Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 1413

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 4
Chunk 1413
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 the profit share of net income from the customer’s mining operations,
or a combination thereof. Some contracts may also include pass-through expenses which are not recognized in revenue. The actual monthly
amounts will be calculated after the close of each month and billed to the customer. If any shortfalls due to outages were to be experienced,
service level credits may be made to customers to offset outages which prevent them from utilizing the AI/HPC facility. Customer contract
security deposits, if applicable, would be reflected as other liabilities created at the time the contract is signed and held until the
conclusion of the contract relationship.

Cost
of Cryptocurrency Mining and Data Center Hosting Revenue

The
Company’s cost of revenue consists primarily of (i) direct production costs related to mining operations, including electricity
costs, profit-sharing fees, and other relevant costs, but excluding depreciation and amortization, which are separately stated in the
Company’s consolidated statements of operations, (ii) service fee costs for capacity at a data center for high performance computing,
and other relevant costs.

     F-14 

Accounts
Receivable and Allowance 

The
Company’s accounts receivable balance consists of amounts due from its data center hosting customers and receivables for demand
response services. The Company records accounts receivable at the invoiced amount less an allowance for any potentially uncollectable
accounts under the current expected credit loss (“CECL”) impairment model and presents the net amount of the financial instrument
expected to be collected. The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life
of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions.
Based on this model, the Company considers many factors, including the age of the balance, collection history, and current economic trends.
The Company determines the allowance based on historical write-off experience and current exposures identified. The Company reviews its
allowance for potentially uncollectible accounts under CECL monthly. Past due balances over 90 days and over a specified amount are reviewed
individually for collectability. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged
off against the allowance when the Company believes it is probable the receivable will not be recovered. The Company does not have any
off balance-sheet credit exposure related to its customers. Bad debts are written off after all collection efforts have ceased.

Allowances
for credit losses are recorded as a direct reduction