Company: SLNH
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023503
Chunk: 29

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 29
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 each of the
    remaining scheduled payments shall be increased by an amount equal to the Make Whole Amount divided by the number of remaining scheduled
    payments,

    (iv)
    modify
    the Note such that the Note is now convertible into up to 2,500,000 shares of the Company’s common stock based (“Conversion
    Shares”) on a conversion price of $5.00,

    (v)
    amend
    the Note to provide that the Company will be a direct co-obligor with CloudCo under the Note; and

    (vi)
    amend
    the SPA to allow the Company to organize or incorporate any subsidiary, over which the Company shall have voting or beneficial control,
    which is being formed with the intent to engage in a business or line of business substantially similar to that of Soluna Cloud or
    the Company, without first paying all of the principal and interest due under the Note and without first obtaining Investor’s
    prior written consent (collectively, the “June SPA Modification”).

The
joint-and-several liability arrangement is between the Company and CloudCo. While no written agreement has been created to establish
the amount that each entity agrees to pay under the obligation, the nature of the relationship is such that the Company has taken a significant
role in the economics of the Notes. The Company expects to make any necessary payments on behalf of CloudCo in order to prevent default
on the Notes because the Investor has a lien on all property and assets of the Company in connection with the Notes. Based on quantitative
analysis performed by the Company, it was determined that the terms of the debt instrument before and after the June SPA Modification
were not substantially different. Accordingly, the June SPA Modification is accounted for as a debt modification.

Subsequently,
the Company and the Investor mutually agreed that the 1,000,000
Escrow Shares would instead be issued directly to the Investor and, on April 29, 2025, the Company issued 1,000,000
shares of common stock to the Investor. When the Investor sells the 1,000,000 shares in the open market (after either SEC registration effectiveness or pursuant
to SEC Rule 144), the net cash proceeds from the sale of shares will be applied to the outstanding principal balance of the note up to
$4.00 per share, and any excess proceeds over $4.00 per share will be retained by the Investor. The Investor has until March 31, 2026
(the