What changed in this filing

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Item 1. Financial Statements

2026-08-19 compared with 2026-05-14 · 790 added, 571 removed, 1136 unchanged (55% of the section changed)

1 unchanged sentence

Balance Sheets

March 31, 2026

December 31, 2025

Current assets:

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$ 214,631,822

Liabilities and Stockholders’ Equity:

4 unchanged sentences

Loans payable - DeFi protocol

Convertible notes payable, net - current portion

Warrant liabilities

Total current liabilities

Convertible notes payable, net

Convertible notes payable, net - non-current portion

Total liabilities

4 unchanged sentences

Series V Preferred Stock;

15,671,405 and 15,671,405 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

15,671,405 and 15,671,405 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Preferred stock value

1 unchanged sentence

975,000,000 shares authorized;

49,775,371 and 46,852,737 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

49,806,434 and 46,852,737 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

5 unchanged sentences

$ 214,631,822

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

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

Blockchain infrastructure revenues

11 unchanged sentences

Realized losses on digital asset transactions

Unrealized loss on digital assets

Unrealized loss (gain) on digital assets

( 8,793,161 )

Total operating expenses

( 4,346,092 )

Other income (expenses):

1 unchanged sentence

( 1,601,133 )

( 3,148,992 )

Change in fair value of warrant liabilities

2 unchanged sentences

( 3,148,992 )

Net income (loss)

$ ( 34,903,230 )

Basic net loss per share attributable to common stockholders

Diluted net loss per share attributable to common stockholders

$ ( 104,067,549 )

$ ( 13,387,165 )

Basic net income (loss) per share attributable to common stockholders

Diluted net income (loss) per share attributable to common stockholders

Basic weighted average number of common shares outstanding

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Statements of Changes in Stockholders’ Equity

the Three Months Ended March 31, 2026

the Three Months Ended June 30, 2026 and 2025

Preferred Stock

Stockholders’

Balance at March 31, 2026

15,671,405 (1)

49,775,371 (2)

$ 312,546,420

$ ( 242,466,029 )

Stock-based compensation

( 34,903,230 )

Balance at June 30, 2026

15,671,405 (1)

49,806,434 (2)

$ 314,192,558

$ ( 277,369,259 )

(1) Includes 278,375

restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based vesting conditions.

See Note 9 – Stockholders’ Equity (Deficit) for further details.

(2) Includes 3,069,272

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

9 – Stockholders’ Equity (Deficit) for further details.

Preferred Stock

Stockholders’

Balance at March 31, 2025

16,004,738 (1)

$ 174,937,017

$ ( 157,216,974 )

Issuance of common stock, net of offering cost / At-the-market offering

Issuance of warrants in connection with convertible note

Stock-based compensation

Net income (loss)

Balance at June 30, 2025

16,004,738 (1)

21,968,566 (2)

$ 181,565,367

$ ( 153,335,442 )

(1) Includes 1,069,801

restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based vesting conditions.

See Note 9 – Stockholders’ Equity (Deficit) for further details.

(2) Includes 1,312,301

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

9 – Stockholders’ Equity (Deficit) for further details.

the Six Months Ended June 30, 2026 and 2025

Preferred Stock

Stockholders’

Balance at December 31, 2025

8 unchanged sentences

( 104,067,549 )

Balance at March 31, 2026

Balance at June 30, 2026

15,671,405 (1)

2 unchanged sentences

$ ( 277,369,259 )

Includes 278,375 restricted shares of Series V Preferred Stock held

by employees that remain subject to forfeiture based on time-based vesting conditions.

See Note 9 – Stockholders’ Equity (Deficit)

for further details.

Includes 3,069,272 restricted shares of Common Stock held by employees

that remain subject to forfeiture based on time-based vesting conditions.

See Note 9 – Stockholders’ Equity (Deficit) for

further details.

the Three Months Ended March 31, 2025

(1) Includes 278,375

restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based vesting conditions.

See Note 9 – Stockholders’ Equity (Deficit) for further details.

(2) Includes 3,069,272

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

9 – Stockholders’ Equity (Deficit) for further details.

Preferred Stock

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15,033,231 (1)

$ 171,283,199

$ ( 139,948,277 )

Issuance of common stock, net of offering cost / At-the-market offering

Issuance of warrants in connection with convertible note

Stock-based compensation

Forfeiture of stock-based awards

Net income (loss)

( 13,387,165 )

Balance at March 31, 2025

Balance at June 30, 2025

16,004,738 (1)

2 unchanged sentences

$ ( 153,335,442 )

Includes 1,069,801 restricted shares of Series V Preferred Stock held

by employees that remain subject to forfeiture based on time-based vesting conditions.

See Note 9 – Stockholders’ Equity (Deficit)

for further details.

Includes 1,312,301 restricted shares of Common Stock held by employees

that remain subject to forfeiture based on time-based vesting conditions.

See Note 9 – Stockholders’ Equity (Deficit) for

further details.

16,004,738 (1)

21,968,566 (2)

$ 181,565,367

$ ( 153,335,442 )

(1) Includes 1,069,801

restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based vesting conditions.

See Note 9 – Stockholders’ Equity (Deficit) for further details.

(2) Includes 1,312,301

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

9 – Stockholders’ Equity (Deficit) for further details.

Statements of Cash Flows

For the Three Months Ended

For the Six Months Ended

Cash flows from operating activities:

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Stock-based compensation

Blockchain infrastructure revenue

Blockchain infrastructure revenue settled in digital assets

( 2,080,000 )

( 4,461,133 )

DeFi revenue settled in digital assets

( 2,513,816 )

1 unchanged sentence

DeFi interest expense settled in digital assets

Blockchain network fees

Blockchain network fees settled in digital assets

Change in fair value of warrant liabilities

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Changes in operating assets and liabilities:

Intangible digital assets

Prepaid expenses and other current assets

Receivable for capital shares sold

Accounts payable and accrued expenses

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Cash flows from investing activities:

Purchase of productive digital assets for validating

Sale of productive digital assets

Purchase of productive digital assets

( 10,180,570 )

Proceeds from the sale of productive digital assets

Purchase of investments

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Net cash provided by (used in) investing activities

Cash flow from financing activities:

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

Proceeds from DeFi borrowing

Payments on DeFi borrowing

( 9,367,059 )

Net cash (used in) provided by financing activities

( 17,721,577 )

Cash flows from financing activities:

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

Proceeds from issuance of convertible notes, net

Payments of debt issuance costs

Net cash provided by financing activities

Net decrease in cash

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Series V Preferred Stock Distribution

Non-cash discount on convertible notes

Dividends distributions paid in ETH

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USDT received against ETH collateral from new DeFi borrowing

ETH swapped to USDT in settlement of DeFi borrowing principal

ETH swapped to USDT in settlement of accrued DeFi interest

ETH swapped to USDT to fund settlement of DeFi borrowing principal

ETH swapped to USDT to fund settlement of accrued DeFi

Liquidity pool activity:

ETH swapped into stablecoins for liquidity pool deployment

Stablecoins swapped into ETH for liquidity pool deployment

( 1,915,822 )

Deployments of digital assets into liquidity pool positions

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Withdrawals of digital assets from liquidity pool positions

of digital assets in exchange for stablecoins

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

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The Company is a blockchain technology business that operates

revenue-generating blockchain infrastructure and decentralized finance (“DeFi”) activities, primarily on the Ethereum network.

BTCS is an Ethereum-first operator focused on generating on-chain revenues while strategically deploying “ETH” (the Ethereum

network’s native token) and other digital assets through its operations.

The Company operates as an active

blockchain infrastructure and DeFi participant rather than as a passive holder of digital assets.

While BTCS maintains significant Ethereum

holdings, those assets are actively deployed across its operations to support revenue generation and operational scalability across the

Company’s business lines.

blockchain infrastructure and decentralized finance (“DeFi”) activities, primarily on the Ethereum network.

BTCS is an Ethereum-first

operator focused on generating on-chain revenues while strategically deploying “ETH” (the Ethereum network’s native

token) and other digital assets through its operations.

Company operates as an active blockchain infrastructure and DeFi participant rather than as a passive holder of digital assets.

BTCS maintains significant Ethereum holdings, those assets are actively deployed across its operations to support revenue generation

and operational scalability across the Company’s business lines.

conducts its operations through the following primary business lines:

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and deploy digital assets while managing liquidity and dilution.

Company actively allocates digital assets across staking, block-building, and DeFi deployments based on expected returns, risk

considerations, and market conditions, including the use of overcollateralized borrowing arrangements and liquidity pool participation

to generate scalable revenue streams and enhance gross profit.

Company actively allocates digital assets across staking, block-building, and DeFi deployments based on expected returns, risk considerations,

and market conditions, including the use of overcollateralized borrowing arrangements and liquidity pool participation to generate scalable

revenue streams and enhance gross profit.

and Dependence on the Ethereum Ecosystem

Company’s operations are subject to various risks, including technological complexity, cybersecurity risks, regulatory

uncertainty, digital asset price volatility, and competition within the blockchain infrastructure and DeFi markets.

Company’s future performance depends in part on the continued adoption and development of the Ethereum network, the evolution

of decentralized infrastructure markets, and BTCS’s ability to operate blockchain infrastructure and engage in DeFi activities

efficiently at scale, including the effective management of risks associated with DeFi protocols such as collateral liquidation,

smart contract vulnerabilities, and liquidity constraints.

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

digital asset price volatility, and competition within the blockchain infrastructure and DeFi markets.

The Company’s future performance

depends in part on the continued adoption and development of the Ethereum network, the evolution of decentralized infrastructure markets,

and BTCS’s ability to operate blockchain infrastructure and engage in DeFi activities efficiently at scale, including the effective

management of risks associated with DeFi protocols such as collateral liquidation, smart contract vulnerabilities, and liquidity constraints.

2 - Basis of Presentation

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

Interim results for the three months ended March 31, 2026 are

not necessarily indicative of results for the full year ending December 31, 2026.

The unaudited condensed financial statements and notes

should be read in conjunction with the financial statements and notes for the year ended December 31, 2025.

Interim results for the three and six months ended June 30, 2026

are not necessarily indicative of results for the full year ending December 31, 2026.

The unaudited condensed financial statements and

notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2025.

of Previously Issued Statements of Cash Flows

During the second quarter of 2026, the Company identified errors in

the presentation of certain DeFi transactions in its previously issued statements of cash flows.

Specifically, certain DeFi borrowing

proceeds received in USD-pegged stablecoins, repayments settled through digital assets or stablecoins, and related deemed digital-asset

purchase or sale activity were included on the face of the statements of cash flows as cash investing or financing activities even though

the transactions did not involve cash or cash equivalents.

