Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 336

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1A
Chunk 336
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 awards on the grant date using a Black-Scholes valuation model. We
use the fair value method of accounting with the modified prospective application, which provides for certain changes to the method for
valuing share-based compensation. The valuation provisions apply to new awards and to awards that are outstanding on the effective date
and subsequently modified.

59

The
determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock
price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price
volatility over 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