Soluna Holdings, Inc: Form 10-Q for the period ended Sep 30, 2025

Unless the context requires otherwise in these condensed consolidated financial statements, the terms “SHI,” “Soluna,” the “Company,” “we,” “us,” and “our” refer to Soluna Holdings, Inc. together with its consolidated subsidiaries, “SDI” refers to Soluna Digital, Inc. “SCI” refers to Soluna Computing, Inc., formerly known as EcoChain, Inc., “Soluna Cloud” or “Cloud” refer to Soluna Cloud, Inc., and “SEI” refers to Soluna Energy, Inc. Other trademarks, trade names, and service marks used in this Quarterly Report on Form 10-Q are the property of their respective owners.

The following discussion of our financial condition and results of operations should be read in conjunction with the Condensed Consolidated Financial Statements and the related notes thereto included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and the related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2024 contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2025 (the “Annual Report”).

In addition to historical information, the following discussion contains forward-looking statements, which involve risk and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements. Important factors that could cause actual results to differ include those set forth in Part I Item 1A-Risk Factors in our Annual Report and elsewhere in this Quarterly Report on Form 10-Q. Readers should not place undue reliance on our forward-looking statements. These forward-looking statements speak only as of the date on which the statements were made and are not guarantees of future performance. Except as may be required by applicable law, we do not undertake or intend to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q. Please see “Statement Concerning Forward-Looking Statements” below.

Overview and Recent Developments

Our mission is to make renewable energy a global superpower using computing as a catalyst.

We develop and operate digital infrastructure that taps into a growing global opportunity: the convergence of renewable energy and High-Performance Computing (HPC). We call this model Renewable Computing™.

Across the world, vast amounts of clean energy go to waste due to curtailment. At the same time, there is a critical shortage of power for energy-intensive infrastructure like AI, HPC, and Bitcoin mining. Renewable Computing™ bridges this gap—unlocking stranded renewable energy and turning it into scalable computing power.

We build, own or co-own, and operate data centers co-located with wind, solar, and hydroelectric plants. Our modular and scalable design supports high-throughput, batchable applications such as Bitcoin, and soon, HPC/AI workloads. These facilities are managed by MaestroOS™, our proprietary operating system (“MaestroOS”), which continuously analyzes signals like local power pricing, weather, grid demand, and market conditions to optimize performance and economics.

This intelligent orchestration enables long-term asset monetization and attractive returns on invested capital. Our approach is purpose-built for the energy transition. We specialize in curtailment solutions, working closely with leading renewable energy developers to access underutilized, low-cost power. Our behind-the-meter model allows us to draw energy directly from the plant or the grid, while also providing demand response services—reducing costs and enhancing grid resilience.

A key strategic advantage is our model of co-locating data centers directly with renewable power generation assets. By building behind the meter, we are able to bypass long interconnection queues and source electricity directly from the generation site. This structure not only improves power economics, but also accelerates time-to-market—an increasingly important factor for companies with large, time-sensitive computing workloads such as AI and HPC.

With a repeatable strategy and a growing pipeline of projects, we are scaling a new category of digital infrastructure—one that enhances returns for renewable farms by purchasing excess capacity, lowers computing costs, and advances a more sustainable future.

We operate across multiple business lines and generate revenue from four primary sources, as described below:

• Bitcoin Mining Business – We mine Bitcoin through proprietary operations and joint ventures located at our data centers.
• Bitcoin Hosting Business – We provide hosting services to third-party Bitcoin mining customers at our data centers.
• High Performance Computing (HPC) Business – We offer colocation and hosting services for companies seeking to train large language models (LLMs), fine-tune existing artificial intelligence models, and deploy other compute-intensive AI or HPC workloads.
• Demand Response Business – We leverage our data center infrastructure to provide demand response services to grid operators.

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In 2024 and into 2025, our execution strategy was centered around four key initiatives:

1. Project Optimization – Enhancing the profitability, operational efficiency, and customer mix of our operating data centers, while improving overall customer satisfaction.

2. Pipeline Expansion – Increasing the number of curtailment assessments completed with power partners, advancing more projects to shovel-ready status, and executing additional project term sheets.

3. Launch AI – Initiating the entry into the AI market, by starting project development activities focused on supporting artificial intelligence workloads, and the formation of strategic partnerships with major HPC original equipment manufacturers.

4. Capital Formation – Pursuing financing opportunities to support key growth initiatives, including Project Dorothy 2 (“D2”) and Project Kati.

Revenue Sources

Bitcoin Mining Business

We engage in proprietary Bitcoin mining, a process that verifies transactions and secures the Bitcoin blockchain. This process involves the use of specialized computing equipment to solve complex cryptographic algorithms. Miners compete to solve these algorithms; the first to do so is awarded a predetermined number of newly issued Bitcoins (the “Block Reward”) and any transaction fees associated with that block.

We participate in one or more mining pools—collaborative networks of miners who combine computing power to improve the probability of earning rewards. Block Rewards earned by the pool are distributed among participants based on each member’s proportional contribution. This model helps reduce revenue volatility compared to solo mining operations.

Our mining operations are energy-intensive and require significant computational resources. We operate data centers equipped with both proprietary and third-party hardware and software. Our proprietary data center operating system, MaestroOS, is used to optimize performance, manage power consumption, and increase operational efficiency.

Revenue from Bitcoin mining consists of Block Rewards and transaction fees and is recognized upon receipt in accordance with applicable accounting guidance. Upon receipt, all digital assets are promptly converted into U.S. dollars through the Coinbase cryptocurrency exchange.

The profitability of this business is affected by several variables, including the market price of Bitcoin, global network hash rate, mining difficulty, electricity and infrastructure costs, and mining pool fees. In addition, Bitcoin undergoes a periodic “halving” event approximately every four years, reducing the Block Reward and potentially impacting future revenue. For the three and nine months ended September 30, 2025, our Bitcoin Mining Business represented approximately 33% and 42% of total revenue. For the three and nine months ended September 30, 2024, our Bitcoin Mining Business represented approximately 37% and 46% of total revenue.

Bitcoin Hosting Business

We provide colocation and hosting services for third-party Bitcoin mining customers at our data centers. Customers contract space based on their power requirements. Our current customer base includes several large-scale (“Hyperscale”) Bitcoin miners. Contracts typically range from 12 to 24 months in duration.

We offer two primary commercial structures:

1. Fixed-Fee Model – Customers pay a fixed fee based on the volume of energy consumed.

2. Profit-Share Model – Customers pay a share of the profits from their mining activity, with power costs passed through.

For the three and nine months ended September 30, 2025, our Bitcoin Hosting Business accounted for approximately 62% and 53% of total revenue. For the three and nine months ended September 30, 2024, our Bitcoin Hosting Business accounted for approximately 57% and 49% of total revenue. Revenue in the Bitcoin Hosting Business was concentrated among a small number of customers. For the three months ended September 30, 2025, two customers made up approximately 63% of hosting revenue and 40% of total revenue. For the nine months ended September 30, 2025, three customers made up approximately 80% of hosting revenue and 42% of total revenue.

High Performance Computing (HPC) Business

In June 2024, we began providing GPU-as-a-Service in partnership with Hewlett Packard Enterprise Company (“HPE”), offering GPU resources to startups, enterprises, and GPU marketplaces for a fee. As further described in our Annual Report, we terminated our agreement with HPE.

We are currently developing new infrastructure projects intended to support AI and HPC workloads. These efforts include engagement with potential joint venture partners, conducting site and feasibility studies, securing access to power and land, and performing other early-stage development activities.

Our first planned AI/HPC colocation project is Project Kati, which is in active construction, and breaking ground near the end of the third quarter 2025. Additional projects, including the announced Project Rosa, are also in progress. For the fiscal year 2024 and the nine months ended September 30, 2025, we generated minimal revenue from our HPC Business.

Demand Response Business

We provide demand response services to grid operators and utilities by leveraging our data centers as dispatchable energy resources. In select states where we operate, our data centers are enrolled in ancillary services programs that support grid reliability.

Under these programs, we commit to reducing a facility’s power consumption to a predetermined level when called upon by the grid operator. In return, we receive compensation for maintaining this dispatch capability, provided we meet specific performance criteria. For example, to qualify for compensation in a given period—typically monthly—the data center must meet minimum uptime and availability requirements.

For the three and nine months ended September 30, 2025, our Demand Response Business represented approximately 5% and 5% of total revenue. For the three and nine months ended September 30, 2024, our Demand Response Business represented approximately 6% and 5% of total revenue. 2026 compensation rates are trending notably downward from increased participation in the program.

Operations and Project Pipeline

As of September 30, 2025, we operate approximately 105 MW of capacity across two active sites located in Murray, Kentucky and Silverton, Texas. An additional 18 MW is under construction at our D2 project site, and as of September 30, 2025, we had over 900 MW of facilities in advanced development or near shovel-ready status. In total, our project pipeline includes over 2.8 gigawatts (GW) of renewable energy-powered data center developments.

A summary of our pipeline, current and anticipated operating locations are as follows (as of September 30, 2025):

We manage our data center operations using MaestroOS. MaestroOS continuously monitors and analyzes a variety of real-time signals, including local electricity prices, weather conditions, Bitcoin market metrics, and grid demand signals, to optimize facility performance. In addition, MaestroOS is used to coordinate and execute our participation in demand response programs.

