What changed in this filing

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Item 1. Financial Statements

2025-11-13 compared with 2025-08-13 · 915 added, 604 removed, 679 unchanged (69% of the section changed)

1 Financial Statements

Consolidated Balance Sheets

Balance Sheets

September 30,

Current assets:

Cash and cash equivalents

Crypto assets

Staked crypto assets

Receivable for capital shares sold

Crypto assets - treasury

Crypto assets - DeFi

Crypto assets - staked

Non-fungible tokens

Prepaid expenses

4 unchanged sentences

Total other assets

$ 298,855,352

Liabilities and Stockholders’ Equity:

3 unchanged sentences

Accrued interest

Loan payable - DeFi protocol

Loans payable - DeFi protocol

Dividends payable

Warrant liabilities

8 unchanged sentences

Series V Preferred Stock;

16,004,738 and 15,033,231 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Preferred stock value

15,671,405 and 15,033,231 shares issued and

outstanding as of September 30, 2025 and December 31, 2024, respectively

Common Stock, $ 0.001 par value per share;

975,000,000 shares authorized;

21,968,566 and 18,717,743 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

47,075,189 and 18,717,743

shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

4 unchanged sentences

Total Liabilities and Stockholders’ Equity

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Consolidated Statements of Operations

$ 298,855,352

accompanying notes are an integral part of these unaudited condensed financial statements.

Statements of Operations

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

Blockchain infrastructure revenues

DeFi revenues

Total revenues

1 unchanged sentence

Blockchain infrastructure costs

Total cost of revenues

Operating expenses:

Professional fees

General and administrative

2 unchanged sentences

Realized (gains) losses on crypto asset transactions

Loss on extinguishment of debt

Total operating expenses

2 unchanged sentences

Interest expense

Change in unrealized appreciation (depreciation) of crypto assets

( 1,496,529 )

( 1,718,423 )

Change in unrealized appreciation (depreciation) of

crypto assets

( 7,396,380 )

Change in fair value of warrant liabilities

1 unchanged sentence

( 7,314,943 )

( 5,896,136 )

Net income (loss)

1 unchanged sentence

$ ( 3,511,070 )

income (loss) per share attributable to common stockholders

Weighted-average shares of common stock used to compute net income per share:

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Consolidated Statements of Changes in Stockholders’ Equity

the Six Months Ended June 30, 2025

Preferred Stock

Net income (loss) per share attributable to common stockholders

Weighted-average shares of common stock used to compute net income per

accompanying notes are an integral part of these unaudited condensed financial statements.

Statements of Changes in Stockholders’ Equity

the Nine Months Ended September 30, 2025

Stockholders’

5 unchanged sentences

Issuance of warrants in connection with convertible note

Issuance of common stock upon exercise of warrants

Issuance of common stock upon exercise of options

Stock-based compensation

Shares repurchased

( 2,999,348 )

( 3,000,000 )

Forfeiture of stock-based awards

Net income (loss)

Dividends declared

( 2,392,351 )

( 3,175,921 )

Balance at June 30, 2025

Net income (loss)

Balance at September 30, 2025

15,671,405 (1)

2 unchanged sentences

$ ( 87,746,633

1,069,801 restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based vesting

$ 225,404,497

322,580 restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based and

market cap target vesting conditions.

See Note 6 – Stockholders’ Equity (Deficit) for further details.

1,312,301 restricted shares of Common Stock held by employees that remain subject to forfeiture based on time-based vesting conditions.

565,080 restricted shares of Common Stock held by employees that remain subject to forfeiture based on time-based and market cap

target vesting conditions.

See Note 6 – Stockholders’ Equity (Deficit) for further details.

the Six Months Ended June 30, 2024

Preferred Stock

the Nine Months Ended September 30, 2024

Stockholders’

Balance at December 31, 2023

Balance December 31, 2023

$ 162,263,634

3 unchanged sentences

Net income (loss)

Balance at June 30, 2024

( 3,511,070 )

the Three Months Ended June 30, 2025

Preferred Stock

Balance September 30, 2024

$ 164,803,541

$ ( 142,188,173 )

the Three Months Ended September 30, 2025

Stockholders’

Balance at March 31, 2025

Balance at June 30, 2025

16,004,738 (1)

3 unchanged sentences

Issuance of warrants in connection with convertible note

Issuance of common stock upon exercise of warrants

Issuance of common stock upon exercise of options

Stock-based compensation

Shares repurchased

( 2,999,348 )

( 3,000,000 )

Forfeiture of stock-based awards

Dividends declared

( 2,392,351 )

( 3,175,921 )

Net income (loss)

Balance at June 30, 2025

Balance at September 30, 2025

15,671,405 (1)

2 unchanged sentences

$ ( 87,746,633

1,069,801 restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based vesting

$ 225,404,497

322,580 restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based and

market cap target vesting conditions.

See Note 6 – Stockholders’ Equity (Deficit) for further details.

1,312,301 restricted shares of Common Stock held by employees that remain subject to forfeiture based on time-based vesting conditions.

565,080 restricted shares of Common Stock held by employees that remain subject to forfeiture based on time-based and market cap

target vesting conditions.

See Note 6 – Stockholders’ Equity (Deficit) for further details.

the Three Months Ended June 30, 2024

Preferred Stock

the Three Months Ended September 30, 2024

Stockholders’

Balance at March 31, 2024

Balance June 30, 2024

$ 163,681,450

7 unchanged sentences

( 9,039,787 )

Balance at June 30, 2024

Balance September 30, 2024

$ 164,803,541

2 unchanged sentences

$ ( 142,188,173 )

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Consolidated Statements of Cash Flows

For the Six Months Ended

accompanying notes are an integral part of these unaudited condensed financial statements.

Statements of Cash Flows

For the Nine Months Ended

Net cash flows used in operating activities:

10 unchanged sentences

Change in fair value of warrant liabilities

Purchase of non-productive crypto assets

Amortization on debt discount and issuance costs

Realized losses on crypto assets transactions

Change in unrealized (appreciation) depreciation of crypto assets

Change in unrealized (appreciation) depreciation of

crypto assets

( 67,987,220 )

19 unchanged sentences

Cash flow from financing activities:

Net proceeds from issuance common stock/ At-the-market offering

Net proceeds from issuance common stock/ At-the-market

Payments for shares repurchased

( 3,000,000 )

Proceeds from issuance of convertible notes, net

3 unchanged sentences

Payments of debt issuance costs

Net cash provided by financing activities

Net cash provided by financing

Net (decrease)/increase in cash

2 unchanged sentences

Cash, end of period

Supplemental disclosure of non-cash financing and investing activities:

Supplemental disclosure of non-cash investing and financing

Series V Preferred Stock Distribution

1 unchanged sentence

Non-cash discount on convertible notes

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

to Unaudited Condensed Consolidated Financial Statements

Extinguishment of USDT-denominated debt via on-chain

Issuance of GHO-denominated debt via on-chain protocol

$ ( 1,500,000 )

Issuance of common stock upon non-cash exercise of warrants and stock options

accompanying notes are an integral part of these unaudited condensed financial statements.

to Unaudited Condensed Financial Statements

1 - Business Organization and Nature of Operations

2 unchanged sentences

The Company is an Ethereum-first blockchain technology business focused on scalable

revenue generation and ETH accumulation through its vertically integrated blockchain infrastructure operations.

operates two core infrastructure initiatives:

NodeOps, which operates Ethereum validator nodes (“nodes”) and earns ETH-denominated

staking rewards;

and Builder+ , a proprietary Ethereum block builder that constructs and submits optimized blocks to the network

in order to earn execution layer rewards, such as transaction fees and MEV (maximal extractable value).

These operations collectively

form the foundation of the Company’s blockchain infrastructure strategy and drive the ETH-denominated revenue that supports its

treasury growth.

operations are strategically supported by its DeFi/TradFi Flywheel, a capital formation and reinvestment framework that leverages both

decentralized finance (e.g., on-chain borrowing) and traditional capital markets (e.g., ATM equity offerings and structured convertible

notes) to scale blockchain infrastructure operations, accelerate revenue growth and increase ETH accumulation while minimizing shareholder

the six months ended June 30, 2025, the Company completed a strategic wind-down of its validator node operations on Avalanche (AVAX),

revenue generation and ETH (the Ethereum network’s native token) accumulation through its blockchain-based infrastructure and decentralized

finance (“DeFi”) operations.

operations comprise three primary business lines:

Node Operations (“NodeOps”) – BTCS operates Ethereum validator nodes (“nodes”) and earns ETH-denominated

staking rewards for performing validation and consensus activities that secure the network.

Building (“Builder+”) – Through its Builder+ operations, the Company participates in the block-building supply

chain on the Ethereum and Binance Smart Chain (“BSC”) networks by operating block builders that construct and submit

optimized transaction blocks to validators.

Revenues are derived by execution layer rewards, including transaction fees and maximal

extractable value (“MEV”) earned from successful block submissions.

Operations (“Imperium”) – Beginning in 2025, BTCS expanded its blockchain operations to include DeFi activities

under its Imperium business line.

Through Imperium, the Company participates directly in DeFi ecosystems by deploying crypto assets,

including ETH and stablecoins, into smart contract-based protocols that facilitate decentralized lending, liquidity provision, and

other on-chain services.

The Company earns variable crypto asset rewards based on its participation and the utilization of its deployed

assets within these protocols.

these business lines, which may be vertically integrated, represent complementary components of the Company’s broader blockchain

strategy, designed to generate recurring on-chain revenues, enhance operational scalability, and increase ETH holdings and long-term

treasury value.

each operation has distinct economic drivers and technology components, NodeOps and Builder+ collectively comprise the Company’s

blockchain infrastructure activities, whereas Imperium represents distinct DeFi operations within the Company’s overall blockchain

Revenues from NodeOps and Builder+ are aggregated and presented as Blockchain infrastructure revenues , while revenues

from Imperium are presented separately as DeFi revenues in the statements of operations.

Segment results for these business lines,

and their reconciliation to the financial-statement line items presented on the face of the statements of operations, are disclosed in

Note 12 – Segment Reporting .

operations are strategically supported by its DeFi/TradFi Flywheel, a capital formation and reinvestment framework that integrates decentralized

finance (e.g., on-chain borrowing) with traditional capital markets (e.g., at-the-market (“ATM”) equity offerings and structured

convertible notes).

This framework is designed to scale blockchain infrastructure operations, accelerate revenue growth and increase

ETH accumulation while minimizing shareholder dilution.

the nine months ended September 30, 2025, the Company completed a strategic wind-down of its validator node operations on Avalanche (AVAX),

Cosmos (ATOM), Akash (AKT), and Kava (KAVA), and liquidated the majority of its non-Ethereum token holdings.

These actions were undertaken

to align operations and capital allocation with the Company’s ETH-centric focus.

addition to its Ethereum operations, BTCS has deployed Builder+ to select EVM-compatible ecosystems, including Binance Smart Chain (“BSC”),

where it participates in the decentralized block-building marketplace.

While ETH remains the Company’s principal focus, this cross-chain

expansion highlights the scalability of its infrastructure.

to align operations and capital allocation with the Company’s Ethereum-centric focus.

Company’s operations are subject to various risks, including technological complexity, regulatory uncertainty, market volatility,

1 unchanged sentence

BTCS’s future success depends on Ethereum’s continued adoption,

the maturity of decentralized infrastructure markets, and the Company’s ability to operate blockchain infrastructure at scale.

the evolution of decentralized infrastructure markets, and the Company’s ability to operate blockchain infrastructure efficiently

2 - Basis of Presentation

of Presentation

accompanying unaudited condensed consolidated 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 consolidated 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 June 30,

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

Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements do not include

all of the information and notes required by GAAP for annual financial statements, but in the opinion of the Company’s management,

reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position,

results of operations and cash flows for the interim periods presented.

