What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-13 compared with 2025-05-15 · 621 added, 352 removed, 662 unchanged (60% of the section changed)

5 unchanged sentences

Staked crypto assets

Receivable for capital shares sold

Prepaid expenses

5 unchanged sentences

Liabilities and Stockholders’ Equity:

Current liabilities:

Accounts payable and accrued expenses

Accrued compensation

Accrued interest

Loan payable - DeFi protocol

Warrant liabilities

Total current liabilities

Non-current liabilities:

Convertible notes payable, net

Total non-current liabilities

Total liabilities

Stockholders’ equity:

Preferred Stock, $ 0.001 par value per share;

shares authorized;

20,000,000 shares authorized, of which:

Series V Preferred Stock;

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

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

Preferred stock value

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975,000,000 shares authorized;

20,206,880 and 18,717,743

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

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

Additional paid-in capital

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For the Three Months Ended

For the Six Months Ended

Blockchain infrastructure revenues

4 unchanged sentences

General and administrative

Research and development

Compensation and related expenses

Research and development

Realized (gains) losses on crypto asset transactions

1 unchanged sentence

Other income (expenses):

Interest income

Interest expense

Change in unrealized appreciation (depreciation) of crypto assets

( 5,943,339 )

( 5,737,661 )

Change in fair value of warrant liabilities

1 unchanged sentence

( 5,800,839 )

( 5,896,136 )

Net income (loss)

$ ( 6,727,869 )

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

Diluted weighted average number of common shares outstanding, basic and diluted

$ ( 13,387,165 )

income (loss) per share attributable to common stockholders

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

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

Consolidated Statements of Changes in Stockholders’ Equity

the Three Months Ended March 31, 2025

the Six Months Ended June 30, 2025

Preferred Stock

Stockholders’

Balance December 31, 2024

15,033,231 (1)

Balance at December 31, 2024

15,033,231 (1)

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

Issuance of warrants in connection with convertible note

Stock-based compensation

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( 13,387,165 )

Balance March 31, 2025

Balance at June 30, 2025

16,004,738 (1)

2 unchanged sentences

$ ( 153,335,442 )

restricted shares of Series

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

Stockholders’ Equity (Deficit) for further details.

restricted shares of Common

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

See Note 6 – Stockholders’

Equity (Deficit) for further details.

the Three Months Ended March 31, 2024

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

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

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

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

the Six Months Ended June 30, 2024

Preferred Stock

Stockholders’

Balance December 31, 2023

Balance at December 31, 2023

$ 162,263,634

$ ( 138,677,103 )

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

Stock-based compensation

Net income (loss)

Balance at June 30, 2024

$ 163,681,450

$ ( 133,148,386 )

the Three Months Ended June 30, 2025

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 March 31, 2024

Balance at June 30, 2025

16,004,738 (1)

2 unchanged sentences

$ ( 153,335,442 )

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

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

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

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

the Three Months Ended June 30, 2024

Preferred Stock

Stockholders’

Balance at March 31, 2024

$ 163,141,291

$ ( 126,420,517 )

$ 163,141,291

$ ( 126,420,517 )

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

Stock-based compensation

Net income (loss)

( 6,727,869 )

Balance at June 30, 2024

$ 163,681,450

$ ( 133,148,386 )

$ 163,681,450

$ ( 133,148,386 )

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

Consolidated Statements of Cash Flows

For the Three Months Ended

For the Six Months Ended

Net cash flows used in operating activities:

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( 4,461,133 )

( 1,012,578 )

Builder payments (non-cash)

1 unchanged sentence

Change in fair value of warrant liabilities

Amortization on debt discount and issuance costs

Realized losses on crypto assets transactions

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( 3,286,074 )

Accrued interest

Net cash used in operating activities

( 3,235,514 )

( 1,693,099 )

Cash flows from investing activities:

Purchase of productive crypto assets for validating

( 14,179,117 )

Sale of productive crypto assets

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Net cash provided by (used in) investing activities

( 13,365,606 )

Cash flow from financing activities:

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

Proceeds from issuance of convertible notes, net

Proceeds from Defi borrowing

Payments to Defi borrowing

( 1,447,000 )

Payments of debt issuance costs

Net cash provided by financing activities

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Series V Preferred Stock Distribution

Cash paid for interest

Non-cash discount on convertible notes

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

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1 - Business Organization and Nature of Operations

(“BTCS” or the “Company”), a Nevada corporation listed on Nasdaq, is a U.S.-based blockchain technology

company focused on blockchain infrastructure.

The Company’s primary operations center on the Ethereum network, reflecting its strategic

emphasis on Ethereum block-building (“Builder+”) and validator node operations (“NodeOps”) across various proof-of-stake

(“PoS”) and delegated proof-of-stake (“dPoS”) networks.

operates non-custodial validator nodes (or “nodes”) that participate in blockchain network consensus by performing transaction

validation (“attestation”) and block proposal services.

