Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 536

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1B
Chunk 536
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 the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate, and expected
dividends.

Theoretical
valuation models and market-based methods are evolving and may result in lower or higher fair value estimates for share-based compensation.
The timing, readiness, adoption, general acceptance, reliability, and testing of these methods is uncertain. Sophisticated mathematical
models may require voluminous historical information, modeling expertise, financial analyses, correlation analyses, integrated software
and databases, consulting fees, customization, and testing for adequacy of internal controls.

For
purposes of estimating the fair value of stock options granted using the Black-Scholes model, we use the historical volatility of our
stock for the expected volatility assumption input to the Black-Scholes model, consistent with the accounting guidance. The risk-free
interest rate is based on the risk-free zero-coupon rate for a period consistent with the expected option term at the time of grant.
The expected option term is calculated based on our historical forfeitures and cancellation rates.

Income
Taxes

We
are subject to income taxes in the U.S. (federal and state). As part of the process of preparing our consolidated financial statements,
we calculate income taxes for each of the jurisdictions in which we operate. This involves estimating actual current taxes due together
with assessing temporary differences resulting from differing treatment for tax and accounting purposes that are recorded as deferred
tax assets and liabilities, loss carryforwards, and tax credit carryforwards, for which income tax benefits are expected to be realized
in future years. Deferred tax assets are reported net of a valuation allowance when it is more likely than not that a tax benefit will
not be realized. The effect on deferred taxes of a change in tax rates is recognized in the period that includes the enactment date.

Significant
management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation
allowance recorded against our net deferred tax assets. We 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 our valuation allowance. In addition, our
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.

We
account for taxes in accordance with the asset and liability method of accounting for income taxes. Under this method, we must recognize
the tax