Interim results for the three months ended September 30, 2025

are not necessarily indicative of results for the full year ending December 31, 2025.

The unaudited condensed consolidated financial

statements and notes should be read in conjunction with the consolidated financial statements and notes for the year ended December 31,

The unaudited condensed financial statements and

notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2024.

Reclassifications

prior period amounts have been reclassified in order to conform with the current period presentation in the unaudited condensed consolidated

financial statements and accompanying notes.

The reclassifications did not have a material impact on the Company’s unaudited condensed

consolidated financial statements and related disclosures.

prior period amounts have been reclassified in order to conform with the current period presentation in the unaudited condensed financial

statements and accompanying notes.

The reclassifications did not have a material impact on the Company’s unaudited condensed financial

statements and related disclosures.

The impact on any prior period disclosures was immaterial.

inception on December 24, 2024, the Company paid approximately $ 2,000 of formation costs on behalf of BTCS Labs Inc.

(“BTCS Labs”)

in exchange for 100 shares of its common stock.

In September 2025, BTCS Labs reimbursed the Company for the original payment of formation

costs, and the 100 shares originally issued were repurchased and retired.

As a result, BTCS Labs is no longer presented as a subsidiary

in the accompanying financial statements.

3 - Summary of Significant Accounting Policies

4 unchanged sentences

The Company maintains cash and cash equivalent balances at financial institutions that are insured by the FDIC.

As of June 30, 2025 and

December 31, 2024, the Company had approximately $ 639,000 and $ 1,978,000 in cash.

The Company has not experienced any losses in such

accounts and believes it is not exposed to any significant credit risk on cash.

As of September 30, 2025

and December 31, 2024, the Company had approximately $ 4,486,000 and $ 1,978,000 in cash.

The Company has not experienced any losses in

such accounts and believes it is not exposed to any significant credit risk on cash.

instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits.

1 unchanged sentence

institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 .

As of June 30, 2025 and December

31, 2024, the Company had approximately $ 351,000 and $ 1,474,000 in excess of the FDIC insured limit, respectively.

Company holds stablecoins, including, but not limited to, USDT (Tether) and USDC (USD Coin), which are crypto assets that are pegged

to the value of designed to maintain a value equivalent to one U.S.

Our stablecoins are typically held in secure digital

wallets or on crypto asset exchanges.

The Company acquires and holds stablecoins primarily to facilitate crypto asset transactions,

including, but not limited to, payments to third-party vendors.

While not accounted for as cash or cash equivalents, these

stablecoins are considered a liquidity resource.

As of September 30, 2025 and

December 31, 2024, the Company had approximately $ 4,018,000 and $ 1,474,000 in excess of the FDIC insured limit, respectively.

Company holds stablecoins, including, but not limited to, USDT (Tether), USDC (USD Coin) and GHO (Aave Protocol’s native stablecoin),

which are crypto assets that are pegged to the value of designed to maintain a value equivalent to one U.S.

Our stablecoins are

typically held in secure digital wallets or on crypto asset exchanges.

The Company acquires and holds stablecoins primarily to facilitate

crypto asset transactions, including, but not limited to, payments to third-party vendors.

While not accounted for as cash or cash equivalents,

these stablecoins are considered a liquidity resource.

Company’s crypto assets primarily consist of Ethereum and other crypto assets held in non-custodial wallets.

These assets are maintained

under the Company’s control through secure private keys and are not held by any third-party custodian.

The Company’s crypto

assets are used to support its blockchain infrastructure operations, including NodeOps, Builder+ and Imperium.

Value Measurement

Company accounts for the fair value measurement of its crypto assets in accordance with Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC”) 820, Fair Value Measurement .

ASC 820 defines fair value as the price that

would be received for an asset in a current sale, assuming an orderly transaction between market participants on the measurement date.

Company accounts for its crypto assets under Accounting Standards Codification (“ASC”) 350-60, Intangibles—Goodwill

and Other—Crypto Assets , and measures such assets at fair value in accordance with ASC 820, Fair Value Measurement .

Fair value represents the price that would be received for an asset in a current sale, assuming an orderly transaction between market

participants on the measurement date.

Market participants are considered to be independent, knowledgeable, and willing and able to transact.

It requires the Company to assume

that its crypto assets are sold in their principal market or, in the absence of a principal market, the most advantageous market.

It requires the Company to assume that its crypto assets are sold in their principal market or, in the absence of a principal market,

the most advantageous market to which it has access.

serves as the principal market for the Company’s crypto assets, being the Company’s primary cryptocurrency exchange for both

14 unchanged sentences

for Crypto Assets

assets are measured at their respective fair market values using the last close price of the day in the UTC time zone at each reporting

period end on the balance sheets and classified as either ‘Staked Crypto Assets’ or ‘Crypto Assets’ to distinguish

their nature within the respective balances.

Staked crypto assets are presented as current assets if their lock-up periods are less than

12 months, and as long-term other assets if the lock-up extends beyond one year.

The majority of our crypto assets are staked, typically

with lock-up periods of less than 28 days, and are considered current assets in accordance with ASC 210-10-20, Balance Sheet ,

due to the Company’s ability to sell them in a liquid marketplace, as we have a reasonable expectation that they will be realized

in cash or sold or consumed during the normal operating cycle of our business to support operations when needed

Company measures its crypto assets at fair value in accordance with ASC 820, Fair Value Measurement , using the last closing price

of the day in the UTC time zone at each reporting period end.

assets are categorized based on their operational use as follows:

assets – treasury represent unencumbered holdings maintained for liquidity and

investment purposes.

assets – DeFi represent assets deployed in decentralized finance protocols for

lending and liquidity provision.

assets – staked represent assets actively staked to validator nodes and deployed

in blockchain validation activities to earn staking rewards.

crypto assets are measured at fair value under ASC 350-60 and are presented as current assets unless they are subject to protocol-imposed

restrictions exceeding twelve months.

Staked crypto assets are classified as non-current if their lock-up periods extend beyond one year.

majority of the Company’s crypto assets are deployed either in staking arrangements with lock-up periods of less than seven days

or in DeFi liquidity pools that permit near-immediate redemption.

Accordingly, these assets are classified as current under ASC 210-10-20,

Balance Sheet , due to the Company’s ability to sell them in a liquid marketplace, as we have a reasonable expectation that

they will be realized in cash or sold or consumed during the normal operating cycle of our business to support operations when needed.

January 1, 2025, the Company enhanced its accounting systems and processes related to the receipt and valuation of crypto assets.

a result of these enhancements, the Company updated its accounting policy for determining the cost basis of crypto assets received.

cost basis is now measured at fair value based on the spot price at the time of receipt, consistent with the applicable guidance under

cost basis is now measured at fair value based on the hourly spot price at the time of receipt, consistent with the applicable guidance

under ASC 350-60.

to January 1, 2025, the cost basis of crypto assets was measured using the last close price of the day in the UTC (Coordinated Universal

13 unchanged sentences

was deemed impracticable due to the nature of prior lot-level selection processes under the specific identification method.

gains (losses) on sale of crypto assets are included in other income (expenses) in the consolidated statements of operations.

recorded realized gains (losses) on crypto assets of approximately ($ 2,778,000 ) and $ 287,000 for the three months ended June 30, 2025

and 2024, respectively, and approximately ($ 4,160,000 ) and $ 298,000 for the six months ended June 30, 2025 and 2024, respectively.

gains (losses) on sale of crypto assets are included in operating expenses in the statements of operations.

The Company recorded

realized gains (losses) on crypto assets of approximately ($ 4,408,000 ) and ($ 122,000 ) for the three months ended September 30, 2025 and

2024, respectively, and approximately ($ 8,568,000 ) and $ 176,000 for the nine months ended September 30, 2025 and 2024, respectively.

Company does not believe the change materially impacts comparability of results.

While the realized loss for the three and six

months ended June 30, 2025, reflects application of the new LIFO method, it is not practicable to quantify the exact impact of the

change as compared to the prior method, given the subjective lot selection involved in specific identification.

Based on this

assessment, the Company does not believe the change has a material effect on the consolidated financial statements.

of Crypto Assets in Financial Statements

classification of purchases and sales in the consolidated statements of cash flows is determined based on the nature of the crypto assets,

which can be categorized as ‘productive’ (i.e.

acquired for purposes of staking) or ‘non-productive’ (e.g., bitcoin).

Acquisitions of non-productive crypto assets are treated as operating activities, while acquisitions of productive crypto assets are

classified as investing activities in accordance with ASC 230-10-20, Investing activities .

Productive crypto assets staked with

lock-up periods of less than 12 months are listed as current assets in the ‘Staked Crypto Assets’ line item on the balance

Staked crypto assets with lock-up periods exceeding 12 months are categorized as long-term other assets.

Non-productive crypto

assets are included in the ‘Crypto Assets’ line item on the balance sheet.

assets used as collateral for DeFi borrowings remain on the Company’s balance sheet, as the Company retains ownership and control

of the associated wallet and the assets are not transferred to a counterparty.

While deposited into a smart contract and restricted from

use, the crypto assets are not derecognized.

These assets are presented within “Crypto Assets” on the balance sheet and disclosed

separately in the footnotes when serving as collateral.

arrangements such as Aave, ETH is deposited as collateral into a smart contract, which remains in the Company’s wallet but is

restricted from transfer until the associated borrowing is repaid.

The Company continues to recognize the underlying ETH as a crypto

asset on its balance sheet, with a corresponding disclosure of its restricted status.

Company’s blockchain infrastructure operations include two primary revenue-generating activities:

Ethereum block building (“Builder+”)

and validator node operations (“NodeOps”).

Company’s Chief Operating Decision Maker (“CODM”) is comprised of several members of its executive management team,

including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”),

who are responsible for evaluating the Company’s financial performance, managing operations, and allocating capital and resources.

CODM regularly reviews discrete financial information related to Builder+ and NodeOps, assessing financial performance based on gross

profit (loss), direct operating expenses, and key financial metrics.

These financial reviews direct operational decisions and shape capital

deployment strategies for each activity.

the CODM evaluates Builder+ and NodeOps separately, these activities share common economic characteristics, infrastructure, and operational

oversight and are therefore aggregated into a single operating segment under ASC 280, Segment Reporting.

with ASU 2023-07, the Company discloses significant segment expenses that are regularly provided to the CODM for decision-making purposes.

See Note 11 – Segment Information for more information.

Company recognizes revenue under ASC 606 , Revenue from Contracts with Customers .

The core principle of the revenue standard is

that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects

the consideration to which the Company expects to be entitled in exchange for those goods or services.

The following five steps are applied

to achieve that core principle:

While the realized loss for the three and nine months

ended September 30, 2025, reflects application of the new LIFO method, it is not practicable to quantify the exact impact of the change

as compared to the prior method, given the subjective lot selection involved in specific identification.

Based on this assessment, the

Company does not believe the change has a material effect on the financial statements.

of Crypto Assets in the Statements of Cash Flows

classification of purchases and sales in the statements of cash flows is determined based on the nature of the crypto assets, which can

be categorized as ‘productive’ (i.e.

acquired for purposes of staking or liquidity provision) or ‘non-productive’

(e.g., NFTs).

Acquisitions of non-productive crypto assets are treated as operating activities, while acquisitions of productive crypto

assets are classified as investing activities in accordance with ASC 230-10-20, Investing activities .

Deployed in DeFi Arrangements

DeFi arrangements, such as those transacted on the Aave protocol, the Company participates as a Liquidity Provider, depositing ETH into

Aave’s decentralized lending pools.

When ETH is supplied, it becomes part of the protocol’s available liquidity that borrowers

may draw upon.

The deposited ETH earns variable rewards based on market supply and demand for borrowing within the protocol.

