Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 185

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 185
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 the date of shareholder approval and reclassified the balance to equity, as such no longer required to be treated as a warrant liability
as of December 31, 2024.

As
discussed in Footnote 8, on June 20, 2024, Cloudco, a subsidiary of Soluna Cloud,
entered into a Promissory Note Agreement of $12.5 million with an accredited investor. In addition, on July 12, 2024, CloudCo, Cloud,
and the accredited investor noted above entered into a First Amendment to the Note Purchase Agreement (the “June SPA Amendment”).
This amendment allows CloudCo to issue additional secured promissory notes totaling $1.25 million to new accredited investors (the “Additional
Investors”). In consideration of entering into the promissory note, Cloud issued warrants to the accredited investors. Since the
warrants were determined to not be indexed to the Company’s own stock under ASC 815-40-15, and since the warrants to be delivered
upon exercise are not readily convertible to cash, they do not meet the net settlement criteria within ASC 815-10-15-83. While Soluna
Holdings, Inc is publicly traded, the shares provided are specific to Soluna Cloud, Inc, which is a subsidiary of Soluna Holdings, Inc.
The shares of Soluna Cloud, Inc are not publicly traded and therefore the common stock underlying the warrant is not readily convertible
to cash. Further evaluation of the Warrants under ASC 815-10 was required to determine if the Warrants meet the definition of a derivative.
The warrants are classified as a liability that are required to be adjusted to fair market value. The Company applied a discounted cash
flow method in relation to the valuation of Cloud in which assumptions from forecasted projected cash flow data and other key operating
assumptions such as working cash flow were used to determine an enterprise value less any current debt in order to determine an equity
value for Cloud. As of December 31, 2024, the warrants were fair valued, and deemed to not have any further value, as such the Company
wrote down the liability balance to $0.

Net
(loss) Income per Share

The
Company computes basic income per common share by dividing net income by the weighted average number of common shares outstanding during
the reporting period. Diluted income per share reflects the potential dilution, if any, computed by dividing income by the combination
of dilutive common share equivalents, comprised