Company: SLNH
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023503
Chunk: 27

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 27
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 obligations
under the Note will be secured by all or substantially all of CloudCo’s assets, including pursuant to a security agreement to be
executed and delivered by CloudCo in favor of the Investor (the “CloudCo Security Agreement”, and together with the June
SPA and the Note, the “CloudCo Agreements”).

As
further inducement for the Investor to purchase the Note, Soluna Cloud issued to the Investor a warrant (the “Warrant”) exercisable
within three years from June 20, 2024 for a number of shares of common stock of Soluna Cloud equal to the sum of (a) 12.5% of Soluna
Cloud’s issued and outstanding common stock as of the date of the Warrant divided by 0.875, plus (b) the percentage of each Qualified
Issuance (as defined below) divided by 0.875. For purposes of the Warrant, “Qualified Issuance” means (y) each issuance of
common stock of Soluna Cloud during the period commencing on the day after the date of the Warrant and ending on the earlier to occur
of (i) the conclusion of up to an additional $112.5 million of capital raised, whether in the form of debt, equity, mixed or otherwise,
by Soluna Cloud and its subsidiaries and (ii) December 31, 2024 and (z) the number of shares of common stock of Soluna Cloud issuable
upon the exercise or conversion of any convertible securities of CloudCo issued during such period (other than certain issuances pursuant
to CloudCo’s equity compensation plans). On June 20, 2024, the Company determined that the warrant should be treated as a warrant
liability and based on valuation, the Company booked a warrant liability of approximately $314 thousand and a related debt discount which
will be amortized over 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 September 30, 2025 and December