What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-19 · 43 added, 35 removed, 56 unchanged (58% of the section changed)

34 unchanged sentences

However, we are subject to the risks and uncertainties associated with an emerging business, as noted above we have no established source of capital, and we have incurred recurring losses from operations since inception.

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

Revenue for the three months ended June 30, 2025 was $1.7 million, an increase of $1.4 million or 403% compared to the revenue for the three months ended June 30, 2024 of $0.3 million.

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Revenue for the three months ended September 30, 2025 was $2.9 million, an increase of $1.7 million or 148% compared to the revenue for the three months ended September 30, 2024 of $1.2 million.

The increase was a result of the acquisition of CSI.

Revenue for the six months ended June 30, 2025 was $2.4 million, an increase of $1.8 million or 294% compared to the revenue for the six months ended June 30, 2024 of $0.6 million.

Revenue for the nine months ended September 30, 2025 was $5.3 million, an increase of $3.5 million or 197% compared to the revenue for the nine months ended September 30, 2024 of $1.8 million.

The increase was a result of the acquisition of CSI.

Gross Profit and Operating Expenses

Gross Profit (Deficit)

Gross profit for the three months ended June 30, 2025 was $35,000 compared to a gross profit of $11,000 for the three months ended June 30, 2024.

The gross margin as a percent of sales was 2% for the three months ended June 30, 2025, compared to 3% for the three months ended June 30, 2024.

Gross profit for the six months ended June 30, 2025 was 0.1 million compared to a gross deficit of ($72,000) for the six months ended June 30, 2024.

Gross profit for the three months ended September 30, 2025 was $95,000 compared to a gross profit of $226,000 for the three months ended September 30, 2024.

The gross profit as a percent of sales was 3% for the three months ended September 30, 2025, compared to the gross profit of 19% for the three months ended September 30, 2024.

The decrease in gross profit is due to the inclusion of lower-margin revenue as a result of the acquisition of CSI.

Gross profit for the nine months ended September 30, 2025 was $199,000 compared to a gross profit of $154,000 for the nine months ended September 30, 2024.

The gross profit as a percent of sales was 4% for the nine months ended September 30, 2025, compared to the gross profit of 9% for the nine months ended September 30, 2024.

The decrease in gross profit is due to the inclusion of lower-margin revenue as a result of the acquisition of CSI.

Research and Development

Research and development expenses for the three months ended June 30, 2025 were $4.2 million, an increase of $2.4 million, compared to the research and development expenses for the three months ended June 30, 2024 of $1.8 million.

The increase in research and development expenses is primarily driven by the acquisition of NYIAX assets for $1.5 million in exchange for 1,500,000 shares of common stock and a payment of $450,000 to NYIAX, higher headcount resulting in increased salaries, wages, benefits, and stock-based compensation of $0.4 million, and legal expenses related to intellectual property of $0.3 million.

Research and development expenses for the six months ended June 30, 2025 were $6.6 million, an increase of $3.1 million compared to the research and development expenses for the six months ended June 30, 2024 of $3.5 million.

The increase in research and development expenses is primarily driven by the acquisition of NYIAX assets for $1.5 million in exchange for 1,500,000 shares of common stock and a payment to NYIAX of $450,000, higher headcount resulting in increased salaries, wages, benefits, and stock-based compensation of $0.8 million and facility expenses of $0.1 million, legal expenses related to intellectual property of $0.4 million and other research and development costs of $0.1 million.

Research and development expenses for the three months ended September 30, 2025 were $5.0 million, an increase of $2.8 million, compared to the research and development expenses for the three months ended September 30, 2024 of $2.2 million.

The increase in research and development expenses is primarily driven by IBM Watsonx AI subscription licenses of $2.2 million and higher stock-based compensation of $1.1 million, offset partially by decreases in research and development expenses due to the adjustment related to the acquisition of NYIAX assets of $0.5 million.

Research and development expenses for the nine months ended September 30, 2025 were $11.6 million, an increase of $5.9 million compared to the research and development expenses for the nine months ended September 30, 2024 of $5.7 million.

The increase in research and development expenses is primarily driven by IBM Watsonx AI subscription licenses of $2.2 million, the increase in research and development expenses of $1.3 million related to the acquisition of NYIAX assets, NFL Alumni license and Brookhaven National Laboratory research, higher headcount resulting in increased salaries, wages, benefits, and stock-based compensation of $1.9 million, and legal expenses related to intellectual property of $0.4 million.

Sales and Marketing

Sales and marketing expenses for the three months ended June 30, 2025 were $1.7 million, an increase of $0.9 million compared to the sales and marketing expenses for the three months ended June 30, 2024 of $0.9 million.

Sales and marketing expenses for the three months ended September 30, 2025 were $2.2 million, an increase of $1.2 million compared to the sales and marketing expenses for the three months ended September 30, 2024 of $1.0 million.

The increase in sales and marketing expenses is primarily related to an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $1.1 million and consulting expenses of $0.1 million.

Sales and marketing expenses for the six months ended June 30, 2025 were $3.2 million, an increase of $1.4 million compared to the sales and marketing expenses for the six months ended June 30, 2024 of $1.8 million.