The Company earns native token rewards by staking its PoS crypto

assets (also referred to “cryptocurrencies”, “crypto”, “crypto assets”, “digital assets”,

or “tokens”) to validator nodes operated by both BTCS and third-parties.

Additionally, on certain dPoS networks, BTCS enables

third-party crypto asset holders to delegate their assets to its validator nodes, earning validator node fees as a percentage of staking

rewards generated from delegated crypto assets.

2024, BTCS launched its Builder+ operations, a core component of its blockchain infrastructure strategy.

Builder+ leverages advanced

algorithms to optimize the construction of Ethereum blocks for on-chain validation, focusing on maximizing gas fee revenue.

has become a central revenue driver for BTCS, positioning the Company as an integral participant in Ethereum’s transaction cycle.

addition to its blockchain infrastructure operations, BTCS has developed ChainQ, an AI-powered blockchain data and analytics platform

designed to enhance transparency and accessibility within the blockchain ecosystem.

Currently in beta, ChainQ provides intuitive tools

for exploring and analyzing on-chain data, leveraging insights from BTCS’s blockchain infrastructure activities.

Company’s operations are subject to regulatory uncertainties, technological risks and market volatility inherent to blockchain

technology and crypto assets.

BTCS’s future success depends on the continued adoption of blockchain technology as well as the Company’s

ability to scale its Ethereum block-building operations and expand its broader blockchain infrastructure operations.

(“BTCS” or the “Company”), short for Blockchain Technology Consensus Solutions, is a Nevada corporation

listed on Nasdaq and headquartered in the United States.

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

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

operates two core infrastructure initiatives:

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

staking rewards;

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

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

These operations collectively

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

treasury growth.

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

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

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

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

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

These actions were undertaken

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

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

where it participates in the decentralized block-building marketplace.

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

expansion highlights the scalability of its infrastructure.

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

and competition within the blockchain infrastructure space.

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

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

2 - Basis of Presentation

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

Interim results for the three months ended March 31,

Interim results for the three months ended June 30,

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

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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, 2025

and December 31, 2024, the Company had approximately $ 270,000 and $ 1,978,000 in cash.

As of June 30, 2025 and

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

The Company has not experienced any losses in such

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

As of March 31, 2025 and December

As of June 30, 2025 and December

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

Company holds stablecoins, such as USDT (Tether) and USDC (USD Coin), which are crypto assets that are pegged to the value of one U.S.

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

The Company acquires and holds stablecoins

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

While not accounted

for as cash or cash equivalents, these stablecoins are considered a liquidity resource.

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

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

Our stablecoins are typically held in secure digital

wallets or on crypto asset exchanges.

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

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

While not accounted for as cash or cash equivalents, these

stablecoins are considered a liquidity resource.

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

Value Measurement

Company accounts for the fair value measurement for its crypto assets in accordance with Financial Accounting Standards Board

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

ASC 820 defines fair value

as the price that would be received for an asset in a current sale, assuming an orderly transaction between market participants on the

measurement date.

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

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

ASC 820 defines fair value as the price that

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

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

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

It requires the Company to assume

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

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

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

cost basis is now measured at fair value based on the spot price at the time of receipt, consistent with the applicable guidance under ASC 350-60.

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

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

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

recorded realized gains (losses) on crypto assets of approximately ($1,382,000) and $11,000 for the three months ended March 31, 2025

and 2024, respectively.

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

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

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

While the realized loss for the three months ended March

31, 2025, reflects application of the new LIFO method, it is not practicable to quantify the exact impact of the change as compared to

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

Based on this assessment, the Company does

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

Presentation of Crypto Assets in Financial Statements

While the realized loss for the three and six

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

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

Based on this

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

of Crypto Assets in Financial Statements

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

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

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

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

While deposited into a smart contract and restricted from

use, the crypto assets are not derecognized.

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

separately in the footnotes when serving as collateral.

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

restricted from transfer until the associated borrowing is repaid.

The Company continues to recognize the underlying ETH as a crypto

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

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

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

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

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

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

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At that point, revenue is recognized.

Block Building (Builder+)

Company participates in the Ethereum blockchain network by engaging in the construction of blocks (“block building”) containing

strategically bundled transactions from the Ethereum mempool and from searchers who connect to the Company’s endpoint with the

intent of the Company’s builder proposing their transactions.

Revenue recognition for these activities, conducted through Builder+,

entails the recognition of gas fees (or “transaction fees”) earned in exchange for successfully constructing blocks of bundled

transactions and having these blocks selected and proposed by a validator to the Ethereum network for validation and successfully finalized

on the network.

