BTCS Inc. 10-Q

ITEM 1 Financial Statements BTCS Inc. Condensed Consolidated Balance Sheets June 30, December 31, 2025 2024 (Unaudited) Assets: Current assets: Cash and cash equivalents $ 639,189 $ 1,977,778 Stablecoins 2,850 39,545 Crypto assets 10,837,423 646,539 Staked crypto assets 28,588,212 35,410,144 Receivable for capital shares sold 156,299 - Prepaid expenses 228,218 63,934 Total current assets 40,452,191 38,137,940 Other assets: Investments, at value (Cost $ 350,000 ) 350,000 100,000 Property and equipment, net 7,367 7,449 Total other assets 357,367 107,449 Total Assets $ 40,809,558 $ 38,245,389 Liabilities and Stockholders’ Equity: Current liabilities: Accounts payable and accrued expenses $ 102,607 $ 70,444 Accrued compensation 621,017 3,907,091 Accrued interest 6,621 - Loan payable - DeFi protocol 4,000,000 - Warrant liabilities 208,050 267,900 Total current liabilities 4,938,295 4,245,435 Non-current liabilities: Convertible notes payable, net 4,801,098 - Total non-current liabilities 4,801,098 - Total liabilities 9,739,393 4,245,435 Stockholders’ equity: Preferred Stock, $ 0.001 par value per share; 20,000,000 shares authorized, of which: Series V Preferred Stock; 16,004,738 and 15,033,231 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 2,818,271 2,646,314 Preferred stock value 2,818,271 2,646,314 Common Stock, $ 0.001 par value per share; 975,000,000 shares authorized; 21,968,566 and 18,717,743 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 21,969 18,718 Additional paid-in capital 181,565,367 171,283,199 Accumulated deficit ( 153,335,442 ) ( 139,948,277 ) Total stockholders’ equity 31,070,165 33,999,954 Total Liabilities and Stockholders’ Equity $ 40,809,558 $ 38,245,389 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 BTCS Inc. Condensed Consolidated Statements of Operations (Unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, 2025 2024 2025 2024 Revenues Blockchain infrastructure revenues $ 2,772,198 $ 561,192 $ 4,461,133 $ 1,012,578 Total revenues 2,772,198 561,192 4,461,133 1,012,578 Cost of revenues Blockchain infrastructure costs 2,853,133 168,848 4,421,792 329,473 Gross profit ( 80,935 ) 392,344 39,341 683,105 Operating expenses: General and administrative 659,645 538,956 1,218,033 $ 1,026,555 Compensation and related expenses 793,400 875,491 1,481,602 1,331,270 Research and development 193,543 163,777 402,794 310,326 Marketing 22,861 28,477 268,033 86,079 Realized (gains) losses on crypto asset transactions 2,777,620 ( 287,327 ) 4,159,908 ( 298,014 ) Total operating expenses 4,447,069 1,319,374 7,530,370 2,456,216 Other income (expenses): Interest income 3,569 - 3,569 - Interest expense ( 221,894 ) - ( 221,894 ) - Change in unrealized appreciation (depreciation) of crypto assets 8,793,161 ( 5,943,339 ) ( 5,737,661 ) 7,159,328 Change in fair value of warrant liabilities ( 165,300 ) 142,500 59,850 142,500 Total other income (expenses) 8,409,536 ( 5,800,839 ) ( 5,896,136 ) 7,301,828 Net income (loss) $ 3,881,532 $ ( 6,727,869 ) $ ( 13,387,165 ) $ 5,528,717 Net income (loss) per share attributable to common stockholders Basic $ 0.18 $ ( 0.43 ) $ ( 0.65 ) $ 0.35 Diluted $ 0.14 $ ( 0.43 ) $ ( 0.65 ) $ 0.28 Weighted-average shares of common stock used to compute net income per share: Basic 21,259,682 15,758,157 20,616,935 15,724,917 Diluted 27,938,660 15,758,157 20,616,935 19,447,348 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 BTCS Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) For the Six Months Ended June 30, 2025 Series V Additional Total Preferred Stock Common Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance at December 31, 2024 15,033,231 (1) $ 2,646,314 18,717,743 $ 18,718 $ 171,283,199 $ ( 139,948,277 ) $ 33,999,954 Issuance of common stock, net of offering cost / At-the-market offering - - 1,871,889 1,872 4,077,213 - 4,079,085 Issuance of warrants in connection with convertible note - - - - 2,533,311 - 2,533,311 Stock-based compensation 1,020,834 180,688 1,508,261 1,508 3,924,842 - 4,107,038 Forfeiture of stock-based awards ( 49,327 ) ( 8,731 ) ( 129,327 ) ( 129 ) ( 253,198 ) - ( 262,058 ) Net income (loss) - - - - - ( 13,387,165 ) ( 13,387,165 ) Balance at June 30, 2025 16,004,738 (1) $ 2,818,271 21,968,566 (2) $ 21,969 $ 181,565,367 $ ( 153,335,442 ) $ 31,070,165 (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 6 – 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. See Note 6 – Stockholders’ Equity (Deficit) for further details. For the Six Months Ended June 30, 2024 Series V Additional Total Preferred Stock Common Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance at December 31, 2023 14,567,829 $ 2,563,938 15,320,281 $ 15,322 $ 162,263,634 $ ( 138,677,103 ) $ 26,165,791 Issuance of common stock, net of offering cost / At-the-market offering - - 163,831 163 240,142 - 240,305 Stock-based compensation - - 410,915 410 1,177,674 - 1,178,084 Net income (loss) - - - - - 5,528,717 5,528,717 Balance at June 30, 2024 14,567,829 $ 2,563,938 15,895,027 $ 15,895 $ 163,681,450 $ ( 133,148,386 ) $ 33,112,897 6 For the Three Months Ended June 30, 2025 Series V Additional Total Preferred Stock Common Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance at March 31, 2025 16,004,738 (1) $ 2,818,271 20,206,880 $ 20,207 $ 174,937,017 $ ( 157,216,974 ) $ 20,558,521 Issuance of common stock, net of offering cost / At-the-market offering - - 1,744,640 1,745 3,848,384 - 3,850,129 Issuance of warrants in connection with convertible note - - - - 2,533,311 - 2,533,311 Stock-based compensation - - 17,046 17 246,655 - 246,672 Net income (loss) - - - - - 3,881,532 3,881,532 Balance at June 30, 2025 16,004,738 (1) $ 2,818,271 21,968,566 (2) $ 21,969 $ 181,565,367 $ ( 153,335,442 ) $ 31,070,165 (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 6 – 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. See Note 6 – Stockholders’ Equity (Deficit) for further details. For the Three Months Ended June 30, 2024 Series V Additional Total Preferred Stock Common Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance at March 31, 2024 14,567,829 $ 2,563,938 15,705,415 $ 15,707 $ 163,141,291 $ ( 126,420,517 ) $ 39,300,419 Balance 14,567,829 $ 2,563,938 15,705,415 $ 15,707 $ 163,141,291 $ ( 126,420,517 ) $ 39,300,419 Issuance of common stock, net of offering cost / At-the-market offering - - 163,831 163 240,142 - 240,305 Stock-based compensation - - 25,781 25 300,017 - 300,042 Net income (loss) - - - - - ( 6,727,869 ) ( 6,727,869 ) Balance at June 30, 2024 14,567,829 $ 2,563,938 15,895,027 $ 15,895 $ 163,681,450 $ ( 133,148,386 ) $ 33,112,897 Balance 14,567,829 $ 2,563,938 15,895,027 $ 15,895 $ 163,681,450 $ ( 133,148,386 ) $ 33,112,897 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 BTCS Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2025 2024 Net cash flows used in operating activities: Net income (loss) $ ( 13,387,165 ) $ 5,528,717 Adjustments to reconcile net income to net cash used in operating activities: Depreciation expense 1,778 2,990 Stock-based compensation 3,844,980 1,178,084 Blockchain infrastructure revenue ( 4,461,133 ) ( 1,012,578 ) Builder payments (non-cash) 4,301,615 158,112 Blockchain network fees (non-cash) 6,907 - Change in fair value of warrant liabilities ( 59,850 ) ( 142,500 ) Amortization on debt discount and issuance costs 150,963 - Realized losses on crypto assets transactions 4,159,908 ( 298,014 ) Change in unrealized (appreciation) depreciation of crypto assets 5,737,661 ( 7,159,328 ) Changes in operating assets and liabilities: Stablecoins 36,695 6,247 Prepaid expenses and other current assets ( 164,284 ) ( 118,458 ) Receivable for capital shares sold ( 156,299 ) 291,440 Accounts payable and accrued