Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 2535

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 9
Chunk 2535
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 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 ABL LLC (“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.

On
March 13, 2024, NYDIG served the NYDIG Defendants with a post-judgment discovery seeking information regarding the NYDIG Defendants’
assets and liabilities. The NYDIG Defendants completed responding to NYDIG’s initial document requests on May
13, 2024. On September 24, 2024, NYDIG sent a letter seeking supplemental discovery from the NYDIG Defendants, and the NYDIG Defendants
completed responding to NYDIG’s additional/supplemental document requests by November 20, 2024. A deposition of a representative
of the NYDIG Defendants occurred on January 23, 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