Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 3879

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 16
Chunk 3879
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 common shares outstanding during the reporting period. Dilutive common
share equivalents include the dilutive effect of in-the-money stock options, which are calculated based on the average share price for
each period using the treasury stock method. Under the treasury stock method, the exercise price of a stock option and the amount of
compensation cost, if any, for future service that the Company has not yet recognized are assumed to be used to repurchase shares in
the current period.

     F-16 

Share-Based
Payments

The
Company grants options to purchase its common stock and awards restricted stock to our employees and directors under the Company’s
equity incentive plans. The benefits provided under these plans are share-based payments and the Company accounts 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. The Company measures stock-based compensation cost at grant
date based on the estimated fair value of the award and recognizes the cost as expense on a straight-line basis in accordance with the
vesting of the options (net of estimated forfeitures) over the option’s requisite service period. The Company estimates the fair
value of stock-based awards on the grant date using a Black-Scholes valuation model. The Company uses 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. Under the
modified prospective application, prior periods are not revised for comparative purposes. Stock-based compensation expense is recorded
in the lines titled “Cost of cryptocurrency mining revenue,” “Cost of data hosting revenue,” and “General
and administrative expenses” in the Consolidated Statements of Operations based on the employees’ respective functions.

The
Company records deferred tax assets for awards that potentially can result in deductions on the Company’s income tax returns based
on the amount of compensation cost that would be recognized upon issuance of the award and the Company’s statutory tax rate. All
income tax effects of awards, including excess tax benefits, recognized on stock-based compensation expenses are reflected in the Consolidated
Statements of Operations as a component of the provision for income taxes on a prospective basis.

The
determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s
stock price as well as