Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 878

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1C
Chunk 878
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, 2025.

Additionally,
NYDIG has stated its intention to pursue the parent company of Guarantor (“Parent Entity”) under a piercing
of the corporate veil theory relating to NYDIG Defendants’ debts and liabilities under the loan documents. Parent Entity intends
to vigorously defend itself from NYDIG’s parent company claims. Parent Entity denies any such liability and filed a complaint for
a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023, seeking a declaratory
judgment as to such matter. On June 22, 2023, the court issued an order granting NYDIG’s motion to dismiss, without prejudice.
Parent Entity intends to continue to vigorously defend any allegations regarding liability on account of NYDIG Defendants’ debts
and liabilities to NYDIG under their loan documents.

As
of December 31, 2024, the Company still has an outstanding principal of approximately $9.2 million and outstanding interest and penalty
balance of approximately $2.3 million. This settlement did not result in the admission of any liability on the part of SHI, whose declaratory
judgment remains the subject of litigation.

In
September 2023, Atlas Technology Group LLC (“Atlas”) filed a complaint against Soluna MC LLC, Soluna Computing, Inc., and
Soluna Holdings, Inc. (collectively, the “Atlas Defendants”) in the Supreme Court of New York regarding a co-location services
agreement. Atlas alleged that Soluna MC’s termination of the agreement was a breach, seeking a return of pre-paid fees of approximately
$464 thousand, additional damages of at least $7.9 million, and reimbursement of legal fees. The complaint also mentioned alter ego liability
and corporate veil piercing.

The
Atlas Defendants filed a motion to dismiss, and on April 17, 2024, the Court dismissed three of the four counts. The remaining count
was answered on May 6, 2024, with counterclaims against Atlas. The Court denied the dismissal of Soluna Computing, Inc. and Soluna Holdings,
Inc. as parties, leading to an appeal filed on May 7, 2024.

On
June 25, 2024, Atlas and the Atlas Defendants entered into a settlement agreement. Soluna MC recorded a gain on the settlement of approximately
$254 thousand for the year ended December 31, 2024, in Other Expense, net on the Consolidated Financial Statements.

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