BTCS Inc.

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 the Nasdaq Stock Market and headquartered in the United States. The Company is a blockchain technology business that operates revenue-generating blockchain infrastructure and decentralized finance (“DeFi”) activities, primarily on the Ethereum network. BTCS is an Ethereum-first operator focused on generating on-chain revenues while strategically deploying “ETH” (the Ethereum network’s native token) and other digital assets through its operations.

The Company operates as an active blockchain infrastructure and DeFi participant rather than as a passive holder of digital assets. While BTCS maintains significant Ethereum holdings, those assets are actively deployed across its operations to support revenue generation and operational scalability across the Company’s business lines.

Business Lines

BTCS conducts its operations through the following primary business lines:

Together, these business lines represent complementary components of the Company’s blockchain technology strategy, designed to generate recurring on-chain revenues and increase long-term value.

While each operation has distinct economic drivers and technology components, revenues generated 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 Company’s operating segments and the reconciliation of segment results to the financial statements are disclosed in Note 8 –Segment Reporting.

Capital Strategy and Operations

BTCS’s operations are supported by an integrated capital formation and deployment framework that combines decentralized finance mechanisms with traditional capital markets activities (the “DeFi/TradFi Flywheel”). This framework includes the use of tools such as at-the-market equity (“ATM”) offerings, structured convertible notes, and ETH-backed DeFi borrowing to fund operations, scale infrastructure, and deploy digital assets while managing liquidity and dilution.

The Company actively allocates digital assets across staking, block-building, and DeFi deployments based on expected returns, risk considerations, and market conditions, including the use of overcollateralized borrowing arrangements and liquidity pool participation to generate scalable revenue streams and enhance gross profit.

Risks and Dependence on the Ethereum Ecosystem

The Company’s operations are subject to various risks, including technological complexity, cybersecurity risks, regulatory uncertainty, digital asset price volatility, and competition within the blockchain infrastructure and DeFi markets. The Company’s future performance depends in part on the continued adoption and development of the Ethereum network, the evolution of decentralized infrastructure markets, and BTCS’s ability to operate blockchain infrastructure and engage in DeFi activities efficiently at scale, including the effective management of risks associated with DeFi protocols such as collateral liquidation, smart contract vulnerabilities, and liquidity constraints.

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 March 31, 2026 are not necessarily indicative of results for the full year ending December 31, 2026. The unaudited condensed financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2025.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation in the unaudited condensed financial statements and accompanying notes. These reclassifications did not have a material impact on the Company’s financial position, results of operations, or cash flows.

Note 3 -Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

However, the Company continues to apply these policies to evolving blockchain-based activities, including digital asset deployments in staking and DeFi arrangements and revenue-generating activities associated with blockchain infrastructure operations. The application of these policies requires significant judgment and may evolve as the Company’s operations and the underlying protocols continue to develop.

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 March 31, 2026 and December 31, 2025, the Company had approximately $285,000 and $1,526,000 in cash, respectively. 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 March 31, 2026 and December 31, 2025, the Company had approximately $0 and $1,122,000 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 digital assets designed to maintain a value substantially equivalent to one U.S. dollar. Stablecoins are generally held in Company-controlled digital wallets, on centralized digital assets exchanges, or deployed into DeFi protocols for liquidity provision and other revenue-generating activities.

The Company accounts for its stablecoins as indefinite-lived intangible assets in accordance with Accounting Standards Codification (“ASC”) 350,Intangibles – Goodwill and Other. While stablecoins are not accounted for as cash or cash equivalents, management considers them a liquidity resource due to their intended price stability and high on-chain and off-chain liquidity.

Stablecoins deployed into DeFi protocols are evaluated for continued control and restrictions on accessibility. As of March 31, 2026, approximately $534,000 of USDC was deployed in DeFi vaults and remained readily withdrawable.

Digital assets

The Company’s digital assets primarily consist of Ethereum and other digital 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 digital assets are used to support its blockchain infrastructure operations, including NodeOps, Builder+ and Imperium.

The Company accounts for its digital assets under two distinct accounting models depending on the nature of the asset:

Digital Assets Measured at Fair Value

The Company accounts for its digital assets under ASC 350-60,Intangibles—Goodwill and Other—Digital 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.

The Company measures fair value based on its 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 as it is the primary cryptocurrency exchange for both purchases and sales. Coinbase is designated as the secondary market. This determination results from a comprehensive evaluation considering various factors, including compliance, trading activity, and price stability. The fair value of digital assets is primarily determined based on pricing data obtained from Kraken, with Coinbase used as a secondary source when necessary. The Company retains flexibility to transact on other exchanges where it maintains accounts in order to adapt to market conditions and achieve cost-effective execution.

The Company measures its digital asset holdings at fair value in accordance with ASC 820,Fair Value Measurement, using the last closing price of the day in the UTC (Coordinated Universal Time) time zone.

Digital assets are categorized based on their operational use and presented on the balance sheet as follows:

Digital assets measured at fair value are further disaggregated in Note 4 –Digital Assets (Fair Value).

Digital assets measured at fair value are presented as current assets unless they are subject to protocol-imposed restrictions exceeding twelve months. Staked digital assets are classified as non-current if their lock-up periods extend beyond one year. The majority of the Company’s digital assets are deployed either in staking arrangements with average lock-up periods of less than seven days or in DeFi arrangements that permit redemption on a near-immediate basis. 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 and its reasonable expectation that they will be realized in cash or in operations within the normal operating cycle.

Cost Basis*:*The cost basis of digital assets received is measured at fair value based on the hourly spot price at the time of receipt, consistent with ASC 350-60.

Cost Relief Method: The Company uses the Last-In, First-Out (“LIFO”) method to determine the cost basis of digital assets disposed of. Realized gains and losses on the sale of digital assets are included in operating expenses in the statements of operations.

Statements of Cash Flows: The classification of purchases and sales in the statements of cash flows is determined based on the nature of the digital assets. Acquisitions of non-productive digital assets (e.g. NFTs) are treated as operating activities, while acquisitions of productive digital assets (e.g. assets acquired for purposes of staking or liquidity provision) are classified as investing activities in accordance with ASC 230-10-20,Investing activities.

Transactions involving the settlement of obligations through transfers of digital assets (i.e., in-kind transactions) are treated as non-cash activities for purposes of the Statement of Cash Flows. Accordingly, such transactions are excluded from the face of the Statement of Cash Flows and presented within supplemental disclosures of non-cash investing and financing activities, as applicable. Amounts settled in-kind are excluded from cash-based disclosures, including cash interest paid.