We finance the development and construction of our data centers through a combination of public equity offerings, debt instruments, and partnerships with project-level capital providers. As of September 30, 2025, we had four primary project-level financing partners:

• Spring Lane Capital (“SLC”) – A private venture capital firm with approximately $450 million in assets under management, focused on sustainability-oriented infrastructure. On May 3, 2022, SLC committed $35 million to finance Soluna’s Project Dorothy 1A (“D1A”). On July 22, 2024, SLC committed an additional $30 million to support the development of D2. On July 22, 2025, SLC committed $20.0 million for the first phase of the construction on Project Kati, subject to customary conditions.
• Navitas West Texas Investments SPV, LLC (“Navitas”) – an investment vehicle organized by Navitas Global, a private equity firm focused on sustainable Bitcoin mining. On May 9, 2023, we entered into a strategic partnership with Navitas to support mining operations at Project Dorothy 1B (“D1B”).
• Galaxy Digital, LLC (“Galaxy”) – a financial services and investment management innovator in the digital asset and blockchain technology sectors. On March 12, 2025, the Soluna SW Loan Parties entered into a five-year term loan facility in the principal amount of $5.0 million.
• Generate Capital (“Generate”) – a leading infrastructure investment firm. On September 12, 2025, we entered into a $100.0 million credit facility with Generate, in which as of September 30, 2025, we have drawn approximately $12.6 million to fund refinancing and construction of active data center projects.

Project Dorothy

During 2023, we transitioned our flagship data center Project Dorothy from construction to operations. This data center is co-located with Briscoe Wind Farm (“Briscoe”), a 150 MW wind power generation facility in Silverton, Texas. The project comprises three phases, D1A and D1B (each 25 MW facilities), and D2 (48 MW facility).

Project Dorothy 1A

D1A is focused on Bitcoin Hosting for industry hyperscale miners. There are approximately 7,700 Bitcoin miners installed at D1A, which as of September 30, 2025, resulted in a hashrate of approximately 990 PH/s. For the year ended December 31, 2024, D1A consumed over 45,700 MWh of Curtailed Energy and for the three and nine months ended September 30, 2025, D1A consumed over 700 and 24,400 MWh of Curtailed Energy.

D1A was constructed in partnership with SLC, a leading venture capital firm focused on sustainability solutions. SLC owns approximately 85% of the Class B Membership Units of D1A, while we own 15% of the Class B Membership Units of D1A and own 100% of the Class A Membership Units of D1A. After SLC achieves an 18% Internal Rate of Return hurdle, Soluna retains 50% of the profits on D1A.

Project Dorothy 1B

D1B is focused on proprietary Bitcoin Mining. There are approximately 6,800 Bitmain Antminer S19s, S19j Pro and S19j Pro+ machines installed, including a September 2025 addition of S19 XP, resulting in an installed hashrate of 726 PH/s for the three months ended September 30, 2025. For the year ended December 31, 2024, D1B consumed over 44,600 MWh of Curtailed Energy and for the three and nine months ended September 30, 2025, D1B consumed over 500 MWh and 24,700 MWh of Curtailed Energy. D1B is co-owned by Navitas, which owns approximately 49% of D1B, while we own the remaining 51%.

In November 2023, we completed registration of Project Dorothy in one of the ERCOT’s Demand Response Services (“DRS”) programs. This designation positioned Project Dorothy as a contributor to grid flexibility and resilience in the Texas power market, while also enabling us to diversify our revenue streams.

Under the DRS program, we commit to maintaining a specified level of curtailment capacity—measured as load reduction availability—on a monthly basis. When called upon by ERCOT, we are required to reduce the facility’s power consumption by the committed amount. In exchange, we receive compensation for maintaining this curtailment readiness, regardless of whether an actual dispatch occurs.

Participation in the program allows us to generate incremental revenue and offset power costs at Project Dorothy, enhancing its cost-efficiency. As a result, the facility ranks among the lowest-cost operators in the sector. Since registration, Project Dorothy has successfully fulfilled its obligations in the Winter, Spring, and Summer DRS periods, and is currently enrolled in the Fall standby period.

Project Dorothy 2

We began planning for the 48 MW expansion of Project Dorothy in 2023 – known as Project Dorothy 2. We partnered with SLC who agreed to finance up to $30 million of the project cost. We closed the initial financing contribution and operation agreement with SLC in July 2024 and broke ground in the third quarter of 2024. Initial energization and ramp-up began as of May 2025. This has enabled the commencement of the commissioning of the first of 3 phases, of 16 MW, that began in May 2025 and was completed at the end of October 2025, as the site is now fully operational. As each phase was commissioned, it began to generate revenue, both due to Bitcoin Hosting and Demand Response Services. D2 features a superior financial waterfall structure and enhanced management and development fees for Soluna compared to D1A, allowing us to benefit from improved income once the facility is operational.

Project Grace

Project Grace is a 2 MW project located at the D2 site focused on next generation data center designs for AI. It contemplates new direct liquid cooling technologies, proprietary building and power designs – called Helix.

Project Sophie

Project Sophie is a 25 MW data center, based in Murray, Kentucky connected to the grid (“Sophie”). The project has a Power Purchase Agreement (“PPA”) that requires the curtailment of the site during certain hours of the day to help balance the Kentucky grid. We own 100% of the facility, which was completed in 2021.

Sophie is focused on Bitcoin Hosting of multiple large customers. The data center generates revenue via a combination of fixed services fees and profit share, while energy cost is passed through to customers. As of September 30, 2025, there are approximately 9,400 Bitcoin miners installed or contracted to be installed, resulting in an installed hashrate of approximately 1.23 EH/s.

Project Kati

We are developing Project Kati in Willacy County, Texas, which is expected to be developed into 166 MW (broken out in 2 phases) of data centers for HPC, Bitcoin Hosting and other computing-intensive applications. It is co-located with a 272.6MW wind farm. We have completed the necessary studies for the ERCOT planning phase, which is the last formal step to secure approvals by regulatory agencies or grid operators, such as ERCOT in Texas, to proceed with project construction and commissioning. We have completed the necessary amendments to the interconnection agreements with American Electric Power, the transmission service provider. We have secured land, contingent on reaching final agreement with local government and schools regarding taxation, for the project and have started capital formation activities. On July 22, 2025, we finalized a contribution agreement from SLC for the first 35 MW of the 83 MW phase of Kati 1 with the goal of achieving initial energization by the first quarter of 2026. On September 18, 2025, we held a groundbreaking ceremony and officially began construction of Project Kati in Willacy County Texas. Project Kati is designed as a two-phase buildout: Kati 1 (83MW) is dedicated to Bitcoin hosting with Galaxy Digital as the first customer already secured, while Kati 2 (83MW) will expand the site to support AI and high-performance computing (HPC) infrastructure.

Project Rosa

We are developing Project Rosa in Snyder, Texas, which is expected to be up to 187 MW of data center capacity for AI and Bitcoin Hosting and other computing-intensive applications. It will be co-located with a 242.5 MW wind farm. We have signed term sheets for both power and land purchase agreements in connection with this project.

Project Hedy

We have signed a term sheet for power for Project Hedy, a new 120 MW data center co-located with a 200 MW wind farm in South Texas. The wind farm is owned by a new power partner–a multinational conglomerate that focuses on developing and managing sustainable infrastructure solutions, with a strong emphasis on renewable energy, water management, and services, aiming to contribute to a low-carbon economy and a better planet.

Project Ellen

We have signed a term sheet for power for Project Ellen, a new 100 MW data center co-located with a 145 MW wind farm in South Texas. The wind farm is owned by a new power partner—a leader in renewable energy and sustainable infrastructure both in the U.S. and internationally. Project Ellen will be developed in two 50MW phases, leveraging wind energy to drive sustainable computing at scale.

Project Annie

We have signed a term sheet for power for Project Annie, a new 75 MW data center co-located with a 114 MW solar farm in Northeast Texas. The solar farm is owned by a new power partner–a leader in renewable energy and sustainable infrastructure both in the U.S. and internationally.

Project Fei

We have signed a term sheet for power for Project Fei is a 100 MW data center in development co-located with a 240 MW utility-scale solar farm, Soluna’s second solar-based project to date. Developed in partnership with a global leader in energy infrastructure investment, Project Fei will convert underutilized solar energy into clean, high-performance computing power. The project is currently advancing through land acquisition, power contract negotiation, and ERCOT interconnection planning.

Project Gladys

We have signed a term sheet for power for Project Gladys is a 150 MW facility in development, which will be co-located with a 226 MW wind farm and developed in partnership with a prominent U.S.-based independent power producer (“IPP”) managing over $40 billion in assets and more than 80 energy facilities nationwide. The project is currently advancing through land acquisition, power contract negotiation, and ERCOT interconnection planning.

Our Growth Strategy

Our growth strategy is focused on expanding our pipeline of renewable energy-powered data center projects and accelerating their development through joint ventures, co-ownership structures, and other strategic partnerships. Over time, we intend to increase our ownership stake in these projects to enhance long-term value.

We believe our renewable energy project pipeline—currently estimated at over 2.8 gigawatts (GW)—represents our most valuable strategic asset. We believe this pipeline has the potential to support the development of approximately 300 to 400 MW of new digital infrastructure annually over the next six to eight years.

In parallel with new project development, we are refining our operational model across existing sites to position ourselves as a partner of choice for both AI/HPC colocation and Bitcoin Hosting.

We continue to grow our pipeline by increasing the number of curtailment assessments completed with power generation partners. These assessments serve as a precursor to securing exclusive Power Purchase Agreements (“PPAs”), acquiring or leasing land, and executing other pre-construction development activities necessary to advance projects to shovel-ready status.

In 2025 and 2026, we are focused on advancing the following key initiatives:

• Power Pipeline Expansion – Increasing the number of curtailment assessments completed with power partners, advancing more projects to shovel-ready status, and executing additional project term sheets.
• AI Infrastructure Development – Form partnerships to harness the value of our considerable and growing pipeline by developing AI/HPC data center joint ventures. Building governance, advisory and employee AI/HPC expertise in support of expected growth strategy.
• Project Optimization – Energize Project Dorothy 2, and enhancing the profitability, operational efficiency, and customer mix of our operational data centers, while improving overall customer satisfaction.
• Capital Formation – Pursuing financing opportunities to support key growth initiatives, including Projects Kati and Rosa. Leveraging strength of project cash flows to refinance and/ or pull forward value of existing projects and to deploy debt financing in new projects.