Certain of these transactions were also disclosed as supplemental noncash investing

and financing activities.

The Company corrected the presentation by removing the applicable noncash amounts from the face of the statements

of cash flows and presenting them as supplemental noncash investing and financing activities, as applicable.

Company evaluated the errors under SAB Topic 1.M and SAB Topic 1.N and concluded that they were not material

to the previously issued financial statements taken as a whole.

The revisions have no effect on net income or loss, earnings per share,

total assets, total liabilities, stockholders’ equity, net change in cash, or ending cash.

The comparative statement of cash flows

for the six months ended June 30, 2025 has been revised accordingly.

Other affected prior-period statements of cash flows will be revised when those periods are next presented.

of the revision on the statement of cash flows for the six months ended June 30, 2025, as previously filed:

of Revision of Previously Issued Statements of Cash Flows

SCF line item

As previously reported

DeFi interest expense settled in digital assets (add-back)

Net cash used in operating activities

( 3,235,514 )

( 3,234,061 )

Purchase of productive digital assets

( 14,179,117 )

( 10,180,570 )

Net cash used in investing activities

( 13,365,606 )

( 9,367,059 )

Proceeds from DeFi borrowing

( 5,447,000 )

Payments on DeFi borrowing

( 1,447,000 )

Net cash provided by financing activities

( 4,000,000 )

Net decrease in cash

( 1,338,589 )

Cash, end of period

of Immaterial Error in the Previously Issued Quarter Ended March 31, 2026.

previously reported, the Company’s statement of cash flows for the three months ended March 31, 2026 included $ 18,221,577 of proceeds

from sale of productive digital assets and net cash provided by investing activities, and $ 500,000 of proceeds from DeFi borrowing, $( 18,221,577 )

of payments on DeFi borrowing, and net cash used in financing activities of $( 17,721,577 ), each of which reflected the same DeFi presentation error described above.

As revised, these amounts are presented as noncash investing and financing activity, and net cash provided

by investing activities and net cash used in financing activities for that period are each $ 0 .

This correction has no effect on net decrease

in cash or cash at the end of the period for the quarter ended March 31, 2026.

The Company evaluated this error under SAB Topic 1.M and

SAB Topic 1.N and concluded it was not material to the financial statements for the three months ended March 31, 2026, taken as a whole.

Accordingly, the Company is not amending its Form 10-Q for the quarter ended March 31, 2026.

of the revision on the Statement of Cash Flows for the three months ended March 31, 2026, as previously filed:

SCF line item

As previously reported

Net cash provided by (used in) operating activities

( 1,741,764 )

( 1,241,764 )

Sale of productive digital assets

( 18,221,577 )

Net cash provided by investing activities

( 18,221,577 )

Proceeds from DeFi borrowing

Payments on DeFi borrowing

( 18,221,577 )

Net cash used in financing activities

( 17,721,577 )

Net decrease in cash

( 1,241,764 )

Cash, end of period

revision tables above show the affected SCF lines and section subtotals (as previously reported, adjustment and as revised) for the six-month

2025 comparative and for the three months ended March 31, 2026.

Reclassifications

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

As of March 31, 2026

and December 31, 2025, the Company had approximately $ 285,000 and $ 1,526,000 in cash, respectively.

The Company has not experienced any

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

As of June 30, 2026 and

December 31, 2025, the Company had approximately $ 262,000 and $ 1,526,000 in cash, respectively.

The Company has not experienced any losses

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

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 March 31, 2026 and December

As of June 30, 2026 and December

31, 2025, the Company had approximately $ 0 and $ 1,122,000 in excess of the FDIC insured limit, respectively.

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Stablecoins are generally held in

Company-controlled digital wallets, on centralized digital assets exchanges, or deployed into DeFi protocols for liquidity provision and other revenue-generating activities.

Company-controlled digital wallets, on centralized digital assets exchanges, or deployed into DeFi protocols for liquidity provision

and other revenue-generating activities.

Company accounts for its stablecoins as indefinite-lived intangible assets in accordance with Accounting Standards Codification (“ASC”)

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deployed into DeFi protocols are evaluated for continued control and restrictions on accessibility.

As of March 31, 2026, approximately

As of June 30, 2026, approximately

$ 0 of USDC was deployed in DeFi vaults and remained readily withdrawable.

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

assets at fair value consist of cryptocurrencies such as Ethereum that are actively traded

in liquid markets and are measured at fair value in accordance with ASC 350-60.

These include

digital assets held in treasury, deployed in DeFi protocols, or staked in validator operations.

assets accounted for as indefinite-lived intangible assets consist of assets that do

not have readily determinable fair values or do not represent fungible tokens, including

tokenized liquidity pool positions (“LP positions”) and non-fungible tokens (“NFTs”).

assets at fair value consist of cryptocurrencies such as Ethereum that are actively traded in liquid markets and are measured

at fair value in accordance with ASC 350-60.

These include digital assets held in treasury, deployed in DeFi protocols, or staked

in validator operations.

assets accounted for as indefinite-lived intangible assets consist of assets that do not have readily determinable fair values

or do not represent fungible tokens, including tokenized liquidity pool positions (“LP positions”) and non-fungible tokens

These assets are recorded at cost less impairment under ASC 350-30.

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price of the day in the UTC (Coordinated Universal Time) time zone.

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

assets measured at fair value are categorized based on their operational use and presented on the balance sheet as follows:

assets – treasury represent unencumbered holdings maintained for liquidity and investment purposes.

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Deployed in DeFi Arrangements

DeFi arrangements, such as those on the Aave protocol, the Company participates as a liquidity provider by depositing ETH

into decentralized lending pools.

The deposited ETH becomes part of the protocol’s available liquidity that borrowers may draw

upon and earns variable rewards based on market supply and demand for borrowing within the protocol.

Deposited ETH may also serve as

collateral supporting on-chain borrowing activities.

The collateral contributes to the Company’s overall “health factor”,

a protocol-defined metric representing the ratio of collateral value to outstanding borrowings that automatically adjusts with changes

in ETH market prices.

DeFi arrangements, such as those on the Aave protocol, the Company participates as a liquidity provider by depositing ETH into decentralized

lending pools.

The deposited ETH becomes part of the protocol’s available liquidity that borrowers may draw upon and earns variable

rewards based on market supply and demand for borrowing within the protocol.

ETH may also serve as collateral supporting on-chain borrowing activities.

The collateral contributes to the Company’s overall

“health factor”, a protocol-defined metric representing the ratio of collateral value to outstanding borrowings that automatically

adjusts with changes in ETH market prices.

The health factor determines the margin of safety against liquidation;

maintaining a value above 1.0 indicates sufficient

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

maintaining a value

above 1.0 indicates sufficient collateralization, while a decline below 1.0 may trigger partial liquidation of the collateral by the

protocol’s smart contracts.

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

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earned from DeFi activities are recognized as DeFi revenues on the statements of operations in accordance with ASC 606, as discussed

in Revenue Recognition section of Note 3 as well as Note 7 – Revenues and Cost of Revenues .

in Revenue Recognition section of Note 3 – Summary of Significant Accounting Policies as well as Note 7 – Revenues

and Cost of Revenues .

assets deployed in DeFi protocols are subject to protocol-specific risks, including smart contract vulnerabilities, liquidity constraints,

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health factor and could result in partial or full liquidation of collateral by the protocol’s smart contracts without prior notice.

As of March 31, 2026, a significant

majority of the Company’s digital assets measured at fair value were deployed within the Aave Protocol as collateral in connection

with DeFi borrowing arrangements.

These assets, while held in Company-controlled wallets, are subject to protocol-enforced restrictions

and are not freely available for general corporate purposes while the related borrowings remain outstanding.

Accordingly, the Company has a significant concentration of its digital assets within the Aave protocol and is exposed

to risks associated with such concentration, including smart contract vulnerabilities, changes in collateral requirements, liquidity constraints

that may limit the Company’s ability to access or withdraw its assets, and the risk of partial or full liquidation in the event

of adverse market movements.

of June 30, 2026, a significant majority of the Company’s digital assets measured at fair value were deployed within the Aave Protocol

as collateral in connection with DeFi borrowing arrangements.

These assets, while held in Company-controlled wallets, are subject to

protocol-enforced restrictions and are not freely available for general corporate purposes while the related borrowings remain outstanding.

the Company has a significant concentration of its digital assets within the Aave protocol and is exposed to risks associated with such

concentration, including smart contract vulnerabilities, changes in collateral requirements, liquidity constraints that may limit the

Company’s ability to access or withdraw its assets, and the risk of partial or full liquidation in the event of adverse market

Assets Accounted for as Indefinite-Lived Intangible Assets

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assets are accounted for as indefinite-lived intangible assets in accordance with ASC 350-30.

They are initially recorded at cost and are

not amortized.

They are initially recorded at cost and

are not amortized.

Company evaluates these assets for impairment each reporting period to determine if any events or changes in circumstances indicate that

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Pool Positions

The Company participates

in decentralized exchange liquidity pools by depositing digital assets into smart contract-based protocols.

In exchange, the Company

receives liquidity pool positions, which may be represented by non-fungible tokens or similar instruments and represent a distinct asset

that provides the Company with protocol-defined rights to remove liquidity, claim fees or other rewards, and participate in the economic

results of the underlying pool of digital assets.

The Company accounts for liquidity

pool positions as indefinite-lived intangible assets under ASC 350.

The Company has concluded that liquidity pool positions do not meet

the definition of financial instruments under U.S.

GAAP because they do not represent ownership interests in a legal entity and do not

provide the Company with a contractual right to receive cash or another financial asset from an issuer or counterparty.

The Company has

also concluded that liquidity pool positions are not derivatives under ASC 815 because they require an initial deposit of digital assets

approximating the fair value of the position, do not provide for contractual net settlement, and represent a nonfinancial liquidity position

rather than a derivative contract with an identifiable counterparty.

Upon deposit into a liquidity

pool, the Company transfers digital assets to the liquidity pool smart contract and no longer controls the specific digital assets contributed.

The contributed assets become part of the shared pool liquidity governed by automated market maker protocol rules and may be used in swaps

initiated by third-party market participants.

In exchange, the Company receives a new liquidity pool position that represents a different

unit of account from the contributed digital assets.

Accordingly, the Company derecognizes the digital assets contributed and recognizes

the liquidity pool position at cost, measured based on the fair value of the digital assets deposited at the time of the transaction.

Any difference between the fair value used to measure the liquidity pool position and the carrying amounts of the digital assets derecognized

is recognized as a realized gain or loss on digital asset transactions in the statements of operations.

While a liquidity pool position

remains open, the relative amounts of the underlying digital assets attributable to the position may change as a result of automated market

maker activity, price movements, and third-party interactions with the pool.

