# Soluna Holdings, Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Soluna Holdings, Inc](/companies/slnh.md) (CIK 64463)
- Form: 10-Q
- Filed: 2025-05-15
- Accepted by EDGAR: May 15, 2025, 16:05 ET
- Period: 2025-03-31
- Accession: 0001641172-25-010886
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/64463/000164117225010886/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/64463/000164117225010886/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $4.8m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $338.0k | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-01-01 to 2025-03-31 | $8.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$7.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $838.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | −$425.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$7.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.88 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.88 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 11,939,983 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$177.0k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $3.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $9.2m | us-gaap:Cash |
| Current assets | at 2025-03-31 | $15.8m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $90.0m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $47.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $63.1m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $10.2m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2025-03-31 | −$16.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 73,550 characters.

*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.*

*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 on Form 10-K for the fiscal year ended December 31, 2024 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 energizes the grid, 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, 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 months ended March 31, 2025, our Bitcoin Mining Business represented approximately 51% 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 months ended March 31, 2025, our Bitcoin Hosting Business accounted for approximately 40% of total revenue. Revenue in this business was concentrated among a small number of customers. For the three months ended March 31, 2025, three customers made up approximately 83% of hosting revenue and 33% 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 below in “Recent Developments”, 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 advanced development. Additional projects, including the announced **Project Rosa**, are also in progress. For the fiscal year 2024 and the three months ended March 31, 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 months ended March 31, 2025, our Demand Response Business represented approximately 9% of total revenue.

### Operations and Project Pipeline

As of March 31, 2025, we operate approximately 75 MW of capacity across two active sites located in Murray, Kentucky and Silverton, Texas. An additional 48 MW is under construction at our D2 project site, and as of March 31, 2025, we had over 623 MW of facilities in advanced development or near shovel-ready status. In total, our project pipeline includes over 2.6 gigawatts (GW) of renewable energy-powered data center developments.

A summary of our pipeline, current and anticipated operating locations are as follows (as of March 31, 2025):

| Project Name | Location | MW | Status | Line of Business | Power Source |
| --- | --- | ---: | --- | --- | --- |
| **Sophie** | Murray, KY | 25 | Operating | Bitcoin Hosting | Grid / Hydro |
| **Dorothy 1A** | Silverton, TX | 25 | Operating | Bitcoin Hosting | Wind |
| **Dorothy 1B** | Silverton, TX | 25 | Operating | Bitcoin Mining | Wind |
| **Dorothy 2** | Silverton, TX | 48 | In Construction | Bitcoin Hosting | Wind |
| **Grace** | Silverton, TX | 2 | Development | HPC | Wind |
| **Kati** | Willacy County, TX | 166 | Development | Bitcoin Hosting / AI or HPC | Wind |
| **Rosa** | Snyder, TX | 187 | Development | Bitcoin Hosting / AI or HPC | Wind |
| **Hedy** | Cameron County, TX | 120 | Development | Bitcoin Hosting / AI or HPC | Wind |
| **Ellen** | Cameron County, TX | 100 | Development | Bitcoin Hosting / AI or HPC | Wind |

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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 December 31, 2024, we had two 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.
- **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”).

### 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).

#### Project Dorothy 1A

D1A is focused on Bitcoin Hosting for some of the industry’s hyperscale miners. There are approximately 7,800 Bitcoin miners installed at D1A, which as of March 31, 2025, resulted in a hashrate of approximately 900 TH/s. For the year ended December 31, 2024, D1A consumed over 45,700 MWh of Curtailed Energy and for the three months ended March 31, 2025, D1A consumed over 11,900 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 7,700 Bitmain Antminer S19s, S19j Pro and S19j Pro+ machines installed, resulting in an installed hashrate of 817 PH/s. For the year ended December 31, 2024, D1B consumed over 44,500 MWh of Curtailed Energy and for the three months ended March 31, 2025, D1B consumed over 13,000 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 is expected by the end of the second quarter of 2025. This will enable the commencement of the commissioning of the first of 3 phases, each of 16MW, that will occur between May and October 2025 when the site is expected to be fully operational. As each phase is commissioned, it will begin 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. As of March 31, 2025, there are approximately 8,600 Bitcoin miners installed or contracted to be installed, resulting in an installed hashrate of approximately 1.07 EH/s and achieved a PUE of 1.03.

### Project Kati

We are developing Project Kati in Willacy County, Texas, which is expected to be developed into 166 MW of data centers for HPC, Bitcoin Hosting and other computing-intensive applications. It is co-located with a 272.6MW wind farm in Texas. 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 also completed the necessary amendments to the interconnection agreements with American Electric Power, the transmission service provider. We have also secured land, contingent on reaching final agreement with local government and schools regarding taxation, for the project and have started capital formation activities.

