additional funding—potentially on unfavorable terms.

To
manage our debt, we may pursue refinancing options, which could include issuing new shares or convertible securities. This could dilute
existing stockholders and reduce the market value of our stock.

We
may be unable to meet our remaining obligations under the terminated HPE Agreement which could lead to a default under that
agreement.

On
March 24, 2025, we notified HPE of our termination of the HPC & AI Cloud Services Agreement and HPE-Soluna Greenlake Statement
of Work, dated June 18, 2024, entered into between Soluna AL CloudCo, LLC, a subsidiary of Soluna Cloud (“CloudCo”), and
HPE (together with the associated Statement of Work, the “HPE Agreement”). Under the HPE Agreement, we agreed to pay HPE
an aggregate of $34 million payable over 36 months beginning June 2024, with $10.3 million pre-paid in June 2024 at contract
execution and monthly payments of $667 thousand due until June 2027.

In
accordance with the terms of the HPE Agreement, upon our notice of termination for convenience, our obligations under the HPE
Agreement accelerated and the remaining payments of $19.3 million owed by us became immediately due and payable, including all
upfront payments and monthly charges, plus any fees incurred for the terminated Services (as defined in the HPE Agreement). Due to
the termination of the HPE Agreement, we reduced our prepaid assets and other long-term assets by approximately $8.6 million,
increased termination liability by approximately $20.0 million and recorded a loss on contract of approximately $28.6 million for
the year ended December 31, 2024 to account for the termination and our contractual payments. We are currently in the process of
renegotiating the HPE Agreement, but this is not considered probable to occur.

Subsequently, on March