Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 44

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 44
---
 payment
for the contingency to be remote.

Bonus Contingency

During the year ended December 31, 2024, the Company’s
Board of Directors approved a discretionary bonus program with an aggregate payout of approximately $2.1 million, including associated
payroll taxes. The bonus is subject to achievement of specific conditions. As of March 31, 2025, management evaluated the likelihood of
meeting the requisite conditions for payout and determined that it is not probable that conditions will be satisfied. Accordingly, no
liability has been recorded in the accompanying condensed consolidated financial statements as of March 31, 2025 and December 31, 2024.
The Company will continue to monitor the status of the conditions and will recognize a liability in future periods if and when it becomes
probable that the bonus will be paid.

Legal

We are subject to legal proceedings, claims and liabilities
which arise in the ordinary course of business. When applicable, we accrue for losses associated with legal claims when such losses are
probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change.
Legal fees are charged to expense as they are incurred.

On December 29, 2022, NYDIG filed a complaint against
Soluna MC Borrowings, LLC 2021- 1, a subsidiary of Soluna MC, LLC, a subsidiary of Soluna Digital, a subsidiary of the Company (“Borrower”)
and Soluna MC, LLC (“Guarantor”, and together with Borrower, “NYDIG Defendants”) in Marshall Circuit Court of
the Commonwealth of Kentucky regarding a series of loans (the “NYDIG Loans”) made by NYDIG to Borrower pursuant to a Master
Equipment Finance Agreement (“MEFA”) that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant
to a written guaranty agreement executed by Guarantor. On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing
the MEFA, and repossessed the collateralized assets. Subsequently, NYDIG filed its Motion for Summary Judgment seeking entry of a judgment
against the NYDIG Defendants in the approximate amount of $10.3 million, and NYDIG and the NYDIG Defendants consensually resolved the
motion in the form of a Stipulation and Agreed Judgment, which the Circuit Court approved on February 23, 2024.

    25

On March 13, 202