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Financing Agreements:

Standby Equity Purchase Agreement

On August 12, 2024, the Company entered into the SEPA with YA. Pursuant to the terms of the SEPA, the Company agreed to issue and sell to YA, from time to time, and YA agreed to purchase from the Company, up to $25 million of shares of the Company’s common stock (the “SEPA Shares”). The Company paid a commitment fee of approximately $250 thousand to YA and consent fee of $25 thousand to the holder of shares of Series B Preferred Stock, which was paid through the issuance of 65,320 shares of common stock. The commitment and consent fees were recorded within Other expense, net on the Company’s consolidated financial statements for the year ended December 31, 2024. The Company and YA also entered into a registration rights agreement, pursuant to which the Company agreed to prepare and file with the SEC a Registration Statement on Form S-1, registering the resale of the SEPA Shares. On November 12, 2024, the Company filed a registration statement on Form S-1 (File No. 333-282559) with the SEC for the resale by YA of 3,000,000 SEPA Shares, which was declared effective by the SEC on February 5, 2025. During the three and nine months ended September 30, 2025, the Company has issued and sold approximately 1.5 million and 3.0 million shares of common stock to YA pursuant to the SEPA for aggregate net proceeds to the Company of approximately $4.2 million and $6.2 million.

ATM Agreement

On April 29, 2025, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), as sales agent, pursuant to which the Company may offer and sell, from time to time, through Wainwright, up to $3.75 million of shares of common stock. The Company will pay Wainwright a commission of 3.0% of the aggregate gross proceeds from each sale of shares and has agreed to provide Wainwright with customary indemnification and contribution rights. An additional prospectus supplement was filed on September 2, 2025, in which the Company may offer and sell shares of our common stock having an aggregate offering price of up to $8,585,280 from time to time through Wainwright, and an additional prospectus supplement was filed on September 23, 2025, in which the Company may offer and sell shares of our common stock having an aggregate offering price up to $87,650,000 from time to time through Wainwright.

During the three and nine months ended September 30, 2025, the Company sold 14,649,141 and 17,989,804 shares of common stock pursuant to the ATM Agreement for net proceeds of $20.8 million and $23.0 million after deducting sales agent commissions. The Company has sold an additional 2,690,679 shares of common stock pursuant to the ATM Agreement subsequent to September 30, 2025 for additional net proceeds of approximately $6.3 million.

The shares of common stock sold under the ATM Agreement are offered and sold pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-286638) filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on April 18, 2024 and declared effective by the SEC on April 29, 2025. As of the date of these condensed financial statements, we have approximately $69.7 million of shares of common stock that are available for issuance under the ATM.

July 2025 Public Offering

On July 15, 2025, the Company entered into a securities purchase agreement with the purchasers signatory thereto, pursuant to which the Company sold in a public offering (the “July 2025 Offering”) an aggregate of (i) 8,794,544 shares of common stock (each a “Share” and collectively, the “Shares”); (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 296,365 shares of common stock; (iii) Series A warrants (the “Series A Warrants”) to purchase 9,090,909 shares of common stock; and (iv) Series B warrants (the “Series B Warrants,” and together with the Series A Warrants, the “Common Warrants”) to purchase 9,090,909 shares of common stock,.

Each Share or Pre-Funded Warrant was sold together with one Series A Warrant to purchase one Share and one Series B Warrant to purchase one Share. The combined public offering price for each Share (or Pre-Funded Warrant) and accompanying Common Warrants was $0.55. The Pre-Funded Warrants have an exercise price of $0.001 per share, are exercisable immediately upon issuance and will expire when exercised in full. Each Common Warrant has an exercise price of $0.55 per share and is exercisable immediately upon issuance. The Series A Warrants will expire on the five-year anniversary of the initial exercise date and the Series B Warrants will expire on the twenty-four-month anniversary of the initial exercise date.

The net proceeds of the July 2025 Offering, after deducting the fees and expenses of the placement agent, and other offering expenses payable by the Company, but excluding the net proceeds, if any, from the exercise of the Common Warrants, is approximately $4.3 million. The July 2025 Offering closed on July 17, 2025. As of the date of these condensed financial statements, the Series A and B warrants have been fully exercised raising an additional $10.0 million in gross proceeds.

Recent Developments

Increase in Authorized Shares

On November 7, 2025, the Company held a Special Meeting of Stockholders (the “Special Meeting”) at which, among other matters of business acted upon, the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation, as amended, to increase the Company’s authorized shares of common stock from 75,000,000 shares to 375,000,000 shares (the “Certificate of Amendment”). On November 7, 2025, the Company filed the Certificate of Amendment with the Secretary of State of the State of Nevada, and such amendment became effective immediately.

Nasdaq Compliance

As previously disclosed, the Company received written notice from Nasdaq indicating that the Company was not in compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), and in accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was given until November 4, 2025, to regain compliance. On October 3, 2025, the Company received formal written notice from Nasdaq indicating that the Company had regained compliance with the Bid Price Rule and that this matter is now closed.

NYDIG Settlement

As previously disclosed, on December 29, 2022, NYDIG ABL LLC (“NYDIG”) filed a complaint against (i) Soluna MC Borrowings, LLC 2021-1, a Delaware limited liability company (“Borrower”) and indirect wholly-owned subsidiary of Soluna Holdings, Inc., a Nevada corporation (the “Company”), and Soluna MC, LLC, a Nevada limited liability company and indirect wholly-owned subsidiary of the Company (“Guarantor”, and together with Borrower, the “Soluna Parties”) in Marshall Circuit Court of the Commonwealth of Kentucky (the “Court”) regarding a series of loans (the “NYDIG Loans”) made by NYDIG to Borrower pursuant to a Master Equipment Finance Agreement, dated December 30, 2021, that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant to a written guaranty agreement. The Soluna Parties and NYDIG entered into a Stipulation and Agreed Judgment which was approved by the Court on February 23, 2024, whereby judgment was granted to NYDIG on the counts in the complaint and the Soluna Parties became jointly and severally liable for an aggregate amount of $9,182,646.13 plus interest (the “Agreed Judgment Amount”).

On September 29, 2025, the Soluna Parties and NYDIG entered into a Settlement Agreement (the “Settlement Agreement”), pursuant to which the Soluna Parties and NYDIG agreed to fully settle and resolve the Agreed Judgment Amount and all other matters relating to the NYDIG Loans in exchange for the Soluna Parties’ agreement to make certain settlement payments to NYDIG in accordance with the Settlement Agreement. As of the date of filing these condensed financial statements, the Settlement Agreement has been fully satisfied and paid.

Generate Loan Facility

On September 12, 2025, the Company caused its subsidiaries Soluna DVSL ComputeCo, LLC (“Dorothy 1A Borrower”), Soluna DVSL II ComputeCo, LLC, and Soluna KK I ComputeCo, LLC (collectively, the “Borrowers”) to enter into a Credit and Guaranty Agreement (the “Credit Agreement”) with Generate Lending, LLC, as administrative agent and collateral agent (the “Agent”), and Generate Strategic Credit Master Fund I-A, L.P. (the “Lender”). The Credit Agreement provides for senior secured term loan commitments in an aggregate principal amount of up to $35.5 million, comprised of (i) Tranche A-1 ($5.5 million), (ii) Tranche A-3 ($11.5 million), and (iii) Tranche B ($18.5 million). In addition, the Credit Agreement permits the Borrowers to request one or more Additional Tranche Loan Commitments (as defined in the Credit Agreement), in the aggregate amount of up to $64.5 million, subject to the approval of the Lender and the Agent, for project-level financing of eligible projects. On September 12, 2025, the Borrowers borrowed $12,623,591 under the Credit Agreement, comprised of Tranche A-1 loans and Tranche A-3 loans. The Company can draw upon Tranche B from September 12, 2025 until October 31, 2026, subject to the conditions set forth in the Credit Agreement. The maturity date for the Tranche A and Tranche B loans is the earlier of (i) payment of outstanding principal, interest, and fees and (ii) September 12, 2030. Additional Tranche Loan Commitments will have maturity dates as set forth in their respective amendments to the Credit Agreement. See further details on the Generate Loan Facility in Note 8.

Pursuant to the Credit Agreement, the Company issued to Generate Strategic Credit Master Fund I-B, L.P., an affiliate of the Lender and the Agent (“Generate”), in a private placement: (i) a pre-funded warrant to purchase up to 2,000,000 shares of common stock; and (ii) a common warrant to purchase up to 2,000,000 shares of common stock (collectively, the “Generate Warrants”).

Chief Financial Officer Resignation and Appointment

On August 5, 2025, John Tunison, the Company’s prior Chief Financial Officer, notified the Company that, effective August 21, 2025, he will resign from his position as Chief Financial Officer and Treasurer of the Company. In connection with Mr. Tunison’s resignation, on August 8, 2025, David C. Michaels, a member of the Company’s Board of Directors, was appointed as the Company’s interim Chief Financial Officer and Treasurer, effective August 21, 2025.

Project Specific Developments

Project Fei

Project Fei is a 100 MW data center in development co-located with a 240 MW utility-scale solar farm, Soluna’s second solar-based project to date. Developed in partnership with a global leader in energy infrastructure investment, Project Fei will convert underutilized solar energy into clean, high-performance computing power. The project is currently advancing through land acquisition, power contract negotiation, and ERCOT interconnection planning.

Project Gladys

Project Gladys is a 150 MW facility in development, which will be co-located with a 226 MW wind farm and developed in partnership with a prominent U.S.-based independent power producer (“IPP”) managing over $40 billion in assets and more than 80 energy facilities nationwide. The project is currently advancing through land acquisition, power contract negotiation, and ERCOT interconnection planning.

