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

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 25
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 ABL LLC (“NYDIG”) financing became current, see note below.

On
December 30, 2021, Soluna MC Borrowings, LLC 2021-1 (the “Borrower”), a subsidiary of Soluna MC, which is a subsidiary
of Soluna Digital Holdings, entered into a Master Equipment Finance Agreement (the “Master Agreement”) with
NYDIG as lender, servicer, and collateral agent. The Master Agreement provided for  up to approximately $14.4
million in total equipment financing (the “NYDIG Loans”).

In January 2022, the Borrower completed two drawdowns
totaling approximately $14.4 million, bearing interest at 14% and repayable over 24 months. As part of the financing, Soluna MC LLC, the
Borrower’s parent, provided a guaranty, and the Borrower pledged its assets, including certain digital asset accounts, as collateral
for the loans.

On
December 20, 2022, after the Borrower defaulted on the NYDIG Loans, NYDIG issued a Notice of Acceleration and Repossession under the
Master Agreement. The obligations under this facility were ring-fenced to the Borrower and its direct parent, Soluna MC LLC.
The Company itself was not a guarantor of the loans.

On February 23, 2023, NYDIG foreclosed on the collateral,
repossessing assets valued at approximately $3.4 million, of which about $0.6 million was applied to accrued interest and penalties. On
December 7, 2023, NYDIG filed a motion for summary judgment seeking approximately $10.3 million for unpaid principal, interest, and penalties.
Following court proceedings, the parties agreed that the total outstanding principal was approximately $9.2 million (the “Agreed
Judgment Amount”).

On September 29, 2025, the Borrower and NYDIG executed
a Settlement Agreement to fully resolve the Agreed Judgment Amount and all related claims. Under the Settlement Agreement, the Borrower
agreed to make certain settlement payments to NYDIG, and in return, NYDIG and its affiliates released the Borrower and its related parties
from all claims related to the NYDIG Loans.

As a result, the Company recorded a gain on extinguishment
of debt for the remaining principal, accrued interest, and penalties. As of September 30, 2025, a portion of the settlement amount had
been paid