### 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 in Texas. We have signed term sheets for both power and land purchase agreements in connection with this project.

### 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 2.6 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, we are focused on advancing the following key initiatives:

- **Power Pipeline Expansion –** We plan to scale our operational footprint by energizing D2 and commencing construction of the 83 MW Bitcoin Hosting phase of Project Kati. Together, these projects are expected to advance our path toward over 200 MW of operational capacity under management.
- **AI Infrastructure Development –** We aim to form joint ventures with leading U.S. data center developers, including top global infrastructure funds and hyperscaler-aligned development and financing partners. Our initial efforts will focus on launching the 83 MW AI phase of Project Kati, with the goal of establishing our first portfolio of advanced data centers purpose-built for AI workloads.
- **Project Optimization –** We continue to prioritize improvements in profitability, operational efficiency, customer mix, and satisfaction across our existing data centers. Our goal is to drive consistent execution and deliver best-in-class performance for our customers using a new service model called *Relentless Stewardship.*
- **Capital Formation –** We plan to pursue targeted capital-raising initiatives to support both near-term project development and long-term growth across our platform.

### Recent Developments

### ATM Agreement

On April 29, 2025, the Company entered into an At the Market Offering Agreement (the “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.

The shares of common stock sold under the Agreement will be 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.

### Soluna Cloud – Termination of HPE Agreement

Soluna launched Project Ada- its GPU-as-a-Service business via Soluna Cloud, Inc. (“Soluna Cloud”) earlier in 2024 in order to achieve two primary goals:

1\. Gain commercial experience in the AI/HPC market in support of future data center development focused on large language models (LLMs) and other AI workloads.

2\. Capitalize on lower-cost capital to pursue high-growth revenue opportunities in the compute infrastructure market.

As a point of entry into Project Ada, Soluna AL CloudCo, LLC (“CloudCo”), a subsidiary of Soluna Cloud, entered into the HPC & AI Cloud Services Agreement and HPE Greenlake Services Custom Statement of Work with Hewlett Packard Enterprise Company (“HPE”) on June 18, 2024 (together with the associated Statement of Work, the “HPE Agreement”), that provided data center and cloud services for artificial intelligence (“AI”) and supercomputing applications, utilizing NVIDIA H100 Graphic Processing Units (“GPUs”).

At the time of launch, the market for NVIDIA H100 GPUs was characterized by constrained supply and strong pricing, which aligned with the economics of the fixed-cost HPE Agreement. However, by the end of 2024, the GPU market shifted significantly. Lead times for NVIDIA H100 GPUs shortened from over 50 weeks in 2023 to 8–12 weeks by the end of 2024, easing supply constraints and reducing urgency among buyers. At the same time, market demand shifted toward larger GPU clusters than those available under the HPE Agreement, making it difficult to secure long-term, reserved contracts at profitable rates. The expected release of NVIDIA’s H200 Blackwell architecture also caused some customers to delay purchases. Although release timelines were impacted by design issues, the prospect of next-generation technology contributed to hesitancy in NVIDIA H100 GPU acquisition. Competitive pressure from alternative GPU vendors further softened demand and market pricing. As a result, Soluna Cloud’s business progressed more slowly than anticipated. Revenues were first recognized in December 2024, with modest growth in early 2025. During the last six months, our engagement with potential financing and operating partners for AI/HPC confirmed that rather than continuing the effort to lease and resell GPU/HPC chips, refocusing on our core strength - creating, developing, financing and operating our extensive pipeline of potential bitcoin and AI hosting facilities - will create far more value for us and our shareholders.

In light of these developments, on March 24, 2025, CloudCo sent notice of its termination of the HPE Agreement for convenience. Subsequently, on March 26, 2025, HPE sent notice of its termination of the HPE Agreement for cause, effective immediately, due to CloudCo’s material breach of its payment obligations that remained uncured for more than thirty (30) days. In accordance with the terms of the HPE Agreement, upon a termination for cause by HPE, CloudCo must pay HPE the remaining payment stream under the term of the HPE Agreement of approximately $19.3 million as of March 31, 2025, including all upfront payments and monthly charges, plus any fees incurred for the terminated Services (as defined in the HPE Agreement).

### June SPA Modification

On June 20, 2024, pursuant to the terms and subject to the conditions of a Note Purchase Agreement (the “June SPA”) by and among (i) CloudCo, (ii) Soluna Cloud, (iii) the Company and (iv) the accredited investor named therein (the “Investor” and collectively, the “Note Parties), CloudCo issued to the Investor a secured promissory note in a principal amount equal to $12.5 million (the “Note”).

On March 23, 2025, the Note Parties entered into a Modification Agreement (the “Modification Agreement”) to, among other things, (i) provide for the deposit of 1,000,000 shares (the “Escrow Shares”) of our common stock into an escrow account maintained by Northland Securities, Inc., pursuant to an escrow agreement (as further described below), (ii) provide for the issuance to the Investor of a warrant to purchase shares of our common stock upon the release by the Investor of its lien on our property, (iii) amend the payment schedule of the Note to provide (a) for each of the six scheduled payments occurring after the earlier of the effectiveness of a registration statement for the resale of the Registrable Securities (as defined below) or the date that the Registrable Securities may be sold pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), without any information requirements, the amount of principal and interest payable on such date shall be reduced by 50% (the aggregate amount of the six months of such reductions, the “Specified Amount”) and (b) if the aggregate amount of payments on the Note applied from the proceeds of the sale of the Escrow Shares on or prior to the last six scheduled payments is less than the Specified Amount (such difference, the “Make Whole Amount”), than the amount of each of the remaining scheduled payments shall be increased by an amount equal to the Make Whole Amount divided by the number of remaining scheduled payments, (iv) modify the Note such that the Note is now convertible into up to 2,500,000 shares (the “Conversion Shares”) of our common stock based on a conversion price of $5.00, (v) amend the Note to provide that we will be a direct co-obligor with CloudCo under the Note, and (vi) amend the SPA to allow us to organize or incorporate any subsidiary, over which we shall have voting or beneficial control, which is being formed with the intent to engage in a business or line of business substantially similar to that of Soluna Cloud or the Company, without first paying all of the principal and interest due under the Note and without first obtaining Investor’s prior written consent.

The net proceeds from dispositions of the Escrow Shares (i) at a price of up to $4.00 per share shall be applied to reduce the outstanding principal balance of the Note and (ii) at a price greater than $4.00 per share shall be applied first to reduce the outstanding principal balance of the Note in an amount equal to $4.00 per share of our common stock and then to the Investor. The outstanding share numbers in this filing do not give effect to the 1,000,000 Escrow Shares to be deposited by the Company in escrow.

Also under the Modification Agreement, we agreed to register for resale the Escrow Shares and Conversion Shares (together, the “Registrable Securities”) as promptly as commercially practicable, as determined by us, following the registration for resale of certain other securities. We also agreed to register for resale the shares of our common stock issuable upon exercise of the Warrant as promptly as commercially practicable, as determined by us, after the issuance of the Warrant.

Subsequently, we and the Investor mutually agreed that the 1,000,000 Escrow Shares would instead be issued directly to the Investor, and, on April 29, 2025, we issued 1,000,000 shares of common stock to the Investor.

### Galaxy Note

On March 12, 2025, Soluna SW LLC (the “SW Borrower”), a Delaware limited liability company and a subsidiary of Soluna SW Holdings LLC (“SW Holdings”), a Delaware limited liability company and a subsidiary of Soluna Digital, Inc. (“SDI”), a Nevada corporation and a subsidiary of the Company, entered into a Loan Agreement (the “Galaxy Loan Agreement”) with SW Holdings and Galaxy Digital LLC (the “Lender”). The Galaxy Loan Agreement comprises a term loan facility in the principal amount of $5.0 million (the “Term Loan Facility”). The Term Loan Facility bears interest at 15.0% per annum, unless an Event of Default (as defined therein) has occurred and is continuing, in which case the Galaxy Term Loan Facility shall bear interest at a rate of 5% above the then applicable interest rate. The Term Loan Facility will mature on March 12, 2030 and will be paid over a five-year term.

### SEPA

On August 12, 2024, we entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD., a Cayman Islands exempt limited company (“YA”). Pursuant to the terms of the SEPA, we agreed to issue and sell to YA, from time to time, and YA agreed to purchase from us, up to $25 million of shares of our common stock (the “SEPA Shares”). We and YA also entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which we 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, we 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. As of the date of this report, we have issued and sold approximately 1.5 million shares of our common stock to YA pursuant to the SEPA for aggregate net proceeds to us of approximately $2.0 million. We intend to continue issuing shares of our common stock to YA pursuant to the SEPA in future periods.

#### Project Specific Developments

### 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 in the U.S. and internationally. Project Ellen will be developed in two 50MW phases, leveraging wind energy to drive sustainable computing at scale.