The increase in sales and marketing expenses is primarily related to an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $0.8 million, and increased consulting and investor relations expenses of $0.5 million and $45,000, respectively.

Sales and marketing expenses for the nine months ended September 30, 2025 were $5.4 million, an increase of $2.6 million compared to the sales and marketing expenses for the nine months ended September 30, 2024 of $2.8 million.

The increase in sales and marketing expenses is primarily related to an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $2.0 million, and increased consulting expenses of $0.6 million.

General and Administrative

General and administrative expenses for the three months ended June 30, 2025 were $6.5 million, an increase of $3.7 million compared to general and administrative expenses for the three months ended June 30, 2024 of $2.8 million.

The increase in general and administrative expenses is primarily driven by higher amortization of intangibles assets of $2.3 million related to the Data Vault asset acquisition that closed on December 31, 2024, an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $1.2 million, increased consulting expense of $0.4 million, increased legal and accounting fees of $0.2 million and $0.2 million, respectively, offset partially by decreases in investor relations and shareholder expenses of $0.8 million and $82,000, respectively.

General and administrative expenses for the six months ended June 30, 2025 were $12.2 million, an increase of $8.0 million, compared to the general and administrative expenses for the three months ended June 30, 2024 of $4.2 million.

The increase in general and administrative expenses is primarily driven by higher amortization of intangibles assets of $4.6 million related to the Data Vault asset acquisition that closed on December 31, 2024, an increase in headcount resulting in increased salaries and wages, benefits and stock-based compensation of $1.8 million, increased consulting expense of $0.8 million, increased legal and accounting fees of $0.4 million and $0.1 million, respectively, offset partially by decreases in investor relations and shareholder expenses of $0.1 million and $0.2 million, respectively.

Interest expense, net for the three months ended June 30, 2025 was $17.2 million, an increase of $17.2 million compared to the interest expense for the three months ended June 30, 2024 of $4,000.

Interest expense increased due to the issuance of the Additional Warrants with the 2025 Notes fair value at issuance of $16.7 million.

Interest expense, net for the six months ended June 30, 2025 was $17.3 million, an increase of $16.1 million compared to the interest expense for the six months ended June 30, 2024 of $1.3 million.

The increase in interest expense, net for the six months ended June 30, 2025, is due to the issuance of the Additional Warrants with the 2025 Notes fair value at issuance of $16.7 million.

Change in fair value of convertible notes measured at fair value increased to $8.8 million for the three and six months ended June 30, 2025 compared to none for the three and six months ended June 30, 2024 due to the issuance of the 2025 Notes and recording the issuance fair value of $8.8 million, including $3.0 million of fees and original issue discount.

Change in fair value of convertible note to related party measured at fair value increased to a gain of $1.4 million in the three and six months ended June 30, 2025 compared to none in the three and six months ended June 30, 2024 due to a decrease in the DV Note fair value of $1.4 million.

General and administrative expenses for the three months ended September 30, 2025 were $7.7 million, an increase of $5.4 million compared to general and administrative expenses for the three months ended September 30, 2024 of $2.3 million.

The increase in general and administrative expenses is primarily driven by higher amortization of intangibles assets of $2.7 million related to the Data Vault asset acquisition that closed on December 31, 2024 and IP acquisitions from Turner Global Media LLC and Web Access LLC closed in July 2025, an increase in headcount resulting in increased salaries and wages, commissions, benefits and stock-based compensation of $1.5 million, increased consulting and legal expenses of $0.7 million and $0.5 million respectively.

General and administrative expenses for the nine months ended September 30, 2025 were $19.8 million, an increase of $13.3 million, compared to the general and administrative expenses for the three months ended September 30, 2024 of $6.5 million.

The increase in general and administrative expenses is primarily driven by higher amortization of intangibles assets of $7.5 million related to the Data Vault asset acquisition that closed on December 31, 2024 and IP acquisitions from Turner Global Media LLC and Web Access LLC closed in July 2025, an increase in headcount resulting in increased salaries and wages, commissions, benefits and stock-based compensation of $3.5 million, increased consulting expense of $1.6 million, increased legal and accounting fees of $0.9 million and $0.2 million, respectively, offset partially by decreases in investor relations of $0.4 million.

Interest expense, net for the three months ended September 30, 2025 was $0.9 million, an increase of $0.9 million compared to the interest income for the three months ended September 30, 2024 of $9,000.

Interest expense increased due to an increase in borrowings.

Interest expense, net for the nine months ended September 30, 2025 was $18.2 million, an increase of $16.9 million compared to the interest expense for the nine months ended September 30, 2024 of $1.3 million.

The increase in interest expense, net for the nine months ended September 30, 2025, is due to the issuance of the Additional Warrants with the 2025 Notes fair value at issuance of $16.7 million and increased borrowings.

Change in fair value of convertible notes measured at fair value increased to $10.8 million for the three months ended September 30, 2025 compared to none for the three months ended September 30, 2024 due to the issuance of the 2025 Notes and recording the issuance fair value of $10.8 million, including original issue discount of $1.3 million and fees of $1.0 million.

