Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | 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 March 31, 2026 and December 31, 2025, the Company had approximately $285,000 and $1,526,000 in cash, respectively. 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 March 31, 2026 and December 31, 2025, the Company had approximately $0 and $1,122,000 in excess of the FDIC insured limit, respectively.
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| Stablecoins | Stablecoins
The Company holds stablecoins, including, but not limited to USDT (Tether), USDC (USD Coin), and GHO (Aave Protocol’s native stablecoin), which are digital assets designed to maintain a value substantially equivalent to one U.S. dollar. Stablecoins are generally held in Company-controlled digital wallets, on centralized digital assets exchanges, or deployed into DeFi protocols for liquidity provision and other revenue-generating activities.
The Company accounts for its stablecoins as indefinite-lived intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other. While stablecoins are not accounted for as cash or cash equivalents, management considers them a liquidity resource due to their intended price stability and high on-chain and off-chain liquidity.
Stablecoins deployed into DeFi protocols are evaluated for continued control and restrictions on accessibility. As of March 31, 2026, approximately $534,000 of USDC was deployed in DeFi vaults and remained readily withdrawable.
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| Digital assets | Digital assets
The Company’s digital assets primarily consist of Ethereum and other digital assets held in non-custodial wallets. These assets are maintained under the Company’s control through secure private keys and are not held by any third-party custodian. The Company’s digital assets are used to support its blockchain infrastructure operations, including NodeOps, Builder+ and Imperium.
The Company accounts for its digital assets under two distinct accounting models depending on the nature of the asset:
Digital Assets Measured at Fair Value
The Company accounts for its digital assets under ASC 350-60, Intangibles—Goodwill and Other—Digital assets, and measures such assets at fair value in accordance with ASC 820, Fair Value Measurement. Fair value represents the price that would be received for an asset in a current sale, assuming an orderly transaction between market participants on the measurement date. Market participants are considered to be independent, knowledgeable, and willing and able to transact.
The Company measures fair value based on its principal market, or in the absence of a principal market, the most advantageous market to which it has access. Kraken serves as the principal market as it is the primary cryptocurrency exchange for both purchases and sales. Coinbase is designated as the secondary market. This determination results from a comprehensive evaluation considering various factors, including compliance, trading activity, and price stability. The fair value of digital assets is primarily determined based on pricing data obtained from Kraken, with Coinbase used as a secondary source when necessary. The Company retains flexibility to transact on other exchanges where it maintains accounts in order to adapt to market conditions and achieve cost-effective execution.
The Company measures its digital asset holdings at fair value in accordance with ASC 820, Fair Value Measurement, using the last closing price of the day in the UTC (Coordinated Universal Time) time zone.
Digital assets are categorized based on their operational use and presented on the balance sheet as follows:
Digital assets measured at fair value are further disaggregated in Note 4 – Digital Assets (Fair Value).
Digital assets measured at fair value are presented as current assets unless they are subject to protocol-imposed restrictions exceeding twelve months. Staked digital assets are classified as non-current if their lock-up periods extend beyond one year. The majority of the Company’s digital assets are deployed either in staking arrangements with average lock-up periods of less than seven days or in DeFi arrangements that permit redemption on a near-immediate basis. Accordingly, these assets are classified as current under ASC 210-10-20, Balance Sheet, due to the Company’s ability to sell them in a liquid marketplace and its reasonable expectation that they will be realized in cash or in operations within the normal operating cycle.
Cost Basis: The cost basis of digital assets received is measured at fair value based on the hourly spot price at the time of receipt, consistent with ASC 350-60.
Cost Relief Method: The Company uses the Last-In, First-Out (“LIFO”) method to determine the cost basis of digital assets disposed of. Realized gains and losses on the sale of digital assets are included in operating expenses in the statements of operations.
Statements of Cash Flows: The classification of purchases and sales in the statements of cash flows is determined based on the nature of the digital assets. Acquisitions of non-productive digital assets (e.g. NFTs) are treated as operating activities, while acquisitions of productive digital assets (e.g. assets acquired for purposes of staking or liquidity provision) are classified as investing activities in accordance with ASC 230-10-20, Investing activities.