expenses 32,163 75,792 Accrued compensation ( 3,286,074 ) ( 203,603 ) Accrued interest 6,621 - 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 ) ( 19,212 ) Sale of productive crypto assets 1,065,207 550,361 Purchase of investments ( 250,000 ) - Purchase of property and equipment ( 3,446 ) - Sale of property and equipment 1,750 - Net cash provided by (used in) investing activities ( 13,365,606 ) 531,149 Cash flow from financing activities: Net proceeds from issuance common stock/ At-the-market offering 4,079,085 240,305 Proceeds from issuance of convertible notes, net 7,306,000 - Proceeds from Defi borrowing 5,447,000 - Payments to Defi borrowing ( 1,447,000 ) - Payments of debt issuance costs ( 122,554 ) - Net cash provided by financing activities 15,262,531 240,305 Net (decrease)/increase in cash ( 1,338,589 ) ( 921,645 ) Cash, beginning of period 1,977,778 1,458,327 Cash, end of period $ 639,189 $ 536,682 Supplemental disclosure of non-cash financing and investing activities: Series V Preferred Stock Distribution $ 180,688 $ - Cash paid for interest $ 64,310 $ - Non-cash discount on convertible notes $ 504,526 $ - The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 8 BTCS Inc. Notes to Unaudited Condensed Consolidated Financial Statements Note 1 - Business Organization and Nature of Operations BTCS Inc. (“BTCS” or the “Company”), short for Blockchain Technology Consensus Solutions, is a Nevada corporation listed on 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. BTCS 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. BTCS’s 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 dilution. During 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. In 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. The 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. Note 2 - Basis of Presentation Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but in the opinion of the Company’s management, reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results for the three months ended June 30, 2025 are not necessarily indicative of results for the full year ending December 31, 2025. The unaudited condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2024. Reclassifications Certain prior period amounts have been reclassified in order to conform with the current period presentation in the unaudited condensed consolidated financial statements and accompanying notes. The reclassifications did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures. The impact on any prior period disclosures was immaterial. 9 Note 3 - Summary of Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2024 Annual Report on the Company’s Form 10-K filed with the Securities and Exchange Commission. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. The Company maintains cash and cash equivalent balances at financial institutions that are insured by the FDIC. As of June 30, 2025 and December 31, 2024, the Company had approximately $ 639,000 and $ 1,978,000 in cash. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 . As of 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. Stablecoins The 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. dollar. 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. Crypto Assets The Company’s crypto assets primarily consist of Ethereum and other crypto assets held in non-custodial wallets. Fair Value Measurement The 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. 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. Kraken serves as the principal market for the Company’s crypto assets, being the Company’s primary cryptocurrency exchange for both purchases and sales. Coinbase is designated as the secondary principal market. This determination results from a comprehensive evaluation considering various factors, including compliance, trading activity, and price stability. The fair value of crypto assets is primarily determined based on pricing data obtained from Kraken, the Company’s principal market. In the absence of Kraken data, pricing from Coinbase serves as a secondary source. While Kraken is designated as the primary exchange, the Company retains flexibility to conduct cryptocurrency transactions on other exchanges where it maintains accounts. This flexibility allows the Company to adapt to changing market conditions and explore alternative platforms when necessary to ensure cost-effective execution and fair value measurement using the most advantageous market. The selection of Kraken as the principal market reflects the Company’s commitment to informed decision-making and achieving the most accurate representation of fair value for its crypto assets. Regular reviews ensure alignment with the Company’s objectives and cryptocurrency market dynamics. 10 Accounting for Crypto Assets Fair Market Value Crypto assets are measured at their respective fair market values using the last close price of the day in the UTC time zone at each reporting period end on the balance sheets and classified as either ‘Staked Crypto Assets’ or ‘Crypto Assets’ to distinguish their nature within the respective balances. Staked crypto assets are presented as current assets if their lock-up periods are less than 12 months, and as long-term other assets if the lock-up extends beyond one year. The majority of our crypto assets are staked, typically with lock-up periods of less than 28 days, and are considered current assets in accordance with ASC 210-10-20, Balance Sheet , due to the Company’s ability to sell them in a liquid marketplace, as we have a reasonable expectation that they will be realized in cash or sold or consumed during the normal operating cycle of our business to support operations when needed Cost Basis Effective January 1, 2025, the Company enhanced its accounting systems and processes related to the receipt and valuation of crypto assets. As a result of these enhancements, the Company updated its accounting policy for determining the cost basis of crypto assets received. The 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. Prior 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 Time) time zone on the date of receipt. The change has been applied prospectively and did not have a material impact on the Company’s financial statements. Cost Relief in Determining Realized Gains and Losses In conjunction with ongoing system and process enhancements, the Company updated its method for determining the cost basis of crypto assets used in computing realized gains and losses. Effective January 1, 2025, the Company adopted the Last-In, First-Out (“LIFO”) method for determining the cost basis of crypto assets disposed of. This method assumes that the most recently acquired assets are sold or used first and replaces the Company’s previous use of the specific identification method, which tracked the actual cost of each individual asset sold. The Company determined that the change in accounting principle is preferable as it better aligns with the Company’s operational systems and financial reporting objectives. The change has been applied prospectively beginning January 1, 2025, as retrospective application was deemed impracticable due to the nature of prior lot-level selection processes under the specific identification method. Realized gains (losses) on sale of crypto assets are included in other income (expenses) in the consolidated statements of operations. The Company 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. The Company does not believe the change materially impacts comparability of results. While the realized loss for the three and six months ended June 30, 2025, reflects application of the new LIFO method, it is not practicable to quantify the exact impact of the change as compared to the prior method, given the subjective lot selection involved in specific identification. Based on this assessment, the Company does not believe the change has a material effect on the consolidated financial statements. Presentation of Crypto Assets in Financial Statements The classification of purchases and sales in the consolidated statements of cash flows is determined based on the nature of the crypto assets, which can be categorized as ‘productive’ (i.e. acquired for purposes of staking) or ‘non-productive’ (e.g., bitcoin). Acquisitions of non-productive crypto assets are treated as operating activities, while acquisitions of productive crypto assets are classified as investing activities in accordance with ASC 230-10-20, Investing activities . Productive crypto assets staked with lock-up periods of less than 12 months are listed as current assets in the ‘Staked Crypto Assets’ line item on the balance sheet. Staked crypto assets with lock-up periods exceeding 12 months are categorized as long-term other assets. Non-productive crypto assets are included in the ‘Crypto Assets’ line item on the balance sheet. 11 Crypto 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. In 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. Operating Segments The Company’s blockchain infrastructure operations include two primary revenue-generating activities: Ethereum block building (“Builder+”) and validator node operations (“NodeOps”). The Company’s Chief Operating Decision Maker (“CODM”) is comprised of several members of its executive management team, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), who are responsible for evaluating the Company’s financial performance, managing operations, and allocating capital and resources. The CODM regularly reviews discrete financial information related to Builder+ and NodeOps, assessing financial performance based on gross profit (loss), direct operating expenses, and key financial metrics. These financial reviews direct operational decisions and shape capital deployment strategies for each activity. While the CODM evaluates Builder+ and NodeOps separately, these activities share common economic characteristics, infrastructure, and operational oversight and are therefore aggregated into a single operating segment under ASC 280, Segment Reporting. Consistent with ASU 2023-07, the Company discloses significant segment expenses that are regularly provided to the CODM for decision-making purposes. See Note 11 – Segment Information for more information. Revenue Recognition The Company recognizes revenue under ASC 606 , Revenue from Contracts with Customers . The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the Company satisfies a performance obligation Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates revenue through 1) staking rewards generated from its blockchain infrastructure operations (NodeOps), and 2) gas fees earned from successful Ethereum block-building through Builder+. These revenues are collectively termed ‘Blockchain infrastructure revenues’ in the consolidated statements of operations. 12 The transaction consideration the Company receives - the crypto asset awards and gas fees - are a non-cash consideration, which the Company measures at fair value on the date received. Blockchain Infrastructure (NodeOps) The Company engages in network-based smart contracts by running its own crypto asset validator nodes as well as by staking (or “delegating”) crypto assets directly to both its own validator nodes and nodes run by third-party operators. Through these contracts, the Company provides crypto assets to stake to a node for the purpose of validating transactions and adding blocks to a respective blockchain network. The term of a smart contract can vary based on the rules of the respective blockchain and typically lasts from a few days to several weeks after it is cancelled (or “un-staked”) by the delegator and requires that the crypto assets staked remain locked up during the duration of the smart contract. In exchange for staking the crypto assets and validating transactions on blockchain networks, the Company is entitled to all of the fixed crypto asset award earned from the network when delegating to the Company’s own node and is entitled to a fractional share of the fixed crypto asset award a third-party node operator receives (less crypto asset transaction fees payable to the node operator, which are immaterial and are recorded as a deduction from revenue), for successfully validating or adding a block to the blockchain. The Company’s fractional share of awards received from delegating to a third-party validator node is proportionate to the crypto assets staked by the Company compared to the total crypto assets staked by all Delegators to that node at that time. On certain blockchain networks on which the Company operates a validator node, the Company earns a validator node fee (“Validator Fee”), determined as a node operator’s published percentage of the crypto asset rewards earned on crypto assets delegated to its node. Token rewards earned from staking, as well as tokens earned as Validator Fees, are calculated and distributed directly to BTCS digital wallets by the blockchain networks as part of their consensus mechanisms. The provision of validating blockchain transactions is an output of the Company’s ordinary activities. Each separate block creation or validation under a smart contract with a network represents a performance obligation. The satisfaction of the performance obligation for processing and validating blockchain transactions occurs at a point in time when confirmation is received from the network indicating that the validation is complete, and the awards are available for transfer. At that point, revenue is recognized. Block-Building (Builder+) The Company earns revenue by participating as a Builder on blockchain networks that have implemented a Proposer-Builder Separation (PBS) framework, including Ethereum and Binance Smart Chain (“BSC”). In these roles, the Company bundles and proposes transaction blocks for submission to network Validators (“block building”), and is compensated when its blocks are selected, proposed, and successfully finalized on the applicable network. Ethereum Block Building The Company participates in the Ethereum blockchain network by engaging in the construction of blocks containing strategically bundled transactions from the Ethereum mempool and from searchers who connect to the Company’s endpoint with the intent of the Company’s builder proposing their transactions. Revenue recognition for these activities, conducted through Builder+, entails the recognition of 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. 13 These gas fees are earned as a direct result of the Company’s fulfillment of its performance obligations, which include the construction of blocks by bundling transactions to maximize the value of the included fees and the proposal of that block by a Validator. Each constructed block under a smart contract with the Ethereum network signifies a distinct performance obligation. As part of the block construction and proposal process, the Company’s Builder purchases block space through a fixed non-negotiable fee paid to a Validator (a “Validator Payment”) embedded in each proposed block. The Validator Payment, predetermined by the Builder, is paid to Validators as compensation for selecting and proposing the Company’s block to the network for validation. The Validator Payment is intrinsically linked to the Company’s performance obligations and is disbursed in the block constructed by the Builder if our Builder’s block is both selected by a Validator and successfully proposed to, and finalized on, the Ethereum network; otherwise, our Validator Payment may be included in a subsequent block. The Validator Payment represents a direct and fixed pre-determined cost. The satisfaction of the performance obligation occurs at a point in time when the constructed block is both proposed by a Validator and successfully finalized on the Ethereum network. At this juncture, the Company has fulfilled its obligations, and the gas fees and tips associated with the transactions included in the block become available and are transferred to the Company’s digital wallet. The Company recognizes revenue, reflecting the fair value of the total gas fees and tips earned from the constructed block. Binance Smart Chain (BSC) Block Building The Company also operates as a Builder on Binance Smart Chain (BSC), which uses a Proof-of-Staked-Authority (“PoSA”) consensus and a distinct block-building and reward structure. The native token of BSC is BNB, which is used for both gas fees and transaction-based payments. Builders 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. The 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. Builder 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. 14 The following table summarizes the revenues earned from the Company’s operations for the three and six months ended June 30, 2025 and 2024. Schedule of Revenues Earned from Company’s Operations For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Revenue from blockchain infrastructure operations NodeOps $ 262,972 $ 485,339 $ 602,263 $ 903,692 Builder+ 2,509,226 75,853 3,858,870 108,886 Total revenue $ 2,772,198 $ 561,192 $ 4,461,133 $ 1,012,578 The 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. Crypto assets earned from blockchain infrastructure staking activities through NodeOps Schedule of Crypto Assets Earned from Blockchain Infrastructure Staking Activities For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Asset Token Rewards Revenue ($USD) Token Rewards Revenue ($USD) Token Rewards Revenue ($USD) Token Rewards Revenue ($USD) Ethereum (ETH) 69 $ 148,351 72 $ 241,588 139 $ 334,546 138 $ 429,666 Cosmos (ATOM) 16,990 $ 74,636 12,565 $ 104,580 33,303 $ 159,486 23,731 $ 225,654 Solana (SOL)* 92 $ 14,184 139 $ 21,353 209 $ 34,787 259 $ 36,725 Axie Infinity (AXS)* 4,569 $ 11,953 5,772 $ 36,379 10,887 $ 30,476 11,152 $ 84,701 Akash (AKT) 2,272 $ 3,367 6,246 $ 26,740 8,229 $ 15,202 10,820 $ 45,486 NEAR Protocol (NEAR)* 1,450 $ 3,826 1,886 $ 12,500 3,482 $ 11,298 2,600 $ 16,922 Avalanche (AVAX) 253 $ 4,917 668 $ 18,491 543 $ 11,322 668 $ 18,491 Kava (KAVA) 4,020 $ 1,738 6,632 $ 4,305 11,031 $ 4,983 12,924 $ 9,557 Stader (SD)* - $ - - $ - 126 $ 89 - $ - Polkadot (DOT)* - $ - 376 $ 2,619 9 $ 40 736 $ 5,576 Rocket Pool (RPL)* - $ - - $ - 10 $ 34 - $ - Kusama (KSM) - $ - 279 $ 8,108 - $ - 289 $ 8,583 Polygon (POL)* - $ - 6,314 $ 3,758 - $ - 12,544 $ 9,489 Tezos (XTZ)* - $ - 354 $ 338 - $ - 671 $ 705 Mina (MINA) - $ - 2,880 $ 2,439 - $ - 5,760 $ 6,085 Oasis Network (ROSE) - $ - 10,431 $ 1,036 - $ - 26,567 $ 3,254 Cardano (ADA)* - $ - 2,039 $ 837 - $ - 3,328 $ 1,590 Evmos (EVMOS)* - $ - 6,834 $ 268 - $ - 18,260 $ 1,208 Total earned from blockchain infrastructure staking activities through NodeOps $ 262,972 $ 485,339 $ 602,263 $ 903,692 * All or a portion of revenue earned from staking to third-party validator nodes Crypto assets earned from block-building through Builder+ Schedule of Crypto Assets Earned From Ethereum For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Asset Token Rewards Revenue ($USD) Token Rewards Revenue ($USD) Token Rewards Revenue ($USD) Token Rewards Revenue ($USD) Ethereum (ETH) 912 $ 2,101,709 23 $ 75,853 1,406 $ 3,451,353 34 $ 108,886 BNB Chain (BNB) 638 $ 407,517 - $ - 638 $ 407,517 - $ - Total earned from block-building through Builder+ $ 2,509,226 $ 75,853 $ 3,858,870 $ 108,886 15 Cost of Revenues The Company’s cost of revenues related to its blockchain infrastructure operations primarily includes direct production costs associated with transaction validation on the network, cloud-based server hosting expenses related to our validator nodes and Builders, and allocated employee salaries dedicated to node maintenance and support. 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. For 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. This 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. The 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. The 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 June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Cost of staking revenues (NodeOps) $ 13,255 $ 47,414 $ 60,021 $ 99,367 Cost of block-building revenues (Builder+) 2,839,878 121,434 4,361,771 230,106 Total cost of revenues $ 2,853,133 $ 168,848 $ 4,421,792 $ 329,473 Internally Developed Software Internally developed software consists of the core technology of the Company’s StakeSeeker and ChainQ platforms. For internally developed software, the Company uses both its own employees as well as the services of external vendors and independent contractors. The Company accounts for computer software used in the business in accordance with ASC 985-20 and ASC 350. ASC 985-20, Software-Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. Some companies use a “tested working model” approach to establishing technological feasibility (i.e., beta version). Under this approach, software under development will pass the technological feasibility milestone when the Company has completed a version that contains essentially all the functionality and features of the final version and has tested the version to ensure that it works as expected. ASC 350, Intangibles-Goodwill and Other , requires computer software costs associated with internal use software to be charged to operations as incurred until certain capitalization criteria are met. Costs incurred during the preliminary project stage and the post-implementation stages are expensed as incurred. Certain qualifying costs incurred during the application development stage are capitalized as property, equipment and software. These costs generally consist of internal labor during configuration, coding, and testing activities. Capitalization begins when (i) the preliminary project stage is complete, (ii) management with the relevant authority authorizes and commits to the funding of the software project, and (iii) it is probable both that the project will be completed and that the software will be used to perform the function intended. Property and Equipment Property and equipment consists of computers, equipment and office furniture and fixtures, all of which are recorded at cost. Depreciation and amortization are recorded using the straight-line method over the respective useful lives of the assets ranging from three 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. Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP. This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of indefinite life intangible assets, stock-based compensation, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the indefinite life intangible assets, could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions. Income Taxes The Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. Should they occur, the Company’s policy is to classify interest and penalties related to tax positions as income tax expense. Since the Company’s inception, no such interest or penalties have been incurred. 