The Company treats these changes as internal economic rebalancing

of the liquidity pool position and does not recognize separate gains or losses from changes in the underlying asset mix while the position

remains open.

Upon withdrawal from a liquidity

pool, the Company derecognizes the liquidity pool position, or the portion withdrawn, and recognizes the digital assets received at fair

Any difference between the carrying value of the liquidity pool position derecognized and the fair value of the digital assets

received is recognized as a realized gain or loss in the statements of operations.

Fees and other rewards earned

through participation in liquidity pools are recognized as DeFi revenues in accordance with ASC 606 as the Company’s liquidity provision

performance obligation is satisfied and are measured based on the fair value of the digital assets earned.

Company participates in decentralized exchange liquidity pools by depositing digital assets into smart contract-based protocols.

the Company receives liquidity pool positions, which may be represented by non-fungible tokens or similar instruments and represent a

distinct asset that provides the Company with protocol-defined rights to remove liquidity, claim fees or other rewards, and participate

in the economic results of the underlying pool of digital assets.

Company accounts for liquidity pool positions as indefinite-lived intangible assets under ASC 350-30.

The Company has concluded that

liquidity pool positions do not meet the definition of financial instruments under U.S.

GAAP because they do not represent ownership

interests in a legal entity and do not provide the Company with a contractual right to receive cash or another financial asset from an

issuer or counterparty.

The Company has also concluded that liquidity pool positions are not derivatives under ASC 815 because they require

an initial deposit of digital assets approximating the fair value of the position, do not provide for contractual net settlement, and

represent a nonfinancial liquidity position rather than a derivative contract with an identifiable counterparty.

deposit into a liquidity pool, the Company transfers digital assets to the liquidity pool smart contract and no longer controls the specific

digital assets contributed.

The contributed assets become part of the shared pool liquidity governed by automated market maker protocol

rules and may be used in swaps initiated by third-party market participants.

In exchange, the Company receives a new liquidity pool position

that represents a different unit of account from the contributed digital assets.

Accordingly, the Company derecognizes the digital assets

contributed and recognizes the liquidity pool position at cost, measured based on the fair value of the digital assets deposited at the

time of the transaction.

a liquidity pool position remains open, the relative amounts of the underlying digital assets attributable to the position may change

as a result of automated market maker activity, price movements, and third-party interactions with the pool.

The Company treats these

changes as internal economic rebalancing of the liquidity pool position and does not recognize separate gains or losses from changes

in the underlying asset mix while the position remains open.

withdrawal from a liquidity pool, the Company derecognizes the liquidity pool position, or the portion withdrawn, and recognizes the

digital assets received at fair value.

Any difference between the carrying value of the liquidity pool position derecognized and the

fair value of the digital assets received is recognized as a realized gain or loss in the statements of operations.

and other rewards earned through participation in liquidity pools are recognized as DeFi revenues in accordance with ASC 606 as the Company’s

liquidity provision performance obligation is satisfied and are measured based on the fair value of the digital assets earned.

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

Pool Impairment

The Company tests each liquidity pool position for impairment on a daily basis for every day the position is outstanding,

comparing the estimated fair value of the position, based on the lowest fair value of the underlying redeemable token composition for the

day, to its then-current

carrying value.

If the fair value on a given day is less than the carrying value, the Company recognizes an impairment loss and reduces

the carrying value to that day’s fair value, establishing a new carrying value.

Because the carrying value is adjusted only downward,

it reflects the lowest fair value observed for the position since inception or the most recent write-down;

subsequent increases in fair

value above that level are not recognized, consistent with the cost-less-impairment model under ASC 350-30.

This daily measurement is applied

uniformly to every position, including a position that is both opened and fully closed within the same reporting period, without regard

to whether a separate qualitative or quantitative triggering event has occurred.

Impairment recognized while a position is open is not

the resulting carrying value carries through to the realized gain or loss recognized upon withdrawal or closure of the position.

value is estimated at each measurement date from on-chain state at a standardized cut-off, applying the Company’s established pricing

policy to the underlying tokens attributable to the position, except that ETH/WETH is priced using that day’s low price rather

than its closing price so as to capture the lowest measurable fair value of the underlying pairing for the day, consistent with the Company’s

existing digital asset valuation approach, and excluding unclaimed fees separately recognized.

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

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building (Builder+), and DeFi operations (Imperium).

The Company’s

Chief Operating Decision Makers (“CODMs”) are comprised of several members of its executive management team, including the

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

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

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

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

(“CTO”), who are responsible for evaluating the Company’s financial performance, managing operations, and allocating

capital and resources.

CODMs regularly review discrete financial information for Builder+, NodeOps, and Imperium, assessing financial performance against gross

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deployment strategies for each business activity.

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

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

Blockchain infrastructure operations , under ASC 280, Segment Reporting .

Imperium, which generates revenue through participation

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

market characteristics.

the CODMs evaluate NodeOps, Builder+, and Imperium individually for internal management purposes, management has determined that the

Company operates as a single reportable segment under ASC 280, Segment Reporting , due to shared infrastructure, centralized management

oversight, and the common objective of on-chain revenue generation across all three business lines.

For presentation on the face of the

statements of operations, revenues from NodeOps and Builder+ are aggregated into a single financial statement line item, Blockchain infrastructure

revenues, because both activities share substantially similar production processes (operation of validator and block-building infrastructure

on proof-of-stake networks) and methods of revenue distribution (on-chain protocol payments).

Revenues from Imperium are presented separately

as DeFi revenues , reflecting the distinct economic drivers of decentralized lending and liquidity pool participation, including

counterparty exposure to smart contract protocols and yields determined by protocol-level supply and demand.

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

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pool activities.

The timing of revenue recognition

depends on the nature of the underlying blockchain or DeFi activity.

Revenues from NodeOps and Builder+ are generally recognized at a

point in time when the applicable validation, attestation, block proposal or constructed block is confirmed or finalized on-chain and

the related digital asset consideration is earned or made available to the Company.

Revenues from DeFi lending and liquidity pool activities

are recognized continuously during the period in which the Company’s digital assets are deployed and available to the applicable

protocol, as protocol-defined fees and rewards accrue and are earned under the applicable protocol mechanics.

For liquidity pool activities,

fees and other rewards are earned based on the Company’s proportional participation in the pool and applicable protocol activity

while the liquidity position remains deployed.

Revenue is measured based on the fair value of the native digital assets or stablecoins

earned at the time the consideration is earned.

Substantially all revenues are earned and settled in native digital assets and stablecoins.

timing of revenue recognition depends on the nature of the underlying blockchain or DeFi activity.

Revenues from NodeOps and Builder+

are generally recognized at a point in time when the applicable validation, attestation, block proposal or constructed block is confirmed

or finalized on-chain and the related digital asset consideration is earned or made available to the Company.

Revenues from DeFi lending

and liquidity pool activities are recognized continuously during the period in which the Company’s digital assets are deployed

and available to the applicable protocol, as protocol-defined fees and rewards accrue and are earned under the applicable protocol mechanics.

For liquidity pool activities, fees and other rewards are earned based on the Company’s proportional participation in the pool

and applicable protocol activity while the liquidity position remains deployed.

Revenue is measured based on the fair value of the native

digital assets or stablecoins earned at the time the consideration is earned.

Substantially all revenues are earned and settled in native

digital assets and stablecoins.

See Note 7– Revenues and Cost of Revenues for further information.

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and equipment consists of computers, equipment and office furniture and fixtures, all of which are recorded at cost.

and amortization are recorded using the straight-line method over the respective useful lives of the assets ranging from 3 three to

Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of

these assets may not be recoverable.

Depreciation and

amortization are recorded using the straight-line method over the respective useful lives of the assets ranging from 3

three to five years .

Long-lived assets are reviewed for impairment

whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.

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

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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.

tax assets if all, or some portion, of such assets will more likely than not 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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The warrant liability is presented as a current liability on the Company’s balance sheet.

outstanding liability-classified warrants expired during the three months ended March 31, 2026 and as a result, there were no liability-classified

warrants outstanding as of March 31, 2026.

outstanding liability-classified warrants expired during the six months ended June 30, 2026 and as a result, there were no liability-classified

warrants outstanding as of June 30, 2026.

Equity-Classified

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at grant, in which case compensation cost is recognized on the grant date.

options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the fair value of the Company’s stock at the date of grant and expire up to ten years from the date of grant.

options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the fair

value of the Company’s stock at the date of grant and expire up to ten

years from the date of grant.

These options generally

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uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise

Dividend – The Company has not historically declared or paid any cash dividends on its common shares and does not plan to pay

any recurring cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

Dividend – The Company has, from time to time, paid one-time special dividends that represented non-recurring returns of

capital (see Note 11 – Dividends and Capital Distributions ), but has not otherwise declared or paid cash dividends on

its common shares.

The Company does not plan to pay recurring cash dividends in the foreseeable future and, therefore, uses an

expected dividend yield of zero in its valuation models.

Stock and Restricted Stock Units (RSUs)

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

When the Company borrows under

a DeFi protocol, the Company’s borrowings are currently denominated primarily in USD-pegged stablecoins, such as USDT, USDC or

GHO, rather than ETH or other non-USD-pegged digital assets.

Such arrangements are recognized as financial liabilities in accordance

with ASC 470 and are measured at the principal amount of the stablecoin units borrowed, net of repayments.

Because the borrowed stablecoins

are designed to maintain a value substantially equivalent to one U.S.

dollar, management believes the carrying amount of the liability

approximates the U.S.

the Company borrows under a DeFi protocol, the Company’s borrowings are currently denominated primarily in USD-pegged stablecoins,

such as USDT, USDC or GHO, rather than ETH or other non-USD-pegged digital assets.

Such arrangements are recognized as financial liabilities

in accordance with ASC 470 and are measured at the principal amount of the stablecoin units borrowed, net of repayments.

borrowed stablecoins are designed to maintain a value substantially equivalent to one U.S.

dollar, management believes the carrying amount

of the liability approximates the U.S.

dollar value of the settlement obligation.

Such borrowings are presented on the balance sheet as Loans payable

– DeFi protocol .

Such borrowings are presented on the balance sheet

as Loans payable – DeFi protocol .

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

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share includes the effect of dilutive potential common shares, if any.

Company reported net losses for the three months ended March 31, 2026 and 2025.

The following potentially dilutive securities were excluded

from the computation of diluted loss per share during the 2026 and 2025 periods of net loss, as their effect would have been anti-dilutive:

Company reported net losses for the three and six months ended June 30, 2026 and for the six months ended June 30, 2025.

