ソルナホールディングスの四半期報告

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 March 31, 2024

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 May 9, 2024, the Registrant had 3,921,503 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 March 31, 2024 (Unaudited) and December 31, 2023		4

	Condensed Consolidated Statements of Operations (Unaudited) For the Three Months Ended March 31, 2024 and 2023		5

	Condensed Consolidated Statements of Changes in Equity For the Year Ended December 31, 2023 and the Three Months Ended March 31, 2024 (Unaudited)		6

	Condensed Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 2024 and 2023		7

	Notes to Condensed Consolidated Financial Statements (Unaudited)		8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

	Item 4.	Controls and Procedures	49

PART II. OTHER INFORMATION			50

	Item 1.	Legal Proceedings	51

	Item 1A.	Risk Factors	51

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

	Item 3.	Defaults Upon Senior Securities	51

	Item 4.	Mine Safety Disclosures	51

	Item 5.	Other Information	51

	Item 6.	Exhibits	51

	SIGNATURES		52

Glossary of Abbreviations and Acronyms for Selected References

The following list defines various abbreviations and acronyms used throughout this 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 Form10-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. Additional context can be obtained by reading our Annual Report on Form 10-K.

1. 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.

2. 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.

3. 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. It’s part of Bitcoin’s deflationary monetary policy, designed to control supply.

4. 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.

5. 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.

6. Data Center Colocation: A service where businesses can be provided with services and infrastructure such as electrical power and network connectivity for nearby 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.

7. 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.

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

9. Generative AI: Artificial intelligence 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.

10. 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.

11. 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.

12. Hashprice: The revenue a miner earns for each unit of computational power (hash) over a specific period. It is influenced by factors such as the price of Bitcoin, network difficulty, and transaction fees. A higher hashprice means more profitability for miners.

13. 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.

14. 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.

15. 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.

16. 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.

17. Machine Learning: A subset of artificial intelligence 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.

18. 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.

19. 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.

20. 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.

21. 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).

22. Terahash (“TH/s”): A unit of computational power equal to one trillion (10^12) hashes per second. It’s a common measure of the performance of cryptocurrency mining hardware, with higher terahash rates indicating more powerful equipment.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Soluna Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

As of March 31, 2024 (Unaudited) and December 31, 2023

	March 31,			December 31,
(Dollars in thousands, except per share)	2024			2023
Assets
Current Assets:
Cash	$	8,438		$	6,368
Restricted cash		1,956			2,999
Accounts receivable		4,428			2,948
Notes receivable		306			446
Prepaid expenses and other current assets		1,692			1,416
Equipment held for sale		176			107
Total Current Assets		16,996			14,284
Restricted cash, noncurrent		1,000			1,000
Other assets		2,953			2,954
Deposits and credits on equipment		1,371			1,028
Property, plant and equipment, net		43,264			44,572
Intangible assets, net		24,673			27,007
Operating lease right-of-use assets		380			431
Total Assets	$	90,637		$	91,276

Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	2,528		$	2,099
Accrued liabilities		5,957			4,906
Convertible notes payable		6,216			8,474
Current portion of debt		10,255			10,864
Income tax payable		24			24
Warrant liability		6,048			-
Customer deposits-current		1,276			1,588
Operating lease liability		194			220
Total Current Liabilities		32,498			28,175

Other liabilities		499			499
Customer deposits- long-term		1,368			1,248
Operating lease liability		189			216
Deferred tax liability, net		7,232			7,779
Total Liabilities		41,786			37,917

Commitments and Contingencies (Note 14)		-			-

Stockholders’ Equity:
9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share, $25.00 liquidation preference; authorized 6,040,000; 3,061,245 shares issued and outstanding as of March 31, 2024 and December 31, 2023		3			3
Series B Preferred Stock, par value $0.0001 per share, authorized 187,500; 62,500 shares issued and outstanding as of March 31, 2024 and December 31, 2023		—			—
Preferred stock , value		—			—
Common stock, par value $0.001 per share, authorized 75,000,000; 2,882,231 shares issued and 2,841,490 shares outstanding as of March 31, 2024 and 2,546,361 shares issued and 2,505,620 shares outstanding as of December 31, 2023		3			3
Additional paid-in capital		291,545			291,276
Accumulated deficit		(256,224	)		(250,970	)
Common stock in treasury, at cost, 40,741 shares at March 31, 2024 and December 31, 2023		(13,798	)		(13,798	)
Total Soluna Holdings, Inc. Stockholders’ Equity		21,529			26,514
Non-Controlling Interest		27,322			26,845
Total Stockholders’ Equity		48,851			53,359
Total Liabilities and Stockholders’ Equity	$	90,637		$	91,276

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

Soluna Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

For the Three Months Ended March 31, 2024 and 2023


	For the three months ended
	March 31,
(Dollars in thousands, except per share)	2024			2023

Cryptocurrency mining revenue	$	6,396		$	2,796
Data hosting revenue		5,278			286
Demand response service revenue		875			-
Total revenue		12,549			3,082
Operating costs:
Cost of cryptocurrency mining revenue, exclusive of depreciation		1,841			2,251
Cost of data hosting revenue, exclusive of depreciation		2,251			272
Costs of revenue-depreciation		1,523			625
Total costs of revenue		1,523			625
Total costs of revenue		5,615			3,148
Operating expenses:
General and administrative expenses, exclusive of depreciation and amortization		3,994			4,360
Depreciation and amortization associated with general and administrative expenses		2,403			2,377
Total general and administrative expenses		6,397			6,737
Impairment on fixed assets		130			209
Operating income (loss)		407			(7,012	)
Interest expense		(424	)		(1,374	)
(Loss) gain on debt extinguishment and revaluation, net		(3,097	)		473
Loss on sale of fixed assets		(1	)		(78	)
Other income, net		23			12
Loss before income taxes		(3,092	)		(7,979	)
Income tax benefit		548			547
Net loss		(2,544	)		(7,432	)
(Less) Net income (loss) attributable to non-controlling interest		2,710			(370	)
Net loss attributable to Soluna Holdings, Inc.	$	(5,254	)	$	(7,062	)

Basic and Diluted (loss) earnings per common share (1):
Basic & Diluted loss per share	$	(2.62	)	$	(10.30	)

Weighted average shares outstanding (Basic and Diluted)		2,807,555			864,922

(1)	Prior period results have been adjusted to reflect the Reverse Stock Split of the Common Stock at a ratio of 1-for-25 that became effective October 13, 2023. See Note 2, “Basis of Presentation,” for details.

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

Soluna Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Equity
For the Year Ended December 31, 2023

And the Three Months Ended March 31, 2024 (Unaudited)

(Dollars in thousands, except per share)

	Series A Shares		Amount		Series B Shares		Amount		Shares (1)		Amount (1)		Paid-in Capital (1)			Accumulated Deficit			Shares (1)		Amount			Controlling Interest			Stockholders’ Equity
	Preferred Stock								Common Stock				Additional						Treasury Stock					Non-			Total
	Series A Shares		Amount		Series B Shares		Amount		Shares (1)		Amount (1)		Paid-in Capital (1)			Accumulated Deficit			Shares (1)		Amount			Controlling Interest			Stockholders’ Equity
January 1, 2023		3,061,245	$	3		62,500	$	—		788,578	$	1	$	277,429		$	(221,769	)		40,741	$	(13,798	)		4,406		$	46,272

Net loss		—		—		—		—		—		—		—			(7,062	)		—		—			(370	)		(7,432	)

Preferred dividends- Series B		—		—		—		—		—		—		(131	)		—			—		—			—			(131	)

Stock-based compensation		—		—		—		—		—		—		865			—			—		—			—			865

Issuance of shares – securities purchase offering		—		—		—		—		87,144		—		439			—			—		—			—			439

Restricted stock units vested		—		—		—		—		5,769		—		—			—			—		—			—			—

Issuance of shares – restricted stock		—		—		—		—		1,400		—		14			—			—		—			—			14

Issuance of shares- Notes conversion		—		—		—		—		174,505		—		1,394			—			—		—			—			1,394

Contribution from Non-Controlling interest		—		—		—		—		—		—		—			—			—		—			8,758			8,758

March 31, 2023		3,061,245	$	3		62,500	$	—		1,057,396	$	1	$	280,010		$	(228,831	)		40,741	$	(13,798	)	$	12,794		$	50,179

Net loss		—		—		—		—		—		—		—			(8,775	)		—		—			(482	)		(9,257	)

Preferred dividends – Series B		—		—		—		—		—		—		(252	)		—			—		—			—			(252	)

Stock-based compensation		—		—		—		—		—		—		2,232			—			—		—			—			2,232

Issuance of shares – securities purchase offering		—		—		—		—		63,978		—		446			—			—		—			—			446

Restricted stock units vested		—		—		—		—		25,125		—		—			—			—		—			—			—

Issuance of shares-merger shares		—		—		—		—		19,800		—		—			—			—		—			—			—

Issuance of shares- Notes conversion		—		—		—		—		64,351		—		400			—			—		—			—			400

Warrants and valuation issued in relation to debt amendment		—		—		—		—		—		—		1,330			—			—		—			—			1,330

Contribution from Non-Controlling interest		—		—		—		—		—		—		—			—			—		—			13,543			13,543

June 30, 2023		3,061,245	$	3		62,500	$	—		1,230,650	$	1	$	284,166		$	(237,606	)		40,741	$	(13,798	)	$	25,855		$	58,621

Net (loss) income		—		—		—		—		—		—		—			(6,662	)		—		—			646			(6,016	)

Preferred dividends-Series B		—		—		—		—		—		—		(38	)		—			—		—			—			(38	)

Stock-based compensation		—		—		—		—		—		—		595			—			—		—			—			595

Issuance of shares – securities purchase offering		—		—		—		—		113,502		—		770			—			—		—			—			770

Common Shares and Warrants for Series B dividend payment		—		—		—		—		44,000		—		656			—			—		—			—			656

Issuance of shares- notes conversion		—		—		—		—		104,577		—		650			—			—		—			—			650

Contribution from Non-Controlling interest		—		—		—		—		—		—		—			—			—		—			151			151

September 30, 2023		3,061,245	$	3		62,500	$	—		1,492,729	$	1	$	286,799		$	(244,268	)		40,741	$	(13,798	)	$	26,652		$	55,389

Net (loss) income		—		—		—		—		—		—		—			(6,702	)		——		—			1,705			(4,997	)

Stock-based compensation		—		—		—		—		—		—		602			—			—		—			—			602

Issuance of shares-merger shares		—		—		—		—		39,600		—		—			—			—		—			—			—

Issuance of shares –warrants exercise		—		—		—		—		81,726		—		—			—			—		—			—			—

True up shares for reverse split		—		—		—		—		37,762		—		—			—			—		—			—			—

Restricted stock units vested		—		—		—		—		2,299		—		—			—			—		—			—			—

Warrant revaluation		—		—		—		—		—		—		307			—			—		—			—			307

Issuance of shares- notes conversion		—		—		—		—		892,245		2		3,568			—			—		—			—			3,570

Distribution to non-controlling interest		—		—		—		—		—		—		—			—			—		—			(1,520	)		(1,520	)

Contribution from Non-Controlling interest		—		—		—		—		—		—		—			—			—		—			8			8

December 31, 2023		3,061,245	$	3		62,500	$	—		2,546,361	$	3	$	291,276		$	(250,970	)		40,741	$	(13,798	)	$	26,845		$	53,359

(1)	Prior period results have been adjusted to reflect the Reverse Stock Split of the Common Stock at a ratio of 1-for-25 that became effective October 13, 2023. See Note 2, “Basis of Presentation,” for details.

	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
Balance		3,061,245	$	3		62,500	$	—		2,546,361	$	3	$	291,276		$	(250,970	)		40,741	$	(13,798	)	$	26,845		$	53,359

Net (loss) income		—		—		—		—		—		—		—			(5,254	)		—		—			2,710			(2,544	)
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 invested		—		—		—		—		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
Balance		3,061,245	$	3		62,500	$	—		2,882,231	$	3	$	291,545		$	(256,224	)		40,741	$	(13,798	)	$	27,322		$	48,851

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

Soluna Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31, 2024 and 2023


	Three Months Ended March 31,
(Dollars in thousands)	2024			2023
Operating Activities
Net loss	$	(2,544	)	$	(7,432	)

Adjustments to reconcile net loss to net cash provided by (used in) by operating activities:
Depreciation expense		1,554			632
Amortization expense		2,372			2,369
Stock-based compensation		661			879
Deferred income taxes		(548	)		(547	)
Impairment on fixed assets		130			209
Amortization of operating lease asset		61			56
Loss (gain) on debt extinguishment and revaluation, net		3,097			(473	)
Amortization on deferred financing costs and discount on notes		7			501
Loss on sale of fixed assets		1			78
Changes in operating assets and liabilities:
Accounts receivable		(1,480	)		41
Prepaid expenses and other current assets		(138	)		(26	)
Other long-term assets		1			(300	)
Accounts payable		430			1,368
Deferred revenue		-			(453	)
Operating lease liabilities		(61	)		(54	)
Other liabilities and customer deposits		(192	)		104
Accrued liabilities		499			(5	)
Net cash provided by (used in) operating activities		3,850			(3,053	)
Investing Activities
Purchases of property, plant, and equipment		(524	)		(860	)
Purchases of intangible assets		(38	)		(24	)
Proceeds from disposal on property, plant, and equipment		78			249
Deposits of equipment, net		(343	)		200
Net cash used in investing activities		(827	)		(435	)
Financing Activities
Proceeds from common stock warrant exercises		300			-
Proceeds from common stock securities purchase agreement offering		-			41
Proceeds from notes and debt issuance		-			900
Payments on Navitas loan		(616	)		-
Costs of common stock securities purchase agreement offering		-			(4	)
Payments on NYDIG loans and line of credit		-			(215	)
Contributions from non-controlling interest		-			5,991
Distributions to non-controlling interest		(1,680	)		-
Net cash (used in) provided by financing activities		(1,996	)		6,713

Increase in cash & restricted cash		1,027			3,225
Cash & restricted cash – beginning of period		10,367			1,821
Cash & restricted cash – end of period	$	11,394		$	5,046

Supplemental Disclosure of Cash Flow Information
Interest paid on NYDIG loans and line of credit		115			6
Interest paid on Navitas loan		57			-
Warrant consideration in relation to convertible notes and revaluation		4,333			-
Notes converted to common stock		1,023			1,394
Noncash membership distribution accrual		1,069			-
Noncash disposal of NYDIG collateralized equipment		-			3,388
Promissory note and interest conversion to common shares		-			401
Noncash non-controlling interest contributions		-			2,767
Noncash activity right-of-use assets obtained in exchange for lease obligations		-			397
Series B preferred dividend in accrued expense		-			(131	)

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

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. and previously, “SCI” refers to Soluna Computing, Inc., formerly known as EcoChain, Inc.

Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated which was originally incorporated in the State of New York in 1961, reincorporated in the State of Nevada on March 24, 2021, and is headquartered in Albany, New York. Effective November 2, 2021, the Company changed its name from “Mechanical Technology, Incorporated” (or “MTI”) to “Soluna Holdings, Inc.” On October 29, 2021, Soluna Callisto merged into Soluna Computing, Inc. (“SCI”), a private green data center development company. The Company formed a wholly owned subsidiary of SHI on December 31, 2023, Soluna Digital, Inc. (“Soluna Digital”, or “SDI”). Effective December 31, 2023, SHI’s previously wholly-owned subsidiary, SCI transferred substantially all of its assets to SHI or its subsidiaries. SHI currently conducts its business through its wholly-owned subsidiary, SDI.

The Company is a digital infrastructure company specializing in transforming surplus renewable energy into computing resources. Our modular data centers can co-locate with wind, solar, or hydroelectric power plants and support compute intensive applications including Bitcoin Mining, Generative AI, and Scientific Computing. This pioneering approach to data centers helps energize a greener grid while delivering cost-effective and sustainable computing solutions.

In fiscal year 2021, the Company began mining operations in Murray, Kentucky, (“Project Sophie”) and Calvert City, Kentucky, (“Project Marie”). Project Marie had performed hosting services and proprietary mining in which 10 megawatts were used for hosting services and 10 megawatts was used for proprietary mining through the end of February 2023, at which time the facility had been decommissioned. In the second quarter of fiscal year 2023, Project Sophie entered into hosting contracts with Bitcoin miners, which marked a shift in the Company’s business model at the Company’s modular data centers at Project Sophie from proprietary mining to hosting Bitcoin miners for the customers for 25 MW. Currently, all of Project Sophie is performing data hosting, including hosting an AI customer in the first quarter of 2024. The Company has sold all of its existing Bitcoin miners at the Project Sophie site and redeployed capital. On September 17, 2022, the Company sold specified assets consisting mainly of mining equipment and other general equipment items to a buyer at its Wenatchee, Washington location, (“Project Edith”). Soluna has committed to providing certain facilities contracts at cost plus a markup to facilitate the continued operations for the sold mining assets, on behalf of the new ownership. Our Texas site (“Project Dorothy”) is located at a wind farm and has a potential for up to 100 MWs, of which the Company obtained approval from the ERCOT and energized 25 MW in May 2023 and has energized another 25 MW in October 2023. The Company as of March 31, 2024, has a 14.6% ownership interest in Soluna DVSL ComputeCo, LLC (“DVSL”), and 53.3% ownership interest in Soluna DV ComputeCo, LLC (“DVCC”) in which are included within the Project Dorothy site, as discussed further in Note 15.

Going Concern and Liquidity

The Company’s condensed financial statements as of March 31, 2024 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 financial statements, the Company was in a net loss, has negative working capital, and has significant outstanding debt as of March 31, 2024. These factors, among others 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 financial statements as of March 31, 2024, or May 15, 2024.

Soluna MC Borrowing 2021-1 (the “Borrower”), received a Notice of Acceleration and Repossession (the “NYDIG Notice”) from NYDIG ABL LLC (“NYDIG”) with respect to the Master Equipment Finance Agreement, dated as of December 30, 2021 (the “MEFA”), by and between Borrower and NYDIG. The NYDIG Notice states that (a) Borrower failed to observe or perform certain covenants, conditions or agreements contained in the MEFA and such failure continued unremedied for a period of ten days after Borrower’s knowledge of such breach, which resulted in an event of default under the MEFA, and (b) Borrower defaulted under the guaranty, collateral agreement, or other support agreement, which resulted in an event of default under the MEFA. In addition, the NYDIG Notice states that Borrower failed to pay certain payments of principal and interest under the MEFA when due, which failure also constituted an event of default under the MEFA. As a result of the foregoing events of default, and pursuant to the MEFA, NYDIG (x) declared the principal amount of all loans due and owing under the MEFA and all accompanying Loan Documents (as defined in the MEFA) to be due and immediately payable, (y) imposed a default rate of interest on any outstanding principal amount of each loan (together with all then unpaid interest accruing thereon) and all other obligations under the MEFA and the Loan Documents, and (z) demanded the return of all equipment subject to the MEFA and the Loan Documents. The obligations of Borrower under the MEFA and reflected in the NYDIG Notice were ring-fenced to Borrower and its direct parent company, Soluna MC LLC.

On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA, which resulted in a reportable disposition of all of the Company’s mining assets at the site and certain of the operating assets of Project Marie. The total net book value of the collateralized assets that were repossessed totaled approximately $3.4 million. Additionally, NYDIG has stated its intention to pursue SCI, the parent company of Soluna MC, LLC (“Guarantor”), under a piercing of the corporate veil claim relating to the Guarantor together with Borrower, (“NYDIG Defendants”) debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023, seeking a declaratory judgment as to such matter. NYDIG filed a motion to dismiss in response to SCI’s declaratory judgment complaint on April 13, 2023. SCI filed a response in opposition to NYDIG’s motion to dismiss on April 27, 2023. The court heard oral arguments on May 16, 2023. On June 22, 2023, the court issued an order granting NYDIG’s motion to dismiss, on the basis that the case was not ripe for decision, without prejudice. SCI intends to continue to vigorously defend any allegations regarding liability on account of NYDIG Defendants’ debts and liabilities to NYDIG under their loan documents and intends to refile a declaratory judgment complaint against NYDIG. As of March 31, 2024, the Borrower has an outstanding principal balance of approximately $9.2 million and accrued interest and penalties of approximately $1.2 million. See Note 10 for further information in relation to the NYDIG litigation matter.

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.

In addition to the Company’s cash on hand for available use of approximately $8.4 million as of March 31, 2024, the Company will need additional capital raising activities, to meet its capital expenditure needs for its current pipeline and other operational needs. The Company in fiscal year 2024 will continue to look to evaluate different strategies to obtain financing to fund operations. 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.

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, 2023 (“the Annual Report”).

The information presented in the accompanying condensed consolidated balance sheet as of December 31, 2023 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 months ended March 31, 2024 and March 31, 2023.

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 15. All intercompany balances and transactions are eliminated in consolidation.

Reverse Stock Split

On October 11, 2023, the Company filed a Certificate of Change (the “Certificate of Change”) effecting a reverse stock split as of 5:00 p.m. Eastern Standard Time on October 13, 2023 with a ratio of 1-for-25 (the “Reverse Split”). The Company’s common stock began trading on a post-split basis under the Company’s existing trading symbol, “SLNH,” when the market opened on October 16, 2023. The reverse stock split was approved by the Board of Directors and by shareholders at the annual meeting of the stockholders on June 29, 2023. At the effective time, every 25 issued and outstanding shares of the Company common stock was converted automatically into one share of the Company’s common stock without any change in the par value per share. The Reverse Split did not change the number of shares of common stock authorized for issuance. No fractional shares were outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock was automatically entitled to receive an additional fraction of a share of common stock to round up to the next whole share.

The primary goal of the Reverse Stock Split was to increase the per share price of the Common Stock in order to meet the minimum per share price requirement of $1.00 for continued listing on the Nasdaq. On October 30, 2023, the Company received a notice of compliance from NASDAQ.

In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding equity awards, warrants and convertible securities with respect to the number of shares of common stock subject to such award or security and the exercise or conversion price thereof. Furthermore, the number of shares of common stock available for issuance under the Company’s equity incentive plans has been proportionately adjusted for the Reverse Split ratio, such that fewer shares will be subject to such plans. Furthermore, proportionate adjustments were made to the conversion factor at which the Company’s Series B Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), may be converted to Common Stock. The total number of shares of Series B Preferred Stock of the Company authorized for issuance remained at 187,500.

The effects of the Reverse Stock Split have been reflected in these financial statements and the accompanying footnotes for all periods presented, which includes adjusting the description of any activity that may have been transacted on a pre-Reverse Stock Split basis.

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.

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 March 31, 2024, the Company had restricted cash of approximately $3.0 million, in which $2.0 million was classified as current and $1.0 million was classified as non-current. As of December, 31, 2023, the Company had restricted cash of approximately $4.0 million, in which $3.0 million was classified as current and $1.0 million was classified as non-current. The balance in restricted cash relates to funds held in escrow accounts due to sales of equipment that were executed, in which the Company can release to the convertible noteholders only if they request their share of funds. If no funds are distributed to the convertible noteholders from the escrow account by July 25, 2024, the funds may be used for general purposes for the Company. In addition, there was a restricted deposit held with a customer that was for less than 12 months. The Company has a long-term restricted cash balance in relation to a collateralized deposit.

Deposits and Credits on equipment

As of March 31, 2024 and December 31, 2023, the Company had approximately $1.4 million and $1.0 million, respectively, in deposits and credits on equipment, that had not yet been received by the Company. Once the Company receives such equipment in the subsequent period, the Company will reclassify such balance into Property, Plant, and Equipment. Included in these balances is a credit on equipment of $975 thousand which is restricted to be used on future purchases by September 1, 2024 (“expiration date”). The Company notes that if an order is not executed by the expiration date, the credit would be forfeited. The Company intends to utilize the full credit balance for future orders prior to the expiration date.

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-K for the year ended December 31, 2023, the Company identified the following errors related to the presentation of basic and diluted Earnings Per Share (“EPS”) in its historical filing for the year ended December 31, 2022, and for the quarters ended March 31, 2023, June 30, 2023, and September 30, 2023:

	●	Inclusion of the net income/loss from noncontrolling interest in the numerator;
	●	Inclusion of the cumulative undeclared preferred dividends in the numerator;
	●	Exclusion of shares issued for little or no cash consideration (ie: penny warrants) in the denominator.

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 10-Q report, but that correcting the cumulative impact of such errors would be significant to our EPS for the year ended December 31, 2023. Accordingly, the Company has corrected such immaterial errors by adjusting its December 31, 2022 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 quarters ended March 31, 2023, June 30, 2023, and September 30, 2023, and the final revised basic and diluted EPS calculation to correct all identified errors:

Schedule of Error Corrections of Basic and Diluted EPS

As reported

for the three months ended March 31, 2023 (1)

As revised

Change

Basic and Diluted net loss per share

(8.74

)

(10.30

)

(1.56

)

	For the three months ended June 30, 2023									For the six months ended June 30, 2023
	(1) As Reported			As Revised			Change			(1) As Reported			As Revised			Change
Basic and Diluted net loss per share	$	(8.44	)	$	(9.54	)	$	(1.10	)	$	(17.14	)	$	(19.74	)	$	(2.60	)

(1)	Prior period results have been adjusted to reflect the Reverse Stock Split of the Common Stock at a ratio of 1-for- 25 that became effective October 13, 2023. See Note 2, “Basis of Presentation,” for details.

	For the three months ended September 30, 2023									For the nine months ended September 30, 2023
	As Reported			As Revised			Change			As Reported			As Revised			Change
Basic and Diluted net loss per share	$	(4.40	)	$	(5.96	)	$	(1.56	)	$	(20.11	)	$	(24.16	)	$	(4.05	)

3. Accounts Receivable

Accounts receivables consist of the following at:

Schedule of Accounts Receivable

(Dollars in thousands)	March 31, 2024		December 31, 2023
Data hosting	$	3,006	$	2,456
Related party receivable		8		8
Demand response service receivable		1,143		268
Proprietary mining Coinbase receivable		271		216
Total	$	4,428	$	2,948
Accounts receivables	$	4,428	$	2,948

The Company’s allowance for expected credit loss was $0 at both March 31, 2024 and December 31, 2023.

4. Property, Plant and Equipment

Property, plant and equipment consist of the following at:

Schedule of Plant And Equipment

(Dollars in thousands)	March 31, 2024			December 31, 2023
Land and land improvements	$	1,553		$	1,538
Buildings and leasehold improvements		25,355			25,369
Computers and related software		11,250			11,764
Machinery and equipment		9,058			9,054
Office furniture and fixtures		28			28
Construction in progress		1,252			1,111
Property,plant and equipment gross		48,496			48,864
Less: Accumulated depreciation		(5,232	)		(4,292	)
Property,plant and equipment, net	$	43,264		$	44,572

Depreciation expense was approximately $1.6 million and $632 thousand for the three months ended March 31, 2024 and 2023, respectively.

The Company had an immaterial loss on sale of equipment of approximately $1 thousand for the three months ended March 31, 2024, in which they received proceeds of approximately $78 thousand for equipment that had a net book value of approximately $79 thousand. In January 2023, the Company sold M20 and M21 miners for a loss on sale of equipment of approximately $82 thousand in which the Company received proceeds of $213 thousand for our M20 and M21 miners which were previously reported as held for sale as of December 31, 2022, in which had a net book value of $295 thousand. There were additional proceeds of $36 thousand in March 2023, in which resulted in a gain of approximately $3 thousand of scrap and other equipment.

During the three months ended March 31, 2024, the Company had impairment charges of approximately $130 thousand. This charge related to the sale of S19 miners that occurred in April 2024, whereas the Company wrote down the net book value of the miners to the subsequent sales price. During the three months ended March 31, 2023, the Company had impairment charges of approximately $209 thousand related to impairment of approximately $166 thousand power supply units (PSUs) at the Sophie location and $43 thousand for M31 miners subsequently sold in April 2023, that the Company wrote down the net book value to subsequent sale price.

Equipment held for sale

In April 2023, Project Sophie entered into a 25 MW hosting contract with a sustainability-focused Bitcoin miner, that has shifted the Company’s business model at the Company’s modular data center at Project Sophie from proprietary mining to hosting Bitcoin miners for the customer. The Company obtained Board of Director approval to sell all remaining miners at the Sophie location and as of December 31, 2023, approximately $107 thousand remained outstanding whereas the Company expected to be sold within a year. For the three months ended, March 31, 2024, the Company has sold approximately $79 thousand of that balance, leaving approximately $28 thousand outstanding as of March 31, 2024. In March 2024, Project Dorothy 1B has begun to look to sell certain miners due to interest from third parties, and as such the Company has included $148 thousand for equipment held for sale as of March 31, 2024.

5. Asset Acquisition

As discussed above, on October 29, 2021, we completed the Soluna Callisto acquisition pursuant to an Agreement and Plan of Merger dated as of August 11, 2021, by and among the Company, SCI and Soluna Callisto (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 HEL, which assets consisted of Soluna Callisto’s existing pipeline of certain cryptocurrency mining projects that HEL previously transferred to Soluna Callisto 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 up to 118,800 shares (the “Merger Shares”) of the Company’s common stock payable upon the achievement of certain milestones within five years after the effective date in the merger, as set forth in the merger agreement and the schedules thereto (the “Merger Consideration”). See Note 15 for further information regarding our relationship with HEL.

The acquisition was accounted for, for purposes of U.S. GAAP, using the asset acquisition method of accounting under the ASC 805-50. We determined that we acquired in the acquisition a group of similar identifiable assets (primarily, the “strategic pipeline contract” of certain cryptocurrency mining projects), which it classified as an intangible asset for accounting purposes. As a result, our acquisition of the set of assets and activities constituted an asset acquisition, as opposed to a business acquisition, under ASC 805. ASC 805-50 provides that assets acquired in an asset acquisition are measured based on the costs of the acquisition, which is the consideration that the acquirer transfers to the seller and includes direct transaction costs related to the acquisition. We include Soluna Callisto’s results of operations in our results of operations beginning on the effective date of the acquisition.

