BTCS Inc.

Notes to Unaudited Condensed Financial Statements

Note 1 -Business Organization and Nature of Operations

BTCS Inc. (“BTCS” or the “Company”), short for Blockchain Technology Consensus Solutions, is a Nevada corporation listed on Nasdaq and headquartered in the United States. The Company is an Ethereum-first blockchain technology business focused on scalable revenue generation and ETH (the Ethereum network’s native token) accumulation through its blockchain-based infrastructure and decentralized finance (“DeFi”) operations.

BTCS’s operations comprise three primary business lines:

Together, these business lines, which may be vertically integrated, represent complementary components of the Company’s broader blockchain strategy, designed to generate recurring on-chain revenues, enhance operational scalability, and increase ETH holdings and long-term treasury value.

While each operation has distinct economic drivers and technology components, NodeOps and Builder+ collectively comprise the Company’s blockchain infrastructure activities, whereas Imperium represents distinct DeFi operations within the Company’s overall blockchain ecosystem. Revenues from NodeOps and Builder+ are aggregated and presented asBlockchain infrastructure revenues, while revenues from Imperium are presented separately asDeFi revenues in the statements of operations. Segment results for these business lines, and their reconciliation to the financial-statement line items presented on the face of the statements of operations, are disclosed in Note 12 –Segment Reporting.

BTCS’s operations are strategically supported by its DeFi/TradFi Flywheel, a capital formation and reinvestment framework that integrates decentralized finance (e.g., on-chain borrowing) with traditional capital markets (e.g., at-the-market (“ATM”) equity offerings and structured convertible notes). This framework is designed to scale blockchain infrastructure operations, accelerate revenue growth and increase ETH accumulation while minimizing shareholder dilution.

During the nine months ended September 30, 2025, the Company completed a strategic wind-down of its validator node operations on Avalanche (AVAX), Cosmos (ATOM), Akash (AKT), and Kava (KAVA), and liquidated the majority of its non-Ethereum token holdings. These actions were undertaken to align operations and capital allocation with the Company’s Ethereum-centric focus.

The Company’s operations are subject to various risks, including technological complexity, regulatory uncertainty, market volatility, and competition within the blockchain infrastructure space. BTCS’s future success depends on Ethereum’s continued adoption, the evolution of decentralized infrastructure markets, and the Company’s ability to operate blockchain infrastructure efficiently at scale.

Note 2 -Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements do not include all of the information and notes required by GAAP for annual financial statements, but in the opinion of the Company’s management, reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results for the three months ended September 30, 2025 are not necessarily indicative of results for the full year ending December 31, 2025. The unaudited condensed financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2024.

Reclassifications

Certain prior period amounts have been reclassified in order to conform with the current period presentation in the unaudited condensed financial statements and accompanying notes. The reclassifications did not have a material impact on the Company’s unaudited condensed financial statements and related disclosures. The impact on any prior period disclosures was immaterial.

BTCS Labs

At inception on December 24, 2024, the Company paid approximately $2,000 of formation costs on behalf of BTCS Labs Inc. (“BTCS Labs”) in exchange for 100 shares of its common stock. In September 2025, BTCS Labs reimbursed the Company for the original payment of formation costs, and the 100 shares originally issued were repurchased and retired. As a result, BTCS Labs is no longer presented as a subsidiary in the accompanying financial statements.

Note 3 -Summary of Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2024 Annual Report on the Company’s Form 10-K filed with the Securities and Exchange Commission.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. The Company maintains cash and cash equivalent balances at financial institutions that are insured by the FDIC. As of September 30, 2025 and December 31, 2024, the Company had approximately $4,486,000 and $1,978,000 in cash. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of September 30, 2025 and December 31, 2024, the Company had approximately $4,018,000 and $1,474,000 in excess of the FDIC insured limit, respectively.

Stablecoins

The Company holds stablecoins, including, but not limited to, USDT (Tether), USDC (USD Coin) and GHO (Aave Protocol’s native stablecoin), which are crypto assets that are pegged to the value of designed to maintain a value equivalent to one U.S. dollar. Our stablecoins are typically held in secure digital wallets or on crypto asset exchanges. The Company acquires and holds stablecoins primarily to facilitate crypto asset transactions, including, but not limited to, payments to third-party vendors. While not accounted for as cash or cash equivalents, these stablecoins are considered a liquidity resource.

Crypto Assets

The Company’s crypto assets primarily consist of Ethereum and other crypto assets held in non-custodial wallets. These assets are maintained under the Company’s control through secure private keys and are not held by any third-party custodian. The Company’s crypto assets are used to support its blockchain infrastructure operations, including NodeOps, Builder+ and Imperium.

Fair Value Measurement

The Company accounts for its crypto assets under Accounting Standards Codification (“ASC”) 350-60,Intangibles—Goodwill and Other—Crypto Assets, and measures such assets at fair value in accordance with ASC 820,Fair Value Measurement. Fair value represents the price that would be received for an asset in a current sale, assuming an orderly transaction between market participants on the measurement date. Market participants are considered to be independent, knowledgeable, and willing and able to transact. It requires the Company to assume that its crypto assets are sold in their principal market or, in the absence of a principal market, the most advantageous market to which it has access.

Kraken serves as the principal market for the Company’s crypto assets, being the Company’s primary cryptocurrency exchange for both purchases and sales. Coinbase is designated as the secondary principal market. This determination results from a comprehensive evaluation considering various factors, including compliance, trading activity, and price stability.

The fair value of crypto assets is primarily determined based on pricing data obtained from Kraken, the Company’s principal market. In the absence of Kraken data, pricing from Coinbase serves as a secondary source.

While Kraken is designated as the primary exchange, the Company retains flexibility to conduct cryptocurrency transactions on other exchanges where it maintains accounts. This flexibility allows the Company to adapt to changing market conditions and explore alternative platforms when necessary to ensure cost-effective execution and fair value measurement using the most advantageous market.

The selection of Kraken as the principal market reflects the Company’s commitment to informed decision-making and achieving the most accurate representation of fair value for its crypto assets. Regular reviews ensure alignment with the Company’s objectives and cryptocurrency market dynamics.

Accounting for Crypto Assets

Fair Market Value

The Company measures its crypto assets at fair value in accordance with ASC 820,Fair Value Measurement, using the last closing price of the day in the UTC time zone at each reporting period end.

Crypto assets are categorized based on their operational use as follows:

All crypto assets are measured at fair value under ASC 350-60 and are presented as current assets unless they are subject to protocol-imposed restrictions exceeding twelve months. Staked crypto assets are classified as non-current if their lock-up periods extend beyond one year.

The majority of the Company’s crypto assets are deployed either in staking arrangements with lock-up periods of less than seven days or in DeFi liquidity pools that permit near-immediate redemption. Accordingly, these assets are classified as current under ASC 210-10-20,Balance Sheet, due to the Company’s ability to sell them in a liquid marketplace, as we have a reasonable expectation that they will be realized in cash or sold or consumed during the normal operating cycle of our business to support operations when needed.

Cost Basis

Effective January 1, 2025, the Company enhanced its accounting systems and processes related to the receipt and valuation of crypto assets. As a result of these enhancements, the Company updated its accounting policy for determining the cost basis of crypto assets received. The cost basis is now measured at fair value based on the hourly spot price at the time of receipt, consistent with the applicable guidance under ASC 350-60.

Prior to January 1, 2025, the cost basis of crypto assets was measured using the last close price of the day in the UTC (Coordinated Universal Time) time zone on the date of receipt.

The change has been applied prospectively and did not have a material impact on the Company’s financial statements.

Cost Relief in Determining Realized Gains and Losses

In conjunction with ongoing system and process enhancements, the Company updated its method for determining the cost basis of crypto assets used in computing realized gains and losses. Effective January 1, 2025, the Company adopted the Last-In, First-Out (“LIFO”) method for determining the cost basis of crypto assets disposed of. This method assumes that the most recently acquired assets are sold or used first and replaces the Company’s previous use of the specific identification method, which tracked the actual cost of each individual asset sold.

