NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with GAAP and include the accounts of the Company, its wholly owned subsidiaries, SheWorks! and Yandiki (for periods prior to its June 2024 merger with SheWorks!), as well as ITSQuest (subject to discussions in Note 11 – Discontinued Operations) and Unicorns. These entities are consolidated in accordance with Accounting Standards Codification (“ASC”) 810, Consolidations (“ASC 810”). All significant intercompany accounts and transactions have been eliminated in consolidation. For ITSQuest, which prior to divestiture was a 51% owned, and Unicorns, which is 71.88% and 66.67% owned as of December 31, 2025 and December 31, 2024, respectively, the minority interests are reflected in the consolidated financial statements as non-controlling interests (“NCI”).

On February 21, 2025, the Company’s majority owned subsidiary, Unicorns, issued 5,000,000 common stock shares to an Executive Producer for the Unicorn Hunters show. This issuance was compensation in connection with the completion of Season 1 of the Unicorn Hunters show. This transaction decreased the Company’s ownership interest from 66.67% to 62.50%.

On March 11, 2024, Moe Vela sold his entire ownership in Unicorns of 7,500,000 common stock shares to the Company, in exchange for 1,500,000 unicoin rights. This transaction increased the Company’s ownership interest from 62.50% to 71.88%. The Company paid Moe Vela with unicoin rights valued at $740 thousand.

These transactions were accounted for under the guidance of ASC 810- Consolidations by recording a change in the non-controlling interest of $1,343 thousand, which represents the increase in the Company’s share of the carrying value of Unicorns net assets. The $2,083 thousand excess of carrying value of Unicorns net assets over the fair value of the unicoin rights paid in consideration was recorded to Additional Paid-In-Capital during the year ended December 31, 2024.

Variable Interest Entity

The Company’s policy is to consolidate all subsidiaries or other entities in which it has a controlling financial interest. The consolidation guidance under ASC 810 “Consolidation” (“ASC 810”) requires an analysis to determine if an entity should be evaluated for consolidation under the voting interest entity (“VOE”) model or the variable interest model (“VIE”). Under the VOE model, controlling financial interest is generally defined as majority ownership of voting interests. The consolidated financial statements include the accounts of all subsidiaries or other entities in which the Company has a direct or indirect controlling financial interest.

The Company assesses all entities in which it has a significant economic, ownership or other financial interest for consolidation on a case-by-case basis depending on the specific facts and circumstances surrounding each entity. Pursuant to ASC 810, the Company first evaluates whether it holds a variable interest in an entity. The Company considers all economic interests, including proportionate interests through related parties, to determine if such interests are considered a variable interest.

For any entity where the Company has determined that it does hold a variable interest, the Company performs an assessment to determine whether it qualifies as a VIE. The Company consolidates a VIE if it is the primary beneficiary having the power to direct the activities that most significantly affect the economic performance of the VIE as well as the obligation to absorb losses and the right to receive benefits that could be significant to the VIE.

Management evaluated whether Unicorns, Inc. (“Unicorns”) meets the criteria for classification as a variable interest entity (“VIE”) or a voting interest entity (“VOE”) and concluded that Unicorns meets the definition of a VIE because it does not have sufficient equity at risk to finance its activities without additional financial support.

Management further concluded that the Company is the primary beneficiary of Unicorns because the Company has the power to direct the activities that most significantly affect Unicorns’ economic performance, including decisions related to financing, production activities, and strategic direction, and because the Company has the obligation to absorb losses and the right to receive benefits that could be significant to Unicorns. Accordingly, the Company consolidates Unicorns as a VIE.

As of December 31, 2025 and 2024, Unicorns had total assets of approximately $9,005 thousand and $8,248 thousand, respectively, consisting primarily of cash and cash equivalents of $1,101 thousand and $0 thousand, respectively, and investments in privately held companies of $7,859 thousand and $8,157 thousand, respectively. As of December 31, 2025 and 2024, Unicorns had total liabilities of approximately $172 thousand and $152 thousand, respectively, consisting primarily of accounts payable, accrued expenses, accrued payroll-related liabilities, and income tax payable. Intercompany balances and transactions between the Company and Unicorns have been eliminated in consolidation.

During the years ended December 31, 2025 and 2024, Unicorns generated revenues of approximately $0 thousand and $3 thousand, respectively, and incurred operating expenses of approximately $579 thousand and $973 thousand, respectively, and impairment loss of $298 thousand and $1,973 thousand, respectively, resulting in net losses of approximately $908 thousand and $3,142 thousand, respectively.

Unicorns does not generate sufficient cash flows on a standalone basis and relies on funding provided by the Company to finance its operations, including the production and ongoing costs associated with the Unicorn Hunters show.

The Company’s maximum exposure to loss as a result of its involvement with Unicorns is limited to the carrying amounts of Unicorns’ consolidated net assets and the funding provided to Unicorns through intercompany arrangements. As part of the agreement pursuant to which the Company acquired a majority ownership interest in Unicorns, the Company extended an initial line of credit of $10,000 thousand, and outstanding intercompany funding provided by the Company to Unicorns amounted to $28,758 thousand and $27,113 thousand as of December 31, 2025 and 2024, respectively, which were eliminated in consolidation. Beyond these arrangements, the Company is not contractually required to provide additional financial support to Unicorns, although it may elect to do so in the future.

Upon the initial consolidation of Unicorns, no gain or loss was recognized. There were no changes in facts or circumstances during the periods presented that affected the Company’s conclusion that it is the primary beneficiary of Unicorns.

Management evaluated whether UII meets the criteria for classification as a variable interest entity (“VIE”) or a voting interest entity (“VOE”) and concluded that UII meets the definition of a VIE primarily because it does not have sufficient equity at risk to finance its activities without additional financial support. Management further concluded that the Company is the primary beneficiary of UII because it has the power to direct the activities that most significantly affect UII’s economic performance through operational decision-making and also has the obligation to absorb losses and the right to receive benefits that could be significant to UII. These conclusions require significant judgment, including the assessment of decision-making authority, the nature of shared services, and the Company’s exposure to UII’s operating results.

UII was established to support the Company’s international activities related to international business development and token-related initiatives. Despite the affiliation, Unicoin and UII are separate legal entities, with UII operating as an affiliate of Unicoin. Unicoin provides operational support to UII, including marketing, advisory, investor relations, IT infrastructure, and shared personnel and office resources. Although the entities collaborate closely and share resources, UII maintains operational and legal independence from Unicoin, and shared personnel remain solely employed or contracted by Unicoin. UII does not generate sufficient cash flows on a standalone basis and relies on Unicoin to fund its operations. UII does not have any third-party creditors, and any obligations incurred by UII do not provide recourse to the general credit of Unicoin.

As of December 31, 2025 and 2024, UII did not hold any assets. As of December 31, 2025 and 2024, UII had liabilities of $109 thousand and $6 thousand, respectively, related to operating payments made by Unicoin on behalf of UII. These intercompany balances were eliminated in consolidation. The total expenses incurred by UII for the years ended December 31, 2025 and 2024 amounted to approximately $103 thousand and $6 thousand. UII does not generate sufficient cash flows on a standalone basis and relies on Unicoin to fund its operations, and UII does not have any third-party creditors whose claims provide recourse to the general credit of Unicoin.

The Company’s maximum exposure to loss as a result of its involvement with UII is limited to the amounts of operating expenses and other obligations funded on UII’s behalf. The Company has not provided, and is not contractually required to provide, any additional financial or other support to UII beyond funding its operating activities. There were no changes in facts or circumstances during the periods presented that affected the Company’s determination that it is the primary beneficiary of UII. UII has not issued voting equity interests that would alter the consolidation analysis under ASC 810.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions in the consolidated financial statements and accompanying notes. Significant estimates and assumptions made by us include: the valuation of unicoin rights and the related embedded feature, valuation of investments in private companies; valuation of land and other real estate received in exchange for unicoin rights; assessments of the recoverability of accounts receivable and determination of the fair value of certain stock awards issued. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the result of which forms the basis for making judgements about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and money market funds with original maturities of three months or less when acquired. Cash equivalents are stated at cost, which approximates fair value. These investments are not subject to significant market risk. The Company maintains its cash and cash equivalents in bank accounts which, at times, exceed the federally insured limits. As of December 31, 2025 and 2024, the Company had $864 thousand and $604 thousand of cash in excess of the FDIC insured amount, respectively. The bank at which the Company had deposits that exceed FDIC limits is not in receivership or under the control of the FDIC. The Company has not experienced any losses in such accounts.

Accounts Receivable

Accounts receivable consist of receivables from sale or renewal of SaaS subscriptions to its software platform or TaaS staffing arrangements. The Company records a receivable for its SaaS segment when customer access to the software platform is provided. For the TaaS segment, receivables are recorded when the Company has a right to invoice and are typically invoiced on a monthly basis. Typical cash payment terms provide that customers pay within 30 days of invoicing.

As more fully discussed in the Revenue Recognition section below, accounts receivable for Unicorns generally consists of commitments from companies that have appeared on the Unicorn Hunters show, to issue stock options, warrants or shares to the Company. These options or warrants typically have a term of five to ten years and are recorded at their estimated fair values. Unicorns invoices customers when an episode is distributed for broadcast or streaming. Receipt of the option or warrant certificates is handled on a case-by-case basis in accordance with each customer agreement. Unicorns receivables are classified as current because the underlying option or warrant certificates are expected to be received within one year of release or distribution of each related episode.

Subsequent to receipt of these option, warrant or share certificates, the related receivables are reclassified to investments in privately-held companies, a long-term asset account. The Company does not charge interest for past due accounts and does not require any collateral for its receivables. As more fully discussed in the Revenue Recognition section below, Unicorns non-cash consideration is recorded at fair value as determined at, or near the date of contract inception. As permitted by a practical expedient provision in ASC 606 “Revenue Recognition,” the Company does not adjust Unicorns contract consideration for the effects of a significant financing component if, at contract inception, management expects the period between time of service and payment to be less than one year.

Allowance for Doubtful Accounts

The Company evaluates the collectability of its accounts receivable based on a combination of factors. Where the Company is aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, the Company records a specific allowance against amounts due. The Company writes off a receivable and charges it against its recorded allowance when all collection efforts are exhausted without success. Amounts are included as a component of general and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss. Subsequent recoveries of amounts previously written off are credited to earnings in the period recovered. For Unicorns, revenue and receivables are generally in the form of commitments from companies, that have appeared on the Unicorn Hunters show, to issue stock options or warrants to the Company.

Accounts receivable is recorded at the invoiced amount, net of allowance for expected credit losses. The Company’s primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the accounts receivable balance to the estimated net realizable value. The Company regularly reviews the adequacy of the allowance for credit losses based on a combination of factors. In establishing any required allowance, management considers historical losses adjusted for current market conditions, the Company’s customers financial condition, the amount of any receivables in dispute, the current receivables aging, current payment terms and expectations of forward-looking loss estimates.

The allowance for doubtful accounts related to Unicorns non-cash receivables is subject to uncertainty because the fair value of the underlying private company options, warrants or shares could change subsequent to the initial determination of fair value and before receipt of the related option, warrant or share certificates. In addition, unforeseen circumstances could arise after contract inception which could impact the customer’s intent or ability to pay. Because the value of any one of the receivables associated with Unicorn’s contracts may be material, changes such as these could have a material effect on the Company’s future financial condition, results of operations and cash flows.

During the years ended December 31, 2025 and 2024, the Company incurred bad debt expense of $12 thousand and $9 thousand, respectively.

As discussed in the Investments in Privately-Held Companies section below, the fair value of options or warrants of private companies, held upon settlement of such receivables, may fluctuate subsequent to receipt resulting in charges or gains to the Company’s consolidated statements of operations and comprehensive loss in future periods.

Investments in Privately-Held Companies

In accordance with ASC 321 “Investments-Equity Securities” (“ASC 321”), equity securities for which the Company has no significant influence (generally less than a 20% ownership interest), and which do not have readily determinable fair values, are accounted for using the measurement alternative which is at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Gains and losses on investments in equity securities are recognized in the consolidated statements of operations and comprehensive loss.

The Company regularly reviews such equity securities for impairment based on a qualitative assessment which includes, but is not limited to (i) significant deterioration in the earnings performance, credit rating, asset quality or business prospects of the investee, (ii) significant adverse changes in the regulatory, economic or technological environment of the investee and (iii) significant adverse changes in the general market condition of either the geographical area or the industry in which the investee operates, (iv) a bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of that investment, (v) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows from operations, working capital deficiencies, or non-compliance with statutory capital requirements or debt covenants. If an equity security is impaired, an impairment loss is recognized in the consolidated statements of operations and comprehensive loss equal to the difference between the fair value of the investment and its carrying amount. If such impairment is determined prior to receiving options or warrants to be received as consideration for Unicorns customer contracts, the related loss on impairment is reflected as bad debt expense.

As discussed in Note 4, as of December 31, 2024, the Company had non-cash receivables consisting of options and warrants to purchase common stock in privately-held companies. The options and warrants underlying these non-cash receivables are subject to significant fluctuations in market values. As of December 31, 2025 all related warrant certificates have been received and these accounts receivable have been reclassified to investments in privately-held companies in the Company’s consolidated balance sheet.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Depreciation of property and equipment is provided for by the straight-line method over the estimated useful lives of the related assets. Gains and losses on depreciable assets retired or sold are recognized in the consolidated statements of operations in the year of disposal. Repairs and maintenance expenditures are expensed as incurred. Depreciation expense for the years ended December 31, 2025 and 2024, amounted to $11 thousand and $10 thousand, respectively.

Digital Assets

The Company has accepted digital assets including Bitcoin (BTC), Ether (ETH), Litecoin (LTC), USD Coin (USDC), Bitcoin Cash (BCH), Tether (USDT) and Wrapped Ethereum (WETH) as consideration from certain investors in exchange for equity, debt or unicoin rights issued by the Company. The Company records the initial cost basis at their original purchase prices or at their then-current quoted market prices (e.g., when received in an exchange rather than purchase transaction) and presents all digital assets held as a result of these transactions as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other, except USDC (refer to Note 3 – Fair Value Measurement, for details of accounting policy regarding USDC). Fair value of the Company’s digital assets is determined in accordance with ASC 820, “Fair Value Measurement” (“ASC 820”), based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets (Level 1 inputs). The Company has ownership and control of its digital assets and utilizes INX and/or Coinbase, third-party custodians, to secure its holdings and facilitate transactions.

During the year ended December 31, 2024, the Company has revised its impairment loss assessment methodology for digital assets to record write-downs to the lowest market price of one unit of digital asset quoted on the active exchange since acquiring the digital asset. This revision would be consistent with the requirements of ASC 350-30-35-19, which indicates impairment exists whenever carrying value exceeds fair value. It also indicates that after an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Management assessed the potential difference in impairment loss that would have resulted in prior periods if this impairment methodology had been applied retroactively, noting the amounts were immaterial.

Impairment losses are recognized within loss from operations in the consolidated statements of operations and comprehensive loss in the period in which the impairment is identified. The impaired digital assets are written down to their fair values at the time of impairment and this new cost basis is not adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale, at which point they are recorded within loss from operations in the consolidated statements of operations and comprehensive loss. In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.

The Company uses digital assets as payment to vendors for goods or services from time to time. The Company computes resulting gains or losses by subtracting the then-current carrying value from the realized proceeds or the fair value of cryptocurrencies on the goods or services transaction date, or the fair value of the goods or services received in exchange for cryptocurrencies, if more readily determinable. Such transactions are processed by the Company’s digital assets custodian. The transfer of control and transaction date are based on the transaction date as indicated in reports from the custodian. Gains and losses are determined separately for each digital asset purchase in accordance with the first in first out (FIFO) method of accounting.

Derivative Financial Instruments

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives, as defined by ASC 815, Derivatives and Hedging (“ASC 815”). Under ASC 815, derivative financial instruments that are accounted for as liabilities are initially recorded at fair value and are then revalued at each reporting date, with changes in the fair value reported in the consolidated statements of operations and comprehensive loss. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the accompanying consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the consolidated balance sheets date. The Company did not have any significant derivative instruments during the years ended December 31, 2025 or 2024.

Common Stock Warrants

The Company has issued common stock warrants to individuals who provided referrals to accredited investors that resulted in sales of common stock in connection with the Company’s various funding rounds. Warrants issued by the Company are evaluated as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance pursuant to ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815. The assessment considers whether the warrants are freestanding financial instruments, meet the definition of a liability, and whether the warrants meet the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own equity and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, was conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. As of December 31, 2025 and December 31, 2024, all of the Company’s outstanding warrants were classified as equity in accordance with ASC 815-40.

Leases

The Company accounts for leases in accordance with ASC 842. ASC 842 generally requires an entity to recognize on its balance sheet operating and finance lease liabilities and corresponding right-of-use (“ROU”) assets, as well as to recognize the associated operating lease expenses in its consolidated statements of operations. The Company policy is to not capitalize leases with a term of 12 months or less on its consolidated balance sheets.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 which requires revenue to be recorded in a manner which depicts the transfer of goods or services to customers at amounts that reflect the consideration the Company expects to receive in exchange for those goods or services. Under ASC 606, revenue is recognized when obligations under the terms of a contract with a customer are satisfied; this occurs with the transfer of control of the Company’s goods or services.

The Company primarily derives its revenues from three revenue streams:

The Company accounts for revenue contracts with customers through the following five steps: (i) identification of the contract, or contracts, with a customer, (ii) identification of the performance obligations in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligation in the contract, and (v) recognition of revenue when, or as, the Company satisfies a performance obligation. The Company’s subscription service arrangements and Unicorns agreements are non-cancellable and do not contain refund-type provisions. Certain service agreements include cancelation clauses and there is a right of refund provided to the customer. The Company estimates and maintains a reserve for expected customer refunds. These estimates involve inherent uncertainties and management judgment. As of December 31, 2025 and 2024 no such reserves were recorded.

The Company’s customers include government institutions, a Fortune 500 Company, and small businesses. At contract inception, the Company assesses the product offerings in its contracts to identify performance obligation(s) that are distinct. A performance obligation is distinct when the customer can benefit from it on its own or together with other resources that are readily available and when it is separately identifiable from other items in the contract. Historically, costs to obtain a contract have not been significant.

To identify its performance obligation(s), the Company considers all the promises in the contract for SaaS, TaaS or Unicorns Services. The Company has concluded there to be a single performance obligation in each of these services. For SaaS arrangements, the primary obligation is the license issuance to the customer to access the Company’s workforce platform. For TaaS arrangements, the primary performance obligation is services provided to the customer by the professional resulting in hours accrued or milestones reached. For Unicorns arrangements, the primary performance obligation is to provide customers with publicity and exposure through appearance on the Unicorn Hunters show which occurs when an episode is distributed for broadcast or streaming.

The transaction price is the total amount of consideration the Company expects to be entitled to in exchange for the service offerings in a contract. At the inception of the contract, the transaction price is known for all the services in the contracts. For SaaS contracts the transaction price is based on the number of licenses sold. TaaS contracts are based on the contracted service hours. Some contracts have a form of variable consideration, for example discounts on licenses sold that exceed certain volumes, or TaaS remote talent projects with a 10% discount for long term engagements that could impact the base transaction price of our services in contracts with the customers. The Company estimates variable consideration and adjusts the transaction price at the time of contract signing.

Revenue and accounts receivable for Unicorns generally consists of the fair value of stock options, warrants or shares of common stock committed from companies that have appeared on the Unicorn Hunters show. Contract consideration is fixed at contract inception and has historically been received in one of two forms: 1) either a pre-determined number of stock options, warrants or shares or 2) options or warrants or shares representing a specific percentage of the customer’s common stock outstanding as of a particular point in time. Other key terms specified in customer contracts include the exercise price and the duration or term of the options or warrants. The options or warrants underlying the commitments typically have a term of five to ten years and accounts receivable are recorded at the estimated fair value of such options or warrants as determined at contract inception. The estimated fair value of stock options and warrants, expected to be received as consideration, is dependent on the fair value of the underlying equity of each privately held presenting company.

The fair value of such underlying private company equity is determined based on (i) the valuation indicated in a recent round of financing (ii) a recent pre-existing third-party valuation report or (iii) a new third-party valuation report as of or near the date of contract inception. Third-party valuation reports consider factors such as recent financing rounds, third-party financing transactions, discounted cash flow analyses and market-based information, including comparable transactions, trading multiples and other factors based on facts and circumstances specific to each privately held presenting company. For non-cash consideration in the form of stock options or warrants of the presenting company, the Company, with assistance from third-party valuation advisors, determines the fair value of such consideration using the Black-Scholes option pricing model which, in addition to the fair value of underlying stock, considers the term of the stock options or warrants, exercise price, volatility, interest rate and dividend yield. These are Level 3 estimates under the fair value hierarchy because they involve significant unobservable inputs. The valuation of stock options or warrants committed by Unicorns customers requires management judgment due to the absence of an observable market price for those options or warrants.

Under ASC 606, the total transaction price is allocated to each performance obligation in the contract. As noted above, each contract in each segment contains only one performance obligation. Accordingly, the total transaction price for all Company contracts relates to the single performance obligation and no allocation is required.

Revenue is recognized upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. If the consideration promised in a contract includes a variable amount, for example, a discount for the subscription to access the software platform or for long term staffing engagements, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.

For SaaS contracts, the typical subscription term is one year or less and the Company generally invoices its customers at the start of the subscription period when access to the software platform is provided. Amounts that have been invoiced are recorded in accounts receivable and deferred revenue and related revenue is recognized over the subscription period. For TaaS contracts, the Company’s staffing contracts are typically for a duration of less than a year and are either on a fixed hourly rate basis or on a fixed cost basis billed upon satisfaction of respective milestones. For Unicorns’ contracts, customers are billed when an episode is distributed for broadcast or streaming.

The Company typically invoices its customers at the end of each month in cases where the contracts involve billing based on fixed hourly rates and/or once a milestone is reached. An over-time method is used to measure progress because the Company’s obligation is to provide continuous service over the contractual period when fixed hourly rate billing is involved. For time-and-materials contracts, revenue from contracts with customers is recognized in the amount to which the Company has a right to invoice, when the services are rendered by the Company’s remote workers in such cases. For milestone-based contracts, revenue is recognized when the milestones are achieved. Revenue is recognized once a milestone is reached for an amount of the transaction price that is proportional to the total milestones in the contract. Milestones reached represent work performed and thereby best depicts the transfer of control to the customer. For Unicorns’ contracts, the promise to the customer is fulfilled and revenue is recognized for the entire transaction price when an episode is distributed on the Unicorn Hunters website.

Revenue from TaaS arrangements is recorded on a gross basis, as principal, rather than on a net basis, as agent. The Company concluded that it is the principal in these arrangements because the Company contracts separately with customers and service providers, is responsible for directing service providers to meet the agreed upon customer specifications, has discretion to establish pricing for services provided to end customers and bears the primary risks related to billing, collection and customer satisfaction.

Deferred Revenue

Deferred revenue represents amounts that have been prepaid in advance of revenue recognition. Deferred revenue is recognized as revenue when transfer of control to customers has occurred or as services are being provided. The Company generally invoices customers in monthly installments for the TaaS business and for SaaS, business customers are invoiced at the start of the contract period therefore timing differences and deferred revenue can occur in the SaaS and TaaS segments. As noted above, Unicorns invoicing and revenue recognition both occur at the time an episode is distributed on the Unicorn Hunters website therefore there is no deferred revenue recorded for the Unicorn Hunters segment.

The Company had deferred revenue of $1 thousand and $4 thousand as of December 31, 2025 and December 2024, respectively. The amount of revenue recognized in fiscal 2025 and 2024 that was included in deferred revenue at the beginning of the periods was $4 thousand and $5 thousand, respectively.

Remaining Performance Obligation

In accordance with ASC 606, the Company is required to include disclosures on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the contracts in the Company’s businesses, these reporting requirements are not applicable. Most of the Company’s remaining contracts meet certain exceptions as defined in ASC 606. For the Company’s contracts that pertain to these exceptions: (i) the remaining performance obligations primarily relates to the provision of access to the software platform for its subscribers; and (ii) the estimated duration of these performance obligations is less than one year or ranges from the remaining of the current calendar year to the next calendar year.

Cost of Revenue

For the SaaS and TaaS segments, cost of revenue includes salaries, and personnel compensation costs, associated with the Company’s website hosting and other costs including providing technical support, materials, and supplies. For Unicorns, cost of revenue includes salaries and personnel compensation costs as noted for SaaS and TaaS but also includes third party costs for production team, celebrity hosts and travel. The Company evaluates if Unicorn Hunters show production costs are expected to be recovered. Costs are capitalized if expected to be recovered and otherwise are expensed as incurred. Any capitalized costs are expensed when the related show is distributed on the Unicorn Hunters website. No production costs were capitalized during the years ended December 31, 2025 or 2024 because of uncertainty about recovery of such costs during the Company’s early stages.

General and Administrative Expense

General and administrative costs primarily consist of compensation, employee benefits, and stock-based compensation related to executive management, finance, administration and human resources, facility costs, professional service fees, and other general overhead costs.

Sales and Marketing Expense

Sales and marketing costs principally consist of third-party marketing, advertising, and branding in addition to compensation and benefits of the Company’s own marketing personnel. Sales, marketing and advertising costs are expensed as incurred. During the years ended December 31, 2025 and 2024, the Company incurred marketing/advertising expenses of $243 thousand and $11,495 thousand, respectively, of which $49 thousand and $8,708 thousand were paid for by exchanging unicoin rights with such fair value.

Research and Development Expense

Research and development costs are related to maintaining and improving the Company’s software platform and primarily consist of personnel-related costs, including salaries and bonuses, benefits and stock-based compensation expense. Research and development costs related to internal use software are not material and are expensed as they are incurred.

Stock-Based Compensation Expense

The Company measures and records stock-based compensation expense related to stock awards and stock options awarded to certain officers, directors, employees and consultants based on the grant date fair value of the award under ASC 718, Stock Compensation (“ASC 718”). The Company estimates the fair value of each stock option at the grant date using the Black-Scholes option-pricing model. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period, of the individual option, generally equal to the vesting period.

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations and comprehensive loss in the period in which the change was enacted. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if management has determined that it is more likely than not that such assets will not be realized. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. The Company is subject to examinations by federal and state authorities for the income tax periods that remain open. In the event that a taxing jurisdiction levies an assessment in the future, it is possible the assessment could have a material adverse effect on the consolidated financial condition or results of operations.

The consolidated financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable tax authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50% likely of being realized upon ultimate settlement. In the event that the Internal Revenue Service (“IRS”) or another taxing jurisdiction levies an assessment in the future, it is possible the assessment could have a material adverse effect on the consolidated financial condition or results of operations. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. The Company recognizes interest and penalties related to income tax matters in income tax expense.

Net Loss per Share

Net loss per common share is computed pursuant to ASC 260-10, Earnings Per Share (“ASC 260”). Basic net loss per share is computed by dividing net loss by the weighted average number of common stock shares outstanding. For each of the years ended December 31, 2025 and 2024, the Company had securities outstanding that could potentially dilute net loss per share, but the shares from the assumed conversion or exercise of these securities were excluded in the computation because the effect would have been anti-dilutive.

Contingent Liabilities

The Company accounts for contingent liabilities in accordance with the ASC 450, Contingencies (“ASC 450”). This guidance requires management to assess potential contingent liabilities that may exist as of the date of the consolidated financial statements to determine the probability and amount of loss that may have occurred, which inherently involves an exercise of judgment. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed in the notes to the consolidated financial statements.

Risks and Uncertainties

The Company is subject to a number of risks that are similar to those which other companies of similar size in its industry are facing, including, but not limited to, the need for additional capital (or financing) to fund operations, competition from substitute products and services from larger companies, protection of proprietary technology, dependence on key customers, dependence on key individuals, and risks associated with changes in information technology.

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents and accounts receivable. The Company’s cash and cash equivalents are held in accounts with major financial institutions, and, at times, exceed federally insured limits. As of December 31, 2025 and 2024, the Company had $864 thousand and $604 thousand of cash in excess of the FDIC insured amount, respectively. The bank at which the Company had deposits that exceed FDIC limits is not in receivership or under the control of the FDIC. The Company has not experienced any losses in such accounts.

In addition, as discussed in Note 4, as of December 31, 2024 the Company had non-cash receivables consisting of options and warrants to purchase common stock in small privately-held companies. The options and warrants underlying these non-cash receivables are subject to significant fluctuations in market values. As of December 31, 2025 all related option and warrant certificates have been received and these accounts receivable have been reclassified to investments in privately-held companies in the Company’s consolidated balance sheets.

As discussed above and in Note 5, the Company has accepted digital assets as consideration from certain investors in exchange for equity, debt or unicoin rights issued by the Company. Digital asset market values are subject to significant fluctuations based on supply and demand for such digital assets and other factors. The Company can either hold, sell, or use digital assets as payment to vendors. Digital asset price risk could adversely affect future operating results including earnings, cash flows and the Company’s ability to meet its ongoing obligations.

The following table summarizes the Company’s revenues from customers that contributed to at least 10% of total revenues:

The following table summarizes the Company’s accounts receivable from customers that contributed to at least 10% of total accounts receivable, net:

Financial Instruments – Credit Losses

The Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit losses on financial instruments later codified as Accounting Standard codification (“ASC”) 326 (“ASC 326”), effective January 1, 2024, using a modified retrospective approach. The guidance introduces a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. There was no significant impact on the date of adoption of ASC 326.

Under ASC 326, accounts receivable are recorded at the invoiced amount, net of allowance for expected credit losses. The Company’s primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the accounts receivable balance to the estimated net realizable value. The Company regularly reviews the adequacy of the allowance for credit losses based on a combination of factors. In establishing any required allowance, management considers historical losses adjusted for current market conditions, the Company’s customers’ financial condition, the amount of any receivables in dispute, the current receivables aging, current payment terms and expectations of forward-looking loss estimates.

All provisions for the allowance for doubtful accounts are included as a component of general and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. Subsequent recoveries of amounts previously written off are credited to earnings in the period recovered.

The allowance for doubtful accounts related to Unicorns non-cash receivables is subject to uncertainty because the fair value of the underlying private company options, warrants or shares could change subsequent to the initial determination of fair value and before receipt of the related option, warrant or share certificates. In addition, unforeseen circumstances could arise after contract inception which could impact the customer’s intent or ability to pay. Because the value of any one of the receivables associated with Unicorn’s contracts may be material, changes such as these could have a material effect on the Company’s future financial condition, results of operations and cash flows.

Since the inception of Unicorn Hunters, the Company has recognized revenue in connection with seven Unicorn Hunters agreements. The total revenue amount related to these agreements was $10,130 thousand to-date. As of December 31, 2025 and 2024, Unicorn Hunters non-cash receivables were $0 and $0 thousand, respectively and represented 0% and 0% of total receivables, respectively. In addition, these receivables represented 0% and 0% of total assets as of December 31, 2025 and 2024, respectively.

The Company reviews each outstanding customer’s non-cash receivable balance with management of the private company customer, and records an allowance for doubtful accounts if either of the following are noted:

To date, the Company has not recorded any bad debt expense or allowance for doubtful accounts related to Unicorn Hunters non-cash receivables and the Company has not experienced any fluctuations or significant matters that would require recording a material allowance for doubtful accounts in any period to date.

As of December 31, 2025 and 2024, the Company had an allowance for doubtful accounts balance of $0 thousand and $5 thousand, respectively. For the year ended December 31, 2025 and 2024, the Company recorded bad debt expense of $12 thousand and $0 thousand, respectively. These amounts were related to trade receivables payable in cash.

Effect of Recently Adopted Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-07, Segment Reporting—Improvements to Reportable Segment Disclosures (Topic 280), which will require public companies to provide more transparency in both quarterly and annual reports about the expenses they incur from revenue generating reportable business segments. In addition, the ASU requires that a public entity disclose significant segment expenses that are regularly provided to the chief operating decision maker, an amount for other segment items by reportable business segment, including a description of its composition, and the primary measures of a business segment’s profit or loss in assessing segment performance. This ASU is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. The Company implemented the updated guidance as of December 31, 2024, which resulted in the incorporation of new segment disclosures, as noted in Note 16 - Segment Information. Also, the implementation of ASU 2024-07, did not have an impact on other disclosures to the consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2024, the FASB issued ASU No. 2024-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2024-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2026. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820), which clarifies how the fair value of equity securities subject to contractual sale restrictions is determined. The amendment clarifies that a contractual sale restriction should not be considered in measuring fair value. It also requires certain qualitative and quantitative disclosures related to equity securities subject to contractual sale restrictions. This authoritative guidance will be effective for us in the first quarter of fiscal 2026, with early adoption permitted. We are currently evaluating the effect of this new guidance on our consolidated financial statements.

In December 2024, the FASB issued ASU 2024-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which seeks to provide financial statement users with more decision-useful information about the underlying economics of crypto assets, and a reporting entity’s financial position. The amendment requires an entity to present crypto assets at fair value on the consolidated balance sheet, present these assets separate from other intangible assets, and record changes from remeasurements of crypto assets separately from changes in carrying amounts from other intangible assets on the income statement. The amendment also requires entities to disclose by crypto asset the name, fair value, cost basis, and number of units, as well as changes crypto holdings over the periods presented. Although early adoption is permitted, the new guidance becomes effective on January 1, 2026, and should be applied using a modified retrospective transition method with a cumulative-effect adjustment recorded to the opening balance of retained earnings as of the beginning of the year of adoption. We are currently evaluating the effect of this new guidance on our consolidated financial statements.