Project Sophie hosting partnership with KULR

On October 9, 2025, we announced a new hosting partnership with KULR Technology Group, Inc. (“KULR”) (NYSE American: KULR), a Bitcoin+ treasury company that builds a portfolio of frontier technology businesses ranging from high-performance energy systems to AI Robotics. Under this agreement, Soluna will operate approximately 3.3 MW of Bitcoin mining capacity for KULR at its Project Sophie facility in Kentucky. The partnership marks the first time Soluna has partnered with a Bitcoin treasury-focused company, expanding the Company’s customer base beyond traditional Bitcoin miners and hyperscalers. The agreement reflects Soluna’s strategy to adapt its renewable-powered hosting model to meet the developing demand profiles of Bitcoin mining and adjacent industries. The 3.3 MW deployment at Project Sophie is expected to commence operations in the fourth quarter of 2025.

Project Dorothy 1A hosting partnership with Canaan

On September 30, 2025, we announced a strategic hosting agreement with Canaan Inc. (“Canaan”) (Nasdaq: CAN), an innovator in crypto mining, to deploy 20 megawatts (MW) of Avalon® A15 XP Bitcoin miners at Soluna’s Project Dorothy in Briscoe County, Texas. The 20 MW, ~1 EH/s deployment is part of a broader roadmap for both companies: Canaan aims to expand its North American presence amid growing global demand for secure and efficient blockchain infrastructure. At the same time, Soluna aims to monetize its 2.8 GW+ pipeline of Renewable Computing projects designed to support both Bitcoin mining and AI workloads. The 20 MW deployment is expected to commence operations in the first quarter of 2026.

Dorothy 2 Completes Construction

On November 13, 2025, we announced the completion and full energization of Project Dorothy 2, the 48 MW second phase of its flagship Project Dorothy in West Texas. With this milestone, the 100 MW Project Dorothy campus is now fully operational, delivered on time and on budget, bringing Soluna’s total energized data center capacity to 123 MW and over 5 EH/s, a 73% increase since April 2025.

Consolidated Results of Operations (unaudited)

Consolidated Results of Operations (unaudited) for the Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024.

The following table summarizes changes in the various components of our net loss during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

(Dollars in thousands)

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The following table summarizes the balances for the project sites for cryptocurrency mining revenue, data hosting revenue, high-performance computing service revenue, demand response revenue, cost of cryptocurrency mining revenue, exclusive of depreciation, cost of data hosting revenue, exclusive of depreciation, cost of high-performance computing services, and cost of depreciation during the three months ended September 30, 2025:

(Dollars in thousands)

The following table summarizes the balances for the project sites for cryptocurrency mining revenue, data hosting revenue, high-performance computing service revenue, demand response revenue, cost of cryptocurrency mining revenue, exclusive of depreciation, cost of data hosting revenue, exclusive of depreciation, cost of high-performance computing services, and cost of depreciation during the three months ended September 30, 2024:

(Dollars in thousands)

Cryptocurrency Mining Revenue: Cryptocurrency mining revenue remained substantially consistent, decreasing minimally for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. We were awarded 24.6 Bitcoins (BTC) for the three-month period ended September 30, 2025, compared to 46.1 BTC for the prior-year period, representing a 46.6% decrease in Bitcoins earned due to decline in operational efficiency of the aging miners. This decrease was substantially offset by an 87.5% increase in the average market price of BTC during the period.

Data Hosting Revenue: Hosting revenue increased for the three months ended September 30, 2025, compared to the same period in 2024. This increase was primarily driven by the ramped-up energization and resulting revenue contribution from the D2 facility during the third quarter of 2025. This positive impact was partially offset by a shift in the customer contract mix at the D1A and Sophie locations. Specifically, following the exit of one of our largest fixed-fee customers in December 2024, the Company onboarded replacement customers operating under a profit-sharing fee structure, thereby impacting the overall revenue contribution model.

Demand Response Service: Demand response service revenue decreased during the three months ended September 30, 2025, compared to the same period in 2024. This reduction was due to a lower capacity of Megawatts bid into the program, primarily resulting from two factors: the known operational degradation of the D1B miner fleet and the required upgrade of the electrical Internet of Things hardware within the modular data centers.

Cost of Cryptocurrency Mining Revenue, exclusive of depreciation: Cost of cryptocurrency mining revenue includes direct utility costs, site overhead expenses, and overhead costs attributable to the operations of our cryptocurrency mining facilities in Texas.

The decrease in the cost of cryptocurrency mining revenue for the three months ended September 30, 2025, compared to the same period in 2024, was primarily due to a reduction in operating and electricity costs, corresponding from a 18% decrease in electricity usage.

Cost of Data Hosting Revenue, exclusive of depreciation: Cost of data hosting revenue includes direct utility costs, site overhead expenses, and overhead costs attributable to the operations of data hosting facilities in Kentucky and Texas.

Cost of data hosting increased for the three months ended September 30, 2025, compared to the same period in 2024. This increase was primarily driven by the initial energization of the Dorothy 2 facility during the second quarter of 2025 and the subsequent increase in MWs capacity and associated operating costs in the third quarter of 2025. This cost increase was partially offset by a favorable change in the hosting contract mix, specifically the replacement of certain fixed-rate volume contracts with new agreements that include an electricity cost passthrough provision.

Cost of High-Performance Computing Services: Cost of High-Performance Computing Services represents the direct production expenses associated with providing AI and HPC processing capabilities. For the three months ended September 30, 2024, this cost totaled approximately $2.9 million, which was related to the agreement executed with HPE effective July 1, 2024, to acquire access to essential datacenter and cloud services necessary for supporting our AI and HPC processes. We did not incur any cost of High-Performance Computing Services the three months ended September 30, 2025.

In connection with the termination of the HPE Agreement on March 24, 2025, we recognized a loss of approximately $28.6 million for the year ended December 31, 2024. This loss represented the remaining contractual obligations under the agreement.

General and Administrative Expenses, exclusive of depreciation and amortization: General and administrative expenses, exclusive of depreciation and amortization include cash and non-cash compensation, benefits, and related costs in support of our general corporate operations, including general management, finance and accounting, human resources, marketing, information technology, corporate development, and legal services.

• Stock-based compensation expense was approximately $1.9 million for the three months ended September 30, 2025, compared to $1.2 million for the three months ended September 30, 2024, representing an increase of approximately $0.7 million. The increase primarily reflects additional equity awards granted to directors and officers in June and September 2025, and September and December 2024, as well as a reduction in the estimated forfeiture rate from 10% to 5%. These increases were partially offset by the cessation of vesting for certain prior-year grants during the 2025 quarter, and the impact of awards with portions that immediately vested during the 2024 period.
• Salaries and benefits expense increased approximately $1.4 million for the three months ended September 30, 2025, primarily due to approved performance-based bonuses that were accrued during the quarter and settled in October 2025.
• Professional and legal fees increased approximately $434 thousand for the three months ended September 30, 2025, primarily due to legal expenses related to SEC regulatory and compliance matters, as well as legal costs associated with Project Kati that were not incurred in the comparable prior-year period.
• Investor relations expense increased approximately $523 thousand for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to an increase in the number and scope of investor outreach and marketing campaigns conducted during the quarter.
• Provision for credit losses decreased approximately $347 thousand for the three months ended September 30, 2025, as no credit losses were recognized during the current quarter, compared to the three months ended September 30, 2024, which included specific loss provisions recorded on outstanding receivables.
• All other fluctuations within general and administrative expenses for the period were not material to the overall results of operations.

Depreciation and Amortization associated with general and administrative expenses: Depreciation and amortization expense was comparable for the three months ended September 30, 2025, and 2024, totaling approximately $2.4 million in each period. The expense primarily relates to amortization of the strategic pipeline contract acquired in October 2021.

Interest expense: Interest expense for the three months ended September 30, 2025 was approximately $1.2 million compared to the $821 thousand for the three months ended September 30, 2024. See table below noting the difference mainly relates to the new loans entered into in fiscal year 2024 and 2025 (June SPA, Galaxy Loan, Generate loan, and equipment loan), which includes amortization of deferred financing costs.

(Dollars in thousands)

Gain on Debt Extinguishment and Revaluation, net: For the three months ended September 30, 2025, we recognized a net gain on extinguishment of debt of approximately $10.1 million, primarily related to the settlement of the NYDIG equipment financing loan and related interest obligations. The gain was partially offset by a loss on extinguishment resulting from the satisfaction and redemption of the Project Kati equipment loan through the issuance of Class B Membership Interests in Project Kati, which were valued at approximately three and three-tenths times the original borrowing amount.

For the three months ended September 30, 2024, we recognized a net gain on revaluation of approximately $0.9 million, primarily related to the remeasurement of convertible notes with an aggregate principal balance of $2.3 million. The gain resulted from changes in conversion assumptions, payout terms, annualized volatility, and stock price conditions on the valuation dates compared to the conversion features available to noteholders as of September 30, 2024. This gain was partially offset by a loss on extinguishment of debt of approximately $1.4 million, resulting from the satisfaction and redemption of the Dorothy 2 equipment loan through the issuance of Class B Membership Interests in the Dorothy 2 project, which were valued at approximately three times the original borrowing amount.

Fair value adjustment, net: For the three months ended September 30, 2025, we recognized a net loss of approximately $22.0 million related to the revaluation of the Series A and Series B warrants issued in connection with the July 2025 Financing, which were classified as liabilities and subsequently exercised during the quarter. The loss also includes a $13.8 million fair value adjustment on the revaluation of outstanding warrant liabilities as of September 30, 2025. These losses were primarily driven by the increase in the Company’s stock price between July and September 2025, which resulted in a higher intrinsic value compared to the warrants’ original fair value. In addition, we incurred an approximate $9.1 million loss in connection with the fair value of warrants issued in excess of the related proceeds from the July 2025 Financing. These losses were partially offset by a gain of approximately $0.8 million related to the revaluation of the Generate Common Warrant during the period.

For the three months ended September 30, 2024, we recognized a gain of approximately $0.3 million related to the revaluation of the Soluna Cloud warrants, which were subsequently written off.

