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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
OR
☐ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to _____

Commission File Number: 001-40261

Soluna Holdings, Inc.

(Exact name of registrant as specified in its charter)

Nevada |  | 14-1462255
State or other jurisdiction |  | (I.R.S. Employer
of incorporation or organization |  | Identification No.)

325 Washington Avenue Extension, Albany, New York 12205

(Address of principal executive offices) (Zip Code)

(516) 216-9257

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading symbol(s) |  | Name of each exchange on which registered
Common Stock, par value $0.001 per share |  | SLNH |  | The Nasdaq Stock Market LLC
9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share |  | SLNHP |  | The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ | Accelerated filer ☐
Non-accelerated filer ☒ | Smaller reporting company ☒
| Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of November 12, 2025, the Registrant had 68,423,108 shares of common stock outstanding.

SOLUNA HOLDINGS, INC. AND SUBSIDIARIES

INDEX

Glossary of Abbreviations and Acronyms |
PART I. FINANCIAL INFORMATION | 4
Item 1. | Financial Statements | 4
| Condensed Consolidated Balance Sheets As of September 30, 2025 (Unaudited) and December 31, 2024 | 4
| Condensed Consolidated Statements of Operations (Unaudited) For the Three and Nine Months Ended September 30, 2025 and 2024 | 5
| Condensed Consolidated Statements of Changes in Equity For the Year Ended December 31, 2024 and the Three and Nine Months Ended September 30, 2025 (Unaudited) | 6
| Condensed Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2025 and 2024 | 8
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 9
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 44
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 67
Item 4. | Controls and Procedures | 67
PART II. OTHER INFORMATION | 68
Item 1. | Legal Proceedings | 68
Item 1A. | Risk Factors | 68
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 69
Item 3. | Defaults Upon Senior Securities | 69
Item 4. | Mine Safety Disclosures | 69
Item 5. | Other Information | 69
Item 6. | Exhibits | 69
SIGNATURES | 70

1

Glossary of Abbreviations and Acronyms for Selected References

The following list defines various abbreviations and acronyms used throughout this Quarterly report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Condensed Consolidated Financial Statements, the Condensed Notes to Consolidated Financial Statements and the Condensed Financial Statement Schedules.

This glossary covers essential terms related to Bitcoin mining, high-performance computing, Artificial Intelligence (“AI”) and related fields, providing valuable context for readers of the Form 10-Q. A number of cross-references to additional information included throughout this Quarterly Report on Form 10-Q are also utilized throughout this report, to assist readers seeking additional information related to a particular subject.

Artificial Intelligence (“AI”): The simulation of human intelligence processes by machines, especially computer systems. These processes include learning (the acquisition of information and rules for using the information), reasoning (using rules to reach approximate or definite conclusions), and self-correction. AI applications include expert systems, natural language processing, speech recognition, and machine vision.

Bitcoin: A decentralized digital currency created in 2009 by an unknown person or group of people using the name Satoshi Nakamoto. It operates on a peer-to-peer network, allowing direct transactions without intermediaries. Transactions are verified by network nodes through cryptography and recorded on a publicly distributed ledger called a blockchain.

Bitcoin Halving: An event occurring approximately every four years where the reward for mining new Bitcoin blocks is halved. This reduces the number of new Bitcoins generated by miners, impacting their profitability and potentially affecting Bitcoin’s value. Bitcoin Halving is part of Bitcoin’s deflationary monetary policy, designed to control supply.

Bitcoin Mining: The process of adding new transactions to the Bitcoin blockchain. It involves solving complex cryptographic puzzles to discover a new block, rewarding miners with transaction fees and newly created Bitcoins. This process secures and verifies transactions on the network.

Curtailment (“Curtailed” or “Curtailments”): In energy management, the reduction in electrical power supply by power plants to balance the grid or avoid excess generation. In Bitcoin mining or other computing activities, curtailment - pausing computing activities and related energy usage - can occur during peak demand periods or insufficient energy supply.

Data Center Colocation: A service where businesses can be provided with services and infrastructure such as electrical power and network connectivity for servers and other computing hardware at a third-party provider’s data center. This arrangement allows for cost savings, better infrastructure, and enhanced security compared to private data centers.

Electric Reliability Council of Texas (“ERCOT”): An independent system operator that manages the flow of electric power to more than 26 million Texas customers, representing about 90 percent of the state’s electric load. ERCOT schedules power on an electric grid that connects more than 46,500 miles of transmission lines and over 680 generation units.

Exahash (“EH/s”): A unit of computational power equal to one quintillion (10^18) hashes per second. EH/s are used to measure the hashrate of the most powerful cryptocurrency mining equipment and the overall computational power of the Bitcoin network.

Fork: A fork refers to a change or divergence in the protocol of a blockchain network. It occurs when the blockchain’s code is modified, resulting in two separate chains: one that follows the old rules and one that follows the new rules.

Generative AI: AI that can generate new content, such as text, images, or music, based on its training data. It learns from vast amounts of data to create outputs that mimic original human-generated content, often used in creative and analytical applications.

Gigawatt (“GW”): A unit of power equal to one billion watts. Often used to measure the capacity of large power plants or the power usage of large operations like data centers and industrial complexes.

Graphics Processing Unit (“GPU”)- as-a Service: The sale of GPU clusters, ranging from bare metal to turnkey solutions, which may be either owned by the Company, or leased from another company and that are housed within data centers which may be owned by the Company or leased from another company, typically on a “per GPU-hour” basis, either on a reserved or on demand basis.

Grid Demand Response Services: Services provided to support the basic services of generating and delivering electricity to the grid. They help maintain power quality, reliability, and efficiency. In the context of Bitcoin mining, the use of mining facilities to provide grid stabilization services is an emerging concept.

2

Hashrate: The measure of computational power per second used in cryptocurrency mining. It indicates the number of hash function computations per second by a miner’s hardware, with higher hashrates implying greater efficiency and network security.

High Performance Computing (“HPC”): The use of supercomputers and parallel processing techniques for solving complex computational problems. HPC is used in fields such as scientific research, simulation, and large-scale data analysis.

Joules: A unit of energy in the International System of Units (SI). One joule is the energy transferred when one watt of power is exerted for one second. In Bitcoin mining, energy efficiency is often measured in joules per hash.

Large Language Models (“LLMs”): Advanced AI models designed to understand, generate, and respond to human language in a way that mimics human-like understanding. They are trained on vast datasets and can perform a variety of language-based tasks, such as translation, summarization, and question-answering.

Machine Learning: A subset of AI involving the creation of algorithms that can learn and make decisions or predictions based on data. It enables computers to improve their performance on a specific task with experience and data, without being explicitly programmed.

Megawatts (“MW”): A unit of power measurement equivalent to one million watts used to measure the electrical power consumption of large operations like data centers and Bitcoin mining rigs.

Mining Pool: A group of cryptocurrency miners who combine their computational resources over a network to increase their chances of finding a block and receiving rewards. The rewards are then divided among the pool participants, proportional to the amount of hashing power each contributed.

Petahash (“PH/s”): A unit of computational power equal to one quadrillion (10^15) hashes per second. It is used to measure the hashrate of extremely powerful cryptocurrency mining equipment.

Power Usage Effectiveness (“PUE”): A ratio that describes how efficiently a computer data center uses energy; specifically, how much energy is used by the computing equipment (in contrast to cooling and other overhead that supports the equipment).

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Soluna Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

As of September 30, 2025 (Unaudited) and December 31, 2024

(Dollars in thousands, except per share) |  | September 30, 2025 |  |  | December 31, 2024 |
Assets |  |  |  |  |  |  |  |
Current Assets: |  |  |  |  |  |  |  |
Cash |  | $ | 51,371 |  |  | $ | 7,843 |
Restricted cash |  |  | 3,630 |  |  |  | 1,150 |
Accounts receivable, net (allowance for expected credit losses of $244 at September 30, 2025 and December 31, 2024) |  |  | 4,408 |  |  |  | 2,693 |
Prepaid expenses and other current assets |  |  | 3,522 |  |  |  | 1,781 |
Loan commitment assets |  |  | 3,474 |  |  |  | - |
Equipment held for sale |  |  | - |  |  |  | 28 |
Total Current Assets |  |  | 66,405 |  |  |  | 13,495 |
Restricted cash, noncurrent |  |  | 5,460 |  |  |  | 1,460 |
Other assets |  |  | 1,090 |  |  |  | 2,724 |
Deposits and credits on equipment |  |  | 813 |  |  |  | 5,145 |
Property, plant and equipment, net |  |  | 63,999 |  |  |  | 47,283 |
Intangible assets, net |  |  | 10,593 |  |  |  | 17,620 |
Operating lease right-of-use assets |  |  | 3,675 |  |  |  | 313 |
Total Assets |  | $ | 152,035 |  |  | $ | 88,040 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |
Current Liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 4,860 |  |  | $ | 2,840 |
Accrued liabilities |  |  | 12,426 |  |  |  | 6,785 |
Accrued interest payable |  |  | 342 |  |  |  | 2,275 |
Contract liability |  |  | 19,348 |  |  |  | 20,015 |
Current portion of debt |  |  | 9,999 |  |  |  | 14,444 |
Income tax payable |  |  | 71 |  |  |  | 37 |
Warrant liability |  |  | 7,225 |  |  |  | - |
Customer deposits |  |  | 1,823 |  |  |  | 1,416 |
Operating lease liability |  |  | 96 |  |  |  | 61 |
Total Current Liabilities |  |  | 56,190 |  |  |  | 47,873 |
Other liabilities |  |  | 2,001 |  |  |  | 235 |
Long-term debt |  |  | 13,254 |  |  |  | 7,061 |
Operating lease liability |  |  | 3,583 |  |  |  | 252 |
Deferred tax liability, net |  |  | 3,542 |  |  |  | 5,257 |
Total Liabilities |  |  | 78,570 |  |  |  | 60,678 |
Commitments and Contingencies (Note 10) |  |  | - |  |  |  | - |
Stockholders’ Equity: |  |  |  |  |  |  |  |
9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share, $25.00 liquidation preference; authorized 6,040,000; 4,928,545 shares issued and outstanding as of September 30, 2025 and 4,953,545 December 31, 2024 |  |  | 5 |  |  |  | 5 |
Series B Preferred Stock, par value $0.0001 per share, authorized 187,500; 62,500 shares issued and outstanding as of September 30, 2025 and December 31, 2024 |  |  | — |  |  |  | — |
Preferred stock, value |  |  | — |  |  |  | — |
Common stock, par value $0.001 per share, authorized 75,000,000; 64,092,531 shares issued and 64,051,790 shares outstanding as of September 30, 2025 and 10,647,761 shares issued and 10,607,020 shares outstanding as of December 31, 2024 |  |  | 64 |  |  |  | 11 |
Additional paid-in capital |  |  | 381,399 |  |  |  | 315,607 |
Accumulated deficit |  |  | (353,198 | ) |  |  | (314,304 | )
Common stock in treasury, at cost, 40,741 shares at September 30, 2025 and December 31, 2024 |  |  | (13,798 | ) |  |  | (13,798 | )
Total Soluna Holdings, Inc. Stockholders’ Equity (Deficit) |  |  | 14,472 |  |  |  | (12,479 | )
Non-Controlling Interest |  |  | 58,993 |  |  |  | 39,841 |
Total Stockholders’ Equity |  |  | 73,465 |  |  |  | 27,362 |
Total Liabilities and Stockholders’ Equity |  | $ | 152,035 |  |  | $ | 88,040 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Soluna Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

For the Three and Nine Months Ended September 30, 2025 and 2024

|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
(Dollars in thousands, except per share) |  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Cryptocurrency mining revenue |  | $ | 2,769 |  |  | $ | 2,811 |  |  | $ | 8,630 |  |  | $ | 13,691 |
Data hosting revenue |  |  | 5,257 |  |  |  | 4,271 |  |  |  | 10,795 |  |  |  | 14,446 |
Demand response service revenue |  |  | 389 |  |  |  | 443 |  |  |  | 1,057 |  |  |  | 1,612 |
High-performance computing service revenue |  |  | - |  |  |  | - |  |  |  | 28 |  |  |  | - |
Total revenue |  |  | 8,415 |  |  |  | 7,525 |  |  |  | 20,510 |  |  |  | 29,749 |
Operating costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of cryptocurrency mining revenue, exclusive of depreciation |  |  | 1,708 |  |  |  | 1,963 |  |  |  | 5,428 |  |  |  | 5,687 |
Cost of data hosting revenue, exclusive of depreciation |  |  | 2,660 |  |  |  | 2,555 |  |  |  | 5,605 |  |  |  | 6,982 |
Cost of high-performance computing services |  |  | - |  |  |  | 2,859 |  |  |  | 7 |  |  |  | 2,859 |
Cost of cryptocurrency mining revenue- depreciation |  |  | 1,053 |  |  |  | 1,068 |  |  |  | 3,200 |  |  |  | 3,220 |
Cost of data hosting revenue- depreciation |  |  | 665 |  |  |  | 444 |  |  |  | 1,578 |  |  |  | 1,320 |
Total costs of revenue |  |  | 665 |  |  |  | 444 |  |  |  | 1,578 |  |  |  | 1,320 |
Total costs of revenue |  |  | 6,086 |  |  |  | 8,889 |  |  |  | 15,818 |  |  |  | 20,068 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General and administrative expenses, exclusive of depreciation and amortization |  |  | 7,708 |  |  |  | 5,248 |  |  |  | 19,053 |  |  |  | 14,625 |
Depreciation and amortization associated with general and administrative expenses |  |  | 2,401 |  |  |  | 2,404 |  |  |  | 7,207 |  |  |  | 7,209 |
Total general and administrative expenses |  |  | 10,109 |  |  |  | 7,652 |  |  |  | 26,260 |  |  |  | 21,834 |
Impairment on fixed assets |  |  | - |  |  |  | - |  |  |  | 12 |  |  |  | 130 |
Operating loss |  |  | (7,780 | ) |  |  | (9,016 | ) |  |  | (21,580 | ) |  |  | (12,283 | )
Interest expense |  |  | (1,212 | ) |  |  | (821 | ) |  |  | (3,246 | ) |  |  | (1,694 | )
Gain (loss) on debt extinguishment and revaluation, net |  |  | 10,107 |  |  |  | 875 |  |  |  | 10,658 |  |  |  | (1,888 | )
Loss on sale of fixed assets and credit on equipment deposit |  |  | (780 | ) |  |  | - |  |  |  | (802 | ) |  |  | (21 | )
Fair value adjustment (loss) gain |  |  | (22,047 | ) |  |  | 328 |  |  |  | (22,165 | ) |  |  | (5,607 | )
Other financing expense |  |  | (4,746 | ) |  |  | - |  |  |  | (5,203 | ) |  |  | - |
Other income (expense), net |  |  | 5 |  |  |  | (6 | ) |  |  | (280 | ) |  |  | (32 | )
Loss before income taxes |  |  | (26,453 | ) |  |  | (8,640 | ) |  |  | (42,618 | ) |  |  | (21,525 | )
Income tax benefit, net |  |  | 666 |  |  |  | 547 |  |  |  | 1,697 |  |  |  | 1,743 |
Net loss |  |  | (25,787 | ) |  |  | (8,093 | ) |  |  | (40,921 | ) |  |  | (19,782 | )
(Less) Net loss (income) attributable to non-controlling interest |  |  | 1,831 |  |  |  | 903 |  |  |  | 2,027 |  |  |  | (3,535 | )
Net loss attributable to Soluna Holdings, Inc. |  | $ | (23,956 | ) |  | $ | (7,190 | ) |  | $ | (38,894 | ) |  | $ | (23,317 | )
Basic and Diluted loss per common share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic & Diluted loss per share |  | $ | (1.14 | ) |  | $ | (1.56 | ) |  | $ | (3.29 | ) |  | $ | (7.15 | )
Weighted average shares outstanding (Basic and Diluted) |  |  | 26,983,023 |  |  |  | 6,388,335 |  |  |  | 15,683,072 |  |  |  | 4,320,546 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Soluna Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

For the Year Ended December 31, 2024

And the Three and Nine Months Ended September 30, 2025 (Unaudited)

(Dollars in thousands, except per share)

|  | Series A Shares |  |  | Amount |  |  | Series B Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Paid-in Capital |  |  | Accumulated Deficit |  |  | Shares |  |  | Amount |  |  | Controlling Interest |  |  | Stockholders’ Equity |
|  | Preferred Stock |  |  | Common Stock |  |  | Additional |  |  |  |  |  | Treasury Stock |  |  | Non- |  |  | Total |
|  | Series A Shares |  |  | Amount |  |  | Series B Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Paid-in Capital |  |  | Accumulated Deficit |  |  | Shares |  |  | Amount |  |  | Controlling Interest |  |  | Stockholders’ Equity |
January 1, 2024 |  |  | 3,061,245 |  |  | $ | 3 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 2,546,361 |  |  | $ | 3 |  |  | $ | 291,276 |  |  | $ | (250,970 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 26,845 |  |  | $ | 53,359 |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,254 | ) |  |  | — |  |  |  | — |  |  |  | 2,710 |  |  |  | (2,544 | )
Reverse split adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 17 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 661 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 661 |
Issuance of shares – warrant exercise |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 61,501 |  |  |  | — |  |  |  | 300 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 300 |
Restricted stock units vested |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,780 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of shares- Notes conversion |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 270,572 |  |  |  | — |  |  |  | 1,023 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,023 |
Warrant revaluation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,715 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,715 | )
Distribution to Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,233 | ) |  |  | (2,233 | )
March 31, 2024 |  |  | 3,061,245 |  |  | $ | 3 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 2,882,231 |  |  | $ | 3 |  |  | $ | 291,545 |  |  | $ | (256,224 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 27,322 |  |  | $ | 48,851 |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (10,873 | ) |  |  | — |  |  |  | — |  |  |  | 1,728 |  |  |  | (9,145 | )
Series A Preferred Stock issuance |  |  | 1,892,300 |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,368 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,368 |
Issuance of shares – warrant exercise |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 529,354 |  |  |  | — |  |  |  | 2,004 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,004 |
Restricted stock units vested |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 100 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of shares-Restricted stock awards |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,149,767 |  |  |  | 1 |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of shares- Notes conversion |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 711,393 |  |  |  | 1 |  |  |  | 2,688 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,689 |
Warrants revaluation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,648 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,648 |
Distribution to Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,482 | ) |  |  | (3,482 | )
June 30, 2024 |  |  | 4,953,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 5,272,845 |  |  | $ | 5 |  |  | $ | 305,250 |  |  | $ | (267,097 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 25,568 |  |  | $ | 49,933 |
Net (loss) income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (7,190 | ) |  |  | — |  |  |  | — |  |  |  | (903 | ) |  |  | (8,093 | )
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,257 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,257 | )
Issuance of shares-warrant exercise |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 596,390 |  |  |  | 1 |  |  |  | 26 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 27 |
Issuance of shares – Restricted stock awards |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,188,691 |  |  |  | 1 |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SEPA commitment fee payment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 59,382 |  |  |  | — |  |  |  | 250 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 250 |
Issuance of shares- notes conversion |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 572,911 |  |  |  | 1 |  |  |  | 2,165 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,166 |
Contribution from Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,259 |  |  |  | 7,259 |
Distribution to Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,204 | ) |  |  | (1,204 | )
September 30, 2024 |  |  | 4,953,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 7,690,219 |  |  | $ | 8 |  |  | $ | 309,947 |  |  | $ | (274,287 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 30,720 |  |  | $ | 51,595 |
Net (loss) income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (40,017 | ) |  |  | —— |  |  |  | — |  |  |  | 1,499 |  |  |  | (38,518 | )
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,027 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,027 |
Issuance of shares –warrants exercise |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 530,776 |  |  |  | 1 |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Restricted stock units vested |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 89,380 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of shares – Restricted stock awards |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,065,101 |  |  |  | 1 |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SEPA consent fee |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,938 |  |  |  | — |  |  |  | 25 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 25 |
Issuance of shares- Placement agent release payment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 308,642 |  |  |  | — |  |  |  | 1,000 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,000 |
Issuance of shares- notes conversion |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 957,705 |  |  |  | 1 |  |  |  | 3,510 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,511 |
Distribution to non-controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,014 | ) |  |  | (2,014 | )
Contribution from Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,636 |  |  |  | 9,636 |
December 31, 2024 |  |  | 4,953,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 10,647,761 |  |  | $ | 11 |  |  | $ | 315,607 |  |  | $ | (314,304 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 39,841 |  |  | $ | 27,362 |

6

|  | Preferred Stock |  |  | Common Stock |  |  | Additional |  |  |  |  |  | Treasury Stock |  |  | Non- |  |  | Total |
|  | Series A Shares |  |  | Amount |  |  | Series B Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Paid-in Capital |  |  | Accumulated Deficit |  |  | Shares |  |  | Amount |  |  | Controlling Interest |  |  | Stockholders’ Equity |
January 1, 2025 |  |  | 4,953,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 10,647,761 |  |  | $ | 11 |  |  | $ | 315,607 |  |  | $ | (314,304 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 39,841 |  |  | $ | 27,362 |
Net (loss) income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (7,556 | ) |  |  | — |  |  |  | — |  |  |  | 202 |  |  |  | (7,354 | )
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,847 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,847 |
Issuance of shares – warrant exercise |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 384,721 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Restricted stock units vested |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,432 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of shares- SEPA draws |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,512,872 |  |  |  | 2 |  |  |  | 2,121 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,123 |
Contribution from Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,310 |  |  |  | 4,310 |
Distribution to Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,295 | ) |  |  | (1,295 | )
March 31, 2025 |  |  | 4,953,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 12,548,786 |  |  | $ | 13 |  |  | $ | 319,575 |  |  | $ | (321,860 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 43,058 |  |  | $ | 26,993 |
Balance |  |  | 4,953,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 12,548,786 |  |  | $ | 13 |  |  | $ | 319,575 |  |  | $ | (321,860 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 43,058 |  |  | $ | 26,993 |
Net (loss) income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (7,382 | ) |  |  | — |  |  |  | — |  |  |  | (398 | ) |  |  | (7,780 | )
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,942 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,942 |
Issuance of shares – warrant exercise |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 59,131 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Restricted stock units vested |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,600 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of shares- restricted stock awards |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,140,683 |  |  |  | 2 |  |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of shares- ATM settlements |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,340,663 |  |  |  | 3 |  |  |  | 2,043 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,046 |
Issuance of restricted shares-Green Cloud issuance |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,000,000 |  |  |  | 1 |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Contribution from Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,542 |  |  |  | 7,542 |
Distribution to Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,424 | ) |  |  | (1,424 | )
June 30, 2025 |  |  | 4,953,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 19,095,863 |  |  | $ | 19 |  |  | $ | 323,557 |  |  | $ | (329,242 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 48,778 |  |  | $ | 29,319 |
Balance |  |  | 4,953,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 19,095,863 |  |  | $ | 19 |  |  | $ | 323,557 |  |  | $ | (329,242 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 48,778 |  |  | $ | 29,319 |
Net (loss) income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (23,956 | ) |  |  | — |  |  |  | — |  |  |  | (1,831 | ) |  |  | (25,787 | )
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,882 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,882 |
Issuance of shares – warrant exercise |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 17,254,463 |  |  |  | 17 |  |  |  | 28,193 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 28,210 |
Issuance of shares – July equity financing |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,090,909 |  |  |  | 9 |  |  |  | 5,028 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,037 |
Issuance of shares- restricted stock awards |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,751,078 |  |  |  | 3 |  |  |  | (3 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of shares- ATM settlements |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 14,649,141 |  |  |  | 15 |  |  |  | 20,738 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 20,753 |
Issuance of shares- SEPA draws |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,487,128 |  |  |  | 1 |  |  |  | 4,169 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,170 |
Forfeiture of RSA shares |  |  | (25 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (236,051 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Warrant issuance and revaluation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,869 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,869 |
Warrant revalued to liability |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,034 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,034 | )
Contribution from Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 12,902 |  |  |  | 12,902 |
Distribution to Non-Controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (856 | ) |  |  | (856 | )
September 30, 2025 |  |  | 4,928,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 64,092,531 |  |  | $ | 64 |  |  | $ | 381,399 |  |  | $ | (353,198 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 58,993 |  |  | $ | 73,465 |
Balance |  |  | 4,928,545 |  |  | $ | 5 |  |  |  | 62,500 |  |  | $ | — |  |  |  | 64,092,531 |  |  | $ | 64 |  |  | $ | 381,399 |  |  | $ | (353,198 | ) |  |  | 40,741 |  |  | $ | (13,798 | ) |  | $ | 58,993 |  |  | $ | 73,465 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