ETH supplied by the Company is also eligible to serve as collateral supporting on-chain borrowing activities.

The collateral value of

the deposited ETH contributes to the overall “health factor” of the Company’s Aave wallet.

The health factor is a protocol

metric that measures the ratio of collateral value to outstanding borrowings and automatically updates with changes in ETH market prices.

The health factor determines the safety buffer against liquidation;

maintaining a value greater than 1.0 ensures sufficient collateralization,

while a decline below 1.0 could trigger partial liquidation of the collateral by the protocol’s smart contracts.

deposit, ETH is automatically wrapped into Aave Wrapped ETH (“WAETH” or “aEthWETH”) to enable ERC-20 interoperability

and facilitate reward accrual within the lending pool.

The Company has concluded that this conversion does not constitute a derecognition

event under ASC 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets , as no other counterparty

obtains control or economic benefits of the deposited ETH.

Rather, WAETH serves as a receipt or claim token evidencing the Company’s

continuing interest in the underlying ETH.

deployed into DeFi protocols remains recognized at its fair value under ASC 350-60.

is not recognized as a separate intangible asset since it is economically equivalent to the

underlying ETH.

deployed within DeFi protocols is disclosed as encumbered when serving as collateral for

borrowing arrangements or liquidity provision activities.

gain or loss is recognized upon wrapping or unwrapping ETH within DeFi protocols.

reward earned from such DeFi deployments is recognized as DeFi revenues on the statements of operations in accordance with ASC

606, as discussed in Note 3 - Revenue Recognition section.

of September 30, 2025, the Company had approximately 38,999 ETH deployed within DeFi protocols, which remains reflected as ETH within

Crypto assets - DeFi on the balance sheet and disclosed separately in Note 4 – Crypto Assets , including disclosure

of their restricted status.

Deployed ETH is subject to protocol-specific risks, including smart-contract vulnerabilities, liquidity constraints,

collateral liquidation risk, and potential protocol governance changes.

Tokens (NFTs)

Company holds certain non-fungible tokens (“NFTs”), which are unique digital assets recorded on a blockchain.

represent ownership interests in an entity or contractual rights to cash flows, and therefore do not qualify as financial instruments

or equity securities under ASC 320 or ASC 321.

Consistent with the accounting treatment applied to other crypto assets, the Company accounts

for NFTs as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other .

are initially recorded at cost and are not amortized.

NFTs are assessed for impairment each reporting period to determine if any events

or changes in circumstances indicate that it is more likely than not that the asset is impaired.

If the fair value of an NFT is less

than its carrying value, an impairment loss is recognized equal to the difference.

Subsequent increases in fair value are not recorded.

Realized gains or losses on the sale of NFTs are included in other income (expense) in the statements of operations.

value used in impairment testing is determined in accordance with ASC 820, Fair Value Measurement .

Unlike fungible crypto assets,

NFTs typically do not trade on centralized exchanges with quoted prices.

Instead, the Company evaluates impairment by reference to observable

transactions, where available, on active NFT marketplaces.

the three and nine months ended September 30, 2025, the Company purchased multiple NFTs for aggregate consideration of approximately

These NFTs are included within Non-fungible tokens on the balance sheets.

No impairment losses were recognized for the

three or nine months ended September 30, 2025.

Company’s blockchain operations include three revenue-generating business lines corresponding to its distinct sources of on-chain

validator node operations (“NodeOps”), block building (“Builder+”) and DeFi operations (“Imperium”).

Company’s Chief Operating Decision Makers (“CODMs”) are comprised of several members of its executive management team,

including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), who are responsible for evaluating

the Company’s financial performance, managing operations, and allocating capital and resources.

CODMs regularly review discrete financial information related to Builder+ NodeOps and Imperium, assessing financial performance based

on gross profit (loss), direct operating expenses, and key financial metrics.

These financial reviews direct operational decisions and

shape capital deployment strategies for each activity.

the CODMs evaluates NodeOps, Builder+, and Imperium individually for internal management purposes, NodeOps and Builder+ share common

economic characteristics, technological infrastructure, and operational oversight and are therefore aggregated into a single operating

segment, Blockchain infrastructure operations , under ASC 280, Segment Reporting .

Imperium, which generates revenue through

participation in DeFi protocols, is presented as a separate reportable segment, DeFi operations , due to its distinct economic

drivers and underlying market characteristics.

with ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , the Company discloses significant

segment expenses and other measures that are regularly provided to the CODMs for decision-making purposes.

Refer to Note 12 – Segment

Information for more information.

Company recognizes revenue under ASC 606 , Revenue from Contracts with Customers , which requires an entity to recognize revenue

when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the entity

expects to be entitled to in exchange for those goods or services.

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

Identify the contract with the customer

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Recognize revenue when the Company satisfies a performance obligation

is 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.

The Company generates revenue through 1) staking rewards

generated from its blockchain infrastructure operations (NodeOps), and 2) gas fees earned from successful Ethereum block-building through

These revenues are collectively termed ‘Blockchain infrastructure revenues’ in the consolidated statements of operations.

transaction consideration the Company receives - the crypto asset awards and gas fees - are a non-cash consideration, which the Company

measures at fair value on the date received.

Infrastructure (NodeOps)

Company’s revenues are generated from blockchain-based operations and comprise three primary sources:

(i) staking rewards earned

from validator node operations (NodeOps);

(ii) execution-layer transaction fees, priority fees, and maximal extractable value (“MEV”)

rewards earned from block-building activities (Builder+);

and (iii) protocol-driven rewards earned from participation in DeFi protocols

Revenues from NodeOps and Builder+ are aggregated and presented as Blockchain infrastructure revenues , while revenues

from Imperium are presented separately as DeFi revenues in the statements of operations.

transaction consideration the Company receives in the form of native crypto assets, such as ETH or other network tokens, represents non-cash

consideration measured at fair value on the date the crypto assets are earned.

Collectively,

these activities represent the outputs of the Company’s ordinary blockchain infrastructure operations and are measured at the fair

value of the crypto assets earned at the time each performance obligation is satisfied.

Company engages in network-based smart contracts by running its own crypto asset validator nodes as well as by staking (or “delegating”)

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crypto asset award earned from the network when delegating to the Company’s own node and is entitled to a fractional share of the

fixed crypto asset award a third-party node operator receives (less crypto asset transaction fees payable to the node operator, which

are immaterial and are recorded as a deduction from revenue), for successfully validating or adding a block to the blockchain.

The Company’s

fractional share of awards received from delegating to a third-party validator node is proportionate to the crypto assets staked by the

Company compared to the total crypto assets staked by all Delegators to that node at that time.

network-determined crypto asset award a third-party node operator receives (less crypto asset transaction fees payable to the node operator,

which are immaterial and are recorded as a deduction from revenue), for successfully validating or adding a block to the blockchain.

The Company’s fractional share of awards received from delegating to a third-party validator node is proportionate to the crypto

assets staked by the Company compared to the total crypto assets staked by all Delegators to that node at that time.

certain blockchain networks on which the Company operates a validator node, the Company earns a validator node fee (“Validator

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At that point, revenue is recognized.

Block-Building

Company earns revenue by participating as a Builder on blockchain networks that have implemented a Proposer-Builder Separation (PBS)

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proposing their transactions.

Revenue recognition for these activities, conducted through Builder+, entails the recognition of gas 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.

gas fees 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.

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.

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.

part of the block construction and proposal process, the Company’s Builder purchases block space through a fixed non-negotiable

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finalized on the Ethereum network.

At this juncture, the Company has fulfilled its obligations, and the gas fees and tips associated

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.

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

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

Smart Chain (BSC) Block Building

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and a distinct block-building and reward structure.

The native token of BSC is BNB, which is used for both gas fees and transaction-based

The native token of BSC is BNB, which is used for both transaction fees and transaction-based

on BSC construct block bids composed of transactions and optional searcher tips.

Unlike Ethereum, gas fees on BSC are paid directly to

the Validator’s coinbase and are not received by the Builder.

Unlike Ethereum, transaction fees on BSC are paid directly

to the Validator’s coinbase and are not received by the Builder.

Instead, the Builder earns revenue in the form of BNB-denominated

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Company recognizes revenue from BSC block building at the time the BNB tips are withdrawn from the tip smart contract to the Company’s

wallet, measured at the fair value of BNB on the withdrawal date.

Because BSC validator payments are embedded in the gas fees of a self-transfer

transaction appended by the Builder, the associated gas cost is treated as cost of revenue.

wallet, measured at the fair value of BNB at the time the withdrawal occurs.

Because BSC validator payments are embedded in the transaction

fees of a self-transfer transaction appended by the Builder, the associated transaction cost is treated as cost of revenue.

performance obligations on BSC are satisfied when the constructed block is selected and proposed by a Validator and finalized on-chain.

Similar to Ethereum, each block is considered a separate performance obligation.

following table summarizes the revenues earned from the Company’s operations for the three and six months ended June 30, 2025 and

in 2025, the Company expanded its blockchain infrastructure operations to include DeFi activities under its Imperium business line.

Imperium, the Company participates directly in DeFi ecosystems by deploying crypto assets, including ETH and stablecoins, into smart

contract-based protocols that facilitate decentralized lending, liquidity provision, and other on-chain financial services.

the Company deposits ETH into a DeFi protocol, such as Aave, the ETH is converted into a tokenized representation (for example, Aave

Wrapped ETH, “WETH” or “aEthWETH”) that represents the Company’s on-chain deposit position and entitles

it to earn variable crypto asset rewards (e.g., ETH).

These rewards accrue continuously based on protocol activity, supply-and-demand

dynamics, and utilization of the Company’s deployed assets within the lending pool.

Company’s participation in DeFi protocols represents a distinct performance obligation that is satisfied over time, as the protocol’s

users simultaneously receive and consume the benefits of the Company’s contributed liquidity or other deployed assets.

is recognized over time in proportion to the variable rewards accrued to the Company’s position, measured at the fair value of

the native token at the time the consideration is earned.

Variable consideration is constrained to amounts not subject to significant

reversal, consistent with ASC 606-10-32-11.

earned through Imperium are classified as DeFi revenues in the statements of operations.

The Company is considered the principal

in these transactions because it controls the deployed crypto assets, bears protocol and market risks (including smart-contract, liquidity,

and liquidation risk), and earns consideration directly from the protocol rather than through an intermediary.

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

2025 and 2024.

Schedule of Revenues Earned from Company’s Operations

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Revenue from blockchain infrastructure operations

Total revenue

following tables detail the native token rewards and their respective fair market value recognized as revenue for the three and six months

ended June 30, 2025 and 2024.

Revenues earned from blockchain infrastructure staking activities through NodeOps include token rewards

earned from the delegation of cryptocurrency assets to third-party validator nodes as well as token rewards derived from BTCS-operated

Three Months Ended September 30,

Nine Months Ended September 30,

Blockchain infrastructure revenues

Total blockchain infrastructure revenues

DeFi revenues (Imperium)

Total revenues

following tables detail the native token rewards and their respective fair market value recognized as revenue for the three and nine

months ended September 30, 2025 and 2024.