ETH Deployed in DeFi Arrangements

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

Deposited ETH may also serve as collateral supporting on-chain borrowing activities. The collateral contributes to the Company’s overall “health factor”, a protocol-defined metric representing the ratio of collateral value to outstanding borrowings that automatically adjusts with changes in ETH market prices. The health factor determines the margin of safety against liquidation; maintaining a value above 1.0 indicates sufficient collateralization, while a decline below 1.0 may 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 wrapping 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 underlying ETH. Rather, WAETH serves as a receipt or claim token evidencing the Company’s continuing interest in the underlying ETH.

Accordingly:

Rewards earned from DeFi activities are recognized asDeFi revenues on the statements of operations in accordance with ASC 606, as discussed inRevenue Recognition section of Note 3 as well as Note 7 –Revenues and Cost of Revenues.

Digital assets deployed in DeFi protocols are subject to protocol-specific risks, including smart contract vulnerabilities, liquidity constraints, and collateralization requirements. These assets may be pledged as collateral in connection with borrowing arrangements and are continuously remeasured based on the fair value of the underlying assets. A decline in the market value of collateralized assets may reduce the Company’s health factor and could result in partial or full liquidation of collateral by the protocol’s smart contracts without prior notice.

As of March 31, 2026, a significant majority of the Company’s digital assets measured at fair value were deployed within the Aave Protocol as collateral in connection with DeFi borrowing arrangements. These assets, while held in Company-controlled wallets, are subject to protocol-enforced restrictions and are not freely available for general corporate purposes while the related borrowings remain outstanding.

Accordingly, the Company has a significant concentration of its digital assets within the Aave protocol and is exposed to risks associated with such concentration, including smart contract vulnerabilities, changes in collateral requirements, liquidity constraints that may limit the Company’s ability to access or withdraw its assets, and the risk of partial or full liquidation in the event of adverse market movements.

Digital Assets Accounted for as Indefinite-Lived Intangible Assets

The Company holds certain digital assets that do not represent ownership interests in an entity or contractual rights to cash flows and, therefore, do not meet the definition of financial instruments or equity securities under ASC 320 or ASC 321. These assets consist of non-fungible tokens (NFTs), tokenized liquidity pool positions (LP positions), and other similar digital assets associated with blockchain-based protocols.

These assets are accounted for as indefinite-lived intangible assets in accordance with ASC 350. They are initially recorded at cost and are not amortized.

The Company evaluates these assets 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 carrying value of an asset exceeds its estimated fair value, an impairment loss is recognized equal to the difference. Subsequent reversals of impairment losses are not permitted.

Fair value is determined in accordance with ASC 820 based on observable market transactions where available. Due to the nature of these assets, quoted prices in active markets are not always available, and management may be required to apply judgment in estimating fair value. For NFTs, the Company considers observable transactions on active NFT marketplaces, where available.

Realized gains or losses on the disposition of these assets are included in operating expenses in the statements of operations.

See Note 5 –Digital Assets (Liquidity Pool Positions and Other Intangible Digital Assets) for additional information.

Liquidity Pool Positions

The Company participates in decentralized exchange liquidity pools by depositing digital assets into smart contract-based protocols. In exchange, the Company receives liquidity pool positions, which may be represented by non-fungible tokens or similar instruments and represent a distinct asset that provides the Company with protocol-defined rights to remove liquidity, claim fees or other rewards, and participate in the economic results of the underlying pool of digital assets.

The Company accounts for liquidity pool positions as indefinite-lived intangible assets under ASC 350. The Company has concluded that liquidity pool positions do not meet the definition of financial instruments under U.S. GAAP because they do not represent ownership interests in a legal entity and do not provide the Company with a contractual right to receive cash or another financial asset from an issuer or counterparty. The Company has also concluded that liquidity pool positions are not derivatives under ASC 815 because they require an initial deposit of digital assets approximating the fair value of the position, do not provide for contractual net settlement, and represent a nonfinancial liquidity position rather than a derivative contract with an identifiable counterparty.

Upon deposit into a liquidity pool, the Company transfers digital assets to the liquidity pool smart contract and no longer controls the specific digital assets contributed. The contributed assets become part of the shared pool liquidity governed by automated market maker protocol rules and may be used in swaps initiated by third-party market participants. In exchange, the Company receives a new liquidity pool position that represents a different unit of account from the contributed digital assets. Accordingly, the Company derecognizes the digital assets contributed and recognizes the liquidity pool position at cost, measured based on the fair value of the digital assets deposited at the time of the transaction. Any difference between the fair value used to measure the liquidity pool position and the carrying amounts of the digital assets derecognized is recognized as a realized gain or loss on digital asset transactions in the statements of operations.

While a liquidity pool position remains open, the relative amounts of the underlying digital assets attributable to the position may change as a result of automated market maker activity, price movements, and third-party interactions with the pool. The Company treats these changes as internal economic rebalancing of the liquidity pool position and does not recognize separate gains or losses from changes in the underlying asset mix while the position remains open.

Upon withdrawal from a liquidity pool, the Company derecognizes the liquidity pool position, or the portion withdrawn, and recognizes the digital assets received at fair value. Any difference between the carrying value of the liquidity pool position derecognized and the fair value of the digital assets received is recognized as a realized gain or loss in the statements of operations.

Fees and other rewards earned through participation in liquidity pools are recognized as DeFi revenues in accordance with ASC 606 as the Company’s liquidity provision performance obligation is satisfied and are measured based on the fair value of the digital assets earned.

See Note 5 –Digital Assets (Liquidity Pool Positions and Other Intangible Digital Assets) for additional information.

Operating Segments

The Company’s blockchain operations include three primary revenue-generating activities: 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”), the Chief Financial Officer (“CFO”) and the Chief Technology Officer (“CTO”), who are responsible for evaluating the Company’s financial performance, managing operations, and allocating capital and resources.

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

While the CODMs evaluate 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 8 –Segment Reporting for more information.

Revenue Recognition

The Company recognizes revenue under ASC 606*, Revenue from Contracts with Customers.*The Company’s revenues are generated from blockchain-based operations and comprise staking rewards earned from validator node operations (NodeOps), execution-layer transaction fees, priority fees and maximal extractable value (“MEV”) rewards earned from block-building activities (Builder+), and protocol-driven rewards and transaction-based fees earned from participation in DeFi protocols (Imperium), including decentralized lending and liquidity pool activities.