Transactions involving the settlement of obligations through transfers of digital assets (i.e., in-kind transactions) are treated as non-cash activities for purposes of the Statement of Cash Flows. Accordingly, such transactions are excluded from the face of the Statement of Cash Flows and presented within supplemental disclosures of non-cash investing and financing activities, as applicable. Amounts settled in-kind are excluded from cash-based disclosures, including cash interest paid.
ETH Deployed in DeFi Arrangements
In DeFi arrangements, such as those on the Aave protocol, the Company participates as a liquidity provider by depositing ETH into decentralized lending pools. The deposited ETH becomes part of the protocol’s available liquidity that borrowers may draw upon and earns variable rewards based on market supply and demand for borrowing within the protocol.
Deposited ETH may also serve as collateral supporting on-chain borrowing activities. The collateral contributes to the Company’s overall “health factor”, a protocol-defined metric representing the ratio of collateral value to outstanding borrowings that automatically adjusts with changes in ETH market prices. The health factor determines the margin of safety against liquidation; maintaining a value above 1.0 indicates sufficient collateralization, while a decline below 1.0 may trigger partial liquidation of the collateral by the protocol’s smart contracts.
Upon deposit, ETH is automatically wrapped into Aave Wrapped ETH (“WAETH” or “aEthWETH”) to enable ERC-20 interoperability and facilitate reward accrual within the lending pool. The Company has concluded that this wrapping does not constitute a derecognition event under ASC 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, as no other counterparty obtains control or economic benefits of the underlying ETH. Rather, WAETH serves as a receipt or claim token evidencing the Company’s continuing interest in the underlying ETH.
Accordingly:
Rewards earned from DeFi activities are recognized as DeFi revenues on the statements of operations in accordance with ASC 606, as discussed in Revenue Recognition section of Note 3 as well as Note 7 – Revenues and Cost of Revenues.
Digital assets deployed in DeFi protocols are subject to protocol-specific risks, including smart contract vulnerabilities, liquidity constraints, and collateralization requirements. These assets may be pledged as collateral in connection with borrowing arrangements and are continuously remeasured based on the fair value of the underlying assets. A decline in the market value of collateralized assets may reduce the Company’s health factor and could result in partial or full liquidation of collateral by the protocol’s smart contracts without prior notice.
As of March 31, 2026, a significant majority of the Company’s digital assets measured at fair value were deployed within the Aave Protocol as collateral in connection with DeFi borrowing arrangements. These assets, while held in Company-controlled wallets, are subject to protocol-enforced restrictions and are not freely available for general corporate purposes while the related borrowings remain outstanding.
Accordingly, the Company has a significant concentration of its digital assets within the Aave protocol and is exposed to risks associated with such concentration, including smart contract vulnerabilities, changes in collateral requirements, liquidity constraints that may limit the Company’s ability to access or withdraw its assets, and the risk of partial or full liquidation in the event of adverse market movements.
Digital Assets Accounted for as Indefinite-Lived Intangible Assets
The Company holds certain digital assets that do not represent ownership interests in an entity or contractual rights to cash flows and, therefore, do not meet the definition of financial instruments or equity securities under ASC 320 or ASC 321. These assets consist of non-fungible tokens (NFTs), tokenized liquidity pool positions (LP positions), and other similar digital assets associated with blockchain-based protocols.
These assets are accounted for as indefinite-lived intangible assets in accordance with ASC 350. They are initially recorded at cost and are not amortized.
The Company evaluates these assets for impairment each reporting period to determine if any events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If the carrying value of an asset exceeds its estimated fair value, an impairment loss is recognized equal to the difference. Subsequent reversals of impairment losses are not permitted.
Fair value is determined in accordance with ASC 820 based on observable market transactions where available. Due to the nature of these assets, quoted prices in active markets are not always available, and management may be required to apply judgment in estimating fair value. For NFTs, the Company considers observable transactions on active NFT marketplaces, where available.
Realized gains or losses on the disposition of these assets are included in operating expenses in the statements of operations.
See Note 5 – Digital Assets (Liquidity Pool Positions and Other Intangible Digital Assets) for additional information.