Revenues earned from blockchain infrastructure staking activities through NodeOps include token

rewards earned from the delegation of cryptocurrency assets to third-party validator nodes as well as token rewards derived from BTCS-operated

validator nodes, which include staking of the Company’s crypto assets to BTCS nodes and Validator Fees earned from third-parties

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of Crypto Assets Earned from Blockchain Infrastructure Staking Activities

the Three Months Ended June 30,

the Six Months Ended June 30,

Infinity (AXS)*

Protocol (NEAR)*

Network (ROSE)

earned from blockchain infrastructure staking activities through NodeOps

the Three Months Ended September 30,

the Nine Months Ended September 30,

Ethereum (ETH)

Cosmos (ATOM)

Solana (SOL)*

Axie Infinity (AXS)*

NEAR Protocol (NEAR)*

Avalanche (AVAX)*

Polkadot (DOT)*

Rocket Pool (RPL)*

Polygon (POL)*

Oasis Network (ROSE)

Cardano (ADA)*

Evmos (EVMOS)*

Total earned from blockchain infrastructure staking

activities through NodeOps

or a portion of revenue earned from staking to third-party validator nodes

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Schedule of Crypto Assets Earned From

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Token Rewards

Revenue ($USD)

Token Rewards

Revenue ($USD)

Token Rewards

Revenue ($USD)

Token Rewards

Revenue ($USD)

the Three Months Ended September 30,

the Nine Months Ended September 30,

Ethereum (ETH)

BNB Chain (BNB)

Total earned from block-building through Builder+

Total earned from block-building

through Builder+

assets earned from DeFi activities through Imperium

the Three Months Ended September 30,

the Nine Months Ended September 30,

Ethereum (ETH)

Total earned from DeFi activities through Imperium

Company’s cost of revenues primarily consists of direct expenses incurred in connection with its blockchain operations, including

NodeOps, Builder+ and Imperium activities.

Infrastructure Operations (NodeOps and Builder+)

Company’s cost of revenues related to its blockchain infrastructure operations primarily includes direct production costs associated

with transaction validation on the network, cloud-based server hosting expenses related to our validator nodes and Builders, and allocated

employee salaries dedicated to node maintenance and support.

with transaction validation and block construction on blockchain networks.

These costs include cloud-based server hosting expenses related

to our validator nodes and Builders and allocated employee compensation related to the monitoring, maintenance and support of these operations.

Additionally,

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for proposing constructed blocks.

These are fixed amounts embedded in the proposed blocks and are only paid when the block is successfully

These are fixed amounts embedded within the proposed blocks and are paid only when the block is successfully

finalized on-chain.

Binance Smart Chain (BSC) block building, although the Builder does not receive the gas fees from 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 gas fees intended to incentivize the Validator to select its block.

self-transaction results in a direct payment to the Validator’s coinbase address.

These Builder-specified bids are separate

from the gas fees attached to user transactions and represent incremental value added by the Builder 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

attempting to fulfill performance obligations under the BSC block-building arrangement.

Company also includes in cost of revenues any fees paid to third parties for assistance with infrastructure hosting, software maintenance,

or other operational support.

These direct expenses are collectively presented as ‘Blockchain infrastructure expenses’ in

the consolidated statements of operations.

following table further details the costs of revenues for the three and six months ended June 30, 2025 and 2024.

Binance Smart Chain (BSC) block building, although the Builder does not receive the transaction fees attached to the bundled

transactions included in a finalized block, it must still compete for inclusion by proposing an additional bid, structured as a self-transaction,

that specifies extra fees intended to incentivize the Validator to select its block.

This self-transaction results in a direct payment

to the Validator’s coinbase address.

These Builder-specified bids are separate from the transaction fees attached to user transactions

and represent incremental value added by the Builder intended to increase the likelihood of block inclusion.

The Company records these

Builder-specified bid payments as cost of revenues, as they are a direct cost of fulfilling the block-building performance obligations

under the BSC block-building arrangement in accordance with ASC 606.

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

validator or builder operations.

expenses are collectively presented as Cost of blockchain infrastructure revenues in the statements of operations.

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 as Cost

of DeFi revenues in the statements of operations.

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

Schedule of Costs of Revenues

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

the Three Months Ended

the Nine Months Ended

Cost of blockchain infrastructure revenues

Cost of staking revenues (NodeOps)

Cost of block-building revenues (Builder+)

Cost of block-building revenues

Total cost of blockchain infrastructure revenues

Cost of DeFi revenues (Imperium)

Total cost of revenues

Developed Software

developed software consists of the core technology of the Company’s StakeSeeker and ChainQ platforms.

For internally developed

software, the Company uses both its own employees as well as the services of external vendors and independent contractors.

accounts for computer software used in the business in accordance with ASC 985-20 and ASC 350.

developed software consists of the core technology of the Company’s ChainQ platform.

For internally developed software, the Company

uses both its own employees as well as the services of external vendors and independent contractors.

The Company accounts for computer

software used in the business in accordance with ASC 985-20 and ASC 350.

985-20, Software-Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires that software development costs

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not be recoverable.

accompanying consolidated financial statements have been prepared in conformity with U.S.

This requires management to make estimates

and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at

the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period.

The Company’s

significant estimates and assumptions include the recoverability and useful lives of indefinite life intangible assets, stock-based compensation,

and the valuation allowance related to the Company’s deferred tax assets.

Certain of the Company’s estimates, including the

carrying amount of the indefinite life intangible assets, could be affected by external conditions, including those unique to the Company

and general economic conditions.

It is reasonably possible that these external factors could have an effect on the Company’s estimates

and could cause actual results to differ from those estimates and assumptions.

accompanying condensed financial statements have been prepared in conformity with U.S.

GAAP, which requires management to make estimates

and assumptions that affect certain reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at

the date of the financial statements, and the reported amounts of revenue and expenses during the period.

Company’s significant estimates and assumptions include, but are not limited to, the recoverability and useful lives of indefinite

life intangible assets, stock-based compensation, valuation allowances related to deferred tax assets, allocations of compensation and

other shared costs among functional expense categories, accruals for employee bonuses and incentives, and the fair value of certain financial

instruments, when applicable.

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

to the financial statements.

Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns.

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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 consolidated 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 than likely 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.

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.

Company accounts for the issuance of Common Stock purchase warrants issued in accordance with ASC 815, Derivatives and Hedging .

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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 consolidated statements of operations as “Change in fair value of warrant liabilities.”

These warrants are classified as Level 3 liabilities within the fair value hierarchy due to the use of unobservable inputs in the valuation

changes in fair value recognized in the statements of operations as “Change in fair value of warrant liabilities.” These

warrants are classified as Level 3 liabilities within the fair value hierarchy due to the use of unobservable inputs in the valuation

model (see Note 5 - Fair Value of Financial Assets and Liabilities ).

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stock price, the warrant exercise price, expected term, expected stock price volatility, risk-free interest rate, and expected dividend

The warrant liability is presented as a current liability on the Company’s consolidated balance sheet.

The warrant liability is presented as a current liability on the Company’s balance sheet.

Equity-Classified

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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 and amortized over the term of the related debt instrument using the effective

interest method.

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.

classified in equity, these warrants remain in equity unless modified in a way that results in liability classification.

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market value of the Company’s stock at the date of grant and expire up to ten years from the date of grant.

These options

generally vest over a one-year period.

These options generally

vest over a one-year period.

Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating

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Lending Arrangements

Company accounts for borrowings under decentralized finance (“DeFi”) protocols, such as Aave, in accordance with ASC 470,

These borrowings are recognized as financial liabilities when proceeds are received and are measured at their principal

amount, net of repayments.

The Company classifies these borrowings as liabilities on the balance sheet under “Loan Payable –

DeFi Protocol.”

borrowings are collateralized by digital assets, such as Ethereum (ETH), which are deposited into protocol-specific smart contracts

as interest-bearing collateral.

The collateral tokens remain in the Company’s wallet but are effectively restricted from

transfer while borrowings remain outstanding.

Although the underlying ETH is restricted and subject to liquidation risk, the Company

retains both custody and beneficial ownership, and continues to recognize the ETH on its balance sheet within “Crypto

Assets” in accordance with ASC 350 and ASC 805-10-25 for nonfinancial assets.

Fair value measurement of the collateralized ETH

follows the guidance in ASC 820.

These assets are disclosed in the footnotes as restricted from use while serving as

on DeFi borrowings is accrued over the borrowing term and recognized as an expense within “Interest Expense” in the

consolidated statements of operations.

Interest earned on collateralized ETH is recognized as “Interest Income” when

realized or earned under the terms of the DeFi protocol.

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

the Company borrows crypto assets under a DeFi protocol, the arrangement is recognized as a financial liability measured at the principal

amount of the borrowed tokens, net of repayments, in accordance with ASC 470.

Such borrowings are presented on the balance sheet as Loans

payable – DeFi protocol .

are collateralized by the Company’s crypto assets, such as ETH, which are deposited into protocol-specific smart contracts as collateral.

The deposited collateral remains recorded on the balance sheet within Crypto Assets , as the Company retains both custody and beneficial

Collateralized assets are considered restricted while serving as security for DeFi borrowings and are disclosed as such in

the notes to the financial statements.

value measurement of the collateralized ETH follows the guidance in ASC 820 , Fair Value Measurement .

Although the ETH is restricted

and subject to liquidation risk, the Company continues to account for the underlying asset at fair value under ASC 350-60 , Intangibles

– Crypto Assets .

modifications and extinguishments

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 under Loss on extinguishment of debt .

or borrowing costs accrued under DeFi lending arrangements are recognized over the borrowing term and presented as Interest 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 under DeFi revenues rather than interest income.

costs are expensed as incurred and included in marketing expenses.

Advertising and marketing expenses amounted to approximately $ 23,000

and $ 28,000 for the three months ended June 30, 2025 and 2024, respectively and approximately $ 268,000 and $ 86,000 for the six months

ended June 30, 2025 and 2024, respectively.

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

Income (Loss) per Share

income (loss) per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of

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.

Potential common shares consist of the

Company’s restricted stock units, restricted common stock, options, warrants and shares issuable upon conversion of outstanding convertible notes.

In periods when the Company reports

a net loss, diluted loss per share excludes the effect of all potential common shares, including those issuable upon the exercise of warrants

and options, the vesting of restricted stock units and restricted common stock, and the conversion of preferred stock or convertible notes—since

their inclusion would be anti-dilutive.

the three months ended June 30, 2024 and the six months ended June 30, 2025, the Company reported net losses;

therefore, all potentially

dilutive securities were excluded from the computation of diluted loss per share.

the three months ended June 30, 2025 and the six months ended June 30, 2024, the Company reported net income, and diluted net income

per share reflects the inclusion of dilutive potential common shares, where applicable.

following financial instruments were excluded from the calculation of diluted loss per share during periods of net loss, as their effect

was anti-dilutive:

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.

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.

Company reported net income for the three and nine months ended September 30, 2025 and net losses for the three and nine months ended

September 30, 2024.

The following potentially dilutive securities were excluded from the computation of diluted loss per share during

the 2024 periods of net loss, as their effect would have been anti-dilutive:

of Earnings Per Share Anti-diluted

As of June 30,

September 30, 2024

Warrants to purchase common stock

Non-vested restricted stock unit awards

Non-vested restricted common stock

Shares issuable upon conversion of convertible notes

Anti-dilutive securities

Accounting Pronouncements

Company continually assesses new accounting pronouncements 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 Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated

Financial Statements properly reflect the change.

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.

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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ASU 2023-07 is intended to enhance reportable segment disclosures by requiring disclosures of significant segment expenses

regularly provided to the CODM, requiring disclosure of the title and position of the CODM and explanation of how the reported measures

of segment profit and loss are used by the CODM in assessing segment performance and a location of resources.

regularly provided to the CODMs, requiring disclosure of the title and position of the CODMs and explanation of how the reported measures

of segment profit and loss are used by the CODMs in assessing segment performance and a location of resources.

ASU 2023-07 is effective

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As a result of the adoption, the Company expanded its disclosures in Note 12 - Segment Information , to present significant

expenses that are included within cost of revenue, by reportable segment, which are presented to the CODM.

expenses that are included within cost of revenue, by reportable segment, which are presented to the CODMs.