Loss on sale of fixed assets and credit on equipment deposit: During the three months ended September 30, 2025, we recognized a loss of approximately $780 thousand related to the forfeiture of an equipment credit that had been recorded in prior periods. The credit, which was restricted for use on future equipment purchases for Project Dorothy 2 and Project Kati through September 1, 2025, expired unused, and no further extension was granted.

Other financing expense: Other financing expenses totaled approximately $4.7 million for the three months ended September 30, 2025, primarily related to consent fees associated with draws under the ATM Agreement and the SEPA facility, as well as transaction costs incurred in connection with the July 2025 Financing.

Net (loss) income attributable to non-controlling interest: We incurred a net loss attributable to non-controlling interest for the three months ended September 30, 2025 of approximately $1.8 million compared to a net loss attributable to non-controlling interest for the three months ended September 30, 2024 of $903 thousand, a change of approximately $928 thousand increase in net loss attributable to non-controlling interest. The increase in net loss attributable to non-controlling interest was mainly due to a loss on $1.7 million associated with the satisfaction of equipment loan through membership interest at Project Kati, in addition Project Kati costs of approximately $608 thousand, in which no revenue had been generated yet for the three months ended September 30, 2025, and no comparable costs were noted for the three months ended September 30, 2024. The change at Project Dorothy 2 was a gain of approximately $1.2 million, due to D2 had a loss on non-controlling interest due to the satisfaction of equipment loan at Project Dorothy 2, creating a loss of approximately $1.4 million for the 3 months ended September 30, 2024, as such for Project Dorothy 2, there was a gain between the comparable periods, and with site energization beginning in the second quarter of 2025, the project site began to see revenue growth. Project D1A had a comparable gain of approximately $200 thousand and D1B had a comparable net loss of approximately $56 thousand, due to the margins compared to the three months ended September 30, 2024.

Consolidated Results of Operations for the Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024.

The following table summarizes changes in the various components of our net loss during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

(Dollars in thousands)

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The following table summarizes the balances for the project sites for cryptocurrency mining revenue, data hosting revenue, high-performance computing service revenue, demand response revenue, cost of cryptocurrency mining revenue, exclusive of depreciation, cost of data hosting revenue, exclusive of depreciation, cost of high-performance computing services, and cost of depreciation during the nine months ended September 30, 2025:

(Dollars in thousands)

The following table summarizes the balances for the project sites for cryptocurrency mining revenue, data hosting revenue, high-performance computing service revenue, demand response revenue, cost of cryptocurrency mining revenue, exclusive of depreciation, cost of data hosting revenue, exclusive of depreciation, cost of high-performance computing services, and cost of depreciation during the nine months ended September 30, 2024:

(Dollars in thousands)

Cryptocurrency Mining Revenue: Cryptocurrency mining revenue decreased between the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 related to the Bitcoin halving event that occurred in April 2024, which reduced the block reward by 50%, in addition to aging miners, which was offset by a change in bitcoin price. We were rewarded 85.8 Bitcoins for the nine months ended September 30, 2025 compared to 233.6 Bitcoins for the nine months ended September 30, 2024. The number of coins decreased by 63.3% but the BTC price of a Bitcoin increased 70.2%, therefore offsetting the difference between the nine months.

Data Hosting Revenue: Cryptocurrency Hosting Services involve providing energized space and comprehensive operating support to third-party mining companies that locate their hardware at our dedicated facilities, including D1A and Project Sophie. Revenue for these services is derived from hosting fees, which utilize either a fixed-fee or a profit-sharing fee structure, along with additional service fees such for equipment installation.

Hosting revenue decreased for the nine months ended September 30, 2025, compared to the same period in 2024. This decline was primarily attributable to the following factors: (i) Bitcoin Halving Event: The industry-wide Bitcoin Halving event, which occurred in April 2024, inherently drove down the effective dollar value per Petahash (“PH”) per day, impacting revenue generated from both fixed-fee and profit-sharing contracts; and (ii) Customer Contract Mix Shift: In December 2024, one of our largest customers exited, creating a temporary gap of 20 MW of vacant capacity. Although this capacity was successfully refilled gradually between December 2024 and March 2025, the replacement customers were onboarded under the profit-sharing fee structure. This shift reduced the revenue yield compared to the fixed-fee model previously in place. These negative impacts were partially mitigated by the successful ramped-up energization and increasing revenue recognition from the D2 facility, which commenced operations and contribution during the third quarter of 2025.

Demand Response Service: Demand response service revenue declined for the nine months ended September 30, 2025, compared to the prior-year period. This decrease was driven by a combination of market conditions and operational limitations. Market factors included a decline in the average ERCOT Clearing Price per MW. Operationally, the capacity bid into the program was reduced due to known outages at the Dorothy site associated with the D2 substation interconnection, in addition to the expected degradation of the D1B miner fleet’s performance.

Cost of Cryptocurrency Mining Revenue, exclusive of depreciation: Cost of cryptocurrency mining revenue includes direct utility costs, site overhead expenses, and overhead costs attributable to the operations of our cryptocurrency mining facilities in Texas.

The cost of cryptocurrency mining revenue experienced a minimal decrease for the nine months ended September 30, 2025, compared to the same period in 2024. This slight decline was primarily attributed to a corresponding reduction in operating and electricity costs, which directly resulted from a marginal decrease in overall electricity usage during the period.

Cost of Data Hosting Revenue, exclusive of depreciation: Cost of data hosting revenue includes direct utility costs, site overhead expenses, and overhead costs attributable to the operations of data hosting facilities in Kentucky and Texas.

Cost of data hosting decreased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 mainly due to a change in hosting contracts mix, in which contracts were entered that included electricity passthrough contracts replacing fixed rate volume contracts. This decrease was partially offset by the initial energization of the Dorothy 2 facility during the second quarter of 2025 and the subsequent increase in MWs capacity and associated operating costs in the third quarter of 2025.

Cost of High-Performance Computing Services: Cost of High-Performance Computing Services represents the direct production expenses associated with providing AI and HPC processing capabilities. For the nine months ended September 30, 2024, this cost totaled approximately $2.9 million, which was related to the agreement executed with HPE effective July 1, 2024, to acquire access to essential datacenter and cloud services necessary for supporting our AI and HPC processes.

Revenue from High-Performance Computing Services totaled $28 thousand for the nine months ended September 30, 2025, representing the initial revenue contribution from this business segment. This is compared to no revenue recorded for the corresponding nine-month period ended September 30, 2024.

Cost of High-Performance Computing Services was not material for both the three months and the nine months ended September 30, 2025.

In connection with the termination of the HPE Agreement on March 24, 2025, we recognized a loss of approximately $28.6 million for the year ended December 31, 2024. This loss represented the remaining contractual obligations under the agreement.

General and Administrative Expenses, exclusive of depreciation and amortization: General and administrative expenses, exclusive of depreciation and amortization include cash and non-cash compensation, benefits, and related costs in support of our general corporate operations, including general management, finance and accounting, human resources, marketing, information technology, corporate development, and legal services.

• Stock-based compensation expense was approximately $5.7 million for the nine months ended September 30, 2025, compared to $3.3 million for the nine months ended September 30, 2024, representing an increase of approximately $2.4 million. The increase primarily reflects equity awards granted to directors and officers between April, June, and December of 2024, additional equity awards granted to directors and officers in June and September 2025, employee grants issued in June 2025 and December 2024, as well as a reduction in the estimated forfeiture rate from 10% to 5%. These increases were partially offset by the cessation of vesting for certain prior-year grants and by the impact of awards with portions that immediately vested during 2024.
• Salaries and benefits expense increased approximately $1.1 million for the nine months ended September 30, 2025, primarily due to approved performance-based bonuses settled in October 2025, as well as cost-of-living and merit-based salary adjustments for management and employees.
• Professional and legal fees increased approximately $1.6 million for the nine months ended September 30, 2025, primarily due to legal expenses related to SEC regulatory and compliance matters and Project Kati legal costs that were not incurred in the comparable prior-year period. The increase also reflects the engagement of external consultants to assist with complex accounting matters.

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• Investor relations expense increased approximately $254 thousand for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to an increase in the number and scope of investor outreach and marketing campaigns conducted during the period.
• Provision for credit losses decreased approximately $610 thousand for the nine months ended September 30, 2025, as no credit losses were recognized during the current period, compared to the nine months ended September 30, 2024, which included specific loss provisions recorded on outstanding receivables.
• All other fluctuations within general and administrative expenses for the period were not material to the overall results of operations.

Depreciation and Amortization associated with general and administrative expenses: Depreciation and amortization expense was comparable for the nine months ended September 30, 2025, and 2024, totaling approximately $7.2 million in each period. The expense primarily relates to the amortization of the strategic pipeline contract acquired in October 2021.

Interest expense: Interest expense for the nine months ended September 30, 2025, was approximately $3.2 million, compared to approximately $1.7 million for the nine months ended September 30, 2024. This increase is primarily attributable to the new debt facilities entered into during fiscal years 2024 and 2025, including the June and July Share Purchase Agreements, the Galaxy Loan, the Generate Loan, and the equipment loan. The expense for the current period also includes the amortization of deferred financing costs associated with these new facilities, partially offset by the full payoff of the Navitas loan. Further details on the components of interest expense are presented in the table below.

(Dollars in thousands)

Gain (Loss) on Debt Extinguishment and Revaluation, net: For the nine months ended September 30, 2025, we recognized a net gain on extinguishment of debt of approximately $10.7 million. The gain primarily related to the settlement of the NYDIG equipment financing loan and related interest obligations in September 2025, as well as the Assignment and Assumption Agreement for the Additional Notes executed on March 14, 2025. These gains were partially offset by a loss on extinguishment resulting from the satisfaction and redemption of the Project Kati equipment loan through the issuance of Class B Membership Interests in Project Kati, which were valued at approximately three and three-tenth times the original borrowing amount.

