Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 21

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 21
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9.0% per annum, subject to adjustment upon an event of
default. The Note matures on June 20, 2027. CloudCo’s obligations under the Note will be secured by all or substantially all of
CloudCo’s assets, including pursuant to a security agreement to be executed and delivered by CloudCo in favor of the Investor (the
“CloudCo Security Agreement”, and together with the June SPA and the Note, the “CloudCo Agreements”).

As further inducement for
the Investor to purchase the Note, Soluna Cloud issued to the Investor a warrant (the “Warrant”) exercisable within three
years from June 20, 2024 for a number of shares of common stock of Soluna Cloud equal to the sum of (a) 12.5% of Soluna Cloud’s
issued and outstanding common stock as of the date of the Warrant divided by 0.875, plus (b) the percentage of each Qualified Issuance
(as defined below) divided by 0.875. For purposes of the Warrant, “Qualified Issuance” means (y) each issuance of common stock
of Soluna Cloud during the period commencing on the day after the date of the Warrant and ending on the earlier to occur of (i) the conclusion
of up to an additional $112.5 million of capital raised, whether in the form of debt, equity, mixed or otherwise, by Soluna Cloud and
its subsidiaries and (ii) December 31, 2024 and (z) the number of shares of common stock of Soluna Cloud issuable upon the exercise or
conversion of any convertible securities of CloudCo issued during such period (other than certain issuances pursuant to CloudCo’s
equity compensation plans). On June 20, 2024, the Company determined that the warrant should be treated as a warrant liability and based
on valuation, the Company booked a warrant liability of approximately $314 thousand and a related debt discount which will be amortized
over the life of the loan. Further evaluation of the Warrants under ASC 815-10 was required to determine if the warrants meet the definition
of a derivative. The warrants are classified as a liability that are required to be adjusted to fair market value. The Company applied
a discounted cash flow method in relation to the valuation of Cloud in which assumptions from forecasted projected cash flow data and
other key operating assumptions such as working cash flow were used to determine an