Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 3012

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 9C
Chunk 3012
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.0 million aggregate contribution cap. The Company considers the probability
of a payment for the contingency to be remote.

Bonus
Contingency

During
the year ended December 31, 2024, the Company’s Board of Directors approved a discretionary bonus program with an aggregate payout
of approximately $2.1 million, including associated payroll taxes. The bonus is subject to achievement of specific conditions. As of
December 31, 2024, management evaluated the likelihood of meeting the requisite conditions for payout and determined that it is not probable
that conditions will be satisfied. Accordingly, no liability has been recorded in the accompanying consolidated financial statements
as of December 31, 2024. The Company will continue to monitor the status of the conditions and will recognize a liability in future periods
if and when it becomes probable that the bonus will be paid.

Legal

We
are subject to legal proceedings, claims and liabilities which arise 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.