Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 129

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 129
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 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 enterprise value less any current debt in order to determine an equity value for Cloud. As of March 31, 2025
and December 31, 2024, the warrants were fair valued, and deemed to not have any further value, as such the Company wrote down the liability
balance to $0.

    16

A “Qualified Issuance”
includes any issuance of common stock by Soluna Cloud from the day after the Cloud Additional Warrant date until the earlier of raising
an additional $111.25 million or December 31, 2024, as well as shares issuable upon exercise or conversion of convertible securities issued
during this period, excluding certain equity compensation plan issuances.

On October 1, 2024, CloudCo, Soluna Cloud and the Company entered into
assignment and assumption agreements (the “Assignment Agreements”) with the Additional Investors with respect to an aggregate
of $1.25 million of notes issued by CloudCo. Pursuant to the Assignment Agreements, the Company will be able to purchase such notes for
a purchase price of $750 thousand, or 60% of face value. The assignment and assumption will be effective once all conditions of the agreement
are met including fulfilling the purchase price. The notes will be paid to the note holders from an escrow that is funded in installments
from the SEPA funding. The transfer is not effective until payment from the escrow is made. The Company was required to escrow 20% of
all SEPA draws until the $750 thousand purchase price is accumulated. In addition to the 20% of SEPA funds, the Company would apply all
principal payments and 50% of interest payments made to date from October 1, 2024, until the $750 thousand purchase price has been met.

On March 14, 2025, the Company fulfilled
the purchase obligations, and assumed the Additional Notes through payment of $750
thousand through principal and 50%
interest payments and use of 20%
SEPA