December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740):

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4 – Crypto Assets

following table presents the Company’s crypto assets held as of June 30, 2025:

following table presents the Company’s crypto assets held as of September 30, 2025, which are measured at fair value in accordance

with ASC 350-60, Intangibles – Crypto Assets .

Measurement is based on quoted prices in active markets (Level 1 inputs under

ASC 820, Fair Value Measurement ).

Schedule of Crypto Assets Held

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Ethereum (ETH) (1)(2)

Cosmos (ATOM)

Avalanche (AVAX)

$ 213,513,938

$ 291,581,923

BNB Chain (BNB)

Rocket Pool (RPL)

holdings include 10,460

ETH staked to validator nodes with an approximate fair market value of $ 26,005,000 .

holdings also include 3,903 ETH deposited as collateral for borrowings through a DeFi protocol (Aave), with a fair market value

of approximately $ 9,704,000 .

Although the deposited ETH remains in the Company’s wallets, it is subject to protocol-enforced restrictions while the related borrowing is outstanding.

$ 214,110,440

$ 293,180,682

of September 30, 2025, the Company’s ETH holdings included:

Approximately

30,784 ETH staked to validator nodes with an approximate fair market value of $ 127,642,000 , presented in Crypto assets –

Approximately

38,999 Aave aEthWETH tokens representing wrapped ETH deployed in DeFi protocols and serving as collateral for outstanding DeFi borrowings,

with a fair market value of approximately $ 161,704,000 .

The underlying ETH remains recognized within Crypto assets - DeFi

at fair value on the balance sheet.

Although the associated aEthWETH tokens reside in the Company’s wallets, they are subject

to protocol-enforced restrictions while the related borrowing is outstanding.

assets remain recorded as ETH within Crypto Assets – DeFi at fair value on the balance sheet and are subject to protocol

restrictions and smart-contract risk while serving as staking or collateralized assets.

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

of Crypto Assets by Operational Use

Crypto assets – treasury

Crypto assets – DeFi

Crypto assets – staked

Total crypto assets

assets – treasury represent unencumbered crypto assets maintained for liquidity

and general corporate purposes.

assets – DeFi represent crypto assets deployed in DeFi protocols, primarily Aave,

for lending and liquidity provision.

When ETH is deposited into Aave, the protocol issues

an equivalent amount of Wrapped Aave ETH (“WAETH”) to the Company’s wallet.

Management concluded under ASC 610-20 that these transactions do not constitute exchanges

and that the underlying ETH remains recognized at fair value.

assets – staked represent crypto assets actively deployed in validator operations

to earn staking rewards.

These assets are subject to protocol lock-ups and governance risks.

Value Measurement

categories of crypto assets are valued using quoted prices in active markets for identical assets and are therefore classified as Level

1 within the fair-value hierarchy (see Note 5 – Fair Value of Financial Assets and Liabilities ).

Encumbrances arising from

staking or DeFi deployments do not affect fair-value classification because such restrictions are entity-specific and do not influence

observable market pricing.

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

of Crypto Assets Rollforward Activity

December 31, 2024 - Fair Market Value

Additions and purchases of crypto assets

Rewards earned from blockchain infrastructure

and DeFi operations

Sales of crypto assets

( 3,431,427 )

Crypto payments

( 8,115,551 )

Realized gains on sale of crypto assets

Realized losses on sale of crypto assets

( 8,771,033 )

Change in unrealized appreciation (depreciation)

of crypto assets

September 30, 2025 - Fair Market Value

$ 293,180,682

5 – Fair Value of Financial Assets and Liabilities

14 unchanged sentences

that market participants would use in pricing the asset or liability.

instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried

at cost, which management believes approximates fair value due to the short-term nature of these instruments.

Company’s crypto assets (treasury, DeFi, and staked) are measured at fair value in accordance with ASC 350-60 using quoted prices

in active markets for the underlying tokens, primarily on major digital-asset exchanges.

These quoted prices represent Level 1 inputs

within the fair-value hierarchy.

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.

all of the Company’s crypto assets are classified as Level 1.

financial instruments, including cash and cash equivalents, stablecoins, accounts and other receivables, accounts payable and accrued

liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments.

following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and the Company’s

estimated level within the fair value hierarchy of those assets and liabilities as of June 30, 2025 and December 31, 2024:

estimated level within the fair value hierarchy of those assets and liabilities as of September 30, 2025 and December 31, 2024:

Schedule of Fair Value of Assets and Liabilities Valued on Recurring Basis

Fair Value Measured at June 30, 2025

Balance at June 30,

Quoted prices in active markets

Significant unobservable inputs

Value Measured at September 30, 2025

Crypto Assets

$ 293,180,682

$ 293,680,682

$ 293,180,682

Warrant Liabilities

Fair Value Measured at December 31, 2024

Balance at December 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Value Measured at December 31, 2024

Crypto Assets

Warrant Liabilities

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

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

3 Valuation Techniques

1 unchanged sentence

determination of fair value requires significant judgment or estimation.

As of June 30, 2025 and December 31, 2024, the Company’s

As of September 30, 2025 and December 31, 2024, the Company’s

Level 3 investments were carried at the original cost of the investments, with a value of $ 500,000 and $ 100,000 , respectively.

7 unchanged sentences

Changes in the values of the warrant liabilities are recorded in “change in fair value of warrant

liabilities” in the Company’s consolidated statements of operations.

liabilities” in the Company’s statements of operations.

March 2, 2021, the Company entered into a securities purchase agreement with certain purchasers which closed on March 4, 2021 pursuant

3 unchanged sentences

At the time of issuance, the Company maintained control of certain fundamental transactions and as such the Warrants were initially classified

As of June 30, 2025, the Company no longer maintained control of certain fundamental transactions because it did not hold

a majority of shareholder voting power.

As of September 30, 2025, the Company no longer maintained control of certain fundamental transactions because it did not

hold a majority of shareholder voting power.

As such, the Company may be required to cash settle the Warrants if a fundamental transaction

6 unchanged sentences

risk-free rates, as well as volatility.

Warrants require the issuance of registered shares upon exercise, do not expressly preclude an implied right to cash settlement and are

therefore accounted for as derivative liabilities.

The Company classifies these derivative warrant liabilities on the balance sheet as

a current liability.

Warrants require the issuance of registered shares upon exercise, and do not expressly preclude an implied right to cash settlement and

are therefore accounted for as derivative liabilities.

The Company classifies these derivative warrant liabilities on the balance sheet

as a current liability.

summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company’s

warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of June 30, 2025

warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of September 30,

2025 and December 31, 2024, is as follows:

Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

June 30, 2025

December 31, 2024

Risk-free rate of interest

12 unchanged sentences

following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets and liabilities

for the six months ended June 30, 2025 that are measured at fair value on a recurring basis:

for the nine months ended September 30, 2025 that are measured at fair value on a recurring basis:

Schedule of Changes in Fair Value and Other Adjustments of Warrants

Fair Value of

Level 3 Financial

September 30,

Beginning balance

1 unchanged sentence

Ending balance

Fair Value of Level 3 Financial Liabilities

September 30,

Beginning balance

Fair value adjustment of warrant liabilities

Fair value adjustment of warrant

Ending balance

6 – Stockholders’ Equity

of June 30, 2025, the Company had 975,000,000 shares of Common Stock, $ 0.001 par value, authorized, of which 21,968,566 shares were issued

and outstanding.

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

issued and outstanding.

At-The-Market

11 unchanged sentences

July 22, 2025, the Company entered into an amendment to its engagement with H.C.

Wainwright in connection with a new Form S-3

registration statement filed on July 23, 2025, to register up to $ 2,000,000,000

of securities for future issuance (the “New Registration Statement”).

Wainwright in connection with a new Form S-3 registration

statement filed on July 23, 2025, to register up to $ 2,000,000,000 of securities for future issuance (the “New Registration Statement”).

The New Registration Statement was approved by the Securities and Exchange Commission (“SEC”) and declared effective on August

5 unchanged sentences

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

the six months ended June 30, 2025, the Company sold a total of 1,871,889 shares of Common Stock under the ATM Agreement for aggregate

the nine months ended September 30, 2025, the Company sold a total of 26,394,414 shares of Common Stock under the ATM Agreement for aggregate

total gross proceeds of approximately $ 139,437,000 at an average selling price of $ 5.28 per share, resulting in net proceeds of approximately

$ 135,161,000 after deducting commissions and other transaction costs.

As of June 30, 2025, the Company had a receivable of approximately $ 156,000 related to ATM sales of 161,617 shares

on that date, which settled on July 1, 2025.

Repurchase Program

September 4, 2025, the Company’s Board of Directors (the “Board”) approved a share repurchase program authorizing the

Company to repurchase up to $ 50 million of its common stock over a three-year period.

Repurchases may be made from time to time in the

open market, in privately negotiated transactions, or otherwise, in such quantities, at such prices, and in such manner as determined

by the Company’s Chief Executive Officer consistent with the Board’s authorization.

Repurchases will be conducted in compliance

with Rule 10b-18 under the Securities Exchange Act of 1934 and applicable state law.

The Company has engaged H.C.

Wainwright & Co.,

LLC as the sole broker to implement the program.

(i) no repurchases may occur at a price per share greater than the current

fair market value of the Company’s crypto assets and cash divided by its outstanding common shares, as determined in good faith

and (ii) repurchases may not occur if the purchase price is less than a 25% discount to any limit orders in any 10b5-1 plan

of a named executive officer, or within 20 calendar days of any market-based order under any such plan.

The program does not obligate

the Company to repurchase any specific number of shares and may be modified, suspended, or discontinued at any time.

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.

the nine months ended September 30, 2025, the Company repurchased and retired 652,020 shares of its common stock for an average purchase

price of $ 4.60 .

As of September 30, 2025, approximately $ 47,000,000 remained available for repurchases under the authorization.

following table sets forth information regarding purchases of the Company’s common stock during the three months ended September

of Purchases of Common Stock

Number of Shares Purchased

Price Paid per Share

Number of Shares Purchased as Part of Publicly Announced Program

Dollar Value of Shares that May Yet Be Purchased Under the Program

July 1 – July 31, 2025 (1)

August 1 – August 31, 2025 (1)

September 1 – September

Total for Quarter Ended September

Company’s share repurchase program commenced on September 4, 2025.

No shares were repurchased

prior to that date.

Based Payments

1 unchanged sentence

The number of shares is determined based on the closing price of the Company’s Common Stock on the last trading day of the applicable

For the six months ended June 30, 2025, the Company issued 42,048 shares of Common Stock with a grant date fair value of approximately

$ 75,000 to independent directors.

For the nine months ended September 30, 2025, the Company issued 49,812 shares of Common Stock with a grant date fair value

of approximately $ 113,000 to independent directors.

Bonus Payments

the six months ended June 30, 2025, the Company issued 329,110 shares of Common Stock to officers and employees as part of the payment

of accrued bonus compensation for the year ended December 31, 2024.

the nine months ended September 30, 2025, the Company issued 329,110 shares of Common Stock to officers and employees as part of the

payment of accrued bonus compensation for the year ended December 31, 2024.

The total fair value of the shares issued was approximately

$ 813,000 based on the Company’s closing stock price on the issuance date.

Of the shares issued, 33,731 were returned to net settle the issuance

and pay related taxes, resulting in a net share issuance of 295,379 shares of Common Stock.

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.

V Preferred Stock

4 unchanged sentences

has a 20% liquidation preference over the shares of Common Stock, (iii) is non-voting, and (iv) has certain rights to dividends and distributions

(at the discretion of the Board of Directors).

September 6, 2024, at the Company’s 2024 Annual Meeting, stockholders approved an amendment to the Series V Certificate of Designation

(at the discretion of the Board).

the Company’s 2024 Annual Meeting on September 6, 2024, stockholders approved an amendment to the Series V Certificate of Designation

granting the Board the discretion to convert each share of Series V into one share of Common Stock.