Block-Building

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

framework, including Ethereum and Binance Smart Chain (“BSC”).

In these roles, the Company bundles and proposes transaction

blocks for submission to network Validators (“block building”), and is compensated when its blocks are selected, proposed,

and successfully finalized on the applicable network.

Block Building

Company participates in the Ethereum blockchain network by engaging in the construction of blocks containing strategically bundled transactions

from the Ethereum mempool and from searchers who connect to the Company’s endpoint with the intent of the Company’s builder

proposing their transactions.

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

(or “transaction fees”) and priority fees (or “tips”) earned in exchange for successfully constructing blocks

of bundled transactions and having these blocks selected and proposed by a validator to the Ethereum network for validation and successfully

finalized on the network.

gas fees are earned as a direct result of the Company’s fulfillment of its performance obligations, which include the construction

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finalized on the Ethereum network.

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

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

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

following table summarizes the revenues earned from the Company’s operations for the three months ended March 31, 2025 and 2024.

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

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

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

Smart Chain (BSC) Block Building

Company also operates as a Builder on Binance Smart Chain (BSC), which uses a Proof-of-Staked-Authority (“PoSA”) consensus

and a distinct block-building and reward structure.

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

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

Unlike Ethereum, gas fees on BSC are paid directly to

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

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

tips, which are voluntarily sent by searchers to a Builder-controlled smart contract as priority fees.

These tips accumulate in the smart

contract and are periodically withdrawn to the Company’s Builder wallet.

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

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

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

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

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

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

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

Schedule of Revenues Earned from Company’s Operations

For the Three Months Ended

Revenues from blockchain infrastructure operations

Total revenues

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

March 31, 2025 and 2024.

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

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

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

to our nodes.

Revenues earned from Ethereum block-building through Builder+ includes block rewards generated by BTCS Builders.

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Revenue from blockchain infrastructure operations

Total revenue

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

ended June 30, 2025 and 2024.

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

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

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

asset delegations to our nodes.

Revenues earned from block-building through Builder+ includes block rewards generated by BTCS Builders.

assets earned from blockchain infrastructure staking activities through NodeOps

of Crypto Assets Earned from Blockchain Infrastructure Staking Activities

For the Three Months Ended March 31,

the Three Months Ended June 30,

the Six Months Ended June 30,

Infinity (AXS)*

Protocol (NEAR)*

Network (ROSE)

earned from blockchain infrastructure staking activities through NodeOps

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

assets earned from block-building through Builder+

Schedule of Crypto Assets Earned From

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Token Rewards

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Revenue ($USD)

Ethereum (ETH)

Cosmos (ATOM)

Solana (SOL)*

Axie Infinity (AXS)*

NEAR Protocol (NEAR)*

Avalanche (AVAX)

Polkadot (DOT)*

Rocket Pool (RPL)*

Polygon (POL)*

Oasis Network (ROSE)

Cardano (ADA)*

Evmos (EVMOS)*

Total earned from blockchain infrastructure staking activities through NodeOps

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

assets earned from block-building through Builder+

Schedule of Crypto Assets Earned From

For the Three Months Ended March 31,

Token Rewards

Revenue ($USD)

Token Rewards

Revenue ($USD)

Ethereum (ETH)

BNB Chain (BNB)

Total earned from block-building through Builder+

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employee salaries dedicated to node maintenance and support.

Additionally, the cost of revenues encompasses Validator Payments made from

our Builder to Validators as well as fees paid to third parties for their assistance in software maintenance and node operations.

costs directly related to the production of revenues are collectively termed ‘Blockchain infrastructure expenses’ in the

consolidated statements of operations.

following table further details the costs of revenues for the three months ended March 31, 2025 and 2024.

Additionally,

for Ethereum block building, cost of revenues includes Validator Payments made by the Company’s Builder to Validators as compensation

for proposing constructed blocks.

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

finalized on-chain.

Binance Smart Chain (BSC) block building, although the Builder does not receive the gas fees from the bundled transactions included

in a finalized block, it must still compete for inclusion by proposing an additional bid, structured as a

self-transaction, that specifies extra gas fees intended to incentivize the Validator to select its block.

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

These Builder-specified bids are separate

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

block inclusion.

The Company records these Builder-specified bid payments as cost of revenues, as they are a direct cost of

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

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

or other operational support.

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

the consolidated statements of operations.

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

Schedule of Costs of Revenues

For the Three Months Ended

Cost of staking revenues

Cost of Builder revenues

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Cost of staking revenues (NodeOps)

Cost of block-building revenues (Builder+)

Total cost of revenues

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Depreciation and

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

Long-lived assets are reviewed for impairment

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

amortization are recorded using the straight-line method over the respective useful lives of the assets ranging from three 3 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 consolidated financial statements have been prepared in conformity with U.S.

