USBC, Inc.

1. ORGANIZATION

USBC, Inc. (NYSE American: USBC) is a publicly-traded, diversified technology company with a strategic focus on developing innovative financial-services infrastructure to enable digital-asset banking capabilities and tokenized-deposit solutions for banks. Our principal executive offices are located in Reno, Nevada. We pursue long‐term value creation for our stockholders through advancement of our token offering, the “USBC deposit token,” and alignment of our research and business operations under a unified digital-finance and technology platform.

USBC, Inc. (the “Company”) was incorporated under the laws of the State of Nevada in 1998. As of December 31, 2025, the Company has authorized 750,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share. As of December 31, 2025, only shares of common stock were issued and outstanding.

Corporate History and Development

Until August 2025, the Company operated under the name Know Labs, Inc. and was primarily focused on non-invasive diagnostic and sensor technologies. In August 2025, following the closing of a controlling-interest acquisition by Goldeneye 1995 LLC (an affiliate of our Chairman and Chief Executive Officer, Greg Kidd), the Company changed its corporate name to USBC, Inc. and its ticker symbol to “USBC” on the NYSE American effective August 15, 2025. Our corporate evolution reflects a strategic pivot to a financial-services and digital-assets platform while continuing to maintain technology capabilities from our legacy sensor business.

Securities Purchase Agreement

On June 5, 2025, the Company entered into a Securities Purchase Agreement with Goldeneye 1995 LLC, a Nevada limited liability company, whereby the Company issued 357.8 million shares of the Company’s common stock to the Buyer in a private placement equal to the per share purchase price of $0.335. The transaction was approved by shareholders and subsequently completed on August 6, 2025. The aggregate purchase price for the shares purchased by Goldeneye at the closing of the private placement was an amount equal to: (i) 1,000 Bitcoin ($115,567 per Bitcoin at time of transfer on August 6, 2025) plus (ii) a cash amount of $15 million.

2. LIQUIDITY AND GOING CONCERN

As of December 31, 2025, the Company had cash and cash equivalents of $4.1 million and an accumulated deficit of approximately $190.5 million. The Company has historically incurred recurring operating losses and negative operating cash flows and expects to continue to incur operating losses for the foreseeable future as it continues to invest in the development and scaling of its financial-technology platform and digital-asset initiatives.

For the three months ended December 31, 2025 (transition period), the Company incurred a net loss of approximately $27.5 million. For the fiscal years ended September 30, 2025 and September 30, 2024, the Company incurred net losses of approximately $22.1 million and $16.6 million, respectively.

In accordance with Accounting Standards Codification (“ASC”) 205-40, management evaluated the Company’s ability to continue as a going concern for a period of one year from the date the financial statements are issued. This assessment considered the Company’s cash on hand, expected cash flows from operations, and access to liquidity, including its Bitcoin treasury reserve. Based on this evaluation, management concluded that there is no substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.

In addition to its existing liquidity resources, the Company continually evaluates potential financing alternatives to support its operating plan and long-term growth objectives.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation – These consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include a three-month transition period ended December 31, 2025 resulting from the Company’s change in fiscal year-end. Accordingly, the results for the transition period are not necessarily comparable to the Company’s historical twelve-month fiscal periods. Unless otherwise indicated, references to “fiscal year 2025” refer to the fiscal year ended September 30, 2025, and references to the “Transition Period” refer to the three-month period ended December 31, 2025.

Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Particle. Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates – Management makes estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements including, but not limited to, those estimates related to digital assets, digital assets receivable, derivatives, leases, debt stock-based compensation, and income taxes. Management believes that estimates utilized in preparing the financial statements are reasonable. Estimates, by their nature, are based on judgment and available information. As such, actual results could differ materially from these estimates included in these financial statements.

Cash and Cash Equivalents – The Company classifies highly liquid temporary investments with an original maturity of three months or less as cash equivalents.

Digital Assets – The Company began holding digital assets in the ordinary course of business as a treasury reserve asset upon receiving 1,000 Bitcoin as part of the closing of the Goldeneye capital investment on August 6, 2025. The Company holds Bitcoin principally as a long-term strategic treasury reserve and as a potential source of balance sheet flexibility and liquidity. From time to time, the Company may monetize a portion of its Bitcoin holdings, including through sales or collateralized financing arrangements, to fund operations, working capital needs, strategic initiatives or other corporate purposes.

As of December 31, 2025, the Company solely held Bitcoin in its corporate treasury. The Company views its Bitcoin as a productive asset, a source of liquidity, yield, and long-term capital appreciation. By activating substantially all of its Bitcoin holdings through structured trading arrangements, the Company seeks to generate incremental income that helps fund operations, expand infrastructure, and reduce the Company’s cost of capital. See description of the Company’s accounting policy for its digital asset derivatives below.

The Company generates yield through its derivative activities on its Bitcoin holdings and actively pursues risk-adjusted return opportunities that support its operating expenses. The Company reports its Bitcoin digital assets as part of the line item,non-current assets on the Consolidated Balance Sheets due to the Company’s intent to retain and hold Bitcoin under its Bitcoin investment approach. The Company engages in trading these assets via Bitcoin derivatives. Trades are executed over the counter via third party trading platforms. As of December 31, 2025, the Company had pledged 290 Bitcoin with a fair value of approximately $25.4 million as collateral under certain pledge agreements to support its derivative trading activities. Under the terms of these agreements, the secured party is permitted to exercise control and liquidate such pledged assets under certain conditions, including events of default or margin deficiencies. The Company did not have any events of default or margin deficiencies as of or during the Transition Period.

The 1,000 Bitcoin received on August 6, 2025 as part of the Goldeneye capital investment was recorded at an average price of $115,567 per Bitcoin. During the Transition Period and the fiscal year ended September 30, 2025, the Company obtained 12.757 Bitcoin, and 2.617, respectively, through its trading strategy, which has been recognized as other derivative income, net, in the Consolidated Statements of Operations. While the Company may periodically make open market purchases of Bitcoin or opt to sell a portion of the Bitcoin it obtains through its treasury trading strategy from time to time, the Company did not purchase or sell any Bitcoin or any other digital assets during the Transition Period or in fiscal 2025.

A summary of the Bitcoin outstanding as of December 31, 2025 were as follows:

The Company stores its digital assets with a third-party qualified custodian that employs multi-signature, cold-storage and other industry standard security controls. Access to wallets and private keys is restricted to authorized personnel. The Company evaluates its custodial arrangements periodically and monitors counterparty, operational and cybersecurity risks associated with digital asset custody.

From time to time, blockchain protocols may initiate hard forks or third parties may distribute airdrops that result in the creation or receipt of new digital assets. The Company recognizes such assets only when it obtains control which generally occurs when (i) the asset is accessible within the Company’s custodial wallet environment, (ii) the Company can transfer, sell, or exchange the asset, and (iii) no legal or operational restrictions prevent disposition. When control is obtained, the new asset is recorded at its fair value on the date of recognition in accordance with ASC 820. The corresponding gain is recognized in other income (expense), net, in the Consolidated Statements of Operations. If the Company is unable to access or control the new asset (e.g., due to custodian limitations or unsupported network upgrades), no asset is recognized until such time as control is achieved. The Company does not actively pursue, solicit, or take technical actions to claim hard forks or airdrops and it does not engage in strategies designed to influence protocol events.