The following

potentially dilutive securities were excluded from the computation of diluted loss per share during the 2026 and 2025 periods of net

loss, as their effect would have been anti-dilutive:

Schedule of Earnings Per Share Anti-diluted

As of March 31,

As of June 30,

Warrants to purchase common stock

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Shares issuable upon conversion of convertible notes

Anti-dilutive securities

Accounting Pronouncements

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and assures that there are proper controls in place to ascertain that the Company’s Financial Statements properly reflect the change.

December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60):

for and Disclosure of Crypto Assets (“ASU 2023-08”), which requires entities to measure certain crypto assets that meet

specified scope criteria at fair value, with changes in fair value recognized in net income each reporting period.

The ASU also requires

disclosures about significant crypto asset holdings, contractual sale restrictions, and changes in holdings during the reporting period.

The amendments in ASU 2023-08 were effective for fiscal years beginning after December 15, 2024, including interim periods within those

fiscal years, with early adoption permitted.

The Company early adopted ASU 2023-08 for the year ended December 31, 2024 in its Form 10-K.

The adoption resulted in the measurement of the Company’s in-scope digital assets, including Ethereum, at fair value with changes

recognized in net income, and expanded the Company’s disclosures within Note 4 – Digital Assets (Fair Value) .

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

Improvements to Income Tax Disclosures , to enhance the transparency

and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 provide improvements primarily related to the rate reconciliation

and income taxes paid information included in income tax disclosures.

The Company is required to disclose additional information regarding

reconciling items equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable

statutory tax rate.

Similarly, the Company is required to disclose income taxes paid (net of refunds received) equal to or greater than

five percent of total income taxes paid (net of refunds received).

The amendments in ASU 2023-09 were effective January 1, 2025.

adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The Company adopted

ASU 2023-09 for the year ended December 31, 2025 in its Form 10-K.

The adoption expanded the Company’s income tax disclosures within

Note 14 – Income Taxes and did not have a material impact on the Company’s financial statements.

Improvements to Income Tax Disclosures (“ASU 2023-09”),

to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 provide improvements primarily

related to the rate reconciliation and income taxes paid information included in income tax disclosures.

The Company is required to disclose

additional information regarding reconciling items equal to or greater than five percent of the amount computed by multiplying pretax

income (loss) by the applicable statutory tax rate.

Similarly, the Company is required to disclose income taxes paid (net of refunds

received) equal to or greater than five percent of total income taxes paid (net of refunds received).

The amendments in ASU 2023-09 were

effective January 1, 2025.

Early adoption is permitted for annual financial statements that have not yet been issued or made available

for issuance.

The Company adopted ASU 2023-09 for the year ended December 31, 2025 in its Form 10-K.

The adoption expanded the Company’s

income tax disclosures within Note 14 – Income Taxes in its Form 10-k and did not have a material impact on the Company’s

financial statements.

December 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures

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Company is evaluating the impact the updated guidance will have on its disclosures.

Other recent accounting pronouncements

issued by the FASB, including guidance and interpretive publications from the American Institute of Certified Public Accountants (“AICPA”),

as well as regulations and guidance from the Securities and Exchange Commission (“SEC”), did not, or are not expected to have

a material impact on the Company’s present or future financial statements.

November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions

of Convertible Debt Instruments (“ASU 2024-04”), which clarifies the requirements for determining whether the settlement

of a convertible debt instrument should be accounted for as an induced conversion rather than a debt extinguishment.

The amendments in

ASU 2024-04 are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those

annual reporting periods, with early adoption permitted.

The Company adopted ASU 2024-04 effective January 1, 2026.

The Company did not

have any induced conversions of convertible debt during the three and six months ended June 30, 2026, and therefore the adoption did

not have an impact on the Company’s financial statements.

recent accounting pronouncements issued by the FASB, including guidance and interpretive publications from the American Institute of

Certified Public Accountants (“AICPA”), as well as regulations and guidance from the Securities and Exchange Commission (“SEC”),

did not, or are not expected to have a material impact on the Company’s present or future financial statements.

4 – Digital Assets (Fair Value)

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

following tables present the Company’s digital assets held as of June 30, 2026 and December 31, 2025:

Schedule of Crypto Assets Held

As of March 31, 2026

As of June 30, 2026

As of December 31, 2025

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$ 210,592,607

BNB Chain (BNB)

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$ 210,764,252

of March 31, 2026, the Company’s ETH holdings included:

of June 30, 2026, the Company’s ETH holdings included:

Approximately

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with a fair value of approximately $ 75,003,000 .

The underlying ETH remains recognized within Digital 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.

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

The underlying ETH remains recognized within Digital 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.

described in Note 3 – Summary of Significant Accounting Policies , the Company classifies its digital assets by operational

use into three categories:

Schedule of Digital Assets by Operational Use

March 31, 2026

June 30, 2026

December 31, 2025

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assets – treasury represent unencumbered digital assets maintained for liquidity and general corporate purposes.

assets – DeFi represent digital assets deployed in DeFi protocols, primarily Aave, for lending and liquidity provision.

Deposits into Aave do not result in derecognition of the underlying ETH, consistent with the Company’s accounting policy in

assets – DeFi represent digital assets measured at fair value deployed in DeFi protocols, primarily Aave, for lending and

liquidity provision.

Deposits into Aave do not result in derecognition of the underlying ETH, consistent with the Company’s

accounting policy in Note 3.

assets – staked represent digital assets actively deployed in validator operations to earn staking rewards.

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Value Measurement

All categories of digital assets

are valued using quoted prices in active markets for identical assets and are therefore classified as Level 1 within the fair-value hierarchy

(see Note 6 – Fair Value Measurements ).

Encumbrances arising from staking or DeFi deployments do not affect fair-value classification

because such restrictions are entity-specific and do not influence observable market pricing.

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

1 within the fair-value hierarchy (see Note 6 – Fair Value Measurements ).

Encumbrances arising from staking or DeFi deployments

do not affect fair-value classification because such restrictions are entity-specific and do not influence observable market pricing.

gains and losses on digital assets represent the period-over-period change in the fair value of digital assets held by the Company and

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of Digital Assets Measured at Fair Value

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

following table presents a roll forward of the Company’s digital assets measured at fair value for the six months ended June 30,

Schedule of Crypto Assets Rollforward Activity

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( 29,265,878 )

Withdrawals from Liquidity Pool positions

Digital asset payments

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( 57,104,990 )

March 31, 2026 - Fair Value

$ 115,955,855

into liquidity pool positions represent the transfer of digital assets measured at fair value

into liquidity pool arrangements, resulting in the derecognition of such digital assets and

the recognition of liquidity pool positions accounted for as indefinite-lived intangible

June 30, 2026 - Fair Value

into liquidity pool positions represent the transfer of digital assets measured at fair value into liquidity pool arrangements, resulting

in the derecognition of such digital assets and the recognition of liquidity pool positions accounted for as indefinite-lived intangible

assets (see Note 5).

gains (losses) presented in this rollforward include only transactions related to digital

assets measured at fair value and exclude realized gains (losses) associated with liquidity

pool positions and stablecoin transactions.

(3) Unrealized

gains and losses exclude changes in value of liquidity pool positions, which are accounted

for under the impairment model described in Note 3.

gains (losses) presented in this rollforward include only transactions related to digital assets measured at fair value and exclude

realized gains (losses) associated with liquidity pool positions and stablecoin transactions.

gains and losses exclude changes in value of liquidity pool positions, which are accounted for under the impairment model described

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

Company holds certain digital assets that are not measured at fair value on a recurring basis and are instead accounted for as

indefinite-lived intangible assets in accordance with ASC 350.

These assets consist of (i) tokenized LP positions and (ii) NFTs,

which primarily represent digital art.

These assets are distinct from digital assets measured at fair value, which are presented

separately in Note 4.

LP positions represent the Company’s

ownership interest in decentralized exchange liquidity pools and provide exposure to a proportional share of the underlying pooled digital

assets, pool-generated fees and other rewards, where applicable.

These assets do not represent ownership interests in a legal entity or

contractual rights to cash flows and are therefore accounted for as indefinite-lived intangible assets.

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

Company holds certain digital assets that are not measured at fair value on a recurring basis and are instead accounted for as indefinite-lived

intangible assets in accordance with ASC 350.

These assets consist of (i) tokenized LP positions and (ii) NFTs, which primarily represent

These assets are distinct from digital assets measured at fair value, which are presented separately in Note 4.

positions represent the Company’s ownership interest in decentralized exchange liquidity pools and provide exposure to a proportional

share of the underlying pooled digital assets, pool-generated fees and other rewards, where applicable.

These assets do not represent

ownership interests in a legal entity or contractual rights to cash flows and are therefore accounted for as indefinite-lived intangible

of June 30, 2026 and December 31, 2025, the carrying value of these assets consisted of:

of Carrying Value of Digital Assets

March 31, 2026

June 30, 2026

December 31, 2025

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NFTs (digital art)

of Digital Assets Accounted for as Indefinite-Lived Intangible Assets

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

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( 47,890,401 )

Realized gains (losses) on withdrawals from Liquidity Pools

Realized gains on withdrawals from Liquidity Pools

Realized losses on withdrawals from Liquidity Pools

Impairment losses

March 31, 2026 – Carrying Value

( 5,451,494 )

June 30, 2026 – Carrying Value

Carrying Value

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of operations.

During the three

months ended March 31, 2026, the Company recognized impairment losses of approximately $210,000 related to its LP positions and NFTs.

Impairment losses are included in impairment loss on intangible digital assets in the statements of operations.

Due to the absence of quoted market prices for LP positions,

the Company estimates fair value based on the observable value of the underlying assets in the liquidity pools, considering pool composition,

the three months and six months ended June 30, 2026, the Company recognized impairment losses of approximately $ 5,242,000 and $ 5,451,000 ,

respectively, related to its LP positions and NFTs.

Impairment losses are included in impairment loss on intangible digital assets

in the statements of operations.

to the absence of quoted market prices for LP positions, the Company estimates fair value based on the observable value of the underlying

assets in the liquidity pools, considering pool composition, liquidity.

and quoted market prices for the underlying digital assets.

See Note 6 – Fair Value Measurements for additional

information regarding nonrecurring fair value measurements.

Note 6 – Fair Value Measurements for additional information regarding nonrecurring fair value measurements.

6 - Fair Value Measurements

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bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that are accessible

at the measurement date.

1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the

measurement date.

2 – Valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted

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These quoted prices represent Level 1 inputs within the fair-value hierarchy.

The Company also holds certain

digital assets, including liquidity pool positions and NFTs that are accounted for as indefinite-lived intangible assets under ASC 350

and are measured at cost less impairment.

These assets are not measured at fair value on a recurring basis and, therefore, are not included

in the recurring fair value hierarchy disclosures presented in this note.

To the extent impairment is recognized, the related fair value

measurement is disclosed as a nonrecurring fair value measurement.

See Note 5 – Digital Assets (Liquidity Pool Positions and

Other Intangible Digital Assets) for additional information.

Company also holds certain digital assets, including liquidity pool positions and NFTs that are accounted for as indefinite-lived intangible

assets under ASC 350 and are measured at cost less impairment.

These assets are not measured at fair value on a recurring basis and,

therefore, are not included in the recurring fair value hierarchy disclosures presented in this note.

To the extent impairment is recognized,

the related fair value measurement is disclosed as a nonrecurring fair value measurement.

See Note 5 – Digital Assets (Liquidity

Pool Positions and Other Intangible Digital Assets) for additional information.

resulting from staking lock-ups or DeFi collateralization do not affect classification within the fair-value hierarchy because such restrictions

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

Financial instruments not measured

at fair value on a recurring basis include cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities,

accrued compensation, accrued interest, loans payable – DeFi protocol, and convertible notes payable.

The carrying amounts of cash and

cash equivalents, accounts and other receivables, accounts payable and accrued liabilities, accrued compensation, and accrued interest

approximate fair value due to the short-term nature of these instruments.

The carrying amount of loans payable

– DeFi protocol approximates fair value because the borrowings are denominated primarily in USD-pegged stablecoins, bear variable

rates determined by the applicable DeFi protocol, have no fixed maturity, and may be repaid or liquidated in accordance with protocol

instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts and other receivables, accounts

payable and accrued liabilities, accrued compensation, accrued interest, loans payable – DeFi protocol, and convertible notes payable.

carrying amounts of cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities, accrued compensation,

and accrued interest approximate fair value due to the short-term nature of these instruments.

carrying amount of loans payable – DeFi protocol approximates fair value because the borrowings are denominated primarily in USD-pegged

stablecoins, bear variable rates determined by the applicable DeFi protocol, have no fixed maturity, and may be repaid or liquidated

in accordance with protocol terms;

the related fair value measurement would be categorized within Level 2 of the fair value hierarchy.

The Company’s convertible notes payable are carried at amortized cost, net of unamortized debt discount and

issuance costs.

Management believes the estimated fair value of the convertible notes approximated carrying value as of March 31, 2026

and December 31, 2025;

the related fair value measurement would be categorized within Level 3 of the fair value hierarchy due to the absence

of an active market for the notes and the use of significant unobservable inputs, including the Company’s estimated credit risk,

liquidity considerations, and assumptions regarding conversion and settlement.

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

the Company’s estimated level within the fair value hierarchy of those assets as of March 31, 2026 and December 31, 2025.

equity investments accounted for under the ASC 321 measurement alternative are not measured at fair value on a recurring basis and are

presented separately below.

Company’s convertible notes payable are carried at amortized cost, net of unamortized debt discount and issuance costs.

believes the estimated fair value of the convertible notes approximated carrying value As of June 30, 2026 and December 31, 2025;

related fair value measurement would be categorized within Level 3 of the fair value hierarchy due to the absence of an active market

for the notes and the use of significant unobservable inputs, including the Company’s estimated credit risk, liquidity considerations,

and assumptions regarding conversion and settlement.

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

estimated level within the fair value hierarchy of those assets As of June 30, 2026 and December 31, 2025.

Private equity investments

accounted for under the ASC 321 measurement alternative are not measured at fair value on a recurring basis and are presented separately

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

Fair Value Measured at March 31, 2026

Balance at March 31,

Fair Value Measured at June 30, 2026

Balance at June 30,

Quoted prices in active markets

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Digital assets measured at fair value

$ 115,955,855

Fair Value Measured at December 31, 2025

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Warrant liabilities

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

* Amount presented rounds to zero.

Company did not make any transfers between the levels of the fair value hierarchy during the six months ended June 30, 2026.

3 Liabilities

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model that incorporated inputs such as the Company’s stock price, expected volatility, risk-free interest rate, and expected term.

outstanding liability-classified warrants expired during the three months ended March 31, 2026.

outstanding liability-classified warrants expired during the six months ended June 30, 2026.

As a result, there were no warrant liabilities

outstanding as of March 31, 2026, and the Company will no longer remeasure warrant liabilities in future periods.

outstanding as of June 30, 2026, and the Company will no longer remeasure warrant liabilities in future periods.

As of December 31, 2025,

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or similar investments of the same issuer.

of March 31, 2026 and December 31, 2025, the carrying amount of the Company’s private equity investments accounted for under the

measurement alternative was $ 600,000

and $ 600,000 ,

respectively.

No impairments, upward adjustments, or downward adjustments were recognized during the three months ended March 31, 2026.

The following table summarizes changes in the carrying amount of private equity investments accounted for under the

ASC 321 measurement alternative for the three months ended March 31, 2026 and the year ended December 31, 2025:

of June 30, 2026 and December 31, 2025, the carrying amount of the Company’s private equity investments accounted for under the

measurement alternative was $ 600,000 and $ 600,000 , respectively.

No impairments, upward adjustments, or downward adjustments were recognized

during the three and six months ended June 30, 2026.

following table summarizes changes in the carrying amount of private equity investments accounted for under the ASC 321 measurement alternative

for the six months ended June 30, 2026 and the year ended December 31, 2025:

Schedule of Changes in Fair Value and Other Adjustments of Warrants

Three Months Ended

March 31, 2026

For the Six Months Ended

June 30, 2026

December 31, 2025

Beginning balance

Upward adjustments from observable price changes

Impairments and downward adjustments

Ending balance

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Assets (Liquidity Pool Positions and Other Intangible Digital Assets) for additional information.

the three months ended March 31, 2026, the Company recognized impairment losses of approximately $ 210,000

the three months ended June 30, 2026, the Company recognized impairment losses of approximately $ 5,242,000

related to intangible digital assets, including approximately

$ 194,000 impairment

of liquidity pool positions and approximately $ 16,000

$ 5,237,000 related

to liquidity pool positions and approximately $ 5,000

related to NFTs, because the carrying amounts of certain assets

exceeded their estimated fair values.

During the six months ended June 30, 2026, the Company recognized impairment losses of approximately

$ 5,451,000 related

to intangible digital assets, including approximately $ 5,431,000

impairment of liquidity pool positions and approximately $ 21,000

impairment of NFTs, because the carrying amounts of certain

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After recognizing impairment, the carrying amounts of liquidity pool positions and NFTs

as of March 31, 2026 were approximately $ 11,358,000

as of June 30, 2026 were approximately $ 7,750,000

and $ 21,000 ,

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To the extent the related assets were written down to fair value during the period, these amounts represent the assets’

fair values as of the March 31, 2026 nonrecurring measurement date.

fair values as of the June 30, 2026 nonrecurring measurement date.

The impairment losses are included in impairment loss on intangible

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and DeFi arrangements.

These revenue streams are accounted for under ASC 606 , Revenue from Contracts

with Customers , as the Company provides services that generate consideration in the form of digital assets.

These revenue streams are accounted for under ASC 606 , Revenue from Contracts with Customers , as the Company

provides services that generate consideration in the form of digital assets.

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

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Collectively,

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

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

The Company operates digital asset

validator nodes on the Ethereum network (“NodeOps”) through which it participates directly in the network’s consensus

In this role, the Company stakes its own digital assets to validate transactions and propose or attest to blocks on the Ethereum

these activities represent the outputs of the Company’s ordinary operations and are measured at the fair value of the digital assets

earned at the time each performance obligation is satisfied.

Company operates digital asset validator nodes on the Ethereum network (“NodeOps”) through which it participates directly

in the network’s consensus mechanism.

In this role, the Company stakes its own digital assets to validate transactions and propose

or attest to blocks on the Ethereum blockchain.

Staked assets are subject to protocol-defined lock-up and withdrawal periods.

In exchange for validating transactions

and participating in block production, the Company earns protocol-determined rewards, including consensus layer issuance and priority

fees, which are distributed by the Ethereum network as part of its consensus mechanism.

exchange for validating transactions and participating in block production, the Company earns protocol-determined rewards, including

consensus layer issuance and priority fees, which are distributed by the Ethereum network as part of its consensus mechanism.

Company earns these rewards directly from the Ethereum protocol, which calculates and distributes such rewards to the Company’s

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pre-determined cost.

satisfaction of the performance obligation occurs at a point in time when the constructed block is both proposed by a Validator and successfully

finalized on the Ethereum network.

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

with the transactions included in the block become available and are transferred to the Company’s digital wallet.

The satisfaction of the performance obligation occurs at a point in time when the constructed block is both proposed

by a Validator and successfully finalized on the Ethereum network.

At this juncture, the Company has fulfilled its obligations, and the

transaction fees and tips associated with the transactions included in the block become available and are transferred to the Company’s

digital wallet.

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

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the Company deposits ETH into Aave, the underlying ETH remains recognized at fair value on the balance sheet, consistent with the accounting

policy described in Note 3.

The Company earns variable rewards, typically in ETH, which accrue continuously based on utilization of the

lending pool.

policy described in Note 3 – Summary of Significant Accounting Policies .

The Company earns variable rewards, typically in

ETH, which accrue continuously based on utilization of the lending pool.

Company has concluded that its participation in these arrangements represents a performance obligation satisfied over time, as the protocol’s

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is constrained to amounts not subject to significant reversal in accordance with ASC 606-10-32-11.

The Company also earns fees and

other rewards through participation in decentralized exchange liquidity pools.

By depositing digital assets into these pools, the Company

provides liquidity to decentralized markets and earns a proportional share of fees generated by the protocol.

Company also earns fees and other rewards through participation in decentralized exchange liquidity pools.

By depositing digital assets

into these pools, the Company provides liquidity to decentralized markets and earns a proportional share of fees generated by the protocol.

contrast to DeFi lending arrangements, deposits into liquidity pools result in the derecognition of the underlying digital assets and

the recognition of liquidity pool positions accounted for as indefinite-lived intangible assets, as described in Note 3 and Note 5.

The Company’s participation

in liquidity pools represents a performance obligation satisfied over time, as liquidity is continuously provided to the protocol.

is recognized over time based on the Company’s proportional share of fees and other rewards generated and is measured at the fair

value of digital assets received at the time the fees are earned.

Variable consideration is constrained to amounts not subject to significant

the recognition of liquidity pool positions accounted for as indefinite-lived intangible assets, as described in Note 3 – Summary

of Significant Accounting Policies and Note 5 – Digital Assets (Liquidity Pool Positions and Other Intangible Digital Assets ).

Company’s participation in liquidity pools represents a performance obligation satisfied over time, as liquidity is continuously

provided to the protocol.

Revenue is recognized over time based on the Company’s proportional share of fees and other rewards generated

and is measured at the fair value of digital assets received at the time the fees are earned.

Variable consideration is constrained to

amounts not subject to significant reversal.

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

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Disaggregation

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

following table summarizes the revenues earned from the Company’s operations for the three and six months ended June 30, 2026 and

Schedule of Disaggregation of Revenues

For the Three Months Ended March 31,

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Blockchain infrastructure revenues

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finalized on-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.

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

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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.

Company’s DeFi operations under its Imperium business line generate 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.

Disaggregation

of Cost of Revenues

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

following table further details the costs of revenues for the three and six months ended June 30, 2026 and 2025:

Schedule of Disaggregation of Cost of Revenues

For the Three Months Ended March 31,

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Cost of blockchain infrastructure revenues

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8 – Segment Reporting

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.

Company operates within a 1 single

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

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submission of optimized transaction blocks to validators on Ethereum and Binance Smart Chain (BSC).

Operations (“Imperium”) – represents the Company’s decentralized finance activities, including

decentralized lending and liquidity pool participation, through which the Company earns protocol-denominated fees and rewards for supplying digital asset liquidity to smart contract-based protocols.

Operations (“Imperium”) – represents the Company’s decentralized finance activities, including decentralized

lending and liquidity pool participation, through which the Company earns protocol-denominated fees and rewards for supplying digital

asset liquidity to smart contract-based protocols.

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

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characteristics but are managed together within the Company’s DeFi operations.

Gross profit (loss) is the primary

measure of segment performance reviewed by the Company’s CODMs, which comprises members of executive management including the Chief

Executive Officer and Chief Financial Officer.

In evaluating performance and allocating resources, the CODMs reviews segment revenues,

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

profit (loss) is the primary measure of segment performance reviewed by the Company’s CODMs, which comprises members of executive

management including the Chief Executive Officer and Chief Financial Officer.

In evaluating performance and allocating resources, the

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

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

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with blockchain infrastructure and DeFi operations.

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

three months ended March 31, 2026 and 2025:

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

the three and six months ended June 30, 2026 and 2025:

Schedule of Segment Revenue and Gross Profit (loss)

For the Three Months Ended March 31, 2026

For the Three Months Ended

June 30, 2026

For the Six Months Ended

June 30, 2026

Cost of revenues

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$ ( 150,175 )

For the Three Months Ended March 31, 2025

For the Three Months Ended

June 30, 2025

For the Six Months Ended

June 30, 2025

Cost of revenues

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$ ( 330,652 )

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

For the Three Months Ended

$ ( 502,901 )

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

For the Three Months

Ended June 30,

For the Six Months Ended

Total operating expenses

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( 103,427,035 )

( 13,268,031 )

Other income (expense)

( 1,601,133 )

( 3,148,992 )

Net income (loss)

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$ ( 104,067,549

$ ( 13,387,165 )

9 – Stockholders’ Equity

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

of June 30, 2026, the Company had 975,000,000 shares of Common Stock, $ 0.001 par value, authorized, of which 49,806,434 shares were issued

and outstanding.

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Wainwright of up to 3.0 % of the gross proceeds from sales.

the three months ended March 31, 2026, the Company did not sell any shares of Common Stock under the ATM Agreement.

During the three

months ended March 31, 2025, the Company sold a total of 127,249 shares of Common Stock under the ATM Agreement for aggregate gross proceeds

of approximately $ 238,000 at an average selling price of $ 1.87 per share, resulting in net proceeds of approximately $ 229,000 after deducting

commissions and other transaction costs.

the six months ended June 30, 2026, the Company did not sell any shares of Common Stock under the ATM Agreement.

During 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 gross proceeds

of approximately $ 4,220,000 at an average selling price of $ 2.25 per share, resulting in net proceeds of approximately $ 4,079,000 after

deducting commissions and other transaction costs.

Repurchase Program

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The Company has engaged H.C.

Wainwright & Co., LLC as the sole broker to implement the program.

Repurchases are subject to certain pricing and timing limitations, including those related to the Company’s fair value and

named executive officer trading plans.

The program does not obligate the Company to repurchase any specific number of shares and may

be modified, suspended, or discontinued at any time.

the three months ended March 31, 2026, the Company did not repurchase any shares of its common stock.

As of March 31, 2026, approximately

Wainwright as the sole broker to implement the program.

are subject to certain pricing and timing limitations, including those related to the Company’s fair value and named executive

officer trading plans.

The program does not obligate the Company to repurchase any specific number of shares and may be modified, suspended,

or discontinued at any time.

the six months ended June 30, 2026, the Company did not repurchase any shares of its common stock.

As of June 30, 2026, approximately

$ 46,000,000 remained available for repurchases under the authorization.

Purchase Warrants

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

following is a summary of warrant activity for the six months ended June 30, 2026:

Summary of Warrant Activity

Number of Warrants

Outstanding as of December 31, 2025

Expiration of warrants

Outstanding as of March 31, 2026

of March 31, 2026, no warrants were classified as derivative liabilities, as all liability-classified warrants expired during the period.

Outstanding as of June 30, 2026

of June 30, 2026, no warrants were classified as derivative liabilities, as all liability-classified warrants expired during the period.

The remaining warrants issued in connection with the convertible notes are classified as equity.

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V into one share of common stock.

As of March 31, 2026, the Board has not elected to convert any Series V shares.

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

March 31, 2026.

As of June 30, 2026, the Board has not elected to convert any Series V shares.

of June 30, 2026, the Company had Series V Preferred Stock authorized, of which 15,671,405 shares were issued and outstanding as of June

shares of Series V Preferred Stock have been issued as restricted shares in connection with the conversion of RSUs to restricted shares

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including market-based and service-based vesting criteria.

of March 31, 2026, the Company had approximately 278,000 restricted shares of Series V Preferred Stock outstanding.

These restricted

shares do not participate in voting rights and are subject to forfeiture if the underlying vesting conditions are not satisfied.

of June 30, 2026, the Company had approximately 278,000 restricted shares of Series V Preferred Stock outstanding.

These restricted shares

do not participate in voting rights and are subject to forfeiture if the underlying vesting conditions are not satisfied.

compensation, including options, RSUs, restricted shares, and share payments, may be granted to directors and employees of the Company

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approval to increase the number of shares authorized for issuance under the 2021 Plan from 7,000,000 shares to 12,000,000 shares.

of March 31, 2026, the Company had approximately 205,647 shares remaining available for future grants under the 2021 Plan, after giving

effect to RSU awards granted under the 2026 LTI Program that were issued within the existing authorized share limit.

the three months ended March 31, 2026, the Company approved additional RSU awards under the 2026 LTI Program in excess of the number

of shares currently authorized for issuance under the 2021 Plan.

The portion of such awards that exceeds the currently authorized share

limit is subject to stockholder approval of an increase in the number of authorized shares at the Company’s 2026 Annual Meeting

of Stockholders.

No shares underlying such awards will be issued unless and until stockholder approval is obtained.

accounting purposes, RSUs approved within the existing authorized share limit are considered granted as of January 1, 2026.

RSUs approved

in excess of the currently authorized share limit are not considered granted for accounting purposes until stockholder approval is obtained.

for the three months ended March 31, 2026, the Company has included all RSUs approved under the 2026 LTI Program in the RSU activity

and ending balances presented below and has recognized stock-based compensation expense for such awards based on an estimated fair value

using the closing price of the Company’s common stock on January 1, 2026, consistent with ASC 718 guidance for awards with unresolved

grant date conditions.

receipt of stockholder approval, the Company will establish the grant date for such awards and will remeasure the fair value based on

the closing price of the Company’s common stock on the grant date.

Any difference between the estimated fair value and the grant

date fair value will be recognized as an adjustment to stock-based compensation expense on a prospective basis over the remaining requisite

service period.

June 8, 2026, the Company received shareholder approval to increase the number of shares authorized for issuance under the 2021 Plan

from 12,000,000 shares to 24,500,000 shares.

of June 30, 2026, the Company had approximately 10,712,674 shares remaining available for future grants under the 2021 Plan.

the six months ended June 30, 2026, the Company approved additional RSU awards under the 2026 LTI Program in excess of the number of

shares authorized for issuance under the 2021 Plan as of the January 1, 2026 grant date.

The portion of such awards that exceeded the

then-authorized share limit was subject to stockholder approval of an increase in the number of authorized shares, which the Company

received at its 2026 Annual Meeting of Stockholders on June 8, 2026.

For accounting purposes, RSUs approved within the then-authorized

share limit are considered granted as of January 1, 2026.

RSUs approved in excess of the previously authorized share limit are considered

granted for accounting purposes on June 8, 2026, the date on which stockholder approval was obtained.

to obtaining stockholder approval, the Company recognized stock-based compensation expense for such awards based on an estimated fair

value using the closing price of the Company’s common stock on January 1, 2026, consistent with ASC 718 guidance for awards with

unresolved grant date conditions.

Upon receipt of stockholder approval on June 8, 2026, the Company established the grant date for such

awards and remeasured the fair value using the closing price of the Company’s common stock on that date of $ 1.35 per share.

difference between the estimated fair value and the grant date fair value is being recognized as an adjustment to stock-based compensation

expense on a prospective basis over the remaining requisite service period.

and Restricted Shares

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

following tables present the activity in RSUs and restricted shares for the three months ended March 31, 2026, followed by additional

detail regarding the nature, valuation, and vesting conditions of such awards.

Activity Rollforward

following tables present the activity in RSUs and restricted shares for the six months ended June 30, 2026, followed by additional detail

regarding the nature, valuation, and vesting conditions of such awards.

Summary of RSU

Activity Rollforward

Average Grant

Number of Restricted

Weighted Average

Nonvested as of December 31, 2025

Vested and converted to restricted common shares

Converted to restricted common shares

( 2,590,897 )

Nonvested as of March 31, 2026

RSU activity presented above includes all RSUs approved under the 2026 LTI Program, including awards subject to stockholder approval

for additional authorized shares under the 2021 Plan.

Stock Activity Rollforward

Nonvested as of June 30, 2026

Stock Activity

Summary of RSU Activity Rollforward

Restricted Shares

of Common Stock

Number of Restricted

Shares of Common Stock

Outstanding and nonvested as of December 31, 2025

Converted from restricted stock units

Outstanding and Nonvested as of March 31, 2026

Oustanding and Nonvested as of June 30, 2026

shares of common stock outstanding primarily relate to RSUs that were previously converted into restricted shares, including in connection

with tax planning strategies (e.g., Section 83(b) elections), and continue to be subject to the original vesting conditions of the underlying

The outstanding and nonvested balance of restricted shares as of December 31, 2025 primarily represents legacy LTI

awards that were previously converted from RSUs and are subject to a combination of market-based performance conditions (including a requirement

for the Company to achieve a specified market capitalization threshold of $ 300 million) and service-based vesting conditions.

three months ended March 31, 2026, the increase in nonvested restricted shares primarily reflects the conversion of RSUs granted under

the 2026 LTI Program into restricted shares, which continue to be subject to their respective vesting conditions.