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such interest or penalties have been incurred.

Company accounts for the issuance of Common Stock purchase warrants issued in connection with the equity offerings in accordance with

the provisions of ASC 815, Derivatives and Hedging .

The Company classifies as equity any contracts that (i) require physical settlement

or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement

or net-share settlement).

The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including

a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives

the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

Under ASC 815, registered Common Stock warrants that require the issuance of registered shares upon exercise and do not expressly preclude

an implied right to cash settlement are accounted for as derivative liabilities.

The Company classifies these derivative warrant liabilities

on the balance sheets as a current liability.

Company assessed the classification of Common Stock purchase warrants as of the date of each offering and determined that such instruments

originally met the criteria for equity classification;

however, as a result of the Company no longer being in control of whether the

warrants may be cash settled, the instruments no longer qualify for equity classification.

Accordingly, the Company classified the warrants

as a liability at their fair value and adjusts the instruments to fair value at each reporting period.

This liability is subject to re-measurement

at each balance sheet date until the warrants are exercised or expired, and any change in fair value is recognized as “change in

the fair value of warrant liabilities” in the consolidated statements of operations.

The fair value of the warrants has been estimated

using a Black-Scholes valuation model (see Note 5 - Fair Value of Financial Assets and Liabilities ).

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

Warrants are evaluated for liability or equity classification at the time of issuance based on the specific terms of the arrangement

and settlement features.

Liability-Classified

are classified as liabilities when they:

(i) require net cash settlement (including upon occurrence of an event outside the Company’s

control), or (ii)provide the counterparty with a choice of cash or share settlement, or (iii) require the issuance of registered shares

and do not explicitly preclude a right to cash settlement.

accordance with ASC 815-40, these instruments are measured at fair value upon issuance and at each subsequent reporting period, with

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

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

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

Company estimates the fair value of these warrants using a Black-Scholes option pricing model, with key inputs including the Company’s

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

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

Equity-Classified

Company also issues warrants that qualify for equity classification under ASC 815-40.

Warrants are classified in equity when they:

require physical or net-share settlement, and (ii) do not include terms that could require cash settlement outside the control of the

Company, and (iii) do not include contingent provisions or other features that would cause the instruments to be classified as liabilities.

equity-classified warrants, the Company estimates the grant-date fair value using a Black-Scholes option pricing model.

The fair value

is recognized in additional paid-in capital (APIC) at the time of issuance and is not subsequently remeasured.

If the warrants are issued

in connection with a financing transaction (e.g., convertible notes), the fair value is allocated to APIC and, when applicable, also

recorded as a debt discount in accordance with ASC 470-20 and amortized over the term of the related debt instrument using the effective

interest method.

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

These instruments

are not included in the fair value measurements disclosure under ASC 820, as they are not remeasured on a recurring basis.

Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation .

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

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

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

These options often vest over

a one-year period.

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

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

These options

generally vest over a one-year period.

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

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Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility.

options granted prior to January 1, 2025, historical volatility was based on the most recent volatility of the stock price over a period equivalent

granted prior to January 1, 2025, historical volatility was based on the most recent volatility of the stock price over a period equivalent

to the expected term of the option.

For options granted on or after January 1, 2025, historical volatility is

determined using a two-year lookback period.

Management selected this approach to better reflect the Company’s current market

conditions and exclude periods of non-representative volatility associated with significant changes in the Company’s business,

market conditions, and capital structure.

The two-year lookback period balances capturing industry and market cycles with avoiding

outdated and non-representative data.

For options granted on or after January 1, 2025, historical volatility is determined using a two-year

lookback period.

Management selected this approach to better reflect the Company’s current market conditions and exclude periods

of non-representative volatility associated with significant changes in the Company’s business, market conditions, and capital

The two-year lookback period balances capturing industry and market cycles with avoiding outdated and non-representative data.

Interest Rate – The risk-free interest rate is based on the U.S.

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as of the valuation dates

Notes Payable

notes are accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options .

Upon issuance, the Company evaluates

embedded features and freestanding instruments for separate accounting.

If applicable, proceeds are allocated between the debt host and

any freestanding equity-classified instruments, such as warrants, using a relative fair value method.

Issuance costs and any original

issue discount are recorded as a reduction to the carrying amount of the debt and amortized over the term of the notes using the effective

interest method.

Interest expense includes both cash interest and amortization of debt discounts.

Lending Arrangements

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

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

amount, net of repayments.

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

DeFi Protocol.”

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

as interest-bearing collateral.

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

transfer while borrowings remain outstanding.

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

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

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

Fair value measurement of the collateralized ETH

follows the guidance in ASC 820.

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

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

consolidated statements of operations.

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

realized or earned under the terms of the DeFi protocol.

