Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 167

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 167
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Project Dorothy 2”) in Silverton, Texas. This facility is owned by ComputeCo and operated by Soluna US Services, LLC,
and may engage in cryptocurrency, batch processing, and other non-crypto related activities. It is adjacent to two other company modular
data center projects at the same site.

Project Dorothy 2 is financed by Soluna2 SLC Fund
II Project Holdco LLC, an investment vehicle of Spring Lane Capital (“SLC”) with a capital contribution of up to $29.98 million,
and the Developer, as the parent company of ComputeCo, with an initial capital contribution of up to $4.6 million. As of the Effective
Date, the Company and the Developer became co-owners of ComputeCo. In exchange for contributions to ComputeCo, the Company and SLC were initially issued 42% and 58% of the Class B
Membership Interests in ComputeCo, respectively, and were admitted as Class B members of ComputeCo. Further, ComputeCo issued 100% of
its Class A Membership Interests to SDI. In relation to distributions, once ERCOT Achievement Date has been met ( date on which SLC and
the Company have mutually agreed upon the parameters for power trading or demand response program in the ERCOT market) until the Target
Return Date (last day of quarter in which the Class B members achieve an 18% internal rate of return, the Class A members will obtain
7.5% of the distributable cash with the remaining 92.5% being distributed to the Class B members on a pro-rata basis. After the Target
Return Date is met, 50% of distributable cash will be allocated to the Class A members and 50% allocated to the Class B members in accordance
with their membership interests.

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Project Dorothy 2 allows the Developer to invest in
ComputeCo, with the total ownership of the Developer and its affiliates capped at 49% of the Class B Membership Interests. This investment
can occur within 30 days after the Effective Date (treated equally to the initial Investor), from day 31 to 180 days after the Effective
Date (subject to a purchase price formula with a 20% discount rate), or after 180 days with the initial Investor’s approval.

On May 16, 2024, the Company secured $1.0 million
in financing from SLC for equipment and machinery for Project Dorothy 2 through an Equipment Loan Agreement (the “