Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 1094

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 2
Chunk 1094
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20.0%) in the event
an Event of Default has occurred and is continuing. The Term Loan Facility matures on March 12, 2030 and includes scheduled payments
over a five-year term.

Soluna
Cloud – Termination of HPE Agreement

When
Soluna launched its GPU-as-a-Service business under its subsidiary, Soluna Cloud, earlier in 2024, it had two primary objectives:
(1) to gain commercial experience in the AI/HPC market in support of future data center development focused on large language models
(LLMs) and other AI workloads; and (2) to capitalize on lower-cost capital to pursue high-growth revenue opportunities in the
compute infrastructure market.

As a point of entry into the market, CloudCo, a
subsidiary of Soluna Cloud, entered into a contract with Hewlett Packard Enterprise Company (“HPE”) on June 18, 2024 (“HPE
Agreement”), that provided data center and cloud services for AI and supercomputing applications, utilizing NVIDIA H100 GPUs.

At
the time of launch, the market for NVIDIA H100 GPU clusters was characterized by constrained supply and strong pricing, which
aligned with the economics of Soluna’s fixed-cost HPE Agreement. However,
by the end of 2024, the GPU market shifted significantly. Lead times for H100 GPUs shortened from over 50 weeks in 2023 to
8–12 weeks by the end of 2024, easing supply constraints and reducing urgency among buyers. At the same time, market demand
shifted toward larger GPU clusters than those available under the HPE Agreement, making it difficult to secure long-term, reserved
contracts at profitable rates.

The
expected release of NVIDIA’s H200 Blackwell architecture also caused some customers to delay purchases. Although release
timelines were impacted by design issues, the prospect of next-generation technology contributed to hesitancy in NVIDIA H100
GPU acquisition. Competitive pressure from alternative GPU vendors further softened demand and market pricing.

As a result, Soluna Cloud’s business progressed more slowly than anticipated. Revenues were first recognized
in December 2024, with modest growth in early 2025. 

During the last six months, Soluna’s engagement with potential financing and operating partners for AI/HPC,
has confirmed that rather than continuing the effort to lease and resell GPU/HPC chips, refocusing on Soluna’s core strength- creating,
developing, financing and operating its extensive pipeline of potential