16 Accounting for Warrants The Company accounts for the issuance of Common Stock purchase warrants issued in accordance with ASC 815, Derivatives and Hedging . Warrants are evaluated for liability or equity classification at the time of issuance based on the specific terms of the arrangement and settlement features. Liability-Classified Warrants Warrants are classified as liabilities when they: (i) require net cash settlement (including upon occurrence of an event outside the Company’s control), or (ii)provide the counterparty with a choice of cash or share settlement, or (iii) require the issuance of registered shares and do not explicitly preclude a right to cash settlement. In accordance with ASC 815-40, these instruments are measured at fair value upon issuance and at each subsequent reporting period, with changes in fair value recognized in the 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 ). The Company estimates the fair value of these warrants using a Black-Scholes option pricing model, with key inputs including the Company’s stock price, the warrant exercise price, expected term, expected stock price volatility, risk-free interest rate, and expected dividend yield. The warrant liability is presented as a current liability on the Company’s consolidated balance sheet. Equity-Classified Warrants The Company also issues warrants that qualify for equity classification under ASC 815-40. Warrants are classified in equity when they: (i) require physical or net-share settlement, and (ii) do not include terms that could require cash settlement outside the control of the Company, and (iii) do not include contingent provisions or other features that would cause the instruments to be classified as liabilities. For equity-classified warrants, the Company estimates the grant-date fair value using a Black-Scholes option pricing model. The fair value is recognized in additional paid-in capital (APIC) at the time of issuance and is not subsequently remeasured. If the warrants are issued in connection with a financing transaction (e.g., convertible notes), the fair value is allocated to APIC and, when applicable, also recorded as a debt discount in accordance with ASC 470-20 and amortized over the term of the related debt instrument using the effective interest method. Once classified in equity, these warrants remain in equity unless modified in a way that results in liability classification. These instruments are not included in the fair value measurements disclosure under ASC 820, as they are not remeasured on a recurring basis. Stock-based compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation . ASC 718 addresses all forms of share-based payment awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718, awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations. Share-based payment awards exchanged for services are accounted for at the fair value of the award on the estimated grant date. Options Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the fair 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. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Expected Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. For options granted prior to January 1, 2025, historical volatility was based on the most recent volatility of the stock price over a period equivalent to the expected term of the option. For options granted on 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. Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the option. Expected Term – The Company’s expected term represents the weighted-average period that the Company’s stock options are expected to be outstanding. The expected term is based on the expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns. Expected Dividend – The Company has not historically declared or paid any cash dividends on its common shares and does not plan to pay any recurring cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models. Restricted Stock Units (RSUs) For awards vesting upon the achievement of a service condition, compensation cost measured on the grant date will be recognized on a straight-line basis over the vesting period. Stock-based compensation expense for the market-based restricted stock units with explicit service conditions is recognized on a straight-line basis over the longer of the derived service period or the explicit service period, regardless of whether the market condition is satisfied. However, in the event that the explicit service period is not met, previously recognized compensation cost would be reversed. Market-based restricted stock units subject to market-based performance targets require achievement of the performance target as well as a service condition in order for these RSUs to vest. The Company estimates the fair value of market-based RSUs as of the grant date and expected derived term using a Monte Carlo simulation that incorporates pricing inputs covering the period from the grant date through the end of the derived service period. Expected Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. Historical volatility is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the RSUs. Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the RSUs. Expected Term – The Company’s expected term represents the weighted-average period that the Company’s RSUs are expected to be outstanding. The expected term is based on the stipulated 5-year period from the grant date until the market-based criteria are achieved. If the market-based criteria are not achieved within the five-year period from the grant date, the RSUs will not vest and shall expire. Vesting Hurdle Price – The vesting hurdle prices are determined by taking the vesting Market Cap criteria divided by the shares outstanding as of the valuation dates 17 Convertible Notes Payable Convertible notes are accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options . Upon issuance, the Company evaluates embedded features and freestanding instruments for separate accounting. If applicable, proceeds are allocated between the debt host and any freestanding equity-classified instruments, such as warrants, using a relative fair value method. Issuance costs and any original issue discount are recorded as a reduction to the carrying amount of the debt and amortized over the term of the notes using the effective interest method. Interest expense includes both cash interest and amortization of debt discounts. Defi Lending Arrangements The Company accounts for borrowings under decentralized finance (“DeFi”) protocols, such as Aave, in accordance with ASC 470, Debt . 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.” DeFi 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 collateral. Interest 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. Advertising Expense Advertisement costs are expensed as incurred and included in marketing expenses. Advertising and marketing expenses amounted to approximately $ 23,000 and $ 28,000 for the three months ended June 30, 2025 and 2024, respectively and approximately $ 268,000 and $ 86,000 for the six months ended June 30, 2025 and 2024, respectively. Net Income (Loss) per Share Basic income (loss) per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the Company’s restricted stock units, restricted common stock, options, warrants and shares issuable upon conversion of outstanding convertible notes. In periods when the Company reports a net loss, diluted loss per share excludes the effect of all potential common shares, including those issuable upon the exercise of warrants and options, the vesting of restricted stock units and restricted common stock, and the conversion of preferred stock or convertible notes—since their inclusion would be anti-dilutive. For 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. For 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. The following financial instruments were excluded from the calculation of diluted loss per share during periods of net loss, as their effect was anti-dilutive: Schedule of Earnings Per Share Anti-diluted As of June 30, 2025 2024 Warrants to purchase common stock 2,614,416 712,500 Options 2,661,410 1,302,500 Non-vested restricted stock unit awards - 1,806,373 Non-vested restricted common stock 1,312,301 - Shares issuable upon conversion of convertible notes 1,334,679 - Total 7,922,806 3,821,373 Anti-dilutive securities 7,922,806 3,821,373 Recent Accounting Pronouncements The Company continually assesses new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of such change to its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated Financial Statements properly reflect the change. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 is intended to enhance reportable segment disclosures by requiring disclosures of significant segment expenses regularly provided to the CODM, requiring disclosure of the title and position of the CODM and explanation of how the reported measures of segment profit and loss are used by the CODM in assessing segment performance and a location of resources. ASU 2023-07 is effective for the Company for annual periods beginning after December 31, 2023. The Company adopted ASU 2023-07 for the year ended December 31, 2024. As a result of the adoption, the Company expanded its disclosures in Note 11 – Segment Information , to present significant expenses that are included within cost of revenue, by reportable segment, which are presented to the CODM. In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide improvements primarily related to the rate reconciliation and income taxes paid information included in income tax disclosures. The Company is required to disclose additional information regarding reconciling items equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory tax rate. Similarly, the Company is required to disclose income taxes paid (net of refunds received) equal to or greater than five percent of total income taxes paid (net of refunds received). The amendments in ASU 2023-09 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. In December 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires, in the notes to the financial statements, disclosures of specified information about certain costs and expenses specified in the updated guidance. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact the updated guidance will have on its disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. 18 Note 4 – Crypto Assets The following table presents the Company’s crypto assets held as of June 30, 2025: Schedule of Crypto Assets Held Asset Tokens Cost Fair Market Value Ethereum (ETH) (1)(2) 14,659 $ 26,893,611 $ 36,444,451 Cosmos (ATOM) 355,813 5,394,231 1,458,228 Solana (SOL) 7,247 521,625 1,122,321 Avalanche (AVAX) 19,628 1,179,923 352,714 BNB Chain (BNB) 68 48,246 44,864 Rocket Pool (RPL) 609 6,749 3,057 Total $ 34,044,385 $ 39,425,635 (1) ETH holdings include 10,460 ETH staked to validator nodes with an approximate fair market value of $ 26,005,000 . (2) ETH 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. 19 Note 5 – Fair Value of Financial Assets and Liabilities The Company measures certain assets and liabilities at fair value. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability (i.e., an ‘exit price’) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Valuations based on unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that are accessible at the measurement date. Since valuations are based on quoted prices that are readily and regularly available in an active market, these valuations do not entail a significant degree of judgment. Level 2 – Valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuations based on inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. 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 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 June 30, 2025 Balance at June 30, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2025 (Level 1) (Level 2) (Level 3) Assets Crypto Assets $ 39,425,635 $ 39,425,635 $ - $ - Investments 350,000 - - 350,000 Total Assets $ 39,775,635 $ 39,425,635 $ - $ 350,000 Liabilities Warrant Liabilities $ 208,050 $ - $ - $ 208,050 Fair Value Measured at December 31, 2024 Balance at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2024 (Level 1) (Level 2) (Level 3) Assets Crypto Assets $ 36,056,683 $ 36,056,683 $ - $ - Investments 100,000 - - 100,000 Total Assets $ 36,156,683 $ 36,056,683 $ - $ 100,000 Liabilities Warrant Liabilities $ 267,900 $ - $ - $ 267,900 The Company did not make any transfers between the levels of the fair value hierarchy during the six months ended June 30, 2025 and 2024. 20 Level 3 Valuation Techniques Level 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. The Company has elected to apply the measurement alternative under ASC 321, Investments—Equity Securities , for these investments. Level 3 financial liabilities consist of the warrant liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. A significant decrease in volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. Changes in the values of the warrant liabilities are recorded in “change in fair value of warrant liabilities” in the Company’s consolidated statements of operations. On March 2, 2021, the Company entered into a securities purchase agreement with certain purchasers which closed on March 4, 2021 pursuant to which the Company sold an aggregate of (i) 950,000 shares of Common Stock, and (ii) Common Stock warrants (the “Warrants”) to purchase up to 712,500 shares of Common Stock for gross proceeds of $ 9.5 million in a private placement offering. The 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 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. 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. The Warrants require the issuance of registered shares upon exercise, do not expressly preclude an implied right to cash settlement and are therefore accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the balance sheet as a current liability. A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company’s warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of June 30, 2025 and December 31, 2024, is as follows: Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities June 30, 2025 December 31, 2024 Risk-free rate of interest 3.96 % 4.16 % Expected volatility 159.46 % 120.67 % Expected life (in years) 0.68 1.17 Expected dividend yield - - The risk-free interest rate was based on rates established by the Federal Reserve Bank. For the Warrants, the Company estimates expected volatility, giving primary consideration to the historical volatility of its Common Stock. The expected volatility is calculated using the standard deviation of the Company’s underlying stock price’s daily logarithmic returns. The expected life of the warrants was determined by the expiration date of the warrants. The expected dividend yield was based on the fact that the Company has not historically paid dividends on its Common Stock and does not expect to pay recurring dividends on its Common Stock in the future. The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets and liabilities for the six months ended June 30, 2025 that are measured at fair value on a recurring basis: Schedule of Changes in Fair Value and Other Adjustments of Warrants Fair Value of Level 3 Financial Assets June 30, 2025 Beginning balance $ 100,000 Purchases 250,000 Unrealized appreciation (depreciation) - Ending balance $ 350,000 Fair Value of Level 3 Financial Liabilities June 30, 2025 Beginning balance $ 267,900 Fair value adjustment of warrant liabilities ( 59,850 ) Ending balance $ 208,050 21 Note 6 – Stockholders’ Equity Common Stock As 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 Offering Agreement On September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”), pursuant to which the Company may offer and sell, from time-to-time, shares of the Company’s Common Stock through H.C. Wainwright, as agent. Initially, the aggregate offering price of shares issuable under the ATM Agreement was $ 98,767,500 , registered pursuant to the Company’s Form S-3 registration statement that became effective in September 2021. On 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 . On 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. Pursuant 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 %. All other terms and conditions of the original ATM Agreement and prior engagement letters remain in full force and effect. 