Compensation expense

for awards subject to market conditions is recognized regardless of whether the market condition is ultimately achieved.

outstanding and nonvested balance of restricted shares as of December 31, 2025 primarily represents legacy LTI awards that were previously

converted from RSUs and are subject to a combination of market-based performance conditions (including a requirement for the Company

to achieve a specified market capitalization threshold of $ 300 million) and service-based vesting conditions.

During the six months ended

June 30, 2026, the increase in nonvested restricted shares primarily reflects the conversion of RSUs granted under the 2026 LTI Program

into restricted shares, which continue to be subject to their respective vesting conditions.

Compensation expense for awards subject

to market conditions is recognized regardless of whether the market condition is ultimately achieved.

Shares - LTI RSU Issuances (2026)

RSU Awards and Share Availability

the three months ended March 31, 2026, the Board approved a long-term incentive program for 2026 (the “2026 LTI Program”)

that contemplates the issuance of restricted stock units, certain of which were granted pursuant to the Company’s 2021 Equity Incentive

Plan, as described below, and certain of which will be subject to the availability of additional shares under the Plan and any required

stockholder approvals.

the three months ended March 31, 2026, the Company approved an aggregate of 5,424,248 RSUs under the 2026 LTI Program.

Of these awards,

2,712,108 RSUs were approved within the existing authorized share limit under the 2021 Plan, and 2,712,140 RSUs are subject to stockholder

approval of an increase in authorized shares under the Plan.

The amounts presented above reflect RSUs approved by the Board during the

period and are not adjusted for subsequent forfeitures.

Such forfeitures are reflected in the RSU activity rollforward presented above.

allocation of RSUs between awards granted under the Plan and those subject to stockholder approval, as well as the timing of issuance,

depends on share availability and the receipt of such stockholder approval.

No shares of common stock underlying RSUs will be issued

until the applicable RSUs have vested and, with respect to RSUs subject to stockholder approval, such approval has been obtained.

the six months ended June 30, 2026, the Board approved a long-term incentive program for 2026 (the “2026 LTI Program”) that

contemplates the issuance of restricted stock units, certain of which were granted pursuant to the Company’s 2021 Equity Incentive

At the time of Board approval, a portion of the awards exceeded the number of shares then available for issuance under the 2021

Plan and was therefore subject to stockholder approval of an increase in the number of shares authorized under the 2021 Plan.

Company approved an aggregate of 5,424,248 RSUs under the 2026 LTI Program.

Of these awards, 2,712,108 RSUs were approved within the

existing authorized share limit under the 2021 Plan and 2,712,140 RSUs were subject to stockholder approval of an increase in the number

of shares authorized under the 2021 Plan.

Stockholder approval was obtained at the Company’s 2026 Annual Meeting of Stockholders

on June 8, 2026.

amounts presented above reflect RSUs approved by the Board during the period and are not adjusted for subsequent forfeitures.

Such forfeitures

are reflected in the RSU activity rollforward presented above.

No shares of common stock underlying RSUs will be issued until the applicable

RSUs have vested.

Framework Applicable to 2026 Long-Term Incentive RSUs

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Continued employment through January 1, 2031

of March 31, 2026, the Company had 5,272,732

unvested equity awards outstanding under the 2026 LTI Program (net of forfeitures), consisting of RSUs and restricted shares that

remain subject to vesting conditions.

of June 30, 2026, the Company had 5,272,732 unvested equity awards outstanding under the 2026 LTI Program (net of forfeitures), consisting

of RSUs and restricted shares that remain subject to vesting conditions.

These awards consisted of:

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

RSUs with only service-based vesting conditions that are subject to stockholder approval, a grant date has not yet been established for

accounting purposes.

Accordingly, the Company has used the closing price of its common stock on January 1, 2026 as an estimate of fair

value for purposes of recognizing stock-based compensation expense during the three months ended March 31, 2026.

Upon receipt of stockholder

approval, the Company will establish the grant date for accounting purposes and will remeasure the fair value of such awards based on

the closing price of the Company’s common stock on the grant date.

Any difference between the estimated fair value and the grant

date fair value will be recognized as an adjustment to stock-based compensation expense on a prospective basis over the remaining requisite

service period.

RSUs with only service-based vesting conditions that were subject to subsequent stockholder approval, a grant date was established upon

receipt of stockholder approval during the 2026 Annual Meeting of Stockholders.

Prior to this date, the Company used the closing price

of its common stock on January 1, 2026 as an estimate of fair value for purposes of recognizing stock-based compensation expense during

the three months ended March 31, 2026.

Upon receipt of stockholder approval, the Company established the grant date for accounting purposes

and remeasured the fair value of such awards based on the closing price of the Company’s common stock on the grant date.

Any difference

between the estimated fair value and the grant date fair value was recognized as an adjustment to stock-based compensation expense on

a prospective basis over the remaining requisite service period.

price performance milestones are achieved when the closing price of the Company’s common stock equals or exceeds the applicable

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Stock options are generally granted with service-based vesting conditions and contractual terms of up to seven years.

the three months ended March 31, 2026, stock options were granted primarily in connection with the settlement of performance-based bonuses

the six months ended June 30, 2026, stock options were granted primarily in connection with the settlement of performance-based bonuses

earned for fiscal year 2025 and paid in equity in January 2026.

During the three months ended March 31, 2025, stock options were granted

During the three months ended June 30, 2025, stock options were granted

primarily in connection with:

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and (ii) sign-on and retention equity awards granted to new employees.

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

summary of options activity under the Company’s stock option plan for the six months ended June 30, 2026 and 2025 are presented

Summary of Option Activity

Contractual Life (in years)

Number of Shares

Weighted Average

Exercise Price

Total Intrinsic

Weighted Average

Remaining Contractual

Life (in years)

Options outstanding as of December 31, 2025

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Employee options forfeitures

Options outstanding as of March 31, 2026

Options vested and exercisable as of December 31, 2025

Options outstanding as of June 30, 2026

Options vested and exercisable as of June 30, 2026

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

Number of Shares

Weighted Average

Exercise Price

Total Intrinsic

Weighted Average

Remaining Contractual

Life (in years)

Options outstanding as of December 31, 2024

Employee options granted

Options outstanding as of March 31, 2025

Options vested and exercisable as of March 31, 2025

following weighted-average assumptions were used to estimate the fair value of options granted during the three months ended March 31,

Employee options expired

Employee options forfeited

Options outstanding as of June 30, 2025

Options vested and exercisable as of June 30, 2025

following weighted-average assumptions were used to estimate the fair value of options granted during the six months ended June 30, 2026

and 2025, using the Black-Scholes model:

Schedule of Weighted-Average Assumptions Used to Estimate Fair Value

For the Three Months Ended March 31,

Weighted-Average Assumptions Used to Estimate Fair Value

For the Six Months Ended June 30, 2026

Exercise price

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not yet settled are recorded within Accrued compensation on the balance sheets until payment or issuance.

the three months ended March 31, 2026, the Company issued 398,208 shares of common stock to officers and employees in January 2026 as

part of the settlement of accrued bonus compensation earned for the year ended December 31, 2025.

The total fair value of the shares

issued was approximately $ 1,051,000 based on the Company’s closing stock price on the issuance date.

Of the shares issued, 87,602

were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 310,606 shares of common stock.

The issuance of shares represents the settlement of previously accrued compensation and did not result in additional stock-based compensation

expense during the period.

the three months ended March 31, 2025, the Company issued 329,110 shares of common stock to officers and employees in January 2025 as

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

The total fair value of the shares

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

Of the shares issued, 33,731

were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 295,379 shares of common stock.

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

the six months ended June 30, 2026, the Company issued 398,208 shares of common stock to officers and employees in January 2026 as part

of the settlement of accrued bonus compensation earned for the year ended December 31, 2025.

The total fair value of the shares issued

was approximately $ 1,051,000 based on the Company’s closing stock price on the issuance date.

Of the shares issued, 87,602 were

returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 310,606 shares of common stock.

of shares represents the settlement of previously accrued compensation and did not result in additional stock-based compensation expense

during the period.

the six months ended June 30, 2025, the Company issued 329,110 shares of common stock to officers and employees in January 2025 as part

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

The total fair value of the shares issued

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

Of the shares issued, 33,731 were returned

to net settle the issuance and pay related taxes, resulting in a net share issuance of 295,379 shares of common stock.

compensation included approximately $ 487,000 and $ 1,609,000 related to performance-based bonus accruals as of June 30, 2026 and December

31, 2025, respectively.

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common stock on the last trading day prior to each quarter-end.

the three months ended March 31, 2026, 26,979 shares of common stock approximating $ 37,500 were issued to independent directors related

the six months ended June 30, 2026, 58,042 shares of common stock approximating $ 72,000 were issued to independent directors related

to the quarterly approved issuances.

For the three months ended March 31, 2025, 25,002 shares of common stock approximating $ 38,000 were

For the six months ended June 30, 2025, 42,058 shares of common stock approximating $ 75,000 were

issued to independent directors related to the quarterly approved issuances.

compensation expenses are recorded as a part of general and administrative expenses, compensation expenses and cost of revenues.

compensation expenses for the three months ended March 31, 2026 and 2025 were as follows:

compensation expenses for the three and six months ended June 30, 2026 and 2025 were as follows:

Schedule of Stock-based Compensation Expense

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Employee stock option awards

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Total stock-based compensation

of March 31, 2026, the Company had approximately $ 1,981,770 of unrecognized stock-based compensation cost related to unvested stock option

awards, which is expected to be recognized over a weighted-average period of 0.54 years, and $ 11,793,973 of unrecognized stock-based

compensation cost related to unvested restricted stock and RSU awards, which is expected to be recognized over a weighted-average period

of 1.98 years.

of June 30, 2026, the Company had approximately $ 1,348,706 of unrecognized stock-based compensation cost related to unvested stock option

awards, which is expected to be recognized over a weighted-average period of 0.46 years, and $ 7,414,417 of unrecognized stock-based compensation

cost related to unvested restricted stock and RSU awards, which is expected to be recognized over a weighted-average period of 2.13 years.

significant portion of the unrecognized compensation cost relates to awards subject to market-based vesting conditions, which may result

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ETH collateral.

