Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 838

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1C
Chunk 838
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 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 2024, the Company increased its valuation allowance against its deferred tax assets. The increase in the
valuation allowance caused incremental tax expense of $1.7 million to be recognized in 2024. The increase of the valuation allowance
was based upon the uncertainty surrounding the Company’s projected future taxable income, causing the Company to evaluate what
portion of the Company’s deferred tax assets it believes are more likely than not to be realized. The Company has determined that
it will not generate sufficient levels of pre-tax earnings in the future to realize the deferred tax assets relating to net operating
loss carryforwards and research and development credit carryforwards recorded on the balance sheet as of December 31, 2024. Taking into
consideration existing levels of permanent differences, non-deductible expenses and the reversal of significant temporary differences,
the Company has determined that all other deferred tax assets recorded on the balance sheet as of December 31, 2024, will be fully realized.

The
valuation allowance on December 31, 2024 and 2023 was $38.5 million and $36.8 million, respectively. Activity in the valuation allowance
for deferred tax assets is as follows as of December 31:

 Schedule of Deferred Tax Asset Valuation Allowance

    (Dollars in thousands) 
    2024  
    2023 

    Valuation allowance, beginning of year 
    $36,791  
    $30,651 
  
    Net operating (loss) income 
     8,200  
     9,813 
  
    Property, plant and equipment 
     (7,171) 
     (4,316)
  
    Stock options 
     673  
     566 
  
    Research and development credit 
     —  
     53 
  
    Accrued expenses 
     (37) 
     24 
  
    Valuation allowance, end of year 
    $38,456  
    $36,791 

Net
operating losses:

As
of December 31, 2024, the Company has unused Federal net operating loss carryforwards of approximately $162.0 million after reducing
the total by