Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 1614

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 5
Chunk 1614
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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 assumptions regarding a number of complex and subjective variables. These variables include the Company’s
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, the Company uses the historical volatility
of its 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.

The
fair value of restricted stock awards is based on the market close price per share on the grant date. The Company expenses the compensation
cost of these awards as the restriction period lapses, which is typically a one- to three-year service period to the Company. The shares
represented by restricted stock awards are outstanding at the grant date, and the recipients are entitled to voting rights with respect
to such shares upon issuance.

Notes
payable

The
Company records notes payable net of any discount or premiums. Discounts and premiums are amortized as interest expense or income over
the life of the note in such a way as to result in a constant rate