For the nine months ended September 30, 2024, we recognized a net loss on debt extinguishment and revaluation of approximately $1.9 million. On February 28, 2024, we entered into the Fourth Amendment with its noteholders, which reduced the conversion price and resulted in the issuance of new warrants and the repricing of existing warrants with revised exercise features. As a result, the Company recorded a gain on revaluation of convertible notes of approximately $1.3 million during the first quarter of 2024 (as of February 28 and March 31, 2024), primarily driven by changes in conversion assumptions, payout features, annualized volatility, and stock price conditions at the respective valuation dates. A subsequent fair value assessment as of June 30, 2024 resulted in a loss on revaluation of approximately $4.0 million, reflecting changes in conversion and payout assumptions and stock price volatility compared to conversion terms available to noteholders at that date. The convertible notes were remeasured again as of September 30, 2024, resulting in a gain of approximately $2.3 million, primarily due to the decline in the Company’s stock price, which offset prior-quarter fair value losses. In addition to these fair value adjustments, we recognized a loss on debt extinguishment of approximately $1.4 million related to the satisfaction and redemption of the Dorothy 2 equipment loan through the issuance of Class B Membership Interests in the Dorothy 2 project, which were valued at approximately three times the original borrowing amount.

Fair value adjustment, net: For the nine months ended September 30, 2025, we recognized a net loss of approximately $22.2 million related to the revaluation of the Series A and Series B warrants issued in connection with the July 2025 Financing, which were classified as liabilities and exercised during the three months ended September 30, 2025. The loss also includes a $13.8 million fair value adjustment related to the revaluation of outstanding warrant liabilities as of September 30, 2025. These losses were primarily driven by the increase in the Company’s stock price between July and September 2025, which resulted in a higher intrinsic value relative to the warrants’ original fair value. Additionally, we incurred an approximate $9.1 million loss representing the excess of the fair value of warrants issued in connection with the July 2025 Financing over the related proceeds received, and $0.1 million in fair value adjustments related to timing differences between SEPA draws and share issuances. These losses were partially offset by a gain of approximately $0.8 million from the revaluation of the Generate Common Warrant during the period.

For the nine months ended September 30, 2024, we recognized a net fair value adjustment loss of approximately $5.6 million, primarily related to the issuance and repricing of additional warrants with modified exercise features pursuant to the Fourth Amendment with the Noteholders. As a result of these modifications, the warrants were reassessed and classified as warrant liabilities, requiring recurring fair value measurement each reporting period. The initial issuance and repricing resulted in a fair value adjustment loss of approximately $5.9 million, which was partially offset by revaluation gains recognized through May 30, 2024, the date of the Company’s Annual Shareholder approval. Upon shareholder approval, the cap-containment provision was removed, and since all other criteria for equity classification were met, the remaining warrant liability was reclassified to equity. Additionally, the Company recognized a gain on revaluation of approximately $0.3 million related to the Soluna Cloud warrants, which were subsequently written off during the period.

Loss on sale of fixed assets and credit on equipment deposit: During the nine months ended September 30, 2025, we recognized a loss of approximately $0.8 million related to the forfeiture of an equipment credit that had been recorded in prior periods. The credit was restricted for use on future equipment purchases for Project Dorothy 2 and Project Kati through September 1, 2025. We did not execute an order prior to the expiration date, and no extension was granted; therefore, the credit was forfeited.

Other financing expense: We incurred approximately $5.1 million in financing expenses for the nine months ended September 30, 2025, primarily related to consent fees associated with the SEPA, draws under the ATM Agreement, and transaction costs incurred in connection with the July 2025 Financing.

Net (loss) income attributable to non-controlling interest: We incurred a net loss attributable to non-controlling interest for the nine months ended September 30, 2025 compared to a net income attributable to non-controlling interest for the nine months ended September 30, 2024. The decrease related mainly due the variances in gross profit related to D1A and D1B noted above mainly due to the halving event in April 2024 and the increase in profit sharing fees for data hosting for the nine months ended September 30, 2025, which created an approximate $3.5 million variance between periods in non-controlling interest. In addition, we incurred a loss of approximately $1.7 million associated with the satisfaction of equipment loan through membership interest at Project Kati, in addition Project Kati costs of approximately $608 thousand, in which no revenue had been generated yet for the nine months ended September 30, 2025, and no comparable costs were noted for the nine months ended September 30, 2024. The change at Project Dorothy 2 was a gain of approximately $204 thousand, due to in the second quarter of 2025, D2 began site energization in which costs exceeded the revenue by approximately $1.2 million, however, D2 for the nine months ended September 30, 2024 had a loss on non-controlling interest due to the satisfaction of equipment loan at Project Dorothy 2, creating a loss of approximately $1.4 million.

Non-GAAP Measures

To supplement our consolidated condensed financial statements included in this quarterly report presented under U.S. generally accepted accounting principles (“GAAP”), we are presenting certain non-GAAP financial measures. We are providing these non-GAAP financial measures to disclose additional information to facilitate the comparison of past and present operations by providing perspective on results absent one-time or significant non-cash items. We utilize these measures in the business planning process to understand expected operating performance and to evaluate results against those expectations. We believe that these non-GAAP financial measures, when considered together with our GAAP financial results, provide management and investors with an additional understanding of our business operating results regarding factors and trends affecting our business and provide a reasonable basis for comparing our ongoing results of operations.

These non-GAAP financial measures are provided as supplemental measures to our performance measures calculated in accordance with GAAP and therefore, are not intended to be considered in isolation or as a substitute for comparable GAAP measures. Further, these non-GAAP financial measures have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. Because of the non-standardized definitions of non-GAAP financial measures, we caution investors that the non-GAAP financial measures as used by us in this quarterly report have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. Further, investors should be aware that when evaluating these non-GAAP financial measures, these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, from time to time in the future there may be items that we may exclude for purposes of our non-GAAP financial measures, and we may in the future cease to exclude items that we have historically excluded for purposes of our non-GAAP financial measures. Likewise, we may determine to modify the nature of the adjustments to arrive at our non-GAAP financial measures. Investors should review the non-GAAP reconciliations provided below and not rely on any single financial measure to evaluate our business.

EBITDA and Adjusted EBITDA

In addition to financial measures calculated in accordance with GAAP, we also use “EBITDA” and “Adjusted EBITDA.” “EBITDA” is defined as earnings before interest, taxes, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation costs, loss on sale of fixed assets, loss on debt extinguishment and revaluation, placement agent release expense, loss on contract, provision for credit losses, convertible note inducement expense and impairment on fixed assets. Management believes that EBITDA and Adjusted EBITDA results in a performance measurement that represents a key indicator of our business operations of cryptocurrency mining, hosting customers engaged in cryptocurrency mining, demand service revenue, and high-performance computing services.

We believe EBITDA and Adjusted EBITDA can be important financial measures because they allow management, investors, and the Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments. Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP. For example, we expect that stock-based compensation costs, which is excluded from the non-GAAP financial measures, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers, and directors. Similarly, we expect that depreciation and amortization of fixed assets will continue to be a recurring expense over the term of the useful life of the assets.

EBITDA and Adjusted EBITDA are provided in addition to and should not be considered to be substitutes for, or superior to net income, the comparable measure calculated in accordance with GAAP. Further, EBITDA and Adjusted EBITDA should not be considered as alternatives to revenue growth, net income, or any other performance measure calculated in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP.

Reconciliations of EBITDA and Adjusted EBITDA to net loss, the most comparable GAAP financial metric, for historical periods are presented in the table below:

(Dollars in thousands)

Adjusted EBITDA decreased for the three and nine months ended September 30, 2025 compared to September 30, 2024 primarily driven by increases in general and administrative expenses, exclusive of depreciation, stock-based compensation costs, and provision for credit losses of approximately $2.2 million and $2.7 million for the comparable periods. The general and administrative expense increase was driven by increases in 2025 bonus expenses of $1.3 million, professional and legal fees of $0.5 million, and investor relations of $0.5 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, the general and administrative increase was driven by increases in the bonus and salary of approximately $1.1 million, professional and legal fees of $1.6 million, and investor relations of $0.3 million. We also incurred other financing costs for the three and nine months ended September 30, 2025 of $4.7 million and $5.2 million, due to Preferred B holder consent fees for draws under the ATM, the SEPA, and July 2025 Financing, in which no similar fees occurred in the prior comparable periods.

In addition, for the nine months ended September 30, 2025 compared to nine months ended September 30, 2024 , there was a decrease in revenue of approximately $9.2 million primarily in Cryptocurrency mining and data hosting revenue following the April 2024 Bitcoin halving and a customer ramp-up of 20 MW through the first quarter of 2025, partially offset by approximately $4.5 million decline in cost of revenue e, excluding depreciation, in which is largely due to no costs associated with high-performance computing services for 2025. We did have a gross profit excluding depreciation increase for the three months ended September 30, 2025 compared to three months ended September 30, 2024 largely due to no costs associated with high-performance computing services which was approximately $2.9 million in the prior period.

The following table represents the Adjusted EBITDA activity between each three-month period from January 1, 2025 through September 30, 2025.

(Dollars in thousands)

The following table represents the Adjusted EBITDA activity between each three-month period from January 1, 2024 through December 31, 2024.

(Dollars in thousands)

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Liquidity and Capital Resources

Several key indicators of our liquidity are summarized in the following table:

(Dollars in thousands)

As of September 30, 2025, we had a consolidated accumulated deficit of approximately $353.2 million and we had positive working capital of approximately $10.2 million, in which was due to significant financings in the third quarter of 2025. As of September 30, 2025, we had total debt outstanding of approximately $23.3 million as summarized further below in the Debt table. In addition, we had outstanding commitments related to Soluna Digital Inc. (“SDI”) of approximately $11.9 million in capital expenditures mainly related to Project Dorothy 2 and Project Kati. In addition, due to CloudCo’s termination of the HPE Agreement on March 24, 2025, and HPE’s termination of the HPE Agreement on March 26, 2025, and the acceleration of the remaining unpaid amounts of the contract in accordance with the HPE Agreement, we have recognized a liability for the remainder of the HPE Agreement on the consolidated balance sheet of approximately $19.3 million. As of September 30, 2025, we had $51.4 million of cash available to fund our operations.