The Company determined that the change in accounting principle is preferable as it better aligns with the Company’s operational systems and financial reporting objectives. The change has been applied prospectively beginning January 1, 2025, as retrospective application was deemed impracticable due to the nature of prior lot-level selection processes under the specific identification method.

Realized gains (losses) on sale of crypto assets are included in operating expenses in the statements of operations. The Company recorded realized gains (losses) on crypto assets of approximately($4,408,000) and($122,000) for the three months ended September 30, 2025 and 2024, respectively, and approximately($8,568,000) and $176,000 for the nine months ended September 30, 2025 and 2024, respectively.

The Company does not believe the change materially impacts comparability of results. While the realized loss for the three and nine months ended September 30, 2025, reflects application of the new LIFO method, it is not practicable to quantify the exact impact of the change as compared to the prior method, given the subjective lot selection involved in specific identification. Based on this assessment, the Company does not believe the change has a material effect on the financial statements.

Presentation of Crypto Assets in the Statements of Cash Flows

The classification of purchases and sales in the statements of cash flows is determined based on the nature of the crypto assets, which can be categorized as ‘productive’ (i.e. acquired for purposes of staking or liquidity provision) or ‘non-productive’ (e.g., NFTs). Acquisitions of non-productive crypto assets are treated as operating activities, while acquisitions of productive crypto assets are classified as investing activities in accordance with ASC 230-10-20,Investing activities.

ETH Deployed in DeFi Arrangements

In DeFi arrangements, such as those transacted on the Aave protocol, the Company participates as a Liquidity Provider, depositing ETH into Aave’s decentralized lending pools. When ETH is supplied, it becomes part of the protocol’s available liquidity that borrowers may draw upon. The deposited ETH earns variable rewards based on market supply and demand for borrowing within the protocol.

The ETH supplied by the Company is also eligible to serve as collateral supporting on-chain borrowing activities. The collateral value of the deposited ETH contributes to the overall “health factor” of the Company’s Aave wallet. The health factor is a protocol metric that measures the ratio of collateral value to outstanding borrowings and automatically updates with changes in ETH market prices. The health factor determines the safety buffer against liquidation; maintaining a value greater than 1.0 ensures sufficient collateralization, while a decline below 1.0 could trigger partial liquidation of the collateral by the protocol’s smart contracts.

Upon deposit, ETH is automatically wrapped into Aave Wrapped ETH (“WAETH” or “aEthWETH”) to enable ERC-20 interoperability and facilitate reward accrual within the lending pool. The Company has concluded that this conversion does not constitute a derecognition event under ASC 610-20,Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, as no other counterparty obtains control or economic benefits of the deposited ETH. Rather, WAETH serves as a receipt or claim token evidencing the Company’s continuing interest in the underlying ETH.

Accordingly:

Any reward earned from such DeFi deployments is recognized asDeFi revenues on the statements of operations in accordance with ASC 606, as discussed in Note 3 -Revenue Recognition section.

As of September 30, 2025, the Company had approximately 38,999 ETH deployed within DeFi protocols, which remains reflected as ETH withinCrypto assets - DeFi on the balance sheet and disclosed separately in Note 4 –Crypto Assets, including disclosure of their restricted status. Deployed ETH is subject to protocol-specific risks, including smart-contract vulnerabilities, liquidity constraints, collateral liquidation risk, and potential protocol governance changes.

Non-Fungible Tokens (NFTs)

The Company holds certain non-fungible tokens (“NFTs”), which are unique digital assets recorded on a blockchain. NFTs do not represent ownership interests in an entity or contractual rights to cash flows, and therefore do not qualify as financial instruments or equity securities under ASC 320 or ASC 321. Consistent with the accounting treatment applied to other crypto assets, the Company accounts for NFTs as indefinite-lived intangible assets in accordance with ASC 350,Intangibles—Goodwill and Other.

NFTs are initially recorded at cost and are not amortized. NFTs are assessed for impairment each reporting period to determine if any events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If the fair value of an NFT is less than its carrying value, an impairment loss is recognized equal to the difference. Subsequent increases in fair value are not recorded. Realized gains or losses on the sale of NFTs are included in other income (expense) in the statements of operations.

Fair value used in impairment testing is determined in accordance with ASC 820,Fair Value Measurement. Unlike fungible crypto assets, NFTs typically do not trade on centralized exchanges with quoted prices. Instead, the Company evaluates impairment by reference to observable transactions, where available, on active NFT marketplaces.

During the three and nine months ended September 30, 2025, the Company purchased multiple NFTs for aggregate consideration of approximately $191,000. These NFTs are included withinNon-fungible tokens on the balance sheets. No impairment losses were recognized for the three or nine months ended September 30, 2025.

Operating Segments

The Company’s blockchain operations include three revenue-generating business lines corresponding to its distinct sources of on-chain revenues: validator node operations (“NodeOps”), block building (“Builder+”) and DeFi operations (“Imperium”).

The Company’s Chief Operating Decision Makers (“CODMs”) are comprised of several members of its executive management team, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), who are responsible for evaluating the Company’s financial performance, managing operations, and allocating capital and resources.

The CODMs regularly review discrete financial information related to Builder+ NodeOps and Imperium, assessing financial performance based on gross profit (loss), direct operating expenses, and key financial metrics. These financial reviews direct operational decisions and shape capital deployment strategies for each activity.

While the CODMs evaluates NodeOps, Builder+, and Imperium individually for internal management purposes, NodeOps and Builder+ share common economic characteristics, technological infrastructure, and operational oversight and are therefore aggregated into a single operating segment,Blockchain infrastructure operations, under ASC 280,Segment Reporting. Imperium, which generates revenue through participation in DeFi protocols, is presented as a separate reportable segment,DeFi operations, due to its distinct economic drivers and underlying market characteristics.

Consistent with ASU 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, the Company discloses significant segment expenses and other measures that are regularly provided to the CODMs for decision-making purposes. Refer to Note 12 –Segment Information for more information.

Revenue Recognition

The Company recognizes revenue under ASC 606*, Revenue from Contracts with Customers*, which requires an entity to recognize revenue when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

Under ASC 606, the Company applies the following five-step model to all revenue-generating arrangements:

The Company’s revenues are generated from blockchain-based operations and comprise three primary sources: (i) staking rewards earned from validator node operations (NodeOps); (ii) execution-layer transaction fees, priority fees, and maximal extractable value (“MEV”) rewards earned from block-building activities (Builder+); and (iii) protocol-driven rewards earned from participation in DeFi protocols (Imperium). Revenues from NodeOps and Builder+ are aggregated and presented asBlockchain infrastructure revenues, while revenues from Imperium are presented separately asDeFi revenues in the statements of operations.

The transaction consideration the Company receives in the form of native crypto assets, such as ETH or other network tokens, represents non-cash consideration measured at fair value on the date the crypto assets are earned.

Collectively, these activities represent the outputs of the Company’s ordinary blockchain infrastructure operations and are measured at the fair value of the crypto assets earned at the time each performance obligation is satisfied.

NodeOps

The Company engages in network-based smart contracts by running its own crypto asset validator nodes as well as by staking (or “delegating”) crypto assets directly to both its own validator nodes and nodes run by third-party operators. Through these contracts, the Company provides crypto assets to stake to a node for the purpose of validating transactions and adding blocks to a respective blockchain network. The term of a smart contract can vary based on the rules of the respective blockchain and typically lasts from a few days to several weeks after it is cancelled (or “un-staked”) by the delegator and requires that the crypto assets staked remain locked up during the duration of the smart contract.

In exchange for staking the crypto assets and validating transactions on blockchain networks, the Company is entitled to all of the fixed crypto asset award earned from the network when delegating to the Company’s own node and is entitled to a fractional share of the network-determined crypto asset award a third-party node operator receives (less crypto asset transaction fees payable to the node operator, which are immaterial and are recorded as a deduction from revenue), for successfully validating or adding a block to the blockchain. The Company’s fractional share of awards received from delegating to a third-party validator node is proportionate to the crypto assets staked by the Company compared to the total crypto assets staked by all Delegators to that node at that time.

On certain blockchain networks on which the Company operates a validator node, the Company earns a validator node fee (“Validator Fee”), determined as a node operator’s published percentage of the crypto asset rewards earned on crypto assets delegated to its node.