As of June 30, 2025, the Board has not filed the amendment or elected to

convert any Series V shares.

the six months ended June 30, 2025, the Company issued 1,020,834 restricted shares of Series V in connection with the vesting of employee

restricted stock units (“RSUs”).

These restricted shares remain subject to forfeiture if specified market capitalization

thresholds are not achieved within the applicable performance measurement period.

Of this amount, 166,668 shares are also subject to

time-based vesting conditions requiring continued service over the vesting period.

February 3, 2025, 49,327 restricted shares of Series V were forfeited following the resignation of the Company’s Chief Technology

These shares were returned to the Company and are no longer outstanding.

of June 30, 2025, a total of 1,069,801 restricted shares of Series V Preferred Stock were issued and outstanding.

Of these, 48,967 shares

remain subject solely to time-based vesting conditions, which extend over a one- to three-year period, with full vesting expected by

December 31, 2027.

Equity Incentive Plan

As of September 30, 2025, the Board

has not filed the amendment or elected to convert any Series V shares.

Series V Issuances and Activity

January 13, 2025, the Company issued 1,020,834 restricted shares of Series V Preferred Stock concurrently with the acceleration and settlement

of previously outstanding long-term incentive (“LTI”) restricted stock units (“RSUs”).

These restricted Series

V shares were issued in the same proportion as restricted Common shares to preserve dividend equivalency under the LTI plan and remain

subject to the original market capitalization-based performance conditions and time-based vesting schedules ranging from one to three

August 7 and August 15, 2025, the Company determined that the market capitalization vesting thresholds of $100 million and $150 million,

respectively, had been achieved and sustained for 30 consecutive days.

In connection with these milestones—consistent with the

vesting of related restricted Common shares— 413,888 restricted Series V shares became fully vested and were reclassified from restricted

to outstanding Series V Preferred Stock.

February 3, 2025, following the resignation of the Company’s Chief Technology Officer, 49,327 restricted Series V shares were forfeited

in tandem with the forfeiture of related restricted Common shares.

On August 18, 2025, 333,333 restricted Series V shares were similarly

forfeited upon the transition of the Company’s Chief Operating Officer to Operations Specialist.

All forfeited shares were returned

to the Company and are no longer outstanding.

of September 30, 2025, a total of 322,580 restricted shares of Series V Preferred Stock were issued and outstanding, of which 93,413

shares remain subject solely to time-based vesting conditions, which extend over a one- to three-year period, with full vesting expected

by December 31, 2027.

2021 Equity Incentive

Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was effective on January 1, 2021 and approved by shareholders

on June 30, 2021 and amended on June 13, 2022.

on September 30, 2021 and amended on June 13, 2022.

The Company received shareholder approval on July 11, 2023 to increase the authorized

amount under the 2021 Plan from 7,000,000 shares to 12,000,000 shares.

summary of stock option activity under the Company’s 2021 Equity Incentive Plan for the six months ended June 30, 2025 and 2024

Incentive Plan Milestone Achievement

August 7, 2025, upon the recommendation of the Compensation Committee, the Board determined that it had exceeded the highest level tier

for the liquidity milestone under its 2025 Annual Performance Incentive Plan.

Specifically,

the Company maintained a cash and crypto balance in excess of $75 million for twenty consecutive days, thereby satisfying the highest

tier (cutoff level being $75 million) of the liquidity milestone.

This liquidity milestone accounts for 25% of each executive officer’s

target incentive compensation and is designed to reward financial strength and liquidity.

accordance with the plan and consistent with the Company’s pay-for-performance philosophy, the Board approved the payment of this

performance-based award to all eligible employees in the form of non-qualified stock options under the 2021 Plan., resulting in the grant

of 330,985 options.

These options:

(i) have a term of seven years, (ii) have an exercise price equal to $4.20 per share, (iii) vest in

full on December 31, 2026, and (iv) are subject to the terms and conditions set forth in the applicable award agreements.

the nine months ended September 30, 2025, option holders exercised 1,100,000 stock options on a cashless basis, surrendering 353,637

options to cover the exercise price and receiving 746,363 net shares.

No cash proceeds were received in connection with these exercises.

Activity Summary

summary of stock option activity under the Company’s 2021 Equity Incentive Plan for the nine months ended September 30, 2025 and

2024 is presented below:

Summary of Option Activity

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining Contractual Life (in years)

Average Exercise Price

Intrinsic Value

Average Remaining Contractual Life (in years)

Options outstanding as of December 31, 2024

Employee options granted

Employee options exercised

( 1,100,000 )

Employee options expired

Employee options forfeited

Options outstanding as of June 30, 2025

Options vested and exercisable as of June 30, 2025

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining Contractual Life (in years)

Options outstanding as of September 30, 2025

Options vested and exercisable as of September 30, 2025

Average Exercise Price

Intrinsic Value

Average Remaining Contractual Life (in years)

Options outstanding as of December 31, 2023

1 unchanged sentence

Employee options expired

Options outstanding as of June 30, 2024

Options vested and exercisable as of June 30, 2024

following weighted-average assumptions were used to estimate the fair value of options granted during the six months ended June 30, 2025

Options outstanding as of September 30, 2024

Options vested and exercisable as of September 30, 2024

following weighted-average assumptions were used to estimate the fair value of options granted during the nine months ended September

30, 2025 and 2024, using the Black-Scholes option pricing model:

Weighted-Average Assumptions Used to Estimate Fair Value

For the Six Months Ended June 30,

Nine Months Ended September 30,

Exercise price

2 unchanged sentences

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

Stock Units (RSUs)

Restricted Stock

Incentive Plan (LTI) RSUs

4 unchanged sentences

for 30 consecutive days on or before December 31, 2026, as follows:

Schedule of Restricted Stock Units

Market Cap Vesting Thresholds

of Restricted Stock Units

Cap Vesting Thresholds

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

1 unchanged sentence

any tranche in which the market capitalization condition is achieved, the RSUs remain subject to a time-based vesting schedule, with

of the eligible RSUs in such tranche vesting annually over five

years , with the first vesting date occurring on December 31, 2025 and subsequent vesting dates occurring on December 31 of

each year through 2029, provided that the grantee remains in continuous service with the Company through each applicable vesting

20 % of the eligible RSUs in such tranche vesting annually over five years, with the first vesting date occurring on December 31, 2025

and subsequent vesting dates occurring on December 31 of each year through 2029, provided that the grantee remains in continuous service

with the Company through each applicable vesting date.

fair value of these market-based RSUs was determined using a Monte Carlo simulation and totaled approximately $ 181,000 as of the grant

1 unchanged sentence

Schedule of Weighted-Average Assumptions Used to Estimate Fair Value

January 1, 2025

Vesting Hurdle Price

10 unchanged sentences

Because a portion of these RSUs were entitled to the previously declared Series V

preferred stock dividend, 1,020,834 restricted shares of Series V were also issued.

preferred stock dividend, 1,020,834 restricted shares of Series V were concurrently issued, in the same proportion as the related restricted

Common shares, to maintain dividend equivalency under the original RSU terms.

restricted shares of Common Stock and Series V preferred stock issued upon acceleration remain subject to the original market capitalization-based

performance conditions and applicable time-based vesting schedules, which range from one 1 to five years .

of Certain Long-Term Incentives

August 7, 2025, the Company determined that the market capitalization vesting condition for certain previously granted Long-Term Incentive

(“LTI”) awards had been satisfied.

Under the applicable award agreements, vesting required the Company to maintain a market

capitalization in excess of $100 million for 30 consecutive days .

Additionally,

on August 15, 2025, the Company determined that the market capitalization vesting condition for certain previously granted Long-Term

Incentive (“LTI”) awards had been satisfied.

Under the applicable award agreements, vesting required the Company to maintain

a market capitalization in excess of $150 million for 30 consecutive days .

a result, 413,888 shares of Common Stock and 413,888 shares of Series V Preferred Stock, originally issued on January 13, 2025, upon

conversion of vested RSUs into restricted equity, became fully vested in accordance with their terms.

These shares, previously classified

as restricted Common Stock and restricted Series V Preferred Stock, were reclassified to outstanding Common Stock and Series V Preferred

Stock, respectively.

of LTI RSUs and Restricted Shares of Common Stock

1 unchanged sentence

restricted shares of Common Stock were forfeited in accordance with the terms of the applicable award agreements.

In accordance with

ASC 718, Compensation—Stock Compensation , the Company reversed approximately $ 262,000 of previously recognized stock-based

compensation expense during the three months ended June 30, 2025.

No further expense will be recognized for these forfeited awards.

August 18, 2025, upon the transition of the Company’s Chief Operating Officer to the role of Operations Specialist, 333,333 restricted

shares of Common Stock were forfeited in accordance with the terms of the applicable award agreements.

accordance with ASC 718, Compensation—Stock Compensation , the Company reversed approximately $ 812,000 of previously recognized

stock-based compensation expense during the nine months ended September 30, 2025.

No further expense will be recognized for these forfeited

Activity Summary

following table summarizes RSU activity under the 2021 Plan for the six months ended June 30, 2025:

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

Summary of Restricted Stock

2 unchanged sentences

Nonvested as of December 31, 2024

Vested and converted to restricted common shares

Vested and converted to restricted

common shares

( 1,170,834 )

Nonvested as of June 30, 2025

Nonvested as of September 30, 2025

Shares of Common Stock Activity Summary

following table summarizes restricted Common Stock activity under the 2021 Plan for the six months ended June 30, 2025:

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

of Restricted Stock

Restricted Shares

of Common Stock

Outstanding and nonvested as of December 31, 2024

Converted from restricted stock units

Outstanding and nonvested as of June 30, 2025

Based Compensation

Outstanding and nonvested as of September 30, 2025

of September 30, 2025, a total of 565,080 restricted shares of Common Stock were issued and outstanding, of which 285,913 shares remain

subject solely to time-based vesting conditions, which extend over a one- to three-year period, with full vesting expected by December

Stock-based Compensation

compensation expenses are allocated among general and administrative expenses, compensation expenses and cost of revenues.

compensation expense for the six months ended June 30, 2025 and 2024 was as follows:

compensation expense for the nine months ended September 30, 2025 and 2024 was as follows:

Schedule of Stock-based Compensation Expense

For the Three Months Ended June 30,

For the Six Months Ended June 30,

the Three Months Ended September 30,

the Nine Months Ended September 30,

Employee stock option awards

Employee restricted stock unit awards

Forfeiture of employee restricted stock unit and share awards

Employee restricted stock awards

Forfeiture of employee restricted stock unit and share

Employee share-based salary payments

Non-employee restricted stock awards

Stock-based compensation

Purchase Warrants

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

Total stock-based compensation

Stock Purchase Warrants

the nine months ended September 30, 2025, holders exercised 1,369,725 warrants on a cashless basis, surrendering 554,401 warrants and

receiving 815,324 net shares.

No cash proceeds were received in connection with these exercises.

Activity Summary

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

Summary of Warrant Activity

1 unchanged sentence

Issuance of warrants in connection with convertible note

Outstanding as of June 30, 2025

of June 30, 2025, 712,500 warrants were classified as derivative liabilities, and 1,901,916 warrants issued in connection with the convertible

notes were classified as equity.

Payable – Defi Protocol (Aave)

Company participates in decentralized finance (“DeFi”) borrowing activity through Aave, a smart-contract based protocol that

facilitates loans collateralized by crypto assets.

During the six months ended June 30, 2025, the Company borrowed an aggregate of $ 5,447,000

in USDT and repaid $ 1,447,000 of principal.

These borrowings are collateralized by Ethereum (ETH) and remain outstanding until repaid

or liquidated in accordance with Aave protocol terms.