Based on business developments, including changes in production levels, staffing requirements, and network infrastructure improvements, we will require additional capital equipment in the foreseeable future. We are focused on developing and monetizing green, zero-carbon computing and cryptocurrency mining facilities, as well as facilities capable of hosting customers engaged in cryptocurrency mining, and data centers to provide specialized AI Cloud and colocation services.

We plan to continue funding operations, including working capital and operating deficits, from operating cash flows and cash flow debt and equity financings, including the ATM Agreement, SEPA, July 2025 Offering, and others to be closed as needed consistent with management’s plans.

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. In the near term, management is evaluating and implementing different strategies to obtain financing to fund the Company’s expenses and growth to achieve a level of revenue adequate to support the Company’s current cost structure. Financing strategies may include, but are not limited to, stock issuances, project level equity, debt borrowings, partnerships and/or collaborations. If the Company is unable to meet its financial obligations, it could be forced to restructure or refinance, seek additional equity capital or sell its assets. The Company might then be unable to obtain such financing or capital or sell its assets on satisfactory terms. There can be no assurance that additional financing will be available to the Company when needed or, if available, that it can be obtained on commercially reasonable terms. If the Company is not able to obtain the additional financing on a timely basis, if and when it is needed, it will be forced to delay or scale down some or all of its development activities or perhaps even cease the operation of its business.

Operating Activities

Net cash used in operations was approximately $3.5 million during the nine months ended September 30, 2025. The Company had a net loss for the nine months ended September 30, 2025 of approximately $40.9 million. Non-cash items included approximately $4.9 million of depreciation expense, $7.1 million of amortization expenses, $22.0 million in fair value adjustments mainly related to warrants being exercised, and $5.7 million of stock compensation expenses. These non-cash items were offset with a deferred tax benefit of $1.7 million and gain on extinguishment of debt of approximately $10.7 million. The change in asset and liabilities of $8.4 million mainly relates to increase in accrued expense of $5.2 million in relation to increase in construction fees for Project Kati and Dorothy 2, legal fees, financing costs, and bonus accrual. In addition, there was a $2.0 million increase in accounts payable due to timing and billing of invoices, and a $2.1 million increase in customer deposits due to new contract agreements being entered into. The other changes in assets and liabilities of approximately $885 thousand mainly related to increase in accounts receivable and other current assets related to timing and billing amounts of invoices, in addition with payment made to HPE in January, offset decrease in other long-term assets of $1.6 million in relation to receipt of Briscoe deposit in January 2025.

Net cash used by operations was approximately $3.4 million during the nine months ended September 30, 2024. The Company had a net loss for the nine months ended September 30, 2024 of approximately $19.8 million. Non-cash items included approximately $4.6 million of depreciation expense and $7.1 million of amortization expenses, $3.3 million of stock compensation expenses, $7.1 million of loss on debt extinguishment and revaluation, $611 thousand in provision for credit losses, and $179 thousand amortized deferred financing costs. These non-cash items were offset with a deferred tax benefit of $1.8 million. The change in asset and liabilities is mainly due to an increase in prepaid expenses and other long-term assets by $9.2 million due to a prepayment of an arrangement with HPE of $10.3 million that is being amortized over the life of the agreement, an increase in accrued expenses and accounts payable of $4.2 million in relation to bonus accruals, NYDIG interest, and Project Dorothy 2 and Kati related bills. The other changes in assets and liabilities were not material.

Investing Activities

Net cash used in investing activities during the nine months ended September 30, 2025 was approximately $18.1 million consisting mainly of capital expenditures of $17.0 million, which consist of additions to property, plant, and equipment offset with transfers from deposits on equipment, and $1.0 million deposit on equipment purchases. Net cash used in investing activities during the nine months ended September 30, 2024 was approximately $7.7 million consisting mainly of capital expenditures of $3.7 million and deposits on equipment purchases of $4.1 million.

Financing Activities

(Dollars in thousands)

Net cash provided by financing activities was approximately $71.6 million for the nine months ended September 30, 2025 consisting mainly of $18.4 million of debt issuance proceeds, $29.0 million of net proceeds from SEPA draws and ATM Agreement settlements, net proceeds of $4.4 million from the July financing offering, $9.5 million net proceeds from warrant exercises, and $22.1 million of contributions from non-controlling interest, offset with cash distributions to non-controlling interest members of approximately $4.8 million and payments on debt and deferred financing costs of approximately $6.9 million to the Green Cloud Secured Loan, Generate debt issuance costs, Galaxy principal and deferred financing costs, CloudCo Additional Secured Loan, and the Navitas term loan. Net cash provided by financing activities for the nine months ended September 30, 2024 was approximately $12.9 million consisting mainly of proceeds from financing of approximately $14.5 million in which $13.75 million was from 2024 secured loan financing in June and July, and $720 thousand was drawn down for equipment financing. In addition, there was $2.3 million in warrants exercised, as well as $5.1 million in contributions of non-controlling membership interest. Offsetting the net cash provided by financing activities was $6.7 million in cash distributions to non-controlling interest members, and payments of $2.3 million relation to Navitas loan and deferred financing charges.

Debt

The following balances are presented net of unamortized debt issuance costs of approximately $2.6 million as of September 30, 2025.

(Dollars in thousands)

64

On June 20, 2024, pursuant to the terms and subject to the conditions of the June SPA by and among (i) CloudCo, (ii) Soluna Cloud, (iii) the Company and (iv) the Investor, CloudCo issued to the Investor a secured promissory note in a principal amount equal to $12.5 million (the “Green Cloud Secured Note”). The Green Cloud Secured Note accrues interest at a rate 9.0% per annum, subject to adjustment upon an event of default. The Green Cloud Secured Note matures on June 20, 2027. On July 12, 2024, the Company, CloudCo, Soluna Cloud, and the Existing Investor entered into a First Amendment to the Note Purchase Agreement. Additional Notes were issued for $1.25 million (“Soluna CloudCo Additional Secured Note”) on July 12, 2024 and are subject to the same terms and conditions as the June SPA financing. On October 1, 2024, CloudCo, Soluna Cloud and the Company entered into assignment and assumption agreements (the “Assignment Agreements”) with the Additional Investors with respect to an aggregate of $1.25 million of notes issued by CloudCo. Pursuant to the Assignment Agreements, the Company will be able to purchase such notes for a purchase price of $750 thousand, or 60% of face value. The assignment and assumption will be effective once all conditions of the agreement are met including fulfilling the purchase price. The assignment and assumption was on March 14, 2025, therefore we extinguished the remaining third-party outstanding debt on the Additional Note, and a gain on extinguishment of the debt of approximately $551 thousand was recorded. In relation to the Green Cloud Secured Note, as of September 30, 2025, the Company had an outstanding principal balance of approximately $8.5 million.

On January 14, 2022, the Company effected an initial drawdown under the Master Equipment Finance Agreement (“MEFA”) with NYDIG in the aggregate principal amount of approximately $4.6 million that bore interest at 14%. On January 26, 2022, the Company had a subsequent drawdown of $9.6 million. On December 20, 2022, Soluna MC Borrowing 2021-1 LLC (“Borrower”) received a Notice of Acceleration and Repossession (the “NYDIG Notice”) from NYDIG with respect to the MEFA, by and between Borrower, a subsidiary of Soluna MC, LLC, a subsidiary of Soluna Digital, a subsidiary of the Company, and NYDIG. The obligations of Borrower under the MEFA and reflected in the NYDIG Notice are ring-fenced to Borrower and its direct parent company, Soluna MC LLC. The Company is not a party to any guaranty, collateral agreement, or other support agreement with or for the benefit of NYDIG. As such, the principal balance of $10.5 million as of December 31, 2022 became due immediately and the Borrower shall bear interest, at a rate per annum equal to 2.0% plus the rate per annum otherwise applicable to such obligations set forth in the MEFA. On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA, and repossessed the collateralized assets that totaled approximately $3.4 million, in which approximately $560 thousand was first used to pay off accrued interest and penalty to date. On September 5, 2023, NYDIG provided a letter finalizing the accounting for the repossessed collateralized assets totaling proceeds of approximately $3.4 million. A summary judgment motion was performed on February 13, 2024 and was agreed upon by both NYDIG and the Borrower, that the total outstanding loan principal balance would be approximately $9.2 million, in which a penalty fee was applied of approximately $1.0 million to the repossessed collateralized assets, and outstanding interest and penalty balance was also applied (the “Agreed Judgment Amount”). On September 29, 2025, the Borrower and NYDIG entered into a Settlement Agreement (the “Settlement Agreement”), pursuant to which the Borrower and NYDIG agreed to fully settle and resolve the Agreed Judgment Amount and all other matters relating to the NYDIG loans in exchange for the Borrower’s agreement to make certain settlement payments to NYDIG in accordance with the Settlement Agreement. In exchange for such settlement payments, NYDIG, on behalf of itself and its related parties, and its and their respective predecessors, successors, heirs and assigns, agreed to release the Borrower and their affiliates from any and all claims, demands, actions, causes of action, liabilities, damages, costs, and expenses, whether known or unknown, arising out of or relating to the Agreed Judgment Amount and the NYDIG loans (other than obligations under the Settlement Agreement). The Company has recorded a gain on extinguishment of debt for the outstanding principal and accrued interest and penalties. As of September 30, 2025, the Borrower has paid a portion of the Settlement Agreement amount, and the remaining settlement obligation is included in “Accrued Expenses”. Subsequently, the remaining Settlement Agreement amount has been fully paid and satisfied.

