7 paragraphs in Risk Factors of the 10-K filed Mar 26, 2026
with nothing like them in the 10-K filed Mar 20, 2025. Quoted exactly.
Paragraphs that were only edited are under 10-K change.
Compared with the Risk Factors in the latest 10-K of the other 31 Crypto companies:
a paragraph with at least half its words the same at another company is called similar, and the companies are listed under it.
A paragraph most of them have is marked boilerplate. No line means no other company has one like it.
This counts text; it does not say how serious a risk is.
We conduct periodic cybersecurity risk assessments to identify reasonably foreseeable internal and external cybersecurity threats, including assessments conducted in connection with material changes to our business operations, systems, or third-party relationships. These risk assessments evaluate, among other things, the potential likelihood and magnitude of harm from such risks, including potential impacts on our operations, financial condition, reputation, digital assets, and business strategy, as well as the effectiveness of existing controls and safeguards.
Risk assessments consider information from internal stakeholders, known security vulnerabilities, threat intelligence, reported incidents affecting other companies in our industry, and information obtained from third parties and external advisors, as appropriate. The results of these assessments are used to inform enhancements to our cybersecurity controls, operational processes, and broader Company-wide risk management activities, which are periodically reported to management and the Audit Committee.
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We maintain a cybersecurity incident response and recovery plan designed to guide our response to cybersecurity incidents. The plan provides a structured framework for incident identification, containment, investigation, remediation, and recovery, and includes defined escalation and communication protocols. In the event of a cybersecurity incident, management evaluates the incident to determine its severity and potential impact, including whether the incident is reasonably likely to be material, based on both quantitative and qualitative factors.
We maintain a vendor risk management program designed to identify and mitigate cybersecurity risks associated with third-party service providers. Third-party providers are subject to cybersecurity risk assessments during onboarding, contract renewal, and upon the identification of elevated risk. These assessments may include questionnaires, management discussions, third-party intelligence, and review of available SOC reports or similar assurances. Cybersecurity incidents affecting third-party providers are evaluated for potential impact to the Company, as appropriate.
Our policies require employees and relevant third-party contractors to contribute to our cybersecurity efforts. We provide periodic cybersecurity and data protection awareness training and require the prompt reporting of suspicious activity or potential cybersecurity incidents to management.
Our Board retains ultimate oversight responsibility for cybersecurity risk. The Board has delegated primary oversight of cybersecurity and information technology risks to the Audit Committee as part of its risk oversight function.
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In the event of a cybersecurity incident, management evaluates the incident and, as appropriate, escalates matters to the Audit Committee and the Board. The Audit Committee receives periodic updates regarding cybersecurity risks, program effectiveness, and any material cybersecurity incidents. The Audit Committee also meets regularly with the Company’s independent registered public accounting firm and discusses cybersecurity risks relevant to financial reporting and internal controls, as appropriate.
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New in the latest 10-Q
33 paragraphs in the 10-Q filed Aug 19, 2026 with nothing like
them in the 10-Q filed May 14, 2026 (at least half the words must differ; new numbers alone do not count).
Quoted exactly, grouped by the item heading above them. This is text that changed, not a judgement of how serious it is.
Financial statements and notes
During the second quarter of 2026, the Company identified errors in the presentation of certain DeFi transactions in its previously issued statements of cash flows. Specifically, certain DeFi borrowing proceeds received in USD-pegged stablecoins, repayments settled through digital assets or stablecoins, and related deemed digital-asset purchase or sale activity were included on the face of the statements of cash flows as cash investing or financing activities even though the transactions did not involve cash or cash equivalents. Certain of these transactions were also disclosed as supplemental noncash investing and financing activities. The Company corrected the presentation by removing the applicable noncash amounts from the face of the statements of cash flows and presenting them as supplemental noncash investing and financing activities, as applicable.
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The Company evaluated the errors under SAB Topic 1. M and SAB Topic 1. N and concluded that they were not material to the previously issued financial statements taken as a whole. The revisions have no effect on net income or loss, earnings per share, total assets, total liabilities, stockholders’ equity, net change in cash, or ending cash. The comparative statement of cash flows for the six months ended June 30, 2025 has been revised accordingly. Other affected prior-period statements of cash flows will be revised when those periods are next presented.
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Effect of the revision on the statement of cash flows for the six months ended June 30, 2025, as previously filed:
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Correction of Immaterial Error in the Previously Issued Quarter Ended March 31, 2026.
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As previously reported, the Company’s statement of cash flows for the three months ended March 31, 2026 included $ 18,221,577 of proceeds from sale of productive digital assets and net cash provided by investing activities, and $ 500,000 of proceeds from DeFi borrowing, $( 18,221,577 ) of payments on DeFi borrowing, and net cash used in financing activities of $( 17,721,577 ), each of which reflected the same DeFi presentation error described above. As revised, these amounts are presented as noncash investing and financing activity, and net cash provided by investing activities and net cash used in financing activities for that period are each $ 0. This correction has no effect on net decrease in cash or cash at the end of the period for the quarter ended March 31, 2026. The Company evaluated this error under SAB Topic 1. M and SAB Topic 1. N and concluded it was not material to the financial statements for the three months ended March 31, 2026, taken as a whole. Accordingly, the Company is not amending its Form 10-Q for the quarter ended March 31, 2026.