Soluna Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Nine Months Ended September 30, 2025 and 2024

(Dollars in thousands) |  | 2025 |  |  | 2024 |
|  | Nine Months Ended September 30, |
(Dollars in thousands) |  | 2025 |  |  | 2024 |
Operating Activities |  |  |  |  |  |  |  |
Net loss |  | $ | (40,921 | ) |  | $ | (19,782 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation expense |  |  | 4,866 |  |  |  | 4,634 |
Amortization expense |  |  | 7,119 |  |  |  | 7,116 |
Stock-based compensation |  |  | 5,671 |  |  |  | 3,286 |
Deferred income taxes |  |  | (1,716 | ) |  |  | (1,806 | )
Impairment on fixed assets |  |  | 12 |  |  |  | 130 |
Provision for credit losses |  |  | - |  |  |  | 611 |
Amortization of operating lease asset |  |  | 79 |  |  |  | 139 |
(Gain) loss on debt extinguishment and revaluation, net |  |  | (10,658 | ) |  |  | 1,888 |
Amortization of deferred financing costs and discount on notes |  |  | 561 |  |  |  | 179 |
Fair value adjustments, including SEPA |  |  | 22,165 |  |  |  | 5,607 |
Fair value on placement warrant financing cost |  |  | 146 |  |  |  | - |
Loss on sale of fixed assets and credit on equipment deposit |  |  | 802 |  |  |  | 21 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | (1,715 | ) |  |  | 536 |
Prepaid expenses and other current assets |  |  | (1,741 | ) |  |  | (3,429 | )
Other long-term assets |  |  | 1,608 |  |  |  | (5,771 | )
Accounts payable |  |  | 2,020 |  |  |  | 1,159 |
Contract liability |  |  | (667 | ) |  |  | - |
Operating lease liabilities |  |  | (75 | ) |  |  | (141 | )
Other liabilities and customer deposits |  |  | 2,173 |  |  |  | (811 | )
Accrued liabilities and interest payable |  |  | 6,792 |  |  |  | 3,022 |
Net cash used in operating activities |  |  | (3,479 | ) |  |  | (3,412 | )
Investing Activities |  |  |  |  |  |  |  |
Purchases of property, plant, and equipment |  |  | (17,008 | ) |  |  | (3,712 | )
Purchases of intangible assets |  |  | (92 | ) |  |  | (95 | )
Proceeds from sale of property, plant, and equipment |  |  | - |  |  |  | 215 |
Deposits on equipment |  |  | (1,028 | ) |  |  | (4,099 | )
Net cash used in investing activities |  |  | (18,128 | ) |  |  | (7,691 | )
Financing Activities |  |  |  |  |  |  |  |
Proceeds from common stock warrant exercises |  |  | 9,455 |  |  |  | 2,330 |
Proceeds from sale of common stock on SEPA |  |  | 6,176 |  |  |  | - |
Proceeds from notes |  |  | 18,434 |  |  |  | 14,470 |
Proceeds from sale of common stock on ATM |  |  | 22,961 |  |  |  | - |
Proceeds from July equity issuance |  |  | 4,509 |  |  |  | - |
Costs associated with July equity issuance |  |  | (145 | ) |  |  | - |
Payments on notes and deferred financing costs |  |  | (6,938 | ) |  |  | (2,261 | )
Payments on ATM |  |  | (162 | ) |  |  | - |
Contributions from non-controlling interest |  |  | 22,078 |  |  |  | 5,098 |
Distributions to non-controlling interest |  |  | (4,753 | ) |  |  | (6,694 | )
Net cash provided by financing activities |  |  | 71,615 |  |  |  | 12,943 |
Increase in cash & restricted cash |  |  | 50,008 |  |  |  | 1,840 |
Cash & restricted cash – beginning of period |  |  | 10,453 |  |  |  | 10,367 |
Cash & restricted cash – end of period |  | $ | 60,461 |  |  | $ | 12,207 |
Supplemental Disclosure of Cash Flow Information |  |  |  |  |  |  |  |
Interest paid on debt |  |  | 1,081 |  |  |  | 218 |
Fair value consideration for Green Cloud issuance of shares |  |  | 810 |  |  |  | - |
Noncash financing cost accrual |  |  | 647 |  |  |  | - |
Noncash deferred financing cost accrual |  |  | 1,078 |  |  |  | - |
Warrant consideration in relation to Generate Common Warrant |  |  | 2,635 |  |  |  | - |
Warrant consideration in relation to convertible notes and revaluation of warrant liability |  |  | - |  |  |  | 5,606 |
Notes converted to common stock |  |  | - |  |  |  | 5,877 |
Noncash membership distribution accrual |  |  | - |  |  |  | 741 |
Warrant consideration in relation to Soluna Cloud |  |  | - |  |  |  | 1,440 |
Noncash non-controlling interest contributions |  |  | 2,675 |  |  |  | 250 |
Noncash activity right-of-use assets obtained in exchange for lease obligations |  |  | 3,441 |  |  |  | - |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Nature of Operations

Description of Business

Unless the context requires otherwise in these notes to the consolidated financial statements, the terms “SHI,” “ 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” refers to Soluna Cloud, Inc., and “SEI” refers to Soluna Energy, Inc.

Soluna Holdings, Inc. (“SHI”) is a digital infrastructure company that specializes in transforming surplus renewable energy into computing resources. The Company’s strategy is to operate modular data centers co-located with wind, solar, and hydroelectric power plants, supporting compute-intensive applications, including Bitcoin mining, generative AI, and high-performance computing (“HPC”). This approach aims to create a more sustainable grid while providing cost-effective and environmentally friendly computing solutions.

SHI was originally incorporated in the State of New York in 1961 as Mechanical Technology, Incorporated and reincorporated in the State of Nevada on March 24, 2021. On March 23, 2021, SHI’s common stock commenced trading on the Nasdaq Stock Market LLC (“Nasdaq”). Headquartered in Albany, New York, the Company changed its name from “Mechanical Technology, Incorporated” to Soluna Holdings, Inc. on November 2, 2021. On October 29, 2021, Soluna Callisto Holdings, Inc. (“Soluna Callisto”) merged into Soluna Computing, Inc. (“SCI”), a private green data center development company and a subsidiary of SHI. MTI Instruments, Inc., a subsidiary of SHI, was sold on April 11, 2022. The Company formed a wholly owned subsidiary of SHI on December 27, 2023, Soluna Digital, Inc. (“Soluna Digital,” or “SDI”). Effective December 31, 2023, SCI transferred substantially all of its assets to SHI or its subsidiaries, including SDI. The Company sold SCI in April 2024.

During fiscal year 2021, the Company commenced mining operations at its Murray, Kentucky location (“Project Sophie”) and Calvert City, Kentucky site (“Project Marie”). Project Marie was decommissioned in February 2023, while Project Sophie transitioned its focus from proprietary Bitcoin mining to hosting customers’ Bitcoin mining operations in the second quarter of 2023. All 25 MW of Project Sophie now perform data hosting services. The Company has since sold all Bitcoin miners at Project Sophie and redeployed the capital.

The Company’s Texas site (“Project Dorothy”), located at a wind farm, holds the potential for up to 100 MW of power generation. By June 2024, SHI had energized 50 MW of the site across two phases, Project Dorothy 1A and 1B. As of September 30, 2025, SHI holds a 15% Class B membership interest in Soluna DVSL ComputeCo, LLC (“DVSL”), owner of Project Dorothy 1A, and a subsidiary of SHI holds a 100% Class A membership interest in DVSL. SHI also holds a 51% ownership interest in Soluna DV ComputeCo, LLC (“DVCC”), owner of Project Dorothy 1B. On July 22, 2024, the Company closed financing for the 48 MW modular data center (the “Project Dorothy 2”). Project Dorothy 2 is financed by Soluna2 SLC Fund II Project Holdco LLC, an investment vehicle of Spring Lane Capital (“SLC”) and SDI. As of September 30, 2025, SDI has 100% Class A membership and 0% Class B membership interest in Project Dorothy 2. On July 22, 2025, the Company closed financing with Spring Lane Capital for a 35 megawatt (MW) expansion of Project Kati in Texas with Project Kati 1. The funds and further contributions are being used for the construction of Project Kati 1 that began in the third quarter of 2025. As of September 30, 2025, SDI has 100% Class A membership and 0% Class B membership interest in Project Kati 1.

Going Concern, Liquidity, and Capital Resources

The Company’s condensed consolidated financial statements as of September 30, 2025 have been prepared using generally accepted accounting principles in the United States of America (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As shown in the accompanying condensed consolidated financial statements, the Company has continued to experience negative cash flows from operations and net losses and its subsidiary its Soluna AL Cloudco, LLC (“CloudCo”) has received a notice of breach of contract. Refer to Note 6 in relation to CloudCo.

The future use of our available liquidity will be based upon the ongoing review of the funding needs of our businesses, the optimal allocation of our resources, successful defense against subsidiary claims, and the timing of cash flow generation. To the extent that we desire to access alternative sources of capital, market conditions could adversely impact our ability to do so at that time and at terms favorable to the Company. Currently, 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.

9

The Company’s unrestricted cash and cash equivalents of $51.4 million as of September 30, 2025, may be insufficient to meet our operating expenses and capital expenditure requirements for at least 12 months from the filing of this Form 10-Q. We have incurred recurring losses since inception and we expect operating losses to continue for the foreseeable future as we grow our business, and it is possible we will never achieve profitability and, as a result, our ability to continue as a going concern is dependent on our ability to raise additional working capital through public and private equity, debt financings and other sources. There can be no assurance that such financing will be available, on acceptable terms and conditions, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including our ability to generate significant revenue, the market demand for our services, management of working capital, and the continuation of normal payment terms.

Until such time as we can generate substantial revenue, we expect to finance our working capital requirements through a combination of equity offerings and debt financing. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures, or declaring dividends. If we are unable to raise additional funds through equity or debt financing or other sources when needed, we may be required to scale back or curtail our operations or expansion efforts, including limiting our ability to expand our hosting and cryptocurrency business to a larger-scale operation.

Other financing activities include the following:

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 $87,650,000 from time to time through Wainwright. As of September 30, 2025, the Company has drawn approximately $23.0 million in net proceeds pursuant to the ATM Agreement and has over $60 million available. Refer to Note 9 for details.

On August 12, 2024, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD., a Cayman Islands exempt limited company (“YA”). In accordance with the terms of the SEPA, YA has agreed to purchase up to $25 million in aggregate gross purchase price of newly issued fully paid shares of the Company’s common stock from time to time subject to the limits and the conditions of the SEPA. The Company drew on the SEPA in the first quarter and third quarter of 2025, and the proceeds were used to pay debt, invest in data center projects, and for working capital and general corporate purposes. As of September 30, 2025, the Company has drawn approximately $6.2 million on the SEPA. Refer to Note 9 for details.

On July 15, 2025, the Company entered into a securities purchase agreement to which the Company received gross proceeds of $5.0 million from a public offering of common stock. In connection with this offering, the Company issued warrants, and as of September 30, 2025, the Company received approximately $9.4 million in gross proceeds from the exercise of such warrants. Refer to Note 9 for details.

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. Proceeds from the Generate Credit Agreement will be used to finance, refinance, develop and construct the Company’s Dorothy 1A, Dorothy 2 and Kati data center projects, fund a debt service reserve account, and pay fees and expenses. Refer to Note 8 for details.

The Company, in 2025, will continue to look to evaluate additional strategies to obtain financing to fund operations, and capital expenditures related to its project portfolio. However, management cannot provide any assurances that the Company will be successful in accomplishing additional financing or any of its other plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

While the financial condition of the Company has improved substantially, other factors taken as a whole indicate that there is substantial doubt about the Company’s ability to continue as a going concern within one year after issuance of these condensed consolidated financial statements as of September 30, 2025, or November 14 2025.

2. Basis of Presentation

In the opinion of management, the Company’s condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the periods presented in accordance with United States of America’s Generally Accepted Accounting Principles (“U.S. GAAP”). The results of operations for the interim periods presented are not necessarily indicative of results for the full year.

Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (“the Annual Report”).

The information presented in the accompanying condensed consolidated balance sheet as of December 31, 2024 has been derived from the Company’s audited consolidated financial statements. All other information has been derived from the Company’s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025 and September 30, 2024.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, including the Company’s variable interest entities disclosed in Note 14. All intercompany balances and transactions are eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid short-term investments with original maturities of less than three months.

10

Restricted Cash

Restricted cash relates to cash that is legally restricted as to withdrawal and usage or is being held for a specific purpose and thus not available to the Company for immediate or general business use. As of September 30, 2025, the Company had restricted cash of approximately $9.1 million, of which $3.6 million was classified as current and $5.5 million was classified as non-current. As of December 31, 2024, the Company had restricted cash of approximately $2.6 million, of which $1.1 million was classified as current and $1.5 million was classified as non-current. Currently, the balance in restricted cash relates to restricted deposits held with customers that were for less than 12 months, or for debt covenant purposes. The Company has a long-term restricted cash balance in relation to a collateralized deposit.

Deposits and Credits on equipment

As of September 30, 2025 and December 31, 2024, the Company had approximately $813 thousand and $5.1 million, respectively, in deposits and credits on equipment that had not yet been received by the Company. Once the Company receives such equipment in a subsequent period, the Company will reclassify such balance into Property, Plant and Equipment, net. Included in the December 31, 2024 balance was a credit on equipment of $975 thousand, of which approximately $195 thousand had been used as of September 30, 2025, and the remaining $780 thousand to be used on future purchases for Project Dorothy 2 and Project Kati until September 1, 2025 (“expiration date”). The Company did not execute an order by the expiration date, and no further extension was granted, and as such the credit was forfeited. The Company recorded a loss on the credit deposit of approximately $780 thousand which was included in Loss on sale of fixed assets and credit on equipment deposit on the condensed financial statements for the three and nine months ended September 30, 2025.

Debt Issuance Costs

Debt issuance costs consist of costs incurred in obtaining long-term financing. These costs are classified on the condensed consolidated balance sheet as a direct deduction from the carrying amount of the related debt liability and subsequently amortized as interest expense in the condensed consolidated statement of operations using the effective interest rate method.

The Company evaluates amendments to its debt instruments in accordance with ASC 470-50, Debt - Modifications and Extinguishments (“ASC 470”) to determine whether the amendment should be accounted for as a modification or an extinguishment. An amendment may be considered modified when the terms of the new debt and original instrument are not “substantially different” (as defined in the debt modification guidance in ASC 470). Amendments that are considered modifications are accounted for prospectively as yield adjustments, based on the revised terms, and lender fees and costs directly incurred with third parties, to the extent material, are recorded as debt discount and amortized to interest expense using the effective interest rate method.

Loan Commitment assets

The Company’s Generate Credit Agreement (see Note 8) contained a commitment from the lender for an additional tranche of debt under certain conditions. The Company incurred costs and fees to obtain a nonrevolving loan commitment. The accounting for warrants issued and fees paid to lenders in connection with a nonrevolving loan commitment are initially treated as an asset. As discussed in Generate Credit Agreement in Note 8, the Company can draw up to $35.5 million between the first three tranches and can draw an additional $64.5 million upon subsequent approval by the lenders. The Company allocated the warrants issued and fees paid to the lenders in connection the nonrevolving loan commitment between the initial draw of $12.6 million and the remaining $22.9 million between debt issuance costs and loan commitment assets. As the $22.9 million remaining commitment gets drawn upon, the Company will reclassify a portion of the loan commitment asset as a debt discount.

Warrant Liability

Under the guidance in ASC 480: Distinguishing Liabilities from Equity (“ASC 480”), and then further in ASC 815, Derivatives and Hedging (“ASC 815”), certain Company warrants associated with the July 2025 Equity Financing discussed in Note 9 did not meet the criteria for equity treatment. In addition, due to a side letter execution in relation to the Generate Common Warrants as discussed in Note 8, the Generate Common Warrants were reclassified to liability treatment. As such, the warrants were recorded on the balance sheet at fair value. This valuation was subject to re-measurement at each balance sheet date, or when the warrant was exercised. With each re-measurement, the warrant valuation was adjusted to fair value, with the change in fair value recognized in the Company’s condensed consolidated statement of operations. The warrants were collectively classified as a Level 3 measurement within the fair value hierarchy due to the use of a valuation model which involves the use of unobservable inputs. As of September 30, 2025, the Company had an outstanding warrant liability balance which represents the fair value of the warrants of approximately $7.2 million. The Company notes, approximately $2.9 million related to the Series A and B Warrants in association with the July 2025 Equity Financing, and $4.3 million related to the Generate Common Warrants. Please refer to Note 9 in relation to the fair value assumptions for the Series A and B Warrant in association with the July 2025 Equity Financing, and refer to Note 8 in relation to the Generate Common Warrants fair value assumptions.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations or net assets.

Correction of an Error

While preparing the Company’s Form 10-Q for the three and nine months ended September 30, 2025, the Company identified the following error related to the presentation of basic and diluted Earnings Per Share (“EPS”) in its historical filing for the year ended December 31, 2024, and for the quarters ended June 30, 2024, September 30, 2024, March 31, 2025, and June 30, 2025:

| ● | Inclusion of the restricted stock awards that had not yet vested.

11

In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements;” the Company evaluated the errors and has determined that the related impacts were not material to any prior annual or quarterly report, but that correcting the cumulative impact of such errors would be significant to our EPS for the year ended December 31, 2025. Accordingly, the Company has corrected such immaterial errors by adjusting its December 31, 2024 consolidated statement of operations related to the calculation of earnings per share. The Company also corrected previously reported interim financial information for such immaterial errors in future filings, as applicable. The following summarizes the effect of the revision on each financial statement line item.

The following analysis provides a comparison amongst the basic and diluted EPS as reported on the Form 10-Q for the quarter ended June 30, 2024, and the final revised basic and diluted EPS calculation to correct all identified errors:

Schedule of Error Corrections for Basic And Diluted EPS

|  | For the three months ended June 30, 2024 |  |  | For the six months ended June 30, 2024 |
|  | As Reported |  |  | As Revised |  |  | Change |  |  | As Reported |  |  | As Revised |  |  | Change |
Basic and Diluted net loss per share |  | $ | (2.97 | ) |  | $ | (3.62 | ) |  | $ | (0.65 | ) |  | $ | (5.68 | ) |  | $ | (6.38 | ) |  | $ | (0.70 | )
Weighted average shares outstanding (Basic and Diluted) |  |  | 4,553,696 |  |  |  | 3,747,160 |  |  |  | (806,536 | ) |  |  | 3,683,558 |  |  |  | 3,275,290 |  |  |  | (408,268 | )

The following analysis provides a comparison amongst the basic and diluted EPS as reported on the Form 10-Q for the quarter ended September 30, 2024, and the final revised basic and diluted EPS calculation to correct all identified errors:

|  | For the three months ended September 30, 2024 |  |  | For the nine months ended September 30, 2024 |
|  | As Reported |  |  | As Revised |  |  | Change |  |  | As Reported |  |  | As Revised |  |  | Change |
Basic and Diluted net loss per share |  | $ | (1.29 | ) |  | $ | (1.56 | ) |  | $ | (0.27 | ) |  | $ | (6.00 | ) |  | $ | (7.15 | ) |  | $ | (1.15 | )
Weighted average shares outstanding (Basic and Diluted) |  |  | 7,738,664 |  |  |  | 6,388,335 |  |  |  | (1,350,329 | ) |  |  | 5,147,602 |  |  |  | 4,320,546 |  |  |  | (827,056 | )

The following analysis provides a comparison amongst the basic and diluted EPS as reported on the Form 10-K for the year ended December 31, 2024, and the final revised basic and diluted EPS calculation to correct all identified errors:

|  | For the year ended December 31, 2024 |
|  | As Reported |  |  | As Revised |  |  | Change |
Basic and Diluted net loss per share |  | $ | (12.15 | ) |  | $ | (14.94 | ) |  | $ | (2.79 | )
Weighted average shares outstanding (Basic and Diluted) |  |  | 6,280,915 |  |  |  | 5,109,339 |  |  |  | (1,171,576 | )

The following analysis provides a comparison amongst the basic and diluted EPS as reported on the Form 10-Q for the quarter ended March 31, 2025, and the final revised basic and diluted EPS calculation to correct all identified errors:

|  | For the three months ended March 31, 2025 |
|  | As Reported |  |  | As Revised |  |  | Change |
Basic and Diluted net loss per share |  | $ | (0.88 | ) |  | $ | (1.21 | ) |  | $ | (0.33 | )
Weighted average shares outstanding (Basic and Diluted) |  |  | 11,939,983 |  |  |  | 8,719,351 |  |  |  | (3,220,632 | )

12

The following analysis provides a comparison amongst the basic and diluted EPS as reported on the Form 10-Q for the quarter ended June 30, 2024, and the final revised basic and diluted EPS calculation to correct all identified errors:

|  | For the three months ended June 30, 2025 |  |  | For the six months ended June 30, 2025 |
|  | As Reported |  |  | As Revised |  |  | Change |  |  | As Reported |  |  | As Revised |  |  | Change |
Basic and Diluted net loss per share |  | $ | (0.69 | ) |  | $ | (0.93 | ) |  | $ | (0.24 | ) |  | $ | (1.55 | ) |  | $ | (2.10 | ) |  | $ | (0.55 | )
Weighted average shares outstanding (Basic and Diluted) |  |  | 14,991,125 |  |  |  | 11,146,142 |  |  |  | (3,844,983 | ) |  |  | 13,473,983 |  |  |  | 9,939,450 |  |  |  | (3,534,533 | )

3. Accounts Receivable, net

Accounts receivables consist of the following at:

Schedule of Accounts Receivable

(Dollars in thousands) |  | September 30, 2025 |  |  | December 31, 2024 |
Data hosting |  | $ | 3,888 |  |  | $ | 1,385 |
Demand response service receivable |  |  | 516 |  |  |  | 1,159 |
Proprietary mining Coinbase receivable |  |  | - |  |  |  | 37 |
Other |  |  | 248 |  |  |  | 356 |
Accounts receivables, gross |  |  | 4,652 |  |  |  | 2,937 |
Less: Allowance for expected credit losses |  |  | (244 | ) |  |  | (244 | )
Accounts receivables, net |  | $ | 4,408 |  |  | $ | 2,693 |

The Company’s allowance for expected credit loss was $244 thousand at September 30, 2025 and December 31, 2024, respectively. For the year ended December 31, 2024, one of the Company’s borrowers for a note receivable was having financial difficulty securing additional financing to pay the note. As such, the Company fully reserved the note balance and incurred a provision on credit loss of approximately $244 thousand. In addition, the Company had a credit provision for approximately $516 thousand due to a pricing dispute with a Bitcoin hosting customer, in which the agreement with the customer was terminated in December 2024. As of December 31, 2024, the Company wrote off the entire allowance with the Bitcoin hosting customer of $516 thousand.

