Company: SLNH
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023503
Chunk: 350

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 4
Chunk 350
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 2025, the Company processed the exercise of liability-classified warrants. Due to complexity surrounding
    the accounting for the derivative liability settlement and the subsequent fair value assessment, an additional material adjustment
    was required. This adjustment was identified, calculated, recorded, and reported in the condensed consolidated financial statements
    late in the quarterly review process. This control deficiency indicates that the Company did not maintain effective controls over
    the accounting for complex or non-routine equity transactions and the associated valuation processes, specifically regarding derivative
    warrant liabilities, resulting in the material adjustment.

Notwithstanding the existence of this material weakness,
management has concluded that the Company’s unaudited condensed consolidated financial statements in its Quarterly Report on Form
10-Q for the period ended September 30, 2025 are fairly stated in all material respects in accordance with generally accepted accounting
principles in the United States of America.

Remediation:

Our Board of
Directors and management take internal control over financial reporting and the integrity of our financial statements seriously. Management
continues to work to improve its controls related to our material weaknesses.  The remediation actions include: (i) enhancing design
and documentation related to complex transactions and control activities, and (ii) developing robust review procedures to ensure
the proper recording and reporting of the complex transactions. To achieve the timely implementation
of the above, management has commenced the following actions and will continue to assess additional opportunities for remediation on an
ongoing basis:

    ●
    Implement more robust internal
    policies and procedures relating to complex transactions and fair value assessments, with a specific focus on establishing reliable
    controls over fair value measurements to ensure the accuracy of financial reporting.

    ●
    Engage qualified consultants
    and third-party specialists to assist in the review of complex transactions, ensuring that all entries recorded align with applicable
    accounting guidance and meet the reporting expectations for the condensed consolidated financial statements.

We cannot provide
any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective
as a result of these efforts. In addition, we continue to evaluate and work to improve our internal control over financial reporting related
to the identified material weakness, management may determine to take additional measures to address control deficiencies or determine
to modify the remediation plan described above.

(b) Changes in Internal Control Over Financial
Reporting

We are taking the remedial actions described above
and expect to implement them prior to December 31, 2025.