### Consolidated Results of Operations (unaudited)

***Consolidated Results of Operations (unaudited) for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024.***

The following table summarizes changes in the various components of our net loss during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

*(Dollars in thousands)*

|  | Three months ended March 31, 2025 | Three months ended March 31, 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Cryptocurrency mining revenue | $2,999 | $6,396 | $(3,397) | (53)% |
| Data hosting revenue | 2,402 | 5,278 | (2,876) | (54)% |
| Demand response service revenue | 507 | 875 | (368) | (42)% |
| High-performance computing service revenue | 28 | - | 28 | 100% |
| Operating costs and expenses: |  |  |  |  |
| Cost of cryptocurrency mining revenue, exclusive of depreciation | 1,954 | 1,841 | 113 | 6% |
| Cost of data hosting revenue, exclusive of depreciation | 1,327 | 2,251 | (924) | (41)% |
| Cost of high-performance computing service revenue | 7 | - | 7 | 100% |
| Cost of cryptocurrency mining revenue- depreciation | 1,074 | 1,087 | (13) | (1)% |
| Cost of data hosting revenue- depreciation | 401 | 436 | (35) | (8)% |
| General and administrative expenses, exclusive of depreciation and amortization | 5,946 | 3,994 | 1,952 | 49% |
| Depreciation and amortization associated with general and administrative expenses | 2,404 | 2,403 | 1 | -% |
| Impairment on fixed assets | - | 130 | (130) | (100)% |
| Operating (loss) profit | (7,177) | 407 | (7,584) | (1,863)% |
| Other (expense) income, net | (315) | 23 | (338) | (1,470)% |
| Interest expense | (838) | (424) | (414) | 98% |
| Loss on sale of fixed assets | - | (1) | 1 | (100)% |
| Gain (loss) on debt extinguishment and revaluation, net | 551 | (3,097) | 3,648 | (118)% |
| Loss before income taxes | (7,779) | (3,092) | (4,687) | 152% |
| Income tax benefit, net | 425 | 548 | (123) | (22)% |
| Net loss | (7,354) | (2,544) | (4,810) | 189% |
| Net income attributable to non-controlling interest, net | (202) | (2,710) | 2,508 | (93)% |
| Net loss attributable to Soluna Holdings, Inc. | $(7,556) | $(5,254) | $(2,302) | 44% |

43

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 March 31, 2025:

*(Dollars in thousands)*

|  | Soluna Digital Project Dorothy 1B | Project Dorothy 1A | Project Sophie | Other | Soluna Digital Subtotal | Soluna Cloud Project Ada | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Cryptocurrency mining revenue | $2,999 | $- | $- | $- | $2,999 | $- | $2,999 |
| Data hosting revenue | - | 1,371 | 1,031 | - | 2,402 | - | 2,402 |
| Demand response services | - | - | - | 507 | 507 | - | 507 |
| High-performance computing services | - | - | - | - | - | 28 | 28 |
| **Total revenue** | 2,999 | 1,371 | 1,031 | 507 | 5,908 | 28 | 5,936 |
| Cost of cryptocurrency mining, exclusive of depreciation | $1,954 | - | - | - | 1,954 | - | 1,954 |
| Cost of data hosting revenue, exclusive of depreciation | - | 885 | 372 | 70 | 1,327 | - | 1,327 |
| Cost of high-performance computing service revenue | - | - | - | - | - | 7 | 7 |
| Cost of cryptocurrency mining revenue- depreciation | 1,074 | - | - | - | 1,074 | - | 1,074 |
| Cost of data hosting revenue- depreciation | - | 295 | 106 | - | 401 | - | 401 |
| **Total cost of revenue** | 3,028 | 1,180 | 478 | 70 | 4,756 | 7 | 4,763 |
| **Gross (loss) profit** | $(29) | $191 | $553 | $437 | $1,152 | $21 | $1,173 |

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 March 31, 2024:

*(Dollars in thousands)*

|  | Soluna Digital Project Dorothy 1B | Project Dorothy 1A | Project Sophie | Other | Soluna Digital Subtotal | Soluna Cloud Project Ada | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Cryptocurrency mining revenue | $6,396 | $- | $- | $- | $6,396 | $- | $6,396 |
| Data hosting revenue | - | 3,542 | 1,736 | - | 5,278 | - | 5,278 |
| Demand response services | - | - | - | 875 | 875 | - | 875 |
| High-performance computing services | - | - | - | - | - | - | - |
| **Total revenue** | 6,396 | 3,542 | 1,736 | 875 | 12,549 | - | 12,549 |
| Cost of cryptocurrency mining, exclusive of depreciation | $1,841 | - | - | - | 1,841 | - | 1,841 |
| Cost of data hosting revenue, exclusive of depreciation | - | 1,737 | 514 | - | 2,251 | - | 2,251 |
| Cost of high-performance computing service revenue | - | - | - | - | - | - | - |
| Cost of cryptocurrency mining revenue- depreciation | 1,084 | - | - | 3 | 1,087 | - | 1,087 |
| Cost of data hosting revenue- depreciation | - | 284 | 150 | 2 | 436 | - | 436 |
| **Total cost of revenue** | 2,925 | 2,021 | 664 | 5 | 5,615 | - | 5,615 |
| **Gross profit** | $3,471 | $1,521 | $1,072 | $870 | $6,934 | $- | $6,934 |

44

***Cryptocurrency Mining Revenue***: Cryptocurrency mining revenue decreased between the three months ended March 31, 2025 compared to the three months ended March 31, 2024 related to the Bitcoin halving event that occurred in April 2024, which reduced the block reward by 50%, which was offset by a change in bitcoin price. We were rewarded 32.5 Bitcoins for the three months ended March 31, 2025 compared to 119.6 Bitcoins for the three months ended March 31, 2024.

***Data Hosting Revenue***: Cryptocurrency hosting services provide energized space and operating services to third-party mining companies who locate their mining hardware at our mining locations- D1A and Project Sophie. Services include fees for hosting the miners which could be fixed fees or profit sharing, as well as potential additional fees for services provided such as installation charges or other services fees. The decrease for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 relate to the Bitcoin halving event that occurred in April 2024, which drove down the dollar Petahash (“PH”) per day. Also, in December 2024, one of our largest customers exited leaving 20 MW of capacity to fill that was ultimately filled slowly over December 2024 and into March 2025.

***Demand Response Service***: Demand response service revenue was lower in the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to the ERCOT Clearing price decreasing by approximately $30 per MW between the comparable periods, in addition to the capacity that we bid on was reduced by 7 MW from 38 MW capacity for the first quarter of 2024 compared to 31 MW capacity for the first quarter of 2025.

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

The increase in costs for the three months ended March 31, 2025 compared to three months ended March 31, 2024 relate mainly to slight increases in operating and electricity costs.

***Cost of Data Hosting Revenue, exclusive of depreciation:*** Cost of data hosting revenue includes utility charges, site overhead expenses, and other charges.

Cost of data hosting decreased for the three months ended March 31, 2025 compared to the three months ended March 31, 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.

***Cost of High-Performance Computing Services:*** Cost of high-performance computing services include operating expenses related to high performance computing services. The costs of high-performance computing services were not material for the three months ended March 31, 2025 and there were no services for the three months ended March 31, 2024. We do note that due to 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, which represented the remaining obligations.

***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 $1.8 million for the three months ended March 31, 2025 compared to approximately $656 thousand in relation to the three months ended March 31, 2024, an increase of approximately $1.2 million. Stock based compensation expense increased approximately $1.7 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily related to grants issued to directors and officers in April, June, September, and December of 2024 and grants issued to employees in December of 2024, however this increase was offset by approximately $500 thousand during the comparable periods related to grants that fully vested during 2024 and in January of 2025, as well as reductions in expense related to the modification accounting of grants that occurred in the second quarter of 2024.
- Professional fees increased approximately $832 thousand in relation to legal fees associated with registration of the SEPA and other SEC regulatory and compliance matters, in addition to higher fees associated with consulting matters.
- Other changes in general and administrative expenses were not material.

***Depreciation and Amortization associated with general and administrative expenses:*** Depreciation and amortization expense was comparable for the three months ended March 31, 2025 and three months ended March 31, 2024 in which the balances totaled approximately $2.4 million, respectively. The balances mainly related to amortization expense related to the strategic pipeline contract that was acquired in October 2021.

***Interest expense:*** Interest expense for the three months ended March 31, 2025 was approximately $837 thousand compared to the $424 thousand for the three months ended March 31, 2024. See table below noting the difference mainly relates to the new loans entered into in fiscal year 2024 and 2025 (June and July SPA, Galaxy Loan, and equipment loan), which includes amortization of deferred financing costs.

*(Dollars in thousands)*

|  | Three months ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| NYDIG interest expense | $357 | $361 |
| Navitas interest expense | 2 | 63 |
| June SPA interest expense | 389 | - |
| July SPA interest expense | 33 | - |
| Galaxy loan interest expense | 42 | - |
| Equipment loan interest expense | 15 | - |
| **Interest expense** | $838 | $424 |

***Gain (Loss) on Debt Extinguishment and Revaluation, net***: For the three months ended March 31, 2025, there was a gain on extinguishment of debt of approximately $551 thousand. The gain was in relation to the fulfillment of the Assignment and Assumption Agreement for the Additional Notes on March 14, 2025.

For the three months ended March 31, 2024, the Company incurred a $3.1 million loss on debt extinguishment and revaluation. On February 28, 2024, the Company entered into the Fourth Amendment with the Noteholders and lowered the conversion price and issued new warrants and repriced additional warrants with certain exercise features. The issuance and reprice of warrants created a loss of extinguishment of debt of approximately $5.8 million, in which was offset by a gain on debt revaluation of the convertible debt of approximately $1.3 million as of February 28, 2024 (date of Fourth Amendment) and March 31, 2024 due to several factors including assumptions on conversions and payouts, annual volatility and stock price conditions on the dates of valuations. In addition, there was a revaluation of the warrant liability as of March 31, 2024, in which created a gain on revaluation of approximately $1.5 million.

***Other expense (income), net:*** Other expense, net increased by approximately $338 thousand for the 3 months ended March 31, 2025 compared to March 31, 2024. For the three months ended March 31, 2025, the Company incurred approximately $118 thousand in fair value adjustments in relation to timing of the SEPA draws to when the shares were issued, and a $205 thousand financing expense in relation to consent fees for the SEPA draws. The Company had nominal other income for the three months ended March 31, 2024 of $23 thousand.

***Net income attributable to non-controlling interest:*** Net income attributable to non-controlling interest for the three months ended March 31, 2025 was significantly lower than the three months ended March 31, 2024, due mainly due the variances in gross profit related to D1A and D1B, noted above mainly to the halving event in April 2024, which created about approximately $2.2 million variance between periods in non-controlling interest. In addition, in the third quarter of 2024, D2 began site development creating an additional cost of approximately $311 thousand in non-controlling interest, in which there is no comparable costs for the three months ended March 31, 2024.

### 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)*

|  | Three months ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net loss from continuing operations | $(7,354) | $(2,544) |
| Interest expense | 838 | 424 |
| Income tax benefit | (425) | (548) |
| Depreciation and amortization | 3,879 | 3,926 |
| **EBITDA** | (3,062) | 1,258 |
| **Adjustments: Non-cash items** |  |  |
| Stock-based compensation costs | 1,847 | 661 |
| Loss on sale of fixed assets | - | 1 |
| (Gain) loss on debt extinguishment and revaluation, net | (551) | 3,097 |
| Fair value adjustment on SEPA draws | 118 | - |
| Impairment on fixed assets | - | 130 |
| **Adjusted EBITDA** | $(1,648) | $5,147 |

Adjusted EBITDA decreased primarily driven by a decrease in revenue of $6.3 million decline in Cryptocurrency mining and data hosting revenue following the April 2024 Bitcoin halving and a customer ram-up of 20 MW through the first quarter of 2025, partially offset by approximately $900 thousand decline in cost of data hosting revenue, excluding depreciation. General and administrative expenses, excluding stock-based compensation, increased approximately $700 thousand mainly related to legal fees associated with the SEPA and other consulting fees.

The following table represents the EBITDA and Adjusted EBITDA activity between each three-month period from January 1, 2024 through March 31, 2025 (unaudited).

*(Dollars in thousands)*

|  | Three months ended March 31, 2024 | Three months ended June 30, 2024 | Three months ended September 30, 2024 | Three months ended December 31, 2024 | Three months ended March 31, 2025 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net loss from continuing operations | $(2,544) | $(9,145) | $(8,093) | $(38,518) | $(7,354) |
| Interest expense, net | 424 | 449 | 821 | 833 | 838 |
| Income tax benefit from continuing operations | (548) | (649) | (547) | (743) | (425) |
| Depreciation and amortization | 3,926 | 3,909 | 3,916 | 3,889 | 3,879 |
| **EBITDA** | 1,258 | (5,436) | (3,903) | (34,539) | (3,062) |
| **Adjustments: Non-cash items** |  |  |  |  |  |
| Stock-based compensation costs | 661 | 1,368 | 1,257 | 2,025 | 1,847 |
| Loss on sale of fixed assets | 1 | 21 | - | 9 | - |
| Provision for credit losses | - | 244 | 367 | 149 | - |
| Convertible note inducement expense | - | - | - | 388 | - |
| Placement agent release expense | - | - | - | 1,000 | - |
| Loss on contract | - | - | - | 28,593 | - |
| Impairment on fixed assets | 130 | - | - | - | - |
| Fair value adjustment on SEPA draws | - | - | - | - | 118 |
| Loss (gain) on debt extinguishment and revaluation, net | 3,097 | 5,600 | (1,203) | (145) | (551) |
| **Adjusted EBITDA** | $5,147 | $1,797 | $(3,482) | $(2,520) | $(1,648) |

We continued positive Adjusted EBITDA from the third quarter of 2023 through the second quarter of 2024. Effective July 1, 2024 we entered into an agreement for services where the quarterly service expense was approximately one million in each third and fourth quarter of 2024. The agreement was terminated in March 2025, and we have seen a Adjusted EBITDA improve from the third quarter of 2024 through the first quarter of 2025.

### Liquidity and Capital Resources

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

*(Dollars in thousands)*

|  | Three Months Ended or as of March 31, 2025 | Three Months Ended or as of March 31, 2024 | Year Ended or as of December 31, 2024 |
| --- | ---: | ---: | ---: |
| Cash | $9,161 | $8,438 | $7,843 |
| Restricted cash | 5,287 | 2,956 | 2,610 |
| Working capital (deficit) | (31,802) | (15,502) | (34,378) |
| Net loss | (7,354) | (2,544) | (58,300) |
| Net cash (used in) provided by operating activities | (177) | 3,850 | (5,069) |
| Purchase of property, plant and equipment | (3,808) | (524) | (9,160) |

As of March 31, 2025, we had a consolidated accumulated deficit of approximately $321.9 million and we had negative working capital of approximately $31.8 million. As of March 31, 2025, we had total debt outstanding of approximately $24.0 million as summarized further below in the Debt table. In addition, we had outstanding commitments related to Soluna Digital Inc. (“SDI”) of approximately $10.4 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 March 31, 2025, we had $9.2 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 YA SEPA 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 by operations was approximately $177 thousand during the three months ended March 31, 2025. The Company had a net loss for the three months ended March 31, 2025 of approximately $7.4 million. Non-cash items included approximately $1.5 million of depreciation expense, and $2.4 million of amortization expenses, and $1.8 million of stock compensation expenses. These non-cash items were offset with a deferred tax benefit of $437 thousand and gain on extinguishment of debt of approximately $551 thousand. The change in asset and liabilities of $1.9 million mainly relates to decrease in other long term assets of $1.6 million in relation to receipt of Briscoe deposit in January 2025. The other changes in assets and liabilities of approximately $500 thousand mainly related to decrease in accounts receivable due to timing and amounts billed related to March services, an increase in accounts payable related to timing and billing amounts of invoices, including increases in legal fees, an increase in interest payable in relation to NYDIG loan and Galaxy loan, offset with payment made to HPE in January and payment of sales and use tax.

Net cash provided by operations was approximately $3.9 million during the three months ended March 31, 2024. The Company had a net loss for the three months ended March 31, 2024 of approximately $2.5 million. Non-cash items included approximately $1.6 million of depreciation expense, and $2.4 million of amortization expenses, $661 thousand of stock compensation expenses, $3.1 million of loss on debt extinguishment and revaluation, and $130 thousand of impairment of fixed assets. These non-cash items were offset with a deferred tax benefit of $548 thousand. The change in asset and liabilities of $942 thousand related to increase in accounts receivable of $1.5 million attributable for demand service revenue and data hosting customer receivables significantly increasing, offset with increases in accrued expenses and accounts payable of $929 thousand. The other changes in assets and liabilities were not material.

### Investing Activities

Net cash used in investing activities during the three months ended March 31, 2025 was approximately $3.6 million consisting mainly of capital expenditures of $3.8 million offset with a decrease in deposits on equipment of $213 thousand. Net cash used in investing activities during the three months ended March 31, 2024 was approximately $827 thousand consisting mainly of capital expenditures of $524 thousand and increase in deposits on equipment of $343 thousand.