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Advertising and marketing expenses amounted to approximately $ 23,000

and $ 58,000 for the three months ended March 31, 2025 and 2024, respectively.

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

ended June 30, 2025 and 2024, respectively.

Income (Loss) per Share

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common shares outstanding during the period.

Diluted earnings per share is computed using the weighted average number of common shares

and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of the Company’s restricted

stock units, options and warrants.

Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and warrants

from the calculation of net loss per share if their effect would be anti-dilutive.

the three months ended March 31, 2025, diluted loss per share excludes all potential common shares, including restricted stock units,

options, warrants, and other convertible instruments, as their inclusion would be anti-dilutive due to the net loss reported for the

the three months ended March 31, 2024, the Company reported net income.

As a result, diluted net income per share included potential

common shares that were dilutive during the period.

following financial instruments were excluded from the calculation of diluted loss per share for the three months ended March 31,

2024, as their effect was anti-dilutive:

Diluted earnings per share is computed using the weighted average number of common

shares and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of the

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

In periods when the Company reports

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

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

their inclusion would be anti-dilutive.

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

therefore, all potentially

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

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

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

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

was anti-dilutive:

of Earnings Per Share Anti-diluted

March 31, 2025

As of June 30,

Warrants to purchase common stock

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Non-vested restricted common stock

Shares issuable upon conversion of convertible notes

Anti-dilutive securities

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Financial Statements properly reflect the change.

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

2023-08”), which is intended to improve the accounting for and disclosure of crypto assets.

The ASU requires entities to subsequently

measure crypto assets that meet specific criteria at fair value, with changes recognized in net income each reporting period.

also requires specific presentation of cash receipts arising from crypto assets that are received as noncash consideration in the

ordinary course of business and are converted nearly immediately into cash.

The amendments in this update are effective for all entities

for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU No.

2023-08 effective January

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

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

Improvements to Income Tax Disclosures , to enhance the

transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 provide improvements primarily related

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

The Company is required to disclose

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

income (loss) by the applicable statutory tax rate.

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

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

The amendments in ASU 2023-09

are effective January 1, 2025.

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

for issuance.

The Company is currently evaluating the impacts of ASU 2023-09 on its financial statements.

Improvements to Income Tax Disclosures , to enhance the transparency

and decision usefulness of income tax disclosures.

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

and income taxes paid information included in income tax disclosures.

The Company is required to disclose additional information regarding

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

statutory tax rate.

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

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

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

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

The Company is currently

evaluating the impacts of ASU 2023-09 on its financial statements.

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

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4 – Crypto Assets

following table presents the Company’s crypto assets held as of March 31, 2025:

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

Schedule of Crypto Assets Held

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Avalanche (AVAX)

Axie Infinity (AXS)

NEAR Protocol (NEAR)

BNB Chain (BNB)

Rocket Pool (RPL)

holdings include 10,460

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

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

of approximately $ 9,704,000 .

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

5 – Fair Value of Financial Assets and Liabilities

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

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

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

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

Fair Value Measured at March 31, 2025

Fair Value Measured at June 30, 2025

Balance at June 30,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

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Fair Value Measured at December 31, 2024

Balance at December 31,

Quoted prices in active markets

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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, 2025 and 2024.

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

3 Valuation Techniques

3 financial assets consist of private equity investments for which there is no current public market for these securities such that

the determination of fair value requires significant judgment or estimation.

As of March 31, 2025 and December 31, 2024, the

Company’s Level 3 investments were carried at the original cost of the investments, with a value of $ 350,000 and $ 100,000 , respectively.

The Company has elected to apply the measurement alternative under ASC 321, Investments—Equity Securities , for these

3 financial assets consist of private equity investments for which there is no current public market for these securities such that the

determination of fair value requires significant judgment or estimation.

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

Level 3 investments were carried at the original cost of the investments, with a value of $ 350,000 and $ 100,000 , respectively.

has elected to apply the measurement alternative under ASC 321, Investments—Equity Securities , for these investments.

3 financial liabilities consist of the warrant liabilities for which there is no current market for these securities such that the determination

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Warrants require, at the option of the holder, a net-cash settlement following certain fundamental transactions (as defined in the Warrants).

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

were initially classified in equity.

As of March 31, 2025, the Company no longer maintained control of certain fundamental transactions

because it did not hold a majority of shareholder voting power.

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

transaction occurs which is outside the Company’s control.

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

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

a majority of shareholder voting power.

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

occurs which is outside the Company’s control.

Accordingly, the Warrants are classified as liabilities.

have been recorded at their fair value using the Black-Scholes valuation model, and will be recorded at their respective fair value at

each subsequent balance sheet date.

This model incorporates transaction details such as the Company’s stock price, contractual

terms, maturity, risk-free rates, as well as volatility.