Token rewards earned from staking, as well as tokens earned as Validator Fees, are calculated and distributed directly to BTCS digital wallets by the blockchain networks as part of their consensus mechanisms.

The provision of validating blockchain transactions is an output of the Company’s ordinary activities. Each separate block creation or validation under a smart contract with a network represents a performance obligation. The satisfaction of the performance obligation for processing and validating blockchain transactions occurs at a point in time when confirmation is received from the network indicating that the validation is complete, and the awards are available for transfer. At that point, revenue is recognized.

Builder+

The Company earns revenue by participating as a Builder on blockchain networks that have implemented a Proposer-Builder Separation (PBS) framework, including Ethereum and Binance Smart Chain (“BSC”). In these roles, the Company bundles and proposes transaction blocks for submission to network Validators (“block building”), and is compensated when its blocks are selected, proposed, and successfully finalized on the applicable network.

Ethereum Block Building

The Company participates in the Ethereum blockchain network by engaging in the construction of blocks containing strategically bundled transactions from the Ethereum mempool and from searchers who connect to the Company’s endpoint with the intent of the Company’s builder proposing their transactions. Revenue recognition for these activities, conducted through Builder+, entails the recognition of execution layer transaction fees (or “transaction fees”) and priority fees (or “tips”) earned in exchange for successfully constructing blocks of bundled transactions and having these blocks selected and proposed by a validator to the Ethereum network for validation and successfully finalized on the network.

These transaction fees and tips are earned as a direct result of the Company’s fulfillment of its performance obligations, which include the construction of blocks by bundling transactions to maximize the value of the included fees and the proposal of that block by a Validator. Each constructed block under a smart contract with the Ethereum network signifies a distinct performance obligation.

As part of the block construction and proposal process, the Company’s Builder purchases block space through a fixed non-negotiable fee paid to a Validator (a “Validator Payment”) embedded in each proposed block. The Validator Payment, predetermined by the Builder, is paid to Validators as compensation for selecting and proposing the Company’s block to the network for validation. The Validator Payment is intrinsically linked to the Company’s performance obligations and is disbursed in the block constructed by the Builder if our Builder’s block is both selected by a Validator and successfully proposed to, and finalized on, the Ethereum network; otherwise, our Validator Payment may be included in a subsequent block. The Validator Payment represents a direct and fixed pre-determined cost.

The satisfaction of the performance obligation occurs at a point in time when the constructed block is both proposed by a Validator and successfully finalized on the Ethereum network. At this juncture, the Company has fulfilled its obligations, and the transaction fees and tips associated with the transactions included in the block become available and are transferred to the Company’s digital wallet.

The Company recognizes revenue, reflecting the fair value of the total transaction fees and tips earned from the constructed block.

Binance Smart Chain (BSC) Block Building

The Company also operates as a Builder on Binance Smart Chain (BSC), which uses a Proof-of-Staked-Authority (“PoSA”) consensus and a distinct block-building and reward structure. The native token of BSC is BNB, which is used for both transaction fees and transaction-based payments.

Builders on BSC construct block bids composed of transactions and optional searcher tips. Unlike Ethereum, transaction fees on BSC are paid directly to the Validator’s coinbase and are not received by the Builder. Instead, the Builder earns revenue in the form of BNB-denominated tips, which are voluntarily sent by searchers to a Builder-controlled smart contract as priority fees. These tips accumulate in the smart contract and are periodically withdrawn to the Company’s Builder wallet.

The Company recognizes revenue from BSC block building at the time the BNB tips are withdrawn from the tip smart contract to the Company’s wallet, measured at the fair value of BNB at the time the withdrawal occurs. Because BSC validator payments are embedded in the transaction fees of a self-transfer transaction appended by the Builder, the associated transaction cost is treated as cost of revenue.

Builder performance obligations on BSC are satisfied when the constructed block is selected and proposed by a Validator and finalized on-chain. Similar to Ethereum, each block is considered a separate performance obligation.

Imperium

Beginning in 2025, the Company expanded its blockchain infrastructure operations to include DeFi activities under its Imperium business line. Through Imperium, the Company participates directly in DeFi ecosystems by deploying crypto assets, including ETH and stablecoins, into smart contract-based protocols that facilitate decentralized lending, liquidity provision, and other on-chain financial services.

When the Company deposits ETH into a DeFi protocol, such as Aave, the ETH is converted into a tokenized representation (for example, Aave Wrapped ETH, “WETH” or “aEthWETH”) that represents the Company’s on-chain deposit position and entitles it to earn variable crypto asset rewards (e.g., ETH). These rewards accrue continuously based on protocol activity, supply-and-demand dynamics, and utilization of the Company’s deployed assets within the lending pool.

The Company’s participation in DeFi protocols represents a distinct performance obligation that is satisfied over time, as the protocol’s users simultaneously receive and consume the benefits of the Company’s contributed liquidity or other deployed assets. Revenue is recognized over time in proportion to the variable rewards accrued to the Company’s position, measured at the fair value of the native token at the time the consideration is earned. Variable consideration is constrained to amounts not subject to significant reversal, consistent with ASC 606-10-32-11.

Revenues earned through Imperium are classified asDeFi revenues in the statements of operations. The Company is considered the principal in these transactions because it controls the deployed crypto assets, bears protocol and market risks (including smart-contract, liquidity, and liquidation risk), and earns consideration directly from the protocol rather than through an intermediary.

The following table summarizes the revenues earned from the Company’s operations for the three and nine months ended September 30, 2025 and 2024.

The following tables detail the native token rewards and their respective fair market value recognized as revenue for the three and nine months ended September 30, 2025 and 2024. Revenues earned from blockchain infrastructure staking activities through NodeOps include token rewards earned from the delegation of cryptocurrency assets to third-party validator nodes as well as token rewards derived from BTCS-operated validator nodes, which include staking of the Company’s crypto assets to BTCS nodes and Validator Fees earned from third-parties asset delegations to our nodes. Revenues earned from block-building through Builder+ includes block rewards generated by BTCS Builders.

Crypto assets earned from blockchain infrastructure staking activities through NodeOps

Crypto assets earned from block-building through Builder+

Crypto assets earned from DeFi activities through Imperium

Cost of Revenues

The Company’s cost of revenues primarily consists of direct expenses incurred in connection with its blockchain operations, including NodeOps, Builder+ and Imperium activities.

Blockchain Infrastructure Operations (NodeOps and Builder+)

The Company’s cost of revenues related to its blockchain infrastructure operations primarily includes direct production costs associated with transaction validation and block construction on blockchain networks. These costs include cloud-based server hosting expenses related to our validator nodes and Builders and allocated employee compensation related to the monitoring, maintenance and support of these operations.

Additionally, for Ethereum block building, cost of revenues includes Validator Payments made by the Company’s Builder to Validators as compensation for proposing constructed blocks. These are fixed amounts embedded within the proposed blocks and are paid only when the block is successfully finalized on-chain.

For Binance Smart Chain (BSC) block building, although the Builder does not receive the transaction fees attached to the bundled transactions included in a finalized block, it must still compete for inclusion by proposing an additional bid, structured as a self-transaction, that specifies extra fees intended to incentivize the Validator to select its block. This self-transaction results in a direct payment to the Validator’s coinbase address. These Builder-specified bids are separate from the transaction fees attached to user transactions and represent incremental value added by the Builder intended to increase the likelihood of block inclusion. The Company records these Builder-specified bid payments as cost of revenues, as they are a direct cost of fulfilling the block-building performance obligations under the BSC block-building arrangement in accordance with ASC 606.

The Company also includes in cost of revenues any third-party fees for hosting, infrastructure support, or software maintenance related to validator or builder operations.

These expenses are collectively presented asCost of blockchain infrastructure revenues in the statements of operations.

Imperium

Beginning in 2025, the Company’s DeFi operations under its Imperium business line generated revenues from participation in decentralized finance protocols. Related costs of revenues primarily consist of allocated employee compensation and related expenses associated with establishing, monitoring, and maintaining DeFi activities, as well as any third-party services that support these operations and other direct on-chain expenses incurred in connection with deploying or interacting with DeFi protocols. These costs are presented asCost of DeFi revenues in the statements of operations.