Merger Consideration

The fair value of the Merger Consideration includes various assumptions, including those related to the allocation of the estimated value of the maximum number of Merger Shares (118,800) issuable as Merger Consideration, which issuance is contingent on the achievement of certain milestones of generating active Megawatts from Qualified Projects in which the Cost Requirement is satisfied within five years after the effective date of the merger, as set forth in the Merger Agreement and the schedules thereto, as set forth below. The Merger Consideration and the timing of the payment thereof is subject to the following qualifications and limitations:

1a)

Upon the Company achieving each one active MegaWatts (“Active MWs”) from the projects in which the cost requirement is satisfied, this will cause SHI to issue to HEL 792 shares for each one MW up to a maximum 150 Active MW.

	i.	If, on or before June 30, 2022, SCI or Soluna Callisto directly or indirectly achieves at least 50 active MWs from one or more of three current projects as set forth in the Merger Agreement that satisfy the Cost Requirement as defined within the Merger Agreement, then the Merger Shares will be issued at an accelerated rate of 1,188 Merger Shares for each of such first 50 Active MW, such that the Merger Shares in respect of the remaining 100 Active MWs (if any) will be issued at a reduced rate of 594 Merger Shares per Active MW (see below for extension and issuance of a proportion of shares);

	ii.	If, by June 30, 2023, SCI or Soluna Calisto fail to achieve directly or indirectly (other than pursuant to a Portfolio Acquisition) at least 50 Active MW from Projects that satisfy the Cost Requirement, then the maximum aggregate number of Merger Shares shall be reduced from 118,800 to 59,400 (see below for extension and issuance of a proportion of shares);

	iii.	No Merger Shares will be issued to HEL without our prior written consent;

	iv.	Issuance of the Merger Shares will also be subject to the continued employment with or engagement by SCI or the surviving corporation of (A) John Belizaire and (B) at least two of Dipul Patel, Mohammed Larbi Loudiyi, (through ML&K Contractor), and Phillip Ng at the time that such Merger Shares are earned. If both (A) and (B) cease to be satisfied on or prior to the date that all Merger Shares are earned (such date, a “Trigger Date”), then “Qualified Projects” for purposes of determining Merger Shares shall only apply to those Qualified Projects that are in the pipeline as of the Trigger Date. For these purposes, if any such individual’s employment or service relationship with SCI is terminated without cause, as a result of his death or disability, or with good reason (as such terms are defined in the employment and consulting agreements), such individual shall be deemed to continue to be employed or engaged by SCI for these purposes;

	v.	If SHI or SCI consummates a Change of Control before the fifth anniversary of the date of the closing of the merger, then we will be obligated to issue all of the unissued Merger Shares (subject to (ii) and (iii) above). The Merger Agreement defines “Change of Control” as (A) the sale, exchange, transfer, or other disposition of all or substantially all of the assets of us or SCI, (B) our failure to continue to own (directly or indirectly) 100% of the outstanding equity securities of SCI and/or the surviving corporation, or (C) a merger, consolidation, or other transaction in which the holders of SHI’s, SCI’s, or the surviving corporation’s outstanding voting securities immediately prior to such transaction own, immediately after such transaction, securities representing less than 50% of the voting power of the corporation or other entity surviving such transaction (excluding any such transaction principally for bona fide equity financing purposes, so long as, in the case of SHI or SCI (but not the surviving corporation) such transactions, individually and in the aggregate, do not result in a change in membership of such entity’s board of directors so that the persons who were members of the board of directors immediately prior to the first such transaction constitute less than 50% of the board membership at any time after such transaction(s) are consummated). Notwithstanding the foregoing, a transaction shall not constitute a Change of Control if its sole purpose is to change the state of SHI’s or SCI’s incorporation or to create a holding company that will be owned in the same proportions by the persons who held SHI’s or SCI’s securities immediately prior to such transaction; and

	vi.	if on any of the fifth anniversary of the effective time of the merger, a facility has not become a Qualified Facility and therefore is not taken into consideration in the calculation of Active MW because any of the elements set forth in the definition of “Qualified Facility” as defined in the Merger Agreement have not been met for reasons beyond the reasonable control of SCI’s management team, but SCI’s management team is then actively engaged in the process of completing and is diligently pursuing the completion of the missing elements, then (A) the target dates set forth above shall be extended for an additional 90 days, and (B) additional extensions of time may be granted by the Board of Directors in its commercially reasonable discretion, in each case for the purpose of enabling SCI’s management team to complete the steps needed to qualify the facility as a Qualified Facility.

On April 11, 2023, the Board had reviewed and approved the progress of SCI’s management team in qualifying facilities as Qualified Facilities and discussed an extension of the date in Section 2.7(a)(ii)(A) of the Merger Agreement to December 31, 2023 (previously was June 30, 2022), and an extension of the date in Section 2.7(a)(ii)(B) of the Merger Agreement to June 30, 2024 (previously was June 30, 2023).

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 and that 19,800 and 39,600 Merger Shares were issued on May 26, 2023 and 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 pursuant to the terms of the Merger Agreement.

The number of Merger Shares is also subject to customary anti-dilution adjustments in the event of any stock split, stock consolidation, stock dividend, or similar event involving the shares of our common stock. Based on the assessment performed, the fair value of the merger consideration as of October 29, 2021 was approximately $33.0 million.

6. Intangible Assets

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

Schedule of Intangible Assets

(Dollars in thousands)	Intangible Assets		Accumulated Amortization		Total

Strategic pipeline contract	$	46,885	$	22,660	$	24,225
Assembled workforce		500		242		258
Patents		202		12		190
Total	$	47,587	$	22,914	$	24,673

Intangible assets consist of the following as of December 31, 2023:

(Dollars in thousands)	Intangible Assets		Accumulated Amortization		Total

Strategic pipeline contract	$	46,885	$	20,317	$	26,568
Assembled workforce		500		216		284
Patents		165		10		155
Total	$	47,550	$	20,543	$	27,007

Amortization expense for the three months ended March 31, 2024 and 2023 was approximately $2.4 million.

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 Expense of Intangible Assets

(Dollars in thousands)
Year	2024
2024 (remainder of the year)	$	7,115
2025		9,487
2026		7,907
2027		9
2028		9
Thereafter		146
Total	$	24,673

7. Income Taxes

During the three months ended March 31, 2024 and 2023, the Company’s effective income tax rate was 8.21% and 9.66%. 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 2023 and permanent differences. There was $548 thousand and $547 thousand income tax benefit for the three months ended March 31, 2024 and 2023.

In connection with the strategic contract pipeline acquired in the Soluna Callisto 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, in which was recorded as a deferred tax liability and this amount will be amortized over the life of the asset. For the three months ended March 31, 2024 and 2023, the Company amortized $547 thousand each period.

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 valuation allowance was $36.8 million and $36.8 million on March 31, 2024 and December 31, 2023, respectively. We will continue to evaluate the ability to realize our deferred tax assets and related valuation allowance on a quarterly basis.

8. Debt

Convertible Notes Payable

Debt consists of the following

Schedule of Debt

(Dollars in thousands):

Maturity Date

Interest Rate

March 31,
2024

December 31,
2023

Convertible Note

July 25, 2024

*18

6,216

8,474

Default interest was waived on March 10, 2023, and no further interest applied on the Convertible Note for the remainder of the year.

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.

The October Secured Notes, subject to an original issue discount of 8%, had a maturity date (the “Maturity Date”) of October 25, 2022, which was extended to April 25, 2023 pursuant to the Addendum Amendment (as defined below), upon which date the October Secured Notes shall be payable in full. Commencing on the Maturity Date and also five (5) days after the occurrence of any Event of Default (as defined in the October Secured Notes), interest on the October Secured Notes will accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. If any Event of Default or a Fundamental Transaction (as defined in the October Secured Notes) or a Change of Control (as defined in the October Secured Notes) occurs, the outstanding principal amount of the October Secured Notes, liquidated damages and other amounts owing in respect thereof through the date of acceleration, will become, at the Noteholder’s election, immediately due and payable in cash at the Mandatory Default Amount (as defined in the October Secured Notes). Under the original terms, the October Secured Notes could not be prepaid, redeemed or mandatorily converted without the consent of the Noteholders. The obligations of the Company pursuant to the October Secured Notes are (i) secured to the extent and as provided in the Security Agreement, dated as of October 25, 2021, by and among the Company, MTI Instruments (a former subsidiary of SHI in which was sold in April 2022), and SCI, Soluna MC, LLC and Soluna SW, LLC (both of which are wholly owned subsidiaries of SCI, and together with MTI Instruments and SCI, the “Subsidiary Guarantors”), and Collateral Services LLC (the “Collateral Agent”), as collateral agent for the Noteholders; and (ii) guaranteed, jointly and severally, by the Subsidiary Guarantors pursuant to each Subsidiary Guaranty, dated as of October 25, 2021, by and among each Subsidiary Guarantor and the Noteholders signatory to the October SPA, subject to subsequent modifications pursuant to the Addendum, the Addendum Amendment and the NYDIG Transactions.

On July 19, 2022 and on September 13, 2022, the Company entered into an Addendum and Addendum Amendment in 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, and based on ASC 470, Debt, the Company determined the Addendum and Addendum Amendment to fall under Debt Extinguishment and the Company would be required to fair value the new debt, and in turn write off the existing debt on the books.

Following the debt extinguishment on July 19, 2022 as noted further above, the Convertible Notes will be 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. Although the Notes are not being accounted for under 825-10, the substance of the debt is considered to be the same and is therefore considered outside the scope of ASC 470-60. As such, the Company performed a fair value analysis of the Convertible Notes. For the year-ended December 31, 2023 and quarter-ended March 31, 2024, the Company had Monte Carlo simulations run-out for the expected conversion dates of the Convertible Notes using risk free rates, annual volatility, daily trading volumes, likely conversion profiles, and other assumptions based on principal and accrued interest as of the period ends. The Company determined the fair value of the Convertible Notes uses certain Level 3 inputs.

Changes in Level 3 Financial Liabilities Carried at Fair Value

Schedule of Changes in Level 3 Financial Liabilities Carried at Fair Value

(in thousands)
Balance, January 1, 2023	$	12,254
Conversions of debt (January 2023- March 31, 2023)		(1,395	)
Total revaluation gains (January 2023- March 31, 2023)		(473	)
Balance, March 31, 2023		10,386
Conversions of debt (April 1, 2023- December 31, 2023)		(4,568	)
Total revaluation losses (April 1, 2023- December 31, 2023)		2,656
Balance December 31, 2023	$	8,474
Financial liabilities, Balance	$	8,474
Conversions of debt (January 1, 2024- March 31, 2024)		(1,023	)
Conversions of debt		(1,023	)
Total revaluation gains (January 1, 2024- March 31, 2024)		(1,235	)
Total revaluation (gains) losses		(1,235	)
Balance March 31, 2024	$	6,216
Financial liabilities, Balance	$	6,216

For the three months ended March 31, 2023, the Company had approximately $1.4 million of note conversions with the Noteholders, therefore reducing the outstanding principal balance to approximately $11.6 million as of March 31, 2023. The Company also performed a fair value assessment whereas the value of the convertible notes was determined to be approximately $10.4 million, resulting in a revaluation gain noted for the three months ended March 31, 2023 between the fair value of the notes as of December 31, 2022, less conversions, to fair value as of March 31, 2023. For the three months ended March 31, 2024, the Company had approximately $1.0 million of conversions with the Noteholders, therefore reducing the outstanding principal balance to approximately $7.7 million as of March 31, 2024. The Company also performed a fair value assessment on February 28, 2024 (date of the Fourth Amendment noted below) for which the fair value was determined to be approximately $7.5 million, and March 31, 2024 the fair value was determined to be approximately $6.2 million.

The following table represents the significant and subjective fair value assumptions used for Convertible Notes during the three months ended March 31, 2024:

Schedule of Fair Value Assumptions For Convertible Notes

	Three months ended March 31, 2024
Stock price	$	2.88 – 3.43
Conversion price	$	3.78
Volatility		97.5 – 115	%
Risk-free interest rate		5.31- 5.46	%

The events of default stated in the Notice of Acceleration and Repossession defined below with NYDIG Financing constituted a cross-default under the terms of secured convertible notes issued to the Noteholders. In addition to such cross-default, the failure of the Company pursuant to the Addendum dated as of July 19, 2022, to escrow an aggregate amount of $950,000 for the benefit of the Noteholders by December 21, 2022, constituted an event of default under the Notes. Due to the default, the Company accrued interest at a rate of 18% which amounted to $617 thousand as of March 10, 2023. On March 10, 2023, the Company entered into a Second Addendum Amendment with the Noteholders, in which the Company paid the accumulated default accrued interest of $617 thousand through the Company’s restricted escrow accounts and contemporaneously with the payment, the Noteholders waived all existing events of default arising under the convertible notes.

On May 11, 2023, the Company entered into a Second Amendment Agreement (the “Second Amendment”) with the holders of its October Secured Notes to extend the maturity date of the October Secured Notes to July 25, 2024. In connection with the Second Amendment, the Company paid an extension fee of $250,000 and increased the principal amount of the outstanding October Secured Notes by 14%. The Company also issued 240,000 new Class A warrants exercisable at $12.50 and 80,000 new Class B warrants exercisable at $20.00.

Subject to the Equity Conditions (as defined below), upon each trigger set forth below, the Company is allowed, once per trigger, require the Note holders to convert up to 20% percent of the outstanding amount of the October Secured Notes as:

	(i)	the Company’s Common Stock trades for 10 consecutive days at or above $12.50 per share and at least 40,000 shares trade on each day.

	(ii)	the Company’s Common Stock trades for 10 consecutive days at or above $17.50 per share and at least 40,000 shares trade on each day.

	(iii)	the Company’s Common Stock trades for 10 consecutive days at or above $22.50 per share and at least 40,000 shares trade on each day.

The Equity Condition is met if all of the following conditions have been satisfied: (i) the shares of Common Stock issuable upon the conversion are either registered under the Securities Act of 1933 or resellable under Rule 144 thereunder without any volume restrictions, (ii) the number of shares issuable to each Note holder are below 4.99% of the outstanding shares, (iii) at least 20 trading days has elapsed since the previous mandatory conversion, (iv) the Company is current in all the SEC filings, and (v) the Company has obtained all required approvals from NASDAQ, or any successor trading market, to list the Common Stock to be issued upon such conversion.

On November 20, 2023, the Company and the Noteholders entered into a Third Amendment Agreement to amend the Notes, the October SPA and related agreements (collectively, the “Transaction Documents”). The aim is to facilitate future financings by the Company that may include funds for prepayment of the Notes by permitting the Company to force conversion of up to $1.5 million of the Notes under certain circumstances, reduce the prepayment penalty in return for reducing the conversion price of the $4.7 million of the Notes and reducing the exercise price of 150,000 of the Warrants to $0.01.

As provided in the original terms of the Notes, in the event the Company prepays the amounts owed under Notes, the Company must pay an additional 20% prepayment penalty. Under the new Transaction Documents, in the event the prepayment occurs between February 15, 2024 and July 24, 2024, prepayment penalty is reduced to 10%.

In addition, under the new Transaction Documents, the Company has the right to force the conversion of up to $1.5 million of face value of the Notes in whole or in part at any time up to the maturity date of the Notes, provided that at the time of such conversion the share price on the trading market on which the Company’s shares is then listed exceeds $5.00 and a minimum volume of 50,000 traded each trading day for the five trading days immediately prior to such forced conversion.

As consideration for the reduction in the prepayment penalty and the new forced conversion right, the Company agreed that an aggregate $4.7 million of the Notes had the conversion price reduced to $3.78 per share and 150,000 of the Warrants had the exercise price reduced to $0.01 (the “Repriced Warrants”), provided that prior to February 1, 2024, for each $31.33 in Notes converted by a Noteholder, such Noteholder may exercise one Repriced Warrant and that on February 1, 2024, all Repriced Warrants became immediately exercisable.

On February 28, 2024 the Company and the Purchasers entered into a Fourth Amendment Agreement to amend the Notes, SPA and related agreements to facilitate future financings by the Company by amending the Transaction Documents as follows:

The Company shall be permitted to undertake at-the-market transactions in the future provided:

●

No Event of Default shall have occurred and be continuing under the Notes; and

●

The market price of the shares of common stock shall be at least the At-the-Market (“ATM”) Floor Price. ATM Floor Price means $10 per share initially, which is reduced to $8 per share six months after the ATM is effective and $6 per share 12 months after the after the effective date of the ATM.

In addition, the Company will be 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 Purchasers 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 this Agreement per each extension.

In consideration of the foregoing, the Company:

	●	Reduced the conversion price of the Notes to $3.78 per share;

	●	The Purchasers received an aggregate of 850,000 three year warrants exercisable at $0.01 per share;

	●	An aggregate of 320,005 warrants held by the Purchasers had the exercise price reduced to $3.78 per share (the “$3.78 Warrants”); and

	●	An aggregate of 478,951 warrants held by the Purchasers 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.

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 will be treated as a liability and be revalued each quarter.

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 noted in Footnote 9. The fair value associated with the 51,618 warrants with non-Noteholders totaled approximately $386 thousand.

Because the foregoing will result in the issuance of more than 20% of the Company’s outstanding shares, it is subject to stockholder approval at the Company’s annual meeting of shareholders, to be held not later than May 30, 2024. Until such shareholder approval is obtained, the Company may not prepay any amount of the Notes which would reduce the aggregate principal amount thereof below $5 million.

On March 5, 2024, one of the Noteholders exercised 50 thousand warrants at the $6.00 repriced warrant value. As such, the Company issued 68 thousand $0.01 warrants, 80 thousand $4.20 warrants, and 80 thousand $5.70 warrants.

The following table represents the significant fair value assumptions used for warrants issued or repriced during the three months ended March 31, 2024:

Schedule of Fair Value Assumptions For Warrants Issued

	Three months ended March 31, 2024
Stock price	$	2.88- 4.07
Exercise price	$	0.01- 20.00
Expected term in years		3.00 – 8.77
Expected dividend yield		0.00	%
Volatility		127.50 – 137.50	%
Risk-free interest rate		4.28- 4.44	%

With the Fourth Amendment on February 28, 2024, a fair value was established at approximately $7.5 million. The Fourth Amendment caused a loss on extinguishment of debt of approximately $5.3 million which included a gain on revaluation of the debt of $436 thousand and warrant valuation of new $0.01 warrants, repriced $3.78 warrants and repriced $6.00 warrants with potential new $0.01, $4.20 and $5.70 additional warrants included if the $6.00 repriced warrants were exercised. This resulted in a $5.8 million loss on extinguishment of debt.

As of December 31, 2023, the fair value of the convertible debt was approximately $8.5 million outstanding which included adjustments to the value due to debt extinguishments and revaluations of multiple amendments throughout the fiscal year, as well as approximately $6.0 million in note conversions of the debt. The Company had approximately an $8.7 million principal balance outstanding for the convertible debt as of December 31, 2023. As of March 31, 2024, the fair value of the debt was approximately $6.2 million which included $1.0 million of conversions from January 1, 2024 through March 31, 2024, as well as a gain on debt for extinguishment with the Fourth Amendment on February 28, 2024 and the quarter valuation on March 31, creating a total gain on debt extinguishment and revaluation of approximately $1.3 million. In addition, a warrant revaluation was done at March 31, 2024, which created a gain on revaluation associated with the warrant liability of approximately $1.5 million.

NYDIG Financing

Schedule of Financing Debt

(Dollars in thousands)	Maturity Dates	Interest Rate	January 1, 2024 - March 31, 2024		January 1, 2023 - December 31, 2023
NYDIG Loans #1-11	April 25, 2023 thru January 25, 2027*	12% thru 15%	$	9,183	$	10,546

Less: repossession of collateralized assets				—		(1,363	)
Total outstanding debt			$	9,183	$	9,183

Due to event of default- the entire NYDIG Financing became current, see note below.

On December 30, 2021, Soluna MC Borrowing 2021-1 LLC (the “Borrower”), an indirect wholly owned subsidiary of the Company entered into a Master Equipment Finance Agreement (the “Master Agreement”) with NYDIG ABL LLC (“NYDIG”) as lender, servicer and collateral agent (the “NYDIG facility”). The Master Agreement outlined the framework for a financing up to approximately $14.4 million in aggregate equipment financing. Subsequently, the parties negotiated the specific terms of each equipment financing transaction as well as the terms upon which the Noteholders would consent to the transactions contemplated by the Master Agreement.

On January 14, 2022, the Borrower effected an initial drawdown under the Master Agreement in the aggregate principal amount of approximately $4.6 million that bore interest at 14% and was to be repaid over 24 months. On January 26, 2022, the Borrower had a subsequent drawdown of $9.8 million. As part of the transactions contemplated under the Master Agreement, (i) the Company’s indirect wholly owned subsidiary, Soluna MC LLC, formerly EcoChain Block LLC (“Guarantor”), which is the owner of 100% of the equity interests of Borrower, executed a Guaranty Agreement in favor of NYDIG, as lender, dated as of December 30, 2021 (the “Guaranty Agreement”), (ii) Borrower has granted a lien on, and security interest in, all of its assets to NYDIG, as collateral agent, (iii) Guarantor entered into an equipment financing arrangement on assets purchased with the borrowed funds, (iv) Borrower would borrow from NYDIG the loans as forth in certain loan schedules (the “Specified Loans”), and (v) Borrower had executed a Digital Asset Account Control Agreement (the “ACA Wallet Agreement”) with NYDIG, as collateral agent and secured party, and NYDIG Trust Company LLC, as custodian, dated as of December 30, 2021, as well as such other agreements related to the foregoing as mutually agreed (collectively, the “NYDIG Transactions”).

In connection with the NYDIG Transactions, on January 13, 2022, the Company entered into a Consent and Waiver Agreement, dated as of January 13, 2022 (the “Consent”), with the Noteholders, in connection with the October SPA, pursuant to which the Noteholders agreed to waive any lien on, and security interest in, certain assets, provided various contingencies are fulfilled, and each Noteholder who acquired October Secured Notes having a principal amount of not less than $3,000,000 agreed to waive its rights under Section 4.17 of the October SPA to participate in Subsequent Financings (as defined in the October SPA) with respect to the NYDIG Transactions and any additional loans under the MEFA that only finance the purchase of equipment from NYDIG, in order to consent to the NYDIG Transactions. Pursuant to the Consent, the Noteholders also waived the current requirement of the October SPA and the other transaction documents (collectively, the “SPA Documents”) that the Borrower become an Additional Debtor (as defined in the Security Agreement) and execute an Additional Debtor Joinder (as defined in the Security Agreement) for so long as the Specified Loans were outstanding, and NYDIG would not have entered into a subordination or intercreditor agreement with respect to the Guaranty. Further, pursuant to the Consent, the Noteholders waived the right to accelerate the Maturity Date of the October Secured Notes and the right to charge a default rate of interest on such Notes, in each case, with respect to certain changes in names of, and jurisdiction of incorporation, of the Debtors (as defined in the SPA Documents), which waiver would not waive any other Event of Default (as defined in any of the SPA Documents), known or unknown, as of the date of Consent.

Promptly after the date of the Consent, the Company issued warrants to purchase up to 3,400 shares of common stock to the Noteholder holding the largest outstanding principal amount of October Secured Notes as of the date of the Consent. Such warrants were substantially in form similar to the other warrants held by the Noteholders. Such warrants were exercisable for three years from the date of the Consent at an exercise price of $237.50 per share. On December 5, 2022, the exercise price of the warrants was reduced to an exercise price of $19.00 per share, effective with the closing of the Securities Purchase Agreement Offering on December 5, 2022.

The Company, through the Borrower, was required to make average monthly principal and interest payments to NYDIG of approximately $730 thousand on initial drawdown in aggregate principal amount of approximately $4.6 million bearing interest at 14%, and a subsequent drawdown of $9.8 million.

On December 20, 2022, the Borrower received a Notice of Acceleration and Repossession (the “NYDIG Notice”) from NYDIG with respect to the Master Agreement, by and between Borrower and NYDIG. The obligations of Borrower under the Master Agreement 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.

The NYDIG Notice states that (a) Borrower failed to observe or perform certain covenants, conditions or agreements contained in the Master Agreement and such failure continued unremedied for a period of ten days after Borrower’s knowledge of such breach, which resulted in an event of default under the Master Agreement, and (b) Borrower defaulted under the guaranty, collateral agreement, or other support agreement, which resulted in an event of default under the Master Agreement. In addition, the NYDIG Notice states that Borrower failed to pay certain payments of principal and interest under the Master Agreement when due, which failure also constituted an event of default under the Master Agreement. As a result of the foregoing events of default, and pursuant to the Master Agreement, NYDIG (x) declared the principal amount of all loans due and owing under the Master Agreement and all accompanying Loan Documents (as defined in the Master Agreement) to be due and immediately payable, (y) imposed a default rate of interest on any outstanding principal amount of each loan (together with all then unpaid interest accruing thereon) and all other obligations under the Master Agreement and the Loan Documents, and (z) demanded the return of all equipment subject to the Master Agreement and the Loan Documents. As such, the principal balance of $10.5 million became due immediately and the Borrower was to 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 Master Agreement. Also, as the Company was not able to obtain a waiver, the outstanding deferred financing costs were written off. As of December 31, 2022, the Borrower had incurred accrued interest and penalty of approximately $274 thousand. 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. This included legal and other expenses associated with the sale of the assets net a modest gain on the estimated net book value of the assets totaling $251 thousand that was expensed as a loss on disposition of assets for the year ended December 31, 2023. On December 7, 2023, NYDIG filed its Motion for Summary Judgment seeking entry of a judgment against Soluna in the approximate amount of $10.3 million for principal and interest and penalties. On January 12, 2024, Soluna filed its objection to NYDIG’s motion for summary judgment on the grounds that NYDIG failed to explain what collateral of which loan was sold and how the sale proceeds were allocated to each loan. A summary judgment motion was performed on February 13, 2024, and was agreed upon by both NYDIG and the Borrower, that the total outstanding loan principal balance would be approximately $9.2 million, in which a penalty fee was applied of approximately $1.0 million to the repossessed collateralized assets, and outstanding interest and penalty balance would be approximately $936 thousand as of December 31, 2023. The Company applied the per diem interest rate agreed upon with the summary judgement for the three months ended March 31, 2024 and recorded interest expense of approximately $363 thousand and has an outstanding interest and penalty accrual of approximately $1.2 million recorded within “Accrued Liabilities” as of March 31, 2024. See Note 10 for further information in relation to the NYDIG litigation matter.

Loan and Security Agreement

Navitas Term Loan

Schedule of Navitas Term Loan

(Dollars in thousands)	Maturity Date	Interest Rate			January 1, 2024- March 31, 2024			May 9, 2023- December 31, 2023
Term Loan and capitalized interest (excludes debt issuance cost)	May 9, 2025		15	%	$	1,707		$	2,254
Less: principal and capitalized interest payments						(616	)		(547	)
Less: debt issuance costs						(19	)		(25	)
Total outstanding debt					$	1,072		$	1,682

On May 9, 2023, DVCC and Navitas West Texas Investments SPV, LLC entered into a 2-year Loan Agreement (“Term Loan”) for $2,050,000. The unpaid principal balance of the Term Loan shall bear interest at per annum rate equal to 15%. Beginning on the last Business Day of the month in which the In-Service Date occurs (date Dorothy 1B is put into full operation following the planned ramp-up period), and continuing on the last Business Day of each month thereafter until the repayment of all Term Loan debt principal and accrued interest occurs, DVCC shall make debt service payments on the Term Loan through a cash sweep with the Site-level Free Cash Flow (total revenue of DVCC minus power costs and site level costs listed in Loan and Security agreement), otherwise to be distributed to Soluna Holdings, Inc., the ultimate parent entity of DVCC (the “SLNH Cash”) being applied as a permanent repayment of the Loan in an amount equal to the greater of: (i) the sum of (A) the amount of accrued and unpaid interest that has not yet been added to the principal balance of the Term Loan, if any, plus (B) an amount equal to 1/24th of the then outstanding principal balance of the Term Loan; provided that the aggregate amount payable pursuant to this clause (i) shall not exceed SLNH Cash times 0.60; or (ii) SLNH Cash times 0.33.

Any and all monthly debt service amounts so paid to Lender shall be applied first to accrued and unpaid interest that has not yet been added to the principal balance of the Term Loan, if any, and then to repayment of the then outstanding principal balance of the Term Loan. On the Term Loan Maturity Date (May 9, 2025), all remaining principal and accrued and unpaid interest that has not yet been added to the principal balance of the Term Loan, if any, shall become immediately due and owing in full and shall be paid by wire transfer in immediately available funds. As of March 31, 2024 and December 31, 2023, approximately $1.1 million and $1.7 million is included in current portion of debt as the Company’s expectation is that principal and capitalized interest payments will be made to pay off the Term Loan within one year after quarter or year-end. The Company has paid approximately $616 thousand in principal for the three months ended March 31, 2024 and $547 thousand in principal and capitalized interest payments for the year ended December 31, 2023. Interest expense related to the Navitas Term Loan for the three months ended March 31, 2024 was approximately $63 thousand.

Line of Credit

On September 15, 2021, the Company entered into a $1.0 million unsecured line of credit with KeyBank National Association (“KeyBank”), that will, among other things, allow the Company to request loans and to use the proceeds of such loans for working capital and other general corporate purposes (the “KeyBank facility”). The line of credit bears interest at a rate of Prime + 0.75% per annum. Accrued interest is due monthly and principal is due in full following KeyBank’s demand. As of January 1, 2023, the Company had drawn on the line of credit and approximately $350 thousand of the amount drawn under the line of credit remained outstanding. As of December 31, 2023, the remaining $350 thousand had been paid down. The Company does not have any remaining balance outstanding as of December 31, 2023 and March 31, 2024. The Company does not plan to draw down on the line of credit in the foreseeable future. In addition, future drawdowns require pre-approval by KeyBank.

9. Stockholders’ Equity

Preferred Stock

The Company has two series of preferred stock outstanding: the Series A Preferred Stock, with a $25.00 liquidation preference; and the Series B Convertible Preferred Stock, par value $0.0001 per share, with a stated value equal to $100.00 (the “Series B Preferred Stock”). As of March 31, 2024 and December 31, 2023, there were 3,061,245 shares of Series A Preferred Stock issued and outstanding, respectively, and as of March 31, 2024 and December 31, 2023 there was 62,500 shares of Series B Preferred Stock issued and outstanding, respectively.

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”).

In addition, on July 19, 2022, the Company issued to the Series B Investor common stock purchase warrants (the “Series B Warrants”) to purchase up to an aggregate of 40,000 shares of common stock at an initial exercise price of $250.00 per share. The Series B Investor is entitled to exercise the Series B Warrants at any time on or after the date that is 180 days following the issue date and on or prior to January 19, 2028. On the closing date of the next public offering of the common stock or other securities, the exercise price of the Series B Warrants is to adjust to a price equal to the lower of (a) the exercise price then in effect, or (b) the price of the warrants issued in the Company’s next public offering, or if no warrants are issued in the Company’s next public offering, 110% of the price per share of the common stock issued in the Company’s next public offering. In addition, upon the Series B Closing, the Series B Investor delivered to the Company for cancellation an outstanding warrant to acquire 40,000 shares of common stock at an exercise price of $287.50 per share previously issued on April 13, 2022, in connection with the Notes.

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 March 31, 2024 and December 31, 2023, there were 2,841,490 and 2,505,620 shares of common stock issued and 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 December 31, 2023, as such the Company has accumulated approximately $8.6 million of dividends in arrears on the Series A Preferred Stock through December 31, 2023, and an additional $1.7 million of dividends in arrears for the three months ended March 31, 2024, for a total of approximately $10.3 million.

The Company’s Series B Preferred Stock includes a 10% accruing dividend compounded daily for 12 months from the original issue date of July 20, 2022 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 Convertible Preferred Stock in the amount of approximately $656 thousand. Pursuant to the Certificate of Designation for the Series B 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 Stock agreed to satisfy the payment of the dividend through the issuance of 44,000 shares of its Common Stock and 70,300 prefunded warrants (the “Prefunded Warrants”).

Each Pre-Funded Warrant has been funded to the amount of $.19999, with $0.00001 per share of common stock payable upon exercise, is immediately exercisable, may be exercised at any time until exercised in full and is subject to customary adjustments. The Pre-Funded Warrants may not be exercised if the aggregate number of shares of the Company’s common stock beneficially owned by the holder (together with her affiliates) would exceed 4.99% of the Company’s outstanding Common Stock immediately after exercise. However, the holder may increase (upon 61 days’ prior notice from the holder to the Company) or decrease such percentages, provided that in no event such percentage exceeds 4.99%.

Reservation of Shares

The Company had reserved common shares for future issuance as follows as of March 31, 2024:

Schedule of Reserved Shares of Common Stock for Future Issuance


Stock options outstanding			51,873
Restricted stock units outstanding			5,732
Warrants outstanding			2,165,010
Common stock available for future equity awards or issuance of options			971,526
Number of common shares reserved			3,194,141

The Company also notes that as of March 31, 2024, there are 1,907,188 Series A preferred stock available for future equity awards under the 2021 Plan.