The Warrants have been

recorded at their fair value using the Black-Scholes valuation model, and will be recorded at their respective fair value at each subsequent

balance sheet date.

This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity,

risk-free rates, as well as volatility.

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

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

warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of March 31, 2025

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

and December 31, 2024, is as follows:

Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

March 31, 2025

June 30, 2025

December 31, 2024

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

for the three months ended March 31, 2025 and 2024, that are measured at fair value on a recurring basis:

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

Schedule of Changes in Fair Value and Other Adjustments of Warrants

Fair Value of Level 3 Financial Assets

Fair Value of

Level 3 Financial

Beginning balance

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6 – Stockholders’ Equity

of March 31, 2025, the Company had 975,000,000

shares of common stock, $ 0.001 par value, authorized, of which

20,206,880 shares

were issued and outstanding.

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

and outstanding.

At-The-Market

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Initially, the aggregate offering price of shares issuable under

the ATM Agreement was $ 98,767,500 (the “Shares”).

October 4, 2024, the Company’s new Form S-3 registration statement became effective, increasing the total amount of securities

that may be offered and sold under the prospectus to $ 250,000,000 .

Company shall pay H.C.

Wainwright a commission equal to 3.0 %

of the aggregate gross proceeds from each sale of Shares under the ATM Agreement.

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

the ATM Agreement was $ 98,767,500 , registered pursuant to the Company’s Form S-3 registration statement that became effective in

September 2021.

October 4, 2024, a new Form S-3 registration statement became effective, increasing the total amount of securities that may be offered

and sold under the base prospectus to $ 250,000,000 .

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

Wainwright in connection with a new Form S-3

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

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

The New Registration Statement was approved by the Securities and Exchange Commission (“SEC”) and declared effective on August 1, 2025.

to the July 2025 amendment, H.C.

Wainwright will continue to act as the Company’s exclusive sales agent for any at-the-market offerings

through November 12, 2027.

Under the amended terms, the Company shall pay H.C.

Wainwright a commission of up to 3.0 %.

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

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

total 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.

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

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

Based Payments

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

For the three months ended March 31, 2025, the Company issued 25,002 shares of common stock with a grant date fair value of

approximately $ 38,000 to independent directors.

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

$ 75,000 to independent directors.

Bonus Payments

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

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

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

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The Series V:

(i) is non-convertible (subject to potential conversion rights, as described below), (ii) has a 20% liquidation

preference over the shares of common stock, (iii) is non-voting, and (iv) has certain rights to dividends and distributions (at the discretion

of the Board of Directors) .

(i) is non-convertible (subject to potential conversion rights, as described below), (ii)

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

(at the discretion of the Board of Directors).

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

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

As of March 31, 2025, the Board has

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

the three months ended March 31, 2025, the Company issued 1,020,834

restricted shares of Series V in connection with the vesting of employee restricted stock units (“RSUs”).

restricted shares remain subject to forfeiture if specified market capitalization thresholds are not achieved within the applicable

performance measurement period.

Of this amount, 166,668

shares are also subject to time-based vesting conditions requiring continued service over the vesting period.

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

convert any Series V shares.

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

restricted stock units (“RSUs”).

These restricted shares remain subject to forfeiture if specified market capitalization

thresholds are not achieved within the applicable performance measurement period.

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

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

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

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

of March 31, 2025, a total of 971,507 restricted shares of Series V Preferred Stock were issued and outstanding.

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

Of these, 48,967 shares

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

on March 31, 2021 and amended on June 13, 2022.

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

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

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

summary of stock option activity under the Company’s 2021 Equity Incentive Plan for the three months ended March 31, 2025 and

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

is presented below:

Summary of Option Activity

Average Exercise

Average Remaining Contractual Life (in

outstanding as of December 31, 2024

options granted

outstanding as of March 31, 2025

vested and exercisable as of March 31, 2025

Average Exercise

Average Remaining Contractual Life (in

as of December 31, 2023

options granted

options forfeited

as of March 31 ,2024

vested and exercisable as of March 31, 2024

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

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining Contractual Life (in years)

Options outstanding as of December 31, 2024

Employee options granted

Employee options expired

Employee options forfeited

Options outstanding as of June 30, 2025

Options vested and exercisable as of June 30, 2025

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining Contractual Life (in years)

Options outstanding as of December 31, 2023

Employee options granted

Employee options expired

Options outstanding as of June 30, 2024

Options vested and exercisable as of June 30, 2024

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

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

Weighted-Average Assumptions Used to Estimate Fair Value

the Three Months Ended March 31,

stock price volatility

rate of interest

For the Six Months Ended June 30,

Exercise price

Expected stock price volatility

Risk-free rate of interest

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

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Market Cap Vesting Thresholds

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

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

consideration.