Rollforward of Allowance of Expected Credit Losses:

Schedule of Allowance of Expected Credit Losses

(Dollars in thousands) |  | January 1, 2025- September 30, 2025 |  |  | January 1, 2024 – December 31, 2024 |
Allowance for expected credit losses, beginning of period |  | $ | 244 |  |  | $ | - |
Current period credit provision |  |  | - |  |  |  | 760 |
Write offs charged against the allowance |  |  | - |  |  |  | (516 | )
Recoveries collected |  |  | - |  |  |  | - |
Allowance of expected credit losses, end of period |  | $ | 244 |  |  | $ | 244 |

4. Property, Plant and Equipment, net

Property, plant and equipment consist of the following at:

Schedule of Plant and Equipment

(Dollars in thousands) |  | September 30, 2025 |  |  | December 31, 2024 |
Land and land improvements |  | $ | 2,800 |  |  | $ | 1,553 |
Buildings and leasehold improvements |  |  | 32,292 |  |  |  | 25,453 |
Computers and related software |  |  | 12,719 |  |  |  | 11,533 |
Machinery and equipment |  |  | 16,246 |  |  |  | 9,324 |
Office furniture and fixtures |  |  | 74 |  |  |  | 34 |
Construction in progress |  |  | 14,537 |  |  |  | 9,250 |
Property, plant and equipment, gross |  |  | 78,668 |  |  |  | 57,147 |
Less: Accumulated depreciation |  |  | (14,669 | ) |  |  | (9,864 | )
Property, plant and equipment, net |  | $ | 63,999 |  |  | $ | 47,283 |

13

Depreciation expense was approximately $1.7 million and $1.5 million for the three months ended September 30, 2025 and 2024, respectively. Depreciation expense was approximately $4.9 million and $4.6 million for the nine months ended September 30, 2025 and 2024, respectively.

5. Intangible Assets, net

Intangible assets consist of the following as of September 30, 2025:

Schedule of Intangiable Assets

(Dollars in thousands) |  | Intangible Assets |  |  | Accumulated Amortization |  |  | Total |
Strategic pipeline contract |  | $ | 46,885 |  |  | $ | 36,727 |  |  | $ | 10,158 |
Assembled workforce |  |  | 500 |  |  |  | 392 |  |  |  | 108 |
Patents |  |  | 359 |  |  |  | 32 |  |  |  | 327 |
Total |  | $ | 47,744 |  |  | $ | 37,151 |  |  | $ | 10,593 |

Intangible assets consist of the following as of December 31, 2024:

(Dollars in thousands) |  | Intangible Assets |  |  | Accumulated Amortization |  |  | Total |
Strategic pipeline contract |  | $ | 46,885 |  |  | $ | 29,694 |  |  | $ | 17,191 |
Assembled workforce |  |  | 500 |  |  |  | 317 |  |  |  | 183 |
Patents |  |  | 266 |  |  |  | 20 |  |  |  | 246 |
Total |  | $ | 47,651 |  |  | $ | 30,031 |  |  | $ | 17,620 |

Amortization expense for each of the three and nine months ended September 30, 2025 and 2024 was approximately $2.4 million and $7.1 million, respectively.

The strategic pipeline contract relates to supply of a critical input to our digital mining and hosting business. The Company has analyzed this strategic pipeline contract similar to a permit for future benefit. The strategic pipeline contract relates to potential renewable energy datacenters that fit in the alignment of the Company structure to expand operations of the Company’s new focus in their business.

The Company expects to record amortization expense of intangible assets over the next five years and thereafter as follows:

Schedule of Amortization of Intangiable Assets

(Dollars in thousands) |  |  |
Year |  | 2025 |
2025 (remainder of the year) |  | $ | 2,375 |
2026 |  |  | 7,914 |
2027 |  |  | 17 |
2028 |  |  | 17 |
2029 |  |  | 17 |
Thereafter |  |  | 253 |
Total |  | $ | 10,593 |

6. Accrued Liabilities

Accrued liabilities consist of the following at:

Schedule of Accrued Liabilities

(Dollars in thousands) |  | September 30, 2025 |  |  | December 31, 2024 |
Salaries, wages, and related expenses |  | $ | 1,657 |  |  | $ | 552 |
Liability to shareholders for previous acquisition |  |  | 363 |  |  |  | 363 |
Legal, audit, tax, and professional fees |  |  | 1,796 |  |  |  | 537 |
Sales tax accrual |  |  | - |  |  |  | 575 |
Real estate taxes accrual |  |  | 537 |  |  |  | 182 |
Hosting and utility fees |  |  | 1,922 |  |  |  | 1,036 |
Construction fees |  |  | 4,852 |  |  |  | 2,211 |
Financing fee accrual |  |  | 1,001 |  |  |  | - |
Membership distribution accrual |  |  | - |  |  |  | 1,179 |
Other |  |  | 298 |  |  |  | 150 |
Total |  | $ | 12,426 |  |  | $ | 6,785 |

14

Contract liability

| In June 2024, Soluna AL Cloudco, LLC (“CloudCo”), a subsidiary of Soluna Cloud, entered into an agreement (the “HPE Agreement”) with Hewlett Packard Enterprise Company (“HPE”), with an initial pre-payment of $10.3 million and a total commitment of $34 million over a 36-month period. On March 24, 2025, CloudCo notified HPE of its termination of the HPE Agreement and, on March 26, 2025, HPE notified CloudCo 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. The HPE Agreement provided the Company access to datacenter and cloud services for AI and supercomputing applications utilizing NVIDIA H100 GPUs. In accordance with the terms of the HPE Agreement, CloudCo was required to pay all of the unpaid fees that were payable over the entire term of the HPE Agreement. 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, including all upfront payments and monthly charges, plus any fees incurred for the terminated Services (as defined in the HPE Agreement). As of December 31, 2024, the Company reduced its prepaid assets and other long-term assets by approximately $8.6 million, increased termination liability by approximately $20.0 million and recorded a loss on contract of approximately $28.6 million to account for the termination of the contract and CloudCo’s contractual payments. The liability has been reduced to approximately $19.3 million as of September 30, 2025. CloudCo has not made any additional payments under the HPE Agreement since CloudCo notified HPE of its termination of the HPE Agreement.

7. Income Taxes

During the three and nine months ended September 30, 2025, the Company’s effective income tax rate was 2.5% and 4.0%, respectively, and for the three and nine months ended September 30, 2024, the Company’s effective tax rate was 6.3% and 8.1%, respectively. The projected annual effective tax rate is less than the Federal statutory rate of 21%, primarily due to the change in the valuation allowance, as well as changes to estimated taxable income for 2025 and permanent differences. For the three months ended September 30, 2025 and 2024, there was a deferred income tax benefit of $666 thousand and $547 thousand, respectively. For the nine months ended September 30, 2025 and 2024, there was a deferred income tax benefit of approximately $1.7 million and $1.8 million, respectively, offset by a $9 thousand and $63 thousand current tax expense for the nine months ended September 30, 2025 and 2024, respectively.

In connection with the strategic contract pipeline acquired in the acquisition as further discussed in Note 5, ASC 740-10-25-51 requires the recognition of a deferred tax impact of acquiring an asset in a transaction that is not a business combination when the amount paid exceeds the tax basis on the acquisition date. As such, the Company is required to adjust the value of the strategic contract pipeline by approximately $10.9 million at inception date, which was recorded as a deferred tax liability, and this amount will be amortized over the life of the asset. For the three and nine months ended September 30, 2025 and 2024, the Company amortized $547 thousand and $1.6 million, respectively.

The Company provides for recognition of deferred tax assets if the realization of such assets is more likely than not to occur in accordance with accounting standards that address income taxes. Significant management judgment is required in determining the period in which the reversal of a valuation allowance should occur. The Company has considered all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income amongst other items, in determining its valuation allowance. In addition, the Company’s assessment requires us to schedule future taxable income in accordance with accounting standards that address income taxes to assess the appropriateness of a valuation allowance which further requires the exercise of significant management judgment.

The Company believes that the accounting estimate for the valuation of deferred tax assets is a critical accounting estimate because judgment is required in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns. The Company based the estimate of deferred tax assets and liabilities on current tax laws and rates and, in certain cases, business plans and other expectations about future outcomes. In the event that actual results differ from these estimates, or the Company adjusts these estimates in future periods, the Company may need to adjust the recorded valuation allowance, which could materially impact our financial position and results of operations. The Company has a full valuation allowance for the deferred tax asset of $43.4 million and $38.5 million on September 30, 2025 and December 31, 2024, respectively. We will continue to evaluate the ability to realize our deferred tax assets and related valuation allowance on a quarterly basis.

15

8. Debt

The following table represents total debt outstanding by agreement as of September 30, 2025:

Schedule of Total Debt Outstanding

(Dollars in thousands): |  | Current portion of debt |  |  | Long term debt |  |  | Total |
NYDIG financing |  | $ | - |  |  | $ | - |  |  | $ | - |
Green Cloud secured note |  |  | 3,487 |  |  |  | 4,589 |  |  |  | 8,076 |
Equipment loan |  |  | - |  |  |  | - |  |  |  | - |
Galaxy loan |  |  | 636 |  |  |  | 3,756 |  |  |  | 4,392 |
Generate credit agreement |  |  | 5,876 |  |  |  | 4,909 |  |  |  | 10,785 |
Total Debt |  | $ | 9,999 |  |  | $ | 13,254 |  |  | $ | 23,253 |

The following table represents total debt outstanding by agreement as of December 31, 2024:

(Dollars in thousands): |  | Current portion of debt |  |  | Long term debt |  |  | Total |
Convertible Notes |  | $ | - |  |  | $ | - |  |  | $ | - |
NYDIG financing |  |  | 9,183 |  |  |  | - |  |  |  | 9,183 |
Navitas term loan |  |  | 137 |  |  |  | - |  |  |  | 137 |
June 2024 secured note |  |  | 3,922 |  |  |  | 7,061 |  |  |  | 10,983 |
July 2024 additional secured note |  |  | 1,202 |  |  |  | - |  |  |  | 1,202 |
Total Debt |  | $ | 14,444 |  |  | $ | 7,061 |  |  | $ | 21,505 |

NYDIG Financing

Schedule of Financing Debt

(Dollars in thousands) |  | Maturity Dates |  | Interest Rate |  | January 1, 2025- September 30, 2025 |  |  | January 1, 2024- December 31, 2024 |
NYDIG Loans #1-11 |  | April 25, 2023 thru January 25, 2027* |  | 14% thru 16% |  | $ | 9,183 |  |  | $ | 9,183 |
Less: repossession of collateralized assets |  |  |  |  |  |  | — |  |  |  | — |
Gain on settlement of debt |  |  |  |  |  |  | (9,183 | ) |  |  | — |
Total outstanding debt |  |  |  |  |  | $ | — |  |  | $ | 9,183 |

* |  | Due to an event of default- the entire NYDIG ABL LLC (“NYDIG”) financing became current, see note below.

On December 30, 2021, Soluna MC Borrowings, LLC 2021-1 (the “Borrower”), a subsidiary of Soluna MC, which is a subsidiary of Soluna Digital Holdings, entered into a Master Equipment Finance Agreement (the “Master Agreement”) with NYDIG as lender, servicer, and collateral agent. The Master Agreement provided for up to approximately $14.4 million in total equipment financing (the “NYDIG Loans”).

In January 2022, the Borrower completed two drawdowns totaling approximately $14.4 million, bearing interest at 14% and repayable over 24 months. As part of the financing, Soluna MC LLC, the Borrower’s parent, provided a guaranty, and the Borrower pledged its assets, including certain digital asset accounts, as collateral for the loans.

On December 20, 2022, after the Borrower defaulted on the NYDIG Loans, NYDIG issued a Notice of Acceleration and Repossession under the Master Agreement. The obligations under this facility were ring-fenced to the Borrower and its direct parent, Soluna MC LLC. The Company itself was not a guarantor of the loans.

On February 23, 2023, NYDIG foreclosed on the collateral, repossessing assets valued at approximately $3.4 million, of which about $0.6 million was applied to accrued interest and penalties. On December 7, 2023, NYDIG filed a motion for summary judgment seeking approximately $10.3 million for unpaid principal, interest, and penalties. Following court proceedings, the parties agreed that the total outstanding principal was approximately $9.2 million (the “Agreed Judgment Amount”).

On September 29, 2025, the Borrower and NYDIG executed a Settlement Agreement to fully resolve the Agreed Judgment Amount and all related claims. Under the Settlement Agreement, the Borrower agreed to make certain settlement payments to NYDIG, and in return, NYDIG and its affiliates released the Borrower and its related parties from all claims related to the NYDIG Loans.

As a result, the Company recorded a gain on extinguishment of debt for the remaining principal, accrued interest, and penalties. As of September 30, 2025, a portion of the settlement amount had been paid, with the remainder recorded in Accrued liabilities. The remaining balance was paid after quarter-end, and no further obligations remain as of the date of this filing.

See Note 10 — Commitments and Contingencies for additional information regarding the NYDIG litigation matter.

16

Green Cloud secured note

Schedule of Secured Note Financing

(Dollars in thousands) |  | Maturity Date |  | Interest Rate |  |  | January 1, 2025- September 30, 2025 |  |  | June 20, 2024- December 31, 2024 |
Term Loan and capitalized interest (excludes debt issuance cost) |  | June 20, 2027 |  |  | 9 | % |  | $ | 11,748 |  |  | $ | 12,784 |
Less: principal and capitalized interest payments |  |  |  |  |  |  |  |  | (3,252 | ) |  |  | (1,036 | )
Less: debt discount |  |  |  |  |  |  |  |  | (126 | ) |  |  | (230 | )
Less: debt issuance costs |  |  |  |  |  |  |  |  | (294 | ) |  |  | (535 | )
Total outstanding note |  |  |  |  |  |  |  |  | 8,076 |  |  |  | 10,983 |
(Less) Current note outstanding |  |  |  |  |  |  |  |  | 3,487 |  |  |  | 3,922 |
Long-term note outstanding |  |  |  |  |  |  |  | $ | 4,589 |  |  | $ | 7,061 |

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, a Delaware limited liability company and indirect wholly owned subsidiary of the Company, (ii) Soluna Cloud, a Nevada corporation, indirect wholly owned subsidiary of the Company, and parent of CloudCo, (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” or “Green Cloud secured note”). The Note accrues interest at a rate 9.0% per annum, subject to adjustment upon an event of default. The Note matures on June 20, 2027. CloudCo’s obligations under the Note will be secured by all or substantially all of CloudCo’s assets, including pursuant to a security agreement to be executed and delivered by CloudCo in favor of the Investor (the “CloudCo Security Agreement”, and together with the June SPA and the Note, the “CloudCo Agreements”).

As further inducement for the Investor to purchase the Note, Soluna Cloud issued to the Investor a warrant (the “Warrant”) exercisable within three years from June 20, 2024 for a number of shares of common stock of Soluna Cloud equal to the sum of (a) 12.5% of Soluna Cloud’s issued and outstanding common stock as of the date of the Warrant divided by 0.875, plus (b) the percentage of each Qualified Issuance (as defined below) divided by 0.875. For purposes of the Warrant, “Qualified Issuance” means (y) each issuance of common stock of Soluna Cloud during the period commencing on the day after the date of the Warrant and ending on the earlier to occur of (i) the conclusion of up to an additional $112.5 million of capital raised, whether in the form of debt, equity, mixed or otherwise, by Soluna Cloud and its subsidiaries and (ii) December 31, 2024 and (z) the number of shares of common stock of Soluna Cloud issuable upon the exercise or conversion of any convertible securities of CloudCo issued during such period (other than certain issuances pursuant to CloudCo’s equity compensation plans). On June 20, 2024, the Company determined that the warrant should be treated as a warrant liability and based on valuation, the Company booked a warrant liability of approximately $314 thousand and a related debt discount which will be amortized over the life of the loan. Further evaluation of the Warrants under ASC 815-10 was required to determine if the warrants meet the definition of a derivative. The warrants are classified as a liability that are required to be adjusted to fair market value. The Company applied a discounted cash flow method in relation to the valuation of Cloud in which assumptions from forecasted projected cash flow data and other key operating assumptions such as working cash flow were used to determine an enterprise value less any current debt in order to determine an equity value for Cloud. As of September 30, 2025 and December 31, 2024, the warrants were fair valued, and deemed to not have any further value, as such the Company wrote down the liability balance to $0.

17

For the three and nine months ended September 30, 2025, the Company incurred approximately $298 thousand and $1.0 million in interest expense in relation to the June SPA, respectively, which includes interest paid on the note and amortization of deferred financing costs.

June SPA Modification

On March 21, 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 the Company’s 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 penny warrants to purchase shares of the Company’s common stock. The number of penny warrants (exercise price at $0.01) shall equal $1.25 million divided by the 5-day VWAP of the Company’s common stock at time of issuance. The warrants will be issued at the time the Investor removes its lien on the property of the Company. As of November 14, 2025, the lien has not yet been removed and the warrants have not been issued,
| (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 Escrow Shares and the Conversion Shares (as defined below) or the date that the Escrow Shares and the Conversion Shares 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 Amended 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 of the Company’s common stock based (“Conversion Shares”) on a conversion price of $5.00,
| (v) | amend the Note to provide that the Company will be a direct co-obligor with CloudCo under the Note; and
| (vi) | amend the SPA to allow the Company to organize or incorporate any subsidiary, over which the Company shall have voting or beneficial control, which is being formed with the intent to engage in a business or line of business substantially similar to that of Soluna Cloud or the Company, without first paying all of the principal and interest due under the Note and without first obtaining Investor’s prior written consent (collectively, the “June SPA Modification”).

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

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

18

July 2024 Additional Secured Note

Schedule of Additional Secured Note Financing

(Dollars in thousands) |  | Maturity Date |  | Interest Rate |  |  | January 1, 2025- September 30, 2025 |  |  | July 12, 2024- December 31, 2024 |
Term Loan and capitalized interest (excludes debt issuance cost) |  | July 12, 2027* |  |  | 9 | % |  | $ | 1,209 |  |  | $ | 1,278 |
Less: principal and capitalized interest payments |  |  |  |  |  |  |  |  | (658 | ) |  |  | (69 | )
Debt discount |  |  |  |  |  |  |  |  | - |  |  |  | (7 | )
Gain on extinguishment |  |  |  |  |  |  |  |  | (551 | ) |  |  | - |
Total outstanding debt |  |  |  |  |  |  |  | $ | - |  |  | $ | 1,202 |

* | On March 14, 2025, the Company satisfied the assignment and assumption agreement, as such a gain on extinguishment was recorded.

On July 12, 2024, the Company, CloudCo, Soluna Cloud, and the Investor entered into a First Amendment to the Note Purchase Agreement (the “June SPA Amendment”). This amendment allows CloudCo to issue additional secured promissory notes totaling $1.25 million (the “Additional Notes”) to new accredited investors (the “Additional Investors”). These Additional Notes are subject to the same terms and conditions as the June SPA financing.

To further incentivize the Additional Investors, Soluna Cloud issued warrants (the “Cloud Additional Warrants”) to each Additional Investor. These Cloud Additional Warrants are exercisable within three years from the effective date of the June SPA Amendment. They allow the purchase of a number of shares of Soluna Cloud common stock equal to 1.25% of Soluna Cloud’s issued and outstanding common stock as of the Cloud Additional Warrant date, divided by 0.9875, plus 1.25% of each Qualified Issuance, divided by 0.9875. On July 12, 2024, the Company determined that the additional warrants were treated as a warrant liability and based on valuation, the Company booked a warrant liability of approximately $13 thousand and a related debt discount which will be amortized over the life of the loan. Further evaluation of the Warrants under ASC 815-10 was required to determine if the warrants meet the definition of a derivative. The warrants are classified as a liability that are required to be adjusted to fair market value. The Company applied a discounted cash flow method in relation to the valuation of Cloud which assumptions from forecasted projected cash flow data and other key operating assumptions such as working cash flow were used to determine an enterprise value less any current debt in order to determine an equity value for Cloud. As of September 30, 2025 and December 31, 2024, the warrants were fair valued, and deemed to not have any further value, as such the Company wrote down the liability balance to $0.

A “Qualified Issuance” includes any issuance of common stock by Soluna Cloud from the day after the Cloud Additional Warrant date until the earlier of raising an additional $111.25 million or December 31, 2024, as well as shares issuable upon exercise or conversion of convertible securities issued during this period, excluding certain equity compensation plan issuances.

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 notes will be paid to the note holders from an escrow that is funded in installments from the SEPA funding. The transfer is not effective until payment from the escrow is made. The Company was required to escrow 20% of all SEPA draws until the $750 thousand purchase price is accumulated. In addition to the 20% of SEPA funds, the Company would apply all principal payments and 50% of interest payments made to date from October 1, 2024, until the $750 thousand purchase price has been met.

On March 14, 2025, the Company fulfilled the purchase obligations, and assumed the Additional Notes through payment of $750 thousand through principal and 50% interest payments and use of 20% SEPA funds. Effectively, the remaining debt assignment was assumed by Soluna Holdings, Inc. and was recorded as an intercompany debt obligation that was eliminated on the Company’s condensed consolidated financial statements as of September 30 2025. The Company recorded a gain on extinguishment of the July 2024 Additional Secured Notes of approximately $551 thousand for the nine months ended September 30, 2025. For the three and nine months ended September 30, 2025, the Company incurred approximately $0 and $33 thousand in interest expense in relation to the July Additional Secured Note.

Galaxy Loan

Schedule of Galaxy Loan

(Dollars in thousands) |  | Maturity Date |  | Interest Rate |  |  | March 12, 2025 – September 30, 2025 |
Term Loan |  | March 12, 2030 |  |  | 15 | % |  | $ | 5,000 |
Less: principal payments |  |  |  |  |  |  |  |  | (250 | )
Less: debt discount and issuance costs |  |  |  |  |  |  |  |  | (358 | )
Total outstanding note |  |  |  |  |  |  |  |  | 4,392 |
(Less) Current note outstanding |  |  |  |  |  |  |  |  | 636 |
Long-term note outstanding |  |  |  |  |  |  |  | $ | 3,756 |

19

On March 12, 2025, Soluna SW LLC (the “SW Borrower”), a Delaware limited liability company and subsidiary of Soluna SW Holdings LLC (“SW Holdings”, and together with the SW Borrower, the “SW Loan Parties”), a subsidiary of SDI, a Nevada corporation and wholly owned subsidiary of Company, entered into a Loan Agreement (the “Galaxy Loan Agreement”) with SW Holdings and Galaxy Digital LLC (the “Lender”).

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 as defined within the Galaxy Loan Agreement has occurred and is continuing. The Term Loan Facility matures on March 12, 2030 and includes scheduled payments over a five-year term. For the three and nine months ended September 30, 2025, the Company incurred approximately $220 thousand and $498 thousand in interest expense in relation to the Term Loan Facility, which includes interest paid on the note and amortization of deferred financing costs.

The SW Borrower may voluntarily prepay all or part of the Term Loan Facility at any time together with accrued and unpaid interest on the principal amount to be prepaid up to the date of prepayment. The SW Borrower shall prepay all or part of the Term Loan Facility with 100% of the Net Cash Proceeds (as defined therein) received upon the occurrence of (i) an Asset Sale or Casualty Event (each as defined therein), (ii) an Equity Issuance (as defined therein), (iii) an issuance or incurrence of Indebtedness (as defined therein), or (iv) an Extraordinary Receipt (as defined therein), each subject to certain exceptions. In addition, certain principal payments are subject to the payment of a premium amount equal to 50% of the remaining amount of interest payable on such principal amount through the scheduled maturity date, if paid on or prior to the 30-month anniversary of the closing date, and 25% of the remaining amount of interest payable on such principal amount through the scheduled maturity date, if paid after the 30-month anniversary of the closing date.

The Galaxy Loan Agreement includes certain restrictions (subject to certain exceptions outlined in the Galaxy Loan Agreement) on the ability of the SW Loan Parties and their subsidiaries to undertake certain activities, including to incur indebtedness and liens, enter into sale or lease-back transactions, merge or consolidate with other entities, dispose or transfer their assets, pay dividends or make distributions, make investments, make Restricted Payments (as defined therein), enter into burdensome agreements or transact with affiliates. In addition, the SW Loan Parties are subject to three financial covenants – a minimum debt service coverage ratio, a minimum current ratio, and cash in customer deposit account must equal or be greater than related customer liabilities. As of the date of these condensed consolidated financial statements, the Company is in compliance with all covenants in relation to the Galaxy Loan Agreement.

Proceeds of the Term Loan Facility will be used to issue a distribution to SW Holdings, the proceeds of which may be used to make a distribution to SDI.

In connection with the Galaxy Loan Agreement, on March 12, 2025, the SW Loan Parties and the Lender entered into a security agreement to secure the obligations under the Term Loan Facility by a lien on substantially all the assets and properties of SW Borrower and SW Holdings, subject to certain exceptions. The SW Borrower is the owner and operator of the Company’s Project Sophie data center.

In connection with the Galaxy Loan Agreement, on March 12, 2025, SDI and the Lender entered into a Limited Guarantee Agreement pursuant to which SDI guarantees the Loss Liabilities (as defined therein) and, after the occurrence of a Recourse Trigger Event (as defined therein), the obligations under the Loan Agreement.

Generate Credit Agreement

Schedule of Generate Credit Agreement

(Dollars in thousands) |  | Maturity Date |  | Interest Rate |  |  | September 12, 2025 – September 30, 2025 |
Tranche A-1 |  | September 12, 2030 |  |  | 14.24 | % |  | $ | 5,500 |
Tranche A-3 |  |  |  |  |  |  |  |  | 7,124 |
Total drawn loan |  |  |  |  |  |  |  |  | 12,624 |
Less: principal payments |  |  |  |  |  |  |  |  | - |
Less: debt discount and issuance costs |  |  |  |  |  |  |  |  | (1,839 | )
Total outstanding note |  |  |  |  |  |  |  |  | 10,785 |
(Less) Current note outstanding |  |  |  |  |  |  |  |  | 5,876 |
Long-term note outstanding |  |  |  |  |  |  |  | $ | 4,909 |

20

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. For the three and nine months ended September 30, 2025, interest expense was $168 thousand.

Proceeds from the Generate Credit Agreement will be used to finance, refinance, develop and construct the Company’s Dorothy 1A, Dorothy 2 and Kati data center projects, fund a debt service reserve account, and pay fees and expenses. The loans bear interest at a variable rate based on either ABR or Term SOFR, as set forth in the Generate Credit Agreement. The applicable interest rate for SOFR loans is equal to Term SOFR plus a margin of 10.0% per annum, and for ABR loans is equal to the ABR plus a margin of 9.0% per annum. The Generate Credit Agreement provides for a SOFR rate floor of 3.50% per annum. The Borrowers are required to pay a commitment fee of 1.00% per annum on undrawn amounts of the Tranche B Loan Commitments and any Additional Tranche Loan Commitments. During the continuance of an event of default, a default rate applies equal to the otherwise applicable rate plus 2.0% per annum.

The loans are subject to scheduled amortization, fees and prepayment premiums which will be paid through excess cash sweeps. The classification of the outstanding principal balance of the Generate loan balance into current and non-current liabilities is contingent upon management’s estimate of the future application of mandatory debt repayments. The Credit Agreement contains a mandatory prepayment provision, or “cash sweep,” requiring a percentage of free cash flow, as defined in the Credit Agreement, to be applied to principal reduction on a periodic basis. The amount expected to be prepaid via this sweep mechanism during the next twelve months is classified as current debt. This classification relies on management’s internal cash flow forecast, which incorporates assumptions regarding future operating performance, capital expenditures, and working capital needs. Assumptions include market volatility risks, which are inherently unpredictable. Because the classification is dependent upon these management estimates, the actual amount of debt paid down through the cash sweep mechanism may differ materially from the amounts classified as current liabilities. The obligations are guaranteed by certain Company subsidiaries and secured by first-priority liens on substantially all assets of the Borrowers and guarantors, including pledges of equity interests, security interests in deposit and other collateral accounts (subject to control agreements), and mortgages/deeds of trust on the relevant project sites.

The Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default for financings of this type. Events of default under the Credit Agreement include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, breach of covenants, cross-default to certain material indebtedness, bankruptcy and insolvency, and change of control. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued but unpaid interest under the Credit Agreement immediately due and payable and may exercise the other rights and remedies provided under the Credit Agreement and related loan documents. Negative covenants in the Credit Agreement include, among other things, restrictions on the Borrowers and guarantors with respect to incurring additional indebtedness, creating liens on assets, selling assets or making fundamental changes, making restricted payments, entering into affiliate transactions, and using loan proceeds for unauthorized purposes. The Credit Agreement also restricts investments, capital expenditures, and speculative transactions, and requires that all deposit and securities accounts be subject to control agreements. Financial covenants require (i) a minimum trailing Debt Service Coverage Ratio of 1.60:1.00 and (ii) a minimum Forward Contracted Debt Service Coverage Ratio of 1.20:1.00, in each case as further described in the Credit Agreement. The facility also includes customary mandatory prepayment provisions.

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 (the “Holder”), in a private placement (the “Private Placement”): (i) a pre-funded warrant (the “Generate Pre-Funded Warrant”) to purchase up to 2,000,000 shares of common stock; and (ii) a common warrant (the “Generate Common Warrant” and, together with the Generate Pre-Funded Warrant, the “Generate Warrants”) to purchase up to 2,000,000 shares of common stock.

On September 28, 2025, the Company executed a side letter with the Holder in relation to 2.0 million outstanding Generate Common Warrant to waive a clause that has a requirement to reserve 2.0 million shares of common stock until there is an increase in the authorized shares of the Company. If the Company does not get shareholder approval to increase the authorized shares, then the Company would have to repurchase shares of common stock in the open market and hold those shares in treasury as a reserve for the Generate Common Warrant. The Company was still required to reserve the Generate Pre-Funded Warrant. As the Generate Common Warrant were contingent upon shareholder approval of increase of authorized shares, and if the Company didn’t get approval, the Company would need to repurchase shares of common stock in the open market, it created the Company to classify the 2.0 million Generate Common Warrant to liability as of September 30, 2025. The change in classification of the Generate Common Warrant created a deemed dividend of approximately $3.8 million, in which was adjusted in the earnings per share calculation, see Note 9 for further details. The Company notes that the Company obtained shareholder approval on November 7, 2025 to increase the authorized limit of shares to 375.0 million.

The following table represents the significant fair value assumptions used for the Generate Warrants issued or revalued during the quarter September 30, 2025.

Schedule of Fair Value Assumptions used for Generate Warrants Issued or Revalued

|  | Three and Nine Months ended September 30, 2025 |
Stock price |  | $ | 0.72-2.75 |
Exercise price |  | $ | 0.0001- 1.18 |
Expected term in years |  |  | 4.95 – 5.00 |
Expected dividend yield |  |  | 0.00 | %
Volatility |  |  | 130.00 | %
Risk-free interest rate |  |  | 3.63- 3.76 | %

21

Equipment Loan Agreement

On May 16, 2024, SDI SL Borrowing – 1, LLC, an affiliate of the Company (the “SDI Borrower”), entered into a loan agreement (the “Equipment Loan Agreement” or the “Loan”) with Soluna2 SLC Fund II Project Holdco LLC (the “Lender”, and collectively, the “Parties”). As further amended on February 28, 2025, the Equipment Loan Agreement provides for the Company to borrow, from time to time, up to $4.0 million, to be used to purchase necessary equipment for the progression of Project Dorothy 2 and Project Kati. Any loans made under the Equipment Loan Agreement have a maturity date of May 16, 2027 and will bear interest at a rate of 15% per annum. The Equipment Loan Agreement includes customary covenants for loans of this nature including financial reporting, monthly updates, event reporting, as well as conduct of business. In addition, the Equipment Loan Agreement contains a multiple on invested capital (“MOIC”) provision, which requires the Company 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 with the Lender. On July 22, 2024, the SDI Borrower satisfied and repaid the borrowing amount in full by issuing the Investor Class B Membership Interests in the Dorothy 2 project valued at three times the borrowing amount (i.e., $2.16 million). The 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 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 August 1, 2025, the SDI Borrower satisfied and repaid the borrowing amount in full by issuing 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.

Per ASC 835-30-S45-1, debt issuance costs related to line of credits should be recorded as an asset and amortized over the life of the line of credit agreement. As such, the Company recorded $64 thousand and $53 thousand within Prepaid expenses and other current assets as of September 30, 2025 and December 31, 2024 and $40 thousand and $75 thousand within Other assets on the consolidated balance sheet as of September 30, 2025 and December 31, 2024, of which approximately $16 thousand and $46 thousand has been amortized and recorded within Interest Expense for the three and nine months ended September 30, 2025.

Navitas Term Loan

Schedule of Navitas Term Loan

(Dollars in thousands) |  | Maturity Date |  | Interest Rate |  |  | January 1, 2025- September 30, 2025 |  |  | January 1, 2024- December 31, 2024 |
Term Loan and capitalized interest (excludes debt issuance cost) |  | May 9, 2025* |  |  | 15 | % |  | $ | 137 |  |  | $ | 1,707 |
Less: principal and capitalized interest payments |  |  |  |  |  |  |  |  | (137 | ) |  |  | (1,570 | )
Total outstanding debt |  |  |  |  |  |  |  | $ | - |  |  | $ | 137 |

* | May 9, 2025 was the maturity date, however, as noted below, the Navitas loan was fully paid off in the first quarter of 2025, and as such no longer remains outstanding.

22

On May 9, 2023, DVCC and Navitas West Texas Investments SPV, LLC entered into a 2-year Loan Agreement (“Navitas Term Loan”) for $2,050,000. As of September 30, 2025, the Company has paid the remaining outstanding balance of $137 thousand, therefore fulfilling its debt obligation with Navitas. Interest expense related to the Navitas Term Loan for the three and nine months ended September 30, 2025 was approximately $0 and $2 thousand, respectively. Interest expense related to the Navitas Term Loan for the three and nine months ended September 30, 2024 was approximately $21 thousand and $122 thousand, respectively.

Convertible Notes

On October 25, 2021, pursuant to a Securities Purchase Agreement (the “October SPA”), the Company issued to certain accredited investors (the “Noteholders”) (i) secured convertible notes in an aggregate principal amount of $16.3 million for an aggregate purchase price of $15 million (collectively, the “October Secured Notes”), which were, subject to certain conditions, convertible at any time by the investors, into an aggregate of 1,776,073 shares of the Company’s common stock, at a price per share of $9.18 and (ii) Class A, Class B and Class C common stock purchase warrants (collectively, the “October Warrants”) to purchase up to an aggregate of 1,776,073 shares of common stock, at an initial exercise price of $12.50, $15 and $18 per share, respectively. The October Warrants are legally detachable and can be separately exercised immediately for five years upon issuance, subject to applicable Nasdaq rules.

On July 19, 2022 and on September 13, 2022, the Company entered into an Addendum and Addendum Amendment which adjusted the terms such as maturity date, conversion prices, and the issuance of new warrants to the Noteholders. Pursuant to the Addendum and Addendum Amendment, the Company evaluated whether the new addendums qualified as debt modification or debt extinguishment. Based on ASC 470, Debt, the Company determined the Addendum and Addendum Amendment to fall under Debt Extinguishment treatment and the Company would be required to record the new debt at fair value, and in turn write off the existing debt on the Company’s books.

Following the debt extinguishment on July 19, 2022 as noted above, the Convertible Notes have been accounted for under the fair value method on a recurring basis upon issuance (e.g., upon execution of the Addendum) per guidance within ASC 480, and at each subsequent reporting period, with changes in fair value reported in earnings. See below for rollforward of the fair value of the convertible debt:

Schedule of Fair value of Convertible Debt

(in thousands) |  |  |
Balance January 1, 2024 |  | $ | 8,474 |
Conversions of debt (January 1, 2024- June 30, 2024) |  |  | (3,712 | )
Extension fee |  |  | 325 |
Total revaluation losses and extinguishment of debt, net (January 1, 2024- June 30, 2024) |  |  | 2,765 |
Balance June 30, 2024 |  |  | 7,852 |
Conversions of debt (July 1, 2024 – September 30, 2024) |  |  | (2,166 | )
Revaluation gains and extinguishment of debt, net (July 1, 2024 – September 30, 2024) |  |  | (2,316 | )
Balance September 30, 2024 |  |  | 3,370 |
Conversions of debt (October 1, 2024- December 31, 2024) |  |  | (3,123 | )
Revaluation gains and extinguishment of debt, net (October 1, 2024- December 31, 2024) |  |  | (247 | )
Balance December 31, 2024 |  | $ | - |

For the three and nine months ended September 30, 2024, the Company had approximately $2.2 million and $5.9 million of note conversions with the Noteholders, approximately $2.3 million in revaluation gains, net and $450 thousand in revaluation losses, net in relation to fair value assessments of the convertible debt, and a 4% note extension in June 2024 increasing the note balance by approximately $325 thousand. As of September, the Company had a fair value outstanding balance of approximately $3.4 million and a principal outstanding value of approximately $3.1 million. In addition, from October 1, 2024 through December 31, 2024, there was approximately $3.1 million of conversion with the Noteholders, and incurred a revaluation gain of debt of approximately $247 thousand, in which as of December 31, 2024, the Convertible Notes were no longer outstanding.

The following table represents the significant and subjective fair value assumptions used for Convertible Notes during the year ended December 31, 2024. As the Convertible Notes were fully converted in fiscal year 2024, no assumptions were noted for the three and nine months ended September 30, 2025.

Schedule of Fair Value Assumptions For Convertible Notes

|  |  | Year Ended December 31, 2024 |
Stock price |  | $ | 2.88 – 6.09 |
Conversion price |  | $ | 2.30 – 3.78 |
Volatility |  |  | 80.0 – 115 | %
Risk-free interest rate |  |  | 4.73- 5.46 | %

On February 28, 2024, the Company and the Noteholders entered into a Fourth Amendment Agreement to amend the Notes, SPA and related agreements to facilitate future financings by the Company. In addition, the Company was permitted to unilaterally extend the maturity date of the Notes for two 3-Month extensions if prior to the then in effect maturity date the Company gives notice to the Noteholders and increases the principal amount of the Notes on the date of each such extension by two percent (2%) the principal amount of the Notes outstanding on the date of such extension.

23

In consideration of the foregoing, the Company:

| ● | Reduced the conversion price of the Notes to $3.78 per share;
| ● | The Noteholders received an aggregate of 850,000 three year warrants exercisable at $0.01 per share;
| ● | An aggregate of 320,005 warrants held by the Noteholders had the exercise price reduced to $3.78 per share (the “$3.78 Warrants”); and
| ● | An aggregate of 478,951 warrants held by the Noteholders had the exercise price reduced to $6.00 per share (the “$6.00 Repriced Warrants”). For every one $6.00 Repriced Warrant exercised by a Purchaser, such Purchaser shall receive 1.36 new five-year warrants with an exercise price of $0.01, 1.6 new five-year warrants with an exercise price of $4.20, and 1.6 new five-year warrants with an exercise price of $5.70.

In June 2024, pursuant to the Fourth Amendment Agreement, the Company exercised its right to extend the maturity date of the Notes for an additional six months, or until January 24, 2025, to enable the Company to continue to pursue its significant project development opportunities for Soluna Cloud, Dorothy 2, and other projects. The extension of the notes caused an increase in the convertible note balance of approximately $325 thousand and the extension fee was recorded within Other Expense, net for the year ended December 31, 2024.

The effect of the additional penny warrants, $3.78 warrants, and the $6.00 repriced warrants including additional warrants if exercised with the Noteholders, created a loss on debt extinguishment of approximately $5.8 million due to the fair value associated as of February 28, 2024. Such amounts were recorded as a loss on debt extinguishment and affected the Company’s warrant liability and additional paid in capital balance account. Due to the requirement of the shareholder approval associated with the Fourth Amendment, the warrants associated were initially treated as a liability. In addition, a warrant revaluation was done on March 31, 2024, which created a gain on revaluation associated with the warrant liability of approximately $1.5 million.

On May 30, 2024, shareholder approval was obtained removing the cap containment provision for the warrants, and as such, the liability accounting treatment was no longer required. Since all other criteria were met to be treated as equity, the Company adjusted the warrant liability as of the date of shareholder approval and reclassified balance to equity. As such, the Company accounted for the change in the fair value of the warrant liability as of the date of the shareholder approval (May 30, 2024), in connection with its loss on revaluation of the warrant of approximately $1.6 million.

Pursuant to additional agreements with holders of another 51,618 outstanding warrants, similar adjustments with those warrants, resulted in a total adjustment to 530,569 warrants. As the 51,618 warrants were not with the Noteholders, the treatment of $6.00 repriced warrants was recorded as a deemed dividend and adjusted the Company’s earnings per share calculation for the year ended December 31, 2024. The fair value associated with the 51,618 warrants with non-Noteholders totaled approximately $386 thousand. On May 17, 2024, the Company permitted the holders of the Company’s Amended Class C Warrants, previously exercisable at $6 per share, to exercise such warrants at a reduced exercise price of $4 per share, provided that each such holder exercised at least 61.83% of their Amended Class C Warrants by the close of business on May 17, 2024. The Company also agreed to reduce the exercise price on all remaining Amended Class C Warrants. The adjustment in the exercise price, resulted in an additional deemed dividend which amounted to approximately $66 thousand for the year ended December 31, 2024.

For the year ended December 31, 2024, 529,161 of the Amended Class C warrants have been exercised by both the Noteholders and non-Noteholders, resulting in the issuance of 719,658 shares of $0.01 warrants, 846,657 shares of $4.20 warrants, and 846,657 shares of $5.70 warrants.

The following table represents the significant fair value assumptions used for warrants issued or repriced during the year ended December 31, 2024. No warrants were issued or repriced for the three and nine months ended September 30, 2025 in relation to the warrants issued in conjunction with convertible notes.

Schedule of Fair Value Assumptions For Warrants Issued

|  | Year ended December 31, 2024 |
Stock price |  | $ | 2.43- 4.07 |
Exercise price |  | $ | 0.01- 287.50 |
Expected term in years |  |  | 0.53 – 8.77 |
Expected dividend yield |  |  | 0.00 | %
Volatility |  |  | 105.0 – 137.50 | %
Risk-free interest rate |  |  | 3.51- 4.44 | %

24

As previously discussed in Footnote 1, the Company entered into the SEPA with YA on August 12, 2024. Access to the SEPA was subject to a number of conditions precedent including, but not limited to, various consents from the Company’s Note Holders. On October 1, 2024, the Noteholders entered into a Consent, Waiver, and Mutual Release Agreement (the “Master Consent”) which provides the following:

| ● | consent to the Company’s entry into the SEPA;
| ● | waiver of any rights of first refusal or participation rights in connection with the SEPA;
| ● | standstill of the rights to exercise certain $0.01 warrants pursuant to the SPA;
| ● | the right to prepay the convertible notes with a 20% premium;
| ● | termination of the SPA and related agreements upon the full payoff of the convertible notes; and
| ● | mutual limited release of claims between the Noteholders and the Company.

In return for these consents, the Company agreed to pay a $750 thousand waiver fee and to prepay to the remaining Note Holders the 20% premium for the prepayment of the Notes of approximately $625 thousand. Such amounts were recorded as within Other Expense, net for the year ended December 31, 2024.

For the year ended December 31, 2024, the Company issued 2,512,581 shares of common stock for conversion of the debt, which includes the final conversion shares noted below.

On December 12, 2024, the Company entered into an agreement with the remaining three Note Holders who held an outstanding principal balance as of December 12, 2024, pursuant to which the three remaining Note Holders elected to immediately convert all of the outstanding principal of certain convertible notes into shares of the Company’s common stock. The agreement satisfied the full outstanding debt owed to the remaining three Note Holders under the Convertible Notes. Following the conversion, 335,661 shares of common stock were issued to the Note Holders in accordance with the terms of the Convertible Notes, as amended. The Company recorded a debt inducement conversion expense of approximately $388 thousand within Other Expense, net for the year ended December 31, 2024. No further amounts are owed by the Company under the Convertible Notes as of September 30, 2025 and December 31, 2024.

9. Stockholders’ Equity

Preferred Stock

The Company has two series of preferred stock outstanding: the Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), with a $25.00 liquidation preference; and the Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”). As of September 30, 2025 and December 31, 2024, there were 4,928,545 and 4,953,545 shares of Series A Preferred Stock issued and outstanding, and as of September 30, 2025 and December 31, 2024, there was 62,500 shares of Series B Preferred Stock issued and outstanding.

Series A Preferred Stock

The Series A Preferred Stock is not convertible into or exchangeable into common stock of the Company, except upon the occurrence of a delisting event or change of control. Per the Company’s Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock (“Series A Certificate of Designations”), if there is an occurrence of delisting or change of control, the holders of Series A Preferred Stock will have the right to convert the number of preferred A shares into a number of common shares by the lesser of (a) the sum of the $25.00 liquidation preference per share of Series A Preferred Stock plus the amount of any accumulated and unpaid dividends divided by the closing price of the common stock on ten consecutive trading days preceding a delisting event, or (b) the share cap of 0.2817.

Series B Preferred Stock

On July 19, 2022, the Company entered into a Securities Purchase Agreement (the “Series B SPA”) with an accredited investor (the “Series B Investor”) pursuant to which the Company sold to the Series B Investor 62,500 shares of Series B Preferred Stock, for a purchase price of $5,000,000. The shares of Series B Preferred Stock are initially convertible, subject to certain conditions, into 46,211 shares of common stock, at a price per share of $135.25 per share, a 20% premium to the closing price of the common stock on July 18, 2022, subject to adjustment as set forth in the Certificate of Designations of Preferences, Rights and Limitations for the Series B Preferred Stock (“Series B Certificate of Designations”). On October 1, 2024, the Company agreed, as a condition of a waiver of the Series B Investor’s’ right of first refusal and participation rights in connection with the SEPA, to reduce the conversion price to $5.00 upon stockholder approval, which was obtained on November 15, 2024.

In addition, in 2022, the Company issued to the Series B Investor 60,000 common stock purchase warrants (the “Series B Warrants”) to purchase up to an aggregate of shares of common stock. In connection with the above referenced waiver, the exercise price of these warrants was reduced to $0.01 per share and an additional 140,000 warrants exercisable for $0.01 per share were issued. The Series B Investor exercised the 60,000 Series B Warrants on April 22, 2025 through a cashless warrant exercise resulting in the issuance of 59,131 shares of common stock.

25

Effective from October 1, 2024, the sale of common stock as a result of conversion of Series B Preferred Stock and exercise of the new 140,000 warrants is subject to a 12-month lockup, followed by a 12 month leak out where the holder may not sell shares during the lockup period and may sell up to 1/12th of total conversion and warrant exercise shares per month during the leak out. The effects of the modification of the Series B Preferred Stock on October 1, 2024, including repriced and newly issued penny warrants, and dividend amendments, created an extinguishment on the Series B Preferred Stock in which the Company recorded a deemed dividend of approximately $1.7 million which relates to the fair value consideration of the modified Series B Preferred Stock less the original carrying value for the year ended December 31, 2024, excluding the consideration of the Preferred B dividend as discussed below.

Common Stock

The Company has one class of common stock, par value $0.001 per share. Each share of the Company’s common stock is entitled to one vote on all matters submitted to stockholders. As of September 30, 2025 and December 31, 2024, there were 64,051,790 and 10,607,020 shares of common stock outstanding, respectively.

Dividends

Pursuant to the Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock of the Company, dividends, when, as and if declared by the Board (or a duly authorized committee of the Board), will be payable monthly in arrears on the final day of each month, beginning August 31, 2021. The Board of Directors had not declared any Series A Preferred Stock dividends beginning October 2022 through September 30, 2025, as such the Company has accumulated approximately $18.5 million of dividends in arrears on the Series A Preferred Stock through December 31, 2024, and an additional $2.8 million and $8.3 million of dividends in arrears for the three and nine months ended September 30, 2025, for a total of approximately $26.9 million.

The Company’s Series B Preferred Stock included a 10% accruing dividend compounded daily for 12 months from the original issue date of July 20, 2022, and annually thereafter, that may be paid in cash or stock at the Company’s option at the earlier of (i) the date the Series B Preferred Stock is converted, or (ii) the Series B Dividend Termination Date. On August 11, 2023, the Company paid a mandatory dividend on its outstanding Series B Preferred Stock in the amount of approximately $656 thousand. Pursuant to the Certificate of Designation for the Series B Preferred Stock, the Company had the option to pay the dividend in cash or shares of Common Stock. Pursuant to a Dividend Payment Agreement, the Company and the holder of the Series B Preferred Stock agreed to satisfy the payment of the dividend through the issuance of 44,000 shares of its Common Stock and 70,300 pre-funded warrants (the “Pre-funded Warrants”).

Effective October 1, 2024, the dividend payment obligation has been modified to be annual. The amendment resulted in annual dividend payments going forward. As a result of the amendment, the Company would be obligated to make annual dividend payments for the period starting from July 2023 as per the Series B Preferred Consent and Waiver, however, the board of directors has not yet declared any dividends for that period. As such, the Company has accumulated approximately $941 thousand dividends in arrears in relation to the Series B Preferred Stock through December 31, 2024 and an additional $173 thousand and $508 thousand for the three and nine months ended September 30, 2025, for a total of approximately $1.4 million. The dividends in arrears are included in the calculation of net loss per share as discussed below.

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 the ATM Agreement” with Wainwright, as sales agent, pursuant to which the Company may offer and sell, from time to time, through Wainwright, up to $87.65 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. 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. As of the date of these condensed financial statements, the Company has approximately $69.7 million of shares of common stock that are available for issuance under the ATM.

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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 5five-year anniversary of the initial exercise date of July 17, 2025 and the Series B Warrants will expire on the 24twenty-four-month anniversary of the initial exercise date of July 17, 2025.

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, was approximately $4.2 million. The July 2025 Offering closed on July 17, 2025.

Based on a review of the Common Warrants, the warrants were liability treated. Based on a fair value assessment on July 17, 2025, the Common Warrants had a fair value of approximately $8.6 million. For the three and nine months ended September 30, 2025, approximately 17.1 million warrants were exercised in which the Company received approximately $9.4 million in gross proceeds, and due to change in fair value on date of exercise and the original fair value on July 17, 2025, there was a fair value adjustment loss of approximately $11.5 million. The Company also evaluated the fair value adjustment for the outstanding Common Warrants, and recognized an additional fair value loss of approximately $2.3 million.

The following table represents the significant fair value assumptions used for the Pre-funded, Series A, and Series B warrants issued or revalued during the three and nine months ended September 30, 2025.

Schedule of Fair Value Assumptions For Pre-funded, Series A and Series B Warrants Issued

|  | Three and Nine Months ended September 30, 2025 |
Stock price |  | $ | 0.60- 3.50 |
Exercise price |  | $ | 0.001- 0.55 |
Expected term in years |  |  | 1.79 – 5.00 |
Expected dividend yield |  |  | 0.00 | %
Volatility |  |  | 130.0 – 140.0 | %
Risk-free interest rate |  |  | 3.51- 3.99 | %

Reservation of Shares

The Company had reserved common shares for future issuance as follows as of September 30, 2025:

Schedule of Reserved Shares of Common Stock for Future Issuance

Stock options outstanding |  |  | 2,645 |
Restricted stock units outstanding |  |  | 199,190 |
Warrants outstanding* |  |  | 5,722,890 |
Series B Preferred Stock outstanding |  |  | 1,250,000 |
Number of common shares reserved |  |  | 7,174,725 |

* |  | The Company noted that there are 7,722,890 warrants outstanding as of September 30, 2025. However, as noted in Note 8, on September 28, 2025, the Company executed a side letter with the Holder in relation to the Generate Common Warrants to waive a clause that requires the Company to reserve 2.0 million shares of common stock until there is an increase in the authorized shares of the Company. Accordingly, 2.0 million warrants were not included in the reservation of common shares balance.

As noted above in relation to the Series B Preferred Stock, as of September 30, 2025, the Series B Preferred Stock can be converted to 1,250,000 shares of the Company’s common stock at approximately $5.00 per share.

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*The Company noted that there are 7,722,890 warrants outstanding as of September 30, 2025. However, as noted in Note 8, on September 28, 2025, the Company executed a side letter with the Holder in relation to the Generate Common Warrants to waive a clause that requires the Company to reserve 2.0 million shares of common stock until there is an increase in the authorized shares of the Company. Accordingly, 2.0 million warrants were not included in the reservation of common shares balance.

Loss per Share

The Company computes basic loss per common share by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share reflects the potential dilution, if any, computed by dividing loss by the combination of dilutive common share equivalents, comprised of shares issuable under outstanding investment rights, warrants and the Company’s share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money stock options, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of a stock option and the amount of compensation cost, if any, for future service that the Company has not yet recognized are assumed to be used to repurchase shares in the current period.

The following table sets forth the reconciliation of the numerators and denominators of the basic and diluted per share computations for operations for the three and nine months ended September 30:

Schedule of Basic and Diluted Per Share Computations for Continuing Operations

|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
(Dollars in thousands, except shares) |  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Numerator: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net loss |  | $ | (25,787 | ) |  | $ | (8,093 | ) |  | $ | (40,921 | ) |  | $ | (19,782 | )
(Less) Net income (loss) attributable to non-controlling interest |  |  | (1,831 | ) |  |  | (903 | ) |  |  | (2,027 | ) |  |  | 3,535 |
Net loss attributable to Soluna Holdings, Inc. |  |  | (23,956 | ) |  |  | (7,190 | ) |  |  | (38,894 | ) |  |  | (23,317 | )
Less: Preferred dividends or deemed dividends |  |  | (3,840 | ) |  |  | - |  |  |  | (3,840 | ) |  |  | (452 | )
Less: Cumulative Preferred Dividends in arrears |  |  | (2,950 | ) |  |  | (2,786 | ) |  |  | (8,858 | ) |  |  | (7,117 | )
Balance |  | $ | (30,746 | ) |  | $ | (9,976 | ) |  | $ | (51,592 | ) |  | $ | (30,886 | )
Denominator: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic and Diluted EPS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common shares outstanding, beginning of period, including penny warrants and excluding restricted stock awards not vested |  |  | 8,106,814 |  |  |  | 2,592,454 |  |  |  | 8,106,814 |  |  |  | 2,592,454 |
Weighted average common shares issued during the period including penny warrants issued and outstanding and excluding restricted stock awards not vested as of quarter-end |  |  | 18,876,209 |  |  |  | 3,795,880 |  |  |  | 7,576,258 |  |  |  | 1,728,091 |
Denominator for basic and diluted earnings per common shares — weighted average common shares |  |  | 26,983,023 |  |  |  | 6,388,335 |  |  |  | 15,683,072 |  |  |  | 4,320,546 |
Basic and diluted loss per share |  | $ | (1.14 | ) |  | $ | (1.56 | ) |  | $ | (3.29 | ) |  | $ | (7.15 | )

The Company notes as continuing operations was in a Net loss for the three and nine months ended September 30, 2025 and 2024, as such basic and diluted EPS is the same balance as continuing operations acts as the control amount in which would cause antidilution. Not included in the computation of earnings per share, assuming dilution, for the three and nine months ended September 30, 2025, were options to purchase 2,645 shares of the Company’s common stock, 199,190 nonvested restricted stock units, and 5,582,790 outstanding warrants not exercised which excludes penny warrants that can be potentially exercised. These potentially dilutive items were excluded because the calculation of incremental shares resulted in an anti-dilutive effect.

Not included in the computation of earnings per share, assuming dilution, for the three and nine months ended September 30, 2024, were options to purchase 3,325 shares of the Company’s common stock, 5,692 nonvested restricted stock units, and 3,222,446 outstanding warrants not exercised which excludes penny warrants that can be potentially exercised. These potentially dilutive items were excluded because the calculation of incremental shares resulted in an anti-dilutive effect.

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10. Commitments and Contingencies

Commitments:

Leases

The Company determines whether an arrangement is a lease at inception. The Company and its subsidiaries have operating leases for certain manufacturing, laboratory, office facilities and certain equipment. The leases have remaining lease terms of approximately three years to 22twenty-two years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of September 30, 2025 and December 31, 2024, the Company has no assets recorded under finance leases.

Lease expense for these leases is recognized on a straight-line basis over the lease term. For the three and nine months ended September 30, total lease costs are comprised of the following:

Summary of Lease Expense Recognized on Straight-line Basis Over Lease Term

|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
(Dollars in thousands) |  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Operating lease cost |  | $ | 70 |  |  | $ | 17 |  |  | $ | 106 |  |  | $ | 139 |
Short-term lease cost |  |  | 13 |  |  |  | — |  |  |  | 50 |  |  |  | — |
Total net lease cost |  | $ | 83 |  |  | $ | 17 |  |  | $ | 156 |  |  | $ | 139 |

Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related asset or liability for such leases. On April 3, 2025, Soluna KK Energy ServiceCo, LLC (“Soluna KK Energy”), a subsidiary of the Company, entered into a lease agreement for 50 acres of property located in Willacy County, Texas, for the purpose of constructing, installing, operating, and maintaining modular data centers and related facilities. Soluna KK Energy can terminate the lease within six months of April 3, 2025. Through July 2025, there was uncertainty over project funding and whether the Company would extend the lease agreement. As such, the Company recorded the lease agreement as short-term. In August 2025, Soluna KK Energy extended the lease agreement for the additional term of twenty-two years. Accordingly, the Company recorded a right-of-use asset and lease liability.

Other information related to leases was as follows:

Schedule of Other Information Related to Leases

|  | Nine Months Ended September 30, 2025 |
Weighted Average Remaining Lease Term (in years): |  |  |  |
Operating leases |  |  | 20.39 |
Weighted Average Discount Rate: |  |  |  |
Operating leases |  |  | 6.34 | %

(Dollars in thousands) |  | Nine Months Ended September 30, 2025 |  |  | Nine Months Ended September 30, 2024 |
Supplemental Cash Flows Information: |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows from operating leases |  | $ | 109 |  |  | $ | 141 |
Non-Cash Activity Right-of-use assets obtained in exchange for lease obligations: |  |  |  |  |  |  |  |
Operating leases |  | $ | 3,441 |  |  | $ | - |

Maturities of noncancellable operating lease liabilities are as follows for the quarter ending September 30:

Schedule of Maturity of Operating Lease Liabilities

(Dollars in thousands) |  |  |
|  | 2025 |
2025 (remainder of year) |  | $ | 91 |
2026 |  |  | 314 |
2027 |  |  | 320 |
2028 |  |  | 272 |
2029 |  |  | 279 |
Thereafter |  |  | 5,643 |
Total lease payments |  |  | 6,919 |
Less: imputed interest |  |  | (3,240 | )
Total lease obligations |  |  | 3,679 |
Less: current obligations |  |  | (96 | )
Long-term lease obligations |  | $ | 3,583 |

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As of September 30, 2025, there were no additional operating lease commitments that had not yet commenced.

Project Dorothy 2 and Project Kati Commitments:

As of September 30, 2025, the Company was contractually committed for approximately $11.9 million of capital expenditures, primarily related to infrastructure builds, equipment procurement, and labor associated with the Company’s Project Dorothy 2 and Project Kati datacenters. These capital expenditures are expected to occur over the current year.

Contingencies:

Spring Lane Capital Contingency

The Company has a potential contingency associated with an agreement with SLC of up to $250 thousand which would be reduced by a proportion of funding received from SLC up to the $45.0 million aggregate contribution cap. The Company considers the probability of a payment for the contingency to be remote.

Legal

We are subject to legal proceedings, claims and liabilities which arise in the ordinary course of business. When applicable, we accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred.

On December 29, 2022, NYDIG filed a complaint against the Soluna Parties in the Court regarding 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 approximately $9.2 million 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.

11. Related Party Transactions

MeOH Power, Inc.

On December 18, 2013, MeOH Power, Inc. and the Company executed a Senior Demand Promissory Note (the Note) in the amount of $380 thousand to secure the intercompany amounts due to the Company from MeOH Power, Inc. upon the deconsolidation of MeOH Power, Inc. Interest accrues on the Note at the Prime Rate in effect on the first business day of the month, as published in the Wall Street Journal. At the Company’s option, all or part of the principal and interest due on this Note may be converted to shares of common stock of MeOH Power, Inc. at a rate of $0.07 per share. Interest began accruing on January 1, 2014. The Company recorded a full allowance against the Note. As of September 30, 2025 and December 31, 2024, $399 thousand and $385 thousand, respectively, of principal and interest are available to convert into shares of common stock of MeOH Power, Inc. Any adjustments to the allowance are recorded as miscellaneous expense during the period incurred.

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Employee Receivables

Certain employees have a receivable due to the Company based on their stock-based awards, in which $110 thousand and $178 thousand was outstanding as of September 30, 2025 and December 31, 2024, respectively. The balance is currently presented as $13 thousand and $82 thousand, respectively within Prepaid expenses and other current assets as of September 30, 2025 and December 31, 2024, and $97 thousand and $96 thousand, respectively within Other assets on the condensed consolidated financial statements.

HEL Transactions

As discussed in the Company’s 2023 Annual Report and all agreements included as exhibits and defined within the 2023 Annual Report, on October 29, 2021, the Company completed the Soluna Callisto acquisition pursuant to the merger agreement (the “Merger Agreement”). The purpose of the transaction was for SCI to acquire substantially all of the assets (other than those assets physically located in Morocco) formerly held by Harmattan Energy, Ltd. (“HEL”), which assets consisted of SCI’s existing pipeline of certain cryptocurrency mining projects that HEL previously transferred to SCI, which was formed expressly for this purpose, and to provide SCI with the opportunity to directly employ or retain the services of four individuals whose services it had retained through HEL prior to the merger. As a result of the merger, each share of common stock of Soluna Callisto issued and outstanding immediately prior to the effective time of the merger, other than shares owned by the Company or any of our subsidiaries, was cancelled and converted into the right to receive a proportionate share of the Merger Consideration.

In connection with the Soluna Callisto acquisition, effective as of October 29, 2021, upon and subject to the terms and conditions of the Termination Agreement, on November 5, 2021: (1) the existing Operating and Management Agreements between HEL and SCI were terminated in all respects; and (2)(A) SCI paid HEL $725 thousand, (B) SHI issued to HEL the Termination Shares, and (C) HEL and SHI entered into an Amended and Restated Contingent Rights Agreement that, among other things, amended the existing Contingent Rights Agreement by and between HEL and SHI, dated January 13, 2020, to provide SHI the right to invest directly in certain cryptocurrency mining opportunities being pursued by HEL. SHI filed a registration statement with the SEC to register the resale of the Termination Shares on February 14, 2022.

Due to conditions being met within the Merger Agreement in relation to energization and retention of employees, the Company has advised SCI US Holdings LLC, a Delaware limited liability company, who is the sole Effective Time Holder (as defined in the Merger Agreement) of the right to receive the Merger Shares of the Company and that 19,800 Merger Shares were issued on May 26, 2023 and 39,600 Merger Shares were issued on October 10, 2023. SCI US Holdings LLC has consented to the issuance of such Merger Shares as required under the Merger Agreement and has directed the Company to issue such Merger Shares to its affiliate, HEL. Following the issuance of the 59,400 Merger Shares, a total of 59,400 Merger Shares remains available for possible issuance through October 29, 2026 pursuant to the terms of the Merger Agreement as of September 30, 2025. On October 8, 2025, the Company issued an additional 17,820 Merger Shares, due to 30 MW of energization being met, as such as of the date of these condensed financial statements, a total of 41,580 Merger Shares remains available for possible issuance through October 29, 2026.

Several of HEL’s equity holders are affiliated with Brookstone Partners, the investment firm that previously held an equity interest in the Company through Brookstone Partners Acquisition XXIV, LLC. The Company’s two Brookstone-affiliated directors also serve as directors and, in one case, as an officer, of HEL and also have ownership interest in HEL. In light of these relationships, the various transactions by and between the Company and SCI, on the one hand, and HEL, on the other hand, were negotiated on behalf of the Company and SCI via an independent investment committee of the Board and separate legal representation. The transactions were subsequently unanimously approved by both the independent investment committee and the full Board.

Four of the Company’s directors have various affiliations with HEL.

Michael Toporek, the former Chief Executive Officer, and current Executive Chairman of the Board, owns (i) 90% of the equity of Soluna Technologies Investment I, LLC, which owns 57.9% of HEL and (ii) 100% of the equity of MJT Park Investors, Inc., which owns 3.1% of HEL, in each case, on a fully diluted basis. Mr. Toporek does not own directly, or indirectly, any equity interest in Tera Joule, LLC, which owns 9.2% of HEL; however, as a result of his 100% ownership of Brookstone IAC, Inc., which is the manager of Tera Joule, LLC, he has dispositive power over the equity interests that Tera Joule owns in HEL.

In addition, one of the Company’s directors, Matthew E. Lipman, serves as a director and is currently acting as President of HEL. Mr. Lipman does not directly own any equity interest in Tera Joule, LLC, which owns 9.2% of HEL; however, as a result of his position as a director and officer of Brookstone IAC, Inc., which is the manager of Tera Joule, LLC, he has dispositive power over the equity interests that Tera Joule owns in HEL. As a result, the approximate dollar value of the amount of Mr. Toporek’s and Mr. Lipman’s interest in the Company’s transactions with HEL for the year ended December 31, 2024 was $0 and $0, respectively.

John Belizaire, the Company’s Chief Executive Officer, and John Bottomley, who were elected to the Board upon the effective time of SCI’s acquisition of Soluna Callisto, serve as directors of HEL. In addition, Mr. Belizaire is the beneficial owner of 1,317,567 shares of common stock of HEL and 102,380 Class Seed Preferred shares, which are convertible into 86,763 shares of common stock of HEL. These interests give Mr. Belizaire an ownership of 10.54% in HEL. Mr. Belizaire also owns an interest in HEL indirectly through his 5.0139% interest in Tera Joule, LLC’s 965,945 Class Seed Preferred shares, which are convertible into 818,596 shares of common stock of HEL. Mr. Bottomley is the beneficial owner of 96,189, or approximately 0.72%, of the outstanding shares of common stock of HEL.

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The Company owned approximately 1.79% of HEL, calculated on a converted fully diluted basis, as of September 30, 2025 and December 31, 2024. The Company’s equity investment of HEL was fully impaired in fiscal year 2023, as such the equity investment is valued at $0 for both September 30, 2025 and December 31, 2024. The Company may enter into additional transactions with HEL in the future

12. Stock Based Compensation

The Company currently issues awards under the Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan, as amended (the “2021 Plan”), and the Soluna Holdings, Inc. Amended and Restated 2023 Stock Incentive Plan, as amended (the “2023 Plan”). There were no amendments to the 2021 Plan or the 2023 Plan during the three and nine months ended September 30, 2025. For further details regarding our stock-based compensation plans and the methods and assumptions used in the determination of the fair value of stock-based awards, refer to our Annual Report on Form 10-K filed with the SEC on March 31, 2025.

During the three months ended September 30, 2025, the Company did not grant any awards under the 2021 Plan.

During the three months ended September 30, 2025, the Company awarded the following under the 2023 Plan:

Schedule of Restricted Stock Share Based Compensation

Award Type |  | Number of Awards |  |  | Fair Value/Closing Market Price at Grant |
Restricted Stock Awards – Common Stock |  |  | 2,751,078 |  |  | $ | 0.47 |

1,618,805 of the restricted stock awards vest at separation from the Company and 1,132,273 of the restricted stock awards vest 33% on September 1, 2026, 33% on September 1, 2027 and 34% on September 1, 2028.

During the nine months ended September 30, 2025, the Company awarded the following under the 2021 Plan:

Award Type |  | Number of Awards |  |  | Fair Value/Closing Market Price at Grant |
Restricted Stock Awards – Common Stock |  |  | 2,140,683 |  |  | $ | 0.64 |
Restricted Stock Units – Common Stock |  |  | 32,000 |  |  | $ | 0.63 |
|  |  | 2,172,683 |  |  |  |  |

During the nine months ended September 30, 2025, the Company awarded the following under the 2023 Plan:

Award Type |  | Number of Awards |  |  | Fair Value/Closing Market Price at Grant |
Restricted Stock Awards – Common Stock |  |  | 2,751,078 |  |  | $ | 0.47 |

2,820,117 of the restricted stock awards vest at separation from the Company, 939,371 of the restricted stock awards vest 33% on June 1 ,2026, 33% on June 1, 2027 and 34% on June 1, 2028, 1,132,273 of the restricted stock awards vest 33% on September 1, 2026, 33% on September 1, 2027 and 34% on September 1, 2028 and 32,000 of the restricted stock units vest 33% on June 3, 2026, 33% on June 3, 2027 and 34% on June 3, 2028.

During the three months ended September 30, 2024, the Company awarded the following under the 2021 Plan:

Award Type |  | Number of Awards |  |  | Fair Value/Closing Market Price at Grant |
Restricted Stock Awards – Common Stock |  |  | 542,896 |  |  | $ | 3.96 |

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During the three months ended September 30, 2024, the Company awarded the following under the 2023 Plan:

Award Type |  | Number of Awards |  |  | Fair Value/Closing Market Price at Grant |
Restricted Stock Awards – Common Stock |  |  | 645,795 |  |  | $ | 3.96 |

12,844 of the restricted stock awards vested immediately, 682,526 of the restricted stock awards vest at separation from the Company, 14,505 of the restricted stock awards vested on June 1, 2025, 14,894 of the restricted stock awards vest on June 1, 2026, 1,710 of the restricted stock awards vest on June 1, 2027, and 462,212 of the restricted stock awards vest 33% on September 1, 2025, 33% on September 1, 2026 and 34% on September 1, 2027.

During the nine months ended September 30, 2024, the Company awarded the following under the 2021 Plan:

Award Type |  | Number of Awards |  |  | Fair Value/Closing Market Price at Grant |
Restricted Stock Awards – Common Stock |  |  | 391,544 |  |  | $ | 1.52 |
Restricted Stock Awards – Common Stock |  |  | 90,734 |  |  | $ | 2.41 |
Restricted Stock Awards – Common Stock |  |  | 542,896 |  |  | $ | 3.96 |
Restricted Stock Awards – Preferred A Stock |  |  | 1,892,300 |  |  | $ | 2.50 |
|  |  | 2,917,474 |  |  |  |  |

During the nine months ended September 30, 2024, the Company awarded the following under the 2023 Plan:

Award Type |  | Number of Awards |  |  | Fair Value/Closing Market Price at Grant |
Restricted Stock Awards – Common Stock |  |  | 610,234 |  |  | $ | 1.52 |
Restricted Stock Awards – Common Stock |  |  | 57,255 |  |  | $ | 2.41 |
Restricted Stock Awards – Common Stock |  |  | 645,795 |  |  | $ | 3.96 |
|  |  | 1,313,284 |  |  |  |  |

38,153 of the restricted stock awards vested immediately, 2,704,772 of the restricted stock awards vest at separation from the Company, 690,223 of the restricted stock awards vest 33% on June 1, 2024, 33% on June 1, 2025 and 34% on June 1, 2026, 304,289 of the restricted stock awards vest 33% on June 1, 2025, 33% on June 1, 2026 and 34% on June 1, 2027, 14,505 of the restricted stock awards vest on June 1, 2025, 14,894 of the restricted stock award vest on June 1, 2026, 1,710 of the restricted stock awards vest on June 1, 2027, and 462,212 of the restricted stock awards vest 33% on September 1, 2025, 33% on September 1 , 2026 and 34% on September 1, 2027.

No options were granted under the 2021 Plan and the 2023 Plan for the three and nine months ended September 30, 2025 and September 30, 2024.

During August 2025, upon the successful election to the Board, certain Awards with separation vesting incurred an extension of the vesting term by three years. As such, a modification occurred. All such unvested equity awards were probable of vesting as of the modification date and the change was accounted for as a Type I modification. In a Type I modification, the Company is required to calculate the incremental difference of the awards, which equals the difference of new award value inclusive of estimated forfeitures and the fair value of the original award as of the modification date. As of the modification date, there is no reversal or adjustment of previously recognized stock compensation expense. The modification related to 492,645 awards of restricted stock granted to two board members. There was no incremental compensation cost resulting from the modification since the awards are grants of restricted stock. The difference between the fair value of the original award as of the modification date and the fair value of the new award as of the modification date are identical, as fair value is determined based on the stock price as of that date.

During April 2024, the Company cancelled certain vested Awards and modified the terms of certain unvested Awards, to permit different settlement outcomes. The service period and vesting terms were changed at the time of modification. All such vested Awards were fully vested as of the cancellation date and all compensation cost had been recognized. All such unvested equity awards were probable of vesting as of the modification date and the change was accounted for as a Type I modification. In a Type I modification, the Company is required to calculate the incremental difference of the awards, which equals the difference of new award value inclusive of estimated forfeitures and the fair value of the original award as of the modification date. As of the modification date, there is no reversal or adjustment of previously recognized stock compensation expense. The modification related to the cancellation of 48,547 under the water stock options granted to eight board members. The options were replaced with new awards of restricted stock. The amount of incremental compensation cost resulting from the modification was approximately $4.0 million.

The Company will recognize the compensation expense on a straight-line basis over the service period for the entire Awards. Accordingly, as of September 30, 2025 and December 31, 2024, the Awards from the Plans are presented within the stockholders’ equity section of the Company’s balance sheet.

As of September 30, 2025, unrecognized compensation cost related to unvested Awards was approximately $8.2 million. That cost is expected to be recognized over a weighted-average period of approximately 1.5 years.

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13. Effect of Recent Accounting Updates

Accounting Updates Effective for fiscal year 2025

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (the “FASB”) in the form of accounting standard updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”). The Company considered the applicability and impact of all ASUs. ASUs not mentioned below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendment is required to be disclosed on an annual basis, in which the Company will include on its annual report for the year ended December 31, 2025.

Stock Compensation

In March 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), to clarify the scope application of profits interest and similar awards by adding illustrative guidance in ASC 718, Compensation—Stock Compensation (“ASC 718”). ASU 2024-01 clarifies how to determine whether profits interest and similar awards should be accounted for as a share-based payment arrangement (ASC 718) or as a cash bonus or profit-sharing arrangement (ASC 710, Compensation—General, or other guidance) and applies to all reporting entities that account for profits interest awards as compensation to employees or non-employees. In addition to adding the illustrative guidance, ASU 2024-01 modified the language in paragraph 718-10-15-3 to improve its clarity and operability without changing the guidance. ASU 2024-01 is effective for fiscal years beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted. The amendments should be applied either retrospectively to all prior periods presented in the financial statements, or prospectively to profits interests and similar awards granted or modified on or after the adoption date. The Company notes that this ASU did not have an impact on the condensed consolidated financial statements for the three and nine months ended September 30, 2025. If any new awards are issued in the future, the Company will evaluate the scope application of this ASU.

Accounting Updates Not Yet Effective

Improvements to Comprehensive Income- Expense Disaggregation

In December 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires, in the notes to the financial statements, disclosures of specified information about certain costs and expenses specified in the updated guidance. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact the updated guidance will have on its disclosures.

Debt with Conversion and Other Options

In December 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. ASU 2024-04 clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion to improve relevance and consistency. The new standard is effective for the Company for its annual periods beginning after December 15, 2025 and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.

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14. Variable Interest Entities and Voting Interest Entities

On January 26, 2022, DVSL was created in order to construct, own, operate and maintain data centers in order to support the mining of cryptocurrency assets, batch processing and other non-crypto related activities (collectively, the “Project”). On May 3, 2022, SCI entered into a Bilateral Master Contribution Agreement (the “Bilateral Contribution Agreement”) with Spring Lane Capital, pursuant to which Spring Lane agreed, pursuant to the terms and conditions of such agreement, to make one or more capital contributions to, and in exchange for equity in, SCI or one of its subsidiaries up to an aggregate amount of $45 million, as amended in the third quarter of fiscal year 2024 to fund certain projects to develop green data centers co-located with renewable energy assets (the “Spring Lane Commitment”).

On August 5, 2022, the Company entered into a Contribution Agreement (the “Dorothy Contribution Agreement”) with Spring Lane, Soluna DV Devco, LLC (“Devco”), an indirect wholly owned subsidiary of SCI, and DVSL an entity formed in order to further the Company’s development for Project Dorothy, (each, a “Party” and, together, the “Parties”). Pursuant to the Dorothy Contribution Agreement, the Company committed to a capital contribution of up to approximately $26.3 million to DVSL (the “Company Commitment”), and on August 5, 2022, the Company was deemed to have contributed approximately $8.1 million, through payment of capital expenditures and development costs made on behalf of DVSL by the Company prior to August 5, 2022. Further under the Agreement, Spring Lane committed to a capital contribution of up to $12.5 million to DVSL (the “Spring Lane Dorothy Commitment”), and as of December 31, 2022, Spring Lane had actually contributed approximately $4.8 million. Under the Dorothy Contribution Agreement, the Company and Spring Lane have committed to make subsequent contributions, up to their respective Company Commitment and Spring Lane Dorothy Commitment amounts, on a pro rata basis, upon receipt of a contribution request from DVSL, as set forth in the Dorothy Contribution Agreement and subject to the satisfaction of certain conditions described therein. The proceeds of any subsequent commitments will be applied to pay project costs in accordance with the project budget.

In exchange for their contributions, the Company and Spring Lane were issued 67.8% and 32.2% of the Class B Membership Interests in DVSL, respectively, and were admitted as Class B members of DVSL. Further pursuant to the Dorothy Contribution Agreement, DVSL issued 100% of its Class A Membership Interests to Devco.

The Company evaluated this legal entity under ASC 810, Consolidations and determined that DVSL is a variable interest entity (“VIE”) that should be consolidated into the Company, with a non-controlling interest recorded to account for Spring Lane’s equity ownership of the Company. The Company has a variable interest in DVSL. The entity was designed by the Company to create an entity for outside investors to invest in specific projects. The creation of this entity resulted in the Company, through its equity interest in DVSL, absorbing operational risk that the entity was created to create and distribute, resulting in the Company having a variable interest in DVSL.

On March 10, 2023, the Company along with Devco, and DVSL, a Delaware limited liability company (the “Project Company”) entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Soluna SLC Fund I Projects Holdco, LLC, a Delaware limited liability company (“Spring Lane”) that is wholly owned indirectly by Spring Lane Management LLC. The Project Company was constructing a modular data center with a peak demand of 25 MW (the “Dorothy Phase 1A Facility”).

Under a series of transactions in February 2023 and March 2023, culminating in the March 10, 2023 Purchase and Sale Agreement, the Company sold to Spring Lane certain Class B Membership Interests for a purchase price of $7.5 million (the “Sale”). After giving effect to the Sale, the Company owned 6,790,537 Class B Membership Interests (constituting 14.6% of the Class B Membership Interests) and Spring Lane owns 39,791,988 Class B Membership Interests (constituting 85.4% of the Class B Membership Interests). The cash portion of the purchase price paid by Spring Lane to the Company was approximately $5.8 million, which represented the purchase price of $7.5 million less the Company’s pro rata share of certain contributions funded entirely by Spring Lane in the earlier portion of this series of transactions occurring during February 2023 and March 2023. As a further part of these transactions, the parties agreed that from January 1, 2023 onwards, the Company would bear only 14.6% of the costs relating to the construction and operation of the Dorothy Phase 1A Facility, compared to its 67.8% share until that time, including during the calendar year 2022. After Spring Lane Capital realizes an 16% Internal Rate of Return hurdle on its investments, the Company retains the right to 50% of the profits on DVSL. In connection with the Spring Lane transactions and agreements, Soluna DV Services, LLC. will be providing the operations and maintenance services to DVSL. DVCC expects to receive a margin of 20% for services rendered on certain expenses.

Concurrently with the Sale, the Company, Spring Lane, Devco and the Project Company entered into (a) the Fourth Amended and Restated Limited Liability Company Agreement of the Project Company, dated as of March 10, 2023 (the “Fourth A&R LLCA”), an amendment and restatement of the Third Amended and Restated Limited Liability Company Agreement of the Project Company dated as of March 3, 2023, and (b) the Amended and Restated Contribution Agreement, dated as of March 10, 2023 (the “A&R Contribution Agreement”), an amendment and restatement of the Contribution Agreement dated as of August 5, 2022. The Fourth A&R LLCA provides for certain updates in respect of Spring Lane’s majority ownership. The A&R Contribution Agreement reflects updated pro rata member funding percentages as a result of the Sale as well as updated contribution caps for each of the Company and Spring Lane.

As of January 1, 2023, there were no changes in the Limited Liability Agreement of DVSL other than those related to incorporating the new investment and the purpose and design of DVSL has not changed. The Company evaluated the concepts under ASC 810 for DVSL after the change in membership interest, concluding that this resulted in the Project Company not being structured with non-substantive voting rights, as the noncontrolling shareholders have disproportionately fewer voting rights but the activities are not conducted on their behalf. This, in conjunction with there being sufficient equity at risk to finance its activities and the equity holders as a group having the characteristics of a controlling financial interest in DVSL, results in DVSL not meeting the definition of a VIE. The Company’s consolidation model is based on the concept of power. Given the Company’s Class A membership interest, the Company has the ability to control the significant decisions made in the ordinary course of the business of DVSL. The non-controlling shareholders do not hold substantive participating rights, voting rights or liquidation rights. This results in the Project Company being a voting interest entity (“VOE”), therefore allowing the Company to continue to consolidate. Effective January 1, 2023, the Company’s ownership in DVSL was reduced from 67.8% to 14.6%; see above for details.

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In September 2025, the Company agreed to terms of a debt facility with Generate under a Credit and Guarantee Agreement, as discussed in Note 8. Several events occurred in connection with the debt facility, [1] the Company completed a restructuring of the subsidiaries that comprise “Project Dorothy 1A” and “Project Dorothy 2” (herein referred to as the “Dorothy Restructuring”), [2] Soluna DVSL ComputeCo LLC, Soluna DVSL II ComputeCo LLC, and Soluna KK I ComputeCo LLC entered into a First Priority Leasehold Deed of Trust (the “Deed of Trust”) with Generate which provides Generate with the power of sale and right of entry and possession of the Trust Property.

Following the Dorothy Restructuring, Project Dorothy 1A consists of Soluna DVSL JVCo, LLC (“DVSL JVCo”), which has Class A units owned by SDI and Class B units owned by SLC (Soluna SLC Fund I). DVSL JVCo is then the sole parent of Soluna DVSL HoldCo, LLC (“DVSL HoldCo”), which holds 100% of the Class A units in DVSL. The Class B units of DVSL ComputeCo are held by the Company. The total ownership of Project Dorothy 1A remains such that the Developer holds all Class A units and that SLC holds 85.4% of Class B units with the Company holding the remaining 14.6% of Class B units.

The Company noted that 1) there is no substantive change to the ascending view of the organizational chart since the Company (through SDI and newly created DVSL JVCo and DVSL ComputeCo) beneficially own the Class A units (i.e., managing units) of DVSL and 2) there are no substantive kick-out rights that exist within Project Dorothy 1A that would cause SDI to not have the ability to direct the activities that most significantly impact the economic performance of DVSL. In addition, the entity’s obligation to absorb losses and right to receive benefits has not changed. As such, Soluna would continue to consolidate the entity since a change in control has not occurred following the execution of Generate Credit Agreement and Deed of Trust.

The carrying amount of the assets and liabilities was as follows for DVSL JVCo:

Schedule of Variable Interest Entities of Assets and Liabilities

(Dollars in thousands) |  | September 30, 2025 |  |  | December 31, 2024 |
Current assets: |  |  |  |  |  |  |  |
Cash and restricted cash |  | $ | 7,493 |  |  | $ | 2,598 |
Accounts receivable, net |  |  | 997 |  |  |  | 481 |
Other receivable, related party |  |  | 1,790 |  |  |  | 1,090 |
Prepaid expenses and other current assets |  |  | 115 |  |  |  | 34 |
Total current assets |  |  | 10,395 |  |  |  | 4,203 |
Other assets, related party |  |  | 1,948 |  |  |  | 2,452 |
Operating lease right-of-use assets |  |  | 40 |  |  |  | 42 |
Deposits on equipment |  |  | 232 |  |  |  | - |
Property, plant and equipment, net |  |  | 12,027 |  |  |  | 12,744 |
Total assets |  | $ | 24,642 |  |  | $ | 19,441 |
Current liabilities: |  |  |  |  |  |  |  |
Due to intercompany |  | $ | 285 |  |  | $ | 51 |
Accrued liabilities |  |  | 892 |  |  |  | 1,608 |
Current portion of debt |  |  | 2,826 |  |  |  | - |
Customer deposits |  |  | 789 |  |  |  | 296 |
Operating lease liability |  |  | 4 |  |  |  | 4 |
Total current liabilities |  |  | 4,796 |  |  |  | 1,959 |
Operating lease liability |  |  | 36 |  |  |  | 39 |
Current portion of debt |  |  | 36 |  |  |  | 39 |
Long term debt |  |  | 1,878 |  |  |  | - |
Customer deposits- long term |  |  | 320 |  |  |  | - |
Other liabilities, related party |  |  | 699 |  |  |  | 275 |
Total liabilities |  | $ | 7,729 |  |  | $ | 2,273 |

On May 9, 2023, the Company’s indirect subsidiary DVCC completed a strategic partnership and financing with a special purpose vehicle, Navitas West Texas Investments SPV, LLC, (“Navitas”) organized by Navitas Global, to complete the second phase of the Dorothy Project (“Dorothy 1B”). Under a Contribution Agreement among the parties, the Company owned a substantially complete 25MW data center under construction, in which the Company had contributed capital expenditures for the data center. Soluna and Navitas amended and restated the Initial LLCA (the “Existing LLCA”) to reflect Navitas’ contribution of $4.5 million and its receipt of 4,500 Membership Interests, constituting 26.5% of the outstanding Membership Interests of DVCC. On June 2, 2023, Soluna and Navitas amended and restated the Existing LLCA to (a) reflect (i) Navitas’s additional capital contribution of approximately $7.6 million and receipt of an additional 7,597 Membership Interests, for a total of 12,097 Membership Interests and 49% ownership of DVCC, and (ii) Soluna’s additional capital contribution of $1.34 million and receipt of an additional 1,340 Membership Interests, for a total of 12,590 Membership Interests and 51% ownership of DVCC, and (b) describe the respective rights and obligations of the Members and the management of DVCC. As of September 30, 2025, Navitas owns 49% and Soluna owns 51% of DVCC.

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The Company evaluated this legal entity under ASC 810, Consolidations and determined that DVCC is a VIE that should be consolidated into the Company, with a non-controlling interest recorded to account for Navitas’ equity ownership of DVCC. The Company has a variable interest in DVCC. The entity was designed by the Company to create an entity for outside investors to invest in specific projects. The creation of this entity resulted in the Company, through its equity interest in DVCC, absorbing operational risk that the entity was created to create and distribute, resulting in the Company having a variable interest in DVCC.

DVCC is a VIE of the Company due to DVCC being structured with non-substantive voting rights. This is due to the following two factors being met as outlined in ASC 810-10-15-14 that require the VIE model to be followed.

| a. | The voting rights of the Company are not proportional to their obligation to absorb the expected losses of the legal entity. The Company gave Navitas veto rights over significant decisions, which resulted in Soluna having fewer voting rights relative to their obligation to absorb the expected losses of the legal entity.
| b. | Substantially all of DVCC’s activities are conducted on behalf of the Company, which has disproportionally fewer voting rights.

Also, the Company is the primary beneficiary due to having the power to direct the activities of DVCC that most significantly impact the performance of DVCC due to its role as the manager handling the day-to-day activities of DVCC as well as majority ownership and the obligation to absorb losses or gains of DVCC that could be significant to the Company.

Accordingly, the accounts of DVCC are consolidated in the accompanying financial statements.

The carrying amount of the VIE’s assets and liabilities was as follows for DVCC:

Schedule of Variable Interest Entities of Assets and Liabilities

(Dollars in thousands) |  | September 30, 2025 |  |  | December 31, 2024 |
Current assets: |  |  |  |  |  |  |  |
Cash and restricted cash |  | $ | 1,515 |  |  | $ | 2,057 |
Accounts receivable |  |  | - |  |  |  | 37 |
Prepaid expenses and other current assets |  |  | 137 |  |  |  | 49 |
Other receivable, related party |  |  | 372 |  |  |  | 1,692 |
Total current assets |  |  | 2,024 |  |  |  | 3,835 |
Other assets, related party |  |  | 1,948 |  |  |  | 2,452 |
Operating lease right-of-use assets |  |  | 40 |  |  |  | 42 |
Property, plant and equipment, net |  |  | 15,474 |  |  |  | 17,774 |
Total assets |  | $ | 19,486 |  |  | $ | 24,103 |
Current liabilities: |  |  |  |  |  |  |  |
Due to intercompany |  | $ | 1,570 |  |  | $ | 1,475 |
Accrued liabilities |  |  | 648 |  |  |  | 1,392 |
Operating lease liability |  |  | 4 |  |  |  | 4 |
Current portion of debt |  |  | - |  |  |  | 137 |
Total current liabilities |  |  | 2,222 |  |  |  | 3,008 |
Operating lease liability |  |  | 36 |  |  |  | 39 |
Total liabilities |  | $ | 2,258 |  |  | $ | 3,047 |

On July 22, 2024 (the “Effective Date”), Soluna Holdings, Inc. (the “Company”) closed financing for the Dorothy 2 project. This project involves Soluna Digital, Inc. (the “Developer”) and Soluna DVSL II ComputeCo, LLC (“DVSL II”), a special purpose vehicle initially owned solely by the Developer. They are collaborating on the development, design, procurement, and construction of a 48 MW modular data center (the “Project Dorothy 2”) in Silverton, Texas. This facility is owned by DVSL II and operated by Soluna US Services, LLC, and may engage in cryptocurrency, batch processing, and other non-crypto related activities. It is adjacent to two other company modular data center projects at the same site.

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Project Dorothy 2 is financed by Soluna2 SLC Fund II Project Holdco LLC, an investment vehicle of SLC with a capital contribution of up to $29.98 million, and the Developer, as the parent company of DVSL II, with an initial capital contribution of up to $4.6 million. As of the Effective Date, the Company and the Developer became co-owners of DVSL II. In exchange for contributions to DVSL II, the Company and SLC were initially issued 42% and 58% of the Class B Membership Interests in DVSL II respectively, and were admitted as Class B members of DVSL II. Further, DVSL II issued 100% of its Class A Membership Interests to SDI. In relation to distributions, once ERCOT Achievement Date has been met ( date on which SLC and the Company have mutually agreed upon the parameters for power trading or demand response program in the ERCOT market) until the Target Return Date (last day of quarter in which the Class B members achieve an 18% internal rate of return), the Class A members will obtain 7.5% of the distributable cash with the remaining 92.5% being distributed to the Class B members on a pro-rata basis. After the Target Return Date is met, 50% of distributable cash will be allocated to the Class A members and 50% allocated to the Class B members in accordance with their membership interests.

Project Dorothy 2 allows the Developer to invest in DVSL II, with the total ownership of the Developer and its affiliates capped at 49% of the Class B Membership Interests. This investment can occur within 30 days after the Effective Date (treated equally to the initial Investor), from day 31 to 180 days after the Effective Date (subject to a purchase price formula with a 20% discount rate), or after 180 days with the initial Investor’s approval.

On May 16, 2024, the Company secured $1.0 million in financing from SLC for equipment and machinery for Project Dorothy 2 through an Equipment Loan Agreement (the “ELA”) between SDI SL Borrowing - 1, LLC (the “Borrower”) and SLC. On that date, SLC lent the Borrower $720,000 to purchase medium voltage cables and low voltage switchboards. This debt was later assigned to DVSL II on the Effective Date. Subsequently, the borrowing amount was paid in full by issuing SLC Class B Membership Interests in the Dorothy 2 project valued at three times the borrowing amount (i.e., $2.16 million).

On April 4, 2025, the Company transferred its Class B Membership to SLC, resulting in 0% Class B Membership Interests held by the Company. SDI still retains 100% Class A Membership Interests in DVSL II as of September 30, 2025. Based on evaluation, the Company would be able to consolidate this entity.

The Company evaluated this legal entity under ASC 810, Consolidations and determined that this entity is a VIE, as the equity holders as a group do not have the characteristics of a controlling financial interest. Even though SLC has all of the Class B membership, the Company holds all the Class A membership, which gives them the ability to control the significant decisions made in the ordinary course of business. The Company has the right to receive benefits that could potentially be significant to the VIE through its Class A membership interest, as it is eligible to receive 50% of distributions upon SLC obtaining a specified internal rate of return. The non-controlling shareholders do not hold substantive participating rights, voting rights or liquidation rights.

In September 2025, the Company agreed to terms of a debt facility with Generate under a Credit and Guarantee Agreement, as discussed in Note 8. Several events occurred in connection with the debt facility, [1] the Company completed a restructuring of the subsidiaries that comprise “Project Dorothy 1A” and “Project Dorothy 2” (herein referred to as the “Dorothy Restructuring”), [2] Soluna DVSL ComputeCo LLC, Soluna DVSL II ComputeCo LLC, and Soluna KK I ComputeCo LLC entered into a First Priority Leasehold Deed of Trust (the “Deed of Trust”) with Generate which provides Generate with the power of sale and right of entry and possession of the Trust Property.

Following the Dorothy Restructuring, Project Dorothy 2 consists of Soluna DVSL II JVCo, LLC (“DVSL II JVCo”), which has Class A units owned by the Developer and Class B units owned by SLC. DVSL II JVCo is then the sole parent of Soluna DVSL II HoldCo, LLC (“DVSL II HoldCo”), which is the sole owner of DVSL II ComputeCo. The total ownership of Project Dorothy 2 remains such that the Developer holds all Class A units and that SLC holds all Class B units.

The Company noted that [1] there is no substantive change to the ascending view of the organizational chart since the Company (through the Developer and newly created DVSL II JVCo and DVSL II ComputeCo) beneficially own the Class A units (i.e., managing units) of DVSL II and [2] there are no substantive kick-out rights that exist within Project Dorothy 2 that would cause the Developer to not have the ability to direct the activities that most significantly impact the economic performance of DVSL II. In addition, the entity’s obligation to absorb losses and right to receive benefits has not changed. As such, Soluna would continue to consolidate the entity since a change in control has not occurred following the execution of Credit Agreement and Deed of Trust.