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 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. Share Based Payments Board Compensation The Company issues $ 12,500 of Common Stock to each independent director at the end of each calendar quarter, subject to continued service. 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 quarter. 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. Performance Bonus Payments For the six months ended June 30, 2025, the Company issued 329,110 shares of Common Stock to officers and employees as part of the payment of accrued bonus compensation for the year ended December 31, 2024. The 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. Preferred Stock Series V Preferred Stock The Company previously designated and issued 14,542,803 shares of Series V Preferred Stock (“Series V”) on June 2, 2023 to shareholders of record as of May 12, 2023. 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). On 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 June 30, 2025, the Board has not filed the amendment or elected to convert any Series V shares. For 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. On February 3, 2025, 49,327 restricted shares of Series V were forfeited following the resignation of the Company’s Chief Technology Officer. These shares were returned to the Company and are no longer outstanding. As of June 30, 2025, a total of 1,069,801 restricted shares of Series V Preferred Stock were issued and outstanding. Of these, 48,967 shares remain subject solely to time-based vesting conditions, which extend over a one- to three-year period, with full vesting expected by December 31, 2027. 22 2021 Equity Incentive Plan The Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was effective on January 1, 2021 and approved by shareholders on June 30, 2021 and amended on June 13, 2022. 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. Options A 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 Number of Shares Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years) Options outstanding as of December 31, 2024 1,302,500 $ 1.96 $ 804,300 1.7 Employee options granted 1,477,068 2.43 - 6.3 Employee options expired ( 68,158 ) 2.47 - - Employee options forfeited ( 50,000 ) 1.40 - - Options outstanding as of June 30, 2025 2,661,410 $ 2.22 $ 475,750 3.8 Options vested and exercisable as of June 30, 2025 2,425,160 $ 2.24 $ 372,913 3.8 Number of Shares Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years) Options outstanding as of December 31, 2023 1,200,000 $ 2.12 $ 8,700 2.4 Employee options granted 120,000 1.52 - 4.9 Employee options expired ( 17,500 ) 10.30 - - Options outstanding as of June 30, 2024 1,302,500 $ 1.96 $ 4,950 2.2 Options vested and exercisable as of June 30, 2024 1,127,500 $ 2.03 $ - 1.8 The 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: Schedule of Weighted-Average Assumptions Used to Estimate Fair Value For the Six Months Ended June 30, 2025 2024 Exercise price $ 2.38 $ 1.55 Term (years) 6.70 5.00 Expected stock price volatility 113.35 % 144.57 % Risk-free rate of interest 4.13 % 4.31 % These assumptions are consistent with the methods described in Note 3 – Summary of Significant Accounting Policies . 23 Restricted Stock Units (RSUs) Long-Term Incentive Plan (LTI) RSUs On January 1, 2025, the Board approved the grant of 150,000 RSUs under the Company’s Long-Term Incentive Plan (“LTI”) to a non-officer employee. These RSUs are subject to both market capitalization and time-based vesting conditions. The RSUs vest in three equal tranches of 50,000 RSUs each, based on the Company achieving and sustaining specific market capitalization thresholds for 30 consecutive days on or before December 31, 2026, as follows: Schedule of Restricted Stock Units Market Cap Vesting Thresholds $ 100 million $ 150 million $ 300 million 50,000 50,000 50,000 Any RSUs for which the market capitalization condition is not met by December 31, 2026, will be forfeited and automatically terminate without consideration. For any tranche in which the market capitalization condition is achieved, the RSUs remain subject to a time-based vesting schedule, with 20 % of the eligible RSUs in such tranche vesting annually over five years , with the first vesting date occurring on December 31, 2025 and subsequent vesting dates occurring on December 31 of each year through 2029, provided that the grantee remains in continuous service with the Company through each applicable vesting date. The fair value of these market-based RSUs was determined using a Monte Carlo simulation and totaled approximately $ 181,000 as of the grant date. The following assumptions were used to determine fair value as of the grant date, January 1, 2025: Schedule of Weighted-Average Assumptions Used to Estimate Fair Value January 1, 2025 Vesting Hurdle Price $ 5.26 - $ 15.79 Term (years) 2.00 Expected stock price volatility 92.70 % Risk-free rate of interest 4.25 % The Company will recognize compensation expense for these RSUs over the requisite service period, subject to acceleration upon meeting the market capitalization criteria. Accelerated Vesting of RSUs and Conversion to Restricted Common Stock On January 13, 2025, the Company accelerated the vesting of all previously outstanding long-term incentive (“LTI”) restricted stock units (“RSUs”), totaling 1,170,834 RSUs granted to executive officers and employees. These RSUs were settled through the issuance of restricted shares of Common Stock. Because a portion of these RSUs were entitled to the previously declared Series V preferred stock dividend, 1,020,834 restricted shares of Series V were also issued. The restricted shares of Common Stock and Series V preferred stock issued upon acceleration remain subject to the original market capitalization-based performance conditions and applicable time-based vesting schedules, which range from one 1 to five years . Forfeitures of LTI RSUs and Restricted Shares of Common Stock On 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 June 30, 2025. No further expense will be recognized for these forfeited awards. 24 RSU Activity Summary The following table summarizes RSU activity under the 2021 Plan for the six months ended June 30, 2025: Summary of Restricted Stock Number of Restricted Stock Units Weighted Average Grant Date Fair Value Nonvested as of December 31, 2024 1,140,971 $ 3.27 Granted 150,000 2.47 Vested - - Vested and converted to restricted common shares ( 1,170,834 ) 3.05 Forfeited ( 120,137 ) 4.37 Nonvested as of June 30, 2025 - $ - Restricted Shares of Common Stock Activity Summary The following table summarizes restricted Common Stock activity under the 2021 Plan for the six months ended June 30, 2025: Summary of Restricted Stock Number of Restricted Shares of Common Stock Outstanding and nonvested as of December 31, 2024 270,794 Converted from restricted stock units 1,170,834 Forfeited ( 129,327 ) Outstanding and nonvested as of June 30, 2025 1,312,301 Stock Based Compensation Stock-based compensation expenses are allocated among general and administrative expenses, compensation expenses and cost of revenues. Stock-based compensation expense for the six months ended June 30, 2025 and 2024 was as follows: Schedule of Stock-based Compensation Expense 2025 2024 2025 2024 For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Employee stock option awards $ 55,523 $ 22,712 $ 110,735 $ 31,993 Employee restricted stock unit awards 153,647 241,752 305,604 480,898 Forfeiture of employee restricted stock unit and share awards - - ( 262,058 ) - Non-employee restricted stock awards 37,501 35,578 75,004 60,580 Stock-based compensation $ 246,671 $ 300,042 $ 229,285 $ 573,471 Stock Purchase Warrants The following is a summary of warrant activity for the three months ended June 30, 2025: Summary of Warrant Activity Number of Warrants Outstanding as of December 31, 2024 712,500 Issuance of warrants in connection with convertible note 1,901,916 Outstanding as of June 30, 2025 2,614,416 As 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. 25 Note 7 – Debt Loan Payable – Defi Protocol (Aave) The 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). The 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 5,447,000 Repayments of principal ( 1,447,000 ) Ending balance – June 30, 2025 $ 4,000,000 As 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. See Note 3 – Summary of Significant Accounting Policies and Note 4 – Crypto Assets for further detail regarding the accounting treatment and classification of these assets. The 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. For 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. The 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. Convertible Notes Payable On 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. The Notes: (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. H.C. 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. The 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. The 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. In 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 Offering. An independent committee of the Company’s Board of Directors approved Mr. Allen’s investment in the Offering. For 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. The Company paid interest of approximately $ 62,000 in cash during the period. 26 Note 8 – Accrued Expenses Accrued expenses consist of the following: Schedule of Accrued Expenses June 30, 2025 December 31, 2024 Accrued compensation $ 621,017 $ 3,907,091 Accrued interest 6,621 - Accounts payable and accrued expenses 102,607 70,444 Accrued Expenses $ 730,245 $ 3,977,535 Accrued 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. Note 9 – Employee Benefit Plans The Company maintains defined contribution benefit plans under Section 401(k) of the Internal Revenue Code covering substantially all qualified employees of the Company (the “401(k) Plan”). Under the 401(k) Plan, the Company may make discretionary contributions of up to 100 % of employee contributions. For the six months ended June 30, 2025 and 2024, the Company made contributions to the 401(k) Plan of $ 122,000 and $ 109,000 , respectively. Note 10 – Liquidity The Company follows “ Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ”. The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As 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. Note 11 – Segment Information The Company operates as a single reportable segment focused on blockchain infrastructure, which consists of two primary revenue-generating activities: Validator Node Operations (“NodeOps”) and Ethereum Block Building (“Builder+”). NodeOps includes revenue generated from staking rewards earned by BTCS’s own proof-of-stake crypto assets, as well as validator fees collected from third-party delegations. Builder+ generates revenue from gas fees embedded in successfully finalized Ethereum blocks constructed by the Builder. Gross profit (loss) is the primary segment performance measure reviewed by the CODM for operational and capital allocation decisions. The following tables present segment revenue and gross profit (loss), including the significant expense items reviewed by the CODM, for the three and six months ended June 30, 2025 and 2024: Schedule of Segment Revenue and Gross Profit (loss) NodeOps Builder+ Total NodeOps Builder+ Total For the Three Months Ended June 30, 2025 For the Six Months Ended June 30, 2025 NodeOps Builder+ Total NodeOps Builder+ Total Revenues from blockchain infrastructure operations $ 262,972 $ 2,509,226 $ 2,772,198 $ 602,263 $ 3,858,870 $ 4,461,133 Less: Cost of Revenues Validator Payments - 2,813,438 2,813,438 - 4,293,380 4,293,380 Cloud and server hosting costs 4,385 15,207 19,592 40,038 45,497 85,535 Compensation costs 7,508 11,233 18,741 17,336 22,894 40,230 Third-party contractor support costs 1,362 - 1,362 2,647 - 2,647 Gross profit (loss) $ 249,717 $ ( 330,652 ) $ ( 80,935 ) $ 542,242 $ ( 502,901 ) $ 39,341 NodeOps Builder+ Total NodeOps Builder+ Total For the Three Months Ended June 30, 2024 For the Six Months Ended June 30, 2024 NodeOps Builder+ Total NodeOps Builder+ Total Revenues from blockchain infrastructure operations $ 485,339 $ 75,853 $ 561,192 $ 903,692 $ 108,886 $ 1,012,578 Less: Cost of Revenues Validator Payments - 92,500 92,500 - 158,112 158,112 Cloud and server hosting costs 31,927 13,737 45,664 73,304 46,255 119,559 Compensation costs 6,825 14,656 21,481 13,650 24,553 38,203 Third-party contractor support costs 8,662 541 9,203 12,413 1,186 13,599 Gross profit (loss) $ 437,925 $ ( 45,581 ) $ 392,344 $ 804,325 $ ( 121,220 ) $ 683,105 The following table reconciles total segment gross profit to consolidated net income (loss): 2025 2024 2025 2024 For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Gross profit ( 80,935 ) 392,344 39,341 683,105 Total operating expenses ( 4,447,069 ) ( 1,319,374 ) ( 7,530,370 ) ( 2,456,216 ) Other income (expense) 8,409,536 ( 5,800,839 ) ( 5,896,136 ) 7,301,828 Net income (loss) $ 3,881,532 $ ( 6,727,869 ) $ ( 13,387,165 ) $ 5,528,717 27 Note 12 – Subsequent Events The Company evaluates events that have occurred after the balance sheet date but before the consolidated financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements other than disclosed. ATM Financing During 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. DeFi Borrowing During 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. Borrowings 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. Convertible Notes Payable On 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”). The Notes: (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. A 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 Exercises Subsequent 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 Incentives On August 7, 2025, the Company determined that the market capitalization vesting condition for certain previously granted Long-Term Incentive (“LTI”) awards had been satisfied. Under the applicable award agreements, vesting required the Company to maintain a market capitalization in excess of $100 million for 30 consecutive days. 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 Milestone 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 and 81,613 , respectively. These options: (i) have a term of seven years, (ii) have an exercise price equal to $4.20 per share, (iii) vest in full on December 31, 2026, and (iv) are subject to the terms and conditions set forth in the applicable award agreements. 28