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

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

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

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

On April 4, 2025, the Company transferred its Class B Membership to SLC, resulting in 0% Class B Membership Interests held by the Company. SDI still retains 100% Class A Membership Interests in DVSL II as of June 30, 2026. The Company concluded that it is the primary beneficiary of DVSL II and consolidates the entity.

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

In September 2025, the Company agreed to terms of a debt facility with Generate under a Credit and Guaranty Agreement, as discussed in Note 10. Several events occurred in connection with the debt facility, [1] the Company completed a restructuring of the subsidiaries that comprise “Project Dorothy 1A” and “Project Dorothy 2” (herein referred to as the “Dorothy Restructuring”), [2] Soluna DVSL ComputeCo LLC, Soluna DVSL II ComputeCo LLC, and Soluna KK I ComputeCo LLC entered into a First Priority Leasehold Deed of Trust (the “Deed of Trust”) with Generate which provides Generate with the power of sale and right of entry and possession of the Trust Property.

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

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


(Dollars in thousands)	June 30, 2026		December 31, 2025

Current assets:
Cash and restricted cash	$	5,995	$	7,969
Accounts receivable, trade	3,005		3,054
Accounts receivable, intercompany	518		175
Prepaid expenses and other current assets	74		77
Other receivable, related party	790		2,580
Total current assets	10,382		13,855


Other assets, related party	4,036		4,036
Operating lease right-of-use assets	70		74
Property, plant and equipment, net	23,227		24,296
Deposits on equipment	5		—
Total assets	$	37,720	$	42,261

Current liabilities:
Accounts payable, trade	$	46	$	8
Accounts payable, related party	141		627
Accrued liabilities	1,385		5,160
Income tax payable	25		13
Current portion of debt	9,570		2,574
Other current liabilities	1,992		91
Operating lease liability	8		8
Total current liabilities	13,167		8,481

Other liabilities	209		2,071
Other liabilities-related party	854		854
Long-term debt	—		7,293
Operating lease liability	62		66
Total liabilities	$	14,292	$	18,765

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

Currently, Project Kati 1 is financed by Soluna2 Kati Project Holdco LLC, an investment vehicle of SLC with a capital contribution cap of up to $48.98 million. In exchange for contributions to KKSL JVCo, SDI was issued 100% of Class A Membership Units in KKSL JVCo, and SLC was initially issued 100% of the Class B Membership Interests in KKSL JVCo and admitted as a Class B member of KKSL JVCo. Further, SDI and SLC entered into a Developer Investment Side Letter that allowed SDI to invest into KKSL JVCo up to 49% of ownership in the Class B Membership Interests through January 31, 2026. SDI had contributed to KKSL JVCo through the period, and as of June 30, 2026, SDI holds 100% of the

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

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

Included within other liabilities, related party is an intercompany loan with SDI of approximately $8.3 million, which is eliminated from the Company's consolidated condensed financial statements. The amount of the assets and liabilities (including intercompany and related party balances that are eliminated in consolidation) was as follows for KKSL JVCo:


(Dollars in thousands)	June 30, 2026		December 31, 2025

Current assets:
Cash and restricted cash	$	3,461	$	1,621
Accounts receivable	754		—
Due from intercompany	725		725
Loan commitment assets	—		3,018
Prepaid expenses and other current assets	134		393
Total current assets	5,074		5,757

Other assets, related party	3,300		3,300
Finance lease right-of-use assets	1,773		2,246
Property, plant and equipment, net	31,735		15,918
Deposits on equipment	—		1,377
Total assets	$	41,882	$	28,598

Current liabilities:
Accounts payable, trade	$	1,144	$	2,236
Accounts payable, related party	1,997		2,590
Accrued liabilities	2,117		2,152
Other current liabilities, related party	1,050		—
Finance lease liability	23		20
Total current liabilities	6,331		6,998

Other liabilities- related party	9,665		1,373
Finance lease liability	1,769		2,236
Total liabilities	$	17,765	$	10,607

On June 3, 2026, Soluna HPC KK II HoldCo, LLC (the "Soluna Member"), an indirect wholly owned subsidiary of the Company, entered into the limited liability company agreement of Soluna MB KK II JVCo, LLC ("Kati 2 JVCo") with DC Kati Venture LLC (the "Metrobloks Member"), an affiliate of Metrobloks, LLC. Kati 2 JVCo was formed on May 22, 2026 to acquire, own and develop, through two wholly owned subsidiary land companies, a multi-phase data center campus in Willacy County, Texas, marketed as "Project Kati 2." The campus is planned in two phases: a Phase I development of approximately 100 MW of critical IT load on property already owned by Kati 2 JVCo, and a Phase II development of approximately 250 MW of critical IT load on property to be acquired under a purchase and sale agreement assigned to Kati 2 JVCo’s Phase II land company at closing.

The Soluna Member holds 100% of the Class A Interests of Kati 2 JVCo and serves as its sole manager. The Metrobloks Member holds 100% of the Class B Interests, which are profits interests carrying no voting rights and an initial capital account of zero. Distributions are made first to repay any default loans, second to return capital contributions to the members, third to provide the members a 14% internal rate of return on their capital contributions, fourth in an amount equal to $100 thousand per megawatt of the project’s contracted generating capacity to the Soluna Member, and thereafter 50% to each member.

As of the effective date, the Soluna Member’s funded capital contribution to Kati 2 JVCo was approximately $6.7 million, consisting of the Phase I property contributed at its cost of $1.1 million, approximately $3.6 million of other pre-formation development costs and fees, and $2.0 million of cash. The Soluna Member has committed to contribute an additional approximate $19.1 million to fund the acquisition of the Phase II property and, subject to approval by the manager, up to an additional $2.0 million to fund operating expenses of Kati 2 JVCo as they become due. The Metrobloks Member made no capital contribution and, other than a reinvestment obligation that arises only upon the transition to the vertical phase of the project, has no obligation to contribute capital. Kati 2 JVCo has no third-party debt outstanding, and its activities have been financed entirely by capital contributions from the Soluna Member. Development of the campus is expected to require substantial financing from third parties, which the joint venture agreement contemplates would be arranged in connection with a future contribution of the project property to a development entity.

The Company concluded that Kati 2 JVCo is a VIE because its total equity investment at risk is not sufficient, by design, to permit it to finance its activities without additional subordinated financial support. In reaching that conclusion, the Company considered that Kati 2 JVCo holds undeveloped land and capitalized development costs that do not generate revenue; that it cannot complete the acquisition of the Phase II property without the Soluna Member’s unfunded capital commitment; and that the development of the campus is expected to be financed through third-party arrangements that have not been obtained. The Company also determined that the Class B Interests are not equity investment at risk, because they were issued for no capital contribution, carry an initial capital account of zero, do not participate in losses and carry no deficit restoration obligation. The equity investment at risk therefore consists solely of the Class A Interests held by the Soluna Member.

The Company concluded that it is the primary beneficiary of Kati 2 JVCo and consolidates the entity. The Soluna Member, as sole manager and holder of all of the voting interests, has the exclusive authority to direct the activities that most significantly impact Kati 2 JVCo’s economic performance, including the acquisition and development of the project properties, the procurement of power, the negotiation of customer contracts, the management of construction and operations, and all financing decisions. The rights held by the Metrobloks Member — consultation rights with respect to the selection of investors and the terms of major debt financing in connection with a future development-entity transaction, an approval right over agreements with affiliates of the Company that are both non-arm’s-length and $500 thousand or more per annum, and a consent right over amendments to the distribution provisions that would affect it disproportionately — are protective rights that do not convey the ability to direct the significant activities of Kati 2 JVCo. The Soluna Member also has the obligation to absorb losses of, and the right to receive benefits from, Kati 2 JVCo that could potentially be significant, through its capital contributions and its priority and residual participation in distributions.

The Soluna Member’s contribution of the Phase I property and related development costs, each of which the Company already controlled, was accounted for as a transaction among entities under common control, and those assets were recorded at their historical carrying amounts. The Company separately evaluated the simultaneous issuance of the Class B Interests to the Metrobloks Member, for which no capital contribution was made, to determine whether the interests were granted in exchange for services and therefore within the scope of ASC 718. Based on the terms of the joint venture agreement, the terms of the design services management agreement between the Company and Metrobloks, LLC — under which the services within its scope are compensated solely in cash — and the contemporaneous record of the negotiations, including the 50/50 ownership structure agreed at the term-sheet stage, the Company concluded that the Class B Interests were issued in respect of the Metrobloks Member’s position as a venture partner and not as compensation for services.

Accordingly, the non-controlling interest attributable to the Class B Interests was recorded at zero upon formation, and no share-based payment cost was recognized. Income and loss will be attributed to the non-controlling interest in accordance with the profit allocation provisions of the joint venture agreement; because the Class B Interests are profits interests with an initial capital account of zero, no income is attributable to the non-controlling interest until the distribution thresholds described above have been satisfied.


(Dollars in thousands)	June 30, 2026

Current assets:
Cash	$	1,900

Due from intercompany	362

Prepaid expenses and other current assets	100
Total current assets	2,362



Property, plant and equipment, net	2,200
Deposits on equipment	170
Total assets	$	4,732

Current liabilities:
Accounts payable, related party	$	1,325




Total current liabilities	1,325



Total liabilities	$	1,325

The assets of Kati 2 JVCo may be used only to settle obligations of Kati 2 JVCo, and the creditors of Kati 2 JVCo have no recourse to the general credit of the Company. The Company’s exposure to loss is limited to its funded capital contribution and the unfunded capital commitments described above. The Company has not provided financial support to Kati 2 JVCo that it was not contractually required to provide, and it is not otherwise obligated to provide such support.

Soluna DVSL JVCo, LLC (the "Dorothy 1A Project Company") owns a wind-powered data center campus in Silverton, Texas focused on bitcoin hosting. Prior to April 15, 2026, Soluna Digital Inc., a wholly owned subsidiary of the Company (the "Purchaser"), held the Class A Membership Interests in the Dorothy 1A Project Company and Soluna SLC Fund I Projects Holdco LLC (the "Seller"), an affiliate of Spring Lane Capital, held 85.4% of the issued and outstanding Class B Membership Interests. The Company consolidated the Dorothy 1A Project Company as its primary beneficiary under ASC 810, Consolidation, and reflected the Seller's Class B interest as a noncontrolling interest on the Company's consolidated balance sheet.

On April 15, 2026, the Purchaser entered into a Membership Interests Purchase Agreement with the Seller, pursuant to which the Purchaser acquired 85.4% of the issued and outstanding Class B Membership Interests in the Dorothy 1A Project Company for aggregate consideration of $16.5 million. At closing, the Purchaser paid $6.0 million in cash to the Seller; an additional $10.5 million was paid as of June 30, 2026.

Upon closing, the Purchaser owns 100% of the issued and outstanding membership interests of the Dorothy 1A Project Company. Because the Company was already the primary beneficiary of the Dorothy 1A Project Company and consolidated it prior to this transaction, the acquisition of the remaining noncontrolling interest was accounted for as an equity transaction. No gain or loss was recognized in the consolidated statements of operations. The carrying amount of the

Soluna DV ComputeCo, LLC (the "Dorothy 1B Project Company") is focused primarily on proprietary bitcoin mining and data center hosting. Prior to May 19, 2026, the Purchaser held 51% of the issued and outstanding membership interests in the Dorothy 1B Project Company, and Navitas West Texas Investments SPV, LLC (the "Seller"), an affiliate of Navitas Advisors, LLC, held the remaining 49%. The Company consolidated the Dorothy 1B Project Company as its primary beneficiary under ASC 810, Consolidation, and reflected the Seller's 49% interest as a noncontrolling interest on the Company's consolidated balance sheet.

On May 19, 2026, the Purchaser entered into a Membership Interests Purchase Agreement (the "MIPA") with Navitas West Texas Investments SPV, LLC (the "Seller") and Navitas Advisors, LLC, pursuant to which the Purchaser acquired 49% of the issued and outstanding membership interests in the Dorothy 1B Project Company for aggregate cash consideration of approximately $8.8 million, paid in full at closing. The closing of the acquisition occurred simultaneously with the execution of the MIPA on May 19, 2026.

Upon closing, the Purchaser owns 100% of the issued and outstanding membership interests in the Dorothy 1B Project Company. Because the Company was already the primary beneficiary of the Dorothy 1B Project Company and consolidated it prior to this transaction, the acquisition of the remaining noncontrolling interest was accounted for as an equity transaction. No gain or loss was recognized in the consolidated statements of operations. The carrying amount of the noncontrolling interest was derecognized, and the difference between the consideration paid and the carrying value of the noncontrolling interest was recorded as an adjustment to additional paid-in capital attributable to the Company.