Subsequent to the Company’s adoption of ASU 2023-08 on July 1, 2025, the Company accounts for its digital assets, which are comprised solely of Bitcoin, at fair value as of the end of each reporting period. The fair value for its Bitcoin holdings is determined by which eligible market is the Company’s principal market under ASC 820,*Fair Value Measurement.*The Company determines its principal market annually to determine if (i) there have been recent changes to each market volume and level of activity in the trailing twelve months, (ii) if any markets have developed that the Company has access to, or (iii) if recent changes to each market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Company’s determination of its principal market. Bitcoin is considered a level 1 instrument.

The Company does not use derivatives, futures, options, or other hedging instruments to mitigate its exposure to Bitcoin price volatility. Accordingly, the carrying value of Bitcoin may experience significant fluctuations. Changes in the fair value of digital assets from period to period are recognized within change in the fair value of digital assets in the Consolidated Statements of Operations. The Company uses the specific identification method for its digital asset portfolio.

Digital Assets - Receivable, net – The Company pledges Bitcoin as collateral for its derivative trading activities. The digital assets receivables are initially measured upon transfer at fair value and subsequently remeasured at fair value each reporting period. The changes in fair value are recognized on the Consolidated Statements of Operations, in accordance with ASC 2023-08.

The digital assets receivable balance is evaluated for expected credit losses, in accordance with ASC 326 -Financial Instruments - Credit Losses (“ASC 326”). The Company estimates the allowance for credit losses on digital assets receivables under the current expected credit loss (“CECL”) model using a probability of default (“PD”) and loss given default (“LGD”) methodology. In order to apply the PD LGD approach, management considers the remaining expected time horizon of the receivables and reasonable and supportable forecasts of future conditions. If deemed material, an allowance for credit losses is recorded as a valuation account, directly offsetting the digital assets receivables on the Consolidated Balance Sheets. As of December 31, 2025, the Company had digital asset receivables outstanding of $2.3 million. No allowance for credit losses was recorded as of December 31, 2025 based on management’s estimate.

Property and Equipment – Equipment consists of machinery, and furniture and fixtures, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives or lease period of the relevant asset, generally three years. The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset).

Revenue Recognition – The Company will determine revenue recognition from contracts with customers through the following steps:

Revenue will be recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Revenue generated from financial instruments such as derivatives and investments are not subject to Financial Accounting Standards Board (“FASB”) ASC 606 - Revenue from Contracts with Customers (“ASC 606”), including revenue generated from financial instruments, such as derivatives and digital assets. The Company recognizes realized gains and losses, net from the trading of derivative contracts which are reported in other derivative income, net, in the Consolidated Statements of Operations. The Company carries certain assets and liabilities at fair value with changes in fair value reported in Change in fair value of digital assets and other derivative income, net, in the Consolidated Statements of Operations. Refer to Notes 4 and 5 for more information regarding fair value measurement.

Research and Development Expenses – Research and development expenses consist of the cost of officers, employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes.

The Company’s current research and development efforts are primarily focused on improving its radio frequency spectroscopy technology; extending its capacity and developing new and unique applications for this technology. The Company incurred research and development expenses of approximately $254,000 during the Transition Period and $1,752,841 for the year ended September 30, 2025.

**Advertising **– Advertising production and communication costs are expensed as incurred and included in selling, general and administrative expenses. Advertising and marketing expenses were $26,810 during the Transition Period, and $99,808 for the year ended September 30, 2025.

Fair Value Measurements and Financial Instruments – Accounting Standards Codification (“ASC”) Topic 820,Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 – Quoted prices in active markets for identical assets and liabilities;

Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts payable, accrued expenses and accrued expenses - related parties approximate the fair value of the respective assets and liabilities as of December 31, 2025 and September 30, 2025 are based upon the short-term nature of the assets and liabilities. Digital assets and derivatives assets and liabilities are held at fair value in the Consolidated Balance Sheets and measured on a recurring basis.

Derivative Financial Instruments – Pursuant to ASC 815,Derivatives and Hedging, the Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company then determines if an embedded derivative must be bifurcated and separately accounted for. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the Consolidated Statements of Operations. For stock-based derivative financial instruments, the Company uses a Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the Consolidated Balance Sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the consolidated balance sheet date.

Digital Asset Derivatives – As part of its Bitcoin yield generation strategy trading activities, the Company has entered into option derivative contracts on its Bitcoin holdings that resulted in obtaining the right to receive or obligation to deliver a fixed amount of Bitcoin crypto assets in the future. Derivatives are instruments that derive their value from changes in an underlying reference outside the control of the Company. Derivatives may be traded on an exchange (exchange-traded) or they may be privately negotiated contracts, which are usually referred to as over the counter (“OTC”) derivatives. The Manager settled the options in physical delivery. The Company accounted for these derivatives in accordance with ASC 815,Derivatives and Hedging.

These derivative contracts derive their value from underlying asset prices, other inputs, or a combination of these factors. Derivative contracts are recognized as either assets or liabilities in the Consolidated Balance Sheets at fair value, with changes in fair value recognized in other operating expense, net, or other (income) expense, net in the Consolidated Statements of Operations, depending on the nature of the derivative. Cash flows from derivative contracts have been recognized as investing activities and adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities in the Consolidated Statements of Cash Flows, depending on the nature of the derivative.

Stock Based Compensation – The Company maintains a share-based compensation plan under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of Company common stock at the fair market value per share at the time of grant. Stock-based compensation is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. The Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. For an award that has a graded vesting schedule, compensation expense is recognized on a straight-line basis of the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. The amount of compensation cost recognized at any date must at least equal the portion of the grant-date value of the award that is vested at that date.

Convertible Securities – Based upon ASC 815-15, the Company utilized a sequencing approach which outlined the application of ASC 815-40 to convertible securities. The Company evaluated its contracts based upon the earliest issuance date. In the event partial reclassification of contracts subject to ASC 815-40-25 was necessary, due to the Company’s inability to demonstrate it had sufficient shares authorized and unissued, shares were allocated on the basis of issuance date, with the earliest issuance date receiving first allocation of shares. If a reclassification of an instrument were required, it would have resulted in the instrument issued latest being reclassified first. No convertible securities were outstanding as of September 30, 2025 or December 31, 2025.

Net Loss per Share – Under the provisions of ASC 260,Earnings Per Share, basic net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss 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. Deemed dividends to preferred shareholders increase the net loss available to common shareholders and impact the net loss per share calculation.

As of December 31, 2025, and September 30, 2025, the Company had 388,143,679 shares of common stock issued and outstanding. As of December 31, 2025, the Company had options outstanding to purchase approximately 96,150,750 shares of common stock and warrants outstanding to purchase approximately 1,154,106 shares of common stock. As of September 30, 2025, the Company had options outstanding to purchase 48,634,500 shares of common stock and warrants outstanding to purchase 1,204,106 shares of common stock. All of the foregoing shares could potentially dilute future earnings per share but are excluded from the December 31, 2025, and September 30, 2025 calculation of net loss per share because their impact is antidilutive.

Comprehensive loss – Comprehensive loss is defined as the change in equity of a business during a period from non-owner sources.

Dividend Policy – The Company has never paid any cash dividends and intends, for the foreseeable future, to retain any future earnings for the development of its business. The Company’s future dividend policy will be determined by the board of directors on the basis of various factors, including results of operations, financial condition, capital requirements and investment opportunities.

***Income Taxes -***The Company uses an asset and liability approach for accounting for deferred income taxes, which requires recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements but have not been reflected in its taxable income. Estimates and judgments are required in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred income tax assets, which arise from temporary differences and carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled.