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The carrying amount of the assets and liabilities was as follows for DVSL II JVCo:

Schedule of Variable Interest Entities of Assets and Liabilities

(Dollars in thousands) |  | September 30, 2025 |  |  | December 31, 2024 |
Current assets: |  |  |  |  |  |  |  |
Cash and restricted cash |  | $ | 7,004 |  |  | $ | 402 |
Accounts receivable, trade |  |  | 2,079 |  |  |  | - |
Accounts receivable, intercompany |  |  | - |  |  |  | 2,868 |
Prepaid expenses and other current assets |  |  | 750 |  |  |  | 41 |
Other receivable, related party |  |  | 2,580 |  |  |  | 3,370 |
Total current assets |  |  | 12,413 |  |  |  | 6,681 |
Other assets |  |  | 172 |  |  |  | - |
Other assets, related party |  |  | 10,437 |  |  |  | 13,223 |
Operating lease right-of-use assets |  |  | 76 |  |  |  | 82 |
Property, plant and equipment, net |  |  | 15,371 |  |  |  | - |
Deposits on equipment |  |  | - |  |  |  | 716 |
Total assets |  | $ | 38,469 |  |  | $ | 20,702 |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable, trade |  | $ | 132 |  |  | $ | - |
Accounts payable, related party |  |  | 2,004 |  |  |  | 3,598 |
Accrued liabilities |  |  | 825 |  |  |  | - |
Due to intercompany |  |  | - |  |  |  | 9 |
Current portion of debt |  |  | 3,053 |  |  |  | - |
Operating lease liability |  |  | 8 |  |  |  | 7 |
Total current liabilities |  |  | 6,022 |  |  |  | 3,614 |
Other liabilities |  |  | 1,433 |  |  |  | - |
Other liabilities-related party |  |  | 854 |  |  |  | - |
Long-term debt |  |  | 3,031 |  |  |  | - |
Operating lease liability |  |  | 68 |  |  |  | 74 |
Total liabilities |  | $ | 11,408 |  |  | $ | 3,668 |

On July 22, 2025 (the “Effective Date”), Soluna Digital, Inc. (“SDI”), a subsidiary of the Company, finalized a contribution agreement and operating agreement for Project Kati, a 166 MW facility located in Willacy County, Texas, in which is expected to be delivered in two phases at 83 MW each. This project involves SDI as the Developer, Soluna KKSL JVCo LLC (the “KKSL JVCo”), a special purpose vehicle initially owned solely by SDI, and Soluna2 Kati Project Holdco LLC (“Spring Lane”). This facility is owned by KKSL JVCo, and operated by Soluna US Services, LLC, and may engage in cryptocurrency, batch processing, and other non-crypto related activities.

Currently Project Kati 1 is financed by Soluna2 Kati Project Holdco LLC, an investment vehicle of Spring Lane Capital (“SLC”) with a capital contribution of up to $48.98 million. In exchange for contributions to KKSL JVCo, SDI was issued 100% of Class A Membership Units and SLC were initially issued 100% of the Class B Membership Interests in KKSL JVCo, respectively, and were admitted as Class B members of KKSL JVCo. Further, SDI and Spring Lane entered into a Developer Investment Side Letter in which allows SDI to invest into KKSL JVCo up to 49% of ownership in the Class B Membership Interests for a period of six months after August 1, 2025.

In relation to distributions, until the Target Achievement Date (date at which Class B members achieve 16% of IRR), the Distributable Cash received by the Company shall be distributed ninety-two and five tenths percent (92.5%) to the Class B Members on a pro rata basis, and seven and five tenths percent (7.5%) to the Class A Member, until each of the Class B Members has received its Target Return; (ii) second, after the Target Achievement Date, the portion of Distributable Cash received by the Company shall be distributed fifty percent (50%) to the Class A Member (or its respective assigns), and fifty percent (50%) to the Class B Members (or their respective assigns), pro rata in accordance with their Membership Interests.

The Company evaluated this legal entity under ASC 810, Consolidations and determined that this entity is a VIE, as the equity holders as a group do not have the characteristics of a controlling financial interest. Even though SLC has all of the Class B membership, SDI holds all the Class A membership, which gives them the ability to control the significant decisions made in the ordinary course of business. The Company has the right to receive benefits that could potentially be significant to the VIE through its Class A membership interest, as it is eligible to receive 50% of distributions upon SLC obtaining a specified internal rate of return. The non-controlling shareholders do not hold substantive participating rights, voting rights or liquidation rights.

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The carrying amount of the assets and liabilities was as follows for KKSL JVCo:

Schedule of Variable Interest Entities of Assets and Liabilities

(Dollars in thousands) |  | September 30, 2025 |
Current assets: |  |  |  |
Cash and restricted cash |  | $ | 3,622 |
Due from intercompany |  |  | 725 |
Prepaid expenses and other current assets |  |  | 2,888 |
Total current assets |  |  | 7,235 |
Other assets, related party |  |  | 1,900 |
Operating lease right-of-use assets |  |  | 3,408 |
Property, plant and equipment, net |  |  | 6,847 |
Deposits on equipment |  |  | 581 |
Total assets |  | $ | 19,971 |
Current liabilities: |  |  |  |
Accounts payable, trade |  | $ | 2,449 |
Accounts payable, related party |  |  | 1,716 |
Accrued liabilities |  |  | 2,741 |
Operating lease liability |  |  | 33 |
Total current liabilities |  |  | 6,939 |
Other liabilities- related party |  |  | 1,373 |
Operating lease liability |  |  | 3,379 |
Total liabilities |  | $ | 11,691 |

15. Segment Information

The Company applies ASC 280, Segment Reporting, in determining its reportable segments. The Company has adopted ASU) 2023-07, Segment Reporting (Topic 280): Improvement to Reportable Segment Disclosures (ASU 2023-07), which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of significant segment expenses. Operating segments are aggregated into a reportable segment if the operating segments have similar quantitative economic characteristics and if the operating segments are similar in the following qualitative characteristics: (i) nature of products and services; (ii) nature of production processes; (iii) type or class of customer for their products and services; (iv) methods used to distribute the products or provide services; and (v) if applicable, the nature of the regulatory environment. The Company’s reportable segments are identified based on the types of service performed. The Company has three reportable segments: Cryptocurrency Mining, Data Center Hosting, and High-Performance Computing. In the third quarter of 2024, the Company initiated Soluna Cloud Services, a new business line to provide high performance computing services to support generative AI workstreams but decided to exit active provision of these services during the first quarter of 2025 and will focus in the future on provision of colocation services at our datacenters to host customers in the AI generative space.

The guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker (“CODM”) to decide how to allocate resources and for purposes of assessing such segments’ performance. The Company’s CODM is composed of several members of its senior leadership team directed by the CEO and CFO who use revenue and cost of revenues which formulate gross profit (loss), as well as total general and administrative expenses of the reporting segments to assess the performance of the business of our reportable operating segments and allocate resources. Operating profit (loss) is used to evaluate actual results against expectations, which are based on comparable prior results, current budget, and current forecast. Non-cash items of depreciation and amortization are included within both costs of sales and general and administrative expenses, however only depreciation through the Company’s site levels are evaluated for segment performance.

In the adoption of ASU 2023-07, the most significant provision was for the Company to disclose significant segment expenses (ie: costs of revenue) that are regularly provided to the CODM. Utility costs, wages and benefit related costs, facility and equipment costs, and depreciation costs at the site level were determined to be significant segment expenses. The CODM only reviews general and administrative expenses by site level as a whole, and not by significant expenses. No operating segments have been aggregated to form the reportable segments. The Company does not allocate all assets to the reporting segments as these are managed on an entity-wide basis. Therefore, the Company does not separately disclose the total assets of its reportable operating segments.

The Cryptocurrency Mining segment generates revenue from the cryptocurrency the Company earns through its Bitcoin mining activities, which is currently generated from Project Dorothy, and previously from Project Sophie and Marie. The Data Center Hosting segment generated revenue from hosting services provided to third-party Bitcoin mining customers at the Company’s data centers, which were previously at Project Marie and are currently from Project Sophie and Project Dorothy. The High-Performance Computing Services segment may generate revenue from either the sale or lease of HPC assets (such as Project Ada which leased GPUs), or from HPC/AI data centers to be leased to third-party HPC/AI customers. This segment began generating revenue in December 2024, as Project Ada worked to build its customer base. With the termination of the HPE Agreement, revenue was minimal for the nine months ended September 30, 2025 and a majority of the costs associated with the termination of approximately $28.6 million were included in the December 31, 2024 financial statements.

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The Company includes demand response revenue as a reconciling item of revenue and is not included within the three reportable segments. The Company utilizes its data centers to deliver demand response services to grid operators or utilities. Under these arrangements with a grid operator, the Company agrees to be available to ramp down a registered data center’s power consumption to a specific target level. In exchange, the grid pays the company a fee for this dispatch right, provided the Company can perform within certain parameters. The Company can be providing any type of service at the data centers whether it be Cryptocurrency Mining, Data Center Hosting, or AI to generate demand response service revenue.

The following table details revenue, cost of revenues, and other operating costs for the Company’s reportable segments for three months ended September 30, 2025 and 2024, and reconciles to net income (loss) on the consolidated statements of operations:

Schedule of Segment Reporting Information

For the three months ended September 30, 2025

|  | Cryptocurrency Mining |  |  | Data Center Hosting |  |  | High- Performance Computing Services |  |  | Total |
Segment Revenue: Revenue from external customers |  | $ | 2,769 |  |  | $ | 5,257 |  |  | $ | - |  |  | $ | 8,026 |
Reconciliation of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand response service revenue (a) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 389 |
Total consolidated revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 8,415 |
Less: Segment cost of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Utility costs |  |  | 1,237 |  |  |  | 1,308 |  |  |  | - |  |  |  | 2,545 |
Wages, benefits, and employee related costs |  |  | 167 |  |  |  | 665 |  |  |  | - |  |  |  | 832 |
Facilities and Equipment costs |  |  | 243 |  |  |  | 556 |  |  |  | - |  |  |  | 799 |
Cost of revenue- depreciation |  |  | 1,053 |  |  |  | 665 |  |  |  | - |  |  |  | 1,718 |
Other cost of revenue* |  |  | 123 |  |  |  | 330 |  |  |  | - |  |  |  | 453 |
Total segment cost of revenue |  |  | 2,823 |  |  |  | 3,524 |  |  |  | - |  |  |  | 6,347 |
General and administrative expenses |  |  | 3 |  |  |  | 874 |  |  |  | - |  |  |  | 877 |
Impairment on fixed assets |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Segment operating income (loss) |  | $ | (57 | ) |  | $ | 859 |  |  | $ | - |  |  | $ | 802 |

For the three months ended September 30, 2024

|  | Cryptocurrency Mining |  |  | Data Center Hosting |  |  | High- Performance Computing Services |  |  | Total |
Segment Revenue: Revenue from external customers |  | $ | 2,811 |  |  |  | 4,271 |  |  | $ | - |  |  | $ | 7,082 |
Reconciliation of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand response service revenue (a) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 443 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | 7,525 |
Less: Segment cost of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Utility costs |  |  | 1,395 |  |  |  | 1,523 |  |  |  | - |  |  |  | 2,918 |
Wages, benefits, and employee related costs |  |  | 212 |  |  |  | 516 |  |  |  | - |  |  |  | 728 |
Facilities and Equipment costs |  |  | 268 |  |  |  | 389 |  |  |  | 2,859 |  |  |  | 3,516 |
Cost of revenue- depreciation |  |  | 1,068 |  |  |  | 444 |  |  |  | - |  |  |  | 1,512 |
Other cost of revenue* |  |  | 183 |  |  |  | 221 |  |  |  | - |  |  |  | 404 |
Total segment cost of revenue |  |  | 3,126 |  |  |  | 3,093 |  |  |  | 2,859 |  |  |  | 9,078 |
General and administrative expenses |  |  | 57 |  |  |  | 804 |  |  |  | 83 |  |  |  | 944 |
Impairment on fixed assets |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Segment operating income (loss) |  | $ | (372 | ) |  | $ | 374 |  |  | $ | (2,942 | ) |  | $ | (2,940 | )

(a) |  | Demand response service revenue is included as a reconciling item of total revenue and not included as part of segment gross profit or loss.
* |  | Other cost of revenue includes insurance, outside service costs and margins, and general costs.

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The following table presents the reconciliation of segment operating income (loss) to net income (loss) before taxes:

|  | 2025 |  |  | 2024 |
|  | For the three months ended September 30, |
|  | 2025 |  |  | 2024 |
Segment operating income (loss) |  | $ | 802 |  |  | $ | (2,940 | )
Reconciling Items: |  |  |  |  |  |  |  |
Elimination of intercompany costs |  |  | 261 |  |  |  | 189 |
Other revenue (a) |  |  | 389 |  |  |  | 443 |
General and administrative, exclusive of depreciation and amortization (b) |  |  | (6,831 | ) |  |  | (4,304 | )
General and administrative, depreciation and amortization |  |  | (2,401 | ) |  |  | (2,404 | )
Interest expense |  |  | (1,212 | ) |  |  | (821 | )
(Loss) gain on debt extinguishment and revaluation, net |  |  | 10,107 |  |  |  | 875 |
Other financing expense |  |  | (4,746 | ) |  |  | - |
Loss on sale of fixed assets and credit on equipment deposit |  |  | (780 | ) |  |  | - |
Fair value adjustment (loss) gain |  |  | (22,047 | ) |  |  | 328 |
Other income (expense), net |  |  | 5 |  |  |  | (6 | )
Net loss before taxes |  | $ | (26,453 | ) |  | $ | (8,640 | )

(a) |  | Demand response service revenue is included as a reconciling item of total revenue and not included as part of segment gross profit or loss.
(b) |  | The reconciling general and administrative expense, exclusive of depreciation and amortization represent corporate and unallocated general and administrative expenses for the three months ended September 30, 2025 and 2024.

The following table details revenue, cost of revenues, and other operating costs for the Company’s reportable segments for nine months ended September 30, 2025 and 2024, and reconciles to net income (loss) on the consolidated statements of operations:

For the nine months ended September 30, 2025

|  | Cryptocurrency Mining |  |  | Data Center Hosting |  |  | High- Performance Computing Services |  |  | Total |
Segment Revenue: Revenue from external customers |  | $ | 8,630 |  |  | $ | 10,795 |  |  | $ | 28 |  |  | $ | 19,453 |
Reconciliation of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand response service revenue (a) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,057 |
Total consolidated revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 20,510 |
Less: Segment cost of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Utility costs |  |  | 3,927 |  |  |  | 2,160 |  |  |  | - |  |  |  | 6,087 |
Wages, benefits, and employee related costs |  |  | 588 |  |  |  | 1,668 |  |  |  | 7 |  |  |  | 2,263 |
Facilities and Equipment costs |  |  | 701 |  |  |  | 1,448 |  |  |  | - |  |  |  | 2,149 |
Cost of revenue- depreciation |  |  | 3,200 |  |  |  | 1,578 |  |  |  | - |  |  |  | 4,778 |
Other cost of revenue* |  |  | 410 |  |  |  | 839 |  |  |  | - |  |  |  | 1,249 |
Total segment cost of revenue |  |  | 8,826 |  |  |  | 7,693 |  |  |  | 7 |  |  |  | 16,526 |
General and administrative expenses |  |  | 62 |  |  |  | 1,337 |  |  |  | 270 |  |  |  | 1,669 |
Impairment on fixed assets |  |  | - |  |  |  | 12 |  |  |  | - |  |  |  | 12 |
Segment operating income (loss) |  | $ | (258 | ) |  | $ | 1,753 |  |  | $ | (249 | ) |  | $ | 1,246 |

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For the nine months ended September 30, 2024

|  | Cryptocurrency Mining |  |  | Data Center Hosting |  |  | High- Performance Computing Services |  |  | Total |
Segment Revenue: Revenue from external customers |  | $ | 13,691 |  |  | $ | 14,446 |  |  | $ | - |  |  | $ | 28,137 |
Reconciliation of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand response service revenue (a) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,612 |
Total consolidated revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 29,749 |
Less: Segment cost of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Utility costs |  |  | 4,093 |  |  |  | 4,243 |  |  |  | - |  |  |  | 8,336 |
Wages, benefits, and employee related costs |  |  | 594 |  |  |  | 1,443 |  |  |  | - |  |  |  | 2,037 |
Facilities and Equipment costs |  |  | 780 |  |  |  | 1,011 |  |  |  | 2,859 |  |  |  | 4,650 |
Cost of revenue- depreciation |  |  | 3,220 |  |  |  | 1,320 |  |  |  | - |  |  |  | 4,540 |
Other cost of revenue* |  |  | 488 |  |  |  | 530 |  |  |  | - |  |  |  | 1,018 |
Total segment cost of revenue |  |  | 9,175 |  |  |  | 8,547 |  |  |  | 2,859 |  |  |  | 20,581 |
General and administrative expenses |  |  | 193 |  |  |  | 994 |  |  |  | 141 |  |  |  | 1,328 |
Impairment on fixed assets |  |  | 130 |  |  |  | - |  |  |  | - |  |  |  | 130 |
Segment operating income (loss) |  | $ | 4,193 |  |  | $ | 4,905 |  |  | $ | (3,000 | ) |  | $ | 6,098 |

(a) |  | Demand response service revenue is included as a reconciling item of total revenue and not included as part of segment gross profit or loss.
* |  | Other cost of revenue includes insurance, outside service costs and margins, and general costs.

The following table presents the reconciliation of segment operating income (loss) to net income (loss) before taxes:

|  | 2025 |  |  | 2024 |
|  | For the nine months ended September 30, |
|  | 2025 |  |  | 2024 |
Segment operating income |  | $ | 1,246 |  |  | $ | 6,098 |
Reconciling Items: |  |  |  |  |  |  |  |
Elimination of intercompany costs |  |  | 708 |  |  |  | 513 |
Other revenue (a) |  |  | 1,057 |  |  |  | 1,612 |
General and administrative, exclusive of depreciation and amortization (b) |  |  | (17,384 | ) |  |  | (13,297 | )
General and administrative, depreciation and amortization |  |  | (7,207 | ) |  |  | (7,209 | )
Interest expense |  |  | (3,246 | ) |  |  | (1,694 | )
Gain (loss) on debt extinguishment and revaluation, net |  |  | 10,658 |  |  |  | (1,888 | )
Loss on sale of fixed assets and credit on equipment deposit |  |  | (802 | ) |  |  | (21 | )
Fair value adjustment loss |  |  | (22,165 | ) |  |  | (5,607 | )
Other financing expense |  |  | (5,203 | ) |  |  | - |
Other expense, net |  |  | (280 | ) |  |  | (32 | )
Net loss before taxes |  | $ | (42,618 | ) |  | $ | (21,525 | )

(a) |  | Demand response service revenue is included as a reconciling item of total revenue and not included as part of segment gross profit or loss.
(b) |  | The reconciling general and administrative expense, exclusive of depreciation and amortization represent corporate and unallocated general and administrative expenses for the nine months ended September 30, 2025 and 2024.

Concentrations

During the three months ended September 30, 2025 and September 30, 2024, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool and the Company’s participation in the demand response program, two customers each contributed more than 10% of the Company’s total consolidated revenue constituting approximately 40% for the three months ended September 30, 2025 and two customers contributed more than 10% of the Company’s total consolidated revenue constituting approximately 49% of the Company’s total consolidated revenue for the three months ended September 30, 2024.

During the nine months ended September 30, 2025 and September 30, 2024, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool and the Company’s participation in the demand response program, three customers each contributed more than 10% of the Company’s total consolidated revenue constituting approximately 42% for the nine months ended September 30, 2025 and two customers contributed more than 10% of the Company’s total consolidated revenue constituting approximately 39% of the Company’s total consolidated revenue for the nine months ended September 30, 2024.

For the three and nine months ended September 30, 2025 and 2024, all of the Company’s cryptocurrency mining revenue was generated from Project Dorothy 1B (data center located in Silverton, Texas).

For the three months ended September 30, 2025 and September 30, 2024, approximately 31% and 82% of the Company’s data center hosting revenue was generated from Project Dorothy 1A, 27% and 18% from Project Sophie, and 42% and 0% from Project Dorothy 2, respectively. For the nine months ended September 30, 2025 and September 30, 2024, approximately 43% and 74% of the Company’s data center hosting revenue was generated from Project Dorothy 1A, 34% and 26% from Project Sophie, and 22% and 0% from Project Dorothy 2, respectively.

16. Subsequent Events

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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

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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.

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A summary of our pipeline, current and anticipated operating locations are as follows (as of September 30, 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 |  | 30/18 |  | Operating/ 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
Annie |  | Lamar, TX |  | 75 |  | Development |  | Bitcoin Hosting / AI or HPC |  | Solar
Fei |  | Childress County, TX |  | 100 |  | Development |  | Bitcoin Hosting / AI or HPC |  | Solar
Gladys |  | Nueces County, Tx |  | 150 |  | Development |  | Bitcoin Hosting / AI or HPC |  | Wind

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.

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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.

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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.

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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.

