Company: SLNH
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023503
Chunk: 77

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 77
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 obtaining a specified internal rate of return. The non-controlling
shareholders do not hold substantive participating rights, voting rights or liquidation rights.

In
September 2025, the Company agreed to terms of a debt facility with Generate under a Credit and Guarantee Agreement, as discussed in
Note 8. Several events occurred in connection with the debt facility, [1] the Company completed a restructuring of the subsidiaries that
comprise “Project Dorothy 1A” and “Project Dorothy 2” (herein referred to as the “Dorothy Restructuring”),
[2] Soluna DVSL ComputeCo LLC, Soluna DVSL II ComputeCo LLC, and Soluna KK I ComputeCo LLC entered into a First Priority Leasehold Deed
of Trust (the “Deed of Trust”) with Generate which provides Generate with the power of sale and right of entry and possession
of the Trust Property.

Following
the Dorothy Restructuring, Project Dorothy 2 consists of Soluna DVSL II JVCo, LLC (“DVSL II JVCo”), which has Class A units
owned by the Developer and Class B units owned by SLC. DVSL II JVCo is then the sole parent of Soluna DVSL II HoldCo, LLC (“DVSL
II HoldCo”), which is the sole owner of DVSL II ComputeCo. The total ownership of Project Dorothy 2 remains such that the Developer
holds all Class A units and that SLC holds all Class B units.

The
Company noted that [1] there is no substantive change to the ascending view of the organizational chart since the Company (through the
Developer and newly created DVSL II JVCo and DVSL II ComputeCo) beneficially own the Class A units (i.e., managing units) of DVSL II
and [2] there are no substantive kick-out rights that exist within Project Dorothy 2 that would cause the Developer to not have the ability
to direct the activities that most significantly impact the economic performance of DVSL II. In addition, the entity’s obligation
to absorb losses and right to receive benefits has not changed. As such, Soluna would continue to consolidate the entity since a change
in control has not occurred following the execution of Credit Agreement and Deed of Trust.

    38

The
carrying amount of the assets and liabilities was as follows for DVSL II JVCo:

 Schedule of Variable Interest Entities of Assets and Liabilities

    (Dollars in thousands) 
    September