Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 92

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 92
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had Warrants included within the SPA agreement as noted in Note 8. The Warrants are considered freestanding equity-classified instruments
due to their detachable and separately exercisable features and meet the indexation criteria within derivative accounting. Accordingly,
the Warrants are presented as a component of Stockholders’ Equity in accordance with derivative accounting.

Following
the debt extinguishment on July 19, 2022 as noted further in Note 2 and 8, the Convertible Notes will be recorded at fair value upon
issuance (e.g., upon execution of the Addendum) per guidance within ASC 480, and at each subsequent reporting period, with changes
in fair value reported in earnings.

On
October 1, 2024, we modified the Series B Preferred Stock Agreement, in order to obtain consent from holders, which led to extinguishment
accounting. We recorded a deemed dividend between the fair value of the modified preferred stock against the carrying value of the original
preferred stock. The fair value of the modified preferred stock considered the conversion price of the preferred stock, assumption on
the lockup expiration date, and closing price of the common stock on the lockup expiration date using daily volatility.

Consistent
with the guidance in purchase accounting, the value of the Strategic Pipeline Contract, see Note 5, as of the acquisition date of October
2021 was estimated using an expected value approach, which probability-weights various future outcomes and uses certain Level 3 inputs.

As
of December 31, 2024, and 2023, the fair values of cash and cash equivalents, accounts receivable, prepaid expenses and other current
assets, accounts payable, and accrued expenses approximated their carrying values because of the short-term nature of these instruments.

Share-Based
Payments

We
award restricted stock to our employees and directors under the 2021 Plan and the Soluna Holdings, Inc. Amended and Restated 2023 Stock
Incentive Plan (the “2023 Plan,” together with the 2021 Plan, the “Plans”). The benefits provided under these
plans are share-based payments and we account for stock-based awards exchanged for employee service in accordance with the appropriate
share-based payment accounting guidance. Stock-based compensation represents the cost related to stock-based awards granted to employees
and directors. We measure stock-based compensation cost at grant date based on the estimated fair value of the award and recognize the
cost as expense on a straight-line basis in accordance with the vesting