The timing of revenue recognition depends on the nature of the underlying blockchain or DeFi activity. Revenues from NodeOps and Builder+ are generally recognized at a point in time when the applicable validation, attestation, block proposal or constructed block is confirmed or finalized on-chain and the related digital asset consideration is earned or made available to the Company. Revenues from DeFi lending and liquidity pool activities are recognized continuously during the period in which the Company’s digital assets are deployed and available to the applicable protocol, as protocol-defined fees and rewards accrue and are earned under the applicable protocol mechanics. For liquidity pool activities, fees and other rewards are earned based on the Company’s proportional participation in the pool and applicable protocol activity while the liquidity position remains deployed. Revenue is measured based on the fair value of the native digital assets or stablecoins earned at the time the consideration is earned. Substantially all revenues are earned and settled in native digital assets and stablecoins. See Note 7–Revenues and Cost of Revenues for further information.

Cost of revenues consists primarily of direct expenses incurred in connection with the Company’s blockchain infrastructure and decentralized finance operations, including hosting, infrastructure costs, validator payments, and other direct on-chain costs. Such costs may include expenses associated with DeFi activities, such as transaction fees and other protocol-related costs incurred in connection with digital asset deployment. See Note 7 –Revenues and Cost of Revenues for further information.

Research and Development

Research and development (“R&D”) costs are accounted for in accordance with ASC 730,Research and Development. R&D costs consist primarily of employee compensation, fees paid to third-party contractors and consultants, data and software costs, and other expenses incurred in connection with the development and evaluation of the Company’s blockchain infrastructure and DeFi capabilities. These activities include block-building systems and DeFi-related infrastructure and tools where technological, operational, or economic feasibility has not yet been established.

R&D costs are expensed as incurred. The Company allocates employee compensation to R&D based on management’s estimate of the time devoted to research and development activities during the period.

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 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 valuation of digital assets, including fair value measurements and the recoverability of indefinite-lived intangible digital assets, stock-based compensation, the valuation allowance 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, market conditions, or other factors, including those affecting digital asset prices and decentralized finance protocols, 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 aschange 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 6 -Fair Value Measurements).

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.

All outstanding liability-classified warrants expired during the three months ended March 31, 2026 and as a result, there wereno liability-classified warrants outstanding as of March 31, 2026.

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. Compensation cost is recognized only for those awards that are expected to vest, and previously recognized compensation cost is reversed in the period in which an award is forfeited due to failure to satisfy the applicable vesting conditions.

Share-based payments

Share-based payment arrangements include equity instruments issued in exchange for employee and nonemployee services, including arrangements used to satisfy compensation obligations such as performance-based compensation and director compensation. Awards are measured at the fair value on the estimated grant date and recognized as compensation cost over the requisite service period, unless the award is fully vested at grant, in which case compensation cost is recognized on the 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 value of the Company’s stock at the date of grant and expire up toten years from the date of grant. These options generally vest over aone-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 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 and Restricted Stock Units (RSUs)

The Company grants restricted stock and restricted stock units as part of its stock-based compensation arrangements. Restricted stock represents issued common shares that are subject to forfeiture until vesting conditions are satisfied, whereas restricted stock units represent the right to receive common shares upon satisfaction of vesting conditions. Restricted stock and restricted stock units may include service conditions, performance conditions, or market conditions.

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 Restricted Stock and 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.

DeFi Borrowings

When the Company borrows under a DeFi protocol, the Company’s borrowings are currently denominated primarily in USD-pegged stablecoins, such as USDT, USDC or GHO, rather than ETH or other non-USD-pegged digital assets. Such arrangements are recognized as financial liabilities in accordance with ASC 470 and are measured at the principal amount of the stablecoin units borrowed, net of repayments. Because the borrowed stablecoins are designed to maintain a value substantially equivalent to one U.S. dollar, management believes the carrying amount of the liability approximates the U.S. dollar value of the settlement obligation. Such borrowings are presented on the balance sheet asLoans payable – DeFi protocol.

Borrowings are collateralized by the Company’s digital assets, such as ETH, which are deposited into protocol-specific smart contracts as collateral. The deposited collateral remains recorded on the balance sheet withinDigital 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 – Digital 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.

Dividends

Dividends are recognized when approved by the Board of Directors and payable to stockholders. Cash dividends are recorded at the declared amount, and noncash dividends, including distributions settled in Ethereum, are measured at the fair value of the assets to be distributed when the dividend payable is recorded, with any difference upon settlement recognized in the statements of operations underLoss on settlement of dividend payable. Dividends subject to conditions or participation rights contingent upon conversion of outstanding convertible notes are not recorded until the obligation becomes determinable and payable.

Share Repurchases

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.

Advertising Expense

Advertisement costs are expensed as incurred and included in Marketing expenses.

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 losses for the three months ended March 31, 2026 and 2025. The following potentially dilutive securities were excluded from the computation of diluted loss per share during the 2026 and 2025 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 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 were 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 adopted ASU 2023-09 for the year ended December 31, 2025 in its Form 10-K. The adoption expanded the Company’s income tax disclosures within Note 14 –Income Taxes and did not have a material impact on the Company’s 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 guidance and interpretive publications from the American Institute of Certified Public Accountants (“AICPA”), as well as regulations and guidance from the Securities and Exchange Commission (“SEC”), did not, or are not expected to have a material impact on the Company’s present or future financial statements.

Note 4 –Digital Assets (Fair Value)

The following tables present the Company’s digital assets held as of March 31, 2026 and December 31, 2025:

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

Category Descriptions

Fair Value Measurement

All categories of digital 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 6 –Fair Value Measurements). 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.

Unrealized gains and losses on digital assets represent the period-over-period change in the fair value of digital assets held by the Company and are recognized in earnings in the period in which the change occurs.

Rollforward of Digital Assets Measured at Fair Value

The following table presents a roll forward of the Company’s digital assets measured at fair value for the three months ended March 31, 2026:

Note 5 -Digital Assets (Liquidity Pool Positions and Other Intangible Digital Assets)

The Company holds certain digital assets that are not measured at fair value on a recurring basis and are instead accounted for as indefinite-lived intangible assets in accordance with ASC 350. These assets consist of (i) tokenized LP positions and (ii) NFTs, which primarily represent digital art. These assets are distinct from digital assets measured at fair value, which are presented separately in Note 4.

LP positions represent the Company’s ownership interest in decentralized exchange liquidity pools and provide exposure to a proportional share of the underlying pooled digital assets, pool-generated fees and other rewards, where applicable. These assets do not represent ownership interests in a legal entity or contractual rights to cash flows and are therefore accounted for as indefinite-lived intangible assets.

As of March 31, 2026 and December 31, 2025, the carrying value of these assets consisted of:

Activity Rollforward

The following table presents the activity of the Company’s digital assets accounted for as indefinite-lived intangible assets:

Deposits into liquidity pools represent the Company’s contribution of digital assets into decentralized exchange protocols in exchange for LP positions. Withdrawals represent the redemption of such positions for underlying digital assets.

Realized gains or losses are recognized upon withdrawal based on the difference between the carrying value of LP position and the fair value of the digital assets received. Realized gains or losses are included in realized gains or losses on digital asset transactions in the statements of operations.

During the three months ended March 31, 2026, the Company recognized impairment losses of approximately $210,000 related to its LP positions and NFTs. Impairment losses are included inimpairment loss on intangible digital assets in the statements of operations.

Due to the absence of quoted market prices for LP positions, the Company estimates fair value based on the observable value of the underlying assets in the liquidity pools, considering pool composition, liquidity. and quoted market prices for the underlying digital assets. See Note 6 –Fair Value Measurements for additional information regarding nonrecurring fair value measurements.

Note 6 -Fair Value Measurements

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 assets or liabilities that are accessible at the measurement date.

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 digital assets measured at fair value, which include assets held in treasury, deployed in DeFi protocols, and staked in validator operations, are accounted for in accordance with ASC 350-60 and are valued 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.

The Company also holds certain digital assets, including liquidity pool positions and NFTs that are accounted for as indefinite-lived intangible assets under ASC 350 and are measured at cost less impairment. These assets are not measured at fair value on a recurring basis and, therefore, are not included in the recurring fair value hierarchy disclosures presented in this note. To the extent impairment is recognized, the related fair value measurement is disclosed as a nonrecurring fair value measurement. See Note 5 –Digital Assets (Liquidity Pool Positions and Other Intangible Digital Assets) for additional information.

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 digital assets measured at fair value on a recurring basis are classified as Level 1.

Financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities, accrued compensation, accrued interest, loans payable – DeFi protocol, and convertible notes payable.

The carrying amounts of cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities, accrued compensation, and accrued interest approximate fair value due to the short-term nature of these instruments.

The carrying amount of loans payable – DeFi protocol approximates fair value because the borrowings are denominated primarily in USD-pegged stablecoins, bear variable rates determined by the applicable DeFi protocol, have no fixed maturity, and may be repaid or liquidated in accordance with protocol terms; the related fair value measurement would be categorized within Level 2 of the fair value hierarchy.

The Company’s convertible notes payable are carried at amortized cost, net of unamortized debt discount and issuance costs. Management believes the estimated fair value of the convertible notes approximated carrying value as of March 31, 2026 and December 31, 2025; the related fair value measurement would be categorized within Level 3 of the fair value hierarchy due to the absence of an active market for the notes and the use of significant unobservable inputs, including the Company’s estimated credit risk, liquidity considerations, and assumptions regarding conversion and settlement.

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 as of March 31, 2026 and December 31, 2025. Private equity investments accounted for under the ASC 321 measurement alternative are not measured at fair value on a recurring basis and are presented separately below.

The Company did not make any transfers between the levels of the fair value hierarchy during the three months ended March 31, 2026.

Level 3 Liabilities

Level 3 financial liabilities previously consisted of warrant liabilities for which there was no active market and fair value was determined using valuation models incorporating unobservable inputs.

The warrant liabilities originated from warrants issued in a prior financing transaction and were previously classified as derivative liabilities. These warrants were classified as derivative liabilities because certain terms could have required net-cash settlement under circumstances outside the Company’s control. Prior to their expiration, the warrant liabilities were measured at fair value using an option pricing model that incorporated inputs such as the Company’s stock price, expected volatility, risk-free interest rate, and expected term.

All outstanding liability-classified warrants expired during the three months ended March 31, 2026. As a result, there were no warrant liabilities outstanding as of March 31, 2026, and the Company will no longer remeasure warrant liabilities in future periods. As of December 31, 2025, the estimated fair value of these warrant liabilities was approximately $0.

Private Equity Investments Accounted for Under ASC 321 Measurement Alternative

The Company holds private equity investments without readily determinable fair values. The Company has elected to account for these investments using the measurement alternative under ASC 321,Investments—Equity Securities, under which such investments are measured at cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

As of March 31, 2026 and December 31, 2025, the carrying amount of the Company’s private equity investments accounted for under the measurement alternative was $600,000 and $600,000, respectively. No impairments, upward adjustments, or downward adjustments were recognized during the three months ended March 31, 2026.

The following table summarizes changes in the carrying amount of private equity investments accounted for under the ASC 321 measurement alternative for the three months ended March 31, 2026 and the year ended December 31, 2025:

Nonrecurring Fair Value Measurements of Intangible Digital Assets

The Company holds certain digital assets, including liquidity pool positions and NFTs, that are accounted for as indefinite-lived intangible assets under ASC 350 and measured at cost less impairment. These assets are not measured at fair value on a recurring basis and, therefore, are excluded from the recurring fair value hierarchy tables presented below. When the Company recognizes an impairment loss, the fair value measurement used to measure the impairment represents a nonrecurring fair value measurement under ASC 820. See Note 5 –Digital Assets (Liquidity Pool Positions and Other Intangible Digital Assets) for additional information.

During the three months ended March 31, 2026, the Company recognized impairment losses of approximately $210,000 related to intangible digital assets, including approximately $194,000 impairment of liquidity pool positions and approximately $16,000 impairment of NFTS, because the carrying amounts of certain assets exceeded their estimated fair values. After recognizing impairment, the carrying amounts of liquidity pool positions and NFTs as of March 31, 2026 were approximately $11,358,000 and $26,000, respectively. To the extent the related assets were written down to fair value during the period, these amounts represent the assets’ fair values as of the March 31, 2026 nonrecurring measurement date. The impairment losses are included inimpairment loss on intangible digital assets in the statements of operations.

The fair value of liquidity pool positions was estimated using a market approach based on the observable value of the underlying digital assets withdrawable from the applicable liquidity pools as of the measurement date, including observable on-chain pool composition, pool liquidity and quoted market prices for the underlying digital assets. Because the measurement was based principally on observable inputs and no significant unobservable adjustments were applied, the related nonrecurring fair value measurement was categorized within Level 2 of the fair value hierarchy.

The fair value of NFTs was estimated using a market approach based on available NFT marketplace information, including recent transactions, floor prices or other marketplace indications for comparable NFTs, as adjusted for asset-specific characteristics and limited market activity. The related nonrecurring fair value measurement was categorized within Level 3 of the fair value hierarchy because there are no quoted prices in active markets for identical NFTs and the measurement involves management judgment. For the Level 3 NFT measurement, significant unobservable inputs consisted primarily of management’s judgment in selecting comparable NFT marketplace data and evaluating asset-specific characteristics and market activity. The Company did not develop material quantitative unobservable adjustments in measuring fair value.