The following table further details the costs of revenues for the three and nine months ended September 30, 2025 and 2024.

Internally Developed Software

Internally developed software consists of the core technology of the Company’s ChainQ platform. For internally developed software, the Company uses both its own employees as well as the services of external vendors and independent contractors. The Company accounts for computer software used in the business in accordance with ASC 985-20 and ASC 350.

ASC 985-20,Software-Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. Some companies use a “tested working model” approach to establishing technological feasibility (i.e., beta version). Under this approach, software under development will pass the technological feasibility milestone when the Company has completed a version that contains essentially all the functionality and features of the final version and has tested the version to ensure that it works as expected.

ASC 350,Intangibles-Goodwill and Other, requires computer software costs associated with internal use software to be charged to operations as incurred until certain capitalization criteria are met. Costs incurred during the preliminary project stage and the post-implementation stages are expensed as incurred. Certain qualifying costs incurred during the application development stage are capitalized as property, equipment and software. These costs generally consist of internal labor during configuration, coding, and testing activities. Capitalization begins when (i) the preliminary project stage is complete, (ii) management with the relevant authority authorizes and commits to the funding of the software project, and (iii) it is probable both that the project will be completed and that the software will be used to perform the function intended.

Property and Equipment

Property and equipment consists of computers, equipment and office furniture and fixtures, all of which are recorded at cost. Depreciation and amortization are recorded using the straight-line method over the respective useful lives of the assets ranging from three tofive years. Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.

Use of Estimates

The accompanying condensed financial statements have been prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period.

The Company’s significant estimates and assumptions include, but are not limited to, the recoverability and useful lives of indefinite life intangible assets, stock-based compensation, valuation allowances related to deferred tax assets, allocations of compensation and other shared costs among functional expense categories, accruals for employee bonuses and incentives, and the fair value of certain financial instruments, when applicable.

Actual results could differ from those estimates due to changes in external conditions or other factors, and such differences may be material to the financial statements.

Income Taxes

The Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more likely than not be realized. Should they occur, the Company’s policy is to classify interest and penalties related to tax positions as income tax expense. Since the Company’s inception, no such interest or penalties have been incurred.

Accounting for Warrants

The Company accounts for the issuance of Common Stock purchase warrants issued in accordance with ASC 815,Derivatives and Hedging. Warrants are evaluated for liability or equity classification at the time of issuance based on the specific terms of the arrangement and settlement features.

Liability-Classified Warrants

Warrants are classified as liabilities when they: (i) require net cash settlement (including upon occurrence of an event outside the Company’s control), or (ii) provide the counterparty with a choice of cash or share settlement, or (iii) require the issuance of registered shares and do not explicitly preclude a right to cash settlement.

In accordance with ASC 815-40, these instruments are measured at fair value upon issuance and at each subsequent reporting period, with changes in fair value recognized in the statements of operations as “Change in fair value of warrant liabilities.” These warrants are classified as Level 3 liabilities within the fair value hierarchy due to the use of unobservable inputs in the valuation model (see Note 5 -Fair Value of Financial Assets and Liabilities).

The Company estimates the fair value of these warrants using a Black-Scholes option pricing model, with key inputs including the Company’s stock price, the warrant exercise price, expected term, expected stock price volatility, risk-free interest rate, and expected dividend yield. The warrant liability is presented as a current liability on the Company’s balance sheet.

Equity-Classified Warrants

The Company also issues warrants that qualify for equity classification under ASC 815-40. Warrants are classified in equity when they: (i) require physical or net-share settlement, and (ii) do not include terms that could require cash settlement outside the control of the Company, and (iii) do not include contingent provisions or other features that would cause the instruments to be classified as liabilities.

For equity-classified warrants, the Company estimates the grant-date fair value using a Black-Scholes option pricing model. The fair value is recognized in additional paid-in capital (APIC) at the time of issuance and is not subsequently remeasured. If the warrants are issued in connection with a financing transaction (e.g., convertible notes), the fair value is allocated to APIC and, when applicable, also recorded as a debt discount in accordance with ASC 470-20,Debt with Conversion and Other Option, and amortized over the term of the related debt instrument using the effective interest method.

Once classified in equity, these warrants remain in equity unless modified in a way that results in liability classification. These instruments are not included in the fair value measurements disclosure under ASC 820, as they are not remeasured on a recurring basis.

Stock-based compensation

The Company accounts for stock-based compensation in accordance with ASC 718,Compensation - Stock Compensation. ASC 718 addresses all forms of share-based payment awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718, awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.

Share-based payment awards exchanged for services are accounted for at the fair value of the award on the estimated grant date.

Options

Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the fair market value of the Company’s stock at the date of grant and expire up to ten years from the date of grant. These options generally vest over a one-year period.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Expected Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. For options granted prior to January 1, 2025, historical volatility was based on the most recent volatility of the stock price over a period equivalent to the expected term of the option. For options granted on or after January 1, 2025, historical volatility is determined using a two-year lookback period. Management selected this approach to better reflect the Company’s current market conditions and exclude periods of non-representative volatility associated with significant changes in the Company’s business, market conditions, and capital structure. The two-year lookback period balances capturing industry and market cycles with avoiding outdated and non-representative data.

Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the option.

Expected Term – The Company’s expected term represents the weighted-average period that the Company’s stock options are expected to be outstanding. The expected term is based on the expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns.

Expected Dividend– The Company has not historically declared or paid any cash dividends on its common shares and does not plan to pay any recurring cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

Restricted Stock Units (RSUs)

For awards vesting upon the achievement of a service condition, compensation cost measured on the grant date will be recognized on a straight-line basis over the vesting period. Stock-based compensation expense for the market-based restricted stock units with explicit service conditions is recognized on a straight-line basis over the longer of the derived service period or the explicit service period, regardless of whether the market condition is satisfied. However, in the event that the explicit service period is not met, previously recognized compensation cost would be reversed. Market-based restricted stock units subject to market-based performance targets require achievement of the performance target as well as a service condition in order for these RSUs to vest.

The Company estimates the fair value of market-based RSUs as of the grant date and expected derived term using a Monte Carlo simulation that incorporates pricing inputs covering the period from the grant date through the end of the derived service period.

Expected Volatility– The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. Historical volatility is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the RSUs.

Risk-Free Interest Rate– The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the RSUs.

Expected Term– The Company’s expected term represents the weighted-average period that the Company’s RSUs are expected to be outstanding. The expected term is based on the stipulated 5-year period from the grant date until the market-based criteria are achieved. If the market-based criteria are not achieved within the five-year period from the grant date, the RSUs will not vest and shall expire.

Vesting Hurdle Price– The vesting hurdle prices are determined by taking the vesting Market Cap criteria divided by the shares outstanding as of the valuation dates

Convertible Notes Payable

Convertible notes are accounted for in accordance with ASC 470-20,Debt with Conversion and Other Options. Upon issuance, the Company evaluates embedded features and freestanding instruments for separate accounting. If applicable, proceeds are allocated between the debt host and any freestanding equity-classified instruments, such as warrants, using a relative fair value method. Issuance costs and any original issue discount are recorded as a reduction to the carrying amount of the debt and amortized over the term of the notes using the effective interest method. Interest expense includes both cash interest and amortization of debt discounts.

Defi Lending Arrangements

The Company accounts for DeFi lending and borrowing arrangements, such as those executed through the Aave protocol, in accordance with ASC 470,Debt.

Borrowings

When the Company borrows crypto assets under a DeFi protocol, the arrangement is recognized as a financial liability measured at the principal amount of the borrowed tokens, net of repayments, in accordance with ASC 470. Such borrowings are presented on the balance sheet asLoans payable – DeFi protocol.

Borrowings are collateralized by the Company’s crypto assets, such as ETH, which are deposited into protocol-specific smart contracts as collateral. The deposited collateral remains recorded on the balance sheet withinCrypto Assets, as the Company retains both custody and beneficial ownership. Collateralized assets are considered restricted while serving as security for DeFi borrowings and are disclosed as such in the notes to the financial statements.

