Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 2714

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 9A
Chunk 2714
---
 economics of Soluna’s fixed-cost HPE Agreement. However,
by the end of 2024, the GPU market shifted significantly. Lead times for H100 GPUs shortened from over 50 weeks in 2023 to
8–12 weeks by the end of 2024, easing supply constraints and reducing urgency among buyers. At the same time, market demand
shifted toward larger GPU clusters than those available under the HPE Agreement, making it difficult to secure long-term, reserved
contracts at profitable rates.

The
expected release of NVIDIA’s H200 Blackwell architecture also caused some customers to delay purchases. Although release
timelines were impacted by design issues, the prospect of next-generation technology contributed to hesitancy in NVIDIA H100
GPU acquisition. Competitive pressure from alternative GPU vendors further softened demand and market pricing.

As a result, Soluna Cloud’s business progressed more slowly than anticipated. Revenues were first recognized
in December 2024, with modest growth in early 2025. 

During the last six months, Soluna’s engagement with potential financing and operating partners for AI/HPC,
has confirmed that rather than continuing the effort to lease and resell GPU/HPC chips, refocusing on Soluna’s core strength- creating,
developing, financing and operating its extensive pipeline of potential bitcoin and AI hosting facilities - will create far more value
for Soluna and its shareholders.

In light of these developments, on March 24,
2025, CloudCo sent notice of its termination of the HPE Agreement for convenience. Subsequently, on March 26, 2025, HPE sent notice
of its termination of the HPE Agreement for cause, effective immediately, due to CloudCo’s material breach of its payment
obligations that remained uncured for more than thirty (30) days. In accordance with the terms of the HPE Agreement, upon a
termination for cause by HPE, CloudCo must pay HPE the remaining payment stream under the term of the HPE Agreement of approximately
$19.3
million as of March 31, 2025 (approximately $20.0 million as of December 31, 2024), including all upfront payments and monthly
charges, plus any fees incurred for the terminated Services (as defined in the HPE Agreement).

 F-46