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 months ended March 31:

Schedule of Basic and Diluted Per Share Computations for Continuing Operations

(Dollars in thousands, except shares)	2024			2023

Numerator:
Net loss from continuing operations	$	(2,544	)	$	(7,432	)
(Less) Net income (loss) attributable to non-controlling interest		2,710			(370	)

Net loss attributable to Soluna Holdings, Inc.	$	(5,254	)	$	(7,062	)
Less: Preferred dividends or deemed dividends		(386	)		(131	)
Less: Cumulative Preferred Dividends in arrears		(1,722	)		(1,722	)
Balance	$	(7,362	)	$	(8,915	)
Denominator:
Basic and Diluted EPS:
Common shares outstanding, beginning of period, including penny warrants		2,592,454			747,847
Weighted average common shares issued during the period including penny warrants issued and outstanding as of quarter-end		215,101			116,167
Denominator for basic earnings per common shares —
Weighted average common shares		2,807,555			864,922

The Company notes as continuing operations was in a Net loss for the three months ended March 31, 2024 and 2023, 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 months ended March 31, 2024, were options to purchase 51,873 shares of the Company’s common stock, 5,732 nonvested restricted stock units, and 2,038,099 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 months ended March 31, 2023, were options to purchase 52,392 shares of the Company’s common stock, 40,320 nonvested restricted stock units, and 514,694 outstanding warrants not exercised. These potentially dilutive items were excluded because the calculation of incremental shares resulted in an anti-dilutive effect.

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 one year to less than ten years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of March 31, 2024 and December 31, 2023, 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 months ended March 31, total lease costs are comprised of the following:

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


(Dollars in thousands)	Three Months Ended March 31,
	2024		2023
Operating lease cost	$	61	$	56
Short-term lease cost		—		—
Total net lease cost	$	61	$	56

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 lease asset or liability for such leases.

Other information related to leases was as follows:

Schedule of Other Information Related to Leases

	Three Months Ended March 31, 2024			Three Months Ended March 31, 2023
Weighted Average Remaining Lease Term (in years):
Operating leases		4.54			4.43

Weighted Average Discount Rate:
Operating leases		8.10	%		7.91	%

Supplemental cash flows information related to leases for the three months ended March 31 was as follows:

(Dollars in thousands)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	61	$	54

Non-Cash Activity Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	-	$	397

Maturities of noncancellable operating lease liabilities are as follows for the quarter ending March 31:

Schedule of Maturity of Operating Lease Liabilities

(Dollars in thousands)	2024
2024 (remainder of year)	$	186
2025		79
2026		29
2027		29
2028		29
Thereafter		116
Total lease payments		468
Less: imputed interest		(85	)
Total lease obligations		383
Less: current obligations		194
Long-term lease obligations	$	189

As of March 31, 2024, there were no additional operating lease commitments that had not yet commenced.

Contingencies:

Spring Lane Capital Contingency

The Company has a potential contingency associated with an agreement with Spring Lane of up to $250 thousand which would be reduced by a proportion of funding received from Spring Lane up to the $35.0 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.

The Company has been named as a party in the December 19, 2019 United States Environmental Protection Agency (“EPA”) Demand Letter regarding the Malta Rocket Fuel Area Superfund Site (“Site”) located in Malta and Stillwater, New York in connection with an alleged release of hazardous materials into the environment. The EPA is seeking reimbursement of response costs from all named parties in the amount of approximately $358 thousand plus interest in connection with the investigation and disposal activities associated with the various drum caches discovered at the Site, issuance of the Explanation of Significant Differences (“ESD”) of the Site, and implementation of the work contemplated by the ESD. The Company considers the likelihood of a material adverse outcome to be remote and does not currently anticipate that any expense or liability it may incur as a result of these matters in the future will be material to the Company’s financial condition.

NYDIG filed a complaint against a subsidiary of Company, Soluna MC Borrowing 2021-1, LLC (“Borrower”) and Soluna MC, LLC, as Guarantor (“Guarantor”), and together with Borrower, (“NYDIG Defendants”) in Marshall Circuit Court of the Commonwealth of Kentucky on December 29, 2022 regarding a series of loans made by NYDIG to Borrower pursuant to a master equipment finance agreement that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant to a written guaranty agreement executed by Guarantor. The Court issued on February 15, 2023 an agreed order granting NYDIG’s motion for writ of possession which, among other things, ordered parties to provide NYDIG access to the collateral described therein and preserved the rights of NYDIG to pursue a deficiency judgment against the NYDIG Defendants. Also on February 15, 2023, the NYDIG Defendants filed their answer and affirmative defenses in this proceeding. The NYDIG Defendants believe that NYDIG has liquidated some of the collateral securing the loans and anticipate that NYDIG will complete the liquidation of collateral and continue to prosecute the complaint to obtain a judgment against the NYDIG Defendants. Additionally, NYDIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to NYDIG Defendants’ debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023 seeking a declaratory judgment as to such matter. NYDIG filed a motion to dismiss in response to SCI’s declaratory judgment complaint on April 13, 2023. SCI filed a response in opposition to NYDIG’s motion to dismiss on April 27, 2023. The court heard oral arguments on May 16, 2023. On June 22, 2023, the court issued an order granting NYDIG’s motion to dismiss, on the basis that the case was not ripe for decision, without prejudice. SCI intends to continue to vigorously defend any allegations regarding liability on account of NYDIG Defendants’ debts and liabilities to NYDIG under their loan documents and intends to refile a declaratory judgment complaint against NYDIG.

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. This included legal and other expenses associated with the sale of the assets net a modest gain on the estimated net book value of the assets totaling $251 thousand that was expensed as a loss on disposition of assets for the year ended December 31, 2023. On December 7, 2023, NYDIG filed its Motion for Summary Judgment seeking entry of a judgment against Soluna in the approximate amount of $10.3 million for principal and interest and penalties. On January 12, 2024, Soluna filed its objection to NYDIG’s motion for summary judgment on the grounds that NYDIG failed to explain what collateral of which loan was sold and how the sale proceeds were allocated to each loan. A summary judgment motion was performed on February 13, 2024, and was agreed upon by both NYDIG and the Borrower, that the total outstanding loan principal balance would be approximately $9.2 million, in which a penalty fee was applied of approximately $1.0 million to the repossessed collateralized assets, and outstanding interest and penalty balance would be approximately $936 thousand as of December 31, 2023. As of March 31, 2024, the Company still has an outstanding principal of approximately $9.2 million and outstanding interest and penalty balance of approximately $1.2 million. This settlement did not result in the admission of any liability on the part of SHI, whose declaratory judgment remains the subject of litigation. On March 13, 2024, NYDIG served the Company with a post-judgment discovery seeking information regarding the Company’s assets and liabilities. Per agreement between NYDIG and the NYDIG Defendants, the deadline to respond to the discovery demands was extended to May 13, 2024 but with rolling weekly production that commenced on April 12, 2024. The Company intends to vigorously defend itself from NYDIG’s parent company claims.

In September 2023, Atlas Technology Group LLC (“Atlas”) filed a complaint against Soluna MC LLC (formerly EcoChain Block LLC) (“Soluna MC”), Soluna Computing, Inc., and Soluna Holdings, Inc. (collectively, the “Atlas Defendants”) in the Supreme Court of the State of New York, County of New York regarding a co-location services agreement between Soluna MC and Atlas. Atlas alleges that the termination of such agreement by Soluna MC was a breach and asserts various claims, including breach of contract and the return of pre-paid fees. The claim requests a judgement against the Atlas Defendants for the return of pre-paid fees of approximately $464 thousand and additional damages to be determined at trial of not less than $7.9 million, and reimbursement of costs including legal fees and other costs. The complaint also contains references to alter ego liability and piercing the corporate veil. The Atlas Defendants filed a motion to dismiss; the Court held a hearing on this motion and issued an order and ruling on April 17, 2024 granting dismissal of three of the four counts in the complaint. The Atlas Defendants subsequently filed on May 6, 2024 an answer with respect to the remaining count and also asserted counterclaims against Atlas. In such order and ruling, the Court also denied at this time the dismissal of SCI and SHI from the action as improper parties; the Atlas Defendants subsequently filed notice of appeal of this portion of such order and ruling on May 7, 2024. The Atlas Defendants believe they have substantial factual and legal defenses to Atlas’s claims and intend to continue to defend the claims vigorously.

The referenced pre-paid fees of approximately $464 thousand have been reported in previous filings on Soluna MC’s balance sheet. No reserves have been established for any other claims asserted in such complaint.

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 March 31, 2024 and December 31, 2023, $368 thousand and $363 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.

Legal Services

During the three months ended March 31, 2024 and 2023, the Company incurred $1 thousand and $1 thousand, respectively, to Couch White, LLP for legal services associated with contract review. A partner at Couch White, LLP is an immediate family member of one of our Directors.

Employee Receivables

Certain employees have a receivable due to the Company based on their stock-based awards, in which $109 thousand and $110 thousand was outstanding as of March 31, 2024 and December 31, 2023, respectively. The balance is currently presented as $13 thousand and $13 thousand within Notes receivable as of March 31, 2024 and December 31, 2023, and $96 thousand and $97 thousand, respectively within Other assets.

HEL Transactions

As discussed above, on October 29, 2021, the Company completed the Soluna Callisto acquisition pursuant to 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 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 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 pursuant to the terms of the Merger Agreement.

Please see Note 5 for additional information regarding the Soluna Callisto acquisition and related transactions.

Several of HEL’s equity holders are affiliated with Brookstone Partners, the investment firm that holds 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 Director of the Company, 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 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 three months ended March 31, 2024 was $0 and $0.

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 of 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.

The Company’s investment in HEL was initially carried at the cost of investment and was $750 thousand. Based on evaluation of projections for the Company’s investment in HEL, the Company fully impaired the equity investment of $750 thousand as of December 31, 2022, writing it down to $0.

The Company owned approximately 1.79% of HEL, calculated on a converted fully diluted basis, as of March 31, 2024 and December 31, 2023. The Company may enter into additional transactions with HEL in the future

12. Stock Based Compensation

2023 Plan

The 2023 Plan was adopted by the Board on February 10, 2023 and approved by the stockholders on March 10, 2023. The 2023 Plan sets the number of shares of our Common Stock reserved for issuance thereunder, on a quarterly basis, to 9.75% of the shares of our Common Stock outstanding on the measurement date. Subject to certain adjustments as provided in the 2023 Plan, the maximum aggregate number of shares of our Common Stock that may be issued under the 2023 Plan (excluding the number of shares of our Common Stock subject to Specified Awards (as defined below)) (i) pursuant to the exercise of stock options, (ii) as unrestricted or restricted Common Stock, and (iii) in settlement of RSUs shall be limited to, beginning with the first quarter of our fiscal year ending December 31, 2023 (or January 1, 2023), 9.75% of the number of shares of our Common Stock outstanding as of the first trading day of each quarter . Subject to certain adjustments as provided in the 2023 Plan, (i) shares of our Common Stock subject to the 2023 Plan shall include shares of our Common Stock which revert back to the 2023 Plan in a prior quarter pursuant to the paragraph below, and (ii) the number of shares of our Common Stock that may be issued under the 2023 Plan may never be less than the number of shares of our Common Stock that are then outstanding under (or available to settle existing) 2023 Plan Award grants.

On June 29, 2023, at the Annual Shareholder Meeting, the Amended and Restated 2023 Stock Incentive Plan was approved. The Amended and Restated 2023 Plan will, among other things, increase the number of shares of our Common Stock reserved for issuance thereunder, on a quarterly basis, to 23.75% of the shares of our Common Stock outstanding on the measurement date. Subject to certain adjustments as provided herein, the maximum aggregate number of Common Shares that may be issued hereunder (excluding the number of Common Shares subject to Specified Awards (as hereinafter defined)) (i) pursuant to the exercise of Options, (ii) as unrestricted Common Shares or Restricted Stock, and (iii) in settlement of RSUs shall be limited to, beginning with the third quarter of our fiscal year ending December 31, 2023 (or July 1, 2023), 23.75% of the number of Common Shares outstanding as of the first trading day of each quarter. Subject to certain adjustments as provided herein, (A) Common Shares subject to this Plan shall include Common Shares which reverted back to this Plan in a prior quarter, and (B) the number of Common Shares that may be issued under this Plan may never be less than the number of Common Shares that are then outstanding under (or available to settle existing) Awards. For purposes of determining the number of Common Shares available under this Plan, Common Shares withheld by the Company to satisfy applicable tax withholding or exercise price obligations pursuant to Section 10(e) of this Plan shall be deemed issued under this Plan. In the event that, prior to the date this Plan shall terminate, any Award granted under this Plan expires unexercised or unvested or is terminated, surrendered or cancelled without the delivery of Common Shares, or any shares of Restricted Stock are forfeited back to the Company, then the Common Shares subject to such Award may be made available for subsequent Awards under the terms of this Plan. As used in this Plan, “Specified Awards” shall mean (i) Awards to Eligible Persons who are not employed or engaged by the Company or any of its subsidiaries as of the last day of any fiscal quarter of the Company, commencing with the fiscal quarter ending March 31, 2023 and (ii) Awards that have a grant date at least three (3) years prior to the last day of any fiscal quarter of the Company, commencing with the fiscal quarter ending March 31, 2023.

2021 Plan

The Company’s 2021 Plan was adopted by the Board on February 12, 2021 and approved by the stockholders on March 25, 2021. The 2021 Plan was amended and restated effective as of October 29, 2021, and May 27, 2022, respectively. The 2021 Plan authorizes the Company to issue shares of common stock upon the exercise of stock options, the grant of restricted stock awards, and the conversion of restricted stock units (collectively, the “Awards”). The Compensation Committee has full authority, subject to the terms of the 2021 Plan, to interpret the 2021 Plan and establish rules and regulations for the proper administration of the 2021 Plan. Subject to certain adjustments as provided in the 2021 Plan, the maximum aggregate number of shares of the Company’s common stock that may be issued under the 2021 Plan (i) pursuant to the exercise of options, (ii) as shares or restricted stock and (iii) in settlement of RSUs shall be limited to (A) during the Company’s fiscal year ending December 31, 2021 (the “2021 Fiscal Year”), 1,460,191 Shares, (B) for the period from January 1, 2022 to June 30, 2022, fifteen percent (15%) of the number of Shares outstanding on January 3, 2022, which was the first trading day of 2022, and (C) beginning with the third quarter of the Company’s fiscal year ending December 31, 2022 (the “2022 Fiscal Year”), fifteen percent (15%) of the number of Shares outstanding as of the first trading day of each quarter, net of any Shares awarded in the previous quarter(s). Subject to certain adjustments as provided in the 2021 Plan, (i) shares subject to the 2021 Plan shall include shares reverted back to the Company pursuant the 2021 Plan in a prior year or quarter, as applicable, as provided herein and (ii) the number of shares that may be issued under the 2021 Plan may never be less than the number of shares that are then outstanding under (or available to settle existing) Awards. For purposes of determining the number of shares available under the 2021 Plan, shares withheld by the Company to satisfy applicable tax withholding or exercise price obligations pursuant to the 2021 Plan shall be deemed issued under this Plan. In the event that, prior to the date on which the 2021 Plan shall terminate, any Award granted under the 2021 Plan expires unexercised or unvested or is terminated, surrendered, or cancelled without the delivery of shares of common stock, or any Awards are forfeited back to the Company, then the shares of common stock subject to such Award may be made available for subsequent Awards under the terms of the 2021 Plan.

On March 10, 2023, at the Special Shareholder Meeting, the Third Amended and Restated 2021 Stock Incentive Plan was approved. The Third Amended and Restated 2021 Plan will, among other things, (a) increase the number of shares of our Common Stock reserved for issuance thereunder, on a quarterly basis, to 18.75% of the shares of our Common Stock outstanding on the measurement date and (b) allow us to grant awards of shares of our 9.0% Series A Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”) (with and without restrictions). Subject to certain adjustments as provided in the Third Amended and Restated 2021 Plan, the maximum aggregate number of shares of our Common Stock that may be issued under the Third Amended and Restated 2021 Plan (excluding the number of shares of our Common Stock subject to Specified Awards (as defined below)) (i) pursuant to the exercise of stock options, (ii) as unrestricted or restricted Common Stock, and (iii) in settlement of RSUs shall be limited to, beginning with the first quarter of our fiscal year ending December 31, 2023 (or January 1, 2023), 18.75% of the number of shares of our Common Stock outstanding as of the first trading day of each quarter. Subject to certain adjustments as provided in the Third Amended and Restated 2021 Plan, the maximum aggregate number of shares of our Series A Preferred Stock that may be issued under the Third Amended and Restated 2021 Plan as unrestricted or restricted Series A Preferred Stock shall equal $3,600,000 valued as of the effective date of the Third Amended and Restated 2021 Plan as determined at the lower of the closing price of our Series A Preferred Stock on Nasdaq on such date or the average of the daily volume weighted average price of our Series A Preferred Stock on Nasdaq as reported by Bloomberg L.P. for a period of five (5) consecutive trading days ending on such date. Subject to certain adjustments as provided in the Third Amended and Restated 2021 Plan, (i) shares of our Common Stock and Series A Preferred Stock, as applicable, subject to the Third Amended and Restated 2021 Plan shall include shares of our Common Stock and Series A Preferred Stock, as applicable, which revert back to the Third Amended and Restated 2021 Plan in a prior quarter or fiscal year, as applicable, pursuant to the paragraph below, and (ii) the number of shares of our Common Stock and Series A Preferred Stock, as applicable, that may be issued under the Third Amended and Restated 2021 Plan may never be less than the number of shares of our Common Stock and Series A Preferred Stock, as applicable, that are then outstanding under (or available to settle existing) 2021 Plan Award grants. For purposes of the Third Amended and Restated 2021 Plan, “Specified Awards” means (i) 2021 Plan Awards issued to Eligible Persons who are not employed or engaged by us or any of our subsidiaries as of the last day of any fiscal quarter, commencing with the fiscal quarter ending March 31, 2023, and (ii) 2021 Plan Awards that have a grant date at least three (3) years prior to the last day of any fiscal quarter, commencing with the fiscal quarter ending March 31, 2023. The exclusion of Specified Awards from the determination of the maximum aggregate number of shares of our Common Stock available for issuance under the Third Amended and Restated 2021 Plan could have material effect on the number of shares of our Common Stock available for issuance thereunder and could have a material dilutive effect on our stockholders.

The Board has approved amendments to the both the 2021 and 2023 Plans subject to stockholder approval at the 2024 Annual Meeting. Under the Plans, the number of shares of common stock available for awards is limited to, 18.75% for the 2021 Plan and 23.75% for the 2023 Plan of the number of Common Shares outstanding as of the first trading day of each quarter. The amendments to each Plan would change the calculation of this limitation to reflect the applicable percentage to 18.75% and 23.75% respectively, after giving effect to the increase in the number of shares subject to awards after giving effect to the amount to the increase as of the date of the calculation.

There were no awards granted during the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company awarded 500,000 restricted stock units under the 2021 Plan, valued at $0.2986 per share based on the closing market price of the Company’s common stock on the date of the grant. The restricted stock units will vest during May 2023.

13. Effect of Recent Accounting Updates

Accounting Updates Effective for fiscal year 2024

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.

Accounting Updates Not Yet Effective

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (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. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and requires retrospective application to all periods presented upon adoption. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2023-07 will have on its condensed consolidated financial statements and disclosures.

Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets

In December 2023, the FASB issued ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which establishes accounting guidance for crypto assets meeting certain criteria. Bitcoin meets this criteria. The amendments require crypto assets meeting the criteria to be recognized at fair value with changes recognized in net income each reporting period. Upon adoption, a cumulative-effect adjustment is made to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption. ASU 2023-08 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted. The guidance is not expected to have an impact on the Company’s condensed consolidated financial statements and disclosures, unless the Company intends to hold crypto assets.

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 Company is currently evaluating the impact that ASU 2023-09 will have on its condensed consolidated financial statements and disclosures.

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, including 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 is currently assessing the impacts of adopting ASU 2024-01 on its condensed consolidated financial statements and disclosures.

14. PROJECT MARIE

As previously disclosed in Footnote 8, on December 20, 2022, Soluna MC Borrowing 2021-1 LLC (“Borrower”), an indirect wholly owned subsidiary of Soluna Holdings, Inc. (the “Company”), received a Notice of Acceleration and Repossession (the “NYDIG Notice”) from NYDIG ABL LLC (“NYDIG”) with respect to the Master Equipment Finance Agreement, dated as of December 30, 2021 (the “MEFA”), by and between Borrower and NYDIG. The NYDIG Notice states that (a) Borrower failed to observe or perform certain covenants, conditions or agreements contained in the MEFA and such failure continued unremedied for a period of ten days after Borrower’s knowledge of such breach, which resulted in an event of default under the MEFA, and (b) Borrower defaulted under the guaranty, collateral agreement, or other support agreement, which resulted in an event of default under the MEFA. In addition, the NYDIG Notice states that Borrower failed to pay certain payments of principal and interest under the MEFA when due, which failure also constituted an event of default under the MEFA. As a result of the foregoing events of default, and pursuant to the MEFA, NYDIG (x) declared the principal amount of all loans due and owing under the MEFA and all accompanying Loan Documents (as defined in the MEFA) to be due and immediately payable, (y) imposed a default rate of interest on any outstanding principal amount of each loan (together with all then unpaid interest accruing thereon) and all other obligations under the MEFA and the Loan Documents, and (z) demanded the return of all equipment subject to the MEFA and the Loan Documents.

The assets which secure the MEFA represent substantially all of the Company’s mining assets at the site and certain of the operating assets of Project Marie, a 20 MW facility located in Kentucky. 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. For the year ended December 31, 2022, the principal balance of $10.5 million became due immediately and the Borrower was to 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 Master Agreement. As of December 31, 2023, the Company reduced the outstanding debt by the repossessed collateralized assets net book value of $3.4 million less accrued interest that was paid off first when the collateral was repossessed of approximately $740 thousand, legal fees of approximately $251 thousand, and an additional penalty expense of $1.0 million, reducing the debt outstanding to approximately $9.2 million as of December 31, 2023. Also, as the Company was not able to obtain a waiver, the outstanding deferred financing costs were written off on September 5, 2023. NYDIG provided a letter finalizing the accounting for the repossessed collateralized assets totaling proceeds of approximately $3.4 million. This included legal and other expenses associated with the sale of the assets net a modest gain on the estimated net book value of the assets totaling $251 thousand that was expensed as a loss on disposition of assets for the year ended December 31, 2023. On December 7, 2023, NYDIG filed its Motion for Summary Judgment seeking entry of a judgment against Soluna in the approximate amount of $10.3 million for principal and interest and penalties. On January 12, 2024, Soluna filed its objection to NYDIG’s motion for summary judgment on the grounds that NYDIG failed to explain what collateral of which loan was sold and how the sale proceeds were allocated to each loan. A summary judgment motion was performed on February 13, 2024, and was agreed upon by both NYDIG and the Borrower, that the total outstanding loan principal balance would be approximately $9.2 million, in which a penalty fee was applied of approximately $1.0 million to the repossessed collateralized assets, and outstanding interest and penalty balance would be approximately $936 thousand as of December 31, 2023. As of March 31, 2024, the Company has an outstanding principal balance of approximately $9.2 million and an outstanding interest and penalty balance of approximately $1.2 million.

On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA, which resulted in a reportable disposition of all of the Company’s mining assets at the site and certain of the operating assets of Project Marie. The total net book value of the collateralized assets that were repossessed totaled $3.4 million in which were written off the Company’s books for the three months ended March 31, 2023, with an offset to the outstanding loan. Additionally, NDYIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to Defendants’ debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023 seeking a declaratory judgment as to such matter. In a related development, also on February 23, 2023, the Borrower received a notice of termination of the Management and Hosting Services Agreement with CC Metals and Alloys, LLC. As a result of this action and certain other characteristics of the facility, the Company elected to shut down the Marie facility. The Company believes it will maximize its profits and return on assets by concentrating its personnel and capital on its Dorothy Facility.

With the notice of termination of the Management and Hosting Services from CCMA, the Company notes that this event triggered the impairment of the remaining fixed assets at the Marie facility for the year ended December 31, 2022. Based on the closure of operations on Project Marie, the Company performed an impairment analysis and determined that approximately $2.4 million of equipment and leasehold approvements associated with Project Marie that were not attached with the repossession of NYDIG collateralized assets were impaired as of the year-ended December 31, 2022.

For the first quarter of 2023, the Company assessed whether the abandonment of the Project Marie facility qualified for the classification of discontinued operations under ASC 205-20-45-1B and 1C. A disposal of a component of an entity or a group of components of an entity shall be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs:

a. The component of an entity or group of components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale.

b. The component of an entity or group of components of an entity is disposed of by sale.

c. The component of an entity or group of components of an entity is disposed of other than by sale in accordance with paragraph 360-10-45-15 (for example, by abandonment or in a distribution to owners in a spinoff).

As such, the Company deemed that criteria c was applicable as the Project Marie facility was abandoned and ceased further operations beginning on February 23, 2023. However, to qualify for reporting as discontinued operations, it must represent a strategic shift. Per ASC 205-20-45-1C, examples of a strategic shift that has (or will have) a major effect on an entity’s operations and financial results could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity. A strategic shift implies that the disposal must result from a change in the way management had intended to run the business. Management does not believe the closure of Project Marie represented a strategic shift as the Company still fully intends to manage operations through data hosting with customers and proprietary mining arrangements for future pipelines, as such the strategic shift criteria was not met and will not qualify as discontinued operations.

However, per ASC 360-10-50-3A, in addition to the disclosures in paragraph 360-10-50-3, if a long-lived asset (disposal group) includes an individually significant component of an entity that either has been disposed of or is classified as held for sale and does not qualify for presentation and disclosure as discontinued operation, a public business entity shall disclose the pretax profit or loss of the individually significant component of an entity for the period in which it is disposed of or is classified as held for sale and for all prior period that are presented in the statement where net income is reported in accordance with ASC 205-20-45-6 through 45-9. Since the evaluation related to prior quarter, the Company has included comparative pretax loss for Project Marie for the three months ended March 31, 2024 and March 31, 2023.

Set forth below are the results of Project Marie:

Schedule of Results of Project Marie

(Dollars in thousands)	Three Months Ended March 31, 2024			Three Months Ended March 31, 2023

Cryptocurrency mining revenue	$	-		$	769
Operation service revenue- intercompany		3			-
Data hosting revenue		-			276
Total revenue		3			1,045
Operating costs:
Cost of cryptocurrency mining revenue, exclusive of depreciation		-			801
Cost of revenue-depreciation		-			122
Data hosting costs		-			214
Operational service costs- intercompany		1			-
General and administrative (income) expense		(32	)		286
Impairment on fixed assets		-			43
Operating profit (loss)		34			(421	)
Interest expense		(361	)		(377	)
Gain on sale of fixed assets		-			12
Other income, net		7			-
Net loss before income taxes	$	(320	)	$	(786	)

For the three months ended March 31, 2024, the intercompany service revenue and costs are eliminated within consolidation. Project Marie received a $32 thousand refund for insurance expenses for the three months ended March 31, 2024 and incurs interest expense in relation to the NYDIG default.

15. VARIABLE INTEREST ENTITY

On January 26, 2022, DVSL was created in order to construct, own, operate and maintain variable 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 $35 million to fund certain projects to develop green data centers co-located with renewable energy assets (the “Spring Lane Commitment”). We anticipate that these capital contributions, once deployed into the projects, will help develop up to three behind-the-meter (BTM) projects designed to convert wasted renewable energy into clean computing services such as Bitcoin mining and artificial intelligence. The Bilateral Contribution Agreement outlines the framework for the Spring Lane Commitment; however, neither we nor Spring Lane are obligated to complete any projects under such agreement and any actual capital contributions are subject to various conditions precedent, including the receipt of requisite lender and other consents, acceptance by Spring Lane of specific projects and negotiations of agreements regarding those projects, including milestones and structure. In partial consideration of the amendment to the October Secured Notes discussed above, the investors agreed to release certain collateral covered by their security agreement to permit the Company to proceed forward with the initial phase of Project Dorothy, which we expect to be partially funded by Spring Lane, which the Company expects to complete in the near future.

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 Agreement, DVSL issued 100% of its Class A Membership Interests to Devco. The Dorothy Contribution Agreement contains customary indemnification provisions, liquidation provisions and governance provisions with respect to DVSL. The Parties also entered into an Amended and Restated Limited Liability Company Agreement of DVSL providing for the governance of DVSL.

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

On March 10, 2023, the Company along with Devco, and Soluna DVSL ComputeCo, LLC, 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 is constructing a modular data center with a peak demand of 25 megawatts (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 $7,500,000 (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 $5,770,065, which represented the purchase price of $7,500,000 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, Soluna 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 18% Internal Rate of Return hurdle on its investments, the Company retains the right to 50% of the profits on Soluna DVSL ComputeCo. In connection with the Spring Lane transactions and agreements, Soluna DV Services, LLC. will be providing the operations and maintenance services to Soluna DVSL ComputeCo, LLC. Soluna DV Services, LLC expects to receive a margin of 20% for services rendered.

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 the Company other than those related to incorporating the new investment and the purpose and design of the Company has not changed. The Company evaluated the power and benefits concepts under ASC 810 to determine whether the change in investment of Class B memberships would change the consolidation of the DVSL, and the Company concluded that, after the additional investment by Spring Lane, Soluna continues to have a controlling financial interest in DVSL. In addition, the Company continues to have the power and benefits associated with DVSL and therefore will continue to consolidate.

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

Schedule of Variable Interest Entities of Assets and Liabilities

(Dollars in thousands)	March 31, 2024		December 31, 2023

Current assets:
Cash and restricted cash	$	3,952	$	2,275
Accounts receivable		1,319		1,246
Assets held for sale
Related party receivable- intercompany

Prepaids and other current assets		17		-
Due from- intercompany		235		235
Total current assets		5,523		3,756

Other assets- long term		2,172		2,172
Property, plant, and equipment		13,481		13,712
Total assets	$	21,176	$	19,640

Current liabilities:

Accounts payable	$	258	$	95
Accrued expense		516		677
Due to intercompany
Related party payable- intercompany
Current portion of debt

Total current liabilities		774		772

Customer deposits- long term		1,300		1,190
Other long-term liabilities		224		224

Total liabilities	$	2,298	$	2,186

Effective, January 1, 2023, the Company’s ownership in DVSL was reduced from 67.8% to 14.6%; see above for details.

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 $4,500,000 and its receipt of 4,500 Membership Interests, constituting 26.5% of the outstanding Membership Interests of the Company. On June 2, 2023, Soluna and Navitas amended and restated the Existing LLCA to (a) reflect (i) Navitas’s additional capital contribution of $7,596,970 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 $1,340,000 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 March 31, 2024, Navitas owns 46.7% and Soluna owns 53.3% of DVCC.

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

DVCC is a variable interest entity of Soluna due to DVCC being structured with non-substantive voting rights. This is due to two factors being met as outlined in ASC 810-10-15-14 that require the Variable Interest Entity model to be followed.

	a.	The voting rights of Soluna are not proportional to their obligation to absorb the expected losses of the legal entity. Soluna gave Navitas veto rights over significant decisions, which results in Soluna having fewer voting rights than their obligation to absorb the expected losses of the legal entity.

	b.	Substantially all of DVCC’s activities are conducted on behalf of Soluna, who has disproportionally fewer voting rights.

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

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)	March 31, 2024		December 31, 2023

Current assets:
Cash and restricted cash	$	3,811	$	2,575
Accounts receivable		271		254
Prepaids and other current assets		17		-
Assets held for sale		147		-
Related party receivable- intercompany		577		577
Total current assets		4,823		3,406

Other assets- long term		2,172		2,172
Property, plant, and equipment		20,864		22,188
Total assets	$	27,859	$	27,766

Current liabilities:
Accounts payable	$	1,535	$	138
Accrued expense		2,185		2,214
Due to intercompany		151		151
Related party payable- intercompany		1,108		1,108
Current portion of debt		1,072		1,681
Total current liabilities		6,051		5,292

Total liabilities	$	6,051	$	5,292

16. Segment Information

The Company applies ASC 280, Segment Reporting, in determining its reportable segments. The Company has two reportable segments: Cryptocurrency Mining and Data Center Hosting. 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 comprised of several members of its executive management team who use revenue and cost of revenues of both reporting segments to assess the performance of the business of our reportable operating segments.

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 mining activities, which is currently generated from Project Dorothy, and previously from Project Sophie and Marie. The Data Center Hosting segment generated revenue from contracts for the provision/consumption of electricity and operation of the data center from the Company’s high performance computing facilities previously at Project Marie and currently from Project Sophie and Project Dorothy.

For the three months ended March 31, 2024 and 2023, approximately 100% and 0% of the Company’s cryptocurrency mining revenue was generated from Project Dorothy 1A (data center located in Silverton, Texas), 0% and 28% from Project Marie, and 0% and 72% from Project Sophie (data center located in Murray, Kentucky), respectively. For three months ended March 31, 2024 and 2023, approximately 67% and 0% of the Company’s data center hosting revenue was generated from Project Dorothy 1B, 33% and 0% from Project Sophie, 0% and 96% from Project Marie, and 0% and 4% from Project Edith.

The Company evaluates performance based on profit or loss from operations before income taxes, accounting changes, items management does not deem relevant to segment performance, and interest income and expense. Inter-segment sales and expenses are not significant. Non-cash items of depreciation and amortization are included within both costs of sales and selling, general and administrative expenses.

The following table details revenue and cost of revenues for the Company’s reportable segments for three months ended March 31, 2024 and 2023, and reconciles to net income (loss) on the consolidated statements of operations:

Schedule of Segment Reporting Information


(Dollars in thousands)	For the Three Months Ended March 31,
	2024			2023
Reportable segment revenue:
Cryptocurrency mining revenue	$	6,396		$	2,796
Data hosting revenue		5,278			286
Demand response service revenue		875			-
Total segment and consolidated revenue		12,549			3,082
Reportable segment cost of revenue:
Cost of cryptocurrency mining revenue, exclusive of depreciation		1,841			2,251
Cost of data hosting revenue, exclusive of depreciation		2,251			272
Cost of revenue- depreciation		1,523			625
Total costs of revenues		1,523			625
Total segment and consolidated cost of revenues		5,615			3,148
Reconciling items:
General and administrative expenses		6,397			6,737
Impairment on fixed assets		130			209
Interest expense		424			1,374
Loss (gain) on debt extinguishment and revaluation, net		3,097			(473	)
Loss on sale of fixed assets		1			78
Other income, net		(23	)		(12	)
Income tax benefit		(548	)		(547	)
Net loss		(2,544	)		(7,432	)
(Less) Net income (loss) attributable to non-controlling interest		2,710			(370	)
Net loss attributable to Soluna Holdings, Inc.	$	(5,254	)	$	(7,062	)

Capital expenditures		524			860
Depreciation and amortization		3,926			3,002

17. Subsequent Events

Appointment of John Tunison as Chief Financial Officer

The Company has appointed John Tunison to serve as the Chief Financial Officer (“CFO”) and Treasurer of the Company, effective April 8, 2024, with employment commencing on March 29, 2024. Mr. Tunison is an experienced finance professional, previously serving as CFO of Verdant Specialty Solutions from May 2023 to March 2024 and CFO of Trussway Manufacturing from March 2019 to December 2022.

Equity Award Agreements

On April 15, 2024, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of Soluna Holdings, Inc., adopted forms of restricted stock award agreements (the “Stock Award Agreements”) that the Company may issue under the Company’s Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan, as amended and in effect from time to time (the “2021 Plan”), and/or the Company’s Soluna Holdings, Inc. 2023 Stock Incentive Plan (the “2023 Plan” and together with the 2021 Plan, each a “Plan” and collectively the “Plans”). The Stock Award Agreements may be denominated in shares of the Company’s Common Stock (“Common Stock”) and/or, in the case of Stock Award Agreements issued under the 2021 Plan, shares of the Company’s 9.0% Series A Cumulative Perpetual Preferred Stock (“Preferred Stock”).

The Company, upon the approval of the Compensation Committee, may issue to a recipient a Master Restricted Stock Agreement (a “Master RSA”) under the 2021 Plan and/or the 2023 Plan. Each Master RSA will be denominated in shares of Common Stock and will be subject to one or more Stock Award Agreements pursuant to which the Company will issue shares of Common Stock in accordance with each Master RSA and the applicable Plan. Each Master RSA and accompanying Stock Award Agreement will be subject to the vesting schedules set forth therein, which may consist of time-based vesting or vesting upon a separation from the Company or a subsidiary thereof. Each Master RSA and accompanying Stock Award Agreement provides that if the recipient maintains a continuous business relationship through each vesting date, a portion of the shares subject to the Master RSA and accompanying Stock Award Agreement shall vest on the applicable vesting date. If the Company terminates the recipient’s business relationship with the Company, or any subsidiary thereof, for any reason, whether voluntary or involuntary, no additional shares subject to the Master RSA or any accompanying Stock Award Agreement shall vest after the termination date. The Compensation Committee shall have the discretion to determine each recipient’s business relationship status. For purposes of each Master RSA, a business relationship consists of service to the Company or its subsidiaries in the capacity of an employee, officer, director, consultant or advisor. If the Company consummates a change of control, all shares of Common Stock subject to the Master RSA and any accompanying Stock Award Agreement will automatically vest and become exercisable, subject to any limitations imposed by Sections 280G and 4999 of the Internal Revenue Code.

The Company, upon the approval of the Compensation Committee, may also issue to a recipient a Restricted Stock Award Agreement (a “General RSA”) under the 2021 Plan. Each General RSA may be denominated in shares of Common Stock and/or Preferred Stock. Each General RSA will be subject to the vesting schedule set forth therein, which may consist of time-based vesting or vesting upon a separation from the Company or a subsidiary thereof. Each General RSA will provide that if the recipient maintains a continuous business relationship through each vesting date, a portion of the shares subject to the Stock Award Agreement shall vest on the applicable vesting date. If the Company terminates the recipient’s business relationship with the Company, or any subsidiary thereof, for any reason, whether voluntary or involuntary, no additional shares subject to the Stock Award Agreement shall vest after the termination date. The Compensation Committee shall have the discretion to determine each recipient’s business relationship status. For purposes of each Stock Award Agreement, a business relationship consists of service to the Company or its subsidiaries in the capacity of an employee, officer, director, consultant or advisor. If the Company consummates a change of control, all or a portion of the shares subject to the General RSA may, at the discretion of the Compensation Committee, vest and become free of some or all restrictions, or otherwise realizable in full or in part, as the case may be, despite the fact that the foregoing actions may cause the application of Sections 280G and 4999 of the Internal Revenue Code. On April 15, 2024, the Company awarded 929,410 shares of Common Stock from their 2021 and 2023 Plans to certain employees and directors, and 1,867,300 shares of Preferred A Stock shares from their 2021 Plan.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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. and previously “SCI” refers to Soluna Computing, Inc., formerly known as EcoChain, Inc.

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, 2023 contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2024.

In addition to historical information, the following discussion contains forward-looking statements, which involve risk and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements. Important factors that could cause actual results to differ include those set forth in Part I Item 1A-Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 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

We are a digital infrastructure company specializing in transforming surplus renewable energy into computing resources. Our modular data centers can co-locate with wind, solar, or hydroelectric power plants and support compute intensive applications including Bitcoin Mining, Generative AI, and Scientific Computing. This pioneering approach to data centers helps energize a greener grid while delivering cost-effective and sustainable computing solutions.

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

SHI through its subsidiaries operates across several business divisions:

	●	Bitcoin Mining [current] – we collaborate with project-level financial partners to mine Bitcoin at our proprietary data centers.

	●	Bitcoin Hosting [current] – we offer data hosting services at our proprietary data centers to prominent Bitcoin Mining companies.

	●	Demand Response Services [current] – we utilize our data centers to deliver demand response services to grid operators.

	●	AI Cloud Services [current] – we are utilizing our data centers to provide specialized AI Cloud and colocation services to companies seeking to train large language models, tune existing AI models, and deploy advanced AI-powered applications for the enterprise.

Operations and Project Pipeline

We currently operate 75 MW of facilities across two locations. We have another 216 MW of facilities in development or near shovel ready in the United States. In addition, we have a 2 GW long term pipeline of renewable-energy powered projects. A summary of our pipeline, current and anticipated operating locations are as follows (as of March 31, 2024):

Project Name	Location	MW	Status	Business Model	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	50	Shovel Ready	Bitcoin Hosting	Wind
Kati	Harlington, TX	166	Development	Bitcoin Hosting	Wind

2023

In 2023, we executed on the following four-pronged strategy: (1) Energize Project Dorothy; (2) Cash Flow, Site and Process Optimization; (3) Flagship Expansion; (4) Pipeline growth. A summary of our developments in these areas follows below.

Energize Project Dorothy

We transitioned our flagship data center Project Dorothy from construction to operations. ERCOT approved the energizing of the first 50 MW of our new data center on April 20, 2023. We completed the construction and ramping of the facility starting in the spring of fiscal year 2023, and completed the full ramp by the end of October 2023. The data center is co-located with Briscoe Wind Farm (“Briscoe”), a 150 MW wind power generation facility in Silverton, Texas. The project is comprised of two elements, Project Dorothy 1A (“D1A”), and Project Dorothy 1B (“D1B”), each 25 MW facilities.

D1A is focused on Bitcoin Hosting. On April 26, 2023 we signed a 5 MW 2-year hosting deal with Compass Mining at D1A. On April 24, 2023 we signed a 20 MW 2-year hosting agreement with another strategic hosting partner at Dorothy 1A. In the summer of 2023, we completed the construction of D1A and the installation of approximately 7,700 Bitcoin miners between the two customers, resulting in an installed hashrate of approximately 950 PH/s. From May 2023 through December 31, 2023, D1A has consumed over 11,900 MWh of Curtailed Energy from the co-located power plant and achieved a power usage effectiveness (“PUE”) of 1.03. For the three months ended March 31, 2024, D1A has consumed over 15,100 MWh of Curtailed Energy from the co-located power plant and has achieved a PUE of 1.03.

The construction of D1A was made possible by a partnership with Spring Lane Capital (“SLC”), a leading venture capital firm focused on sustainability solutions. On April 22, 2022, we finalized agreements with SLC for a $35 million capital pool to finance Soluna projects alongside renewable energy power plants. Approximately $12.5 million of this was designated for the Dorothy Project. In July 2022, Soluna began tapping into the SLC managed funds to finance Dorothy construction and repay prior funding provided by the Company. In return, SLC received approximately 32% of Class B Membership Interests of D1A. On March 10, 2023, we completed a new series of project-level agreements for $7.5 million from SLC-managed funds. Due to limited liquidity, and access to the capital markets, we sold a portion of our ownership to SLC in 2023. The funds raised aided in the completion of the substation interconnection, and the final stages of project Dorothy. It also provided capital to fund Soluna’s corporate operations. SLC, increased its stake in D1A from approximately 32% to 85%, reducing Soluna’s ownership from 68% to 15%. After SLC achieves an 18% Internal Rate of Return hurdle, Soluna retains 50% of the profits on D1A.

D1B is focused on Bitcoin Mining through a strategic partnership with Navitas Global (“Navitas”). On May 9, 2023, we consummated a project-level financing with Navitas, which included a $2 million loan to D1B to complete the construction and a $12.1 million equity investment in the project. After consummating the financing, Navitas owned 49% of D1B and Soluna owned 51%. As of March 31, 2024, Navitas owns 46.7% of D1B, and Soluna owns 53.3%. In June 2023, D1B purchased 8,378 Bitmain Antminer S19s, S19j Pro and S19j Pro+ machines for the partnership. The purchase resulted in an estimated 868 PH/s of hashrate with an average efficiency of 29.9 J/TH and at a cost of $10.59 $/TH. As of December 31, 2023, over 7,900 of the miners had been deployed. D1B was fully energized and began ramping in late October 2023. D1B now has an installed hashrate of 817 PH/s. From July 2023 through December 31, 2023, D1B has consumed over 10,600 MWh of Curtailed Energy from the co-located power plant and achieved a power usage effectiveness (“PUE”) of 1.03. For the three months ended March 31, 2024, D1B has consumed over 15,400 MWh of Curtailed Energy from the co-located power plant and achieved a PUE of 1.03.

Demand Response Services at Dorothy

In November 2023, we completed our registration of Project Dorothy for one of ERCOT’s demand response programs establishing the project as key contributor to intelligent and flexible energy solutions, promoting environmental and economic advantages for the state of Texas. It also allowed us to diversify our revenue. Under the program, we have a single promise to stand ready, on a monthly basis, to deliver a set amount of curtailment (committed capacity) per month when and if called upon by ERCOT. Soluna will be able to make additional revenue for Project Dorothy by providing this grid resilience support and potentially reduce its power costs, making it among the lowest cost players in the industry.

Cash Flow, Site and Process Optimization

In the second quarter of 2023, we shifted our business from primarily proprietary Bitcoin Mining to Bitcoin Hosting. We signed 50 MW of hosting agreements at Dorothy 1A and Sophie.

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.

The Company owns 100% of the facility and completed its construction in 2021. In the second quarter of fiscal year 2023, we shifted Project Sophie to Data Hosting, signing contracts with leading Bitcoin miners. We sold older, less efficient Bitcoin mining equipment and used the cash to make operational improvements to the site and to fund corporate operations. Throughout 2023, Sophie progressively secured new more profitable hosting contracts. We have deployed over 8,000 mining machines for hosting in 2023 and 2024 at the site. The Data Hosting agreements are a combination of a fixed services fee and a profit share component. The cost of power is passed through to customers. Customers at the site now include leading public Bitcoin Miners such as Bit Digital, Compass Mining, and other leading sustainability focused customers.

Marie

In February 2023, Project Marie, our 20 MW data center in Kentucky was decommissioned. The decision was sparked by following events:

	●	NYDIG our asset-backed-lender on mining and infrastructure equipment, accelerated their loan and repossessed their collateral.
	●	Our Bitcoin Hosting customer, Atlas Technology Group, LLC (“Atlas”), at the site failed to upgrade and invest in their mining equipment, decreasing the profitability of the site.
	●	Our landlord, CC Metals and Alloys, LLC, (“CCMA”) terminated our lease.

As a result, we disposed of all remaining assets at the site, terminated the Atlas hosting agreement, and decommissioned the site.

Cost Cutting and Process Optimization

In 2023, we implemented a number of cost cutting measures including staff reductions, renegotiations or termination of key advisory agreements. We ramped up a new Financial Planning and Analysis (“FP&A”) function to provide our management and operations teams better insight into the financial performance of our data centers. This helped us find opportunities to improve profitability and proactively address critical issues with infrastructure equipment at all sites. Our MaestroOS software platform managed the efficient operations of projects Dorothy and Sophie through record setting temperatures (hot and cold) in both Texas and Kentucky in 2023.

Expand Flagship, Dorothy 2

In 2023, we began the planning process for building out the second 50 MW phase of Project Dorothy – Dorothy 2. We completed the design, established new procurement partners, and submitted an updated approval to ERCOT.

Grow Pipeline

We signed a term sheet for a new 166 MW data center called Kati that will be integrated with a 300 MW wind farm that has surplus energy due to increasing curtailment by the grid. We worked throughout 2023 to advance the project through grid operator’s, ERCOT planning process.

Convertible Noteholders

In 2023, the Company negotiated three amendments to the October Convertible Notes. On February 28, 2024, a fourth amendment was executed. These amendments were focused on extending the maturity date of the notes, lowering the conversion price of the notes, adding features to the notes to allow early payoff with predetermined cost, and the repricing of certain warrants to assist the company in raising capital for operations.

2024

Grow Pipeline

We aim to double our assets under management to 150 MW by the end of fiscal year 2024, focusing on constructing and energizing 48 MW of Project Dorothy 2, and breaking ground on Project Kati.

Finance Opportunities

We plan to raise funds to support our growth initiatives, particularly in our AI business, which we believe is a great fit for our renewable computing data center model.

Optimize

Our objective is to achieve operational excellence across all data centers, targeting a budgeted EBITDA and maintaining high customer satisfaction.

Launch AI

We have 2 MW of our Project Dorothy 2 site slated for our Helix Pilot, focused on next generation data centers for AI. We will partner with industry leaders to bring this online and create a repeatable blueprint for our new AI business.

Recent Developments and Trends

Industry Trends

Soluna’s business is influenced by several industry trends, including: (1) challenges in the Bitcoin ecosystem, (2) the Bitcoin Halving, (3) the Inflation Reduction Act, (4) the global Supply Chain, (5) the growth of AI.

Bitcoin Ecosystem

Fiscal years 2022 and 2023 proved challenging for the Bitcoin Mining industry. In 2022, several companies in the ecosystem initiated bankruptcy proceedings due to the severe decline in the price of Bitcoin and, the impact on energy prices of the war in Ukraine. This turmoil continued into most of 2023 with many companies working their way through chapter 11 and flooding the market with equipment sales. The trial of Sam Backman Fried, founder and CEO of FTX, the industry’s largest digital asset exchange, dominated the news and continued to compress the value of Bitcoin. Later in the year Changpeng Zhao, the founder of Binance, the largest cryptocurrency exchange in the world, pleaded guilty to money laundering violations. By the end of 2023, tides began to turn for Bitcoin as major asset managers like Black Rock, Greyscale, and Bitwise filed for Bitcoin Spot ETFs. This caused a surge in Bitcoin price beginning in the tail end of 2023 that has benefited revenues in the ecosystem. Consolidation in the space will likely decrease competition on the Bitcoin network, increasing our pro rata share of profits. Our industry leading power prices will allow us to stay on the network longer. Increased regulation of the industry could increase our costs.

Bitcoin Halving

In April 2024, Bitcoin underwent its fourth halving event, occurring approximately every four years or after every 210,000 blocks are mined. During a halving, miners’ rewards for validating transactions and creating new blocks on the Bitcoin blockchain are cut in half, reducing the rate of new Bitcoin generation. This event typically triggers anticipation and speculation within the Bitcoin community and among investors, leading to increased market activity. Price volatility tends to rise before and after a halving as the market reacts to perceived supply scarcity. Mining profitability decreases post-halving, potentially prompting some miners to shut down operations. This often sparks consolidations in the space reducing the number of mining companies. However, the network automatically adjusts mining difficulty to ensure consistent block production. The halving also causes a supply shock, reducing Bitcoin’s inflation rate and potentially driving long-term price appreciation, although past performance does not guarantee future outcomes. The 2024 halving will be the first to happen during a high interest rate environment, and in the presence of strong institutional demand for Bitcoin driven by ETFs. Reduction in block-reward will represent a short-term reduction in revenue. But, the supply-shock effect and the growth of ETF may lessen the volatility. A projected rise in Bitcoin price after the halving would increase revenues and increase demand for our low-cost data centers.

Inflation Rate Act

The Inflation Reduction Act of 2022 (“IRA”), signed into law by President Biden, is a significant investment in climate and energy in the U.S. At the time of its passage, legislators estimated that the bill would allocate $370 billion, primarily in the form of tax credits, to a wide array of decarbonization efforts. Recent private estimates are much higher. In March, the Brookings Institute released a study estimating the spending at $1.2 trillion, which is three times the Congressional estimate. The Act aims to tackle the climate crisis, advance environmental justice, secure America’s position as a world leader in clean energy manufacturing, and work towards achieving a net-zero economy by 2050. Since its enactment, the Inflation Reduction Act has driven substantial investment in clean energy projects, with over $110 billion announced in new clean-energy manufacturing investments. This includes investments in electric vehicle supply chains and solar manufacturing. Overall, the IRA stimulates economic growth through renewable energy development and infrastructure reinvestment in the United States. The IRA is accelerating the development of new renewable power plants across the country and extending the tax incentives. This growth is likely to exacerbate the wasted energy problem as grid transmission will not keep pace. This would help to increase the company’s long-term project pipeline.

Supply Chain

The global supply chain is facing challenges, particularly in the electric power sector, due to the scarcity of power infrastructure components like transformers. The electric grid component market is experiencing a supply and demand mismatch, leading to an ongoing shortage of transformers and other grid components. Over 70% of transmission and power transformers in the U.S. are over 25 years old, and there is insufficient manufacturing capacity to meet the demand for grid transformers and component parts. Factors contributing to the scarcity include aging infrastructure, increasing demand for electricity, extreme weather events threatening reliability, insufficient domestic manufacturing capacity, and reliance on foreign suppliers. President Biden authorized the use of the Defense Production Act Title III to accelerate domestic production of electric grid transformers and components to address the shortage. Companies are using emergency stocks of components, reviewing scheduled work, substituting materials when possible, improving communication with suppliers, and digitalizing processes to enhance efficiency. The scarcity of power infrastructure components like transformers is a critical issue and efforts are being made to address these challenges through various strategies and actions. Difficult to source equipment could affect our growth. We have developed strategic relationships with key equipment providers with manufacturing facilities in the US and Abroad.

Since the inception of ChatGPT by OpenAI, AI has experienced remarkable growth, transforming the field. Large language models (“LLM”s) have revolutionized AI, fueling interest in generative AI technologies. The introduction of ChatGPT alone has increased AI-related job listings significantly, indicating its impact beyond tech. In 2023, global venture capital investments in AI soared to $50 billion, reflecting confidence in AI’s future potential. Funding focus has shifted to mature companies with proven technologies, signaling market maturation. This growth has driven demand for computing resources and attracted enterprise interest. The generative AI market is projected to reach $1.3 trillion by 2032, with significant energy implications. By 2030, AI could comprise 3-4% of global power demand, with Google already attributing 10-15% of its power use to AI technologies. The widespread adoption of generative AI like ChatGPT may substantially increase energy consumption across various applications and services. The energy demands of AI will increase focus on the sustainability of the industry. We expect increasing demand for specialized AI data centers with access to renewable energy. This will likely open opportunities for Soluna to provide AI Cloud and Co-location services to new companies and enterprises investing in AI initiatives.

Consolidated Results of Operations

Consolidated Results of Operations for the Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023.

The following table summarizes changes in the various components of our net loss during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

(Dollars in thousands)	Three Months Ended March 31, 2024			Three Months Ended March 31, 2023			$ Change			% Change
Cryptocurrency mining revenue	$	6,396			2,796			3,600			129	%
Data hosting revenue		5,278			286			4,992			1,745	%
Demand response service revenue		875			-			875			100	%
Operating costs and expenses:
Cost of cryptocurrency mining revenue, exclusive of depreciation		1,841			2,251			(410	)		(18	)%
Cost of data hosting revenue, exclusive of depreciation		2,251			272			1,979			728	%
Costs of revenue- depreciation		1,523			625			898			144	%
General and administrative expenses, exclusive of depreciation and amortization		3,994			4,360			(366	)		(8	)%
Depreciation and amortization associated with general and administrative expenses		2,403			2,377			26			1	%
Impairment on fixed assets		130			209			(79	)		(38	)%
Operating income (loss)		407			(7,012	)		7,419			(106	)%
Other income, net		23			12			11			92	%
Interest expense		(424	)		(1,374	)		950			(69	)%
Loss on sale of fixed assets		(1	)		(78	)		77			(99	)%
(Loss) gain on debt extinguishment and revaluation, net		(3,097	)		473			(3,570	)		(755	)%
Loss before income taxes		(3,092	)		(7,979	)		4,887			(61	)%
Income tax benefit		548			547			1			-	%
Net loss		(2,544	)		(7,432	)		4,888			(66	)%
Net income (loss) attributable to non-controlling interest		2,710			(370	)		(3,080	)		(832	)%
Net loss attributable to Soluna Holdings, Inc.	$	(5,254	)		(7,062	)		1,808			(26	)%

The following table summarizes the balances for the Project sites for cryptocurrency mining revenue, data hosting revenue, cost of cryptocurrency mining revenue, exclusive of depreciation, cost of data hosting revenue, exclusive of depreciation, and cost of depreciation during the three months ended March 31, 2024:

(Dollars in thousands)	Project Dorothy 1B		Project Dorothy 1A		Project Sophie		Project Marie		Other		Total

Cryptocurrency mining revenue	$	6,396	$	-	$	-	$	-	$	-	$	6,396
Data hosting revenue		-		3,542		1,736		-		-		5,278
Demand response services		-		-		-		-		875		875
Total revenue	$	6,396	$	3,542	$	1,736	$	-	$	-	$	12,549

Cost of cryptocurrency mining, exclusive of depreciation	$	1,841	$	-		-		-		-		1,841
Cost of data hosting revenue, exclusive of depreciation		-		1,737		514		-		-		2,251
Cost of revenue- depreciation		1,084		284		150		-		5		1,523
Total cost of revenue	$	2,925	$	2,021	$	664	$	-	$	5	$	5,615

(Dollars in thousands)	Project Dorothy 1B		Project Dorothy 1A		Project Sophie		Project Marie		Other		Total

Cryptocurrency mining revenue	$	-	$	-	$	2,027	$	769	$		$	2,796
Data hosting revenue		-		-		-		276		10		286
Demand response services		-		-		-		-		-		-
Total revenue	$	-	$	-	$	2,027	$	1,045	$	10	$	3,082

Cost of cryptocurrency mining, exclusive of depreciation	$	61	$	-		1,389		801		-		2,251
Cost of data hosting revenue, exclusive of depreciation		-		58		-		214		-		272
Cost of revenue- depreciation		-		-		503		122		-		625
Total cost of revenue	$	61	$	58	$	1,892	$	1,137	$	-	$	3,148

Cryptocurrency Mining Revenue: Cryptocurrency revenue consists of revenue recognized from Soluna’s cryptocurrency mining operations. Cryptocurrency revenue was approximately $6.4 million for the three months ended March 31, 2024 compared to $2.8 million for the three months ended March 31, 2023. We noted the significant increase of approximately $3.6 million related to the average price of Bitcoin increasing by 134% from the first three months of March 2023 compared to the same period in 2024. We also noted that the dollar Petahash per day between the two periods is 26.6% higher for the three months ended March 31, 2024 compared to same period in 2023. For the three months ended March 31, 2024, all cryptocurrency mining revenue related to Project Dorothy 1B, which began energization in the fourth quarter of 2023, and has been running at a full 25 MWs. Operations were stopped for Project Marie in February 2023 with the CCMA termination and NYDIG repossession of collateralized assets, and Project Sophie switched to Data Hosting beginning in the second quarter of fiscal year 2023, as such no revenue was recognized for either Project Marie or Sophie for the three months ended March 31, 2024. The Company also noted for the three months ended March 31, 2023, that Project Marie shut down when only 8 MW was running for Proprietary Mining and Project Sophie was beginning to struggle and not being able to maintain running at 25 MW, therefore we started our transition to a hosting model.

Data Hosting Revenue: The Company’s cryptocurrency hosting services provide energized space and operating services to third-party mining companies who locate their mining hardware at one of our mining locations. Services include fees for hosting the miners which could be fixed fees or profit sharing, as well as potential additional fees for services provided such as installation charges or other services fees. Data hosting revenue was approximately $5.3 million for the three months ended March 31, 2024 compared to $286 thousand for the three months ended March 31, 2023. The significant increase was primarily related to energization and the deployment of hosting customers at Project Dorothy 1A in the second quarter of 2023 creating approximately $3.5 million in data hosting revenue. In addition, Project Sophie switched their business model from proprietary mining to data hosting in the second quarter of 2023, which created an additional increase of approximately $1.7 million. As such, the Company was performing hosting services utilizing approximately 50 MW between Project Dorothy 1A and Project Sophie. Offsetting the increase was the decommission of Project Marie operations in February 2023 causing a decline of approximately $276 thousand quarter over quarter. For the three months ended March 31, 2023, Project Marie was hosting at approximately 10 MW.

Demand Response Service: In November 2023, we completed our registration of Project Dorothy for one of ERCOT’s demand response programs, in which we began services in December 2023. On a monthly basis we stand ready to deliver a set amount of committed capacity per month when and if called upon by ERCOT. No such services were performed for the three months ended March 31, 2023.

Cost of Cryptocurrency Revenue, exclusive of depreciation: Cost of cryptocurrency mining revenue includes direct utility costs, site overhead expenses, and overhead costs that relate to the operations of our cryptocurrency mining facilities in Kentucky and Texas. Going forward, cost of cryptocurrency revenue will include any additional cryptocurrency mining facilities that are part of the Company’s future pipeline.

Cost of cryptocurrency revenue, exclusive of depreciation costs was approximately $1.8 million and $2.3 million for the three months ended March 31, 2024 and 2023, respectively, approximately a $410 thousand decrease. The decline in costs related to the Company operating only one facility for the three months ended March 31, 2024, compared to two facilities for the three months ended March 31, 2023. Also, the electricity costs at Project Dorothy 1B are comparatively cheaper than the costs were at Project Sophie and Marie.

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

Cost of data hosting revenue was approximately $2.3 million for the three months ended March 31, 2024 compared to $272 thousand for the same period in 2023. This increase was due to Project Dorothy 1A which began operations and hosting services in May 2023, creating costs of approximately $1.7 million for the three months ended March 31, 2024. Also, the Company began data hosting operations at Project Sophie in mid-April 2023, which created an increase in costs of approximately $514 thousand. The increase was offset as a direct result by Project Marie’s operations ceasing in February 2023, where the main hosting contract was also simultaneously terminated, creating a decline in costs of approximately $214 thousand.

Cost of revenue- depreciation: Depreciation costs associated with cryptocurrency and data hosting revenue was approximately $1.5 million for the three months ended March 31, 2024 compared to approximately $625 thousand for the three months ended March 31, 2023. The increase related to the capital additions to fixed assets between the second quarter of fiscal year 2023 through the first quarter of 2024, totaling approximately $12.4 million. As the Company has begun to invest more in capital expenditures, we expect to see depreciation costs to significantly increase over the next several quarters.

General and Administrative Expenses: General and administrative expenses 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.

General and administrative expenses decreased approximately $366 thousand or 8% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Total general and administrative expenses were approximately $4.0 million, including approximately $656 thousand of stock compensation expense for the three months ended March 31, 2024, compared to approximately $4.4 million, including $847 thousand of stock compensation for the three months ended March 31, 2023, a. This decrease was mainly related to legal, stock compensation expenses, and investor relations offset with increases in wage and employee recruitment expenses.

Legal fees were reduced by approximately $469 thousand for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was mainly attributable to Project Dorothy 1A and 1B with Spring Lane and Navitas, in which legal fees associated with those projects were approximately $480 thousand for the three months ended March 31, 2023, compared to $50 thousand for the three months ended March 31, 2024.

Stock based compensation expense decreased by approximately $166 thousand for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, due to an acceleration of the Company’s grants and awards that occurred in May of 2023, as such, the outstanding grants and awards were higher in the previous year for the three months ended March 31, 2023, compared to the three months ended March 31, 2024.

Investor relations decreased by $92 thousand for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to expenses associated with higher reach out efforts, in addition to the Special Meeting held in March 2023, in which no Special Shareholder meeting was being held for the three months ended March 31, 2024.

The Company had an increase of approximately $374 thousand in wage related expense for the three months ended March 31, 2024 compared to three months ended March 31, 2023 due to anticipation of hitting performance based targets. The Company incurred approximately $90 thousand in recruitment expenses for the three months ended March 31, 2024 whereas there were no recruitment expenses for the three months ended March 31, 2023, related to the hiring additional key employees for 2024.

Depreciation and Amortization associated with general and administrative expenses: Depreciation and amortization expense was comparable for the three months ended March 31, 2024 and the three months ended March 31, 2023 in which the balances totaled approximately $2.4 million, respectively. The balances mainly related to amortization expense related to the strategic pipeline contract that was acquired in October 2021.

Impairment on Fixed Assets: During the three months ended March 31, 2024, the Company had impairment charges of approximately $130 thousand related to the sale S19 miners that occurred in April 2024, in which the Company wrote down the net book value of the miners to the subsequent sales price. During the three months ended March 31, 2023 the Company had impairment charges of approximately $209 thousand in which related to impairment of approximately $166 power supply units (PSUs) at their Sophie location and $43 thousand for M31 miners in which were subsequently sold in April 2023, in which the Company wrote down the net book value to subsequent sale price.

Interest expense: Interest expense for the three months ended March 31, 2024 was approximately $424 thousand related to approximately $361 thousand to the NYDIG loan and approximately $63 thousand to the Navitas loan. Comparatively, interest expense for the three months ended March 31, 2023 was approximately $1.4 million and related to default and continuing interest expense relating to the NYDIG loan of approximately $377 thousand, interest and other charges of approximately $220 thousand for the promissory notes issued in January and February of 2023, and interest on amortization of warrants for the convertible debt of approximately $360 thousand, as well as default interest charged through March 10, 2023 for the convertible holders of approximately $420 thousand.

Loss (Gain) on Debt Extinguishment and Revaluation: For the three months ended March 31, 2024, the Company incurred a $3.1 million loss on debt extinguishment and revaluation. On February 28, 2024, the Company entered into the Fourth Amendment with the Noteholders and lowered the conversion price and issued new warrants and repriced additional warrants with certain exercise features. The issuance and reprice of warrants created a loss of extinguishment of debt of approximately $5.8 million, in which was offset by a gain on debt revaluation of the convertible debt of approximately $1.3 million as of February 28, 2024 (date of Fourth Amendment) and March 31, 2024 due to several factors including assumptions on conversions and payouts, annual volatility and stock price conditions on the dates of valuations. In addition, there was a revaluation of the warrant liability, in which created a gain on revaluation of approximately $1.5 million. The Company did a fair value assessment of the Notes as of March 31, 2023, in which a gain of $473 thousand was recognized for the three months ended March 31, 2023. See Note 8 for further details.

Loss on Sale of Fixed Assets: The Company incurred an immaterial loss on sale of assets of approximately $1 thousand for in which they received proceeds of approximately $78 thousand compared to the net book value of the assets of approximately $79 thousand at the time of sale. The Company incurred a $78 thousand loss for the three months ended March 31, 2023 in connection with mainly the sale of their M20 and M21 miners in which contributed to a loss on sale of equipment of approximately $82 thousand in which they received proceeds of $213 thousand for their M20 and M21 miners, in which had a net book value of $295 thousand prior to the sale. There were additional proceeds of $36 thousand from sale on equipment in March 2023, in which resulted in a gain of approximately $3 thousand of scrap and other equipment.

Income Tax Benefit: Income tax benefit for the three months ended March 31, 2024 and March 31, 2023 was $548 thousand and $547 thousand. The balance mainly related to deferred tax amortization 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 (October 29, 2021), in which was recorded as a deferred tax liability and this amount will be amortized over the life of the asset. For the three months ended March 31, 2024 and March 31, 2023, the Company amortized $547 thousand. There was an additional state income tax benefit of approximately $1 thousand for the three months ended March 31, 2024.

Net income / (loss) attributable to non-controlling interest: Net income attributable to non-controlling interest for the three months ended March 31, 2024 was $2.7 million compared to a net loss of approximately $370 thousand for the three months ended March 31, 2023. This amount relates to Spring Lane’s 85% noncontrolling interest of the net profit in Soluna DVSL and Navitas 46.7% through 49% noncontrolling interest of the net profit in Soluna DV ComputeCo for the three months ended March 31, 2024, compared to the Spring Lane’s 32.2% noncontrolling interest of Net loss in Soluna DVSL for the three months ended March 31, 2023. Note, there was no noncontrolling interest of DV ComputeCo for the three months ended March 31, 2023. The change in non-controlling interest relates to continued profitability at Dorothy 1A and Dorothy 1B, creating a total net profit which started to grow in the third quarter of fiscal year 2023. There was no minority interest for Dorothy 1B (DV ComputeCo), until the 2nd quarter of 2023, when Navitas obtained interest in DV ComputeCo. Dorothy 1A had a net profit of approximately $1.4 million for three months ended March 31, 2024, creating a non-controlling interest profit of approximately $1.2 million, compared to a $433 thousand net loss for the three months ended March 31, 2023, creating a non-controlling interest loss of $370 thousand. In addition, the increase also related to Dorothy 1B, which had a zero balance for the three months ended March 31, 2023 for non-controlling interest to a non-controlling interest profit of $1.5 million for the three months ended March 31, 2024. As the Company was generating revenue from energization at Project Dorothy, the Company began to see a shift from a net loss to profit within non-controlling interest.

Non-GAAP Measures

In addition to financial measures calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), we also use “Adjusted EBITDA.” Adjusted EBITDA is a non-GAAP financial measure defined as net income (loss) from interest, taxes, depreciation and amortization (“EBITDA”) adjusted to eliminate the effects of certain non-cash, non-recurring items, that we believe do not reflect our ongoing strategic business operations. Management believes that Adjusted EBITDA results in a performance measurement that represents a key indicator of the Company’s business operations of cryptocurrency mining and hosting customers engaged in cryptocurrency mining.

We believe Adjusted EBITDA can be an important financial measure because it allows 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 U.S. 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.

Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measure calculated in accordance with U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure calculated in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP.

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

(Dollars in thousands)	March 31, 2024			March 31, 2023

Net loss	$	(2,544	)	$	(7,432	)
Interest expense, net		424			1,374
Income tax benefit		(548	)		(547	)
Depreciation and amortization		3,926			3,002
EBITDA		1,258			(3,603	)
Adjustments- Non-cash items

Stock-based compensation costs		661			879
Impairment on fixed assets		130			209
Loss on sale of fixed assets		1			78
Loss (gain) on debt revaluation and extinguishment, net		3,097			(473	)
Adjusted EBITDA	$	5,147		$	(2,910	)

Stock based compensation costs represented $468 thousand non-cash restricted stock units and $193 thousand non-cash stock options for the three months ended March 31, 2024 to members of our Board of Directors and certain Company employees compared to $687 thousand non-cash restricted stock units and $192 thousand non-cash stock options for the three months ended March 31, 2023 to members of our Board of Directors and certain Company employees .

The following table represents the Adjusted EBITDA activity between each three-month period from January 1, 2023 through March 31, 2024.

(Dollars in thousands)	Three months ended March 31, 2023			Three months ended June 30, 2023			Three months ended September 30, 2023			Three months ended December 31, 2023			Three months ended March 31, 2024

Net loss	$	(7,432	)	$	(9,257	)	$	(6,016	)	$	(4,998	)	$	(2,544	)
Interest expense, net		1,374			486			495			393			424
Income tax (benefit) expense		(547	)		(547	)		569			(542	)		(548	)
Depreciation and amortization		3,002			2,918			3,579			3,877			3,926
EBITDA		(3,603	)		(6,400	)		(1,373	)		(1,270	)		1,258

Adjustments: Non-cash items

Stock-based compensation costs		879			2,232			595			606			661
Loss (gain) on sale of fixed assets		78			(48	)		373			(5	)		1
Impairment on fixed assets		209			169			41			156			130
Loss (gain) on debt extinguishment and revaluation, net		(473	)		2,054			769			1,554			3,097
Adjusted EBITDA	$	(2,910	)	$	(1,993	)	$	405		$	1,041		$	5,147

Liquidity and Capital Resources

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

	Three Months Ended or as of			Three Months Ended or as of			Year Ended or as of
(Dollars in thousands)	March 31, 2024			March 31, 2023			December 31, 2023
Cash	$	8,438		$	4,553		$	6,368
Restricted cash		2,956			493			3,999
Working capital (deficit)		(15,502	)		(17,218	)		(13,891	)
Net loss		(2,544	)		(7,432	)		(27,703	)
Net cash provided by (used in) operating activities		3,850			(3,053	)		(2,987	)
Purchase of property, plant and equipment		(524	)		(860	)		(12,705	)

The Company had a consolidated accumulated deficit of approximately $256.2 million as March 31, 2024. As of March 31, 2024, the Company had negative working capital of approximately $15.5 million, $7.7 million outstanding principal in notes payable that may be converted to common stock, a subsidiary of the Company that defaulted on equipment financing and has a current outstanding loan of $9.2 million, and a 2-year $2.05 million principal loan commitment to Navitas, in which as of March 31, 2024 has an outstanding principal balance of approximately $1.1 million. The Company had outstanding commitments as of March 31, 2024, related to SDI of 3.4 million in capital expenditures, in which 95% relate to Project Dorothy 2, and approximately $8.4 million of cash available to fund its 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. The Company is 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 from our current cash position and our projected 2024 cash flows pursuant to management’s plans. If necessary, we may also seek to supplement our resources by increasing credit facilities to fund operational working capital and capital expenditure requirements. We expect to fund growth, including additional development and build-outs of data centers and its AI initiative through project-level capital raising and equity sale activities, to the extent that we can successfully raise capital through sales of additional debt or equity securities, as well as a variety of project specific funding options. Any additional financing, if required, may not be available to us on acceptable terms or not at all.

As shown in the accompanying financial statements, the Company did not generate sufficient revenue to generate net income and has negative working capital as of March 31, 2024. These factors, among others, indicate that there is substantial doubt about the Company’s ability to continue as a going concern within one year after issuance of the condensed financial statements as of March 31, 2024, or May 15, 2024.

Further, various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, interest rates and overall economic conditions. For instance, inflation could negatively impact the Company by increasing our labor costs, through higher wages and higher interest rates. If inflation or other factors were to significantly increase our business costs, our ability to develop our current projects may be negatively affected. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of our business and our ability to raise capital in order to fund our operations. If our revenue estimates are off either in timing or amount, or if cash generated from operations is insufficient to satisfy the operational working capital and capital expenditure requirements, the Company plans to implement additional steps to ensure liquidity including, but not limited to, the deferral of planned capital spending and/or delaying existing or pending product development initiatives; alternatively, the Company may be required to obtain credit facilities or other loans, if available, to fund these initiatives. However, the Company is actively monitoring this situation and the possible effects on our financial condition, liquidity, operations, suppliers, and the industry.

Operating Activities

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

Net cash used in operations was approximately $3.1 million during the three months ended March 31, 2023. The Company had a net loss for the three months ended March 31, 2023 of $7.4 million. Non-cash items included $632 thousand of depreciation expense and $2.4 million of amortization expenses, as well as amortization on discount on notes payable of approximately $500 thousand, $879 thousand of stock compensation expenses, and $209 thousand of impairment of fixed assets. These non-cash items were offset with a deferred tax benefit of $547 thousand and revaluation gain on debt of $473 thousand. The change in asset and liabilities of $675 thousand related to increase in accounts payable of $1.4 million in which Spring Lane made noncash contributions to pay off approximately $1.1 million that was outstanding as of December 31, 2022, offset by increases in other long term liabilities related to electricity deposits to Western Kentucky and Washington state, and a decrease in deferred revenue of $453 thousand in which the balance had been written off as of March 31,2023. The other changes in assets and liabilities were not material.

Investing Activities

Net cash used in investing activities during the three months ended March 31, 2024 was approximately $827 thousand consisting mainly of capital expenditures of $524 thousand and increase in deposits on equipment of $343 thousand. Net cash used in investing activities during the three months ended March 31, 2023 was approximately $435 thousand consisting mainly of capital expenditures of $860 thousand less cash proceeds from sale of equipment and $200 thousand net change in deposits on equipment.

Financing Activities

Net cash used in financing activities was approximately $2.0 million consisting mainly of $1.7 million of cash distributions to non-controlling interest members, $616 thousand in principal payments of the Navitas loan, offset with $300 thousand of warrant exercises. Net cash provided by financing activities was approximately $6.7 million during the three months ended March 31, 2023, which consisted of cash contributions for non-controlling interest of approximately $6.0 million. The Company also received net proceeds from debt issuances of $900 thousand less costs of $215 thousand.

Debt

On September 15, 2021, the Company entered into a $1.0 million unsecured line of credit with KeyBank National Association (“KeyBank”), that will, among other things, allow the Company to request loans and to use the proceeds of such loans for working capital and other general corporate purposes (the “KeyBank facility”). The line of credit bears interest at a rate of Prime + 0.75% per annum. Accrued interest is due monthly and principal is due in full following KeyBank’s demand. As of January 1, 2022, the entire line of credit of $1.0 million was drawn and outstanding. As of December 31, 2023, the entire original $1.0 million outstanding balance has been paid down, and the Company did not have an outstanding balance as of December 31, 2023 and March 31, 2024. The Company does not plan to draw down on the line of credit in the foreseeable future. In addition, future drawdowns may require pre-approval by KeyBank.

On October 25, 2021, the Company issued to certain institutional investors secured convertible notes in the aggregate principal amount of approximately $16.3 million for an aggregate purchase price of $15.0 million. The notes are convertible, subject to certain conditions, at any time at the option of the investors, into an aggregate of 71,043 shares of the Company’s common stock. On May 11, 2023, the Company entered into the Second Amendment with the Noteholders in which increased the principal outstanding balance to approximately $13.3 million and extending the maturity date to July 2024. On November 20, 2023 the Company and the Noteholders entered into a Third Amendment Agreement to amend the Notes, the October SPA and related agreements to facilitate future financings by the Company that may include funds for prepayment of the Notes by permitting the Company to force conversion of up to $1.5 million of the Notes under certain circumstances and reduce the prepayment penalty in return for reducing the conversion price of the $4.7 million of the Notes to $3.78 and reducing the exercise price of 150 thousand of the Warrants to $0.01.The Noteholders have converted approximately $4.6 million between May 11, 2023 to December 31, 2023, reducing the principal balance to approximately $8.7 million as of December 31, 2023. On February 28, 2024, the Company and the Noteholders have entered into a Fourth Amendment which allowed all the outstanding debt to be converted at a rate of $3.78. The Noteholders converted approximately $1.0 million between January 1, 2024 through March 31, 2024, reducing the outstanding principal balance to approximately $7.7 million as of March 31, 2024.

On January 14, 2022, the Company effected an initial drawdown under the Master Equipment Finance Agreement 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 Master Agreement, by and between Borrower and NYDIG. The obligations of Borrower under the Master Agreement 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 Master Agreement. 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. This included legal and other expenses associated with the sale of the assets net a modest gain on the estimated net book value of the assets totaling $251 thousand that was expensed as a loss on disposition of assets for the year ended December 31, 2023. On December 7, 2023, NYDIG filed its Motion for Summary Judgment seeking entry of a judgment against Soluna in the approximate amount of $10.3 million for principal and interest and penalties. On January 12, 2024, Soluna filed its objection to NYDIG’s motion for summary judgment on the grounds that NYDIG failed to explain what collateral of which loan was sold and how the sale proceeds were allocated to each loan. A summary judgment motion was performed on February 13, 2024, and was agreed upon by both NYDIG and the Borrower, that the total outstanding loan principal balance would be approximately $9.2 million, in which a penalty fee was applied of approximately $1.0 million to the repossessed collateralized assets, and outstanding interest and penalty balance would be approximately $936 thousand as of December 31, 2023. As of March 31, 2024, the Company still has an outstanding loan principal of approximately $9.2 million and outstanding interest and penalty balance of approximately $1.3 million.

On May 9, 2023, Soluna DV ComputeCo, LLC 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 March 31, 2024, the Company has an outstanding principal balance of approximately $1.1 million.

Critical Accounting Policies and Significant Judgments and Estimates

The above discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. Note 2, Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 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, 2023. 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;

	●	ability of the Company to successfully implement its business expansion strategy into cloud service for artificial intelligence;

	●	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 our data centers; and

	●	other factors beyond the Company’s control;

	●	other factors discussed under the heading “Risk Factors” in this report and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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.

Factors Expected to Affect Our Future Results

Revenue Sources:

Our revenue streams consist of several components:

1. Hosting Revenues: We provide electrical power and network connectivity to cryptocurrency mining customers, who pay a specified amount and rate for these services. In the first quarter of 2024, we have engaged in a co-location agreement with a GPU startup delivering specialized GPU services for AI computing.

2. Block Rewards in Bitcoin: These are fixed rewards programmed into the Bitcoin software and awarded to miners for solving cryptographic problems and creating new blocks on the blockchain.

3. Participation in Demand Response Programs: We also generate revenue by participating in demand response programs.

Market Price of Bitcoin

Changes in the market value of Bitcoin directly impact our revenues. For example, in 2021 and 2022, the average Bitcoin price was $47,432 and $28,298, respectively. By December 31, 2023, the price of Bitcoin had reached a high of $44,146. For the three months ended March 31, 2024, the price of Bitcoin had reached a high of $73,083, and the average price of Bitcoin for the three months ended March 31, 2024 was $53,578.

Halving

Halving events occur periodically in the Bitcoin network, reducing block rewards. The reduction is designed to occur irrespective of ongoing demand. While halving can impact our revenues negatively by reducing the rewards for mining, it will continue until the total Bitcoin rewards issued reach approximately 21 million, expected around 2140. As of March 31, 2024, the block rewards were fixed at 6.25 Bitcoin per block, and on April 19, 2024 Bitcoin halved again to 3.125.

Network Hash Rate and Difficulty

A miner’s chance of earning Bitcoin rewards depends on their hash rate relative to the global network hash rate. As demand for Bitcoin increases, the global network hash rate rises rapidly, leading to higher network difficulty. This adjustment ensures a ten-minute block validation time, making the network more secure but requiring more computing power to earn rewards. Failure to keep pace with industry trends in deploying additional hash rate can decrease a miner’s share of the global network hash rate and, consequently, their chance of earning rewards.

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.

(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 March 31, 2024. 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 March 31, 2024, due to the following material weakness:

●

During the quarter ended March 31, 2024 the Company incurred a debt amendment. The Company performed accounting analysis to record this transaction. However, due to its complexity, an additional material adjustment related to the classification of warrants was identified, recorded and reported in the condensed consolidated financial statements later during the quarterly review.

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 March 31, 2024 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:

	●	Implementing more robust policies and procedures, relating to complex transactions and assessments, to ensure the reliability of controls and financial reporting

	●	Engaging consultants and third-party specialists to ensure that all entries recorded in regards to complex transactions align to accounting guidance and align to expectations on the condensed 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 June 30, 2024. 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 March 31, 2024 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.

EPA

We have been named as a party in the December 19, 2019 United States Environmental Protection Agency (“EPA”) Demand Letter regarding the Malta Rocket Fuel Area Superfund Site (“Site”) located in Malta and Stillwater, New York, in connection with an alleged release of hazardous materials into the environment. The EPA is seeking reimbursement of response costs from all named parties in the amount of approximately $358 thousand plus interest in connection with the investigation and disposal activities associated with the various drum caches discovered at the Site, issuance of the Explanation of Significant Differences (“ESD”) of the Site, and implementation of the work contemplated by the ESD. We consider the likelihood of a material adverse outcome with respect to this matter to be remote and do not currently anticipate that any expense or liability that we may incur as a result of this matter in the future will be material to the Company’s business or financial condition.

NYDIG

NYDIG ABL LLC, (“NYDIG”) filed a complaint against SMCB1(“Borrower”) and SMC (“Guarantor”, and together with Borrower, “NYDIG Defendants”) in Marshall Circuit Court of the Commonwealth of Kentucky on December 29, 2022 regarding a series of loans made by NYDIG to Borrower pursuant to a master equipment finance agreement that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant to a written guaranty agreement executed by Guarantor. The Court issued on February 15, 2023, an agreed order granting NYDIG’s motion for writ of possession which, among other things, ordered parties to provide NYDIG access to the collateral described therein and preserved the rights of NYDIG to pursue a deficiency judgment against the NYDIG Defendants. Also on February 15, 2023, the NYDIG Defendants filed their answer and affirmative defenses in this proceeding. The NYDIG Defendants believe that NYDIG has liquidated some of the collateral securing the loans and anticipate that NYDIG will complete the liquidation of collateral and continue to prosecute the complaint to obtain a judgment against the NYDIG Defendants. Additionally, NYDIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to NYDIG Defendants’ debts and liabilities under the loan documents. SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023, seeking a declaratory judgment as to such matter. NYDIG filed a motion to dismiss in response to SCI’s declaratory judgment complaint on April 13, 2023. SCI filed a response in opposition to NYDIG’s motion to dismiss on April 27, 2023. The court heard oral arguments on May 16, 2023. On June 22, 2023, the court issued an order granting NYDIG’s motion to dismiss, on the basis that the case was not ripe for decision, without prejudice. SCI intends to continue to vigorously defend any allegations regarding liability on account of NYDIG Defendants’ debts and liabilities to NYDIG under their loan documents and intends to refile a declaratory judgment complaint against NYDIG.

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. This included legal and other expenses associated with the sale of the assets net a modest gain on the estimated net book value of the assets totaling $251 thousand that was expensed as a loss on disposition of assets for the year ended December 31, 2023. On December 7, 2023, NYDIG filed its Motion for Summary Judgment seeking entry of a judgment against Soluna in the approximate amount of $10.3 million for principal and interest and penalties. On January 12, 2024, Soluna filed its objection to NYDIG’s motion for summary judgment on the grounds that NYDIG failed to explain what collateral of which loan was sold and how the sale proceeds were allocated to each loan. 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. This settlement did not result in the admission of any liability on the part of SHI, whose declaratory judgment remains the subject of litigation. On March 13, 2024, NYDIG served the Company with a post-judgment discovery seeking information regarding the Company’s assets and liabilities. Per agreement between NYDIG and the NYDIG Defendants, the deadline to respond to the discovery demands was extended to May 13, 2024 but with rolling weekly production that commenced on April 12, 2024. The Company intends to vigorously defend itself from NYDIG’s parent company claims.

Atlas

In September 2023, Atlas Technology Group LLC (“Atlas”) filed a complaint against SMC (formerly EcoChain Block LLC) (“Soluna MC”), SCI, and SHI (collectively, the “Atlas Defendants”) in the Supreme Court of the State of New York, County of New York regarding a co-location services agreement between Soluna MC and Atlas. Atlas alleges that the termination of such agreement by SMC was a breach and asserts various claims, including breach of contract and the return of pre-paid fees. The claim requests a judgement against the Atlas Defendants for the return of pre-paid fees of approximately $464 thousand and additional damages to be determined at trial of not less than $7.9 million, and reimbursement of costs including legal fees and other costs. The complaint also contains references to alter ego liability and piercing the corporate veil. The Atlas Defendants filed a motion to dismiss; the Court held a hearing on this motion and issued an order and ruling on April 17, 2024 granting dismissal of three of the four counts in the complaint. The Atlas Defendants subsequently filed on May 6, 2024 an answer with respect to the remaining count and also asserted counterclaims against Atlas. In such order and ruling, the Court also denied at this time the dismissal of SCI and SHI from the action as improper parties; the Atlas Defendants subsequently filed notice of appeal of this portion of such order and ruling on May 7, 2024. The Atlas Defendants believe they have substantial factual and legal defenses to Atlas’s claims and intend to continue to defend the claims vigorously.

The referenced to pre-paid fees of approximately $464 thousand have been reported in previous filings on SMC’s balance sheet. No reserves have been established for any other claims asserted in such complaint.

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 April 1, 2024, sets forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition and operating results. Except as to the risk factors set forth below and to the extent that information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters described in Part I, Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations – Statement Concerning Forward Looking Statements), there have been no material changes to our risk factors disclosed in our most recently filed Annual Report on Form 10-K. Those risk factors continue to be relevant to an understanding of our business, financial condition and operating results, however, and, accordingly, you should review and consider such risk factors in making any investment decision with respect to our securities.

We have a Limited History in the Cloud Service and Artificial Intelligence Business

We are implementing a strategy to move into the cloud service business to provide green energy to power-intensive artificial intelligence applications. This is a new business for the Company and no history of operations in this industry from which to evaluate our future operating performance in this segment. Our ability to implement this strategy is dependent upon successfully deploy new supercomputers in conjunction with our strategic partner and to attract and retain customers in a very competitive market.

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

None

Item 6.

Exhibits

Exhibit No.		Description
4.20		Form of Warrant- Amended Class A Warrant (dated February 28, 2024)
4.21		Form of Warrant- Amended Class B Warrant (dated February 28, 2024)
4.22		Form of Warrant- Amended Class C Warrant (dated February 28, 2024)
4.23		Form of Warrant- Extension $0.01 Warrant (dated February 28, 2024)
4.24		Form of Warrant- Five Year Warrant for Exercise of $6.00 Repriced Warrant
10.81		Employment agreement with John Tunison (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2024)
10.82		Form of Common Award Agreement- 2-year vest, 50% per year, no performance
10.83		Form of Common Award Agreement- 3-year time vesting (2024 fixed date start)
10.84		Form of Common Award Agreement- 3-year time vesting (2025 fixed date start)
10.85		Form of Common Award Agreement- 3-year vest, 33% per year, no performance
10.86		Form of Common Award Agreement- 4-year vest, 25% per year, no performance
10.87		Form of Common Award Agreement- 5-year vest, 20% per year, no performance
10.88		Form of Common Award Agreement- Separation vesting
10.89		Form of Preferred Award Agreement- Separation vesting
10.90		Form of Preferred Award Agreement- Time vesting, June 1, 2025 Start date
10.91		Form of Preferred Award Agreement- Time vesting, Start at 12 months
10.92		Form of Preferred Award Agreement- Time vesting, Start at 18 months
10.93		Form of Preferred Award Agreement- Time vesting, June 1, 2024 Start date
10.94		Master Form of True Up Common Award Agreement- 2-year time based vesting
10.95		Master Form of True Up Common Award Agreement- 3-year time based vesting
10.96		Master Form of True Up Common Award Agreement- 3-year time vesting (2024 fixed date start)
10.97		Master Form of True Up Common Award Agreement- 3-year time vesting (2025 fixed date start)
10.98		Master Form of True Up Common Award Agreement- 4-year time based vesting
10.99		Master Form of True Up Common Award Agreement- 5-year time based vesting
10.100		Master Form of True Up Common Award Agreement- Separation vesting
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.

# Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K. Such information is both not material and is the information that the registrant customarily and actually treats as private or confidential. The omitted information is identified in the exhibit with brackets and “**”.

* 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 March 31, 2024, formatted in eXtensible Business Reporting Language (XBRL) and tagged as blocks of text and including detailed tags: (i) Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023; (ii) Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023; (iii) Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023; and (iv) related notes.

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: May 15, 2024	By:	/s/ John Belizaire
		John Belizaire
		Chief Executive Officer

	By:	/s/ John Tunison
		John Tunison
		Chief Financial Officer

EX-4.20 2 ex4-20.htm

Exhibit 4.20

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN ACCREDITED INVESTOR AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

AMENDED CLASS A COMMON STOCK PURCHASE WARRANT

SOLUNA HOLDINGS, INC.

(F/K/A MECHANICAL TECHNOLOGY, INCORPORATED)

Warrant Shares: ________

Amendment Date: February 28, 2024

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _______ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time following the approval of the transactions contemplated by the Fourth Amendment Agreement dated as of February 24, 2024 between and among Soluna Holdings, Inc. (formerly known as Mechanical Technology, Incorporated), a Nevada corporation (the “Company”) and the Purchasers named on Schedule A thereto (the “Amended Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on May 11, 2028 (the “Termination Date”) but not thereafter, to subscribe for and purchase from, up to _______ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated October 20, 2021, among the Company and the purchasers signatory thereto.

Section 2. Exercise.

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Amended Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 4:00 p.m. (New York City time) on the Trading Date prior to the Amended Exercise Date, which may be delivered at any time after the time of execution of the Purchase Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Amended Exercise Date and the Amended Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $3.78, subject to adjustment hereunder (the “Exercise Price”).

c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

	(A) =	as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

	(B) =	the Exercise Price of this Warrant, as adjusted hereunder; and

	(X) =	the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

Notwithstanding anything herein to the contrary, on the Termination Date, unless the Holder notifies the Company otherwise, if there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder and the Exercise Price is greater than the VWAP on the Trading Day immediately preceding the date on which the Warrant would otherwise expire, then this Warrant shall be automatically exercised via cashless exercise pursuant to this.

d) Mechanics of Exercise.

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

f) Issuance Restrictions. If the Company has not obtained Shareholder Approval, and such Shareholder Approval is required pursuant to the rules of the principal Trading Market, then the Company may not issue any Warrant Shares in excess of the amount permitted under the rules of the principal Trading Market. For avoidance of doubt, unless and until any required Shareholder Approval is obtained and effective, warrants issued to any registered broker-dealer as a fee in connection with the Securities issued pursuant to the Purchase Agreement shall provide that such warrants shall be unexercisable unless and until such Shareholder Approval is obtained and effective.

g) Call Provision. If, at any time commencing four (4) months after the Initial Effective Date (as defined in the Registration Rights Agreement), (i) the VWAP of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. exceeds 130% of the Exercise Price in effect for ten (10) consecutive Trading Days (the “Measurement Period”); (ii) the aggregate value of the shares of the Company’s common stock traded on its principal Trading Market as reported by Bloomberg, L.P. on each day during the Measurement Period exceeds $2,000,000, (iii) there is an effective registration statement under the Securities Act of 1933, as amended covering the resale of the shares of Common Stock issuable upon exercise of this Warrant, (iv) the Holder is not in possession of any information provided by the Company that constitutes material nonpublic information, (v) [reserved], and (vi) no Event of Default (as defined in the Note issued pursuant to the Purchase Agreement) which has not been timely cured or an event which with the passage of time or giving notice could become an Event of Default is pending, then the Company may call for cancellation of that portion of this Warrant for which an Exercise Notice has not yet been delivered as of the date of the Call Notice (as defined below) for consideration equal to $0.001 per Warrant Share up to one-half, in the aggregate, of the Warrant Shares issuable upon full exercise of this Warrant. The Company shall deliver to the Holder a written notice (a “Call Notice”) of any call for cancellation of the Warrants pursuant to this Section 2(g) within three (3) Trading Days following the last day of the Measurement Period. The Call Notice must be personally delivered to Holder, unless Holder acknowledges in writing or electronically receipt of the Call Notice if not delivered personally. On the twentieth (20th) Trading Day after the date of the Call Notice (the “Call Date”), the portion of this Warrant for which an Exercise Notice shall not have been received by the Call Date will be cancelled at 5:30 p.m. (local time in New York City, New York). In furtherance of the foregoing, the Company covenants and agrees that it will honor all Exercise Notices that are tendered on or before 5:29 p.m. (local time in New York City, New York) on the Call Date. A Call Notice may not be given to the Holder with respect to any Warrants which if exercised pursuant to Section 2(a) would cause such Holder to exceed the Beneficial Ownership Limitation. Unless otherwise agreed to by the Holder of this Warrant, a Call Notice must be given to all other holders of Warrants issued pursuant to the Purchase Agreement in proportion to the amount of Warrants held by all such Holders on the date of the Call Notice without giving effect to the Beneficial Ownership Limitation. A Call Notice must be given first with respect to any outstanding “Warrant” issued pursuant to the Purchase Agreement having the lowest Exercise Price of such “Warrants” before a Call Notice may be given to a “Warrant” having a higher Exercise Price. A Call Notice with respect to any “Warrants” issued pursuant to the Purchase Agreement may not be given more frequently than one (1) time each twenty (20) Trading Days.

Section 3. Certain Adjustments.

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of Directors, Holder shall only be entitled to receive from the Company or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock will be deemed to have received common stock of the Successor Entity (which Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the highest VWAP during the period beginning on the Trading Day immediately preceding the announcement of the applicable Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to this Section 3(e) and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation of the Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Fundamental Transaction shall not include the transactions described on Schedule 3.1(i) of the Purchase Agreement under the heading “Fundamental Transaction Exclusions.”

e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

f) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4. Transfer of Warrant.

a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Amended Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company and its transfer agent for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

Section 5. Miscellaneous.

a) No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required to net cash settle an exercise of this Warrant.

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

d) Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

IN WITNESS WHEREOF, the Company has caused this Amended Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

SOLUNA HOLDINGS, INC. (F/K/A MECHANICAL TECHNOLOGY, INCORPORATED)

By:
Name:	John Belizaire
Title:	CEO

NOTICE OF EXERCISE

TO:	SOLUNA HOLDINGS, INC. (F/K/A MECHANICAL TECHNOLOGY, INCORPORATED)

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:

Signature of Authorized Signatory of Investing Entity:

Name of Authorized Signatory:
Title of Authorized Signatory:

Date:

EXHIBIT B

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:	________________________________________________
	(Please Print)
Address:	________________________________________________
	(Please Print)

Phone Number:	________________________________________________

Email Address:	________________________________________________

Dated: _______________ __, ______

Holder’s Signature: ____________________

Holder’s Address: _____________________

EX-4.21 3 ex4-21.htm

Exhibit 4.21

AMENDED CLASS B COMMON STOCK PURCHASE WARRANT

SOLUNA HOLDINGS, INC.

(F/K/A MECHANICAL TECHNOLOGY, INCORPORATED)

Warrant Shares: ________

Amendment Date: February 24, 2024

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _______ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time following the approval of the transactions contemplated by the Fourth Amendment Agreement dated as of February 24, 2024 between and among Soluna Holdings, Inc. (formerly known as Mechanical Technology, Incorporated), a Nevada corporation (the “Company”) and the Purchasers named on Schedule A thereto (the “Amended Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on May 10, 2028 (the “Termination Date”) but not thereafter, to subscribe for and purchase from, up to _______ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 2. Exercise.

b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $3.78, subject to adjustment hereunder (the “Exercise Price”).

	(A) =	as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

	(B) =	the Exercise Price of this Warrant, as adjusted hereunder; and

	(X) =	the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

d) Mechanics of Exercise.

vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

Section 3. Certain Adjustments.

f) Notice to Holder.

Section 4. Transfer of Warrant.

Section 5. Miscellaneous.

d) Authorized Shares.

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

IN WITNESS WHEREOF, the Company has caused this Amended Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

SOLUNA HOLDINGS, INC. (F/K/A MECHANICAL TECHNOLOGY, INCORPORATED)

By:
Name:	John Belizaire
Title:	CEO

NOTICE OF EXERCISE

TO:	SOLUNA HOLDINGS, INC. (F/K/A MECHANICAL TECHNOLOGY, INCORPORATED)

(2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:

Signature of Authorized Signatory of Investing Entity:

Name of Authorized Signatory:
Title of Authorized Signatory:

Date:

EXHIBIT B

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:	________________________________________________
	(Please Print)
Address:	________________________________________________
	(Please Print)

Phone Number:	________________________________________________

Email Address:	________________________________________________

Dated: _______________ __, ______

Holder’s Signature: ____________________

Holder’s Address: _____________________

EX-4.22 4 ex4-22.htm

Exhibit 4.22

AMENDED AND RESTATED CLASS C COMMON STOCK PURCHASE WARRANT

SOLUNA HOLDINGS, INC.

Warrant Shares: __________

Initial Exercise Date: July 27, 2023

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, ________ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on December 6, 2027 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Soluna Holdings, Inc., a Nevada corporation (the “Company”), up to ________ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This is an amendment and restatement of the Common Stock Purchase Warrant originally issued on September 13, 2022.

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated October 25, 2021, among the Company and the purchasers signatory thereto.

Section 2. Exercise.

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 4:00 p.m. (New York City time) on the Trading Date prior to the Initial Exercise Date, which may be delivered at any time after the time of execution of the Purchase Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise Price is received by such Warrant Share Delivery Date. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $6.00, subject to adjustment hereunder (the “Exercise Price”).

c) Mechanics of Exercise.

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise, $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(c)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

d) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

e) Issuance Restrictions. If the Company has not obtained Shareholder Approval, and such Shareholder Approval is required pursuant to the rules of the principal Trading Market, then the Company may not issue any Warrant Shares in excess of the amount permitted under the rules of the principal Trading Market. For avoidance of doubt, unless and until any required Shareholder Approval is obtained and effective, warrants issued to any registered broker-dealer as a fee in connection with the Securities issued pursuant to the Purchase Agreement shall provide that such warrants shall be unexercisable unless and until such Shareholder Approval is obtained and effective.

f) Call Provision. If, at any time commencing four (4) months after the Initial Effective Date (as defined in the Registration Rights Agreement),; (i) the aggregate value of the shares of the Company’s common stock traded on its principal Trading Market as reported by Bloomberg, L.P. on each day during the Measurement Period exceeds $2,000,000, (ii) there is an effective registration statement under the Securities Act of 1933, as amended covering the resale of the shares of Common Stock issuable upon exercise of this Warrant, (iii) the Holder is not in possession of any information provided by the Company that constitutes material nonpublic information, (iv) [reserved], and (v) no Event of Default (as defined in the Note issued pursuant to the Purchase Agreement) which has not been timely cured or an event which with the passage of time or giving notice could become an Event of Default is pending, then the Company may call for cancellation of that portion of this Warrant for which an Exercise Notice has not yet been delivered as of the date of the Call Notice (as defined below) for consideration equal to $0.001 per Warrant Share up to one-half, in the aggregate, of the Warrant Shares issuable upon full exercise of this Warrant. The Company shall deliver to the Holder a written notice (a “Call Notice”) of any call for cancellation of the Warrants pursuant to this Section 2(f) within three (3) Trading Days following the last day of the Measurement Period. The Call Notice must be personally delivered to Holder, unless Holder acknowledges in writing or electronically receipt of the Call Notice if not delivered personally. On the twentieth (20th) Trading Day after the date of the Call Notice (the “Call Date”), the portion of this Warrant for which an Exercise Notice shall not have been received by the Call Date will be cancelled at 5:30 p.m. (local time in New York City, New York). In furtherance of the foregoing, the Company covenants and agrees that it will honor all Exercise Notices that are tendered on or before 5:29 p.m. (local time in New York City, New York) on the Call Date. A Call Notice may not be given to the Holder with respect to any Warrants which if exercised pursuant to Section 2(a) would cause such Holder to exceed the Beneficial Ownership Limitation. Unless otherwise agreed to by the Holder of this Warrant, a Call Notice must be given to all other holders of Warrants issued pursuant to the Purchase Agreement in proportion to the amount of Warrants held by all such Holders on the date of the Call Notice without giving effect to the Beneficial Ownership Limitation. A Call Notice must be given first with respect to any outstanding “Warrant” issued pursuant to the Purchase Agreement having the lowest Exercise Price of such “Warrants” before a Call Notice may be given to a “Warrant” having a higher Exercise Price. A Call Notice with respect to any “Warrants” issued pursuant to the Purchase Agreement may not be given more frequently than one (1) time each twenty (20) Trading Days.

Section 3. Certain Adjustments.

d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(d) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of Directors, Holder shall only be entitled to receive from the Company or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock will be deemed to have received common stock of the Successor Entity (which Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation of the Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Fundamental Transaction shall not include the transactions described on Schedule 3.1(i) of the Purchase Agreement under the heading “Fundamental Transaction Exclusions.”

f) Notice to Holder.

Section 4. Transfer of Warrant.

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

Section 5. Miscellaneous.

a) No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive cash payments pursuant to Section 2(c)(i) and Section 2(c)(iv) herein, in no event shall the Company be required to net cash settle an exercise of this Warrant.

d) Authorized Shares.

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

	SOLUNA HOLDINGS, INC.

	By:
	Name:	John Belizaire
	Title:	CEO

NOTICE OF EXERCISE

TO:	SOLUNA HOLDINGS, INC.

	(1)	The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

	(2)	Payment shall take the form of in lawful money of the United States;

	(3)	Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below

__________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

__________________________

(4)

Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ___________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _____________________________________________________

Name of Authorized Signatory: _______________________________________________________________________

Title of Authorized Signatory: ________________________________________________________________________

Date: ___________________________________________________________________________________________

EXHIBIT B

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:		_______________________________________________
		(Please Print)

Address:		_______________________________________________
		(Please Print)

Phone Number:		_______________________________________________

Email Address:		_______________________________________________

Dated: ____________, _______	,

Holder’s Signature: _______________________

Holder’s Address: ________________________

EX-4.23 5 ex4-23.htm

Exhibit 4.23

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

EXTENSION COMMON SHARE PURCHASE WARRANT

SOLUNA HOLDINGS, INC.

Warrant Shares:______

Issuance Date: February 28, 2024

THIS EXTENSION COMMON SHARE PURCHASE WARRANT (the “Extension Warrant” or “Warrant”) certifies that, for value received, _______, or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date that the Company’s Common Shares have been approved for and are listed for trading on a Trading Market (the “Initial Exercise Date”) until the close of business on the three (3) year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from SOLUNA HOLDINGS, INC., a Nevada corporation (the “Company”), up to _______ shares of Common Stock (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This represents the “Extension Warrant” referred to in the Fourth Amendment Agreement dated February 28, 2024, amongst the Company and the Holder (and other convertible noteholders).

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in this Section:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which commercial banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Commission” means the United States Securities and Exchange Commission.

“Common Share” shall mean the common stock of the Company.

“Common Share Equivalent” means any securities of the Company or its subsidiaries which would entitle the holder thereof to acquire at any time Common Share, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Share.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“Subsidiary” means with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity of which (A) more than 35% of (i) the outstanding capital stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such entity, or (B) is under the actual control of the Company. Representations, undertakings and obligations set forth in this Agreement shall be applicable only to Subsidiaries which exist or have existed at the applicable and relevant time.

“Trading Day” means a day on which the principal Trading Market is open for trading for three or more hours, and if the Company has no Trading Market, shall mean a Business Day.

“Trading Market” means any of the following markets or exchanges: the NYSE MKT LLC, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, NYSE American, the OTC Bulletin Board, the OTCQB, and the OTCQX (or any successors to any of the foregoing).

“Transfer Agent” means the transfer agent of the Company. As of the Issuance Date, the Transfer Agent is Securities Transfer Corporation.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Share is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Share for such date (or the nearest preceding date) on the Trading Market on which the Common Share is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Share is not then listed or quoted for trading on a Trading Market but is then reported on the OTC Pink Marketplace maintained by the OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the volume weighted average price of the Common Share on the first such facility (or a similar organization or agency succeeding to its functions of reporting prices), or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by a majority in interest and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

Section 2. Exercise.

(a) Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within two (2) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant from, the Company), the Holder shall not be required to physically surrender this Warrant to the Company until the Hol der has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Trading Day of delivery of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

(b) Exercise Price. The exercise price per share of the Common Shares under this Warrant shall be $0.01, subject to adjustment as described herein (“Exercise Price”).

(c) Cashless Exercise. If at any time after the Initial Exercise Date, there is no effective registration statement registering the Warrant Shares for unrestricted public offering and resale, or no current prospectus available for the unrestricted public offering and resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at the Holder’s election, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

	(A) =	the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

	(B) =	the Exercise Price of this Warrant, as adjusted hereunder; and

	(X) =	the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, unless the Holder notifies the Company otherwise, if there is no effective registration statement registering the Warrant Shares, or no current prospectus available for the resale of the Warrant Shares by the Holder, then this Warrant shall be automatically exercised on the last Trading Day on which this Warrant may be exercised via cashless exercise pursuant to this Section 2(c).

(d) Mechanics of Exercise.

(i) Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise and Rule 144 is available, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise no later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon exercise of this Warrant the proportionate amount of $10 per Trading Day (increasing to $20 per Trading Day after the fifth (5th) Trading Day) commencing three (3) Trading Days after the Warrant Share Delivery Date for each $1,000 of Exercise Price of Warrant Shares for which this Warrant is exercised which are not timely delivered. The Company shall pay any payments incurred under this Section in immediately available funds upon demand. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate representing common stock issued without a restrictive legend.

(ii) Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(iii) Revocation of Exercise. In addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company.

(iv) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Shares to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of Common Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Common Shares with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Common Shares upon exercise of the Warrant as required pursuant to the terms hereof.

(v) No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

(vi) Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

(vii) Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

(e) Holder’s Exercise Limitations. Upon the Company’s having a class of stock registered with the SEC, the Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the Holder and its Affiliates shall include the number of Common Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Common Shares which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Shares Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of Common Shares then outstanding. In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Shares outstanding immediately after giving effect to the issuance of Common Shares issuable upon exercise of this Warrant. The Holder may decrease the Beneficial Ownership Limitation at any time. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

Section 3. Certain Adjustments.

(iv) issues by reclassification of shares of the Common Shares any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Shares Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Shares (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of Common Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such Common Shares as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

(c) Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Shares (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Shares (which shall be subject to 3(c)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Shares as determined by the board of directors of the Company in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one Common Share. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

(d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Shares (not including any Common Shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of Common Shares (or successor security) of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Common Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Common Shares acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the Common Shares pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.

(e) Adjustment Upon Issuance of Common Shares. If and whenever on or after the date hereof, the Company issues or sells, or in accordance with this Section 3 is deemed to have issued or sold, any Common Shares (including the issuance or sale of Common Shares owned or held by or for the account of the Company for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Exercise Price then in effect is referred to as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and consideration per share under this Section 3(e)), the following shall be applicable:

(i) Issuance of Options. If the Company in any manner grants or sells any options and the lowest price per share for which one Common Share is issuable upon the exercise of any such option or upon conversion, exercise or exchange of any Common Shares Equivalents issuable upon exercise of any such option is less than the Applicable Price, then such Common Shares shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such option for such price per share. For purposes of this Section 3(e)(i), the “lowest price per share for which one Common Share is issuable upon the exercise of any such options or upon conversion, exercise or exchange of any Common Shares Equivalents issuable upon exercise of any such option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one Common Share upon the granting or sale of such option, upon exercise of such option and upon conversion, exercise or exchange of any Common Shares Equivalent issuable upon exercise of such option and (y) the lowest exercise price set forth in such option for which one Common Share is issuable upon the exercise of any such options or upon conversion, exercise or exchange of any Common Shares Equivalents issuable upon exercise of any such option minus (2) the sum of all amounts paid or payable to the holder of such option (or any other Person) upon the granting or sale of such option, upon exercise of such option and upon conversion, exercise or exchange of any Common Shares Equivalent issuable upon exercise of such option plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Shares or of such Common Shares Equivalents upon the exercise of such options or upon the actual issuance of such Common Shares upon conversion, exercise or exchange of such Common Shares Equivalents.

(ii) Issuance of Common Shares Equivalents. If the Company in any manner issues or sells any Common Shares Equivalents and the lowest price per share for which one Common Share is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such Common Shares shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Common Shares Equivalents for such price per share. For the purposes of this Section 3(e)(ii), the “lowest price per share for which one Common Share is issuable upon the conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one Common Share upon the issuance or sale of the Common Shares Equivalent and upon conversion, exercise or exchange of such Common Shares Equivalent and (y) the lowest conversion price set forth in such Common Shares Equivalent for which one Common Share is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts paid or payable to the holder of such Common Shares Equivalent (or any other Person) upon the issuance or sale of such Common Shares Equivalent plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Common Shares Equivalent (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Shares upon conversion, exercise or exchange of such Common Shares Equivalents, and if any such issue or sale of such Common Shares Equivalents is made upon exercise of any options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 3(e), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue or sale.

(iii) Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Common Shares Equivalents, or the rate at which any Common Shares Equivalents are convertible into or exercisable or exchangeable for Common Shares increases or decreases at any time, the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such options or Common Shares Equivalents provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(e)(iii), if the terms of any option or Common Shares Equivalent that was outstanding as of the date of issuance of this Warrant are increased or decreased in the manner described in the immediately preceding sentence, then such option or Common Shares Equivalent and the Common Shares deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(e) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

(iv) Calculation of Consideration Received. If any option and/or Common Shares Equivalent and/or adjustment right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such option and/or Common Shares Equivalent and/or adjustment right, the “Secondary Securities”), together comprising one integrated transaction, the consideration per Common Shares with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one Common Share was issued in such integrated transaction (or was deemed to be issued pursuant to Section 3(e)(i) or Section 3(e)(ii) above, as applicable) solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Value of each such option, if any, (II) the fair market value (as determined by the Holder) or the Black Scholes Value, as applicable, of such adjustment right, if any, and (III) the fair market value (as determined by the Holder) of such Common Shares Equivalent, if any, in each case, as determined on a per share basis in accordance with this Section 3(e)(iv). If any Common Shares, options or Common Shares Equivalents are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Shares, option or Common Shares Equivalent, but not for the purpose of the calculation of the Black Scholes Value) will be deemed to be the net amount of consideration received by the Company therefor. If any Common Shares, options or Common Shares Equivalents are issued or sold for a consideration other than cash (for the purpose of determining the consideration paid for such Common Shares, option or Common Shares Equivalent, but not for the purpose of the calculation of the Black Scholes Value), the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any Common Shares, options or Common Shares Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity (for the purpose of determining the consideration paid for such Common Shares, option or Common Shares Equivalent, but not for the purpose of the calculation of the Black Scholes Value), the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Shares, options or Common Shares Equivalents, as the case may be. The fair value of any consideration other than cash or publicly traded securities (for the purpose of determining the consideration paid for such Common Shares, option or Common Shares Equivalent, but not for the purpose of the calculation of the Black Scholes Value) will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

(f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.

(g) Notice to Holder.

(i) Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly give notice to the Holder setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a statement of the facts requiring such adjustment (“Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3, upon the occurrence of any Dilutive Issuance or other reduction of the Exercise Price, the Holder is entitled to receive a number of Warrant Shares based upon the reduced Exercise Price regardless of whether the Holder accurately refers to the Exercise Price in the Notice of Exercise.

(ii) Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Shares are converted into other securities, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, the Company shall deliver to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Shares of record shall be entitled to exchange their shares of the Common Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

(h) Increase in Warrant Shares. In the event the Exercise Price is reduced for any reason, including but not limited to pursuant to Section 3(e) of this Warrant, the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment.

Section 4. Transfer of Warrant.

(a) Transferability. Subject to compliance with any applicable securities laws and the provisions of this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

(c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

Section 5. Miscellaneous.

(a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).

(b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

(c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

(d) Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant. Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

(e) Jurisdiction. All questions concerning governing law, jurisdiction, venue and the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the laws of the State of New York.

(f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, or unless exercised in a cashless exercise when Rule 144 is available, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

(g) Non-Waiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be made in writing to the mailing address or email address provided by the Holder of this Warrant, and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the Holder if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission); or (d) on the day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.

(i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Shares or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

(k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

(l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder of this Warrant.

(m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

	SOLUNA HOLDINGS, Inc.

	By:
	Name:	David Michaels
	Title:	Chief Financial Officer

NOTICE OF EXERCISE

TO: SOLUNA HOLDINGS, INC.

(1) The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States;

[ ] [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 2(c).

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

____________________________

(4) After giving effect to this Notice of Exercise, the undersigned will not have exceeded the Beneficial Ownership Limitation.

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

____________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: ___________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _____________________________________________________

Name of Authorized Signatory: _______________________________________________________________________

Title of Authorized Signatory: ________________________________________________________________________

Date: ___________________________________________________________________________________________

ASSIGNMENT FORM

(To assign the foregoing warrant, execute this

form and supply required information.

Do not use this form to exercise the warrant.)

SOLUNA HOLDINGS, INC.

FOR VALUE RECEIVED, [___] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

__________________________________whose address is

__________________________________________.

__________________________________________

Dated: _____________________, _____________

	Holder’s Signature:

	Holder’s Address:

Signature Guaranteed: _______________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EX-4.24 6 ex4-24.htm

Exhibit 4.24

FIVE YEAR COMMON SHARE PURCHASE WARRANT

SOLUNA HOLDINGS, INC.

Warrant Shares:

Issuance Date:

THIS FIVE YEAR COMMON SHARE PURCHASE WARRANT (the “Five Year Warrant” or “Warrant”) certifies that, for value received, ______or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time following the approval of the transactions contemplated by the Fourth Amendment Agreement dated as of February 28, 2024 between and among Soluna Holdings, Inc. (formerly known as Mechanical Technology, Incorporated), a Nevada corporation (the “Company”) and the Purchasers named on Schedule A thereto (the “Amended Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on _____ (the “Termination Date”) but not thereafter, to subscribe for and purchase from, up to _____ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This represents the new five year term warrant to be issued pursuant to each exercise of a Repriced Warrant as defined in the Fourth Amendment Agreement dated February 28, 2024, amongst the Company and the Holder (and other convertible noteholders).

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in this Section:

“Commission” means the United States Securities and Exchange Commission.

“Common Share” shall mean the common stock of the Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Trading Day” means a day on which the principal Trading Market is open for trading for three or more hours, and if the Company has no Trading Market, shall mean a Business Day.

“Transfer Agent” means the transfer agent of the Company. As of the Issuance Date, the Transfer Agent is Securities Transfer Corporation.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies:

(a) if the Common Share is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Share for such date (or the nearest preceding date) on the Trading Market on which the Common Share is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Share is not then listed or quoted for trading on a Trading Market but is then reported on the OTC Pink Marketplace maintained by the OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the volume weighted average price of the Common Share on the first such facility (or a similar organization or agency succeeding to its functions of reporting prices), or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by a majority in interest and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

Section 2. Exercise.

(b) Exercise Price. The exercise price per share of the Common Shares under this Warrant shall be $__, subject to adjustment as described herein (“Exercise Price”).

	(A) =	the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

	(B) =	the Exercise Price of this Warrant, as adjusted hereunder; and

(X) =

the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

(d) Mechanics of Exercise.

(vii) Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

Section 3. Certain Adjustments.

(a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance of doubt, shall not include any Common Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding Common Shares into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Shares any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.

(f) Notice to Holder.

(g) Increase in Warrant Shares. In the event the Exercise Price is reduced for any reason, the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment.

Section 4. Transfer of Warrant.

Section 5. Miscellaneous.

(l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder of this Warrant.

(n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

	SOLUNA HOLDINGS, Inc.

	By:
	Name:	Jessica Thomas
	Title:	Chief Accounting Officer

NOTICE OF EXERCISE

TO: SOLUNA HOLDINGS, INC.

(1) The undersigned hereby elects to purchase ___________Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

☐ in lawful money of the United States;

☐ [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 2(c).

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_________________________________

(4) After giving effect to this Notice of Exercise, the undersigned will not have exceeded the Beneficial Ownership Limitation.

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

_________________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: ___________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _____________________________________________________

Name of Authorized Signatory: _______________________________________________________________________

Title of Authorized Signatory: ________________________________________________________________________

Date: ___________________________________________________________________________________________

ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

SOLUNA HOLDINGS, INC.

FOR VALUE RECEIVED, [_____] all of or [_____] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to _____________________________________________whose address is __________________________________________________________.

__________________________________________________________

	Dated:	______________, ___________

	Holder’s Signature:

	Holder’s Address:

Signature Guaranteed: ___________________________________________

EX-10.82 7 ex10-82.htm

Exhibit 10.82

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement

Soluna Holdings, Inc. (the “Company”) and the Recipient named below each hereby into this Restricted Stock Agreement on the execution date specified in the table below (including the Terms and Conditions attached hereto, the “Agreement”). The Company grants to the Recipient the shares of Restricted Stock specified herein on the dates specified herein pursuant to the [Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan][Soluna Holdings, Inc. 2023 Stock Incentive Plan], as amended and in effect from time to time (the “Plan”).

Name of recipient (the “Recipient”):
Execution Date		[_______]
Date of grant of Restricted Stock under this Agreement (the “Grant Date”):		[_______]
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of shares of such type of Restricted Stock granted pursuant to this Agreement:		[___________]
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		50% of the number of Common Shares granted under this Agreement will vest on the one-year anniversary of the Grant Date; and 50% of the number of Common Shares granted under this Agreement will vest on the two-year anniversary of the Grant Date.

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

1. Grant Under Plan. This award is subject to the terms and conditions of this Agreement and the Plan, which are incorporated herein by this reference. Capitalized terms used in this Agreement but not defined herein have the respective meanings specified in the Plan or in any employment or similar agreement between the Recipient and the Company or a subsidiary, as applicable.

2. Vesting.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(c) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient after such date (such applicable date, the “Separation Date”). For the avoidance of doubt, no shares of Restricted Stock will be granted under this Agreement after the Separation Date. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

“Business Relationship” means service to the Company or its subsidiaries in the capacity of an employee, officer, director, consultant or advisor, unless specified otherwise in a written agreement between the Recipient and the Company or a subsidiary.

	(i)	The Committee may at any time provide that all or any portion of the shares of Restricted Stock awarded pursuant to this Agreement shall become free of some or all restrictions, or otherwise realizable in full or in part, as the case may be, despite the fact that the foregoing actions may cause the application of Sections 280G and 4999 of the Internal Revenue Code if there is a “change in ownership or control” (within the meaning of those Sections) of the Company.

	(ii)	Notwithstanding the other sections of this Section 2, if there is a Change in Control, then all unvested shares of Restricted Stock shall be immediately vested upon the Change in Control. A “Change in Control” for purposes of this Section 2(c)(ii) shall mean a merger or consolidation in which securities constituting more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons that do not own more than 50% of the combined voting power of the Company’s securities immediately prior to such transaction, or the sale, transfer or other disposition of all or substantially all of the Company’s assets to a non-affiliate of the Company.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

4. Rights as a Stockholder. The Recipient shall have all rights as a stockholder of the Company as provided in Section 6(c) of the Plan with respect to the Restricted Stock granted under this Agreement.

5. Withholding Taxes. The Company or an employing subsidiary may withhold any and all applicable income and employment taxes required to be withheld from the Recipient in connection with the issuance or vesting of the shares of Restricted Stock to the Recipient, as provided in the Plan.

6. Compliance with Securities Act; Lock-Up Agreement. The Company shall not be obligated to issue any Shares or other securities pursuant to this Agreement unless the Shares or other securities with respect to which this Agreement applies are at that time effectively registered or exempt from registration under the Securities Act and applicable state or provincial securities laws/any applicable securities laws unless the Recipient complies with the remaining portion of this Section 6. In the event Shares or other securities shall be issued that shall not be so registered, the Recipient hereby represents, warrants and agrees that he or she will receive such Shares or other securities for investment and not with a view to their resale or distribution, and will execute an appropriate investment letter satisfactory to the Company and its counsel. The Recipient further hereby agrees that as a condition to the acquisition of Shares pursuant to this Agreement, he or she will execute an agreement in a form acceptable to the Company to the effect that the Shares shall be subject to any underwriter’s lock-up agreement in connection with a public offering of any securities of the Company that may from time to time apply to shares held by officers and employees of the Company, and such agreement or a successor agreement must be in full force and effect.

7. Legends. The Recipient hereby acknowledges that the stock certificate or certificates (or entries in the case of book entry form) evidencing Shares or other securities issued pursuant to this Agreement may bear a legend (or provide a restriction) setting forth the restrictions on their transferability described in Section 6 hereof, if such restrictions are then in effect.

8. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Recipient consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

9. Company Policies. This award shall be subject to any applicable clawback or recoupment policies, share trading policies, and other policies that may be implemented by the Board from time to time, in accordance with applicable law.

10. Provision of Documentation to Recipient. By signing the cover page of this Agreement, the Recipient acknowledges receipt of a copy of this entire Agreement, a copy of the Plan and a copy of the Plan’s related prospectus.

11. Effect upon Employment and Performance of Services. Nothing in this Agreement or the Plan shall be construed to impose any obligation upon the Company or any subsidiary to employ or utilize the services of the Recipient or to retain the Recipient in its employ or to engage or retain the services of the Recipient.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan and this Agreement;

(b) the grant of this award is voluntary and occasional and does not create any contractual or other right to receive future awards under the Plan or benefits in lieu of Plan awards, even if Plan awards have been granted in the past;

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

	(i)	any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

	(ii)	any Shares acquired under the Plan do not constitute compensation of any kind for services of any kind rendered to the Company and/or any subsidiary thereof and are outside the scope of the Recipient’s employment contract, if any;

	(iii)	any Shares acquired under the Plan are not part of normal or expected compensation or salary, including, but not limited to, for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, service awards, pension or retirement or welfare benefits or similar payments unless such other arrangement explicitly provides to the contrary;

	(iv)	no claim or entitlement to compensation or damages shall arise from forfeiture of any Shares under this award resulting from a termination of the Business Relationship for any reason and in consideration of the grant of this award, the Recipient irrevocably agrees never to institute a claim against the Company and/or any subsidiary, waives his or her ability to bring such claim and releases the Company and/or its subsidiaries from any claim; if, notwithstanding the foregoing, such claim is allowed by a court of competent jurisdiction, then by accepting this award, the Recipient is deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

	(v)	neither the Company nor any subsidiary shall be liable for any foreign exchange rate fluctuation between the Recipient’s local currency and the United States dollar that may affect the value of the award or any amounts due pursuant to the award or the subsequent sale of any Shares acquired upon settlement.

14. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. This Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. In the event of a conflict between the terms of this Agreement and the Plan, the terms of the Plan shall control. In the event of a conflict between the terms of the Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(c) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, subject to the limitations set forth herein.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

(e) Construction. This Agreement is to be construed in accordance with the terms of the Plan. In case of any conflict between the Plan and this Agreement, the Plan shall control. The titles of the sections of this Agreement and of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include both sexes; the singular shall include the plural and the plural the singular unless the context otherwise requires.

(f) Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement entered into by the Company, the Recipient: (i) authorizes the Company, and any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate the issuance of Restricted Stock and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this Section 14(f), the term “Company” refers to the Company, its subsidiaries and any other affiliate.

(g) Notices. All notices hereunder shall be in writing and shall be deemed given when sent by certified or registered mail, postage prepaid, return receipt requested, if to the Recipient, to the address set forth on the cover page hereof or at the address shown on the records of the Company, and if to the Company, to the Company’s principal executive offices, attention of the Corporate Secretary.

EX-10.83 8 ex10-83.htm

Exhibit 10.83

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement

Soluna Holdings, Inc. (the “Company”) hereby enters into this Restricted Stock Agreement, dated as of the date set forth below and including the Terms and Conditions attached hereto, with the Recipient named herein (the “Agreement”) and grants to the Recipient the shares of Restricted Stock specified herein pursuant to the [Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan] [Soluna Holdings, Inc. 2023 Stock Incentive Plan], as amended and in effect from time to time (the “Plan”). This Agreement is entered into by the Company and the Recipient pursuant to the Master Restricted Stock Agreement dated as of [________], by and between the Company and the Recipient (the “Master Agreement”).

Name of recipient (the “Recipient”):
Date of this Restricted Stock grant (the “Grant Date”):		[_________]
Number of shares of Restricted Stock granted pursuant to this Agreement:		[_________]
Consideration payable for shares of Restricted Stock, if any:		$0
Vesting Schedule:		33% on June 1, 2024 33% on June 1, 2025 34% on June 1, 2026

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting if Business Relationship Continues.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(c) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient and the Company shall have the right to repurchase all shares of unvested Restricted Stock for an amount equal to the consideration originally payable for the Shares. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

(b) Termination of Business Relationship. For purposes hereof, a Business Relationship shall not be considered as having terminated during any military leave, sick leave or other leave of absence if approved in writing by the Company (or a subsidiary) and if such written approval, or applicable law, contractually obligates the Company (or the subsidiary) to continue the Business Relationship of the Recipient after the approved period of absence (an “Approved Leave of Absence”). In the event of an Approved Leave of Absence, vesting of shares of Restricted Stock shall continue in accordance with the original Vesting Schedule unless otherwise provided in the Company’s (or subsidiary’s) written approval of the leave of absence that specifically refers to this Agreement.

	(i)	The Committee may at any time provide that all or any portion of the shares of Restricted Stock awarded pursuant to this Agreement shall become free of some or all restrictions, or otherwise realizable in full or in part, as the case may be, despite the fact that the foregoing actions may cause the application of Sections 280G and 4999 of the Internal Revenue Code if there is a “change in ownership or control” (within the meaning of those Sections) of the Company.

	(ii)	Notwithstanding the other sections of this Section 2, if there is a Change in Control, all remaining unvested shares of Restricted Stock shall be immediately vested upon the Change in Control. A “Change in Control” for purposes of this Section 2(c)(ii) shall mean a merger or consolidation in which securities constituting more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons that do not own more than 50% of the combined voting power of the Company’s securities immediately prior to such transaction, or the sale, transfer or other disposition of all or substantially all of the Company’s assets to a non-affiliate of the Company.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

4. Rights as a Stockholder. Upon receipt of a Restricted Stock award, the Recipient shall have all rights as a stockholder of the Company as provided in Section 6(c) of the Plan.

6. Compliance with Securities Act; Lock-Up Agreement. The Company shall not be obligated to issue any Shares or other securities pursuant to this Agreement unless the Shares or other securities with respect to which this Agreement applies are at that time effectively registered or exempt from registration under the Securities Act and applicable state or provincial securities laws/any applicable securities laws. In the event Shares or other securities shall be issued that shall not be so registered, the Recipient hereby represents, warrants and agrees that he or she will receive such Shares or other securities for investment and not with a view to their resale or distribution, and will execute an appropriate investment letter satisfactory to the Company and its counsel. The Recipient further hereby agrees that as a condition to the acquisition of Shares pursuant to this Agreement, he or she will execute an agreement in a form acceptable to the Company to the effect that the Shares shall be subject to any underwriter’s lock-up agreement in connection with a public offering of any securities of the Company that may from time to time apply to shares held by officers and employees of the Company, and such agreement or a successor agreement must be in full force and effect.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

	(i)	any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

	(ii)	any Shares acquired under the Plan do not constitute compensation of any kind for services of any kind rendered to the Company and/or any subsidiary thereof and are outside the scope of the Recipient’s employment contract, if any;

	(iii)	any Shares acquired under the Plan are not part of normal or expected compensation or salary, including, but not limited to, for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, service awards, pension or retirement or welfare benefits or similar payments unless such other arrangement explicitly provides to the contrary;

	(iv)	no claim or entitlement to compensation or damages shall arise from forfeiture of any Shares under this award resulting from a termination of the Business Relationship for any reason and in consideration of the grant of this award, the Recipient irrevocably agrees never to institute a claim against the Company and/or any subsidiary, waives his or her ability to bring such claim and releases the Company and/or its subsidiaries from any claim; if, notwithstanding the foregoing, such claim is allowed by a court of competent jurisdiction, then by accepting this award, the Recipient is deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

	(v)	neither the Company nor any subsidiary shall be liable for any foreign exchange rate fluctuation between the Recipient’s local currency and the United States dollar that may affect the value of the award or any amounts due pursuant to the award or the subsequent sale of any Shares acquired upon settlement.

14. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement, together with the Master Agreement, constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. This Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. In the event of a conflict between the terms of this Agreement and the Plan, the terms of the Plan shall control. In the event of a conflict between the terms of this Agreement and the Master Agreement, the terms of the Master Agreement shall control. In the event of a conflict between the terms of the Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.84 9 ex10-84.htm

Exhibit 10.84

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement

Name of recipient (the “Recipient”):
Date of this Restricted Stock grant (the “Grant Date”):		[_________]
Number of shares of Restricted Stock granted pursuant to this Agreement:		[_________]
Consideration payable for shares of Restricted Stock, if any:		$0
Vesting Schedule:		33% on June 1, 2025 33% on June 1, 2026 34% on June 1, 2027

		SOLUNA HOLDINGS, INC.

		By:
Signature of Recipient		Name:
[Address]		Title:

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting if Business Relationship Continues.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(c) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient and the Company shall have the right to repurchase all shares of unvested Restricted Stock for an amount equal to the consideration originally payable for the Shares. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

	(i)	The Committee may at any time provide that all or any portion of the shares of Restricted Stock awarded pursuant to this Agreement shall become free of some or all restrictions, or otherwise realizable in full or in part, as the case may be, despite the fact that the foregoing actions may cause the application of Sections 280G and 4999 of the Internal Revenue Code if there is a “change in ownership or control” (within the meaning of those Sections) of the Company.

	(ii)	Notwithstanding the other sections of this Section 2, if there is a Change in Control, all remaining unvested shares of Restricted Stock shall be immediately vested upon the Change in Control. A “Change in Control” for purposes of this Section 2(c)(ii) shall mean a merger or consolidation in which securities constituting more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons that do not own more than 50% of the combined voting power of the Company’s securities immediately prior to such transaction, or the sale, transfer or other disposition of all or substantially all of the Company’s assets to a non-affiliate of the Company.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

4. Rights as a Stockholder. Upon receipt of a Restricted Stock award, the Recipient shall have all rights as a stockholder of the Company as provided in Section 6(c) of the Plan.

6. Compliance with Securities Act; Lock-Up Agreement. The Company shall not be obligated to issue any Shares or other securities pursuant to this Agreement unless the Shares or other securities with respect to which this Agreement applies are at that time effectively registered or exempt from registration under the Securities Act and applicable state or provincial securities laws/any applicable securities laws. In the event Shares or other securities shall be issued that shall not be so registered, the Recipient hereby represents, warrants and agrees that he or she will receive such Shares or other securities for investment and not with a view to their resale or distribution, and will execute an appropriate investment letter satisfactory to the Company and its counsel. The Recipient further hereby agrees that as a condition to the acquisition of Shares pursuant to this Agreement, he or she will execute an agreement in a form acceptable to the Company to the effect that the Shares shall be subject to any underwriter’s lock-up agreement in connection with a public offering of any securities of the Company that may from time to time apply to shares held by officers and employees of the Company, and such agreement or a successor agreement must be in full force and effect.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

	(i)	any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

	(ii)	any Shares acquired under the Plan do not constitute compensation of any kind for services of any kind rendered to the Company and/or any subsidiary thereof and are outside the scope of the Recipient’s employment contract, if any;

	(iii)	any Shares acquired under the Plan are not part of normal or expected compensation or salary, including, but not limited to, for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, service awards, pension or retirement or welfare benefits or similar payments unless such other arrangement explicitly provides to the contrary;

	(iv)	no claim or entitlement to compensation or damages shall arise from forfeiture of any Shares under this award resulting from a termination of the Business Relationship for any reason and in consideration of the grant of this award, the Recipient irrevocably agrees never to institute a claim against the Company and/or any subsidiary, waives his or her ability to bring such claim and releases the Company and/or its subsidiaries from any claim; if, notwithstanding the foregoing, such claim is allowed by a court of competent jurisdiction, then by accepting this award, the Recipient is deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

	(v)	neither the Company nor any subsidiary shall be liable for any foreign exchange rate fluctuation between the Recipient’s local currency and the United States dollar that may affect the value of the award or any amounts due pursuant to the award or the subsequent sale of any Shares acquired upon settlement.

14. Miscellaneous.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.85 10 ex10-85.htm

Exhibit 10.85

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement

Name of recipient (the “Recipient”):
Execution Date		[_______]
Date of grant of Restricted Stock under this Agreement (the “Grant Date”):		[_______]
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of shares of such type of Restricted Stock granted pursuant to this Agreement:		[___________]
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		33% of the number of Common Shares granted under this Agreement will vest on the one-year anniversary of the Grant Date; 33% of the number of Common Shares granted under this Agreement will vest on the two-year anniversary of the Grant Date; and 34% of the number of Common Shares granted under this Agreement will vest on the three-year anniversary of the Grant Date.

		SOLUNA HOLDINGS, INC.

		By:
Signature of Recipient		Name:
[Address]		Title:

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting.

	(i)	The Committee may at any time provide that all or any portion of the shares of Restricted Stock awarded pursuant to this Agreement shall become free of some or all restrictions, or otherwise realizable in full or in part, as the case may be, despite the fact that the foregoing actions may cause the application of Sections 280G and 4999 of the Internal Revenue Code if there is a “change in ownership or control” (within the meaning of those Sections) of the Company.

	(ii)	Notwithstanding the other sections of this Section 2, if there is a Change in Control, then all unvested shares of Restricted Stock shall be immediately vested upon the Change in Control. A “Change in Control” for purposes of this Section 2(c)(ii) shall mean a merger or consolidation in which securities constituting more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons that do not own more than 50% of the combined voting power of the Company’s securities immediately prior to such transaction, or the sale, transfer or other disposition of all or substantially all of the Company’s assets to a non-affiliate of the Company.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

	(i)	any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

	(ii)	any Shares acquired under the Plan do not constitute compensation of any kind for services of any kind rendered to the Company and/or any subsidiary thereof and are outside the scope of the Recipient’s employment contract, if any;

	(iii)	any Shares acquired under the Plan are not part of normal or expected compensation or salary, including, but not limited to, for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, service awards, pension or retirement or welfare benefits or similar payments unless such other arrangement explicitly provides to the contrary;

	(iv)	no claim or entitlement to compensation or damages shall arise from forfeiture of any Shares under this award resulting from a termination of the Business Relationship for any reason and in consideration of the grant of this award, the Recipient irrevocably agrees never to institute a claim against the Company and/or any subsidiary, waives his or her ability to bring such claim and releases the Company and/or its subsidiaries from any claim; if, notwithstanding the foregoing, such claim is allowed by a court of competent jurisdiction, then by accepting this award, the Recipient is deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

	(v)	neither the Company nor any subsidiary shall be liable for any foreign exchange rate fluctuation between the Recipient’s local currency and the United States dollar that may affect the value of the award or any amounts due pursuant to the award or the subsequent sale of any Shares acquired upon settlement.

14. Miscellaneous.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.86 11 ex10-86.htm

Exhibit 10.86

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement

Name of recipient (the “Recipient”):
Execution Date		[_______]
Date of grant of Restricted Stock under this Agreement (the “Grant Date”):		[_______]
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of shares of such type of Restricted Stock granted pursuant to this Agreement:		[___________]
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		25% of the number of Common Shares granted under this Agreement will vest on the one-year anniversary of the Grant Date; 25% of the number of Common Shares granted under this Agreement will vest on the two-year anniversary of the Grant Date; 25% of the number of Common Shares granted under this Agreement will vest on the three-year anniversary of the Grant Date; and 25% of the number of Common Shares granted under this Agreement will vest on the four-year anniversary of the Grant Date.

		SOLUNA HOLDINGS, INC.

		By:
Signature of Recipient		Name:
[Address]		Title:

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting.

(i)

The Committee may at any time provide that all or any portion of the shares of Restricted Stock awarded pursuant to this Agreement shall become free of some or all restrictions, or otherwise realizable in full or in part, as the case may be, despite the fact that the foregoing actions may cause the application of Sections 280G and 4999 of the Internal Revenue Code if there is a “change in ownership or control” (within the meaning of those Sections) of the Company.

(ii)

Notwithstanding the other sections of this Section 2, if there is a Change in Control, then all unvested shares of Restricted Stock shall be immediately vested upon the Change in Control. A “Change in Control” for purposes of this Section 2(c)(ii) shall mean a merger or consolidation in which securities constituting more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons that do not own more than 50% of the combined voting power of the Company’s securities immediately prior to such transaction, or the sale, transfer or other disposition of all or substantially all of the Company’s assets to a non-affiliate of the Company.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i)

any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

(ii)

any Shares acquired under the Plan do not constitute compensation of any kind for services of any kind rendered to the Company and/or any subsidiary thereof and are outside the scope of the Recipient’s employment contract, if any;

(iii)

any Shares acquired under the Plan are not part of normal or expected compensation or salary, including, but not limited to, for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, service awards, pension or retirement or welfare benefits or similar payments unless such other arrangement explicitly provides to the contrary;

(iv)

no claim or entitlement to compensation or damages shall arise from forfeiture of any Shares under this award resulting from a termination of the Business Relationship for any reason and in consideration of the grant of this award, the Recipient irrevocably agrees never to institute a claim against the Company and/or any subsidiary, waives his or her ability to bring such claim and releases the Company and/or its subsidiaries from any claim; if, notwithstanding the foregoing, such claim is allowed by a court of competent jurisdiction, then by accepting this award, the Recipient is deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

(v)

neither the Company nor any subsidiary shall be liable for any foreign exchange rate fluctuation between the Recipient’s local currency and the United States dollar that may affect the value of the award or any amounts due pursuant to the award or the subsequent sale of any Shares acquired upon settlement.

14. Miscellaneous.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.87 12 ex10-87.htm

Exhibit 10.87

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement

Name of recipient (the “Recipient”):
Execution Date		[_______]
Date of grant of Restricted Stock under this Agreement (the “Grant Date”):		[_______]
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of shares of such type of Restricted Stock granted pursuant to this Agreement:		[___________]
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		20% of the number of Common Shares granted under this Agreement will vest on the one-year anniversary of the Grant Date; 20% of the number of Common Shares granted under this Agreement will vest on the two-year anniversary of the Grant Date; 20% of the number of Common Shares granted under this Agreement will vest on the three-year anniversary of the Grant Date; 20% of the number of Common Shares granted under this Agreement will vest on the four-year anniversary of the Grant Date; and 20% of the number of Common Shares granted under this Agreement will vest on the five-year anniversary of the Grant Date.

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting.

(i)

(ii)

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

	(i)	any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

	(ii)	any Shares acquired under the Plan do not constitute compensation of any kind for services of any kind rendered to the Company and/or any subsidiary thereof and are outside the scope of the Recipient’s employment contract, if any;

	(iii)	any Shares acquired under the Plan are not part of normal or expected compensation or salary, including, but not limited to, for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, service awards, pension or retirement or welfare benefits or similar payments unless such other arrangement explicitly provides to the contrary;

	(iv)	no claim or entitlement to compensation or damages shall arise from forfeiture of any Shares under this award resulting from a termination of the Business Relationship for any reason and in consideration of the grant of this award, the Recipient irrevocably agrees never to institute a claim against the Company and/or any subsidiary, waives his or her ability to bring such claim and releases the Company and/or its subsidiaries from any claim; if, notwithstanding the foregoing, such claim is allowed by a court of competent jurisdiction, then by accepting this award, the Recipient is deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

	(v)	neither the Company nor any subsidiary shall be liable for any foreign exchange rate fluctuation between the Recipient’s local currency and the United States dollar that may affect the value of the award or any amounts due pursuant to the award or the subsequent sale of any Shares acquired upon settlement.

14. Miscellaneous.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.88 13 ex10-88.htm

Exhibit 10.88

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement

Name of recipient (the “Recipient”):
Date of this Restricted Stock grant (the “Grant Date”):		[_________]
Number of shares of Restricted Stock granted pursuant to this Agreement:		[_________]
Consideration payable for shares of Restricted Stock, if any:		$0
Vesting Schedule:		100% on the Separation Date (as defined in Section 2(a) of the Master Agreement) or such other Vesting Date as specified in Section 2 of the Master Agreement

		SOLUNA HOLDINGS, INC.

		By:
Signature of Recipient		Name:
[Address]		Title:

SOLUNA HOLDINGS, INC.

[Third Amended and Restated 2021 Stock Incentive Plan]

[2023 Stock Incentive Plan]

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting if Business Relationship Continues.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(c) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient and the Company shall have the right to repurchase all shares of unvested Restricted Stock for an amount equal to the consideration originally payable for the Shares. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

	(i)	The Committee may at any time provide that all or any portion of the shares of Restricted Stock awarded pursuant to this Agreement shall become free of some or all restrictions, or otherwise realizable in full or in part, as the case may be, despite the fact that the foregoing actions may cause the application of Sections 280G and 4999 of the Internal Revenue Code if there is a “change in ownership or control” (within the meaning of those Sections) of the Company.

	(ii)	Notwithstanding the other sections of this Section 2, if there is a Change in Control, all remaining unvested shares of Restricted Stock shall be immediately vested upon the Change in Control. A “Change in Control” for purposes of this Section 2(c)(ii) shall mean a merger or consolidation in which securities constituting more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons that do not own more than 50% of the combined voting power of the Company’s securities immediately prior to such transaction, or the sale, transfer or other disposition of all or substantially all of the Company’s assets to a non-affiliate of the Company.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

4. Rights as a Stockholder. Upon receipt of a Restricted Stock award, the Recipient shall have all rights as a stockholder of the Company as provided in Section 6(c) of the Plan.

6. Compliance with Securities Act; Lock-Up Agreement. The Company shall not be obligated to issue any Shares or other securities pursuant to this Agreement unless the Shares or other securities with respect to which this Agreement applies are at that time effectively registered or exempt from registration under the Securities Act and applicable state or provincial securities laws/any applicable securities laws. In the event Shares or other securities shall be issued that shall not be so registered, the Recipient hereby represents, warrants and agrees that he or she will receive such Shares or other securities for investment and not with a view to their resale or distribution, and will execute an appropriate investment letter satisfactory to the Company and its counsel. The Recipient further hereby agrees that as a condition to the acquisition of Shares pursuant to this Agreement, he or she will execute an agreement in a form acceptable to the Company to the effect that the Shares shall be subject to any underwriter’s lock-up agreement in connection with a public offering of any securities of the Company that may from time to time apply to shares held by officers and employees of the Company, and such agreement or a successor agreement must be in full force and effect.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

	(i)	any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

	(ii)	any Shares acquired under the Plan do not constitute compensation of any kind for services of any kind rendered to the Company and/or any subsidiary thereof and are outside the scope of the Recipient’s employment contract, if any;

	(iii)	any Shares acquired under the Plan are not part of normal or expected compensation or salary, including, but not limited to, for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, service awards, pension or retirement or welfare benefits or similar payments unless such other arrangement explicitly provides to the contrary;

	(iv)	no claim or entitlement to compensation or damages shall arise from forfeiture of any Shares under this award resulting from a termination of the Business Relationship for any reason and in consideration of the grant of this award, the Recipient irrevocably agrees never to institute a claim against the Company and/or any subsidiary, waives his or her ability to bring such claim and releases the Company and/or its subsidiaries from any claim; if, notwithstanding the foregoing, such claim is allowed by a court of competent jurisdiction, then by accepting this award, the Recipient is deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

	(v)	neither the Company nor any subsidiary shall be liable for any foreign exchange rate fluctuation between the Recipient’s local currency and the United States dollar that may affect the value of the award or any amounts due pursuant to the award or the subsequent sale of any Shares acquired upon settlement.

14. Miscellaneous.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.89 14 ex10-89.htm

Exhibit 10.89

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement

Soluna Holdings, Inc. (the “Company”) and the Recipient named below each hereby into this Restricted Stock Agreement on the execution date specified in the table below (including the Terms and Conditions attached hereto, the “Agreement”). The Company grants to the Recipient the shares of Restricted Stock specified herein pursuant to the Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan, as amended and in effect from time to time (the “Plan”).

Name of recipient (the “Recipient”):		INSERT
Date of execution (the “Execution Date”)		INSERT, 2024
Date of grant of Restricted Stock under this Agreement (the “Grant Date”):		INSERT, 2024
Type of Restricted Stock granted pursuant to this Agreement:		Preferred Shares
Number of Shares of such type of Restricted Stock granted pursuant to this Agreement:		[INSERT]
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		100% on the Separation Date (as defined in Section 2(a) of the Agreement) or such other Vesting Date as specified in Section 2 of the Agreement

		SOLUNA HOLDINGS, INC.

		By:
Signature of Recipient		Name:
[Address]		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

1. Grant Under Plan. The Company shall issue to Recipient on the Grant Date an award of restricted stock consisting of a number of shares of preferred stock specified in the table above. This award is subject to the terms and conditions of this Agreement and the Plan, which is incorporated herein by this reference. Capitalized terms used in this Agreement but not defined herein have the respective meanings specified in the Plan or in any employment or similar agreement between the Recipient and the Company or a subsidiary, as applicable.

2. Vesting.

(a) Vesting Schedule. If the Recipient’s Business Relationship with the Company or any subsidiary is terminated after the Execution Date (i) by reason of Recipient’s death or Disability; (ii) by the Company or any subsidiary for any reason other than Cause, including, as applicable, the failure to be nominated to serve as a director of the Company; or (iii) by the failure to be elected by the shareholders of the Company to serve as a director (such date described in clause (i), (ii) or (iii), the “Separation Date”), then 100% of the shares of Restricted Stock granted to Recipient under this Agreement shall automatically vest on the Separation Date. For the avoidance of doubt, no shares of Restricted Stock will be granted under this Agreement after the Separation Date. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

(b) Forfeiture. If the Recipient’s Business Relationship with the Company or any subsidiary is terminated for any reason other than in a manner described in Section 2(a), all shares of Restricted Stock granted to Recipient under this Agreement shall be automatically forfeited on the date of such termination.

(c) Acceleration. Notwithstanding the other sections of this Section 2, if there is a Change in Control, then that portion of any preferred stock award and this award that would not cause the excise tax under Code Section 4999 to be imposed on Recipient, determined after adding all other “parachute payments” (within the meaning of Section 4999) payable to Executive would become 100% vested and shares will be delivered to Executive within sixty (60) days of the Change in Control. The value of the award (or the value of the acceleration of its vesting or payment, as the case may be) that would vest in accordance with the preceding sentence shall be allocated proportionately between such preferred stock award, if any, and this award.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

12. Section 409A of the Internal Revenue Code. The shares of Restricted Stock granted hereunder are intended to avoid the potential adverse tax consequences to the Recipient of Section 409A of the Internal Revenue Code and the Committee may make such modifications to this Agreement as it deems necessary or advisable to avoid such adverse tax consequences. Notwithstanding any provision herein to the contrary, the Recipient acknowledges that the Recipient will be solely responsible for any and all tax liabilities payable by the Recipient in connection with the Recipient’s acquisition of the Restricted Stock. The Company (a) makes no representation or undertaking regarding the treatment of any income tax, social insurance, payroll tax or other tax-related withholding (“Tax-Related Items”) in connection with the grant or vesting of the Restricted Stock or the subsequent sale of any shares underlying the Restricted Stock and (b) does not commit to structure the Restricted Stock to reduce or eliminate the Recipient’s liability for any Tax-Related Items.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i) any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

(ii) any Shares acquired under the Plan do not constitute compensation of any kind for services of any kind rendered to the Company and/or any subsidiary thereof and are outside the scope of the Recipient’s employment contract, if any;

(iii) any Shares acquired under the Plan are not part of normal or expected compensation or salary, including, but not limited to, for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, service awards, pension or retirement or welfare benefits or similar payments unless such other arrangement explicitly provides to the contrary;

(iv) no claim or entitlement to compensation or damages shall arise from forfeiture of any Shares under this award resulting from a termination of the Business Relationship for any reason and in consideration of the grant of this award, the Recipient irrevocably agrees never to institute a claim against the Company and/or any subsidiary, waives his or her ability to bring such claim and releases the Company and/or its subsidiaries from any claim; if, notwithstanding the foregoing, such claim is allowed by a court of competent jurisdiction, then by accepting this award, the Recipient is deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

(v) neither the Company nor any subsidiary shall be liable for any foreign exchange rate fluctuation between the Recipient’s local currency and the United States dollar that may affect the value of the award or any amounts due pursuant to the award or the subsequent sale of any Shares acquired upon settlement.

14. Certain Definitions.

(a) “Business Relationship” means service to the Company or its subsidiaries in the capacity of an employee, officer, director, consultant or advisor, unless specified otherwise in a written agreement between the Recipient and the Company or a subsidiary. For purposes hereof, a Business Relationship shall not be considered as having terminated during any military leave, sick leave or other leave of absence if approved in writing by the Company (or a subsidiary) and if such written approval, or applicable law, contractually obligates the Company (or the subsidiary) to continue the Business Relationship of the Recipient after the approved period of absence.

(b) “Cause” means that Recipient is determined by the administrator of the Plan (the “Administrator”) to have committed an act of embezzlement, fraud, dishonesty, or breach of fiduciary duty to the Company or any of its subsidiaries or because Recipient has made any unauthorized disclosure of any of the secrets or confidential information of the Company or any of its subsidiaries. The preceding notwithstanding, if the Recipient has a written employment, consulting, severance or similar agreement with the Company that defines the term “cause”, then the definition(s) of such term in such agreement shall control for purposes of this Agreement. The Administrator may also determine that a Recipient’s termination was for Cause retroactively if the Administrator determines after the date of termination that grounds for termination for Cause existed at the time of termination. The determination as to whether a Recipient termination was for Cause shall be made in good faith by the Company and shall be final and binding on the Recipient.

(c) “Change in Control” means (a) a merger or consolidation in which securities constituting more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons that do not own more than 50% of the combined voting power of the Company’s securities immediately prior to such transaction, or (b) the sale, transfer or other disposition of all or substantially all of the Company’s assets to a non-affiliate of the Company.

(d) “Disability” means Recipient’s inability to perform the essential duties, responsibilities and functions of Recipient’s position with the Company for a continuous period of ninety (90) days as a result of any mental or physical disability or incapacity, with or without reasonable accommodation, all as determined by the Administrator in its reasonable discretion.

15. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. Except as set forth in the immediately following sentence, this Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. Amendments and modifications of Section 1(d) and Section 1(e) of this Agreement may be effected by a written agreement executed only by the Company and only after approval of 80% of the Board. In the event of a conflict between the terms of this Agreement and the applicable Plan, the terms of the applicable Plan shall control. In the event of a conflict between the terms of the applicable Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

(f) Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement entered into by the Company, the Recipient: (i) authorizes the Company, and any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate the issuance of Restricted Stock and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this Section 15(f), the term “Company” refers to the Company, its subsidiaries and any other affiliate.

EX-10.90 15 ex10-90.htm

Exhibit 10.90

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement

Soluna Holdings, Inc. (the “Company”) and the Recipient named below each hereby into this Restricted Stock Agreement on the execution date specified in the table below (including the Terms and Conditions attached hereto, the “Agreement”). The Company grants to the Recipient the shares of Restricted Stock specified herein on the dates specified herein pursuant to the Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan, as amended and in effect from time to time (the “Plan”).

Name of recipient (the “Recipient”):
Execution Date		[_______]
Date of grant of Restricted Stock under this Agreement (the “Grant Date”):		[_______]
Type of Restricted Stock granted pursuant to this Agreement:		Preferred Shares
Number of shares of such type of Restricted Stock granted pursuant to this Agreement:		[___________]
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		33% of the number of Preferred Shares granted under this Agreement will vest on June 1, 2025; 33% of the number of Preferred Shares granted under this Agreement will vest on June 1, 2026; and 34% of the number of Preferred Shares granted under this Agreement will vest on June 1, 2027.

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting.

(i)

(ii)

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i)

any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

(ii)

(iii)

(iv)

(v)

14. Miscellaneous.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.91 16 ex10-91.htm

Exhibit 10.91

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement

Soluna Holdings, Inc. (the “Company”) and the Recipient named below each hereby into this Restricted Stock Agreement on the execution date specified in the table below (including the Terms and Conditions attached hereto, the “Agreement”). The Company grants to the Recipient the shares of Restricted Stock specified herein on the dates specified herein pursuant to the Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan, as amended and in effect from time to time (the “Plan”).

Name of recipient (the “Recipient”):
Execution Date		[_______]
Date of grant of Restricted Stock under this Agreement (the “Grant Date”):		[_______]
Type of Restricted Stock granted pursuant to this Agreement:		Preferred Shares
Number of shares of such type of Restricted Stock granted pursuant to this Agreement:		[___________]
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		50% of the number of Preferred Shares granted under this Agreement will vest on the twelve-month anniversary of the Grant Date and the remainder will vest in equal monthly installments thereafter for a period of twenty-four months

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting.

(i)

(ii)

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i)

any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

(ii)

(iii)

(iv)

(v)

14. Miscellaneous.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.92 17 ex10-92.htm

Exhibit 10.92

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement

Soluna Holdings, Inc. (the “Company”) and the Recipient named below each hereby into this Restricted Stock Agreement on the execution date specified in the table below (including the Terms and Conditions attached hereto, the “Agreement”). The Company grants to the Recipient the shares of Restricted Stock specified herein on the dates specified herein pursuant to the Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan, as amended and in effect from time to time (the “Plan”).

Name of recipient (the “Recipient”):
Execution Date		[_______]
Date of grant of Restricted Stock under this Agreement (the “Grant Date”):		[_______]
Type of Restricted Stock granted pursuant to this Agreement:		Preferred Shares
Number of shares of such type of Restricted Stock granted pursuant to this Agreement:		[___________]
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		50% of the number of Preferred Shares granted under this Agreement will vest on the eighteen-month anniversary of the Grant Date and the remainder will vest in equal monthly installments thereafter for a period of eighteen months

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting.

(i)

(ii)

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i)

any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

(ii)

(iii)

(iv)

(v)

14. Miscellaneous.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.93 18 ex10-93.htm

Exhibit 10.93

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement

Soluna Holdings, Inc. (the “Company”) and the Recipient named below each hereby into this Restricted Stock Agreement on the execution date specified in the table below (including the Terms and Conditions attached hereto, the “Agreement”). The Company grants to the Recipient the shares of Restricted Stock specified herein on the dates specified herein pursuant to the Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan, as amended and in effect from time to time (the “Plan”).

Name of recipient (the “Recipient”):
Execution Date		[_______]
Date of grant of Restricted Stock under this Agreement (the “Grant Date”):		[_______]
Type of Restricted Stock granted pursuant to this Agreement:		Preferred Shares
Number of shares of such type of Restricted Stock granted pursuant to this Agreement:		[___________]
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		33% of the number of Preferred Shares granted under this Agreement will vest on June 1, 2024; 33% of the number of Preferred Shares granted under this Agreement will vest on June 1, 2025; and 34% of the number of Preferred Shares granted under this Agreement will vest on June 1, 2026.

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof.

2. Vesting.

(i)

(ii)

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i)

any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

(ii)

(iii)

(iv)

(v)

14. Miscellaneous.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

EX-10.94 19 ex10-94.htm

Exhibit 10.94

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement

Soluna Holdings, Inc. (the “Company”) and the Recipient named below each hereby into this Master Restricted Stock Agreement on the execution date specified in the table below (including the Terms and Conditions attached hereto, the “Agreement”). The Company grants to the Recipient the shares of Restricted Stock specified herein on the dates specified herein pursuant to the Soluna Holdings, Inc. Third Amended and Restated 2021 Stock Incentive Plan, as amended and in effect from time to time (the “2021 Plan”) and/or the Soluna Holdings, Inc. 2023 Stock Incentive Plan, as amended and in effect from time to time (the “2023 Plan”, and together with the 2021 Plan, the “Plans” and each individually, a “Plan”).

Name of recipient (the “Recipient”):		INSERT
Reference Date		December 31, 2023
Reference Percentage		INSERT
Date of execution (the “Execution Date”)		INSERT, 2024
Date of initial grant of Restricted Stock under this Agreement (the “Initial Grant Date”):		INSERT, 2024
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of Shares of such type of Restricted Stock granted pursuant to this Agreement:		The aggregate of (a) INSERT Common Shares (the “Reference Date Stock”) plus (b) the June 2024 Stock (as defined in Section 1(c) of this Agreement) plus (c) the BDP Stock (as defined in Section 1(d) of this Agreement) plus (d) the ADP Stock (as defined in Section 1(e) of this Agreement).
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		50% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the one-year anniversary of each applicable Grant Date and 50% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the two-year anniversary of each such Grant Date.

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement – Terms and Conditions

The Company agrees to award to the Recipient, and the Recipient agrees to accept from the Company, the number of shares of Restricted Stock set forth on the cover page hereof. If elected by the Company in its sole discretion, the Company and the Recipient agree to enter into short-form agreements referencing this Agreement on the applicable Grant Date. If elected by the Company in its sole discretion, the Company and Recipient agree to enter into short-form grant agreements referencing this Agreement on the applicable Grant Date.

1. Grants Under Plans.

(a) The Company shall issue to Recipient on the Initial Grant Date, the June 24 Grant Date (as defined below), each ADP Grant Date (as defined below), and each BDP Grant Date (as defined below) (each of the foregoing, a “Grant Date”) an award of restricted stock consisting of a number of shares of common stock specified in the table above (the “Restricted Stock”), provided that (i) Recipient has not severed all Business Relationship (as defined below) with the Company or any subsidiary prior to the respective Grant Date and (ii) there is availability under the Plans as of the respective Grant Date (any shares of Restricted Stock not issued on a Grant Date due to this clause (ii) (an “Availability Condition Date”) are referred to herein as the “Availability Condition Stock”). This award is subject to the terms and conditions of this Agreement and the Plans, which are incorporated herein by this reference. The Recipient confirms, acknowledges and agrees that a portion of the Restricted Stock (including without limitation the Reference Date Stock) is Availability Condition Stock if tested as of the Execution Date. The Company shall have the sole and absolute discretion to allocate Restricted Stock granted to Recipient between the Plans. Capitalized terms used in this Agreement but not defined herein have the respective meanings specified in the appliable Plan or in any employment or similar agreement between the Recipient and the Company or a subsidiary, as applicable.

(b) The Company shall issue to Recipient on the Initial Grant Date the Reference Date Stock (as defined on the cover page hereto).

(c) The Company shall issue to Recipient on June 1, 2024 (the “June 2024 Grant Date”) an award of restricted stock (the “June 2024 Stock”) consisting of a number of shares of common stock of the Company equal to the aggregate of (x) the Reference Percentage times the Retained Percentage (as defined below) times the sum of the Specified Issuances (as defined in Section 1(c)(i) below) and the Other Issuances (as defined in Section 1(c)(ii) below) during the period commencing on the Reference Date and ending on March 31, 2024 (the “June 2024 Calculation Date”) plus (y) the Reference Percentage of such number of shares determined pursuant to preceding clause (x).

(i) “Specified Issuances” means the common stock of the Company issued during an applicable period in connection with the Convertible Note Documents and the Preferred Stock B Documents, including without limitation as a result of any repayment, redemption, conversion or otherwise.

(ii) “Other Issuances” means the common stock of the Company issued during an applicable period that does not constitute Specified Issuances.

(d) The Company shall issue to Recipient on June 1, September 1 and/or December 1 of each year occurring during the BDP Availability Period (as defined in Section 1(d)(i) below) (each, an “Additional BDP Grant Date”; and together with the June 2024 Grant Date (as defined in Section 1(c)), the “BDP Grant Dates” and each individually, a “BDP Grant Date”) an award of restricted stock consisting of a number of shares of common stock equal to the aggregate of (x) the Reference Percentage times the Retained Percentage times the Specified Issuances during the period commencing on the first day of the first fiscal quarter ending after the BDP Calculation Date (as defined in this subsection (d) below) used to determine the most recent BDP Grant Date and ending on the last day of the fiscal quarter immediately preceding the applicable BDP Grant Date (each, an “Additional BDP Calculation Date”, and together with the June 2024 Calculation Date (as defined in Section 1(c)), the “BDP Calculation Dates” and each individually a “BPD Calculation Date”) plus (y) the Reference Percentage of such number of shares determined pursuant to preceding clause (x). The Company has the sole discretion in determining whether or not to select Additional BDP Grant Dates of September 1 and December 1 in any calendar year. All Restricted Stock issued to Recipient pursuant to this Section 1(d) is referred to herein as “BDP Stock”.

(i) “BDP Availability Period” means the period commencing on April 1, 2024 and continuing until the earliest to occur of (A) March 31, 2029, (B) the Separation Date or such other Vesting Date and (C) the date, if any, that at least eighty percent (80%) of the Board have approved as the cessation date for Recipient and all other recipients of similar award structures.

(e) The Company shall issue to Recipient on June 1, September 1 and/or December 1 of each year occurring during the ADP Availability Period (as defined in Section 1(e)(i) below) (each, an “Additional ADP Grant Date”; and together with the June 2024 Grant Date, the “ADP Grant Dates” and each individually, a “ADP Grant Date”) an award of restricted stock consisting of a number of shares of common stock equal to the aggregate of (x) the Reference Percentage times the Retained Percentage times the Other Issuances during the period commencing on the first day of the first fiscal quarter ending after the ADP Calculation Date (as defined in this subsection (e) below) used to determine the most recent ADP Grant Date and ending on the last day of the fiscal quarter immediately preceding the applicable ADP Grant Date (each, an “Additional BDP Calculation Date”, and together with the June 2024 Calculation Date (as defined in Section 1(c), the “ADP Calculation Dates” and each individually a “ADP Calculation Date”) plus (y) the Reference Percentage of such number of shares determined pursuant to preceding clause (x). The Company has the sole discretion in determining whether or not to select Additional ADP Grant Dates of September 1 and December 1 in any calendar year. All restricted stock issued to Recipient pursuant to this Section 1(e) is referred to herein as “ADP Stock”.

(i) “ADP Availability Period” means the period commencing on April 1, 2024 and continuing until the earliest to occur of (A) March 31, 2029, (B) the Separation Date or such other Vesting Date and (C) the date, if any, that at least eighty percent (80%) of the Board have approved as the cessation date for Recipient and all other recipients of similar award structures.

(f) The Company shall issue Availability Condition Stock to Recipient on the first Grant Date to occur after an Availability Condition Date for which there is availability under the Plans and the Recipient has not severed all Business Relationship with the Company or any subsidiary prior to such Grant Date.

2. Vesting.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(b) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient after such date (such applicable date, the “Separation Date”). For the avoidance of doubt, no shares of Restricted Stock will be granted under this Agreement after the Separation Date. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

(b) Acceleration. Notwithstanding the other sections of this Section 2, if there is a Change in Control, then that portion of any preferred stock award and this award that would not cause the excise tax under Code Section 4999 to be imposed on Recipient, determined after adding all other “parachute payments” (within the meaning of Section 4999) payable to Executive would become 100% vested and shares will be delivered to Executive within sixty (60) days of the Change in Control. The value of the award (or the value of the acceleration of its vesting or payment, as the case may be) that would vest in accordance with the preceding sentence shall be allocated proportionately between such preferred stock award, if any, and this award.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

12. Section 409A of the Internal Revenue Code. The award of the shares of Restricted Stock hereunder is intended to be exempt from or in compliance with the requirements of Code Section 409A so as to avoid the potential adverse tax consequences to the Recipient of Code Section 409A, and the Committee may make such modifications to this Agreement as it deems necessary or advisable to avoid such adverse tax consequences. Notwithstanding any provision herein or in the applicable Plan to the contrary, the Recipient acknowledges that the Recipient will be solely responsible for any and all tax liabilities payable by the Recipient in connection with the Recipient’s acquisition of the Restricted Stock. The Company (a) makes no representation or undertaking regarding the application of any income tax, social insurance, payroll tax or other tax-related obligations (“Tax-Related Items”) in connection with the grant or vesting of the Restricted Stock or the subsequent sale of any shares underlying the Restricted Stock and (b) does not commit to structure the Restricted Stock to reduce or eliminate the Recipient’s liability for any Tax-Related Items.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i) any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

14. Certain Definitions.

(a) “ADP” is the acronym for additional dilution protection.

(b) “BDP” is the acronym for base dilution protection.

(c) “Business Relationship” means service to the Company or its subsidiaries in the capacity of an employee, officer, director, consultant or advisor, unless specified otherwise in a written agreement between the Recipient and the Company or a subsidiary. For purposes hereof, a Business Relationship shall not be considered as having terminated during any military leave, sick leave or other leave of absence if approved in writing by the Company (or a subsidiary) and if such written approval, or applicable law, contractually obligates the Company (or the subsidiary) to continue the Business Relationship of the Recipient after the approved period of absence.

(d) “Cause” means that Recipient is determined by the administrator of the Plan (the “Administrator”) to have committed an act of embezzlement, fraud, dishonesty, or breach of fiduciary duty to the Company or any of its subsidiaries or because Recipient has made any unauthorized disclosure of any of the secrets or confidential information of the Company or any of its subsidiaries. The preceding notwithstanding, if the Recipient has a written employment, consulting, severance or similar agreement with the Company that defines the term “cause”, then the definition(s) of such term in such agreement shall control for purposes of this Agreement. The Administrator may also determine that a Recipient’s termination was for Cause retroactively if the Administrator determines after the date of termination that grounds for termination for Cause existed at the time of termination. The determination as to whether a Recipient termination was for Cause shall be made in good faith by the Company and shall be final and binding on the Recipient.

(e) “Change in Control” means (a) a merger or consolidation in which securities constituting more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons that do not own more than 50% of the combined voting power of the Company’s securities immediately prior to such transaction, or (b) the sale, transfer or other disposition of all or substantially all of the Company’s assets to a non-affiliate of the Company.

(f) “Convertible Note Documents” means, collectively, the Securities Purchase Agreement, dated October 20, 2021, by and among the Company and the investors party thereto, as amended, and the related transaction documents, as amended.

(g) “Disability” means Recipient’s inability to perform the essential duties, responsibilities and functions of Recipient’s position with the Company for a continuous period of ninety (90) days as a result of any mental or physical disability or incapacity, with or without reasonable accommodation, all as determined by the Administrator in its reasonable discretion.

(h) “Preferred Stock B Documents” means, collectively, the Securities Purchase Agreement dated December 5, 2022 entered into among the Company and the investors party thereto, as amended, and the related transaction documents, as amended.

(i) “Retained Percentage” means, as of any date of determination, the result (expressed in the terms of a percentage) of (a) the total number of shares of Restricted Stock vested on or prior to such date that are still owned by Recipient on such date divided by (b) the total number of shares of Restricted Stock vested on or prior to such date.

15. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. Except as set forth in the immediately following sentence, this Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. Amendments and modifications of Section 1(d) and Section 1(e) of this Agreement may be effected by a written agreement executed only by the Company and only after approval of 80% of the Board. In the event of a conflict between the terms of this Agreement and the applicable Plan, the terms of the applicable Plan shall control. In the event of a conflict between the terms of the applicable Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

(e) Construction. This Agreement is to be construed in accordance with the terms of the Plan. In case of any conflict between the Plan and this Agreement, the Plan shall control. The titles of the sections of this Agreement and of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include all genders; the singular shall include the plural and the plural the singular unless the context otherwise requires.

(f) Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement entered into by the Company, the Recipient: (i) authorizes the Company, and any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate the issuance of Restricted Stock and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this Section 15(f), the term “Company” refers to the Company, its subsidiaries and any other affiliate.

EX-10.95 20 ex10-95.htm

Exhibit 10.95

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement

Name of recipient (the “Recipient”):		INSERT
Reference Date		December 31, 2023
Reference Percentage		INSERT
Date of execution (the “Execution Date”)		INSERT, 2024
Date of initial grant of Restricted Stock under this Agreement (the “Initial Grant Date”):		INSERT, 2024
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of Shares of such type of Restricted Stock granted pursuant to this Agreement:		The aggregate of (a) INSERT Common Shares (the “Reference Date Stock”) plus (b) the June 2024 Stock (as defined in Section 1(c) of this Agreement) plus (c) the BDP Stock (as defined in Section 1(d) of this Agreement) plus (d) the ADP Stock (as defined in Section 1(e) of this Agreement).
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		33% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the one-year anniversary of each applicable Grant Date; 33% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the two-year anniversary of each such Grant Date and 34% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the three-year anniversary of each such Grant Date.

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement – Terms and Conditions

1. Grants Under Plans.

(b) The Company shall issue to Recipient on the Initial Grant Date the Reference Date Stock (as defined on the cover page hereto).

(ii) “Other Issuances” means the common stock of the Company issued during an applicable period that does not constitute Specified Issuances.

2. Vesting.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(b) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient after such date (such applicable date, the “Separation Date”). For the avoidance of doubt, no shares of Restricted Stock will be granted under this Agreement after the Separation Date. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i) any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

14. Certain Definitions.

(a) “ADP” is the acronym for additional dilution protection.

(b) “BDP” is the acronym for base dilution protection.

15. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. Except as set forth in the immediately following sentence, this Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. Amendments and modifications of Section 1(d) and Section 1(e) of this Agreement may be effected by a written agreement executed only by the Company and only after approval of 80% of the Board. In the event of a conflict between the terms of this Agreement and the applicable Plan, the terms of the applicable Plan shall control. In the event of a conflict between the terms of the applicable Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

(e) Construction. This Agreement is to be construed in accordance with the terms of the Plan. In case of any conflict between the Plan and this Agreement, the Plan shall control. The titles of the sections of this Agreement and of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include all genders; the singular shall include the plural and the plural the singular unless the context otherwise requires.

(f) Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement entered into by the Company, the Recipient: (i) authorizes the Company, and any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate the issuance of Restricted Stock and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this Section 15(f), the term “Company” refers to the Company, its subsidiaries and any other affiliate.

EX-10.96 21 ex10-96.htm

EXHIBIT 10.96

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement

Name of recipient (the “Recipient”):		INSERT
Reference Date		December 31, 2023
Reference Percentage		INSERT
Date of execution (the “Execution Date”)		INSERT, 2024
Date of initial grant of Restricted Stock under this Agreement (the “Initial Grant Date”):		INSERT, 2024
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of Shares of such type of Restricted Stock granted pursuant to this Agreement:		The aggregate of (a) INSERT Common Shares (the “Reference Date Stock”) plus (b) the June 2024 Stock (as defined in Section 1(c) of this Agreement) plus (c) the BDP Stock (as defined in Section 1(d) of this Agreement) plus (d) the ADP Stock (as defined in Section 1(e) of this Agreement).
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		33% of the Reference Date Stock and the June 2024 Stock granted under this Agreement will vest on June 1, 2024; 33% of the Reference Date Stock and the June 2024 Stock granted under this Agreement will vest on June 1, 2025; and 34% of the Reference Date Stock and the June 2024 Stock granted under this Agreement will vest on June 1, 2026. 33% of the BDP Stock and the ADP Stock granted under this Agreement will vest on the one-year anniversary of each applicable Grant Date; 33% of the BDP Stock and the ADP Stock granted under this Agreement will vest on the two-year anniversary of each such Grant Date and 34% of the BDP Stock and the ADP Stock granted under this Agreement will vest on the three-year anniversary of each such Grant Date.

		SOLUNA HOLDINGS, INC.

		By:
Signature of Recipient		Name:
[Address]		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement – Terms and Conditions

1. Grants Under Plans.

(b) The Company shall issue to Recipient on the Initial Grant Date the Reference Date Stock (as defined on the cover page hereto).

(ii) “Other Issuances” means the common stock of the Company issued during an applicable period that does not constitute Specified Issuances.

2. Vesting.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(b) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient after such date (such applicable date, the “Separation Date”). For the avoidance of doubt, no shares of Restricted Stock will be granted under this Agreement after the Separation Date. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i) any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

14. Certain Definitions.

(a) “ADP” is the acronym for additional dilution protection.

(b) “BDP” is the acronym for base dilution protection.

15. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. Except as set forth in the immediately following sentence, this Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. Amendments and modifications of Section 1(d) and Section 1(e) of this Agreement may be effected by a written agreement executed only by the Company and only after approval of 80% of the Board. In the event of a conflict between the terms of this Agreement and the applicable Plan, the terms of the applicable Plan shall control. In the event of a conflict between the terms of the applicable Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

(e) Construction. This Agreement is to be construed in accordance with the terms of the Plan. In case of any conflict between the Plan and this Agreement, the Plan shall control. The titles of the sections of this Agreement and of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include all genders; the singular shall include the plural and the plural the singular unless the context otherwise requires.

(f) Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement entered into by the Company, the Recipient: (i) authorizes the Company, and any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate the issuance of Restricted Stock and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this Section 15(f), the term “Company” refers to the Company, its subsidiaries and any other affiliate.

EX-10.97 22 ex10-97.htm

Exhibit 10.97

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement

Name of recipient (the “Recipient”):		INSERT
Reference Date		December 31, 2023
Reference Percentage		INSERT
Date of execution (the “Execution Date”)		INSERT, 2024
Date of initial grant of Restricted Stock under this Agreement (the “Initial Grant Date”):		INSERT, 2024
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of Shares of such type of Restricted Stock granted pursuant to this Agreement:		The aggregate of (a) INSERT Common Shares (the “Reference Date Stock”) plus (b) the June 2024 Stock (as defined in Section 1(c) of this Agreement) plus (c) the BDP Stock (as defined in Section 1(d) of this Agreement) plus (d) the ADP Stock (as defined in Section 1(e) of this Agreement).
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		33% of the Reference Date Stock and the June 2024 Stock granted under this Agreement will vest on June 1, 2025; 33% of the Reference Date Stock and the June 2024 Stock granted under this Agreement will vest on June 1, 2026; and 34% of the Reference Date Stock and the June 2024 Stock granted under this Agreement will vest on June 1, 2027. 33% of the BDP Stock and the ADP Stock granted under this Agreement will vest on the one-year anniversary of each applicable Grant Date; 33% of the BDP Stock and the ADP Stock granted under this Agreement will vest on the two-year anniversary of each such Grant Date and 34% of the BDP Stock and the ADP Stock granted under this Agreement will vest on the three-year anniversary of each such Grant Date.

		SOLUNA HOLDINGS, INC.

		By:
Signature of Recipient		Name:
[Address]		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement – Terms and Conditions

1. Grants Under Plans.

(b) The Company shall issue to Recipient on the Initial Grant Date the Reference Date Stock (as defined on the cover page hereto).

(ii) “Other Issuances” means the common stock of the Company issued during an applicable period that does not constitute Specified Issuances.

2. Vesting.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(b) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient after such date (such applicable date, the “Separation Date”). For the avoidance of doubt, no shares of Restricted Stock will be granted under this Agreement after the Separation Date. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i) any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

14. Certain Definitions.

(a) “ADP” is the acronym for additional dilution protection.

(b) “BDP” is the acronym for base dilution protection.

15. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. Except as set forth in the immediately following sentence, this Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. Amendments and modifications of Section 1(d) and Section 1(e) of this Agreement may be effected by a written agreement executed only by the Company and only after approval of 80% of the Board. In the event of a conflict between the terms of this Agreement and the applicable Plan, the terms of the applicable Plan shall control. In the event of a conflict between the terms of the applicable Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

(e) Construction. This Agreement is to be construed in accordance with the terms of the Plan. In case of any conflict between the Plan and this Agreement, the Plan shall control. The titles of the sections of this Agreement and of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include all genders; the singular shall include the plural and the plural the singular unless the context otherwise requires.

(f) Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement entered into by the Company, the Recipient: (i) authorizes the Company, and any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate the issuance of Restricted Stock and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this Section 15(f), the term “Company” refers to the Company, its subsidiaries and any other affiliate.

EX-10.98 23 ex10-98.htm

Exhibit 10.98

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement

Name of recipient (the “Recipient”):		INSERT
Reference Date		December 31, 2023
Reference Percentage		INSERT
Date of execution (the “Execution Date”)		INSERT, 2024
Date of initial grant of Restricted Stock under this Agreement (the “Initial Grant Date”):		INSERT, 2024
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of Shares of such type of Restricted Stock granted pursuant to this Agreement:		The aggregate of (a) INSERT Common Shares (the “Reference Date Stock”) plus (b) the June 2024 Stock (as defined in Section 1(c) of this Agreement) plus (c) the BDP Stock (as defined in Section 1(d) of this Agreement) plus (d) the ADP Stock (as defined in Section 1(e) of this Agreement).
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		25% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the one-year anniversary of each applicable Grant Date; 25% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the two-year anniversary of each such Grant Date; 25% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the three-year anniversary of each such Grant Date; and 25% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the four-year anniversary of each such Grant Date.

	SOLUNA HOLDINGS, INC.

Signature of Recipient	By:
[Address]	Name:
	Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement – Terms and Conditions

1. Grants Under Plans.

(b) The Company shall issue to Recipient on the Initial Grant Date the Reference Date Stock (as defined on the cover page hereto).

(ii) “Other Issuances” means the common stock of the Company issued during an applicable period that does not constitute Specified Issuances.

2. Vesting.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(b) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient after such date (such applicable date, the “Separation Date”). For the avoidance of doubt, no shares of Restricted Stock will be granted under this Agreement after the Separation Date. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i) any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

14. Certain Definitions.

(a) “ADP” is the acronym for additional dilution protection.

(b) “BDP” is the acronym for base dilution protection.

15. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. Except as set forth in the immediately following sentence, this Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. Amendments and modifications of Section 1(d) and Section 1(e) of this Agreement may be effected by a written agreement executed only by the Company and only after approval of 80% of the Board. In the event of a conflict between the terms of this Agreement and the applicable Plan, the terms of the applicable Plan shall control. In the event of a conflict between the terms of the applicable Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

(e) Construction. This Agreement is to be construed in accordance with the terms of the Plan. In case of any conflict between the Plan and this Agreement, the Plan shall control. The titles of the sections of this Agreement and of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include all genders; the singular shall include the plural and the plural the singular unless the context otherwise requires.

(f) Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement entered into by the Company, the Recipient: (i) authorizes the Company, and any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate the issuance of Restricted Stock and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this Section 15(f), the term “Company” refers to the Company, its subsidiaries and any other affiliate.

EX-10.99 24 ex10-99.htm

Exhibit 10.99

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement

Name of recipient (the “Recipient”):		INSERT
Reference Date		December 31, 2023
Reference Percentage		INSERT
Date of execution (the “Execution Date”)		INSERT, 2024
Date of initial grant of Restricted Stock under this Agreement (the “Initial Grant Date”):		INSERT, 2024
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of Shares of such type of Restricted Stock granted pursuant to this Agreement:		The aggregate of (a) INSERT Common Shares (the “Reference Date Stock”) plus (b) the June 2024 Stock (as defined in Section 1(c) of this Agreement) plus (c) the BDP Stock (as defined in Section 1(d) of this Agreement) plus (d) the ADP Stock (as defined in Section 1(e) of this Agreement).
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		20% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the one-year anniversary of each applicable Grant Date; 20% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the two-year anniversary of each such Grant Date; 20% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the three-year anniversary of each such Grant Date; 20% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the four-year anniversary of each such Grant Date; and 20% of the Reference Date Stock, the June 2024 Stock, the BDP Stock and the ADP Stock granted under this Agreement will vest on the five-year anniversary of each such Grant Date.

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement – Terms and Conditions

1. Grants Under Plans.

(b) The Company shall issue to Recipient on the Initial Grant Date the Reference Date Stock (as defined on the cover page hereto).

(ii) “Other Issuances” means the common stock of the Company issued during an applicable period that does not constitute Specified Issuances.

2. Vesting.

(a) Vesting Schedule. If the Recipient has maintained continuously a Business Relationship through each date specified on the cover page hereof, a portion of the Restricted Stock shall vest on such date in such amounts as are set forth on the cover page hereof. Except as specifically provided in Section 2(b) below, if the Recipient’s Business Relationship is terminated by the Company, a subsidiary or by the Recipient for any reason, whether voluntarily or involuntarily, no additional shares of Restricted Stock shall become vested under any circumstances with respect to the Recipient after such date (such applicable date, the “Separation Date”). For the avoidance of doubt, no shares of Restricted Stock will be granted under this Agreement after the Separation Date. Any determination under this Agreement as to Business Relationship status or other matters referred to above shall be made in good faith by the Committee, whose decision shall be final and binding on all parties.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i) any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

14. Certain Definitions.

(a) “ADP” is the acronym for additional dilution protection.

(b) “BDP” is the acronym for base dilution protection.

15. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. Except as set forth in the immediately following sentence, this Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. Amendments and modifications of Section 1(d) and Section 1(e) of this Agreement may be effected by a written agreement executed only by the Company and only after approval of 80% of the Board. In the event of a conflict between the terms of this Agreement and the applicable Plan, the terms of the applicable Plan shall control. In the event of a conflict between the terms of the applicable Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

(e) Construction. This Agreement is to be construed in accordance with the terms of the Plan. In case of any conflict between the Plan and this Agreement, the Plan shall control. The titles of the sections of this Agreement and of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include all genders; the singular shall include the plural and the plural the singular unless the context otherwise requires.

(f) Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement entered into by the Company, the Recipient: (i) authorizes the Company, and any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate the issuance of Restricted Stock and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this Section 15(f), the term “Company” refers to the Company, its subsidiaries and any other affiliate.

EX-10.100 25 ex10-100.htm

Exhibit 10.100

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement

Name of recipient (the “Recipient”):		INSERT
Reference Date		December 31, 2023
Reference Percentage		INSERT
Date of execution (the “Execution Date”)		INSERT, 2024
Date of initial grant of Restricted Stock under this Agreement (the “Initial Grant Date”):		INSERT, 2024
Type of Restricted Stock granted pursuant to this Agreement:		Common Shares
Number of Shares of such type of Restricted Stock granted pursuant to this Agreement:		The aggregate of (a) INSERT Common Shares (the “Reference Date Stock”) plus (b) the June 2024 Stock (as defined in Section 1(c) of this Agreement) plus (c) the BDP Stock (as defined in Section 1(d) of this Agreement) plus (d) the ADP Stock (as defined in Section 1(e) of this Agreement).
Consideration payable for shares of Restricted Stock, if any:		$0.00
Vesting Schedule:		100% on the Separation Date (as defined in Section 2(a) of the Agreement) or such other Vesting Date as specified in Section 2 of the Agreement

		SOLUNA HOLDINGS, INC.

Signature of Recipient		By:
[Address]		Name:
		Title:

SOLUNA HOLDINGS, INC.

Third Amended and Restated 2021 Stock Incentive Plan

2023 Stock Incentive Plan

Master Restricted Stock Agreement – Terms and Conditions

1. Grants Under Plans.

(b) The Company shall issue to Recipient on the Initial Grant Date the Reference Date Stock (as defined on the cover page hereto).

(c) The Company shall issue to Recipient on June 1, 2024 (the “June 2024 Grant Date”) an award of restricted stock (the “June 2024 Stock”) consisting of a number of shares of common stock of the Company equal to the aggregate of (x) the Reference Percentage of the sum of the Specified Issuances (as defined in Section 1(c)(i) below) and the Other Issuances (as defined in Section 1(c)(ii) below) during the period commencing on the Reference Date and ending on March 31, 2024 (the “June 2024 Calculation Date”) plus (y) the Reference Percentage of such number of shares determined pursuant to preceding clause (x).

(ii) “Other Issuances” means the common stock of the Company issued during an applicable period that does not constitute Specified Issuances.

(d) The Company shall issue to Recipient on June 1, September 1 and/or December 1 of each year occurring during the BDP Availability Period (as defined in Section 1(d)(i) below) (each, an “Additional BDP Grant Date”; and together with the June 2024 Grant Date (as defined in Section 1(c)), the “BDP Grant Dates” and each individually, a “BDP Grant Date”) an award of restricted stock consisting of a number of shares of common stock equal to the aggregate of (x) the Reference Percentage of the Specified Issuances during the period commencing on the first day of the first fiscal quarter ending after the BDP Calculation Date (as defined in this subsection (d) below) used to determine the most recent BDP Grant Date and ending on the last day of the fiscal quarter immediately preceding the applicable BDP Grant Date (each, an “Additional BDP Calculation Date”, and together with the June 2024 Calculation Date (as defined in Section 1(c)), the “BDP Calculation Dates” and each individually a “BPD Calculation Date”) plus (y) the Reference Percentage of such number of shares determined pursuant to preceding clause (x). The Company has the sole discretion in determining whether or not to select Additional BDP Grant Dates of September 1 and December 1 in any calendar year. All restricted stock issued to Recipient pursuant to this Section 1(d) is referred to herein as “BDP Stock”.

(e) The Company shall issue to Recipient on June 1, September 1 and/or December 1 of each year occurring during the ADP Availability Period (as defined in Section 1(e)(i) below) (each, an “Additional ADP Grant Date”; and together with the June 2024 Grant Date, the “ADP Grant Dates” and each individually, a “ADP Grant Date”) an award of restricted stock consisting of a number of shares of common stock equal to the aggregate of (x) the Reference Percentage of the Other Issuances during the period commencing on the first day of the first fiscal quarter ending after the ADP Calculation Date (as defined in this subsection (e) below) used to determine the most recent ADP Grant Date and ending on the last day of the fiscal quarter immediately preceding the applicable ADP Grant Date (each, an “Additional BDP Calculation Date”, and together with the June 2024 Calculation Date (as defined in Section 1(c), the “ADP Calculation Dates” and each individually a “ADP Calculation Date”) plus (y) the Reference Percentage of such number of shares determined pursuant to preceding clause (x). The Company has the sole discretion in determining whether or not to select Additional ADP Grant Dates of September 1 and December 1 in any calendar year. All restricted stock issued to Recipient pursuant to this Section 1(e) is referred to herein as “ADP Stock”.

2. Vesting.

3. Restrictions on Transfer. The Recipient shall not sell, assign, transfer, pledge, encumber or dispose of all or any of his or her unvested shares of Restricted Stock.

13. Nature of Award. By accepting this award, the Recipient acknowledges, understands and agrees that:

(d) he or she is voluntarily participating in the Plan;

(e) the future value of Shares is unknown and cannot be predicted with certainty;

(f) if the Recipient resides and/or works outside the United States, the following additional provisions shall apply:

(i) any Shares acquired under the Plan do not replace any pension or retirement rights or compensation;

14. Certain Definitions.

(a) “ADP” is the acronym for additional dilution protection.

(b) “BDP” is the acronym for base dilution protection.

15. Miscellaneous.

(a) Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. Except as set forth in the immediately following sentence, this Agreement may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Agreement. Amendments and modifications of Section 1(d) and Section 1(e) of this Agreement may be effected by a written agreement executed only by the Company and only after approval of 80% of the Board. In the event of a conflict between the terms of this Agreement and the applicable Plan, the terms of the applicable Plan shall control. In the event of a conflict between the terms of the applicable Plan and an employment or similar agreement the specific terms of which relate to this award, the terms of the employment or similar agreement shall control.

(b) Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(d) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without giving effect to the principles of the conflicts of laws thereof.

(e) Construction. This Agreement is to be construed in accordance with the terms of the Plan. In case of any conflict between the Plan and this Agreement, the Plan shall control. The titles of the sections of this Agreement and of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include all genders; the singular shall include the plural and the plural the singular unless the context otherwise requires.

(f) Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement entered into by the Company, the Recipient: (i) authorizes the Company, and any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate the issuance of Restricted Stock and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this Section 15(f), the term “Company” refers to the Company, its subsidiaries and any other affiliate.

EX-31.1 26 ex31-1.htm

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John Belizaire, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Soluna Holdings, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 15, 2024	/s/ John Belizaire
	John Belizaire
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2 27 ex31-2.htm

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John Tunison certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Soluna Holdings, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 15, 2024	/s/ John Tunison
	John Tunison
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1 28 ex32-1.htm

Exhibit 32.1

Soluna Holdings, Inc.
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350)

In connection with the Quarterly Report on Form 10-Q of Soluna Holdings, Inc. (the “Company”) for the three month period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Belizaire, Chief Executive Officer of the Company, certify, pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, (18 U.S.C. Sections 1350(a) and (b)), that, to my knowledge:

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 15, 2024

	/s/ John Belizaire
	John Belizaire
	Chief Executive Officer
	(Principal Executive Officer)

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and is not being filed as part of the Report or as a separate disclosure document, and may not be disclosed, distributed or used by any person for any reason other than as specifically required by law.

EX-32.2 29 ex32-2.htm

Exhibit 32.2

Soluna Holdings, Inc.
Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350)

In connection with the Quarterly Report on Form 10-Q of Soluna Holdings, Inc. (the “Company”) for the three month period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Tunison, Chief Financial Officer of the Company, certify, pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, (18 U.S.C. Sections 1350(a) and (b)), that, to my knowledge:

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 15, 2024

	/s/ John Tunison
	John Tunison
	Chief Financial Officer
	(Principal Financial Officer)