Fair value measurement of the collateralized ETH follows the guidance in ASC 820*, Fair Value Measurement*. Although the ETH is restricted and subject to liquidation risk, the Company continues to account for the underlying asset at fair value under ASC 350-60*, Intangibles – Crypto Assets*.

Debt modifications and extinguishments

The Company accounts for debt modifications and extinguishments in accordance with ASC 470-50*, Debt – Modifications and Extinguishments*. When existing DeFi debt is repaid or substantially modified, the previous liability is derecognized and replaced with a new liability at fair value. Any resulting gain or loss is recognized in the statement of operations underLoss on extinguishment of debt.

Interest expense

Interest or borrowing costs accrued under DeFi lending arrangements are recognized over the borrowing term and presented asInterest Expense in the statements of operations. Any rewards earned from the Company’s separate participation as a liquidity provider or protocol participant (e.g., Imperium) is recognized as revenue underDeFi revenues rather than interest income.

Advertising Expense

Advertisement costs are expensed as incurred and included in Marketing expenses in the statements of operations.

Net Income (Loss) per Share

Basic income (loss) per share is computed by dividing the net income or loss attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Potential common shares consist of the Company’s restricted stock units, restricted common stock, stock options, warrants and shares issuable upon conversion of outstanding convertible notes.

For periods when the Company reports a net loss, diluted net loss per share is the same as basic net loss per share because the inclusion of potentially dilutive securities would be anti-dilutive. For periods in which the Company reports net income, diluted net income per share includes the effect of dilutive potential common shares, if any.

The Company reported net income for the three and nine months ended September 30, 2025 and net losses for the three and nine months ended September 30, 2024. The following potentially dilutive securities were excluded from the computation of diluted loss per share during the 2024 periods of net loss, as their effect would have been anti-dilutive:

Recent Accounting Pronouncements

The Company continually assesses new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) and other standard-setting bodies to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of such change to its Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Financial Statements properly reflect the change.

In November 2023, the FASB issued ASU 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures(“ASU 2023-07”). ASU 2023-07 is intended to enhance reportable segment disclosures by requiring disclosures of significant segment expenses regularly provided to the CODMs, requiring disclosure of the title and position of the CODMs and explanation of how the reported measures of segment profit and loss are used by the CODMs in assessing segment performance and a location of resources. ASU 2023-07 is effective for the Company for annual periods beginning after December 31, 2023. The Company adopted ASU 2023-07 for the year ended December 31, 2024. As a result of the adoption, the Company expanded its disclosures in Note 12 -Segment Information, to present significant expenses that are included within cost of revenue, by reportable segment, which are presented to the CODMs.

In December 2023, FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide improvements primarily related to the rate reconciliation and income taxes paid information included in income tax disclosures. The Company is required to disclose additional information regarding reconciling items equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory tax rate. Similarly, the Company is required to disclose income taxes paid (net of refunds received) equal to or greater than five percent of total income taxes paid (net of refunds received). The amendments in ASU 2023-09 are effective January 1, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impacts of ASU 2023-09 on its financial statements.

In December 2024, the FASB issued ASU 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires, in the notes to the financial statements, disclosures of specified information about certain costs and expenses specified in the updated guidance. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact the updated guidance will have on its disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Note 4 –Crypto Assets

The following table presents the Company’s crypto assets held as of September 30, 2025, which are measured at fair value in accordance with ASC 350-60,Intangibles – Crypto Assets. Measurement is based on quoted prices in active markets (Level 1 inputs under ASC 820,Fair Value Measurement).

As described in Note 3, the Company classifies its crypto assets by operational use into three categories:

Category Descriptions

Fair Value Measurement

All categories of crypto assets are valued using quoted prices in active markets for identical assets and are therefore classified as Level 1 within the fair-value hierarchy (see Note 5 –Fair Value of Financial Assets and Liabilities). Encumbrances arising from staking or DeFi deployments do not affect fair-value classification because such restrictions are entity-specific and do not influence observable market pricing.

Activity Rollforward

The following table summarizes the activity in the Company’s crypto assets for the nine months ended September 30, 2025:

Note 5 –Fair Value of Financial Assets and Liabilities

The Company measures certain assets and liabilities at fair value. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability (i.e., an ‘exit price’) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date.

Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that are accessible at the measurement date. Since valuations are based on quoted prices that are readily and regularly available in an active market, these valuations do not entail a significant degree of judgment.

Level 2 – Valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Valuations based on inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

The Company’s crypto assets (treasury, DeFi, and staked) are measured at fair value in accordance with ASC 350-60 using quoted prices in active markets for the underlying tokens, primarily on major digital-asset exchanges. These quoted prices represent Level 1 inputs within the fair-value hierarchy.

Encumbrances resulting from staking lock-ups or DeFi collateralization do not affect classification within the fair-value hierarchy because such restrictions are entity-specific and do not impact the market prices of the respective tokens available to other market participants. Accordingly, all of the Company’s crypto assets are classified as Level 1.

Other financial instruments, including cash and cash equivalents, stablecoins, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of September 30, 2025 and December 31, 2024:

The Company did not make any transfers between the levels of the fair value hierarchy during the nine months ended September 30, 2025 and 2024.

Level 3 Valuation Techniques

Level 3 financial assets consist of private equity investments for which there is no current public market for these securities such that the determination of fair value requires significant judgment or estimation. As of September 30, 2025 and December 31, 2024, the Company’s Level 3 investments were carried at the original cost of the investments, with a value of $500,000 and $100,000, respectively. The Company has elected to apply the measurement alternative under ASC 321,Investments—Equity Securities, for these investments.

Level 3 financial liabilities consist of the warrant liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation.

Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

A significant decrease in volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. Changes in the values of the warrant liabilities are recorded in “change in fair value of warrant liabilities” in the Company’s statements of operations.

On March 2, 2021, the Company entered into a securities purchase agreement with certain purchasers which closed on March 4, 2021 pursuant to which the Company sold an aggregate of (i)950,000 shares of Common Stock, and (ii) Common Stock warrants (the “Warrants”) to purchase up to 712,500 shares of Common Stock for gross proceeds of $9.5 million in a private placement offering.

The Warrants require, at the option of the holder, a net-cash settlement following certain fundamental transactions (as defined in the Warrants). At the time of issuance, the Company maintained control of certain fundamental transactions and as such the Warrants were initially classified in equity. As of September 30, 2025, the Company no longer maintained control of certain fundamental transactions because it did not hold a majority of shareholder voting power. As such, the Company may be required to cash settle the Warrants if a fundamental transaction occurs which is outside the Company’s control. Accordingly, the Warrants are classified as liabilities. The Warrants have been recorded at their fair value using the Black-Scholes valuation model, and will be recorded at their respective fair value at each subsequent balance sheet date. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk-free rates, as well as volatility.

The Warrants require the issuance of registered shares upon exercise, and do not expressly preclude an implied right to cash settlement and are therefore accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the balance sheet as a current liability.

A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company’s warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of September 30, 2025 and December 31, 2024, is as follows:

The risk-free interest rate was based on rates established by the Federal Reserve Bank. For the Warrants, the Company estimates expected volatility, giving primary consideration to the historical volatility of its Common Stock. The expected volatility is calculated using the standard deviation of the Company’s underlying stock price’s daily logarithmic returns. The expected life of the warrants was determined by the expiration date of the warrants. The expected dividend yield was based on the fact that the Company has not historically paid dividends on its Common Stock and does not expect to pay recurring dividends on its Common Stock in the future.

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets and liabilities for the nine months ended September 30, 2025 that are measured at fair value on a recurring basis:

Note 6 –Stockholders’ Equity

Common Stock

As of September 30, 2025, the Company had 975,000,000 shares of Common Stock, $0.001 par value, authorized, of which 47,075,189 shares were issued and outstanding.

At-The-Market Offering Agreement

On September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”), pursuant to which the Company may offer and sell, from time-to-time, shares of the Company’s Common Stock through H.C. Wainwright, as agent. Initially, the aggregate offering price of shares issuable under the ATM Agreement was $98,767,500, registered pursuant to the Company’s Form S-3 registration statement that became effective in September 2021.

On October 4, 2024, a new Form S-3 registration statement became effective, increasing the total amount of securities that may be offered and sold under the base prospectus to $250,000,000.