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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) |  | Three months ended September 30, 2025 |  |  | Three months ended September 30, 2024 |  |  | $ Change |  |  | % Change |
Cryptocurrency mining revenue |  | $ | 2,769 |  |  | $ | 2,811 |  |  | $ | (42 | ) |  |  | (1 | )%
Data hosting revenue |  |  | 5,257 |  |  |  | 4,271 |  |  |  | 986 |  |  |  | 23 | %
Demand response service revenue |  |  | 389 |  |  |  | 443 |  |  |  | (54 | ) |  |  | (12 | )%
Operating costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of cryptocurrency mining revenue, exclusive of depreciation |  |  | 1,708 |  |  |  | 1,963 |  |  |  | (255 | ) |  |  | (13 | )%
Cost of data hosting revenue, exclusive of depreciation |  |  | 2,660 |  |  |  | 2,555 |  |  |  | 105 |  |  |  | 4 | %
Cost of high-performance computing services |  |  | - |  |  |  | 2,859 |  |  |  | (2,859 | ) |  |  | (100 | )%
Cost of cryptocurrency mining revenue- depreciation |  |  | 1,053 |  |  |  | 1,068 |  |  |  | (15 | ) |  |  | (1 | )%
Cost of data hosting revenue- depreciation |  |  | 665 |  |  |  | 444 |  |  |  | 221 |  |  |  | 50 | %
General and administrative expenses, exclusive of depreciation and amortization |  |  | 7,708 |  |  |  | 5,248 |  |  |  | 2,460 |  |  |  | 47 | %
Depreciation and amortization associated with general and administrative expenses |  |  | 2,401 |  |  |  | 2,404 |  |  |  | (3 | ) |  |  | - | %
Operating loss |  |  | (7,780 | ) |  |  | (9,016 | ) |  |  | 1,236 |  |  |  | (14 | )%
Other income (expense), net |  |  | 5 |  |  |  | (6 | ) |  |  | 11 |  |  |  | (183 | )%
Interest expense |  |  | (1,212 | ) |  |  | (821 | ) |  |  | (391 | ) |  |  | 48 | %
Other financing expense |  |  | (4,746 | ) |  |  | - |  |  |  | (4,746 | ) |  |  | (100 | )%
Loss on fixed assets and credit on equipment deposit |  |  | (780 | ) |  |  | - |  |  |  | (780 | ) |  |  | (100 | )%
Fair value adjustment (loss) gain |  |  | (22,047 | ) |  |  | 328 |  |  |  | (22,375 | ) |  |  | (6,822 | )%
Gain on debt extinguishment and revaluation, net |  |  | 10,107 |  |  |  | 875 |  |  |  | 9,232 |  |  |  | 1,055 | %
Loss before income taxes |  |  | (26,453 | ) |  |  | (8,640 | ) |  |  | (17,813 | ) |  |  | 206 | %
Income tax benefit, net |  |  | 666 |  |  |  | 547 |  |  |  | 119 |  |  |  | 22 | %
Net loss |  |  | (25,787 | ) |  |  | (8,093 | ) |  |  | (17,694 | ) |  |  | 219 | %
Net loss attributable to non-controlling interest, net |  |  | 1,831 |  |  |  | 903 |  |  |  | 928 |  |  |  | 103 | %
Net loss attributable to Soluna Holdings, Inc. |  | $ | (23,956 | ) |  | $ | (7,190 | ) |  | $ | (16,766 | ) |  |  | 233 | %

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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:

|  | Soluna Digital |
(Dollars in thousands) |  | Project Dorothy 1B |  |  | Project Dorothy 1A |  |  | Project Dorothy 2 |  |  | Project Sophie |  |  | Other |  |  | Total |
Cryptocurrency mining revenue |  | $ | 2,769 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 2,769 |
Data hosting revenue |  |  | - |  |  |  | 1,650 |  |  |  | 2,203 |  |  |  | 1,404 |  |  |  | - |  |  |  | 5,257 |
Demand response services |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 389 |  |  |  | 389 |
Total revenue |  |  | 2,769 |  |  |  | 1,650 |  |  |  | 2,203 |  |  |  | 1,404 |  |  |  | 389 |  |  |  | 8,415 |
Cost of cryptocurrency mining, exclusive of depreciation |  |  | 1,708 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,708 |
Cost of data hosting revenue, exclusive of depreciation |  |  | - |  |  |  | 669 |  |  |  | 1,558 |  |  |  | 345 |  |  |  | 88 |  |  |  | 2,660 |
Cost of cryptocurrency mining revenue- depreciation |  |  | 1,053 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,053 |
Cost of data hosting revenue- depreciation |  |  | - |  |  |  | 261 |  |  |  | 306 |  |  |  | 98 |  |  |  | - |  |  |  | 665 |
Total cost of revenue |  |  | 2,761 |  |  |  | 930 |  |  |  | 1,864 |  |  |  | 443 |  |  |  | 88 |  |  |  | 6,086 |
Gross profit |  | $ | 8 |  |  | $ | 720 |  |  | $ | 339 |  |  | $ | 961 |  |  | $ | 301 |  |  | $ | 2,329 |

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:

|  | Soluna Digital |  |  | Soluna Cloud |  |  |  |
(Dollars in thousands) |  | Project Dorothy 1B |  |  | Project Dorothy 1A |  |  | Project Sophie |  |  | Other |  |  | Soluna Digital Subtotal |  |  | Project Ada |  |  | Total |
Cryptocurrency mining revenue |  | $ | 2,811 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 2,811 |  |  | $ | - |  |  | $ | 2,811 |
Data hosting revenue |  |  | - |  |  |  | 3,515 |  |  |  | 756 |  |  |  | - |  |  |  | 4,271 |  |  |  | - |  |  |  | 4,271 |
Demand response services |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 443 |  |  |  | 443 |  |  |  | - |  |  |  | 443 |
High-performance computing services |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total revenue |  |  | 2,811 |  |  |  | 3,515 |  |  |  | 756 |  |  |  | 443 |  |  |  | 7,525 |  |  |  | - |  |  |  | 7,525 |
Cost of cryptocurrency mining, exclusive of depreciation |  |  | 1,963 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,963 |  |  |  | - |  |  |  | 1,963 |
Cost of data hosting revenue, exclusive of depreciation |  |  | - |  |  |  | 2,025 |  |  |  | 521 |  |  |  | 9 |  |  |  | 2,555 |  |  |  | - |  |  |  | 2,555 |
Cost of high-performance computing service revenue |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,859 |  |  |  | 2,859 |
Cost of cryptocurrency mining revenue- depreciation |  |  | 1,068 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,068 |  |  |  | - |  |  |  | 1,068 |
Cost of data hosting revenue- depreciation |  |  | - |  |  |  | 292 |  |  |  | 152 |  |  |  | - |  |  |  | 444 |  |  |  | - |  |  |  | 444 |
Total cost of revenue |  |  | 3,031 |  |  |  | 2,317 |  |  |  | 673 |  |  |  | 9 |  |  |  | 6,030 |  |  |  | 2,859 |  |  |  | 8,889 |
Gross (loss) profit |  | $ | (220 | ) |  | $ | 1,198 |  |  | $ | 83 |  |  | $ | 434 |  |  | $ | 1,495 |  |  | $ | (2,859 | ) |  | $ | (1,364 | )

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.

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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.

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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) |  | Three months ended September 30, |
|  | 2025 |  |  | 2024 |
NYDIG equipment financing |  | $ | 365 |  |  | $ | 369 |
Navitas term loan |  |  | - |  |  |  | 21 |
Green Cloud secured loan and Additional CloudCo secured loan |  |  | 298 |  |  |  | 430 |
Spring Lane financing cost |  |  | 61 |  |  |  | - |
Galaxy loan |  |  | 220 |  |  |  | - |
Generate loan |  |  | 168 |  |  |  | - |
Equipment loan |  |  | 100 |  |  |  | 1 |
Interest expense |  | $ | 1,212 |  |  | $ | 821 |

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.

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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) |  | Nine months ended September 30, 2025 |  |  | Nine months ended September 30, 2024 |  |  | $ Change |  |  | % Change |
Cryptocurrency mining revenue |  | $ | 8,630 |  |  | $ | 13,691 |  |  | $ | (5,061 | ) |  |  | (37 | )%
Data hosting revenue |  |  | 10,795 |  |  |  | 14,446 |  |  |  | (3,651 | ) |  |  | (25 | )%
Demand response service revenue |  |  | 1,057 |  |  |  | 1,612 |  |  |  | (555 | ) |  |  | (34 | )%
High-performance computing service revenue |  |  | 28 |  |  |  | - |  |  |  | 28 |  |  |  | 100 | %
Operating costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of cryptocurrency mining revenue, exclusive of depreciation |  |  | 5,428 |  |  |  | 5,687 |  |  |  | (259 | ) |  |  | (5 | )%
Cost of data hosting revenue, exclusive of depreciation |  |  | 5,605 |  |  |  | 6,982 |  |  |  | (1,377 | ) |  |  | (20 | )%
Cost of high-performance computing service revenue |  |  | 7 |  |  |  | 2,859 |  |  |  | (2,852 | ) |  |  | (100 | )%
Cost of cryptocurrency mining revenue- depreciation |  |  | 3,200 |  |  |  | 3,220 |  |  |  | (20 | ) |  |  | (1 | )%
Cost of data hosting revenue- depreciation |  |  | 1,578 |  |  |  | 1,320 |  |  |  | 258 |  |  |  | 20 | %
General and administrative expenses, exclusive of depreciation and amortization |  |  | 19,053 |  |  |  | 14,625 |  |  |  | 4,428 |  |  |  | 30 | %
Depreciation and amortization associated with general and administrative expenses |  |  | 7,207 |  |  |  | 7,209 |  |  |  | (2 | ) |  |  | (- | )%
Impairment on fixed assets |  |  | 12 |  |  |  | 130 |  |  |  | (118 | ) |  |  | (91 | )%
Operating loss |  |  | (21,580 | ) |  |  | (12,283 | ) |  |  | (9,297 | ) |  |  | 76 | %
Other expense, net |  |  | (280 | ) |  |  | (32 | ) |  |  | (248 | ) |  |  | 775 | %
Interest expense |  |  | (3,246 | ) |  |  | (1,694 | ) |  |  | (1,552 | ) |  |  | 92 | %
Other financing expense |  |  | (5,203 | ) |  |  | - |  |  |  | (5,203 | ) |  |  | (100 | )%
Loss on sale of fixed assets and credit on equipment deposit |  |  | (802 | ) |  |  | (21 | ) |  |  | (781 | ) |  |  | 3,719 | %
Fair value adjustment loss |  |  | (22,165 | ) |  |  | (5,607 | ) |  |  | (16,558 | ) |  |  | 295 | %
Gain (loss) on debt extinguishment and revaluation, net |  |  | 10,658 |  |  |  | (1,888 | ) |  |  | 12,546 |  |  |  | (665 | )%
Loss before income taxes |  |  | (42,618 | ) |  |  | (21,525 | ) |  |  | (21,093 | ) |  |  | 98 | %
Income tax benefit, net |  |  | 1,697 |  |  |  | 1,743 |  |  |  | (46 | ) |  |  | (3 | )%
Net loss |  |  | (40,921 | ) |  |  | (19,782 | ) |  |  | (21,139 | ) |  |  | 107 | %
Net loss (income) attributable to non-controlling interest, net |  |  | 2,027 |  |  |  | (3,535 | ) |  |  | 5,562 |  |  |  | (157 | )%
Net loss attributable to Soluna Holdings, Inc. |  | $ | (38,894 | ) |  | $ | (23,317 | ) |  | $ | 15,577 |  |  |  | 67 | %

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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:

|  | Soluna Digital |  |  | Soluna Cloud |  |  |  |
(Dollars in thousands) |  | Project Dorothy 1B |  |  | Project Dorothy 1A |  |  | Project Dorothy 2 |  |  | Project Sophie |  |  | Other |  |  | Soluna Digital Subtotal |  |  | Project Ada |  |  | Total |
Cryptocurrency mining revenue |  | $ | 8,630 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 8,630 |  |  | $ | - |  |  | $ | 8,630 |
Data hosting revenue |  |  | - |  |  |  | 4,674 |  |  |  | 2,412 |  |  |  | 3,709 |  |  |  | - |  |  |  | 10,795 |  |  |  | - |  |  |  | 10,795 |
Demand response services |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,057 |  |  |  | 1,057 |  |  |  | - |  |  |  | 1,057 |
High-performance computing services |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 28 |  |  |  | 28 |
Total revenue |  |  | 8,630 |  |  |  | 4,674 |  |  |  | 2,412 |  |  |  | 3,709 |  |  |  | 1,057 |  |  |  | 20,482 |  |  |  | 28 |  |  |  | 20,510 |
Cost of cryptocurrency mining, exclusive of depreciation |  |  | 5,428 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,428 |  |  |  | - |  |  |  | 5,428 |
Cost of data hosting revenue, exclusive of depreciation |  |  | - |  |  |  | 2,405 |  |  |  | 1,974 |  |  |  | 1,138 |  |  |  | 88 |  |  |  | 5,605 |  |  |  | - |  |  |  | 5,605 |
Cost of high-performance computing service revenue |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7 |  |  |  | 7 |
Cost of cryptocurrency mining revenue- depreciation |  |  | 3,200 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,200 |  |  |  | - |  |  |  | 3,200 |
Cost of data hosting revenue- depreciation |  |  | - |  |  |  | 830 |  |  |  | 442 |  |  |  | 306 |  |  |  | - |  |  |  | 1,578 |  |  |  | - |  |  |  | 1,578 |
Total cost of revenue |  |  | 8,628 |  |  |  | 3,235 |  |  |  | 2,416 |  |  |  | 1,444 |  |  |  | 88 |  |  |  | 15,811 |  |  |  | 7 |  |  |  | 15,818 |
Gross (loss) profit |  | $ | 2 |  |  | $ | 1,439 |  |  | $ | (4 | ) |  | $ | 2,265 |  |  | $ | 969 |  |  | $ | 4,671 |  |  | $ | 21 |  |  | $ | 4,692 |

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:

|  | Soluna Digital |  |  | Soluna Cloud |  |  |  |
(Dollars in thousands) |  | Project Dorothy 1B |  |  | Project Dorothy 1A |  |  | Project Sophie |  |  | Other |  |  | Soluna Digital Subtotal |  |  | Project Ada |  |  | Total |
Cryptocurrency mining revenue |  | $ | 13,691 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 13,691 |  |  | $ | - |  |  | $ | 13,691 |
Data hosting revenue |  |  | - |  |  |  | 10,623 |  |  |  | 3,823 |  |  |  | - |  |  |  | 14,446 |  |  |  | - |  |  |  | 14,446 |
Demand response services |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,612 |  |  |  | 1,612 |  |  |  | - |  |  |  | 1,612 |
High-performance computing services |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total revenue |  |  | 13,691 |  |  |  | 10,623 |  |  |  | 3,823 |  |  |  | 1,612 |  |  |  | 29,749 |  |  |  | - |  |  |  | 29,749 |
Cost of cryptocurrency mining, exclusive of depreciation |  | $ | 5,687 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,687 |  |  |  | - |  |  |  | 5,687 |
Cost of data hosting revenue, exclusive of depreciation |  |  | - |  |  |  | 5,520 |  |  |  | 1,452 |  |  |  | 10 |  |  |  | 6,982 |  |  |  | - |  |  |  | 6,982 |
Cost of high-performance computing service revenue |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,859 |  |  |  | 2,859 |
Cost of cryptocurrency mining revenue- depreciation |  |  | 3,220 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,220 |  |  |  | - |  |  |  | 3,220 |
Cost of data hosting revenue- depreciation |  |  | - |  |  |  | 867 |  |  |  | 453 |  |  |  | - |  |  |  | 1,320 |  |  |  | - |  |  |  | 1,320 |
Total cost of revenue |  |  | 8,907 |  |  |  | 6,387 |  |  |  | 1,905 |  |  |  | 10 |  |  |  | 17,209 |  |  |  | 2,859 |  |  |  | 20,068 |
Gross profit |  | $ | 4,784 |  |  | $ | 4,236 |  |  | $ | 1,918 |  |  | $ | 1,602 |  |  | $ | 12,540 |  |  | $ | (2,859) |  |  | $ | 9,681 |

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.

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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) |  | Nine months ended September 30, |
|  | 2025 |  |  | 2024 |
NYDIG equipment financing |  | $ | 1,084 |  |  | $ | 1,092 |
Navitas term loan |  |  | 2 |  |  |  | 122 |
Green Cloud secured loan and Additional CloudCo secured loan |  |  | 1,075 |  |  |  | 465 |
Galaxy loan |  |  | 498 |  |  |  | - |
Spring Lane financing cost |  |  | 183 |  |  |  | - |
Generate loan |  |  | 168 |  |  |  | - |
Equipment loan |  |  | 236 |  |  |  | 15 |
Interest expense |  | $ | 3,246 |  |  | $ | 1,694 |

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.

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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.

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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 September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Net loss |  | $ | (25,787 | ) |  | $ | (8,093 | ) |  | $ | (40,921 | ) |  | $ | (19,782 | )
Interest expense |  |  | 1,212 |  |  |  | 821 |  |  |  | 3,246 |  |  |  | 1,694 |
Income tax benefit |  |  | (666 | ) |  |  | (547 | ) |  |  | (1,697 | ) |  |  | (1,743 | )
Depreciation and amortization |  |  | 4,119 |  |  |  | 3,916 |  |  |  | 11,985 |  |  |  | 11,749 |
EBITDA |  |  | (21,122 | ) |  |  | (3,903 | ) |  |  | (27,387 | ) |  |  | (8,082 | )
Adjustments: Non-cash items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Stock-based compensation costs |  |  | 1,882 |  |  |  | 1,257 |  |  |  | 5,671 |  |  |  | 3,286 |
Loss on sale of fixed assets and credit on equipment deposit |  |  | 780 |  |  |  | - |  |  |  | 802 |  |  |  | 21 |
Provision for credit losses |  |  | - |  |  |  | 367 |  |  |  | - |  |  |  | 611 |
Impairment on fixed assets |  |  | - |  |  |  | - |  |  |  | 12 |  |  |  | 130 |
Fair value adjustment loss (gain) |  |  | 22,047 |  |  |  | (328 | ) |  |  | 22,165 |  |  |  | 5,607 |
Fair value on placement agent warrants financing fee |  |  | 146 |  |  |  | - |  |  |  | 146 |  |  |  | - |
(Gain) loss on debt extinguishment and revaluation, net |  |  | (10,107 | ) |  |  | (875 | ) |  |  | (10,658 | ) |  |  | 1,888 |
Adjusted EBITDA |  | $ | (6,374 | ) |  | $ | (3,482 | ) |  | $ | (9,249 | ) |  | $ | 3,461 |

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.

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

(Dollars in thousands) |  | Three months ended March 31, 2025 |  |  | Three months ended June 30, 2025 |  |  | Three months ended September 30, 2025 |
Net loss |  | $ | (7,354 | ) |  | $ | (7,780 | ) |  | $ | (25,787 | )
Interest expense, net |  |  | 838 |  |  |  | 1,196 |  |  |  | 1,212 |
Income tax (benefit) expense |  |  | (425 | ) |  |  | (608 | ) |  |  | (666 | )
Depreciation and amortization |  |  | 3,879 |  |  |  | 3,989 |  |  |  | 4,119 |
EBITDA |  |  | (3,062 | ) |  |  | (3,203 | ) |  |  | (21,122 | )
Adjustments: Non-cash items |  |  |  |  |  |  |  |  |  |  |  |
Stock-based compensation costs |  |  | 1,847 |  |  |  | 1,942 |  |  |  | 1,882 |
Loss (gain) on sale of fixed assets and credit on equipment deposit |  |  | - |  |  |  | 22 |  |  |  | 780 |
Impairment on fixed assets |  |  | - |  |  |  | 12 |  |  |  | - |
Fair value adjustment loss |  |  | 118 |  |  |  | - |  |  |  | 22,047 |
Fair value on placement agent warrant financing fees |  |  | - |  |  |  | - |  |  |  | 146 |
(Gain) loss on debt extinguishment and revaluation, net |  |  | (551 | ) |  |  | - |  |  |  | (10,107 | )
Adjusted EBITDA |  | $ | (1,648 | ) |  | $ | (1,227 | ) |  | $ | (6,374 | )

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

(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 |
Net loss from continuing operations |  | $ | (2,544 | ) |  | $ | (9,145 | ) |  | $ | (8,093 | ) |  | $ | (38,518 | )
Interest expense, net |  |  | 424 |  |  |  | 449 |  |  |  | 821 |  |  |  | 833 |
Income tax benefit from continuing operations |  |  | (548 | ) |  |  | (649 | ) |  |  | (547 | ) |  |  | (743 | )
Depreciation and amortization |  |  | 3,926 |  |  |  | 3,909 |  |  |  | 3,916 |  |  |  | 3,889 |
EBITDA |  |  | 1,258 |  |  |  | (5,436 | ) |  |  | (3,903 | ) |  |  | (34,539 | )
Adjustments: Non-cash items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Stock-based compensation costs |  |  | 661 |  |  |  | 1,368 |  |  |  | 1,257 |  |  |  | 2,025 |
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 loss (gain) adjustment |  |  | 4,333 |  |  |  | 1,600 |  |  |  | (328 | ) |  |  | 100 |
(Gain) loss) on debt extinguishment and revaluation, net |  |  | (1,236 | ) |  |  | 4,000 |  |  |  | (875 | ) |  |  | (245 | )
Adjusted EBITDA |  | $ | 5,147 |  |  | $ | 1,797 |  |  | $ | (3,482 | ) |  | $ | (2,520 | )

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Liquidity and Capital Resources

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

(Dollars in thousands) |  | Nine Months Ended or as of |  |  | Nine Months Ended or as of |  |  | Year Ended or as of |
|  | September 30, 2025 |  |  | September 30, 2024 |  |  | December 31, 2024 |
Cash |  | $ | 51,371 |  |  | $ | 8,766 |  |  | $ | 7,843 |
Restricted cash |  |  | 9,090 |  |  |  | 3,441 |  |  |  | 2,610 |
Working capital (deficit) |  |  | 10,215 |  |  |  | (12,820 | ) |  |  | (34,378 | )
Net loss |  |  | (40,921 | ) |  |  | (19,782 | ) |  |  | (58,300 | )
Net cash used in operating activities |  |  | (3,479 | ) |  |  | (3,412 | ) |  |  | (5,069 | )
Purchase of property, plant and equipment, including deposits |  |  | (18,036 | ) |  |  | (7,811 | ) |  |  | (13,277 | )

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.

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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) |  | Nine months ended September 30, |
|  | 2025 |  |  | 2024 |
Proceeds from debt issuance |  | $ | 18,434 |  |  | $ | 14,470 |
Payments on debt and deferred financing costs |  |  | (6,938 | ) |  |  | (2,261 | )
Contributions from non-controlling interest |  |  | 22,078 |  |  |  | 5,098 |
Distributions to non-controlling interest |  |  | (4,753 | ) |  |  | (6,694 | )
Proceeds from warrant exercises |  |  | 9,455 |  |  |  | 2,330 |
Net proceeds from financing offering |  |  | 4,364 |  |  |  | - |
Net proceeds from SEPA and ATM |  |  | 28,975 |  |  |  | - |
Net cash provided by financing activities |  | $ | 71,615 |  |  | $ | 12,943 |

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.

|  | September 30, 2025 |  |  | December 31, 2024 |
(Dollars in thousands) |  |  |  |  |  |
Galaxy loan |  | $ | 4,392 |  |  | $ | - |
NYDIG Equipment Financing |  |  | - |  |  |  | 9,183 |
Equipment loan |  |  | - |  |  |  | - |
Navitas Term Loan |  |  | - |  |  |  | 137 |
Generate loan |  |  | 10,785 |  |  |  | - |
Green Cloud Secured Note |  |  | 8,076 |  |  |  | 10,983 |
CloudCo Additional Secured Loan |  |  | - |  |  |  | 1,202 |
Total Debt |  | $ | 23,253 |  |  | $ | 21,505 |

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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.

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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.

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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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

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.

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(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. OTHER INFORMATION

Item 1. Legal Proceedings

At any point in time, we may be involved in various lawsuits or other legal proceedings. Such lawsuits could arise from the sale of products or services or from other matters relating to our regular business activities, compliance with various governmental regulations and requirements, or other transactions or circumstances.

NYDIG

On December 29, 2022, NYDIG filed a complaint against the Soluna Parties in the Court regarding 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 approximately $9.2 million 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 filings this report, all such settlements have been made.

Item 1A. Risk Factors

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.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Arrangements and Non-Rule 10b5-1 Trading Arrangements

During the fiscal quarter ended September 30, 2025, none of our officers or directors, as those terms are defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.

Item 6. Exhibits

Exhibit No. |  | Description
3.1 |  | [Certificate of Amendment to Articles of Incorporation, filed with the Secretary of State of Nevada on November 7, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K Report filed November [10], 2025).]
4.1 |  | Form of Series A Warrant issued in the Offering (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 17, 2025)
4.2 |  | Form of Series B Warrant issued in the Offering (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 17, 2025)
4.3 |  | Form of Pre-Funded Warrant issued in the Offering (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 17, 2025)
4.4 |  | Form of Placement Agent Warrant issued in the Offering (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 17, 2025)
4.5 |  | Form of Pre-Funded Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2025)
4.6 |  | Form of Common Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2025)
10.1 |  | Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.113 to the Company’s Registration Statement on Form S-1/A (File No. 333-287519) filed on June 16, 2025).
10.2 |  | Consulting Agreement, entered into on August 8, 2025 and effective August 21, 2025, between Soluna Holdings, Inc. and David Michaels (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 8, 2025)
10.3 **^ |  | Credit and Guaranty Agreement, dated as of September 12, 2025, by and among the Company and the parties thereto (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2025)
10.4 |  | Registration Rights Agreement, dated September 12, 2025 between the Company and Generate Strategic Credit Master Fund I-B, L.P. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2025)
10.5 |  | Board Observer Letter, dated September 12, 2025, between the Company and Generate Strategic Credit Master Fund I-A, L.P. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2025)
31.1 |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 |  | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* |  | Inline XBRL Instance Document
101.SCH* |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* |  | Inline XBRL Taxonomy Definition Linkbase Document
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (embedded within the Inline XBRL document)

All other exhibits for which no other filing information is given are filed herewith.

* Submitted electronically herewith. Attached as Exhibit 101 are the following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, formatted in eXtensible Business Reporting Language (XBRL) and tagged as blocks of text and including detailed tags: (i) Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024; (ii) Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024; (iii) Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024; and (iv) related notes.

** Annexes, schedules and/or exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplementally a copy of any of the omitted schedules and exhibits to the SEC on a confidential basis upon request.

^ The Company has omitted portions of the referenced exhibit pursuant to Item 601(b) of Regulation S-K, because they (a) are not material and (b) are the type that the Company treats as private or confidential.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| Soluna Holdings, Inc.
Date November 14, 2025 | By: | /s/ John Belizaire
|  | John Belizaire
|  | Chief Executive Officer
| By: | /s/ David Michaels
|  | David Michaels Chief Financial Officer

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