### Financing Activities

*(Dollars in thousands)*

|  | Three months ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Proceeds from debt issuance | $5,000 | $- |
| Payments on debt | (1,978) | (616) |
| Contributions from non-controlling interest | 4,310 | - |
| Distributions to non-controlling interest | (1,525) | (1,680) |
| Proceeds from warrant exercises | - | 300 |
| Net proceeds from SEPA | 2,005 | - |
| **Net cash provided by (used in) financing activities** | $7,812 | $(1,996) |

Net cash provided by financing activities was approximately $7.8 million consisting mainly of $5.0 million of debt issuance proceeds, $2.0 million of net proceeds from SEPA draws, and $4.3 million of contributions from non-controlling interest, offset with cash distributions to non-controlling interest members of approximately $1.5 million and payments on debt and deferred financing costs of approximately $2.0 million to the CloudCo Secured Loan, CloudCo Additional Secured Loan, Navitas term loan, and for deferred financing costs. For the three months ended March 31, 2024, net cash used in financing activities was approximately $2.0 million consisting mainly of $1.7 million of cash distributions to non-controlling interest members, $616 thousand in principal payments of the Navitas loan, offset with $300 thousand of warrant exercises.

### Debt

*(Dollars in thousands)*

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Galaxy loan | $4,550 | $- |
| NYDIG Financing | 9,183 | 9,183 |
| Equipment loan | 250 | - |
| Navitas Term Loan | - | 137 |
| CloudCo Secured Loan | 10,055 | 10,983 |
| CloudCo Additional Secured Loan | - | 1,202 |
| **Total Debt** | $24,038 | $21,505 |

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 “Soluna CloudCo Secured Note”). The Soluna CloudCo Secured Note accrues interest at a rate 9.0% per annum, subject to adjustment upon an event of default. The Soluna CloudCo 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 Soluna Cloudco Secured Note, as of March 31, 2025, the Company had an outstanding principal balance of approximately $10.7 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 would be approximately $936 thousand as of December 31, 2023. As of March 31, 2025, the Company still has an outstanding loan principal of approximately $9.2 million and outstanding interest and penalty balance of approximately $2.6 million as of March 31, 2025.

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 December 31, 2024, the Company has an outstanding principal balance of approximately $137 thousand. As of March 31, 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 May 17, 2024, the SDI Borrower drew down $720 thousand of the Loan. On July 22, 2024, SDI Borrower satisfied and repaid the borrowing amount in full by issuing the Lender Class B Membership Interests in the D2 valued at three times the borrowing amount (i.e., $2.16 million). The redemption of debt through equity created approximately a $1.4 million loss on debt extinguishment for the year ended December 31, 2024. On March 21, 2025, the SDI Borrower drew down $250 thousand of the Loan, in relation to Project Kati. The amount is outstanding as of March 31, 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 March 31, 2025, we were compliant with all debt covenants and no principal payments have been made.

### 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;

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- 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.

## Controls and procedures

As filed, 2,576 characters.

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 SHI’s disclosure controls and procedures as of March 31, 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 U.S. Securities and Exchange Commission’s (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 its 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 the evaluation of our disclosure controls and procedures as of March 31, 2025, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

#### (b) Changes in Internal Control Over Financial Reporting

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 March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 3,478 characters.

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, 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. 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.

***If we fail to regain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.***

Our common stock is currently listed for trading on Nasdaq. On May 8, 2025, we received notice from The Nasdaq Stock Market LLC indicating that we are not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq (the “minimum closing bid price requirement”). We were provided an initial compliance period of 180 calendar days from the date of the notice, or until November 4, 2025, to regain compliance with the minimum closing bid price requirement, pursuant to Nasdaq Rule 5810(c)(3)(A). We may be eligible for an additional 180 calendar day compliance period. There can be no assurance that we will regain compliance with the minimum closing bid price requirement during the 180-day compliance period, secure a second period of 180 days to regain compliance or maintain compliance with the other Nasdaq listing requirements.

We will continue to monitor the closing bid price of our common stock and assess potential actions to regain compliance with the minimum closing bid price requirement and may, if appropriate, consider and effectuate available options, including implementation of a reverse stock split of our common stock. If we implement a reverse stock split in order to remain listed on Nasdaq, the announcement or implementation of such a reverse stock split could negatively affect the price of our common stock.

We must regain compliance with Nasdaq’s minimum closing bid price requirement of $1.00 per share (and must continue to maintain compliance with Nasdaq’s other continued listing requirements), or risk delisting, which could have a material adverse effect on our business. If our common stock is delisted from Nasdaq, it could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, contractual counterparties, and employees and fewer business development opportunities. If our common stock were delisted, it could be more difficult to buy or sell our common stock or to obtain accurate quotations, and the price of our common stock could suffer a material decline. Delisting could also impair our ability to raise capital on acceptable terms, if at all.

Filed May 15, 2025.
Source: SEC EDGAR, the filing index for accession 0001641172-25-010886. Last ingested by Listed: Oct 27, 2026, 17:30 ET. No prices; not investment advice.