On July 22, 2025, the Company entered into an amendment to its engagement with H.C. Wainwright in connection with a new Form S-3 registration statement filed on July 23, 2025, to register up to $2,000,000,000 of securities for future issuance (the “New Registration Statement”). The New Registration Statement was approved by the Securities and Exchange Commission (“SEC”) and declared effective on August 1, 2025.

Pursuant to the July 2025 amendment, H.C. Wainwright will continue to act as the Company’s exclusive sales agent for any at-the-market offerings through November 12, 2027. Under the amended terms, the Company shall pay H.C. Wainwright a commission of up to 3.0%.

All other terms and conditions of the original ATM Agreement and prior engagement letters remain in full force and effect.

During the nine months ended September 30, 2025, the Company sold a total of 26,394,414 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $139,437,000 at an average selling price of $5.28 per share, resulting in net proceeds of approximately $135,161,000 after deducting commissions and other transaction costs.

Share Repurchase Program

On September 4, 2025, the Company’s Board of Directors (the “Board”) approved a share repurchase program authorizing the Company to repurchase up to $50 million of its common stock over a three-year period. Repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, in such quantities, at such prices, and in such manner as determined by the Company’s Chief Executive Officer consistent with the Board’s authorization. Repurchases will be conducted in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 and applicable state law. The Company has engaged H.C. Wainwright & Co., LLC as the sole broker to implement the program. In addition: (i) no repurchases may occur at a price per share greater than the current fair market value of the Company’s crypto assets and cash divided by its outstanding common shares, as determined in good faith by the CEO; and (ii) repurchases may not occur if the purchase price is less than a 25% discount to any limit orders in any 10b5-1 plan of a named executive officer, or within 20 calendar days of any market-based order under any such plan. The program does not obligate the Company to repurchase any specific number of shares and may be modified, suspended, or discontinued at any time.

The Company accounts for share repurchases under the retirement method of accounting. Accordingly, shares repurchased are immediately retired and deemed cancelled, reducing both issued and outstanding shares. In connection with these retirements, the Company reduces Common Stock and Additional Paid-in Capital (“APIC”) based on a pro rata (average per-share) APIC allocation method, with any differences between the repurchase price and the book value of equity retired recorded to APIC – Share Repurchase. If necessary, amounts are recorded to Retained Earnings once APIC – Share Repurchase is exhausted.

During the nine months ended September 30, 2025, the Company repurchased and retired 652,020 shares of its common stock for an average purchase price of $4.60. As of September 30, 2025, approximately $47,000,000 remained available for repurchases under the authorization.

The following table sets forth information regarding purchases of the Company’s common stock during the three months ended September 30, 2025:

Share Based Payments

Board Compensation

The Company issues $12,500 of Common Stock to each independent director at the end of each calendar quarter, subject to continued service. The number of shares is determined based on the closing price of the Company’s Common Stock on the last trading day of the applicable quarter. For the nine months ended September 30, 2025, the Company issued 49,812 shares of Common Stock with a grant date fair value of approximately $113,000 to independent directors.

Performance Bonus Payments

For the nine months ended September 30, 2025, the Company issued 329,110 shares of Common Stock to officers and employees as part of the payment of accrued bonus compensation for the year ended December 31, 2024. The total fair value of the shares issued was approximately $813,000 based on the Company’s closing stock price on the issuance date. Of the shares issued,33,731 were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 295,379 shares of Common Stock.

Preferred Stock

Series V Preferred Stock

The Company previously designated and issued 14,542,803 shares of Series V Preferred Stock (“Series V”) on June 2, 2023 to shareholders of record as of May 12, 2023. The Series V: (i) is non-convertible (subject to potential conversion rights, as described below), (ii) has a 20% liquidation preference over the shares of Common Stock, (iii) is non-voting, and (iv) has certain rights to dividends and distributions (at the discretion of the Board).

At the Company’s 2024 Annual Meeting on September 6, 2024, stockholders approved an amendment to the Series V Certificate of Designation granting the Board the discretion to convert each share of Series V into one share of Common Stock. As of September 30, 2025, the Board has not filed the amendment or elected to convert any Series V shares.

Restricted Series V Issuances and Activity

On January 13, 2025, the Company issued 1,020,834 restricted shares of Series V Preferred Stock concurrently with the acceleration and settlement of previously outstanding long-term incentive (“LTI”) restricted stock units (“RSUs”). These restricted Series V shares were issued in the same proportion as restricted Common shares to preserve dividend equivalency under the LTI plan and remain subject to the original market capitalization-based performance conditions and time-based vesting schedules ranging from one to three years.

On August 7 and August 15, 2025, the Company determined thatthe market capitalization vesting thresholds of $100 million and $150 million, respectively, had been achieved and sustained for 30 consecutive days. In connection with these milestones—consistent with the vesting of related restricted Common shares—413,888 restricted Series V shares became fully vested and were reclassified from restricted to outstanding Series V Preferred Stock.

On February 3, 2025, following the resignation of the Company’s Chief Technology Officer,49,327 restricted Series V shares were forfeited in tandem with the forfeiture of related restricted Common shares. On August 18, 2025,333,333 restricted Series V shares were similarly forfeited upon the transition of the Company’s Chief Operating Officer to Operations Specialist. All forfeited shares were returned to the Company and are no longer outstanding.

As of September 30, 2025, a total of 322,580 restricted shares of Series V Preferred Stock were issued and outstanding, of which 93,413 shares remain subject solely to time-based vesting conditions, which extend over a one- to three-year period, with full vesting expected by December 31, 2027.

2021 Equity Incentive Plan

The Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was effective on January 1, 2021 and approved by shareholders on September 30, 2021 and amended on June 13, 2022. The Company received shareholder approval on July 11, 2023 to increase the authorized amount under the 2021 Plan from 7,000,000 shares to 12,000,000 shares.

Options

Performance Incentive Plan Milestone Achievement

On August 7, 2025, upon the recommendation of the Compensation Committee, the Board determined that it had exceeded the highest level tier for the liquidity milestone under its 2025 Annual Performance Incentive Plan.

Specifically, the Company maintained a cash and crypto balance in excess of $75 million for twenty consecutive days, thereby satisfying the highest tier (cutoff level being $75 million) of the liquidity milestone. This liquidity milestone accounts for 25% of each executive officer’s target incentive compensation and is designed to reward financial strength and liquidity.

In accordance with the plan and consistent with the Company’s pay-for-performance philosophy, the Board approved the payment of this performance-based award to all eligible employees in the form of non-qualified stock options under the 2021 Plan., resulting in the grant of 330,985 options. These options: (i) have a term of seven years, (ii) have an exercise price equal to $4.20 per share, (iii) vest in full on December 31, 2026, and (iv) are subject to the terms and conditions set forth in the applicable award agreements.

Option Exercises

During the nine months ended September 30, 2025, option holders exercised 1,100,000 stock options on a cashless basis, surrendering 353,637 options to cover the exercise price and receiving 746,363 net shares. No cash proceeds were received in connection with these exercises.

Options Activity Summary

A summary of stock option activity under the Company’s 2021 Equity Incentive Plan for the nine months ended September 30, 2025 and 2024 is presented below:

The following weighted-average assumptions were used to estimate the fair value of options granted during the nine months ended September 30, 2025 and 2024, using the Black-Scholes option pricing model:

These assumptions are consistent with the methods described in Note 3 –Summary of Significant Accounting Policies.

Restricted Stock Units (RSUs)

Long-Term Incentive Plan (LTI) RSUs

On January 1, 2025, the Board approved the grant of 150,000 RSUs under the Company’s Long-Term Incentive Plan (“LTI”) to a non-officer employee. These RSUs are subject to both market capitalization and time-based vesting conditions.

The RSUs vest in three equal tranches of 50,000 RSUs each, based on the Company achieving and sustaining specific market capitalization thresholds for 30 consecutive days on or before December 31, 2026, as follows:

Any RSUs for which the market capitalization condition is not met by December 31, 2026, will be forfeited and automatically terminate without consideration.