As of March 31, 2026, the Company has not experienced any full or partial liquidation events related to these borrowings.

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

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

As of June 30, 2026, the Company has not experienced any full or partial liquidation events related to these borrowings.

the three and six months ended June 30, 2026, the Company borrowed an aggregate of approximately $ 500,000 and $ 1,000,000 , respectively.

following table summarizes the Company’s DeFi borrowing activity during the six months ended June 30, 2026:

Summary of Defi Protocol Lending Activity

For the Three Months Ended

March 31, 2026

For the Six Months Ended June 30, 2026

Beginning balance – January 1, 2026

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( 26,492,300 )

Ending balance – March 31, 2026

As of March 31, 2026, the Company’s outstanding DeFi borrowings were denominated primarily in USD-pegged stablecoins,

including USDT and GHO, rather than ETH or other non-USD-pegged digital assets.

The Company’s obligation is to repay the borrowed

stablecoin units, plus accrued protocol interest, in accordance with Aave’s protocol terms.

Because the borrowed stablecoins are

designed to maintain a value substantially equivalent to one U.S.

dollar, management believes the carrying amount of the borrowings approximates

Ending balance – June 30, 2026

of June 30, 2026, the Company’s outstanding DeFi borrowings were denominated primarily in USD-pegged stablecoins, including USDT

and GHO, rather than ETH or other non-USD-pegged digital assets.

The Company’s obligation is to repay the borrowed stablecoin units,

plus accrued protocol interest, in accordance with Aave’s protocol terms.

Because the borrowed stablecoins are designed to maintain

a value substantially equivalent to one U.S.

dollar, management believes the carrying amount of the borrowings approximates the U.S.

dollar value of the settlement obligation.

See Note 6 – Fair Value Measurements for

additional information regarding the estimated fair value of outstanding DeFi borrowings.

of March 31, 2026, the Company had approximately 49,970 Aave aEthWETH tokens representing wrapped ETH deployed within DeFi protocols

and serving as collateral for outstanding borrowings, with a fair value of approximately $ 105,135,000 .

These assets remain recorded as

ETH within Digital 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 6 – Fair Value Measurements for additional information regarding the

estimated fair value of outstanding DeFi borrowings.

of June 30, 2026, the Company had approximately 47,775 Aave aEthWETH tokens representing wrapped ETH deployed within DeFi protocols and

serving as collateral for outstanding borrowings, with a fair value of approximately $ 75,003,047 .

These assets remain recorded as ETH

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

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

See Note 3 – Summary of Significant Accounting Policies and Note 4 –

Digital Assets (Fair Value) for further detail regarding the accounting treatment and classification of these assets.

The loans accrue interest at variable

rates determined by Aave’s on-chain interest-rate model, which automatically adjusts based on market utilization and liquidity conditions

for each borrowed asset.

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

During the three months

ended March 31, 2026, the weighted-average annualized borrowing rate on the Company’s DeFi borrowings was 3.65 %, calculated based

on the applicable protocol borrowing rates and outstanding USDT and GHO borrowings during the period.

the three months ended March 31, 2026, the Company recognized approximately $ 469,000 in interest expense, of which approximately $ 219,000

remained unpaid and is included 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.

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

market utilization and liquidity conditions for each borrowed asset.

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

During the six months ended June 30, 2026, the weighted-average annualized borrowing rate on the Company’s DeFi borrowings

was 3.95 %, calculated based on the applicable protocol borrowing rates and outstanding USDT and GHO borrowings during the period.

the three and six months ended June 30, 2026, the Company recognized approximately $ 448,000 and $ 917,000 , respectively, in interest expense,

of which approximately $ 286,000 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 coverage limitation

on the Aave protocol of 50 % 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

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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 months ended March 31, 2026, the Company recognized total interest expense of approximately $ 1,548,000 , which includes contractual

Wainwright acted as the Company’s exclusive placement agent in connection with both offerings.

The Company incurred total transaction-related

costs of approximately $ 254,000 , which included legal, placement agent, and other issuance expenses.

These costs, together with the original

issue discount and the allocated fair value of the warrants, were recorded as a debt discount in accordance with ASC 470-20 and are being

amortized over the term of the Notes using the effective interest method.

The warrants were determined to be freestanding equity-classified

instruments and were valued using the Black-Scholes option pricing model.

the three months ended June 30, 2026, the Company recognized total interest expense of approximately $ 1,601,000 , which includes contractual

interest, the amortization of debt discounts and issuance costs using the effective interest method, and variable interest on DeFi borrowings.

this amount, approximately $ 268,000 related to contractual interest on the Company’s convertible notes, approximately $ 811,000

Of this amount, approximately $ 268,000 related to contractual interest on the Company’s convertible notes, approximately $ 885,000

represented non-cash amortization of debt discount and issuance costs, and approximately $ 448,000 related to interest incurred on DeFi

Company paid approximately $ 518,000

of interest during the period, consisting of $ 268,000 paid in cash and $ 250,000 paid in stablecoins, with the

remainder representing non-cash or accrued amounts.

the six months ended June 30, 2026, the Company recognized total interest expense of approximately $ 3,149,000 which includes contractual

interest, the amortization of debt discounts and issuance costs using the effective interest method, and variable interest on DeFi borrowings.

Of this amount, approximately $ 536,000 related to contractual interest on the Company’s convertible notes, approximately $ 1,696,000

represented non-cash amortization of debt discount and issuance costs, and approximately $ 917,000 related to interest incurred on DeFi

Company paid approximately $ 536,000 of interest during the period, with the remainder representing non-cash or accrued amounts.

11 – Dividends and Capital Distributions

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There were no dividends declared

during the three months ended March 31, 2026.

during the six months ended June 30, 2026.

2025, the Company’s Board approved a one-time loyalty payment of $ 0.35 per share (the “Loyalty Payment”), payable solely

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Notes Eligible for Capital Distributions – Contingent Liability

of March 31, 2026, the Company had outstanding convertible notes that provide holders the right, upon conversion, to participate in dividends

of June 30, 2026, the Company had outstanding convertible notes that provide holders the right, upon conversion, to participate in dividends

or other distributions declared on the Company’s common stock during the period the notes are outstanding, as if the notes had

been converted immediately prior to the applicable record date.

of March 31, 2026, there were approximately 2,107,757 shares of common stock underlying the outstanding convertible notes that would

be entitled to such distributions if converted in accordance with the note terms, representing a potential contingent distribution totaling

of June 30, 2026, there were approximately 2,107,757 shares of common stock underlying the outstanding convertible notes that would be

entitled to such distributions if converted in accordance with the note terms, representing a potential contingent distribution totaling

approximately $ 105,000 .

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

recorded as of March 31, 2026, in accordance with ASC 450-20, Contingencies .

recorded as of June 30, 2026, in accordance with ASC 450-20, Contingencies .

12 – Employee Benefit Plans

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up to 100% of employee contributions.

For the three months ended March 31, 2026 and 2025, the Company made contributions to the 401(k)

Plan of $ 179,000 and $ 122,000 , respectively.

For the six months ended June 30, 2026 and 2025, the Company made contributions to the 401(k) Plan

of $ 197,000 and $ 122,000 , respectively.

13 – Liquidity

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in the normal course of business.

reflected in the condensed unaudited financial statements, the Company has historically incurred net losses and has an accumulated

deficit of approximately $ 242,466,000

at March 31, 2026, and net cash used in operating activities of approximately $ 1,742,000

for the reporting period then ended.

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

deliberate financing strategy that includes DeFi protocol borrowing and convertible note issuances to scale its blockchain

infrastructure and DeFi operations.

reflected in the condensed unaudited financial statements, the Company has historically incurred net losses and has an accumulated deficit

of approximately $ 277,369,000 at June 30, 2026, and net cash used in operating activities of approximately $ 1,264,000 for the reporting

period then ended.

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

that includes DeFi protocol borrowing and convertible note issuances to scale its blockchain infrastructure and DeFi operations.

on the Company’s cash position and liquid digital assets, consisting primarily of Ethereum held directly and not subject to long-term

lockups, as of May 14, 2026, management has determined that these resources are sufficient to support its daily operations and meet

lockups, as of August 17, 2026, management has determined that these resources are sufficient to support its daily operations and meet

its obligations for at least twelve months from the issuance date of these financial statements.

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by the Chairman and Chief Executive Officer and the related trust was approved by an independent committee of the Board.

of March 31, 2026, these related parties continue to hold a portion of the outstanding convertible notes, and the Company continues to

of June 30, 2026, these related parties continue to hold a portion of the outstanding convertible notes, and the Company continues to

incur interest expense and has repayment obligations associated with these instruments in accordance with their terms.

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Debt for additional information regarding the terms of the convertible notes and related warrants.

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

as described above, the Company did not have any other material related party transactions during the six months ended June 30, 2026.

15 – Subsequent Events

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

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

to or disclosure in the financial statements.

Based upon the

evaluation, other than as described below, the Company did not identify any recognized or non-recognized subsequent events that would

have required adjustment to or disclosure in the financial statements.

the period from July 1, 2026 to August 17, 2026, the Company sold a total of 599,207 shares of Common Stock under the ATM Agreement

for aggregate total gross proceeds of approximately $ 631,500 at an average selling price of $ 1.05 per share, resulting in net

proceeds of approximately $ 608,000 after deducting commissions and other transaction costs.

DeFi Borrowing

period from July 1, 2026 to August 17, 2026 the Company borrowed an additional $ 6,500,000

in stablecoins through Aave, a decentralized finance protocol, collateralized by the Company’s ETH already deposited on the

No additional collateral was posted in connection with these borrowings.

During this same period, the Company also withdrew 1,340 ETH, with an aggregate fair value of approximately $ 2,497,000 ,

which was deployed into additional Imperium liquidity pools.

As of August 17,

2026, the Company had approximately $ 42,979,000 in outstanding DeFi borrowings, inclusive of accrued interest, collateralized by

approximately 46,525 ETH with an aggregate fair value of approximately $ 88,650,000 , based on the ETH closing price of $ 1,905 on that

of Independent Director

July 1, 2026, the Board of Directors appointed Chris Janis as an independent director, Chairperson of the Audit Committee, and a member

of the Compensation Committee.

Janis will receive compensation on the same terms as the Company’s other independent directors,

as disclosed in the Company’s Current Report on Form 8-K filed in connection with the appointment.

Accelerated Settlement and

Conversion of RSUs into Restricted Common Stock

In July 2026, the settlement of 2,066,300 RSUs was accelerated, and the RSUs were converted into an equal

number of restricted shares of Common Stock issued to executive officers and employees.

The restricted shares retain the

awards’ original time-based vesting conditions and schedules ranging from six months to five years.

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