The Company regularly assesses the likelihood that its deferred income tax assets will be realized from recoverable income taxes or recovered from future taxable income. To the extent that the Company believes any amounts are not “more likely than not*”* to be realized, the Company records a valuation allowance to reduce the deferred income tax assets. In the event the Company determines that all or part of the net deferred tax assets are not realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made. Similarly, if the Company subsequently determines that deferred income tax assets, previously determined to be unrealizable, are now realizable, the respective valuation allowance would be reversed, resulting in an adjustment to earnings in the period such determination is made.

ASC740, Income Taxes, requires that the tax benefit of NOLs, temporary differences, and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Because the Company had previously concluded, based on all available evidence, it was not “more-likely-than-not” that sufficient tax earnings will be generated to utilize the NOL carryforwards, a corresponding valuation allowance equal to 100% of the Company’s total federal and state deferred tax assets was established as of September 30, 2025. Subsequent to September 30, 2025, the Company believes that the unrealized gain on its digital asset holdings may present future taxable income, and has reversed the approximately $5.7 million valuation allowance as of December 31, 2025.

The Company regularly reviews its tax positions. For a tax benefit to be recognized, the related tax position must be “more likely than not*”* to be sustained upon examination. Any amount recognized is generally the largest benefit that is “more likely than not*”* to be realized upon settlement. The Company’s policy is to recognize interest and penalties related to income tax matters as an income tax expense. The Company did not have any interest or penalties associated with unrecognized tax benefits for any periods presented in the accompanying financial statements.

On July 4, 2025*,*new U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act” or “OBBBA”), which made permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA made changes to certain U.S. corporate tax provisions, with certain provisions effective in 2025 and others to be implemented in 2026 and subsequent years. The Company is currently assessing the potential implications of the legislation on its operations and on the Company's consolidated financial statements and will continue to monitor future administrative guidance and regulations that clarify the legislative text of the OBBBA and the bill’s potential effect on the Company’s income taxes.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires enhanced disclosures surrounding income taxes, particularly related to rate reconciliation and income taxes paid information. The standard is effective for the Company for annual periods beginning October 1, 2025 on a prospective basis with retrospective application permitted for all prior periods presented. The adoption will only impact annual disclosures. The Company adopted ASU No. 2023-09 for the Transition Period, with no material impact to the consolidated financial statements.

4. FAIR VALUE MEASUREMENTS

The Company’s assets and liabilities recorded at fair value measured on a recurring basis consist of investments in digital assets and derivative assets and liabilities.

In determining the fair value of its digital assets, the Company is able to cite quoted prices as determined by the Company’s principal market. As such, the Company’s digital assets and digital asset - receivables, net which consist entirely of Bitcoin were determined to be Level 1 assets.

In estimating the fair value of its derivative assets and derivative liabilities, the Company uses a market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities found on derivative exchanges. The Company determined that the derivative assets and liabilities are Level 2. Determining which category an asset or liability falls within the hierarchy requires significant judgment.

The Company has a money market account which is considered a Level 1 asset. The balance as of December 31, 2025 and September 30, 2025 was approximately $3,337,000 and $8,699,000, respectively.

There were no transfers in or out of Level 3 or between levels during the Transition Period or during the fiscal year ended September 30, 2025.

5. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, the Company enters into transactions involving derivative instruments for trading purposes. Risks arise from changes in the market values of the underlying digital assets as well as the possible inability of counterparties to meet the terms of their contracts. The credit risk associated with these contracts is typically limited to the cost of replacing all contracts on which the Company has recorded an unrealized gain.

The Company enters into OTC derivatives, which are negotiated and settled bi-laterally with the derivative counterparty. These trades have maturities of 12 months or less and are not designated as hedging instruments under the authoritative accounting guidance.

The underlying transactions and the corresponding contracts are marked to market at the end of each quarter and the fair value impacts are reflected within the consolidated financial statement line item, other derivative income, net in the Consolidated Statements of Operations. As of December 31, 2025, the Company had outstanding digital asset option contracts with gross notional values of approximately $114.8 million. As of September 30, 2025, the Company had outstanding digital asset option contracts with gross notional values of approximately $75.7 million. As of December 31, 2025, 100% of these contracts will mature within three months. As of September 30, 2025, approximately 70% of these contracts matured within three months and 30% matured within six months.

As of December 31, 2025, the Company had outstanding digital asset option contracts recognized as current assets within derivative assets with a fair value of approximately $61,348, and outstanding option contracts recognized as current liabilities within derivative liabilities with a fair value of approximately $509,022. As of September 30, 2025, the Company had outstanding digital asset option contracts recognized as current assets within derivative assets with a fair value of approximately $708,170, and outstanding option contracts recognized as current liabilities within derivative liabilities with a fair value of approximately $724,255. The Company had unrealized gain/(loss), net related to outstanding option contracts of approximately $637,090 as of December 31, 2025. The Company had unrealized gain/(loss), net, balance related to outstanding option contracts of approximately $(187,514) as of September 30, 2025 recognized within other derivative income, net on the Consolidated Statements of Operations. During the Transition Period, the Company recognized realized gain/(loss), net related to derivative contracts of approximately $463,921 within other derivative income, net on the Consolidated Statements of Operations. The Company had realized gain/(loss), net, balance related to all derivative contracts during the year ended September 30, 2025 of approximately $470,668 within other derivative income, net on the Consolidated Statements of Operations.

6. PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2025 and September 30, 2025 was comprised of the following:

Depreciation expense totaled $6,882 during the Transition Period and $31,367 for the year ended September 30, 2025. Substantially all depreciation expense was classified in research and development expenses in the Consolidated Statements of Operations during the Transition Period and the year ended September 30, 2025.

7. LEASES

The Company evaluates lease agreements to determine whether an arrangement is or contains a lease in accordance with ASC 842,Leases. Right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The incremental borrowing taking into consideration the Company’s credit quality and borrowing rate for similar assets is used in determining the present value of future payments. Because the rate implicit in each lease is not readily determinable, the Company uses its estimated incremental borrowing rate to determine the present value of the lease payments.

Lease expense is recorded within general and administrative expenses on the Company’s Consolidated Statements of Operations. The Company elected the package of transitional practical expedients, under which the Company (i) did not reassess whether any expired or existing contracts are or contain leases, (ii) the Company did not reassess the lease classification for any expired or existing leases and (iii) the Company did not reassess initial direct costs for any existing leases. Additionally, the Company elected the short-term lease recognition exemption, and does not recognize right-of-use assets or lease liabilities for leases with an initial term of twelve months or less. The Company also elected the practical expedient to not separate lease and non-lease components for all asset classes. In the event the Company is reasonably certain to exercise the option to extend a lease, the Company will include the extended terms.

The Company’s operating leases primarily relate to office and development facilities and generally have initial terms ranging from two to three years, with renewal options. ROU assets and Operating lease liabilities are recognized based on the present value of lease payments over the expected lease term. As of December 31, 2025 and September 30, 2025, ROU assets were $186,900 and $218,475, respectively, and operating lease liabilities were $234,818 and $254,363, respectively. During the Transition Period, and the year ended September 30, 2025, the Company recognized total lease expense of $36,882 and $136,000, respectively. During the Transition Period, and year ended September 30, 2025, cash paid for amounts included in the measurement of lease liabilities was $24,853, and $148,869, respectively.

The weighted average remaining lease term for the Company’s operating lease was approximately 19 months, and 22 months as of December 31, 2025 and September 30, 2025, respectively. The weighted average discount rate for the Company’s operating lease was 8.86% as of December 31, 2025 and September 30, 2025.

The minimum future lease payments as of December 31, 2025 and September 30, 2025 were as follows:

8. CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

As of December 31, 2025, the Company had no convertible notes payable or promissory notes outstanding. All legacy convertible notes and promissory notes were repaid, converted, or otherwise extinguished prior to December 31, 2025. Accordingly, there was no notes payable activity during the Transition Period from October 1, 2025 through December 31, 2025.

Convertible notes payable as of December 31, 2025 and September 30, 2025 are summarized below:

The closing of the Goldeneye private placement on August 6, 2025 was contingent upon a number of closing conditions, including, among other things, the conversion by the holder of the shares of the Company’s Series H Convertible Preferred Stock into shares of common stock, and the termination of the Lind Senior Convertible Note and the Struve Loan Documents.

●Convertible Promissory Notes with Clayton A. Struve

On August 6, 2025, the Company repaid in full and extinguished legacy obligations of $1,071,000 and interest of $107,952 under the Struve Loan Documents through a mix of $75,000 cash and 3,295,379 shares of the Company’s common stock at $0.335 per share. As of September 30, 2025, all obligations under the Struve Loan Documents had been satisfied. The Company recorded a loss on debt extinguishment of $195,470 for the fiscal year ended September 30, 2025 in loss on debt settlements, net on the Company’s Consolidated Statements of Operations.

●Convertible Redeemable Promissory Notes with J3E2A2Z LP – Related Party

On June 2, 2025, the Company entered into a Promissory Note Conversion Agreement with J3E2A2Z LP, an entity affiliated with and controlled by Ronald P. Erickson, the Company’s former Chief Executive Officer and Chairman, and the holder of two convertible redeemable promissory notes, pursuant to which J3E2A2Z LP agreed to exchange $1,184,066 in aggregate principal owed to J3E2A2Z LP pursuant to the two outstanding Convertible Redeemable Promissory Notes, each dated January 31, 2018 into an aggregate of 16,916 shares of Series H Convertible Preferred Stock. Upon the consummation of the Conversion Agreement with J3E2A2Z LP for shares of the Company’s newly-designated class of convertible preferred stock, the J3E2A2Z LP Debt Amount was no longer outstanding, however, any accrued and unpaid interest remained outstanding due and payable under the J3E2A2Z LP Converted Notes.

J3E2A2Z LP received one share of Series H Convertible Preferred Stock for every $70.00 in principal converted under the Conversion Agreement. The Series H Convertible Preferred Stock was convertible into Company common stock at an initial conversion price of $0.335 per share, subject to potential future adjustment. The holder of Series H Convertible Preferred Stock was entitled to cast the number of votes equal to the number of shares of Company common stock into which the Series H Convertible Preferred Stock held by such holder were convertible, subject to abeneficial ownership limitation of 19.99%, unless stockholder approval is obtained. Each outstanding share of Series H Convertible Preferred Stock accrued cumulative dividends at a rate equal to 8.0% per annum of the stated value of $70.00, subject to adjustment as provided in the certificate of designation.

On August 6, 2025, J3E2A2Z LP elected redemption of all 16,916 shares of the Company’s Series H Convertible Preferred Stock, including interest, for a combination of $654,276 paid to J3E2A2Z LP by the Company in cash and the issuance to J3E2A2Z LP of 2,000,000 shares of common stock at a conversion price of $0.335 per share. As of December 31, 2025, all obligations under Series H Convertible Preferred Stock had been satisfied. The Company recorded a deemed dividend of $679,020 related to the Series H Convertible Preferred Stock upon conversion.

●Senior Convertible Note with Lind Global Fund II, LP

During the fiscal year ended September 30, 2025, the Company issued 3,029,621 shares of its common stock at $0.575 per share for a total value of $1,741,497 related to a principal payment of senior convertible debt with Lind Global Fund II, LP. On August 6, 2025, the Company paid $2,242,500 and a prepayment penalty of $112,125. The Company recorded a loss on debt extinguishment of $746,992 and interest expense of $133,748 during the year ended September 30, 2025. The Company recorded default interest expense of $748,600 during the year ended September 30, 2025 in loss on debt settlements, net on the Company’s Consolidated Statements of Operations. All obligations under the Senior Convertible Note had been satisfied as of December 31, 2025.

Promissory Note with 1800 Diagonal Lending LLC

On February 28, 2025, the Company entered into a Promissory Note with 1800 Diagonal Lending LLC, pursuant to which the Company issued a promissory note with principal face amount of $236,900 and received $200,000. The Note has a payoff balance of $265,328 and requires monthly installments of $33,166. The Company incurred expenses of $6,000, incurred an original interest discount of $30,900 and an interest expense of $28,428. The Promissory Note is unsecured and matured on December 30, 2025. During the Transition Period, and the fiscal year ended September 30, 2025, the Company repaid approximately $99,497, and $165,830, respectively. As of December 31 2025, the Promissory Note had been repaid in full and no amounts were remaining.

Original Issuance Discount Notes

During the fiscal year ended September 30, 2025, the Company entered into Original Issuance Discount Notes (the “Notes”) with three investors for approximately $200,000. The Notes’ payoff balance of $246,000 and interest of $4,866 were repaid during September 2025. As of December 31, 2025, all obligations under the Original Issuance Discount Notes had been satisfied.

Promissory Note with Goldeneye 1995 LLC

On July 28, 2025, Goldeneye 1995 LLC and the Company entered into a Promissory Note in connection with the private placement pursuant to which Goldeneye loaned the Company an aggregate amount of $210,000. On August 11, 2025, the Company repaid $210,519 to Goldeneye 1995 LLC upon closing of the private placement on August 6, 2025. As of December 31, 2025, all obligations under the Promissory Note had been satisfied.

During the Transition Period and the year ended September 30, 2025, the Company recognized total interest expense of approximately $11,070 and $1,185,689, respectively, related to the notes payable described above, including the amortization of related debt issuance costs.

9. EQUITY

Authorized Capital Stock

The following description summarizes important terms of the classes of our authorized capital stock as of December 31, 2025. This summary does not purport to be complete and is qualified in its entirety by the provisions of our articles of incorporation as amended, and our second amended and restated bylaws.

The Company’s authorized capital stock consists of 750,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of blank check preferred stock, par value $0.001 per share.

Outstanding Shares of Capital Stock. The Company’s common stock is the only security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. All outstanding shares of the Company’s capital stock are fully paid and nonassessable. As of December 31, 2025, there were 388,143,679 shares of common stock issued and outstanding, held by 174 stockholders of record. This number does not include approximately 7,300 beneficial owners whose shares are held in the names of various security brokers, dealers and registered clearing agencies.

Reverse Stock Split

The Board of Directors of the Company approved a reverse stock split of the Company’s authorized and issued and outstanding shares of common stock, par value $0.001 per share at a ratio of 1-for-40 (the “Reverse Stock Split”). The Company filed a Certificate of Change (the “Certificate of Change”) pursuant to Nevada Revised Statutes Section 78.209 with the Secretary of State of the State of Nevada on February 10, 2025. The reverse stock split was processed and announced by FINRA on February 18, 2025 and became effective on February 19, 2025.

As a result of the reverse stock split on the effective date, the number of shares of the Company’s authorized common stock was reduced from 300,000,000 shares to 7,500,000 shares andeach forty (40) shares of common stock outstanding was automatically combined into one (1) new share of common stock without any action on the part of the holders, andthe number of outstanding shares common stock was reduced from 112,423,912 shares to approximately 2,810,598 shares (subject to rounding of fractional shares and fractional shares were issued).

The reverse stock split had no effect on the par value per share of the Company’s common stock or authorized or outstanding shares of preferred stock, and did not modify any voting rights or other terms of the common stock or preferred stock.

Common Stock Activity

Each share of common stock entitles its holder to one vote on each matter submitted to the stockholders for a vote, and no cumulative voting for directors is permitted. Stockholders do not have any preemptive rights to acquire additional securities issued by the Company.

During the Transition Period, the Company did not issue any shares of common stock, and there were no equity financings, conversions, or share issuances. As of December 31, 2025 and September 30, 2025, the Company had 388,143,679 shares of common stock issued and outstanding.

Fiscal Year Ended September 30, 2025

On December 12, 2024, the Company entered into subscription agreements with certain investors for a registered direct offering of 31,250 units consisting of one share of the Company’s common stock, and one warrant to purchase one share of Common Stock at an exercise price equal to $9.60 per share of Common Stock at an offering price of $9.60 per unit, for an aggregate gross proceeds of $300,000, before deducting fees payable to the placement agent and advisors and other estimated offering expenses payable by the Company, and excluding the proceeds from any exercise of the warrants.

On December 31, 2024, the Company entered into a Capital on Demand Sales Agreement (the “Sales Agreement”) with JonesTrading Institutional Services LLC, as sales agent, pursuant to which the Company may, from time to time, offer and sell shares of its common stock, through or to JonesTrading as its sales agent or manager.

The offer and sale of the Shares will be made pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-276246) filed with the U.S. Securities and Exchange Commission on December 22, 2023 and declared effective by the SEC on January 11, 2024, as supplemented by a prospectus supplement dated December 31, 2024 and filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended. Pursuant to the Prospectus Supplement, the Company may offer and sell up to a maximum of $5,000,000 of Shares under the Sales Agreement. On September 4, 2025, the Company determined to increase the amount available for sale under the Sales Agreement, up to an aggregate offering price of $14,500,000. The Company issued 1,708,124 shares under the Sales Agreement and received gross proceeds of $1,269,212 during the year ended September 30, 2025.

During the year ended September 30, 2025, the Company issued 3,029,621 shares of its common stock at $0.575 per share related to a principal payment of senior convertible debt with Lind Global Fund II, LP for a total value of $1,741,497.

During the year ended September 30, 2025, the Company issued 1,408,731 shares of common stock to employees, directors and investors. The shares were valued at $0.44 per share and the Company expensed $1,096,142 related to the issuances.

Securities Purchase Agreement with Goldeneye 1995 LLC and Related Transactions

On June 5, 2025, the Company entered into a Securities Purchase Agreement with Goldeneye 1995 LLC, a Nevada limited liability company, whereby the Company issued an amount of shares of the Company’s common stock to Goldeneye 1995 LLC in a private placement equal to the aggregate purchase price divided by the per share purchase price of $0.335. The transaction was approved by shareholders and subsequently completed on August 6, 2025. The aggregate purchase price for the shares purchased by Goldeneye at the closing of the private placement was an amount equal to: (i)1,000 Bitcoin ($115,567 per Bitcoin at time of transfer) and (ii) a cash amount of $15 million.

In connection with the private placement, the Company issued 3,909,549 shares of common stock to J.V.B. Financial Group LLC (Cohen & Company Capital Markets) as Goldeneye 1995 LLC’s financial advisor. The shares were valued at $0.335 per share and $1,309,699 was recorded as a transaction fee in connection with the closing of the Securities Purchase Agreement.

In connection with the private placement, the Company issued 3,909,549 shares of common stock to Fifth Era LLC as Goldeneye 1995 LLC’s financial advisor. The shares were valued at $0.335 per share and $1,309,699 was recorded as a transaction fee in connection with the closing of the Securities Purchase Agreement.

During fiscal year 2025, the Company completed the conversion and redemption of all outstanding shares of its Series C, Series D, and Series H Convertible Preferred Stock in connection with strategic financing and recapitalization transactions. As of December 31, 2025, there were no shares of preferred stock issued or outstanding.

Warrants to Purchase Common Stock

During the Transition Period, warrants to purchase 50,000 shares of common stock at an exercise price of $61.20 per share were forfeited. There were no warrant issuances or exercises during the period.

As of December 31, 2025, the Company had warrants outstanding to purchase an aggregate of 1,154,106 shares of common stock at a weighted-average exercise price of $17.55 per share, with expiration dates through 2030. The vested warrants outstanding as of December 31, 2025 had an aggregate intrinsic value of $101,512, calculated based on the Company’s closing market price of common stock as of December 31, 2025.

A summary of the warrants outstanding as of December 31, 2025 were as follows:

Year Ended September 30, 2025

On June 2, 2025, the exercise price of the 150,000 Lind warrants previously issued on February 27, 2024 was reduced from $9.60 per share to $0.335 per share. Pursuant to the terms of the Convertible Promissory Note Agreement with Lind, the exercise price of the Lind warrants was reduced to that value upon the Company’s issuance of convertible instruments with a conversion price below the $9.60 conversion price of the Convertible Promissory Notes with Lind, which was considered a down round triggering event.

On December 12, 2024, the Company closed a registered direct offering and issued 31,250 warrants to purchase common stock at an exercise price equal to $9.60 per share, resulting in a down round triggering event which lowered the conversion price of the Convertible Promissory Notes with Mr. Struve, Mr. Erickson and his affiliated entity, J3E2A2Z LP, to that value from the original $10.00 conversion price. Thefive year warrants expire on December 12, 2029. The Company also issued a warrant to purchase 2,188 shares of common stock to the placement agent. The five year warrant expires on December 12, 2029.

The Company issued a warrant to purchase common stock of 1,250 shares at $9.60 per share. The five year warrant expires on December 10, 2029.

Warrants to purchase 64,129 shares of common stock at $49.99 per share were forfeited.

10. EQUITY INCENTIVE PLANS

On August 12, 2021, the Company established the 2021 Equity Incentive Plan, which was adopted by the Company’s shareholders on October 15, 2021. The 2021 Plan was approved for 20,000,000 shares of the Company’s common stock. Common stock reserved under the 2021 Plan increased to 22,000,000 shares on January 1, 2022. On October 25, 2024, shareholders approved a Plan Amendment which increased the maximum number of shares of our common stock that may be delivered to participants under the 2021 Plan to 40,000,000. Effective January 1, 2025, pursuant to the evergreen provisions of the 2021 Plan, the maximum number of shares of Common Stock authorized under the Plan was increased by 50,000 Shares to 1,050,000. On August 5, 2025, shareholders approved a Plan Amendment which increased the maximum number of shares of common stock that may be delivered to participants under the 2021 Plan to 50,000,000 shares.

Amended and Restated 2021 Equity Incentive Plan

On August 25, 2025, our Board of Directors approved, and on September 29, 2025, our stockholders adopted the Amended and Restated USBC, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), effective September 29, 2025, which increased the plan share reserve by 65,000,000 shares. The 2021 Plan was previously amended effective July 31, 2025 to increase the plan share reserve to a total of 50,000,000 shares.

Under the 2021 Plan, all 115.3 million shares of common stock available under the Plan Share Reserve, as well as future shares added through the evergreen feature, are eligible for grants as “incentive stock options” intended to qualify for special tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended.

The 2021 Plan contains an evergreen provision pursuant to which, on January 1 of each calendar year during the term specified in the 2021 Plan, the number of shares available for issuance under the 2021 Plan automatically increases by a number of shares equal to the lesser of(i) 15,000,000 shares, (ii) 4% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year and (iii) such lesser number of shares as determined by the Board, in each case subject to adjustment for any stock split, reverse stock split, stock dividend or similar change in capitalization.

Stock Option Activity

During the Transition Period, the Company issued stock option grants for 62,530,000 shares of common stock at a weighted average price of $1.07 per share and unvested stock option grants for 15,013,750 shares with an exercise price of $1.10 per share were forfeited. These options generally vest quarterly over three years beginning on the one-year anniversary of the grant date, with certain grants vesting earlier in accordance with the applicable award agreements. The options have contractual terms of ten years from the date of grant.

During the Transition Period, the Company repriced 48,620,000 stock options from an original exercise price of $2.45 per share to $1.10 per share, representing the closing market price of the Company’s common stock on the date of approval. The Company recognized incremental stock-based compensation expense of $1,217,564 related to the repricing during the Transition Period, in accordance with ASC 718.

Fiscal Year Ended September 30, 2025

During the fiscal year ended September 30, 2025, the Company issued stock option grants for 48,628,250 shares at a weighted average price of $2.45 per share. These options generally vest quarterly over three years beginning on the one-year anniversary of the grant date, with certain awards vesting earlier in accordance with the applicable award agreements.

A summary of the stock options outstanding as of December 31, 2025 were as follows:

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2025:

The significant weighted average assumptions relating to the valuation of the Company’s stock option grants issued and repriced during the Transition Period were as follows:

Stock Option Outstanding and Exercisable

As of December 31, 2025, stock option grants of 96,150,750 shares of common stock were outstanding under the 2021 plan, with a weighted average exercise price of $1.08 per share. The Company recognized stock-based compensation expense related to stock options of $11,868,452 for the Transition Period ended December 31, 2025 and $7,407,088 for the year ended September 30, 2025. As of December 31, 2025, there was $94,145,942 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average remaining vesting period of 3.61 years. Stock-based compensation expense is included within selling, general and administrative expenses in the Company’s consolidated Statements of Operations.

11. INCOME TAXES

The Company has opted to implement ASU 2023-09 on a prospective basis. The Company computes its income tax provision by applying the estimated annual effective tax rate to pretax income or loss and adjusts the income tax provision for discrete tax items recorded in the period. A summary of the income expense (benefit) for the period is as follows:

A reconciliation of the United States Federal Statutory rate to the Company’s effective tax rate for the Transition Period is as follows:

The Company’s effective tax rate differs from the federal statutory rate for the Transition Period principally due to the tax effect of the change in valuation allowance and nondeductible expenses.

The tax effects of temporary differences that give rise to the principal components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and September 30, 2025 are as follows:

There were no income tax payments made during the Transition Period or the fiscal year ended September 30, 2025.

There were no state or foreign income taxes paid (net of refunds) exceeding 5 percent of total income tax paid (net of refunds).

The Company has incurred net losses since inception, which have generated net operating loss (NOL) carryforwards for federal and state tax purposes.

As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $81.8 million, expiring in 2028-2038. In accordance with IRC Section 172, losses incurred after 2017 have an indefinite life. The Company does not recognize the majority of its state tax operating loss carryforwards as deferred tax assets as it no longer has any operation in those states.

Because the Company had previously concluded, based upon all available evidence, it was not “more-likely-than-not” that sufficient tax earnings will be generated to utilize the NOL carryforwards, a corresponding valuation allowance equal to 100% of the Company’s total federal and state deferred tax assets of approximately $5.7 million was established as of September 30, 2025. As of December 31, 2025, the Company has reversed the valuation allowance on its deferred tax assets as the unrealized gain on its digital asset holdings may present future taxable income.

Under the Tax Reform Act of 1986, the amounts of, and benefits from, NOLs may be limited in certain circumstances, including following a change in control. Section 382 and Section 383 of the Internal Revenue Code impose an annual limitation on the amount of U.S. tax attribute carry-forwards when a corporation has undergone a change in control. Based on the Company’s analysis of the change in control that occurred in 2025 as a result of the Goldeneye capital investment, the Section 382/383 limitation in conjunction with the twenty-year carryforward limitation caused approximately $74.1 million of tax attributes to be deemed worthless, which resulted in a write-off of the related deferred tax asset and the corresponding valuation allowance as of September 30, 2025.

As of September 30, 2025, the Company recorded a deferred tax liability with respect to the unrealized gain on its digital asset holdings of approximately $24.0 million to reflect the transfer of the 1,000 Bitcoin to the Company as part of the Goldeneye capital investment in a transaction qualifying under Section 351, and fair value adjustments due to extremely volatile digital asset markets.

As of December 31, 2025, the Company recorded a deferred tax liability with respect to the unrealized gain on its digital asset holdings of approximately $18.4 million related to its Bitcoin holdings and fair value adjustments due to extremely volatile digital asset markets.

The Company recognized an income tax benefit of $15,736,607, and $172,843 for the Transition Period, and the year ended September 30, 2025, respectively.

The Company is subject to possible tax examination by the IRS and various state taxing authorities for the years ended September 30, 2021 through December 31, 2025, although the Company is not currently under examination in any jurisdiction.

As of December 31, 2025, there were no uncertain tax positions. Management does not anticipate any future adjustments in the next twelve months which would result in a material change to its tax position. For the Transition Period and the year ended September 30, 2025, the Company did not have any interest and penalties.

12. SIGNIFICANT AND OTHER TRANSACTIONS WITH RELATED PARTIES

Transactions with Clayton A. Struve

On March 19, 2024, the Company signed an Extension of Warrant Agreement with Clayton A. Struve, a significant stockholder prior to the Goldeneye capital investment that closed on August 6, 2025, extending the exercise date of warrants covering 12,500 shares to March 19, 2026. On December 17, 2024, the Company signed an additional Extension of Warrant Agreement from 2025 to 2030 with Mr. Struve extending the exercise dates on four legacy warrant issuances originally dated August 4, 2016; August 14, 2017; December 12, 2017; and February 28, 2018, and initially extended to 2024 on December 7, 2022. The Company recorded no interest expense during the Transition Period, and recorded interest expense of approximately $513,499 during the year ended September 30, 2025 related to the additional extension of these warrants.

On August 6, 2025, Mr. Struve, the sole holder of Series C and D Convertible Preferred Stock, elected redemption of $2,000,000, including dividends of $255,987, for 8,333,440 shares of common stock.

On August 6, 2025, Mr. Struve, the holder of convertible debt, elected conversion of $1,071,000, including interest of $107,952, for a combination of $75,000 in cash and 3,295,379 shares of common stock.

As of December 31, 2025, all obligations under the Series C and D convertible preferred instruments and convertible notes payable had been satisfied.

Transactions with Former CEO and Chairman Ronald P. Erickson and J3E2A2Z LP

Mr. Erickson previously served as the Company’s Chief Executive Officer and Chairman from January 2023 through August 6, 2025, at which time he transitioned to his current position of President of the Science Division, Senior Vice President.

On January 30, 2024, the Company signed an Extension of Warrant Agreement with each of Mr. Erickson and J3E2A2Z LP, extending the exercise dates of the 47,367 warrants issued in conjunction with the Convertible Promissory Notes from January 30, 2024 to January 31, 2026.

On October 22, 2024, the due dates on the two Convertible Promissory Notes, each dated January 31, 2018, with J3E2A2Z LP, an entity controlled by Mr. Erickson, were extended to September 30, 2025 from September 30, 2024 and the interest rate was increased from 6% to 8%.

On June 2, 2025, the Company entered into a Promissory Note Conversion Agreement with J3E2A2Z LP, pursuant to which $1,184,066 of principal owed under the two outstanding convertible promissory notes was exchanged for 16,916 shares of Series H Convertible Preferred Stock. Each share of Series H Preferred was convertible into shares of the Company’s common stock at an initial conversion price of $0.335 per share and carried an 8% cumulative dividend. The Company recognized a deemed dividend of approximately $0.7 million upon the conversion.

On August 6, 2025, upon election by J3E2A2Z LP, the Company redeemed all 16,916 issued and outstanding shares of Series H Convertible Preferred Stock held by J3E2A2Z LP for (i) cash of approximately $654,276 and (ii) the issuance of 2.0 million shares of common stock in the aggregate, at a conversion price of $0.335 per share, representing total consideration equal to the stated value of $70 plus all accrued and unpaid dividends in an amount of approximately $140,210. As of September 30, 2025, all obligations under the Series H convertible preferred instrument had been satisfied.

On May 5, 2025, the Company issued 100,000 shares of common stock to Mr. Erickson. The shares were valued at $0.44 per share.

Effective August 6, 2025, the Company issued 335,000 shares of common stock to Mr. Erickson that were valued at $0.50 per share, 50% of which were fully vested upon grant and the remainder of which will vest, subject to Mr. Erickson’s continued employment through each vesting date, in eight quarterly installments with the first two installments vesting following a six-month cliff. The restricted shares vest in full in the event of a sale of all or substantially all of the sensor related intellectual property or an involuntary termination of Mr. Erickson’s employment.

Transactions with Former Chief Financial Officer Peter J. Conley

Mr. Conley served as our Chief Financial Officer from May 2022 through August 6, 2025. On October 10, 2023, the Company granted him options to purchase 75,025 shares at an exercise price of $10.00 per share, vesting quarterly over four years. In connection with his departure, unvested awards were forfeited and vested awards remain exercisable in accordance with the 2021 Plan.

On May 5, 2025, the Company issued 50,000 shares of common stock to Mr. Conley. The shares were valued at $0.44 per share.

On August 6, 2025, the Company issued 107,500 shares of common stock to Mr. Conley. The shares were valued at $0.50 per share.

Transactions with Goldeneye 1995 LLC and Robert Gregory Kidd

A majority of the voting power of our outstanding common stock is held by Goldeneye 1995 LLC, which is solely owned and managed by Robert Gregory Kidd, our Chairman and Chief Executive Officer.

On June 5, 2025, the Company entered into a Securities Purchase Agreement with Goldeneye 1995 LLC providing for a private placement of our common stock. At the closing on August 6, 2025, the Company issued approximately 357.8 million shares of common stock to Goldeneye 1995 LLC in exchange for 1,000 Bitcoin and $15 million in cash. Under IRC Section 351 the basis of the Bitcoin from Goldeneye 1995 LLC will transfer over to the Company. As a result, the Company recognized a deferred tax liability of approximately $24 million.

As of December 31, 2025, Mr. Kidd beneficially owned approximately 82% of our outstanding common stock through Goldeneye 1995 LLC.

On July 28, 2025, Goldeneye 1995 LLC and the Company entered into a Promissory Note pursuant to which the Buyer has loaned the Company an aggregate amount of $210,000. On August 11, 2025, the Company repaid $210,519 to Goldeneye 1995 LLC. As of September 30, 2025, all obligations under the Promissory Note have been satisfied.

Transactions with our Vice Chair Linda Jenkinson and our non-CEO NEOs

On October 7, 2025, the Company’s Board approved a repricing of outstanding stock options granted on August 6, 2025 as permitted by our Amended and Restated 2021 Equity Incentive Plan, including options held by certain executive officers and directors. The exercise price of approximately 48.6 million outstanding options, including 4,760,000 options granted to our Vice Chair Linda Jenkinson and 1,790,000 and 7,140,000 options granted to our non-CEOs, Ms. Payne and Mr. Chapman, respectively, wasreduced from $2.45 to $1.10 per share, the closing market price on the date of approval. The repricing applied uniformly to all participants and was reviewed and approved by the Board of Directors, which determined that the adjustment was in the best interests of stockholders to maintain the incentive and retention value of eligible awards in light of prevailing market conditions.

On October 7, 2025, our Board approved the grant of 55.0 million ten year stock options under the 2021 Plan, including 5,240,000 options granted to our Vice Chair Linda Jenkinson and 1,960,000 and 7,860,000 options granted to our non-CEO NEOs, Ms. Payne and Mr. Chapman, respectively. The exercise price of the options granted was $1.10 per share, the closing market price of our common stock on the date of Board approval. The options will vest 25% of the shares on the one-year anniversary of the grant date and in quarterly installments thereafter over the next three years, subject to their continued service.

On December 15, 2025, the Company and Kirk Chapman mutually agreed that Mr. Chapman would depart from his position as Chief Operating Officer, effective immediately. The departure was not the result of any disagreement with the Company on any matter related to the Company's operations, policies or practices. On January 6, 2026, the Company entered into a separation agreement with Mr. Chapman, in connection with his departure. Mr. Chapman’s separation from the Company became effective on December 31, 2025, at which time all of his unvested option awards were forfeited.

Transactions with Former Director John Cronin and ipCapital Group, Inc.

Mr. Cronin served as a director beginning in November 2023 and was the Company’s Interim Chief Technology Officer from September 2024 to August 2025. He is Chairman and CEO of ipCapital Group, Inc., to which the Company paid approximately $239,000 in professional-service fees during the fiscal year ended September 30, 2025. The Company did not pay professional-service fees to Mr. Cronin during the Transition Period. No ongoing consulting or advisory agreements with Mr. Cronin or ipCapital Group, Inc. were in effect as of December 31, 2025. On November 19, 2025, Mr. Cronin provided the Company with notice of his resignation from the Board of Directors. His decision to resign was not the result of any disagreement with the Company or its management on any matter relating to the Company’s operations, policies, or practices.

Transactions with Vice Chair Linda Jenkinson, Chairman and CEO Robert Gregory Kidd and Vast Holdings, Inc.

Linda Jenkinson has served as the Company’s Vice Chair since August 2025 and is also the Chief Executive Officer and Chair of Vast Holdings, Inc., the holding company for Vast Bank. In 2024, the Company’s Chairman and CEO, Robert Gregory Kidd, personally invested $53 million of capital into Vast Holdings, Inc. to support Vast Bank. On October 23, 2025, the Company announced a strategic partnership with Vast Bank and Uphold to pursue retail tokenized U.S.-dollar deposit products. The Company’s collaboration with Vast Bank and Uphold contemplates joint development and pilot activities related to the deposit tokenization initiative. The terms of the collaboration were negotiated at arm’s length and reviewed by disinterested members of the Company’s Board. No payments were made to or received from Vast Bank during the Transition Period or the year ended September 30, 2025.

Transactions with Directors

During the Transition Period, the Company did not issue any shares of common stock. During the year ended September 30, 2025, the Company issued an aggregate of 150,000 shares of common stock to six directors for board service and valued the shares at $0.44 per share.

Other than the relationships described above, the Company did not engage in any material related-party transactions during the Transition Period, or the year ended September 30, 2025.

13. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

The Company may from time to time become a party to various legal proceedings arising in the ordinary course of business. The Company is currently not a party to any pending legal proceeding that is not ordinary routine litigation incidental to the Company’s business.

Properties and Operating Leases

The Company maintains executive and research and testing facilities in Seattle, Washington. On March 2, 2024, the Company entered into a lease for 5,996 square feet at 619 Western Avenue, Suite 610, Seattle, Washington 98104, at a net monthly payment of $11,492, subject to 3% annual increases after the first year. The lease commenced on May 1, 2024 and is originally scheduled to terminate on July 31, 2027. On July 9, 2025, the Company entered into a Deferred Rent Agreement with the landlord, pursuant to which the Company paid $31,732 and deferred $91,094 of contractual base rent through the remaining lease term. As a result of the Deferred Rent Agreement, a portion of the Company’s contractual base rent is deferred, reducing the monthly cash payment for base rent to approximately $8,000, exclusive of applicable triple-net charges, with the deferred amounts payable over the remaining lease term.

The Company does not own any real property and believes the existing facilities are suitable and adequate for its current needs.

14. SEGMENT REPORTING

The Financial Accounting Standards Board, Accounting Standard Codification Topic 280, Segment Reporting, requires that an enterprise report selected information about reportable segments in its financial reports issued to its stockholders. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Makers (“CODMs”) to allocate resources and assess performance. The Company has determined that its Chief Executive Officer and Chief Financial Officer collectively function as the CODM because they jointly review consolidated operating results, evaluate performance and make decisions regarding the allocation of resources on a consolidated basis. The CODMs monitor the expense components of the various products and services we offer, but operations are managed and financial performance is evaluated on a corporation-wide basis in comparison to a business plan which is developed each year.

Although the Company conducts activities across multiple business initiatives, including digital asset treasury activities, product development related to tokenized deposits, and legacy technology development, the Company does not prepare or utilize separate financial information at a level below the consolidated financial statements. In addition, the CODMs do not regularly review revenue, expense, or profitability information by business line, product, or service. Accordingly, all operations are considered by management to be one operating segment and one reportable segment as contained in the Consolidated Statements of Operations included in the consolidated financial statements.

The CODMs use consolidated net income (loss) as reported in the consolidated financial statements, as the primary measure of performance for assessing results and allocating resources.

15. SUBSEQUENT EVENTS

Management evaluated subsequent events, for purposes of determining whether adjustment to or disclosure in the financial statements was required through the date the financial statements were issued. Subsequent to December 31, 2025, the Company had the following material transactions requiring disclosure:

Strategic Business Partnership with Vast Bank and Uphold

On January 20, 2026, the Company entered into a Strategic Partnership Agreement with Vast and Uphold, which formalized the parties’ respective roles in the tokenized deposit network, including the Company’s role as network operator, Vast’s role as the issuing bank, and Uphold’s role as platform developer and service provider. The agreement also establishes a revenue-sharing framework and other commercial terms governing the program. The Company’s Chairman and Chief Executive Officer Robert Gregory Kidd has significant ownership interests in Vast Holdings, Inc. (parent of Vast Bank) and Uphold and the Company’s Vice Chair, Linda Jenkinson, serves as President and Chair of Vast Holdings, Inc. No related party transactions requiring disclosure occurred between the Company and these entities during the fiscal year ended December 31, 2025.

Master Loan Agreement

On March 18, 2026, the Company entered into a Master Loan Agreement (the “MLA”) with Payward Interactive, Inc. (the “Lender”), pursuant to which the Company may, from time to time, borrow fiat currency or digital assets on the terms set forth therein in an aggregate principal amount of up to $25 million for up to a twelve-month term, subject to the execution of one or more individual loan term sheets. The MLA contains customary conditions, initial collateral requirements, collateral maintenance and liquidation mechanics, and early return and recall rights. Borrowings under the MLA are solely secured by Bitcoin collateral held in and subject to collateral maintenance requirements based on specified margin ratios. The Bitcoin collateralizing the borrowing facility is held for the benefit of the Lender by an affiliate of the Lender, Payward Financial, Inc. (the "Custodian") and subject to an account control agreement by and among the Lender, the Company and the Custodian.

On March 20, 2026, the Company entered into a term sheet for a fixed-term loan of $5.0 million bearing interest at a rate of 8.5% per annum under the MLA maturing on March 18, 2027. The obligations under the MLA are prepayable at the Company’s option after an initial term of three months. The MLA provides the Company with an additional source of liquidity to support its operations and strategic initiatives, primarily the further development and future launch of the tokenized deposit program. Proceeds from the Facility will be used primarily to fund further development costs of the tokenized deposit program offering, including costs paid to our affiliate, Vast Holdings, Inc. (“Vast”).

Affiliate Services Agreement

The Company entered into an affiliate services agreement with Vast (the “Agreement”) on March 18, 2026. Pursuant to the terms of the Agreement, the Company will reimburse Vast for costs incurred to perform certain strategic, operational, and administrative services in support of the further development of the tokenized deposit program offering. We believe that it will be more economical and efficient for certain services necessary for these operations to be performed by officers, employees or consultants of Vast, recognizing that cost reimbursements to Vast must be at least on or favorable to market terms. Total reimbursements under the Agreement are capped at $10.5 million during the term of the Agreement, unless otherwise mutually agreed upon with Vast and are subject to detailed invoicing, documentation, and approval requirements. The Agreement expires on December 31, 2026. Accordingly, the Agreement was reviewed and approved by the independent Audit Committee and the Company’s Board of Directors and the Board prior to its execution

Repricing, Issuance, and Forfeiture of Stock* *Option Grants

On March 18, 2026, the Company’s Board of Directors approved the repricing of all outstanding stock options, including (i) options originally granted in August 2025 and subsequently repriced in October 2025 to $1.10 per share, (ii) options granted in October 2025 with an exercise price of $1.10 per share, and (iii) options granted in October 2025 with an exercise price of $0.87 per share. The repricing reduced the exercise price of all such awards to $0.37 per share. No changes were made to the vesting schedules or contractual terms of these awards.

On March 18, 2026, the Company’s Board of Directors approved the issuance of stock option grants for an aggregate of 10,470,000 shares at an exercise price of $0.37 per share. The stock option grants expire inten years and vest over four years.

Subsequent to December 31, 2025,13,137,500 unvested stock options were forfeited pursuant to the terms of the 2021 Plan. Accordingly, such forfeited awards became available for future grant under the 2021 Plan.

Bitcoin* Market Price Volatility and Potential *Earnings Impact

Subsequent to December 31, 2025, digital asset markets have exhibited elevated volatility. The fair value of Bitcoin has declined significantly compared to its reported fair value as of December 31, 2025. ASU No. 2023-08 requires that the fair value of the Company’s Bitcoin holdings be measured at the end of each reporting period with gains and losses from changes in the value of Bitcoin recognized in net income (loss). As a result, the Company’s earnings results are highly sensitive to and directly correlated with changes in the market price of Bitcoin.

On March 22, 2026, the Company held 986.005 of Bitcoin with a fair value of $67,226,949 and had a digital asset receivable with a fair value of $2,714,002 or 39.80575 Bitcoin, which are both based on a fair value of $68,181 per Bitcoin. The Company has the ability to sell its Bitcoin holdings to fund operating expenses and product development costs and continually monitors market conditions and its liquidity needs. Any realized gains or losses upon disposition, if applicable, would be recorded in the Consolidated Statements of Operations in the period of sale.

None of these subsequent events affected conditions existing at December 31, 2025, and therefore, no adjustments have been made to the accompanying consolidated financial statements.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.