any tranche in which the market capitalization condition is achieved, the RSUs remain subject to a time-based vesting schedule, with 20 %

20 % of eligible RSUs vesting annually over five years , beginning on each December 31, 2025 through 2029, provided the grantee remains

in continuous service through each vesting date.

of the eligible RSUs in such tranche vesting annually over five

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

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

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

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

performance conditions and applicable time-based vesting schedules, which range from one 1

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

of LTI RSUs and Restricted Shares of Common Stock

February 3, 2025, upon the voluntary resignation of the Company’s Chief Technology Officer, 120,137

unvested LTI RSUs and 129,327

February 3, 2025, upon the voluntary resignation of the Company’s Chief Technology Officer, 120,137 unvested LTI RSUs and 129,327

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

In accordance with ASC 718, Compensation—Stock Compensation , the Company reversed

approximately $ 262,000

of previously recognized stock-based compensation expense during the three months ended March 31, 2025.

No further expense will be

recognized for these forfeited awards.

In accordance with

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

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

No further expense will be recognized for these forfeited awards.

Activity Summary

following table summarizes RSU activity under the 2021 Plan for the three months ended March 31, 2025:

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

Summary of Restricted Stock

Average Grant

Date Fair Value

Nonvested as of December 31, 2024

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( 1,170,834 )

Nonvested as of March 31, 2025

Nonvested as of June 30, 2025

Shares of Common Stock Activity Summary

following table summarizes restricted Common Stock activity under the 2021 Plan for the three months ended March 31, 2025:

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

of Restricted Stock

Restricted Shares

of Common Stock

Outstanding and nonvested as of December 31, 2024

Converted from restricted stock units

Outstanding and nonvested as of March 31, 2025

Outstanding and nonvested as of June 30, 2025

Based Compensation

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

compensation expense for the three months ended March 31, 2025 and 2024 was as follows:

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

Schedule of Stock-based Compensation Expense

For the Three Months Ended

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Employee stock option awards

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Purchase Warrants

following is a summary of warrant activity for the three months ended March 31, 2025:

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

Summary of Warrant Activity

Outstanding as of December 31, 2024

Expiration of warrants

Outstanding as of March 31, 2025

Issuance of warrants in connection with convertible note

Outstanding as of June 30, 2025

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

notes were classified as equity.

Payable – Defi Protocol (Aave)

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

facilitates loans collateralized by crypto assets.

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

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

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

or liquidated in accordance with Aave protocol terms.

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

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

The health factor is calculated based on the value

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

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

Summary of Defi Protocol Lending Activity

For the Six Months Ended

June 30, 2025

Beginning balance – January 1, 2025

Proceeds from DeFi borrowings

Repayments of principal

( 1,447,000 )

Ending balance – June 30, 2025

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

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

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

accounting treatment and classification of these assets.

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

utilization and liquidity conditions.

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

fluctuate based on protocol-level market conditions.

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

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

The Company also earned approximately $ 1,000 of interest

income on the ETH collateral during the same period.

Company’s Board of Directors has approved the use of Aave for borrowing activities, subject to a maximum loan-to-value (LTV) ratio

and debt-to-asset (DTA) coverage limitation of 40 % at the time of borrowing.

The Board also approved temporary exceedances of these limitations

for operational purposes, provided such exceedances do not exceed two days.

Notes Payable

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

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

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

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

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

price of $ 2.75 per share.

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

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

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

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

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

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

The Company paid

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

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

interest method over the term of the Notes.

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

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

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

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

connection with the transaction, Mr.

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

in the Offering.

Additionally, a trust of which Mr.

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

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

Allen’s investment in the Offering.

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

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

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

8 – Accrued Expenses

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of Accrued Expenses

March 31, 2025

June 30, 2025

December 31, 2024

Accrued compensation

Accrued interest

Accounts payable and accrued expenses

Accrued Expenses

compensation includes performance bonus accruals of approximately $ 309,000

and $ 3,907,000

as of March 31, 2025 and December 31, 2024, respectively.

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

respectively.

The significant decrease in bonus accruals reflects bonus payments made during the first quarter of 2025.

4 unchanged sentences

up to 100 % of employee contributions.

For the three months ended March 31, 2025 and 2024, the Company made contributions to the 401(k)

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

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

6 unchanged sentences

of liabilities in the normal course of business.

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

of approximately $ 157,217,000

at March 31, 2025, and net cash used in operating activities of approximately $ 1,902,000

for the reporting period then ended.

The Company is implementing its business plan and generating revenue.

Company’s cash position and liquid crypto assets as of May 13, 2025, management has determined that these resources are

sufficient to support its daily operations over the next twelve months.

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

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

period then ended.

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

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

infrastructure operations.

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

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

11 – Segment Information

7 unchanged sentences

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

three months ended March 31, 2025 and 2024:

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

of Segment Revenue and Gross Profit (loss)

For the Three Months Ended March 31,

For the Three Months Ended

June 30, 2025

For the Six Months Ended

June 30, 2025

Revenues from blockchain infrastructure operations

6 unchanged sentences

$ ( 330,652 )

For the Three Months Ended March 31,

$ ( 502,901 )

For the Three Months Ended

June 30, 2024

For the Six Months Ended

June 30, 2024

Revenues from blockchain infrastructure operations

5 unchanged sentences

Gross profit (loss)

$ ( 121,220 )

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

For the Three Months Ended March 31,

For the Three Months Ended

For the Six Months Ended

Total operating expenses

1 unchanged sentence

( 1,319,374 )

( 7,530,370 )

( 2,456,216 )

Other income (expense)

( 5,800,839 )

( 5,896,136 )

Net income (loss)

$ ( 6,727,869 )

$ ( 13,387,165 )

12 – Subsequent Events

2 unchanged sentences

or disclosure in the consolidated financial statements other than disclosed.

ATM Financing

the period from April 1, 2025 to May 13, 2025, the Company sold a total of 888,510 shares of Common Stock under the ATM Agreement

for aggregate total gross proceeds of approximately $ 1,440,000 at an average selling price of $ 1.62 per share, resulting in net proceeds

of approximately $ 1,390,000 after deducting commissions and other transaction costs.

AAVE Loan Payable

on April 23, 2025, the Company borrowed $ 320,000

USDT from AAVE, a decentralized finance lending protocol.

(i) is collateralized by 446 Ethereum (ETH) with an approximate

value of $ 780,000

based on an ETH price of approximately $ 1,750

(subject to market volatility), and (ii) has no fixed maturity date but is subject to liquidations or partial liquidations if the

health factor (“HF”) falls below one.

The Company faces potential liquidation risk if the value of ETH decreases

significantly relative to the loan amount.

The HF is calculated by taking the total value of the ETH collateral, multiplying it by

its liquidation threshold (approximately 80 %

for ETH), and then dividing that result by the total value of the borrowed USDT, the HF of the Company’s loan was

approximately two upon initiation.

interest rate on the loan is variable and determined by AAVE’s smart contract based on market conditions, with rates published

The interest rate at the time of the loans origination was approximately 3.9 % per annum, subject to variation in accordance

with AAVE’s protocol.

The proceeds from the loan were used to acquire additional ETH.

The Company’s Board of Directors authorized

management to borrow up to $ 500,000 in USDT utilizing AAVE with a loan to value of no more than 40 % at the time of borrowing.

Convertible Notes Payable

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

pursuant to which the Company issued 5% Original Issue Discount Senior Secured Convertible Notes (the “Notes”) in the aggregate

principal amount of $ 7,810,526 for a purchase price of $ 7,420,000 .

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

to issue to the Investors 1,901,916 five-year warrants to purchase shares of the Company’s common stock at an exercise price of

$ 2.75 per share.

(i) are convertible

into shares of the Company’s common stock at a conversion price of $5.85 per share, (ii) mature 24 months from the closing date,

(iii) accrue an interest rate of 6% per annum, which may be paid on a quarterly basis in cash or freely tradable shares, (iv) contain

a 4.99% beneficial ownership conversion blocker, and (v) are secured by all of the Company’s assets as collateral, except for Ethereum

deposited as collateral for USDT borrowings on AAVE and certain other exclusions.

Charles Allen, the Company’s

Chairman of the Board and Chief Executive Officer, invested $ 95,000 in the Offering.

Additionally, a trust of which Mr.

Allen is a beneficiary

but is not the settlor or trustee invested $ 200,000 in the Offering.

An independent committee of the Company’s Board of Directors

Allen’s investment in the Offering.

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

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

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

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

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

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

As of August 12, 2025, the Company had

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

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

on that date.

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

liquidity and market demand.

ETH collateral posted also accrues variable interest.

These rates are published and updated in

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

Notes Payable

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

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

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

In connection with

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

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

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

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

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

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

trust of which Mr.

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

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

As part of the July

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

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

Option and Warrant

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

stock options and warrants.

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

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

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

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

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

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

No cash proceeds were received in connection with these exercises.

Vesting of Certain Long-Term

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

awards had been satisfied.

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

excess of $100 million for 30 consecutive days.

As a result, 318,055

shares of Common Stock and 318,055

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

equity, became fully vested in accordance with their terms.

These shares, previously classified as restricted Common Stock and

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

Grant of Stock Options for Achievement of Performance

On August 7, 2025, upon the recommendation

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

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

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

Specifically, the Company maintained

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

$75 million) of the liquidity milestone.

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

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

In accordance with

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

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

The Company’s

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

respectively.

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

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

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