Commitments and Contingencies

12 Months Ended

Dec. 31, 2025

Commitments and Contingencies Disclosure [Abstract]

Commitments:

Leases

The Company determines whether an arrangement is a lease at inception. The Company has operating and financing leases for certain manufacturing, land, office facilities and certain equipment. The leases have remaining lease terms of two years to less than twenty-two years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease expense for these leases is recognized on a straight-line basis over the lease term. For the twelve months ended December 31, total lease costs are comprised of the following:


(Dollars in thousands)
	2025		2024
Operating lease cost	$	82	$	157

Short-term lease cost	50		—

Finance lease costs:
Amortization of right of use assets	57		—
Interest on lease liabilities	71		—
Total finance lease costs	128		—

Total net lease cost	$	260	$	157

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. On April 3, 2025, Soluna KK Energy ServiceCo, LLC (“Soluna KK Energy”), a subsidiary of the Company, entered into a lease agreement for 50 acres of property located in Willacy County, Texas, for the purpose of constructing, installing, operating, and maintaining modular data centers and related facilities. Soluna KK Energy had the ability to terminate the lease within six months of April 3, 2025. Through July 2025, there was uncertainty over project funding and whether the Company would extend the lease agreement. As such, the Company recorded the lease agreement as short-term. In August 2025, Soluna KK Energy extended the lease agreement for the additional term of twenty-two years. Accordingly, the Company recorded a right-of-use asset and lease liability.

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


(Dollars in thousands)
	2025		2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	82	$	159
Operating cash flows from financing leases	$	118	$	—

Non-Cash Activity Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	146
Finance leases	$	2,303	$	—

Supplemental balance sheet information for the twelve months ended December 31 was as follows:


(Dollars in thousands, except lease term and discount rate)
	2025			2024
Assets
Operating lease ROU asset	$	252		$	313
Finance lease asset, net	2,246			—
Total lease assets	$	2,498		$	313

Liabilities
Current operating lease liabilities	$	65		$	61
Current finance lease liabilities	20			—
Non-current operating lease liabilities	187			252
Non-current financing lease liabilities	2,236			—
Total lease liabilities	$	2,508		$	313






Weighted Average Remaining Lease Term (in years):
Operating leases	5.05			5.71
Finance leases	21.33			—

Weighted Average Discount Rate:
Operating leases	9.50		%	7.65		%
Finance leases	11.00		%	—		%

Maturities of operating and finance lease liabilities are as follows for the year ending December 31:

(Dollars in thousands)


	Operating leases		Finance leases		Total
2026	$	82	$	231	$	313
2027	82		237		319
2028	29		244		273
2029	29		250		279
2030	29		257		286
Thereafter	59		5,299		5,358
Total lease payments	310		6,518		6,828
Less: imputed interest	(58)		(4,262)		(4,320)
Total lease obligations	252		2,256		2,508
Less: current obligations	(65)		(20)		(85)
Long-term lease obligations	$	187	$	2,236	$	2,423

As of December 31, 2025, there were no additional operating lease commitments that had not yet commenced.

Project Kati Commitments:

As of December 31, 2025, the Company was contractually committed for approximately $27.0 million of capital expenditures, primarily related to infrastructure builds, equipment procurement, and labor mainly associated with the Company’s Project Kati data center. These capital expenditures are expected to occur over the next year.

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 $45.0 million aggregate contribution cap. The Company considers the probability of a payment for the contingency to be remote.

Legal

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

On December 29, 2022, NYDIG filed a complaint against the NYDIG Defendants regarding the NYDIG Loans made by NYDIG to Borrower pursuant to a Master Equipment Finance Agreement, dated December 30, 2021, that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant to a written guaranty agreement. The NYDIG Defendants s and NYDIG entered into a Stipulation and Agreed Judgment which was approved by the Court on February 23, 2024, whereby judgment was granted to NYDIG on the counts in the complaint and the NYDIG Defendants became jointly and severally liable for an aggregate amount of approximately $9.2 million plus interest (the “Agreed Judgment Amount”).

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