Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 3461

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 12
Chunk 3461
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 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.

     F-42 

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.

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 “ELA”) between SDI SL Borrowing - 1, LLC (the “Borrower”) and SLC. On that date, SLC lent
the Borrower $720,000 to purchase medium voltage cables and low voltage switchboards. This debt was later assigned to ComputeCo on the
Effective Date. Subsequently, the Borrowing amount in full by issuing the Investor Class B Membership Interests in the Dorothy 2 project
valued at three times the borrowing amount (i.e., $2.16 million).

The
Company evaluated this legal entity under ASC 810, Consolidations and determined that this is not a VIE. This entity is a VOE
primarily due to there being sufficient equity at risk to finance its activities, the equity holders as a group having the characteristics
of a controlling financial interest and the entity is not structured with non-substantive voting rights. The Company’s consolidation
model is based on the concept of power. Given the Company’s Class A membership interest, the Company has the ability to control
the significant decisions