For any tranche in which the market capitalization condition is achieved, the RSUs remain subject to a time-based vesting schedule, with 20% of the eligible RSUs in such tranche vesting annually over five years, with the first vesting date occurring on December 31, 2025 and subsequent vesting dates occurring on December 31 of each year through 2029, provided that the grantee remains in continuous service with the Company through each applicable vesting date.

The fair value of these market-based RSUs was determined using a Monte Carlo simulation and totaled approximately $181,000 as of the grant date. The following assumptions were used to determine fair value as of the grant date, January 1, 2025:

The Company will recognize compensation expense for these RSUs over the requisite service period, subject to acceleration upon meeting the market capitalization criteria.

Accelerated Vesting of RSUs and Conversion to Restricted Common Stock

On January 13, 2025, the Company accelerated the vesting of all previously outstanding long-term incentive (“LTI”) restricted stock units (“RSUs”), totaling 1,170,834 RSUs granted to executive officers and employees. These RSUs were settled through the issuance of restricted shares of Common Stock. Because a portion of these RSUs were entitled to the previously declared Series V preferred stock dividend,1,020,834 restricted shares of Series V were concurrently issued, in the same proportion as the related restricted Common shares, to maintain dividend equivalency under the original RSU terms.

The restricted shares of Common Stock and Series V preferred stock issued upon acceleration remain subject to the original market capitalization-based performance conditions and applicable time-based vesting schedules, which range from one tofive years.

Vesting of Certain Long-Term Incentives

On August 7, 2025, the Company determined that the market capitalization vesting condition for certain previously granted Long-Term Incentive (“LTI”) awards had been satisfied. Under the applicable award agreements, vesting required the Company to maintain a market capitalization in excess of $100 million for 30 consecutive days.

Additionally, on August 15, 2025, the Company determined that the market capitalization vesting condition for certain previously granted Long-Term Incentive (“LTI”) awards had been satisfied. Under the applicable award agreements, vesting required the Company to maintain a market capitalization in excess of $150 million for 30 consecutive days.

As a result,413,888 shares of Common Stock and 413,888 shares of Series V Preferred Stock, originally issued on January 13, 2025, upon conversion of vested RSUs into restricted equity, became fully vested in accordance with their terms. These shares, previously classified as restricted Common Stock and restricted Series V Preferred Stock, were reclassified to outstanding Common Stock and Series V Preferred Stock, respectively.

Forfeitures of LTI RSUs and Restricted Shares of Common Stock

On February 3, 2025, upon the voluntary resignation of the Company’s Chief Technology Officer,120,137 unvested LTI RSUs and 129,327 restricted shares of Common Stock were forfeited in accordance with the terms of the applicable award agreements.

On August 18, 2025, upon the transition of the Company’s Chief Operating Officer to the role of Operations Specialist,333,333 restricted shares of Common Stock were forfeited in accordance with the terms of the applicable award agreements.

In accordance with ASC 718,Compensation—Stock Compensation, the Company reversed approximately $812,000 of previously recognized stock-based compensation expense during the nine months ended September 30, 2025. No further expense will be recognized for these forfeited awards.

RSU Activity Summary

The following table summarizes RSU activity under the 2021 Plan for the nine months ended September 30, 2025:

Restricted Shares of Common Stock Activity Summary

The following table summarizes restricted Common Stock activity under the 2021 Plan for the nine months ended September 30, 2025:

As of September 30, 2025, a total of 565,080 restricted shares of Common Stock were issued and outstanding, of which 285,913 shares remain subject solely to time-based vesting conditions, which extend over a one- to three-year period, with full vesting expected by December 31, 2027.

Stock-based Compensation

Stock-based compensation expenses are allocated among general and administrative expenses, compensation expenses and cost of revenues. Stock-based compensation expense for the nine months ended September 30, 2025 and 2024 was as follows:

Stock Purchase Warrants

Warrant Exercises

During the nine months ended September 30, 2025, holders exercised 1,369,725 warrants on a cashless basis, surrendering 554,401 warrants and receiving 815,324 net shares. No cash proceeds were received in connection with these exercises.

Warrant Activity Summary

The following is a summary of warrant activity for the three months ended September 30, 2025:

As of September 30, 2025,712,500 warrants were classified as derivative liabilities, and 1,411,566 warrants issued in connection with the convertible notes were classified as equity.

Note 7 –Dividends and Capital Distributions

Dividends Payable

On August 1, 2025, the Board approved, and on August 18, 2025 the Company announced, a special dividend of $0.05 per share (the “Bividend”), payable to stockholders of record as of the close of business on September 26, 2025. Holders of the Company’s common stock may elect to receive the Bividend in either cash or Ethereum (ETH), while holders of the Company’s Series V Preferred Stock are entitled to receive the Bividend solely in cash. The total dividend payable as of September 30, 2025 was approximately $3,176,000, which is recorded as dividends payable within stockholders’ equity. The Bividend was subsequently settled in early October 2025 through aggregate cash payments of approximately $2,680,000 and distributions of approximately 123 ETH to stockholders who elected ETH.

Convertible Notes Eligible for Capital Distributions – Contingent Liability

As of September 30, 2025, the Company had outstanding convertible notes that provide holders the right, upon any subsequent conversion of such notes, to participate in dividends or other distributions on the Company’s common stock declared during the period the notes are outstanding, to the same extent as if the notes had been converted immediately prior to the record date of such distribution. As of September 30, 2025, there were 2,107,757 shares of common stock underlying the outstanding convertible notes that would be entitled to the dividend payments if converted in accordance with the note terms, representing a potential contingent distribution totaling approximately $105,000. Because the obligation to deliver such distributions is contingent upon future conversions, no liability has been recorded as of September 30, 2025, in accordance with ASC 450-20,Contingencies.

Loyalty Payment – Contingent Liability

In addition, the Board authorized a one-time loyalty payment of $0.35 per share (the “Loyalty Payment”), payable solely in ETH. The Loyalty Payment is available only to holders of common stock of record on September 26, 2025 who (i) completed the required ETH Opt-In and (ii) maintained their shares at the Company’s transfer agent through January 26, 2026. Holders of Series V Preferred Stock are not eligible for the Loyalty Payment.

The Loyalty Payment is contingent on stockholder actions through January 26, 2026, and accordingly, no liability has been recorded as of September 30, 2025. For both the Bividend and the Loyalty Payment, the number of ETH units per share is fixed based on the ETH/USD exchange rate on the September 26, 2025 record date.

As of September 30, 2025, approximately 3,858,000 common shares had completed the Opt-In process and were held at the transfer agent. If all such shares were to remain eligible through January 26, 2026, the hypothetical maximum Loyalty Payment would be approximately $1,350,000 (shares × $0.35). Using an ETH/USD rate of $4,036 as of the September 26, 2025 record date, this would correspond to approximately 335 ETH. The actual payout, if any, will depend on the final number of qualifying shares and the program’s ETH settlement terms at the time of eligibility.

Note 8 –Debt

Loans Payable – Defi Protocol

The Company participates in decentralized finance (DeFi) borrowing activity through Aave, a smart contract–based protocol that facilitates overcollateralized loans backed by crypto assets. Borrowings have no fixed maturity date and remain outstanding until repaid or liquidated in accordance with Aave’s protocol terms. Loans are subject to full or partial liquidation if the loan’s “health factor” falls below a protocol-defined minimum threshold, generally 1.0x. The health factor is calculated based on the value of the collateral relative to the loan balance and Aave’s liquidation threshold, which is generally 80% for Ethereum (ETH) collateral.

During the nine months ended September 30, 2025, the Company borrowed an aggregate of approximately $59,447,000, which includes borrowings issued in connection with an on-chain debt refinancing transaction executed during the third quarter. In that transaction, the Company utilized Aave’s flash loan functionality to extinguish approximately $1,500,000 in outstanding USDT-denominated debt and simultaneously issue an equivalent amount of new borrowings denominated in GHO, Aave’s native overcollateralized stablecoin token, at a lower variable interest rate. Due to substantive differences in the borrowing terms, including a change in the underlying asset and revised rate structure, the transaction was accounted for as a debt extinguishment under ASC 470-50, and the Company recognized a loss on extinguishment of debt of approximately $9,000 during the period. The Company also repaid approximately $1,447,000 in principal during the period.

The following table summarizes the Company’s Defi borrowing activity during the nine months ended September 30, 2025:

As of September 30, 2025, the Company’s outstanding borrowings consisted primarily of USD-pegged stablecoins, including USDT and GHO, obtained through the Aave protocol. The use of USD-pegged tokens does not materially impact the economic characteristics or risk profile of the borrowings.

As of September 30, 2025, the Company had approximately 38,999 Aave aEthWETH tokens representing wrapped ETH deployed within DeFi protocols and serving as collateral for outstanding borrowings, with a fair value of approximately $161,704,000. These assets remain recorded as ETH withinCrypto assets - DeFi on the balance sheet in accordance with ASC 350-60 and are measured at fair value using quoted prices in active markets (Level 1 inputs under ASC 820). See Note 3 –Summary of Significant Accounting Policies and Note 4 –Crypto Assets for further detail regarding the accounting treatment and classification of these assets.

The loans accrue interest at variable rates determined by Aave’s on-chain interest-rate model, which automatically adjusts based on market utilization and liquidity conditions. These rates are published and updated in real-time on the Aave protocol’s website .

For the three and nine months ended September 30, 2025, the Company recognized approximately $665,000 in interest expense, of which approximately $664,000 remained unpaid and is included inAccrued interest payable on the balance sheet at period end.

The Board has approved the use of Aave for borrowing activities, subject to a maximum loan-to-value (LTV) ratio and debt-to-asset (DTA) coverage limitation of 40% at the time of borrowing. The Board also approved temporary exceedances of these limitations for operational purposes, provided such exceedances do not exceed two days.

Convertible Notes Payable

On May 13, 2025 and July 21, 2025, the Company entered into separate Securities Purchase Agreements with accredited investors, pursuant to which it issued 5% Original Issue Discount Senior Secured Convertible Notes (the “May Notes” and “July Notes”, respectively, and together, the “Notes”) in the aggregate principal amounts of $7,810,526 and $10,050,000 for gross cash proceeds of $7,420,000 and $9,537,500, respectively. In connection with the issuance of the Notes, the Company also issued warrants to purchase an aggregate of 2,781,291 shares of the Company’s common stock, with 1,901,916 warrants issued under the May Notes exercisable at $2.75 per share, and 879,375 warrants issued under the July Notes exercisable at $8.00 per share. The warrants issued in connection with both offerings have a five-year term from the respective issuance dates.

The Notes are convertible into shares of the Company’s common stock at conversion prices of $5.85 and $13.00 per share for the May Notes and July Notes, respectively, mature twenty-four months from their issuance dates, accrue interest at an annual rate of 6% payable quarterly in either cash or freely tradable shares at the Company’s election, contain a 4.99% beneficial ownership conversion limitation (subject to increase to 9.99% upon notice), and are secured by substantially all of the Company’s assets, excluding Ethereum deposited as collateral for USDT borrowings on Aave and certain other customary exclusions. In connection with the July Offering, the Company agreed not to amend the conversion terms of its Series V Preferred Stock for a period of 18 months while the July Notes remain outstanding.

The May Offering included participation by the Company’s Chairman and Chief Executive Officer, who invested $95,000, as well as a trust for which he is a beneficiary, which invested an additional $200,000. The July Offering included an investment of $47,500 by the same trust. The participation by the Chairman and CEO and the related trust were approved by an independent committee of the Board.

H.C. Wainwright & Co., LLC acted as the Company’s exclusive placement agent in connection with both offerings. The Company incurred total transaction-related costs of approximately $254,000, which included legal, placement agent, and other issuance expenses. These costs, together with the original issue discount and the allocated fair value of the warrants, were recorded as a debt discount in accordance with ASC 470-20 and are being amortized over the term of the Notes using the effective interest method. The warrants were determined to be freestanding equity-classified instruments and were valued using the Black-Scholes option pricing model.

For the three and nine months ended September 30, 2025, the Company recognized total interest expense of approximately $1,053,000, which includes both contractual interest and the amortization of debt discounts and issuance costs using the effective interest method.

Of this amount, approximately $299,000 related to contractual interest on the Company’s convertible notes, $754,000 represented non-cash amortization of debt discount and issuance costs, and approximately $665,000 related to interest incurred on decentralized finance (DeFi) borrowings. The Company paid approximately $300,000 of interest in cash during the period, with the remainder representing non-cash or accrued amounts.

Note 9 –Accrued Expenses

Accrued expenses consist of the following:

Accrued compensation includes performance bonus accruals of approximately $1,050,000 and $3,907,000 as of September 30, 2025 and December 31, 2024, respectively. The significant decrease in bonus accruals reflects bonus payments made during the first quarter of 2025.

Note 10 –Employee Benefit Plans

The Company maintains defined contribution benefit plans under Section 401(k) of the Internal Revenue Code covering substantially all qualified employees of the Company (the “401(k) Plan”). Under the 401(k) Plan, the Company may make discretionary contributions of up to 100% of employee contributions. For the nine months ended September 30, 2025 and 2024, the Company made contributions to the 401(k) Plan of $122,000 and $109,000, respectively.

Note 11 –Liquidity

The Company follows “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the financial statements, the Company has historically incurred a net loss and has an accumulated deficit of approximately $87,747,000 at September 30, 2025, and net cash used in operating activities of approximately $6,032,000 for the reporting period then ended. The Company is actively implementing its business plan, generating revenue, and executing a deliberate financing strategy that includes DeFi protocol borrowing and convertible note issuances to accelerate the accumulation of Ethereum (ETH) and scale its blockchain infrastructure and DeFi operations. Based on the Company’s cash position and liquid crypto assets as of November 10, 2025, management has determined that these resources are sufficient to support its daily operations over the next twelve months.

Note 12 –Segment Information

The Company operates within a single reportable segment underASC 280, Segment Reporting, focused on blockchain-based revenue generation through its blockchain infrastructure and DeFi operations.

Within this reportable segment, the Company’s operations are organized around three primary business lines that represent distinct revenue-generating activities:

Revenues from NodeOps and Builder+ are aggregated and presented asBlockchain infrastructure revenues, while revenues from Imperium are presented separately asDeFi revenues in the statements of operations. Although these business lines have distinct economic drivers and operational processes, management evaluates them together as part of the Company’s single reportable segment due to shared infrastructure, integrated management oversight, and the common objective of ETH accumulation and on-chain revenue generation.

Gross profit (loss) is the primary measure of segment performance reviewed by the Company’s Chief Operating Decision Maker (“CODM”), which comprises members of executive management including the CEO and CFO. In evaluating performance and allocating resources, the CODM reviews segment revenues, direct production costs, validator payments, hosting expenses, and allocated employee compensation.

Consistent withASU 2023-07, the Company discloses the significant segment expenses regularly provided to the CODM for decision-making purposes, including validator payments, infrastructure hosting costs, and allocated employee compensation.

The following tables present segment revenue and gross profit (loss), including the significant expense items reviewed by the CODM, for the three and nine months ended September 30, 2025 and 2024:

The following table reconciles total segment gross profit to net income (loss):

Note 13 –Subsequent Events

The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements other than disclosed.

Share Repurchases

During the period from October 1, 2025 to November 10, 2025, the Company repurchased and retired 236,657 shares of its common stock for an average purchase price of $4.23. As of November 10, 2025, approximately $46,000,000 remained available for repurchases under the authorization.

DeFi Borrowing

During the period from July 1, 2025 to November 10, 2025 the Company borrowed an additional $3,500,000 in stablecoins through Aave, a decentralized finance protocol, using Ethereum (ETH) as collateral. As of November 10, 2025, the Company had approximately $61,052,000 in outstanding borrowings, inclusive of accrued interest, collateralized by approximately 39,077 ETH with a fair market value of approximately $138,988,000, based on the ETH closing price of $3,557 on that date.

Borrowings accrue interest at variable rates determined by Aave’s on-chain smart contracts, which adjust dynamically based on protocol liquidity and market demand. ETH collateral posted also accrues variable interest. These rates are published and updated in real-time on the Aave protocol’s website, and the net cost of capital may fluctuate based on protocol-level market conditions.