Borrowings have no fixed maturity date and are subject to partial or full liquidation

if the loan’s health factor falls below the protocol-defined minimum threshold.

The health factor is calculated based on the value

of the collateral relative to the loan balance and Aave’s protocol-specific liquidation threshold (generally 80 % for ETH).

following table summarizes the Defi protocol lending activity during the six months ended June 30, 2025:

( 1,369,725 )

Outstanding as of September 30, 2025

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

convertible notes were classified as equity.

Note 7 – Dividends and Capital

Distributions

Dividends Payable

August 1, 2025, the Board approved, and on August 18, 2025 the Company announced, a special dividend of $ 0.05 per share (the “Bividend”),

payable to stockholders of record as of the close of business on September 26, 2025.

Holders of the Company’s common stock may

elect to receive the Bividend in either cash or Ethereum (ETH), while holders of the Company’s Series V Preferred Stock are entitled

to receive the Bividend solely in cash.

The total dividend payable as of September 30, 2025 was approximately $ 3,176,000 , which is recorded

as dividends payable within stockholders’ equity.

The Bividend was subsequently settled in early October 2025 through aggregate

cash payments of approximately $ 2,680,000 and distributions of approximately 123 ETH to stockholders who elected ETH.

Convertible Notes Eligible for Capital

Distributions – Contingent Liability

of September 30, 2025, the Company had outstanding convertible notes that provide holders the right, upon any subsequent conversion of

such notes, to participate in dividends or other distributions on the Company’s common stock declared during the period the notes

are outstanding, to the same extent as if the notes had been converted immediately prior to the record date of such distribution.

of September 30, 2025, there were 2,107,757 shares of common stock underlying the outstanding convertible notes that would be entitled

to the dividend payments if converted in accordance with the note terms, representing a potential contingent distribution totaling approximately

Because the obligation to deliver such distributions is contingent upon future conversions, no liability has been recorded

as of September 30, 2025, in accordance with ASC 450-20, Contingencies .

Loyalty Payment – Contingent Liability

addition, the Board authorized a one-time loyalty payment of $ 0.35 per share (the “Loyalty Payment”), payable solely in ETH.

The Loyalty Payment is available only to holders of common stock of record on September 26, 2025 who (i) completed the required ETH Opt-In

and (ii) maintained their shares at the Company’s transfer agent through January 26, 2026.

Holders of Series V Preferred Stock

are not eligible for the Loyalty Payment.

Loyalty Payment is contingent on stockholder actions through January 26, 2026, and accordingly, no liability has been recorded as of

September 30, 2025.

For both the Bividend and the Loyalty Payment, the number of ETH units per share is fixed based on the ETH/USD exchange

rate on the September 26, 2025 record date.

of September 30, 2025, approximately 3,858,000 common shares had completed the Opt-In process and were held at the transfer agent.

all such shares were to remain eligible through January 26, 2026, the hypothetical maximum Loyalty Payment would be approximately $ 1,350,000

(shares × $ 0.35 ).

Using an ETH/USD rate of $ 4,036 as of the September 26, 2025 record date, this would correspond to approximately

The actual payout, if any, will depend on the final number of qualifying shares and the program’s ETH settlement terms

at the time of eligibility.

Note 8 – Debt

Loans Payable –

Defi Protocol

Company participates in decentralized finance (DeFi) borrowing activity through Aave, a smart contract–based protocol that facilitates

overcollateralized loans backed by crypto assets.

Borrowings have no fixed maturity date and remain outstanding until repaid or liquidated

in accordance with Aave’s protocol terms.

Loans are subject to full or partial liquidation if the loan’s “health factor”

falls below a protocol-defined minimum threshold, generally 1.0x.

The health factor is calculated based on the value of the collateral

relative to the loan balance and Aave’s liquidation threshold, which is generally 80 % for Ethereum (ETH) collateral.

the nine months ended September 30, 2025, the Company borrowed an aggregate of approximately $ 59,447,000 , which includes borrowings issued

in connection with an on-chain debt refinancing transaction executed during the third quarter.

In that transaction, the Company utilized

Aave’s flash loan functionality to extinguish approximately $ 1,500,000 in outstanding USDT-denominated debt and simultaneously

issue an equivalent amount of new borrowings denominated in GHO, Aave’s native overcollateralized stablecoin token, at a lower

variable interest rate.

Due to substantive differences in the borrowing terms, including a change in the underlying asset and revised

rate structure, the transaction was accounted for as a debt extinguishment under ASC 470-50, and the Company recognized a loss on extinguishment

of debt of approximately $ 9,000 during the period.

The Company also repaid approximately $ 1,447,000 in principal during the period.

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

Summary of Defi Protocol Lending Activity

For the Six Months Ended

June 30, 2025

the Nine Months Ended

September 30, 2025

Beginning balance – January 1, 2025

Proceeds from DeFi borrowings

Addition of debt (via swap)

Extinguishment of debt (via swap)

( 1,500,000 )

Repayments of principal

( 1,447,000 )

Ending balance – June 30, 2025

of June 30, 2025, the Company had approximately 3,903 ETH deposited as collateral with a fair market value of approximately $ 9,704,000 .

The collateralized ETH remains in the Company’s wallets but is restricted from transfer while the loan is outstanding.

3 – Summary of Significant Accounting Policies and Note 4 – Crypto Assets for further detail regarding the

accounting treatment and classification of these assets.

loan accrues interest at variable rates determined by Aave’s on-chain smart contracts, which adjust dynamically based on market

utilization and liquidity conditions.

These rates are published and updated in real-time at aave.com, and the net cost of capital may

fluctuate based on protocol-level market conditions.

the three and six months ended June 30, 2025, the Company recognized approximately $ 8,000 in interest expense, of which approximately

$ 7,000 remained unpaid and is included in accrued expenses as of period end.

The Company also earned approximately $ 1,000 of interest

income on the ETH collateral during the same period.

Company’s Board of Directors 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.

Notes Payable

May 13, 2025, the Company entered into a Securities Purchase Agreement (the “SPA”) with three accredited investors (the “Investors”),

pursuant to which it issued 5% Original Issue Discount Senior Secured Convertible Notes (the “Notes”) with an aggregate principal

amount of $ 7,810,526 in exchange for gross cash proceeds of $ 7,420,000 .

In connection with the issuance of the Notes, the Company also

agreed to issue to the Investors 1,901,916 warrants, each exercisable for one share of the Company’s Common Stock at an exercise

price of $ 2.75 per share.

The warrants have a term of five years from the issuance date.

(i) are convertible into shares of the Company’s Common Stock at a conversion price of $ 5.85 per share, (ii) mature 24 months

from the issuance date, (iii) accrue interest at an annual rate of 6 %, payable quarterly in either cash or freely tradable shares at

the Company’s discretion, (iv) contain a 4.99 % beneficial ownership conversion blocker, and (v) are secured by all of the Company’s

assets as collateral, excluding ETH deposited as collateral for USDT borrowings through Aave and certain other customary carve-outs.

Wainwright & Co., LLC acted as the Company’s exclusive placement agent in connection with the offering.

The Company paid

legal, placement agent, and administrative issuance costs of approximately $ 236,000 ,

which were allocated between the debt and warrant components and recorded as a debt discount to be amortized using the effective

interest method over the term of the Notes.

fair value of the warrants issued in connection with the offering was estimated using the Black-Scholes option pricing model and allocated

as a debt discount in accordance with ASC 470-20, as the warrants were determined to be freestanding equity-classified instruments.

Notes include a debt discount representing the original issue discount, issuance costs, and the allocated fair value of the freestanding

warrants, which will be amortized over the term of the Notes using the effective interest method.

connection with the transaction, Mr.

Charles Allen, the Company’s Chairman of the Board and Chief Executive Officer, invested $ 95,000

in the Offering.

Additionally, a trust of which Mr.

Allen is a beneficiary but is not the settlor or trustee invested $ 200,000 in the

An independent committee of the Company’s Board of Directors approved Mr.

Allen’s investment in the Offering.

the three and six months ended June 30, 2025, the Company recognized total interest expense of approximately $ 213,000 , which includes

both contractual interest and the amortization of debt discounts and issuance costs using the effective interest method.

paid interest of approximately $ 62,000 in cash during the period.

8 – Accrued Expenses

Ending balance – September 30, 2025

of September 30, 2025, the Company’s outstanding borrowings consisted primarily of USD-pegged stablecoins, including USDT and GHO,

obtained through the Aave protocol.

The use of USD-pegged tokens does not materially impact the economic characteristics or risk profile

of the borrowings.

of September 30, 2025, the Company had approximately 38,999 Aave aEthWETH tokens representing wrapped ETH deployed within DeFi protocols

and serving as collateral for outstanding borrowings, with a fair value of approximately $ 161,704,000 .

These assets remain recorded as

ETH within Crypto assets - DeFi on the balance sheet in accordance with ASC 350-60 and are measured at fair value using quoted

prices in active markets (Level 1 inputs under ASC 820).

See Note 3 – Summary of Significant Accounting Policies and Note

4 – Crypto Assets for further detail regarding the accounting treatment and classification of these assets.

loans accrue interest at variable rates determined by Aave’s on-chain interest-rate model, which automatically adjusts based on

market utilization and liquidity conditions.

These rates are published and updated in real-time on the Aave protocol’s website

the three and nine months ended September 30, 2025, the Company recognized approximately $ 665,000 in interest expense, of which approximately

$ 664,000 remained unpaid and is included in Accrued interest payable on the balance sheet at period end.

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

May 13, 2025 and July 21, 2025, the Company entered into separate Securities Purchase Agreements with accredited investors, pursuant

to which it issued 5% Original Issue Discount Senior Secured Convertible Notes (the “May Notes” and “July Notes”,

respectively, and together, the “Notes”) in the aggregate principal amounts of $ 7,810,526 and $ 10,050,000 for gross cash

proceeds of $ 7,420,000 and $ 9,537,500 , respectively.

In connection with the issuance of the Notes, the Company also issued warrants to

purchase an aggregate of 2,781,291 shares of the Company’s common stock, with 1,901,916 warrants issued under the May Notes exercisable

at $ 2.75 per share, and 879,375 warrants issued under the July Notes exercisable at $ 8.00 per share.

The warrants issued in connection

with both offerings have a five-year term from the respective issuance dates.

Notes are convertible into shares of the Company’s common stock at conversion prices of $ 5.85 and $ 13.00 per share for the May

Notes and July Notes, respectively, mature twenty-four months from their issuance dates, accrue interest at an annual rate of 6 % payable

quarterly in either cash or freely tradable shares at the Company’s election, contain a 4.99 % beneficial ownership conversion limitation

(subject to increase to 9.99 % upon notice), and are secured by substantially all of the Company’s assets, excluding Ethereum deposited

as collateral for USDT borrowings on Aave and certain other customary exclusions.

In connection with the July Offering, the Company agreed

not to amend the conversion terms of its Series V Preferred Stock for a period of 18 months while the July Notes remain outstanding.

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

The participation by the Chairman and CEO and the related trust were approved by an independent committee of the Board.

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.

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.

the three and nine months ended September 30, 2025, the Company recognized total interest expense of approximately $ 1,053,000 , which

includes both contractual interest and the amortization of debt discounts and issuance costs using the effective interest method.

this amount, approximately $ 299,000 related to contractual interest on the Company’s convertible notes, $ 754,000 represented non-cash

amortization of debt discount and issuance costs, and approximately $ 665,000 related to interest incurred on decentralized finance (DeFi)

The Company paid approximately $ 300,000 of interest in cash during the period, with the remainder representing non-cash or

accrued amounts.

