Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 535

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1B
Chunk 535
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4, 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 of the options (net of estimated forfeitures) over the option’s
requisite service period. We estimate the fair value of stock-based 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