Company: SLNH
Filing Date: 2025-01-15
Form Type: S-1/A
Source: 0001493152-25-002391
Chunk: 207

Company: Soluna Holdings, Inc
Filing Date: 2025-01-15
Form: S-1/A
Chunk 207
---
                                   |     |      |   1,562 |   |     |      |     996 |   |
| Research and development tax credit             |     |      |     227 |   |     |      |     174 |   |
| Deferred tax assets                             |     |      |  36,791 |   |     |      |  30,651 |   |
| Valuation allowance                             |     |      | (36,791 | ) |     |      | (30,651 | ) |
| Deferred tax assets, net of valuation allowance |     |      |       — |   |     |      |       — |   |
| Deferred tax liabilities:                       |     |      |         |   |     |      |         |   |
| Intangibles                                     |     |      |  (7,779 | ) |     |      |  (8,886 | ) |
| Deferred tax liabilities                        |     |      |  (7,779 | ) |     |      |  (8,886 | ) |
| Deferred tax liabilities, net                   |     | $    |  (7,779 | ) |     | $    |  (8,886 | ) |

In connection with the strategic contract pipeline acquired in the Soluna Callisto acquisition as further discussed in Note 6, 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 $ 10.9million and this amount will be amortized over the life of the asset.

Valuation Allowance:

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.

As a result of its assessment in 2023, the Company increased its valuation allowance against its deferred tax assets. The increase in the valuation allowance caused incremental tax expense of $ 6.1million to be recognized in 2023. The increase of the valuation allowance was based upon the uncertainty surrounding the Company’s projected future taxable income, causing the Company to