Note 9 – Accrued

expenses consist of the following:

of Accrued Expenses

June 30, 2025

December 31, 2024

Accrued compensation

1 unchanged sentence

Accounts payable and accrued expenses

compensation includes performance bonus accruals of approximately $ 617,000 and $ 3,907,000 as of June 30, 2025 and December 31, 2024,

Total accrued expenses

compensation includes performance bonus accruals of approximately $ 1,050,000 and $ 3,907,000 as of September 30, 2025 and December 31,

2024, respectively.

5 unchanged sentences

up to 100 % of employee contributions.

For the six months ended June 30, 2025 and 2024, the Company made contributions to the 401(k)

For the nine months ended September 30, 2025 and 2024, the Company made contributions to the 401(k)

Plan of $ 122,000 and $ 109,000 , respectively.

10 – Liquidity

Company follows “ Presentation of Financial Statements—Going Concern (Subtopic 205-40):

1 unchanged sentence

an Entity’s Ability to Continue as a Going Concern ”.

The Company’s consolidated 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.

reflected in the consolidated financial statements, the Company has historically incurred a net loss and has an accumulated deficit of

approximately $ 153,335,000 at June 30, 2025, and net cash used in operating activities of approximately $ 3,236,000 for the reporting

period then ended.

The Company is actively implementing its business plan, generating revenue, and executing a deliberate financing strategy

that includes DeFi protocol borrowing and convertible note issuances to accelerate the accumulation of Ethereum (ETH) and scale its blockchain

infrastructure operations.

Based on the Company’s cash position and liquid crypto assets as of August 12, 2025, management has

determined that these resources are sufficient to support its daily operations over the next twelve months.

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.

reflected in the financial statements, the Company has historically incurred a net loss and has an accumulated deficit of approximately

$ 87,747,000 at September 30, 2025, and net cash used in operating activities of approximately $ 6,032,000 for the reporting period then

The Company is actively implementing its business plan, generating revenue, and executing a deliberate financing strategy that

includes DeFi protocol borrowing and convertible note issuances to accelerate the accumulation of Ethereum (ETH) and scale its blockchain

infrastructure and DeFi operations.

Based on the Company’s cash position and liquid crypto assets as of November 10, 2025, management

has determined that these resources are sufficient to support its daily operations over the next twelve months.

Segment Information

Company operates as a single reportable segment focused on blockchain infrastructure, which consists of two primary revenue-generating

Validator Node Operations (“NodeOps”) and Ethereum Block Building (“Builder+”).

NodeOps includes

revenue generated from staking rewards earned by BTCS’s own proof-of-stake crypto assets, as well as validator fees collected from

third-party delegations.

Builder+ generates revenue from gas fees embedded in successfully finalized Ethereum blocks constructed by the

profit (loss) is the primary segment performance measure reviewed by the CODM for operational and capital allocation decisions.

Company operates within a single 1 reportable segment under ASC 280, Segment Reporting , focused on blockchain-based revenue generation

through its blockchain infrastructure and DeFi operations.

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

Validator Node Operations (“NodeOps”) – earns

ETH-denominated staking rewards and validator fees from operating validator nodes that secure proof-of-stake blockchain networks.

Block Building (“Builder+”) – generates execution-layer

transaction fees and maximal extractable value (“MEV”) from the construction and submission of optimized transaction

blocks to validators on Ethereum and Binance Smart Chain (BSC).

DeFi Operations (“Imperium”) – represents

the Company’s decentralized finance activities, including liquidity provision and other on-chain DeFi operations, through which

the Company earns protocol-denominated rewards for supplying crypto-asset liquidity to decentralized markets.

from NodeOps and Builder+ are aggregated and presented as Blockchain infrastructure revenues , while revenues from Imperium are

presented separately as DeFi revenues in the statements of operations.

Although these business lines have distinct economic drivers

and operational processes, management evaluates them together as part of the Company’s single reportable segment due to shared

infrastructure, integrated management oversight, and the common objective of ETH accumulation and on-chain revenue generation.

profit (loss) is the primary measure of segment performance reviewed by the Company’s Chief Operating Decision Maker (“CODM”),

which comprises members of executive management including the CEO and CFO.

In evaluating performance and allocating resources, the CODM

reviews segment revenues, direct production costs, validator payments, hosting expenses, and allocated employee compensation.

with ASU 2023-07 , the Company discloses the significant segment expenses regularly provided to the CODM for decision-making purposes,

including validator payments, infrastructure hosting costs, and allocated employee compensation.

following tables present segment revenue and gross profit (loss), including the significant expense items reviewed by the CODM, for the

three and six months ended June 30, 2025 and 2024:

three and nine months ended September 30, 2025 and 2024:

of Segment Revenue and Gross Profit (loss)

For the Three Months Ended

June 30, 2025

For the Six Months Ended

June 30, 2025

Revenues from blockchain infrastructure operations

the Three Months Ended September 30, 2025

the Nine Months Ended September 30, 2025

Cost of Revenues

2 unchanged sentences

Compensation costs

Third-party contractor support costs

Third-party support costs

Gross profit (loss)

1 unchanged sentence

$ ( 981,912 )

For the Three Months Ended

June 30, 2024

For the Six Months Ended

June 30, 2024

Revenues from blockchain infrastructure operations

the Three Months Ended September 30, 2024

the Nine Months Ended September 30, 2024

Cost of Revenues

2 unchanged sentences

Compensation costs

Third-party contractor support costs

Third-party support costs

Gross profit (loss)

$ ( 217,213 )

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

For the Three Months Ended

For the Six Months Ended

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

the Three Months Ended

the Nine Months Ended

Total operating expenses

5 unchanged sentences

( 7,314,943 )

( 5,896,136 )

Net income (loss)

2 unchanged sentences

Subsequent Events

Company evaluates events that have occurred after the balance sheet date but before the consolidated financial statements are issued.

Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment

or disclosure in the consolidated financial statements other than disclosed.

the period from July 1, 2025 to August 12, 2025, the Company sold a total of 24,522,525 shares of Common Stock under the ATM Agreement

for aggregate total gross proceeds of approximately $ 135,217,000 at an average selling price of $ 5.51 per share, resulting in net

proceeds of approximately $ 131,082,000 after deducting commissions and other transaction costs.

the period from July 1, 2025 to August 12, 2025 the Company borrowed an additional $ 47,500,000

in USDT through Aave, a decentralized finance protocol, using Ethereum (ETH) as collateral.

As of August 12, 2025, the Company had

approximately $ 51,702,000 in outstanding borrowings, inclusive of accrued interest, collateralized by approximately 38,400 ETH with a

fair market value of approximately $ 176,062,000 , based on the ETH closing price of $ 4,584

on that date.

accrue interest at variable rates determined by Aave’s on-chain smart contracts, which adjust dynamically based on protocol

liquidity and market demand.

Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued.

Based upon the

evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure

in the financial statements other than disclosed.

Share Repurchases

the period from October 1, 2025 to November 10, 2025, the Company repurchased and retired 236,657 shares of its common stock for an average

purchase price of $ 4.23 .

As of November 10, 2025, approximately $ 46,000,000

remained available for repurchases under the authorization.

DeFi Borrowing

the period from July 1, 2025 to November 10, 2025 the Company borrowed an additional $ 3,500,000 in stablecoins through Aave, a decentralized

finance protocol, using Ethereum (ETH) as collateral.

As of November 10, 2025, the Company had approximately $ 61,052,000 in outstanding

borrowings, inclusive of accrued interest, collateralized by approximately 39,077 ETH with a fair market value of approximately $ 138,988,000 ,

based on the ETH closing price of $ 3,557 on that date.

accrue interest at variable rates determined by Aave’s on-chain smart contracts, which adjust dynamically based on protocol liquidity

and market demand.

ETH collateral posted also accrues variable interest.

These rates are published and updated in

real-time at aave.com, and the net cost of capital may fluctuate based on protocol-level market conditions.

Notes Payable

July 21, 2025, the Company entered into a Securities Purchase Agreement (the “SPA”) with two accredited investors (collectively

the “Investors”), pursuant to which the Company will issue to the Investors 5% Original Issue Discount Senior Secured Convertible

Notes (the “Notes”) in an aggregate principal amount of $ 10,050,000 , for a purchase price of $ 9,547,500 .

In connection with

the issuance of the Notes, the Company also agreed to issue 879,375 five-year warrants (“Warrants”) to the investors, exercisable

at $ 8.00 per share (collectively, the “Offering”).

(i) are convertible into shares of the Company’s Common Stock at a conversion price of $ 13.00 per share, (ii) mature 24

months from the closing date, (iii) accrue an interest rate of 6 % per annum, which may be paid on a quarterly basis in cash or freely

tradable shares, (iv) contain a 4.99 % beneficial ownership conversion limitation, and (v) are secured by all of the Company’s assets

as collateral, except for Ethereum deposited as collateral for USDT borrowings on Aave and certain other exclusions.

trust of which Mr.

Charles Allen, the Company’s Chairman of the Board and Chief Executive Officer, is a beneficiary but is not

the settlor or trustee invested $ 47,500 in the Offering.

As part of the July

21, 2025 Senior Secured Convertible Note financing terms, the Company agreed that, while the notes remain outstanding, it will not amend

the Series V Preferred Shares to allow for conversion into Common Stock for a period of 18 months.

Option and Warrant

to June 30, 2025, the Company issued an aggregate of 1,561,687 shares of Common Stock in connection with the cashless exercise of outstanding

stock options and warrants.

On July 9, 2025, holders exercised 1,100,000 stock options on a cashless basis, surrendering 353,637 options

to cover the exercise price and receiving 746,363 net shares.

On July 8, 2025, holders exercised 913,150 warrants on a cashless basis,

surrendering 406,337 warrants and receiving 506,813 net shares.

On July 18, 2025, holders exercised 456,575 warrants on a cashless basis,

surrendering 148,064 warrants and receiving 308,511 net shares.

No cash proceeds were received in connection with these exercises.

Vesting of Certain Long-Term

7, 2025, the Company determined that the market capitalization vesting condition for certain previously granted Long-Term Incentive (“LTI”)

awards had been satisfied.

Under the applicable award agreements, vesting required the Company to maintain a market capitalization in

excess of $100 million for 30 consecutive days.

As a result, 318,055

shares of Common Stock and 318,055

shares of Series V Preferred Stock, originally issued on January 13, 2025, upon conversion of vested RSUs into restricted

equity, became fully vested in accordance with their terms.

These shares, previously classified as restricted Common Stock and

restricted Series V Preferred Stock, were reclassified to outstanding Common Stock and Series V Preferred Stock, respectively.

Grant of Stock Options for Achievement of Performance

On August 7, 2025, upon the recommendation

of the Compensation Committee, the Board of Directors of the Company determined that it had exceeded the highest level tier for the liquidity

milestone under its 2025 Annual Performance Incentive Plan, which was previously disclosed in the Company’s Current Report on Form

8-K filed on January 2, 2025 (the “January 8-K”).

Specifically, the Company maintained

a cash and crypto balance in excess of $75 million for twenty consecutive days, thereby satisfying the highest tier (cutoff level being

$75 million) of the liquidity milestone.

As disclosed in the January 8-K, this liquidity milestone accounts for 25% of each executive

officer’s target incentive compensation and is designed to reward financial strength and liquidity.

In accordance with

the plan and consistent with the Company’s pay-for-performance philosophy, the Board approved the payment of this performance-based

award to all eligible employees in the form of non-qualified stock options under the Company’s equity incentive plan.

The Company’s

Chief Executive Officer and Chief Financial Officer were granted 169,232

respectively.

(i) have a term of seven years, (ii) have an exercise price equal to $4.20 per share, (iii) vest in full on December 31, 2026,

and (iv) are subject to the terms and conditions set forth in the applicable award agreements.

These rates are published and updated in real-time on the Aave

protocol’s website, and the net cost of capital may fluctuate based on protocol-level market conditions.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements