Note 7 – Revenues and Cost of Revenues

Revenue Recognition

The Company generates revenue from blockchain infrastructure operations, including validator node operations, block building activities, and DeFi arrangements. These revenue streams are accounted for under ASC 606, Revenue from Contracts with Customers, as the Company provides services that generate consideration in the form of digital assets.

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

The Company’s revenues are generated from blockchain-based operations and comprise three primary sources: (i) staking rewards earned from validator node operations (NodeOps); (ii) execution-layer transaction fees, priority fees, and MEV rewards earned from block-building activities (Builder+); and (iii) protocol-driven rewards earned from participation in DeFi protocols (Imperium). Revenues from NodeOps and Builder+ are aggregated and presented as Blockchain infrastructure revenues, while revenues from Imperium are presented separately as DeFi revenues in the statements of operations.

The transaction consideration the Company receives in the form of native digital assets, such as ETH or other network tokens, represents non-cash consideration at fair value on the date the digital assets are earned.

Collectively, these activities represent the outputs of the Company’s ordinary operations and are measured at the fair value of the digital assets earned at the time each performance obligation is satisfied.

NodeOps

The Company operates digital asset validator nodes on the Ethereum network (“NodeOps”) through which it participates directly in the network’s consensus mechanism. In this role, the Company stakes its own digital assets to validate transactions and propose or attest to blocks on the Ethereum blockchain. Staked assets are subject to protocol-defined lock-up and withdrawal periods.

In exchange for validating transactions and participating in block production, the Company earns protocol-determined rewards, including consensus layer issuance and priority fees, which are distributed by the Ethereum network as part of its consensus mechanism.

The Company earns these rewards directly from the Ethereum protocol, which calculates and distributes such rewards to the Company’s digital wallets, and does not act as an agent or intermediary for third parties.

The provision of validation services represents an output of the Company’s ordinary activities. Validation activities, including block proposals and attestations, represent the Company’s performance obligations. The performance obligation is satisfied at a point in time when the validation is confirmed by the network and the associated rewards are earned and available for transfer, at which point revenue is recognized.

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 execution layer transaction 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.

These transaction fees and tips 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 transaction 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 transaction 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 transaction fees and transaction-based payments.

Builders on BSC construct block bids composed of transactions and optional searcher tips. Unlike Ethereum, transaction fees associated with user transactions included in a finalized BSC block are paid directly to the Validator’s coinbase address and are not received by the Builder. Instead, the Builder earns revenue in the form of BNB-denominated tips that are directed to a Builder-controlled tip smart contract as priority fees and transferred or made available to the Company as part of the block-level settlement mechanics for each successfully finalized block.

Builder performance obligations on BSC are satisfied on a block-by-block basis when the constructed block is selected and proposed by a Validator and finalized on-chain. Each finalized block is considered a separate performance obligation. The Company recognizes BSC block-building revenue at the time each block is finalized and the related BNB-denominated tips are transferred or otherwise made available to the Company, measured at the fair value of BNB at that time.

In connection with BSC block building, the Company includes a Builder-specified bid payment, structured through a self-transfer transaction appended by the Builder, to incentivize the Validator to select the Company’s block. Such payments are recorded as cost of revenues because they represent direct costs of fulfilling the BSC block-building performance obligation.

Imperium

DeFi Lending Revenue (Aave)

The Company earns rewards from DeFi lending arrangements, primarily through the Aave protocol, by supplying digital assets to decentralized lending pools. These arrangements generate variable returns based on supply and demand dynamics within the protocol.

When the Company deposits ETH into Aave, the underlying ETH remains recognized at fair value on the balance sheet, consistent with the accounting policy described in Note 3. The Company earns variable rewards, typically in ETH, which accrue continuously based on utilization of the lending pool.

The Company has concluded that its participation in these arrangements represents a performance obligation satisfied over time, as the protocol’s users simultaneously receive and consume the benefits of the Company’s supplied liquidity. Revenue is recognized over time in proportion to rewards earned and is measured at the fair value of the digital assets at the time the consideration is earned. Variable consideration is constrained to amounts not subject to significant reversal in accordance with ASC 606-10-32-11.

Liquidity Pool Revenue

The Company also earns fees and other rewards through participation in decentralized exchange liquidity pools. By depositing digital assets into these pools, the Company provides liquidity to decentralized markets and earns a proportional share of fees generated by the protocol.

In contrast to DeFi lending arrangements, deposits into liquidity pools result in the derecognition of the underlying digital assets and the recognition of liquidity pool positions accounted for as indefinite-lived intangible assets, as described in Note 3 and Note 5.

The Company’s participation in liquidity pools represents a performance obligation satisfied over time, as liquidity is continuously provided to the protocol. Revenue is recognized over time based on the Company’s proportional share of fees and other rewards generated and is measured at the fair value of digital assets received at the time the fees are earned. Variable consideration is constrained to amounts not subject to significant reversal.

Revenues earned through Imperium are classified as DeFi revenues in the statements of operations. The Company is considered the principal in these arrangements because it controls the deployment of its digital assets, bears protocol and market risks (including smart-contract, liquidity, and liquidation risk), and earns consideration directly from the protocol rather than through an intermediary.

Disaggregation of Revenues

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

 Schedule of Disaggregation of Revenues

Cost of Revenues

The Company’s cost of revenues primarily consists of direct expenses incurred in connection with its blockchain operations, including NodeOps, Builder+ and Imperium activities.

Blockchain Infrastructure Operations (NodeOps and Builder+)

The Company’s cost of revenues related to its blockchain infrastructure operations primarily includes direct production costs associated with transaction validation and block construction on blockchain networks. These costs include cloud-based server hosting expenses related to our validator nodes and Builders, allocated employee compensation related to the monitoring, maintenance and support operations.

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 within the proposed blocks and are paid only when the block is successfully finalized on-chain.

For BSC block building, although the Builder does not receive the transaction fees attached to the bundled transactions included in a finalized block, it must still compete for inclusion by proposing an additional bid, structured as a self-transaction, that specifies extra fees intended to incentivize the Validator to select its block. This self-transaction results in a direct payment to the Validator’s coinbase address. These Builder-specified bids are separate from the transaction fees attached to user transactions and represent incremental value added by the Builder intended to increase the likelihood of block inclusion. The Company records these Builder-specified bid payments as cost of revenues, as they are a direct cost of fulfilling the block-building performance obligations under the BSC block-building arrangement in accordance with ASC 606.

The Company also includes in cost of revenues any third-party fees for hosting, infrastructure support, or software maintenance related to Validator or Builder operations.

These expenses are collectively presented as Cost of blockchain infrastructure revenues in the statements of operations.

Imperium

Beginning in 2025, the Company’s DeFi operations under its Imperium business line generated revenues from participation in decentralized finance protocols. Related costs of revenues primarily consist of allocated employee compensation and related expenses associated with establishing, monitoring, and maintaining DeFi activities, as well as any third-party services that support these operations and other direct on-chain expenses incurred in connection with deploying or interacting with DeFi protocols. These costs are presented as Cost of DeFi revenues in the statements of operations.

Disaggregation of Cost of Revenues

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

 Schedule of Disaggregation of Cost of Revenues