Liquidity Pool Positions
The Company participates in decentralized exchange liquidity pools by depositing digital assets into smart contract-based protocols. In exchange, the Company receives liquidity pool positions, which may be represented by non-fungible tokens or similar instruments and represent a distinct asset that provides the Company with protocol-defined rights to remove liquidity, claim fees or other rewards, and participate in the economic results of the underlying pool of digital assets.
The Company accounts for liquidity pool positions as indefinite-lived intangible assets under ASC 350. The Company has concluded that liquidity pool positions do not meet the definition of financial instruments under U.S. GAAP because they do not represent ownership interests in a legal entity and do not provide the Company with a contractual right to receive cash or another financial asset from an issuer or counterparty. The Company has also concluded that liquidity pool positions are not derivatives under ASC 815 because they require an initial deposit of digital assets approximating the fair value of the position, do not provide for contractual net settlement, and represent a nonfinancial liquidity position rather than a derivative contract with an identifiable counterparty.
Upon deposit into a liquidity pool, the Company transfers digital assets to the liquidity pool smart contract and no longer controls the specific digital assets contributed. The contributed assets become part of the shared pool liquidity governed by automated market maker protocol rules and may be used in swaps initiated by third-party market participants. In exchange, the Company receives a new liquidity pool position that represents a different unit of account from the contributed digital assets. Accordingly, the Company derecognizes the digital assets contributed and recognizes the liquidity pool position at cost, measured based on the fair value of the digital assets deposited at the time of the transaction. Any difference between the fair value used to measure the liquidity pool position and the carrying amounts of the digital assets derecognized is recognized as a realized gain or loss on digital asset transactions in the statements of operations.
While a liquidity pool position remains open, the relative amounts of the underlying digital assets attributable to the position may change as a result of automated market maker activity, price movements, and third-party interactions with the pool. The Company treats these changes as internal economic rebalancing of the liquidity pool position and does not recognize separate gains or losses from changes in the underlying asset mix while the position remains open.
Upon withdrawal from a liquidity pool, the Company derecognizes the liquidity pool position, or the portion withdrawn, and recognizes the digital assets received at fair value. Any difference between the carrying value of the liquidity pool position derecognized and the fair value of the digital assets received is recognized as a realized gain or loss in the statements of operations.
Fees and other rewards earned through participation in liquidity pools are recognized as DeFi revenues in accordance with ASC 606 as the Company’s liquidity provision performance obligation is satisfied and are measured based on the fair value of the digital assets earned.
See Note 5 – Digital Assets (Liquidity Pool Positions and Other Intangible Digital Assets) for additional information.
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| Operating Segments | Operating Segments
The Company’s blockchain operations include three primary revenue-generating activities: validator node operations (NodeOps), block building (Builder+), and DeFi operations (Imperium).
The Company’s Chief Operating Decision Makers (“CODMs”) are comprised of several members of its executive management team, including the Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”) and the Chief Technology Officer (“CTO”), who are responsible for evaluating the Company’s financial performance, managing operations, and allocating capital and resources.
The CODMs regularly review discrete financial information for Builder+, NodeOps, and Imperium, assessing financial performance against gross profit (loss), direct operating expenses, and key financial metrics. These financial reviews direct operational decisions and shape capital deployment strategies for each business activity.
While the CODMs evaluate NodeOps, Builder+, and Imperium individually for internal management purposes, NodeOps and Builder+ share common economic characteristics, technological infrastructure, and operational oversight and are therefore aggregated into a single operating segment, Blockchain infrastructure operations, under ASC 280, Segment Reporting. Imperium, which generates revenue through participation in DeFi protocols, is presented as a separate reportable segment, DeFi operations, due to its distinct economic drivers and underlying market characteristics.
Consistent with ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, the Company discloses significant segment expenses and other measures that are regularly provided to the CODMs for decision-making purposes. Refer to Note 8 – Segment Reporting for more information.
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| Revenue Recognition | Revenue Recognition
The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The Company’s revenues are generated from blockchain-based operations and comprise staking rewards earned from validator node operations (NodeOps), execution-layer transaction fees, priority fees and maximal extractable value (“MEV”) rewards earned from block-building activities (Builder+), and protocol-driven rewards and transaction-based fees earned from participation in DeFi protocols (Imperium), including decentralized lending and liquidity pool activities.
The timing of revenue recognition depends on the nature of the underlying blockchain or DeFi activity. Revenues from NodeOps and Builder+ are generally recognized at a point in time when the applicable validation, attestation, block proposal or constructed block is confirmed or finalized on-chain and the related digital asset consideration is earned or made available to the Company. Revenues from DeFi lending and liquidity pool activities are recognized continuously during the period in which the Company’s digital assets are deployed and available to the applicable protocol, as protocol-defined fees and rewards accrue and are earned under the applicable protocol mechanics. For liquidity pool activities, fees and other rewards are earned based on the Company’s proportional participation in the pool and applicable protocol activity while the liquidity position remains deployed. Revenue is measured based on the fair value of the native digital assets or stablecoins earned at the time the consideration is earned. Substantially all revenues are earned and settled in native digital assets and stablecoins. See Note 7– Revenues and Cost of Revenues for further information.
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| Cost of Revenues | Cost of Revenues
Cost of revenues consists primarily of direct expenses incurred in connection with the Company’s blockchain infrastructure and decentralized finance operations, including hosting, infrastructure costs, validator payments, and other direct on-chain costs. Such costs may include expenses associated with DeFi activities, such as transaction fees and other protocol-related costs incurred in connection with digital asset deployment. See Note 7 – Revenues and Cost of Revenues for further information.
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| Research and Development | Research and Development
Research and development (“R&D”) costs are accounted for in accordance with ASC 730, Research and Development. R&D costs consist primarily of employee compensation, fees paid to third-party contractors and consultants, data and software costs, and other expenses incurred in connection with the development and evaluation of the Company’s blockchain infrastructure and DeFi capabilities. These activities include block-building systems and DeFi-related infrastructure and tools where technological, operational, or economic feasibility has not yet been established.
R&D costs are expensed as incurred. The Company allocates employee compensation to R&D based on management’s estimate of the time devoted to research and development activities during the period.
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| Property and Equipment | 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 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.
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| Use of Estimates | Use of Estimates
The accompanying financial statements have been prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period.
The Company’s significant estimates and assumptions include, but are not limited to the valuation of digital assets, including fair value measurements and the recoverability of indefinite-lived intangible digital assets, stock-based compensation, the valuation allowance related to deferred tax assets, allocations of compensation and other shared costs among functional expense categories, accruals for employee bonuses and incentives, and the fair value of certain financial instruments, when applicable.
Actual results could differ from those estimates due to changes in external conditions, market conditions, or other factors, including those affecting digital asset prices and decentralized finance protocols, and such differences may be material to the financial statements.
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| Income Taxes | 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 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 likely than 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.
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| Accounting for Warrants | 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 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 6 - Fair Value Measurements).
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 balance sheet.
All outstanding liability-classified warrants expired during the three months ended March 31, 2026 and as a result, there were no liability-classified warrants outstanding as of March 31, 2026.
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, Debt with Conversion and Other Option, 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.
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| 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. Compensation cost is recognized only for those awards that are expected to vest, and previously recognized compensation cost is reversed in the period in which an award is forfeited due to failure to satisfy the applicable vesting conditions.
Share-based payments
Share-based payment arrangements include equity instruments issued in exchange for employee and nonemployee services, including arrangements used to satisfy compensation obligations such as performance-based compensation and director compensation. Awards are measured at the fair value on the estimated grant date and recognized as compensation cost over the requisite service period, unless the award is fully vested at grant, in which case compensation cost is recognized on the 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 value of the Company’s stock at the date of grant and expire up to 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 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 and Restricted Stock Units (RSUs)
The Company grants restricted stock and restricted stock units as part of its stock-based compensation arrangements. Restricted stock represents issued common shares that are subject to forfeiture until vesting conditions are satisfied, whereas restricted stock units represent the right to receive common shares upon satisfaction of vesting conditions. Restricted stock and restricted stock units may include service conditions, performance conditions, or market conditions.
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 Restricted Stock and 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.
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| Convertible Notes Payable | 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.
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| DeFi Lending Arrangements | DeFi Lending Arrangements
The Company accounts for DeFi lending and borrowing arrangements, such as those executed through the Aave protocol, in accordance with ASC 470, Debt.
DeFi Borrowings
When the Company borrows under a DeFi protocol, the Company’s borrowings are currently denominated primarily in USD-pegged stablecoins, such as USDT, USDC or GHO, rather than ETH or other non-USD-pegged digital assets. Such arrangements are recognized as financial liabilities in accordance with ASC 470 and are measured at the principal amount of the stablecoin units borrowed, net of repayments. Because the borrowed stablecoins are designed to maintain a value substantially equivalent to one U.S. dollar, management believes the carrying amount of the liability approximates the U.S. dollar value of the settlement obligation. Such borrowings are presented on the balance sheet as Loans payable – DeFi protocol.
Borrowings are collateralized by the Company’s digital assets, such as ETH, which are deposited into protocol-specific smart contracts as collateral. The deposited collateral remains recorded on the balance sheet within Digital assets, as the Company retains both custody and beneficial ownership. Collateralized assets are considered restricted while serving as security for DeFi borrowings and are disclosed as such in the notes to the financial statements.
Fair value measurement of the collateralized ETH follows the guidance in ASC 820, Fair Value Measurement. Although the ETH is restricted and subject to liquidation risk, the Company continues to account for the underlying asset at fair value under ASC 350-60, Intangibles – Digital assets.
Debt modifications and extinguishments
The Company accounts for debt modifications and extinguishments in accordance with ASC 470-50, Debt – Modifications and Extinguishments. When existing DeFi debt is repaid or substantially modified, the previous liability is derecognized and replaced with a new liability at fair value. Any resulting gain or loss is recognized in the statement of operations under Loss on extinguishment of debt.
Interest expense
Interest or borrowing costs accrued under DeFi lending arrangements are recognized over the borrowing term and presented as Interest Expense in the statements of operations. Any rewards earned from the Company’s separate participation as a liquidity provider or protocol participant (e.g., Imperium) is recognized as revenue under DeFi revenues rather than interest income.
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| Dividends | Dividends
Dividends are recognized when approved by the Board of Directors and payable to stockholders. Cash dividends are recorded at the declared amount, and noncash dividends, including distributions settled in Ethereum, are measured at the fair value of the assets to be distributed when the dividend payable is recorded, with any difference upon settlement recognized in the statements of operations under Loss on settlement of dividend payable. Dividends subject to conditions or participation rights contingent upon conversion of outstanding convertible notes are not recorded until the obligation becomes determinable and payable.
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| Share Repurchases |
The Company accounts for share repurchases under the retirement method of accounting. Accordingly, shares repurchased are immediately retired and deemed cancelled, reducing both issued and outstanding shares. In connection with these retirements, the Company reduces Common Stock and Additional Paid-in Capital (“APIC”) based on a pro rata (average per-share) APIC allocation method, with any differences between the repurchase price and the book value of equity retired recorded to APIC – Share Repurchase. If necessary, amounts are recorded to Retained Earnings once APIC – Share Repurchase is exhausted.
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| Advertising Expense | Advertising Expense
Advertisement costs are expensed as incurred and included in Marketing expenses.
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| Net Income (Loss) per Share |
Basic income (loss) per share is computed by dividing the net income or loss attributable 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. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Potential common shares consist of the Company’s restricted stock units, restricted common stock, stock options, warrants, and shares issuable upon conversion of outstanding convertible notes.
For periods when the Company reports a net loss, diluted net loss per share is the same as basic net loss per share because the inclusion of potentially dilutive securities would be anti-dilutive. For periods in which the Company reports net income, diluted net income per share includes the effect of dilutive potential common shares, if any.
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements
The Company continually assesses new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) and other standard-setting bodies 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 Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Financial Statements properly reflect the change.
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 were 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 adopted ASU 2023-09 for the year ended December 31, 2025 in its Form 10-K. The adoption expanded the Company’s income tax disclosures within Note 14 – Income Taxes and did not have a material impact on the Company’s 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 guidance and interpretive publications from the American Institute of Certified Public Accountants (“AICPA”), as well as regulations and guidance from the Securities and Exchange Commission (“SEC”), did not, or are not expected to have a material impact on the Company’s present or future financial statements.
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