Note 7 –Revenues and Cost of Revenues

Revenue Recognition

The Company generates revenue from blockchain infrastructure operations, including validator node operations, block building activities, and DeFi arrangements. These revenue streams are accounted for under ASC 606*, Revenue from Contracts with Customers*, as the Company provides services that generate consideration in the form of digital assets.

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 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 digital assets, such as ETH or other network tokens, represents non-cash consideration at fair value on the date the digital assets are earned.

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

NodeOps

The Company operates digital asset validator nodes on the Ethereum network (“NodeOps”) through which it participates directly in the network’s consensus mechanism. In this role, the Company stakes its own digital assets to validate transactions and propose or attest to blocks on the Ethereum blockchain. Staked assets are subject to protocol-defined lock-up and withdrawal periods.

In exchange for validating transactions and participating in block production, the Company earns protocol-determined rewards, including consensus layer issuance and priority fees, which are distributed by the Ethereum network as part of its consensus mechanism.

The Company earns these rewards directly from the Ethereum protocol, which calculates and distributes such rewards to the Company’s digital wallets, and does not act as an agent or intermediary for third parties.

The provision of validation services represents an output of the Company’s ordinary activities. Validation activities, including block proposals and attestations, represent the Company’s performance obligations. The performance obligation is satisfied at a point in time when the validation is confirmed by the network and the associated rewards are earned and available for transfer, at which 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 associated with user transactions included in a finalized BSC block are paid directly to the Validator’s coinbase address and are not received by the Builder. Instead, the Builder earns revenue in the form of BNB-denominated tips that are directed to a Builder-controlled tip smart contract as priority fees and transferred or made available to the Company as part of the block-level settlement mechanics for each successfully finalized block.

Builder performance obligations on BSC are satisfied on a block-by-block basis when the constructed block is selected and proposed by a Validator and finalized on-chain. Each finalized block is considered a separate performance obligation. The Company recognizes BSC block-building revenue at the time each block is finalized and the related BNB-denominated tips are transferred or otherwise made available to the Company, measured at the fair value of BNB at that time.

In connection with BSC block building, the Company includes a Builder-specified bid payment, structured through a self-transfer transaction appended by the Builder, to incentivize the Validator to select the Company’s block. Such payments are recorded as cost of revenues because they represent direct costs of fulfilling the BSC block-building performance obligation.

Imperium

DeFi Lending Revenue (Aave)

The Company earns rewards from DeFi lending arrangements, primarily through the Aave protocol, by supplying digital assets to decentralized lending pools. These arrangements generate variable returns based on supply and demand dynamics within the protocol.

When the Company deposits ETH into Aave, the underlying ETH remains recognized at fair value on the balance sheet, consistent with the accounting policy described in Note 3. The Company earns variable rewards, typically in ETH, which accrue continuously based on utilization of the lending pool.

The Company has concluded that its participation in these arrangements represents a performance obligation satisfied over time, as the protocol’s users simultaneously receive and consume the benefits of the Company’s supplied liquidity. Revenue is recognized over time in proportion to rewards earned and is measured at the fair value of the digital assets at the time the consideration is earned. Variable consideration is constrained to amounts not subject to significant reversal in accordance with ASC 606-10-32-11.

Liquidity Pool Revenue

The Company also earns fees and other rewards through participation in decentralized exchange liquidity pools. By depositing digital assets into these pools, the Company provides liquidity to decentralized markets and earns a proportional share of fees generated by the protocol.

In contrast to DeFi lending arrangements, deposits into liquidity pools result in the derecognition of the underlying digital assets and the recognition of liquidity pool positions accounted for as indefinite-lived intangible assets, as described in Note 3 and Note 5.

The Company’s participation in liquidity pools represents a performance obligation satisfied over time, as liquidity is continuously provided to the protocol. Revenue is recognized over time based on the Company’s proportional share of fees and other rewards generated and is measured at the fair value of digital assets received at the time the fees are earned. Variable consideration is constrained to amounts not subject to significant reversal.

Revenues earned through Imperium are classified asDeFi revenues in the statements of operations. The Company is considered the principal in these arrangements because it controls the deployment of its digital 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.

Disaggregation of Revenues

The following table summarizes the revenues earned from the Company’s operations for the three months ended March 31, 2026 and 2025:

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, allocated employee compensation related to the monitoring, maintenance and support 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 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.

Disaggregation of Cost of Revenues

The following table further details the costs of revenues for the three months ended March 31, 2026 and 2025:

Note 8 –Segment Reporting

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 on-chain revenue generation.

DeFi activities include both DeFi lending arrangements and decentralized exchange liquidity pool participation, which have distinct economic characteristics but are managed together within the Company’s DeFi operations.

Gross profit (loss) is the primary measure of segment performance reviewed by the Company’s CODMs, which comprises members of executive management including the Chief Executive Officer and Chief Financial Officer. In evaluating performance and allocating resources, the CODMs 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 CODMs for decision-making purposes, including validator payments, infrastructure hosting costs, allocated employee compensation, and other direct operating costs associated with blockchain infrastructure and DeFi operations.

The following tables present segment revenue and gross profit (loss), including the significant expense items reviewed by the CODMs, for the three months ended March 31, 2026 and 2025:

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

Note 9 –Stockholders’ Equity

Common Stock

As of March 31, 2026 the Company had 975,000,000 shares of Common Stock, $0.001 par value, authorized, of which 49,775,371 shares were issued and outstanding.

At The Market Offering Agreement

The Company has 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. The ATM Agreement operates under the Company’s effective registration statement, which registers up to $2,000,000,000 of securities for potential future issuance, and provides for a commission to H.C. Wainwright of up to 3.0% of the gross proceeds from sales.

During the three months ended March 31, 2026, the Company did not sell any shares of Common Stock under the ATM Agreement. During the three months ended March 31, 2025, the Company sold a total of 127,249 shares of Common Stock under the ATM Agreement for aggregate gross proceeds of approximately $238,000 at an average selling price of $1.87 per share, resulting in net proceeds of approximately $229,000 after deducting commissions and other transaction costs.

Share Repurchase Program

The Company has a share repurchase program authorizing the repurchase of up to $50 million of its common stock. Repurchases may be made from time to time in the open market or in privately negotiated transactions 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. Repurchases are subject to certain pricing and timing limitations, including those related to the Company’s fair value and named executive officer trading plans. The program does not obligate the Company to repurchase any specific number of shares and may be modified, suspended, or discontinued at any time.

During the three months ended March 31, 2026, the Company did not repurchase any shares of its common stock. As of March 31, 2026, approximately $46,000,000 remained available for repurchases under the authorization.

Stock Purchase Warrants

The following is a summary of warrant activity for the three months ended March 31, 2026:

As of March 31, 2026, no warrants were classified as derivative liabilities, as all liability-classified warrants expired during the period. The remaining warrants issued in connection with the convertible notes are classified as equity.

Preferred Stock

Series V

In 2023, the Company issued Series V Preferred Stock to shareholders on a one-for-one basis. The Series V is non-convertible, has a 20% liquidation preference over common stock, is non-voting, and includes certain rights to dividends and distributions at the discretion of the Board.

In 2024, stockholders approved an amendment to the Certificate of Designation to provide the Board discretion to convert each share of Series V into one share of common stock. As of March 31, 2026, the Board has not elected to convert any Series V shares.

As of March 31, 2026, the Company had Series V Preferred Stock authorized, of which 15,671,405 shares were issued and outstanding as of March 31, 2026.

Certain shares of Series V Preferred Stock have been issued as restricted shares in connection with the conversion of RSUs to restricted shares of common stock in prior periods. These restricted shares remain subject to the original vesting conditions of the underlying RSU awards, including market-based and service-based vesting criteria.

As of March 31, 2026, the Company had approximately 278,000 restricted shares of Series V Preferred Stock outstanding. These restricted shares do not participate in voting rights and are subject to forfeiture if the underlying vesting conditions are not satisfied.

Share-Based Compensation

Share-based compensation, including options, RSUs, restricted shares, and share payments, may be granted to directors and employees of the Company under the Company’s 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan became effective on January 1, 2021, was approved by shareholders on March 31, 2021, and was amended on June 13, 2022. On July 11, 2023, the Company received shareholder approval to increase the number of shares authorized for issuance under the 2021 Plan from 7,000,000 shares to 12,000,000 shares.

As of March 31, 2026, the Company had approximately 205,647 shares remaining available for future grants under the 2021 Plan, after giving effect to RSU awards granted under the 2026 LTI Program that were issued within the existing authorized share limit.

During the three months ended March 31, 2026, the Company approved additional RSU awards under the 2026 LTI Program in excess of the number of shares currently authorized for issuance under the 2021 Plan. The portion of such awards that exceeds the currently authorized share limit is subject to stockholder approval of an increase in the number of authorized shares at the Company’s 2026 Annual Meeting of Stockholders. No shares underlying such awards will be issued unless and until stockholder approval is obtained.

For accounting purposes, RSUs approved within the existing authorized share limit are considered granted as of January 1, 2026. RSUs approved in excess of the currently authorized share limit are not considered granted for accounting purposes until stockholder approval is obtained.

However, for the three months ended March 31, 2026, the Company has included all RSUs approved under the 2026 LTI Program in the RSU activity and ending balances presented below and has recognized stock-based compensation expense for such awards based on an estimated fair value using the closing price of the Company’s common stock on January 1, 2026, consistent with ASC 718 guidance for awards with unresolved grant date conditions.

Upon receipt of stockholder approval, the Company will establish the grant date for such awards and will remeasure the fair value based on the closing price of the Company’s common stock on the grant date. Any difference between the estimated fair value and the grant date fair value will be recognized as an adjustment to stock-based compensation expense on a prospective basis over the remaining requisite service period.

RSUs and Restricted Shares

The Company grants RSUs, including long-term incentive (“LTI”) awards, to employees and officers under its equity incentive plans as part of its overall compensation and retention strategy. RSUs are generally subject to service-based vesting conditions and, in certain cases, market-based performance conditions.

In certain circumstances, RSUs may be settled through the issuance of restricted shares of common stock, including in connection with tax elections or other administrative considerations, while retaining the original vesting conditions of the underlying awards. Certain RSUs are entitled to dividend equivalents, including Series V preferred stock, and may be settled in a combination of common stock and Series V preferred stock, as applicable.

RSU forfeitures represent unvested awards that were cancelled in connection with employee departures in the ordinary course of business.

The following tables present the activity in RSUs and restricted shares for the three months ended March 31, 2026, followed by additional detail regarding the nature, valuation, and vesting conditions of such awards.

RSU Activity Rollforward

The RSU activity presented above includes all RSUs approved under the 2026 LTI Program, including awards subject to stockholder approval for additional authorized shares under the 2021 Plan.

Restricted Stock Activity Rollforward

Restricted shares of common stock outstanding primarily relate to RSUs that were previously converted into restricted shares, including in connection with tax planning strategies (e.g., Section 83(b) elections), and continue to be subject to the original vesting conditions of the underlying awards.

The outstanding and nonvested balance of restricted shares as of December 31, 2025 primarily represents legacy LTI awards that were previously converted from RSUs and are subject to a combination of market-based performance conditions (including a requirement for the Company to achieve a specified market capitalization threshold of $300 million) and service-based vesting conditions. During the three months ended March 31, 2026, the increase in nonvested restricted shares primarily reflects the conversion of RSUs granted under the 2026 LTI Program into restricted shares, which continue to be subject to their respective vesting conditions. Compensation expense for awards subject to market conditions is recognized regardless of whether the market condition is ultimately achieved.

Granted Shares - LTI RSU Issuances (2026)

Aggregate RSU Awards and Share Availability

During the three months ended March 31, 2026, the Board approved a long-term incentive program for 2026 (the “2026 LTI Program”) that contemplates the issuance of restricted stock units, certain of which were granted pursuant to the Company’s 2021 Equity Incentive Plan, as described below, and certain of which will be subject to the availability of additional shares under the Plan and any required stockholder approvals.

During the three months ended March 31, 2026, the Company approved an aggregate of 5,424,248 RSUs under the 2026 LTI Program. Of these awards,2,712,108 RSUs were approved within the existing authorized share limit under the 2021 Plan, and 2,712,140 RSUs are subject to stockholder approval of an increase in authorized shares under the Plan. The amounts presented above reflect RSUs approved by the Board during the period and are not adjusted for subsequent forfeitures. Such forfeitures are reflected in the RSU activity rollforward presented above.

The allocation of RSUs between awards granted under the Plan and those subject to stockholder approval, as well as the timing of issuance, depends on share availability and the receipt of such stockholder approval. No shares of common stock underlying RSUs will be issued until the applicable RSUs have vested and, with respect to RSUs subject to stockholder approval, such approval has been obtained.

Vesting Framework Applicable to 2026 Long-Term Incentive RSUs

RSUs granted under the 2026 LTI Program vest over a five-year period based on a combination of stock price performance, market capitalization performance, and continued service. Each vesting milestone represents a specified percentage of the total RSUs granted to a recipient, with the number of RSUs that vest upon satisfaction of any milestone determined in accordance with the applicable RSU award agreement and the Plan.

As of March 31, 2026, the Company had 5,272,732 unvested equity awards outstanding under the 2026 LTI Program (net of forfeitures), consisting of RSUs and restricted shares that remain subject to vesting conditions. These awards consisted of:

A portion of these awards has been converted from RSUs into restricted shares of common stock; however, such conversions did not change the underlying vesting conditions or the accounting treatment of the awards.

These awards represent the Company’s primary long-term incentive structure and are expected to result in continued stock-based compensation expense over the remaining vesting periods.

The recognition of this expense will vary based on the vesting conditions of the underlying awards. Expense related to service-based awards will be recognized on a straight-line basis over the requisite service period, while expense related to market-based awards will be recognized over the derived service period regardless of whether the applicable market conditions are ultimately achieved.

Valuation of RSUs

The fair value of RSUs granted with market-based vesting conditions, including stock price and market capitalization targets, was estimated using a Monte Carlo simulation model. The following assumptions were used in the Monte Carlo simulation model for RSUs granted on January 1, 2026:

The weighted-average grant date fair value of RSUs with market-based vesting conditions was approximately $2.21 per unit.

For RSUs with only service-based vesting conditions that are subject to stockholder approval, a grant date has not yet been established for accounting purposes. Accordingly, the Company has used the closing price of its common stock on January 1, 2026 as an estimate of fair value for purposes of recognizing stock-based compensation expense during the three months ended March 31, 2026. Upon receipt of stockholder approval, the Company will establish the grant date for accounting purposes and will remeasure the fair value of such awards based on the closing price of the Company’s common stock on the grant date. Any difference between the estimated fair value and the grant date fair value will be recognized as an adjustment to stock-based compensation expense on a prospective basis over the remaining requisite service period.

Additional Provisions

Stock price performance milestones are achieved when the closing price of the Company’s common stock equals or exceeds the applicable threshold for 20 consecutive calendar days. Market capitalization performance milestones are achieved when the Company’s market capitalization equals or exceeds the applicable threshold for 20 consecutive calendar days, with market capitalization calculated as the number of shares of common stock outstanding on a given day, as reported by the Company’s transfer agent, multiplied by the closing stock price on such day.

The stock price and market capitalization performance thresholds will be equitably adjusted by the Board or the Compensation Committee to reflect any stock split, reverse stock split, stock dividend, recapitalization, reclassification, or similar transaction, in each case in a manner intended to preserve the original economic intent of the awards.

Continued service milestones vest solely based on the recipient’s continued employment with the Company through the applicable vesting date, subject to the terms of the applicable RSU award agreement and the Plan.

All RSUs granted under the 2026 LTI Program are subject to the terms and conditions of the Plan and applicable RSU award agreements, including provisions relating to forfeiture, termination of service, change in control, and clawback, as applicable.

Conversion of RSUs to Restricted Common Stock

On February 23, 2026,2,590,897 RSUs were converted into restricted shares of Common Stock issued to executive officers and employees. The restricted shares of Common Stock retain the original vesting conditions of the RSUs, including multiple market capitalization and stock price vesting thresholds, as well as time-based vesting schedules, which range from one to five years. These conversions were made primarily to permit recipients to make elections under Section 83(b) of the Internal Revenue Code.

The conversion of RSUs to restricted shares did not result in incremental compensation cost, as the awards retained the same underlying vesting conditions and fair value measurement established at the original grant date.

All RSUs granted under the 2026 LTI Program are subject to the terms and conditions of the Plan and applicable RSU award agreements, including provisions relating to forfeiture, termination of service, change in control, and clawback, as applicable.

Options

The Company grants stock options to employees and officers under its equity incentive plans as part of its overall compensation and retention strategy. Stock options are generally granted with service-based vesting conditions and contractual terms of up to seven years.

During the three months ended March 31, 2026, stock options were granted primarily in connection with the settlement of performance-based bonuses earned for fiscal year 2025 and paid in equity in January 2026. During the three months ended March 31, 2025, stock options were granted primarily in connection with: (i) the settlement of performance-based bonuses earned for fiscal year 2024 and paid in equity in January 2025; and (ii) sign-on and retention equity awards granted to new employees.

A summary of options activity under the Company’s stock option plan for the three months ended March 31, 2026 and 2025 are presented below:

Option forfeitures reflect unvested awards that were cancelled in connection with employee departures in the ordinary course of business.

The following weighted-average assumptions were used to estimate the fair value of options granted during the three months ended March 31, 2026 and 2025, using the Black-Scholes model:

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

Other Share-Based Payments

Performance-Based Compensation

The Company maintains performance-based incentive compensation programs for officers and employees, which may be settled in cash, shares of common stock, stock options, or a combination thereof, as approved by the Board of Directors. Compensation expense related to performance-based bonuses is recognized in the period in which the applicable performance conditions are achieved or deemed probable. Amounts accrued but not yet settled are recorded withinAccrued compensation on the balance sheets until payment or issuance.

For the three months ended March 31, 2026, the Company issued 398,208 shares of common stock to officers and employees in January 2026 as part of the settlement of accrued bonus compensation earned for the year ended December 31, 2025. The total fair value of the shares issued was approximately $1,051,000 based on the Company’s closing stock price on the issuance date. Of the shares issued,87,602 were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 310,606 shares of common stock. The issuance of shares represents the settlement of previously accrued compensation and did not result in additional stock-based compensation expense during the period.

For the three months ended March 31, 2025, the Company issued 329,110 shares of common stock to officers and employees in January 2025 as part of the settlement of accrued bonus compensation earned 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.

Accrued compensation included approximately $251,000 and $1,609,000 related to performance-based bonus accruals as of March 31, 2026 and December 31, 2025, respectively.

Board Compensation

Effective January 19, 2023, the Board approved the issuance of $50,000 of common stock to each independent director, payable in four equal quarterly installments of $12,500, subject to continued service. The number of shares issued is based on the closing price of the Company’s common stock on the last trading day prior to each quarter-end.

For the three months ended March 31, 2026,26,979 shares of common stock approximating $37,500 were issued to independent directors related to the quarterly approved issuances. For the three months ended March 31, 2025,25,002 shares of common stock approximating $38,000 were issued to independent directors related to the quarterly approved issuances.

Stock-based Compensation

Stock-based compensation expenses are recorded as a part of general and administrative expenses, compensation expenses and cost of revenues. Stock-based compensation expenses for the three months ended March 31, 2026 and 2025 were as follows:

As of March 31, 2026, the Company had approximately $1,981,770 of unrecognized stock-based compensation cost related to unvested stock option awards, which is expected to be recognized over a weighted-average period of 0.54 years, and $11,793,973 of unrecognized stock-based compensation cost related to unvested restricted stock and RSU awards, which is expected to be recognized over a weighted-average period of 1.98 years.

A significant portion of the unrecognized compensation cost relates to awards subject to market-based vesting conditions, which may result in variable expense recognition over the remaining service periods of such awards.

Note 10 –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 digital assets. The Company accounts for these borrowings as financial liabilities in accordance with ASC 470, as the arrangements represent obligations to repay borrowed 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. Such liquidation events could result in material losses and the Company has no recourse against the protocol or any counterparty in the event of liquidation, technical failure, smart contract vulnerabilities, or oracle manipulation. 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 ETH collateral. As of March 31, 2026, the Company has not experienced any full or partial liquidation events related to these borrowings.

During the three months ended March 31, 2026, the Company borrowed an aggregate of approximately $500,000.

The following table summarizes the Company’s DeFi borrowing activity during the three months ended March 31, 2026:

As of March 31, 2026, the Company’s outstanding DeFi borrowings were denominated primarily in USD-pegged stablecoins, including USDT and GHO, rather than ETH or other non-USD-pegged digital assets. The Company’s obligation is to repay the borrowed stablecoin units, plus accrued protocol interest, in accordance with Aave’s protocol terms. Because the borrowed stablecoins are designed to maintain a value substantially equivalent to one U.S. dollar, management believes the carrying amount of the borrowings approximates the U.S. dollar value of the settlement obligation. See Note 6 –Fair Value Measurements for additional information regarding the estimated fair value of outstanding DeFi borrowings.

As of March 31, 2026, the Company had approximately 49,970 Aave aEthWETH tokens representing wrapped ETH deployed within DeFi protocols and serving as collateral for outstanding borrowings, with a fair value of approximately $105,135,000. These assets remain recorded as ETH withinDigital 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 –Digital Assets (Fair Value) 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 for each borrowed asset. These rates are published and updated in real-time on the Aave protocol’s website. During the three months ended March 31, 2026, the weighted-average annualized borrowing rate on the Company’s DeFi borrowings was 3.65%, calculated based on the applicable protocol borrowing rates and outstanding USDT and GHO borrowings during the period.

For the three months ended March 31, 2026, the Company recognized approximately $469,000 in interest expense, of which approximately $219,000 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 $9,547,500, 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 61 days 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.

Interest Expense

For the three months ended March 31, 2026, the Company recognized total interest expense of approximately $1,548,000, which includes contractual interest, the amortization of debt discounts and issuance costs using the effective interest method, and variable interest on DeFi borrowings.

Of this amount, approximately $268,000 related to contractual interest on the Company’s convertible notes, approximately $811,000 represented non-cash amortization of debt discount and issuance costs, and approximately $469,000 related to interest incurred on DeFi borrowings.

The Company paid approximately $518,000 of interest during the period, consisting of $268,000 paid in cash and $250,000 paid in stablecoins, with the remainder representing non-cash or accrued amounts.

Note 11 –Dividends and Capital Distributions

Prior Period Dividend

In August 2025, the Company’s Board approved a special dividend of $0.05 per share (the “Bividend”), payable to stockholders of record as of September 26, 2025. The dividend was paid in October 2025 in a combination of cash and ETH. There were no dividends declared during the three months ended March 31, 2026.

Loyalty Payment

In 2025, the Company’s Board approved a one-time loyalty payment of $0.35 per share (the “Loyalty Payment”), payable solely in ETH to eligible holders of common stock who satisfied specified holding and election requirements.

In February 2026, the Company settled the Loyalty Payment through the distribution of approximately 329 ETH, with an aggregate fair value of approximately $723,000 at the time of distribution. The distribution was recognized at its fair value at the time of settlement as a reduction to stockholders’ equity.

Convertible Notes Eligible for Capital Distributions – Contingent Liability

As of March 31, 2026, the Company had outstanding convertible notes that provide holders the right, upon conversion, to participate in dividends or other distributions declared on the Company’s common stock during the period the notes are outstanding, as if the notes had been converted immediately prior to the applicable record date.

As of March 31, 2026, there were approximately 2,107,757 shares of common stock underlying the outstanding convertible notes that would be entitled to such distributions 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 conversion, no liability has been recorded as of March 31, 2026, in accordance with ASC 450-20,Contingencies.

Note 12 –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 three months ended March 31, 2026 and 2025, the Company made contributions to the 401(k) Plan of $179,000 and $122,000, respectively.

Note 13 –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 condensed unaudited financial statements, the Company has historically incurred net losses and has an accumulated deficit of approximately $242,466,000 at March 31, 2026, and net cash used in operating activities of approximately $1,742,000 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 scale its blockchain infrastructure and DeFi operations.

Based on the Company’s cash position and liquid digital assets, consisting primarily of Ethereum held directly and not subject to long-term lockups, as of May 14, 2026, management has determined that these resources are sufficient to support its daily operations and meet its obligations for at least twelve months from the issuance date of these financial statements. Management’s assessment considers expected operating cash flows, scheduled debt service, collateral requirements associated with DeFi borrowings, and potential variability in digital asset prices. Accordingly, management has determined that there is no substantial doubt about the Company’s ability to continue as a going concern.

Note 14 –Related Party Transactions

Related parties include the Company’s executive officers, directors, and entities in which such persons have a beneficial interest.

In May 2025, the Company’s Chairman and Chief Executive Officer and a trust for which he is a beneficiary participated as investors in the Company’s 5% Original Issue Discount Senior Secured Convertible Notes for an aggregate investment of $342,500. The participation by the Chairman and Chief Executive Officer and the related trust was approved by an independent committee of the Board.

As of March 31, 2026, these related parties continue to hold a portion of the outstanding convertible notes, and the Company continues to incur interest expense and has repayment obligations associated with these instruments in accordance with their terms. See Note 10 –Debt for additional information regarding the terms of the convertible notes and related warrants.

Except as described above, the Company did not have any other material related party transactions during the three months ended March 31, 2026.

Note 15 –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 to or disclosure in the financial statements.