On May 9, 2023, DVCC and Navitas West Texas Investments SPV, LLC entered into a 2-year Loan Agreement for $2,050,000. The unpaid principal balance of the Term Loan shall bear interest at per annum rate equal to 15%. As of September 30, 2025, the Navitas loan has been fully paid off.

On May 16, 2024, the SDI Borrower, entered into the Equipment Loan Agreement with the Lender. The Equipment Loan Agreement provides for the SDI Borrower to borrow, from time to time, up to $4.0 million, as further amended on February 28, 2025, to be used to purchase necessary equipment for the progression of D2 and Project Kati. Any loans made under the Equipment Loan Agreement have a maturity date of May 16, 2027 and bear interest at a rate of 15% per annum. The Equipment Loan Agreement includes customary covenants for loans of this nature, as well as a multiple on invested capital provision, which requires us to pay, in addition to principal and interest, an amount equal to the difference of (i) the greater of (a) the principal amount of the Loan being repaid plus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan, and (b) the principal amount of the Loan being repaid multiplied by three, minus (ii) the sum of the principal amount of the Loan being repaid plus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan. On March 21, 2025, the SDI Borrower drew down $250 thousand of the Loan with the Lender, in relation to Project Kati. In addition, on June 11, 2025 and July 16th, the SDI Borrower drew down an additional $269.2 thousand and $291.4 thousand of the Loan with the Lender, in relation to Project Kati. The total amount of equipment loans of $810.6 thousand was outstanding prior to the assignment of equipment and payoff of the loan. The SDI Borrower shall repay the Loans under these Borrowing Requests with a different MOIC Payment than as defined in the Equipment Loan Agreement. The MOIC Payment for these Borrowing Requests only, shall be an amount equal to the difference of (i) the greater of (a) the principal amount of the Loan being repaid plus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan, and (b) the principal amount of the Loan being repaid multiplied by three and three tenths (3.3), minus (ii) the sum of the principal amount of the Loan being repaid plus all interest previously paid or simultaneously being paid to Lender in respect of such principal of the Loan. As of the date prior to the payoff, the Company had approximately $180.6 thousand in Accrued interest payable in relation to the MOIC and 15% interest accruing on the Loan that was outstanding. On the August 1, 2025, the SDI Borrower satisfied and repaid the Borrowing amount in full by issuing the Spring Lane Capital (“SLC”) Class B Membership Interests in Soluna KKSL JVCo LLC (“Kati”) project for 3.3 times the membership units ($810.6 thousand payoff equal to fair value of approximately $2.7 million for Class B membership units issued to SLC), as part of the contribution agreement between the Parties. Through initial contributions of $810.6 thousand (debt repayment), SLC received 2,675 Class B Membership units, which constituted a 100% initial membership interest of Kati. The redemption of debt through equity created approximately a $1.7 million loss on debt extinguishment for the three and nine months ended September 30, 2025.

On March 12, 2025, the SW Borrower, a Delaware limited liability company and subsidiary of SW Holdings, itself a subsidiary of SDI, a Nevada corporation and wholly owned subsidiary of the Company, entered into the Galaxy Loan Agreement with SW Holdings and Galaxy Digital LLC. The Galaxy Loan Agreement provides for a term loan facility in the principal amount of $5.0 million (the “Term Loan Facility”). The Term Loan Facility bears interest at a rate of 15.0% per annum, subject to an increase of 5.0% (for a total of 20.0%) in the event an Event of Default has occurred and is continuing. The Term Loan Facility matures on March 12, 2030 and includes scheduled payments over a five-year term. As of September 30, 2025, the outstanding principal balance is approximately $4.8 million as we were compliant with all debt covenants.

On September 12, 2025, the Company caused its subsidiaries Soluna DVSL ComputeCo, LLC (“Dorothy 1A Borrower”), Soluna DVSL II ComputeCo, LLC (“Dorothy 2 Borrower”), and Soluna KK I ComputeCo, LLC (“Tranche B Borrower” and collectively with Dorothy 1A Borrower and Dorothy 2 Borrower, the “Borrowers”) to enter into a Credit and Guaranty Agreement (the “Credit Agreement”) with Generate Lending, LLC, as administrative agent and collateral agent (the “Agent”), and Generate Strategic Credit Master Fund I-A, L.P. (the “Lender”). The Credit Agreement provides for senior secured term loan commitments in an aggregate principal amount of up to $35.5 million, comprised of (i) Tranche A-1 ($5.5 million), (ii) Tranche A-3 ($11.5 million), and (iii) Tranche B ($18.5 million). In addition, the Credit Agreement permits the Borrowers to request one or more Additional Tranche Loan Commitments (as defined in the Credit Agreement), in the aggregate amount of up to $64.5 million, subject to the approval of the Lender and the Agent, for project-level financing of eligible projects. On September 12, 2025, the Borrowers borrowed approximately $12.6 million under the Credit Agreement, comprised of Tranche A-1 loans and Tranche A-3 loans. The Company can draw upon Tranche B from September 12, 2025 until October 31, 2026, subject to the conditions set forth in the Credit Agreement. The maturity date for the Tranche A and Tranche B loans is the earlier of (i) payment of outstanding principal, interest, and fees and (ii) September 12, 2030. Additional Tranche Loan Commitments will have maturity dates as set forth in their respective amendments to the Credit Agreement. As of September 30, 2025, the outstanding principal balance is approximately $12.6 million.

Critical Accounting Policies and Significant Judgments and Estimates

The above discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. Note 2, Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024 includes a summary of our most significant accounting policies. There have been no material changes to the critical accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. The preparation of these condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, income taxes, fair value measurements, and stock-based compensation. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Periodically, our management reviews our critical accounting estimates with the Audit Committee of our Board of Directors.

Statement Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. Any statements contained in this Form 10-Q that are not statements of historical fact may be forward-looking statements. When we use the words “anticipate,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” “should,” “could,” “may,” “will” and similar words or phrases, we are identifying forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding:

• the availability of financing opportunities, risks associated with economic conditions, dependence on management and conflicts of interest;
• the ability to service debt obligations and maintain flexibility in respect of debt covenants;
• economic dependence on regulated terms of service and electricity rates;
• the speculative and competitive nature of the technology sector;
• ability of the Company to attract and retain hosted customers for its hosting operations;
• dependency in continued growth in blockchain and cryptocurrency usage;
• lawsuits and other legal proceedings and challenges;
• conflict of interests with directors and management;
• government regulations;
• The ability of the Company to construct and complete the anticipated expansion of its data centers; and
• other risks and uncertainties discussed under the heading “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

The certifications of our Chief Executive Officer and Chief Financial Officers are attached as Exhibits 31.1 and 31.2 to this Quarterly Report on Form 10-Q include, in paragraph 4 of such certification, information concerning our disclosure controls and procedures and internal control over financial reporting. Such certification should be read in conjunction with the information contained in this Item 4 for a more complete understanding of the matters covered by such certification.

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. We recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and we necessarily apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our management concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of September 30, 2025, due to the following material weakness:

• The Company did not maintain effective control over the accurate calculation of both basic and diluted EPS. Specifically, controls failed to ensure the correct treatment of complex equity instruments, as evidenced by an error identified in the financial statements concerning the calculation of earnings per share (EPS). This error involved the incorrect inclusion of unvested Restricted Stock Award (RSA) shares in the denominator used for calculating basic and diluted EPS for the periods ranging from June 30, 2024, through June 30, 2025.
• During the quarter ended September 30, 2025, the Company processed the exercise of liability-classified warrants. Due to complexity surrounding the accounting for the derivative liability settlement and the subsequent fair value assessment, an additional material adjustment was required. This adjustment was identified, calculated, recorded, and reported in the condensed consolidated financial statements late in the quarterly review process. This control deficiency indicates that the Company did not maintain effective controls over the accounting for complex or non-routine equity transactions and the associated valuation processes, specifically regarding derivative warrant liabilities, resulting in the material adjustment.

Notwithstanding the existence of this material weakness, management has concluded that the Company’s unaudited condensed consolidated financial statements in its Quarterly Report on Form 10-Q for the period ended September 30, 2025 are fairly stated in all material respects in accordance with generally accepted accounting principles in the United States of America.

Remediation:

Our Board of Directors and management take internal control over financial reporting and the integrity of our financial statements seriously. Management continues to work to improve its controls related to our material weaknesses. The remediation actions include: (i) enhancing design and documentation related to complex transactions and control activities, and (ii) developing robust review procedures to ensure the proper recording and reporting of the complex transactions. To achieve the timely implementation of the above, management has commenced the following actions and will continue to assess additional opportunities for remediation on an ongoing basis:

• Implement more robust internal policies and procedures relating to complex transactions and fair value assessments, with a specific focus on establishing reliable controls over fair value measurements to ensure the accuracy of financial reporting.
• Engage qualified consultants and third-party specialists to assist in the review of complex transactions, ensuring that all entries recorded align with applicable accounting guidance and meet the reporting expectations for the condensed consolidated financial statements.

We cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. In addition, we continue to evaluate and work to improve our internal control over financial reporting related to the identified material weakness, management may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above.

(b) Changes in Internal Control Over Financial Reporting

We are taking the remedial actions described above and expect to implement them prior to December 31, 2025. Other than the changes for our control procedures around complex transactions in which we plan to remediate above, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our fiscal quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II, Item 1A (Risk Factors) of our most recently filed Annual Report on Form 10-K with the SEC, filed on March 31, 2025, as supplemented by Item 1A of our Form 10-Q filed with the SEC on May 15, 2025, sets forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition and operating results. There have been no material changes to our risk factors disclosed in our most recently filed Annual Report on Form 10-K, as supplemented by Item 1A of our Form 10-Q filed with the SEC on May 15, 2025. Those risk factors continue to be relevant to an understanding of our business, financial condition and operating results, however, and, accordingly, you should review and consider such risk factors in making any investment decision with respect to our securities.