Change in fair value of convertible notes measured at fair value increased to $19.6 million for the nine months ended September 30, 2025 compared to none for the nine months ended September 30, 2024 due to the issuance of the 2025 Notes and recording the issuance fair value of $19.6 million, including the original issue discount of $3.0 million and fees of $2.3 million.

Change in fair value of convertible note to related party measured at fair value increased to $1.1 million in the three months ended September 30, 2025 compared to none in the three months ended September 30, 2024 due to an increase in the DV Note fair value of $1.1 million.

Change in fair value of convertible note to related party measured at fair value increased to a gain of $0.2 million in the nine months ended September 30, 2025 compared to none in the nine months ended September 30, 2024 due to an increase in the DV note fair value of the note of $1.1 million offset by a decrease in the DV note fair value of $1.3 million.

Change in other income, net increased to income of $0.3 million for the three and nine months ended September 30, 2025 for an increase of $0.2 million over the three and nine months ended September 30, 2024 due to the unrealized gain on the fair value of bitcoin intangible assets at September 30, 2025.

Debt Extinguishment

Debt extinguishment expense in the three and nine months ended September 30, 2025 was $5.8 million due to the extinguishment of the convertible notes issued in April and May 2025 with the issuance of the convertible notes in August.

The Company recognized the pre-modification fair value and the post modification incremental fair value change in the April and May notes due to the decrease in the alternative conversion feature and recorded $2.1 million in expense and the exchange of 30,738,449 outstanding warrants held by the holders of the April and May notes for common stock for which the Company recognized the incremental fair value of $3.7 million.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability for the three months ended June 30, 2025 was a gain of $2,000 compared to a loss of $37,255,000 for the three months ended June 30, 2024.

The change in fair value of the warrant liability for the three months ended June 30, 2024 was due to the issuance of additional warrants to purchase 5,602,693 shares of common stock and the subsequent valuing of such warrants.

The additional warrants were issued as a result of provision in certain of the warrant agreements that was triggered following the Company’s reverse stock split that occurred in April 2024.

There was no such activity in the three months ended June 30, 2025.

Change in fair value of warrant liability for the six months ended June 30, 2025 was a gain of $19,000 compared to a loss of $29,126,000 for the six months ended June 30, 2024.

The change in fair value of the warrant liability for the six months ended June 30, 2024 was due to the issuance of additional warrants to purchase 5,602,693 shares of common stock and the subsequent valuing of such warrants.

Change in fair value of warrant liability for the three months ended September 30, 2025 was zero compared to a loss of $6,000 for the three months ended September 30, 2024.

Change in fair value of warrant liability for the nine months ended September 30, 2025 was a gain of $19,000 compared to a loss of $29,120,000 for the nine months ended September 30, 2024.

The change in fair value of the warrant liability for the nine months ended September 30, 2024 was due to the issuance of additional warrants to purchase 5,602,693 shares of common stock and the subsequent valuing of such warrants.

The additional warrants were issued as a result of provision in certain of the warrant agreements that was triggered following the Company’s reverse stock split that occurred in April 2024.

There was no such activity in the six months ended June 30, 2025.

There was no such activity in the nine months ended September 30, 2025 .

Liquidity and Capital Resources

Cash and cash equivalents as of June 30, 2025 were $0.7 million compared to $3.3 million, as of December 31, 2024.

We recorded a net loss of $37.1 million and $46.7 million for the three and six months ended June 30, 2025 and used net cash in operating activities of $12.8 million for the six months ended June 30, 2025 vs $9.0 million for the six months ended June 30, 2024.

Excluding non-cash adjustments, the primary reasons for the increase in the use of net cash from operating activities during the six months ended June 30, 2025, was related to an increase in the net loss.

Cash provided by financing activities for the six months ended June 30, 2025 and 2024 totaled approximately $16.7 million and $14.9 million, respectively.

Cash and cash equivalents as of September 30, 2025 were $1.7 million compared to $3.3 million, as of December 31, 2024.

We recorded a net loss of $33.0 million and $79.7 million, respectively, for the three and nine months ended September 30, 2025 and used net cash in operating activities of $23 million for the nine months ended September 30, 2025 vs $13.3 million for the nine months ended September 30, 2024.

Excluding non-cash adjustments, the primary reasons for the increase in the use of net cash from operating activities during the nine months ended September 30, 2025, was related to an increase in the net loss.

Cash provided by financing activities for the nine months ended September 30, 2025 and 2024 totaled approximately $28.1 million and $17.1 million, respectively.

Cash used in investing activities for the nine months ended September 30, 2025 and 2024 totaled approximately $6.6 million and $0.4 million, respectively.

The increase was due to the acquisition of CSI on May 20, 2025.

We have financed our operations to date primarily through the issuance of equity securities, proceeds from the exercise of warrants to purchase common stock and sale of debt instruments.

In August 2025 and September 2025, we received $5.5 million and $6 million in proceeds from the issuance of the Q3 2025 Notes.

In April 2025 and May 2025 we received $4.5 million and $9.2 million in proceeds from the issuance of the 2025 Notes.

9 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis