Accounting Policies, by Policy (Policies) |
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| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of presentation and principles of consolidation | Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of June 30, 2026, and its results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the full fiscal year or any other period.
These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on June 30, 2026. The condensed consolidated balance sheet as of December 31, 2025 was derived from the audited financial statements as of that date but does not include all disclosures required by U.S. GAAP. There have been no material changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K for the year ended December 31, 2025.
Reverse Stock Split. On May 8, 2026, the Company effected a 1-for-10 reverse stock split of its then-outstanding common stock. All share and per share amounts set forth in these condensed consolidated financial statements, including the prior period comparative amounts, have been retroactively recast to reflect the reverse stock split as if it had occurred as of the earliest period presented. |
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| Reclassifications | Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform with the current year presentation. |
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| Restatement of Previously Issued Financial Statements | Restatement of Previously Issued Financial Statements
In February 2025, the Company completed the Merger with NAHD. As consideration for the Merger, the Company issued 4,000,000 shares of its Series A Preferred Stock. The Company initially recorded the consideration transferred at a fair value of $34,569,600. During the finalization of the Company’s December 31, 2025, financial statements, the acquisition-date fair value of the 4,000,000 shares of Series A Preferred Stock issued as consideration was restated down to $18,800,000.
Accounting Standards Codification (“ASC 805”), Business Combinations, requires the consideration transferred in a business combination, including equity interests issued by the acquirer, to be measured at fair value as of the acquisition date. The $15,769,600 difference between the amount originally recorded and the acquisition-date fair value therefore represents an error in measurement in previously issued financial statements within the meaning of ASC 250, Accounting Changes and Error Corrections.
Because the identifiable assets acquired and liabilities assumed in the Merger were unchanged, the correction reduces the consideration transferred, and correspondingly goodwill, by $15,769,600, and reduces by the same amount the value recorded in stockholders’ equity for the Series A Preferred Stock issued as consideration. The correction does not change the number of shares of Series A Preferred Stock issued or outstanding, the rights and preferences of those shares, or the Company’s net loss, net loss per share, cash flows, or working capital for any period presented. The correction to the June 30, 2025 financial statements is contained in the June 30, 2026 financial statements included herein. Management is in the process of preparing the corrected financial statements for the six months ended June 30, 2025 which will be filed in an amendment on Form 10-Q/A for the period ended June 30, 2025.
The Merger was completed during the six months ended June 30, 2025. Accordingly, the restatement has no effect on total stockholders’ equity as of December 31, 2024, and affects only the line items within the condensed consolidated statement of changes in stockholders’ equity and the condensed consolidated statement of cash flows reflecting the issuance of Series A Preferred Stock as consideration for the Merger, and the resulting balance as of June 30, 2025, and September 30, 2025. The following table presents the effect of the revision on the affected line items of the condensed consolidated statement of changes in stockholders’ equity and condensed consolidated statement of cash flows for the six months ended June 30, 2025:
In addition, the Company reclassified $6.8 million from goodwill to identifiable assets and liabilities for the year ended December 31, 2025, which is related to the finalization of the Company’s December 31, 2025 acquisition-date fair value of the 4,000,000 shares of Series A Preferred Stock. This was not a correction of an error, as the purchase price allocation was provisional until that point and the amortization of said identifiable intangible assets was trued up. |
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| Accounting estimates | Accounting estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period, together with amounts disclosed in the related notes to the financial statements. The Company’s estimates used in these condensed consolidated financial statements include, but are not limited to, revenue recognition, stock-based compensation, accounts receivable reserves, inventory valuations, embedded derivatives, the valuation allowance related to the Company’s deferred tax assets, the carrying amount of goodwill and intangible assets, right of use assets, oil and gas reserve estimates and the recoverability and useful lives of long-lived assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. |
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| Revenue recognition | Revenue recognition
The Company determines, at contract inception, whether it will transfer control of a promised good or service over time or at a point in time, regardless of the length of contract or other factors. The recognition of revenue aligns with the timing of when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following five steps in accordance with its revenue policy:
Construction Services
The Company applies recognition of revenue over time. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations satisfied over time, the Company uses a cost-to-cost input method to recognize revenue with any changes in total estimated costs, and related progress toward complete satisfaction of the performance obligation being recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. The Company believes the cost-to-cost input method faithfully depicts the transfer of control to the customer because the costs incurred (principally labor, materials, and subcontractor costs) are incurred as the Company satisfies the performance obligation and are directly proportionate to the Company’s progress in transferring control of the promised goods or services to the customer. As costs are incurred, control of the work in process - and the resulting asset or service - passes to the customer, so the ratio of costs incurred to total estimated costs reasonably represents the extent to which the performance obligation has been satisfied. When the current estimate of total costs for a performance obligation indicates a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident.
Contract assets include unbilled amounts from construction services when revenue recognized under the cost-to-cost measure of progress exceeds the amounts invoiced to customers, as the amounts cannot be billed under the related contract terms. Such amounts are recoverable from customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract.
Contract liabilities from construction and engineering contracts occur when amounts invoiced to customers exceed revenues recognized under the cost-to-cost measure of progress. Contract liabilities additionally include advanced payments from customers on certain contracts. Contract liabilities decrease as the Company recognizes revenue from the satisfaction of the related performance obligation.
Although the Company believes it has established adequate procedures for estimating costs to complete on open contracts, it is at least reasonably possible that additional significant costs could occur on contracts prior to completion. The Company periodically evaluates and revises its estimates and makes adjustments as considered necessary.
Industrial Connectivity and Monitoring Service
The Company has concluded that the hardware, embedded and hosted software, post-contract customer support, and related engineering and consulting services promised in its customer arrangements are not distinct within the context of the contract. The goods and services are highly interdependent and interrelated, with the Company providing a significant integration service that combines them into a single, customer-specific industrial IoT solution. Accordingly, the Company accounts for these services as a single performance obligation.
The Company recognizes these revenues over time with respect to this combined performance obligation, as the Company’s performance creates or enhances an asset that the customer controls and the Company’s performance does not create an asset with an alternative use to the Company together with an enforceable right to payment for performance completed to date. Because the combined solution is delivered as a continuous service, the Company has determined that a time-elapsed output method faithfully depicts the transfer of control to the customer. Revenue is therefore recognized ratably over the service period, commencing on the date the solution is made available to the customer and continuing through the term of the arrangement.
Oil and Gas Sales
The Company recognizes revenue from its interests in oil and gas properties when control of the commodity transfers to the purchaser, which typically occurs at the delivery point designated in the sales contract. Revenue is derived from the Company’s proportionate share of oil and gas production under lease agreements. The Company’s other revenue is related to subscription services, of which revenue is recognized over time as services are provided.
Crypto mining revenue
The Company operates bitcoin mining equipment that it owns and participates in third-party mining pools under contractual arrangements whereby its mining equipment contributes computing power to the Bitcoin network in exchange for bitcoin rewards. Revenue from mining activities is accounted for in accordance with ASC 606, Revenue from Contracts with Customers. The Company’s performance obligation is satisfied as hash computation services are provided to the mining pool operators. Revenue is recognized when the Company has the right to receive consideration, which generally occurs when the mining pool operators determine the Company’s share of mining rewards based on the computational power contributed. The bitcoin received is measured at fair value on the date the mining rewards are earned using the quoted market price in the Company’s principal market. Electricity and depreciation of mining equipment are recorded in cost of revenues.
The following tables provide further disaggregation of the Company’s revenues by performance obligations:
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| Cryptocurrency holdings | Cryptocurrency holdings
The Company’s crypto assets consist of bitcoin generated by its cryptocurrency mining operations. These assets are measured at fair value at each reporting date, with changes in fair value recognized in operations in the period in which they occur. Fair value is determined using the quoted price in the Company’s principal market at the measurement date and is classified within Level 1 of the fair value hierarchy. Crypto assets are presented separately from other intangible assets in the condensed consolidated balance sheets and are classified as current, as the Company generally converts them to cash within one year. The Company held no crypto assets subject to contractual sale restrictions at June 30, 2026.
The Company holds substantially all of its bitcoin in self-custody wallets. Mining rewards are paid by the pool operators directly into those wallets. Bitcoin is transferred to the Company’s account at the third-party custodian only when the Company requires funds, in order to be sold; the sale proceeds are then remitted to the Company’s bank account. The account is used to execute sales and is not used to hold bitcoin over time, and the amount and timing of transfers are therefore determined by the Company’s cash requirements rather than by a fixed schedule
For the self-custody wallets, the private keys are held on hardware devices controlled by the Company. Signing authority is limited to named officers and no third party holds or has access to the keys. The wallets are not insured, and the Company bears the risk of loss, theft or unauthorized access; there is no equivalent of deposit insurance for digital assets held in this way.
Under the custody agreement, digital assets delivered to the custodian are held in trust for the Company, the custodian has no right, interest or title in them, they do not form part of the custodian’s balance sheet, and in the event of the custodian’s insolvency or receivership they pass to the Company. The agreement also provides that assets held there are not protected by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation, that they may not be segregated from the assets of other customers of the custodian, and that the custodian’s liability for loss is limited other than in cases of gross negligence, fraud or willful misconduct. Given that bitcoin is held at the custodian only transiently and that the balance at each reporting date was immaterial, the Company does not consider its exposure to the custodian to be significant.
The Company has not pledged any of its bitcoin as collateral and no bitcoin is subject to lending, staking or similar arrangements. |
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| Property and equipment | Property and equipment
Property, plant and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated lives of each asset. Estimated useful lives and capitalized amounts for significant classes of assets are as follows:
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| Co-location hosting security deposits | Co-location hosting security deposits
Security deposits consist of refundable amounts paid to Genesis Digital Assets pursuant to co-location hosting agreements. These deposits are refundable upon termination of the respective hosting agreement and are classified as non-current assets. |
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| Fair value measurements | Fair value measurements
The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.
The Company uses three levels of inputs that may be used to measure fair value:
Transfers into and transfers out of the hierarchy levels are recognized as if they had taken place at the end of the reporting period. There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques. The Company’s derivative liabilities are measured at fair value using Level 3 inputs. Other than the Company’s cryptocurrency holdings, which are measured at fair value using Level 1 inputs, the Company’s financial instruments measured at fair value consist of derivative liabilities measured using Level 3 inputs.
The following table presents the roll forward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2026:
All changes in the fair value of the embedded derivative conversion features are recorded within “Change in fair value of derivatives” on the condensed consolidated statements of operations. There were no transfers into or out of Level 3 during either period. |
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| Accounting Standards Recently Adopted | Accounting Standards Recently Adopted
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date.
The Company adopted Accounting Standards Update (“ASU”) 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, effective January 1, 2025. The Company held no crypto assets on that date, and accordingly no cumulative-effect adjustment to accumulated deficit was recorded on adoption. The Company first applied the guidance during the second quarter of 2026, when it acquired crypto assets and commenced cryptocurrency mining operations in connection with the acquisition of CS Digital Ventures, LLC described in Note 4.
In connection with those operations, the Company established accounting policies for crypto assets and for cryptocurrency mining revenue, which are described above. The initial adoption of an accounting policy for transactions that had not previously occurred is not a change in accounting principle, and no prior period amounts have been restated. Other than as described above, there have been no material changes to the Company’s significant accounting policies, or to recent accounting pronouncements adopted, from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025. |
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| Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This guidance will require additional disclosures and disaggregation of certain costs and expenses presented on the face of the income statement. The amendments are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027 with early adoption permitted. The Company is currently evaluating the impact of this new guidance to its condensed consolidated financial statements.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying condensed consolidated financial statements. |
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