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The revision tables above show the affected SCF lines and section subtotals (as previously reported, adjustment and as revised) for the six-month 2025 comparative and for the three months ended March 31, 2026.
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The Company tests each liquidity pool position for impairment on a daily basis for every day the position is outstanding, comparing the estimated fair value of the position, based on the lowest fair value of the underlying redeemable token composition for the day, to its then-current carrying value. If the fair value on a given day is less than the carrying value, the Company recognizes an impairment loss and reduces the carrying value to that day’s fair value, establishing a new carrying value. Because the carrying value is adjusted only downward, it reflects the lowest fair value observed for the position since inception or the most recent write-down; subsequent increases in fair value above that level are not recognized, consistent with the cost-less-impairment model under ASC 350-30.
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This daily measurement is applied uniformly to every position, including a position that is both opened and fully closed within the same reporting period, without regard to whether a separate qualitative or quantitative triggering event has occurred. Impairment recognized while a position is open is not reversed; the resulting carrying value carries through to the realized gain or loss recognized upon withdrawal or closure of the position.
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Fair value is estimated at each measurement date from on-chain state at a standardized cut-off, applying the Company’s established pricing policy to the underlying tokens attributable to the position, except that ETH/WETH is priced using that day’s low price rather than its closing price so as to capture the lowest measurable fair value of the underlying pairing for the day, consistent with the Company’s existing digital asset valuation approach, and excluding unclaimed fees separately recognized.
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While the CODMs evaluate NodeOps, Builder+, and Imperium individually for internal management purposes, management has determined that the Company operates as a single reportable segment under ASC 280, Segment Reporting, due to shared infrastructure, centralized management oversight, and the common objective of on-chain revenue generation across all three business lines. For presentation on the face of the statements of operations, revenues from NodeOps and Builder+ are aggregated into a single financial statement line item, Blockchain infrastructure revenues, because both activities share substantially similar production processes (operation of validator and block-building infrastructure on proof-of-stake networks) and methods of revenue distribution (on-chain protocol payments). Revenues from Imperium are presented separately as DeFi revenues, reflecting the distinct economic drivers of decentralized lending and liquidity pool participation, including counterparty exposure to smart contract protocols and yields determined by protocol-level supply and demand.
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In December 2023, the FASB issued ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), which requires entities to measure certain crypto assets that meet specified scope criteria at fair value, with changes in fair value recognized in net income each reporting period. The ASU also requires disclosures about significant crypto asset holdings, contractual sale restrictions, and changes in holdings during the reporting period. The amendments in ASU 2023-08 were effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted. The Company early adopted ASU 2023-08 for the year ended December 31, 2024 in its Form 10-K. The adoption resulted in the measurement of the Company’s in-scope digital assets, including Ethereum, at fair value with changes recognized in net income, and expanded the Company’s disclosures within Note 4 - Digital Assets (Fair Value).
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In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”), which clarifies the requirements for determining whether the settlement of a convertible debt instrument should be accounted for as an induced conversion rather than a debt extinguishment. The amendments in ASU 2024-04 are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company adopted ASU 2024-04 effective January 1, 2026. The Company did not have any induced conversions of convertible debt during the three and six months ended June 30, 2026, and therefore the adoption did not have an impact on the Company’s financial statements.
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NodeOps Builder+ Imperium Total NodeOps Builder+ Imperium Total For the Three Months Ended For the Six Months Ended
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NodeOps Builder+ Imperium Total NodeOps Builder+ Imperium Total For the Three Months Ended For the Six Months Ended
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The following table reconciles total segment gross profit to consolidated net income (loss):
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During the period from July 1, 2026 to August 17, 2026 the Company borrowed an additional $6,500,000 in stablecoins through Aave, a decentralized finance protocol, collateralized by the Company’s ETH already deposited on the protocol. No additional collateral was posted in connection with these borrowings. During this same period, the Company also withdrew 1,340 ETH, with an aggregate fair value of approximately $2,497,000, which was deployed into additional Imperium liquidity pools.
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As of August 17, 2026, the Company had approximately $42,979,000 in outstanding DeFi borrowings, inclusive of accrued interest, collateralized by approximately 46,525 ETH with an aggregate fair value of approximately $88,650,000, based on the ETH closing price of $1,905 on that date.
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On July 1, 2026, the Board of Directors appointed Chris Janis as an independent director, Chairperson of the Audit Committee, and a member of the Compensation Committee. Mr. Janis will receive compensation on the same terms as the Company’s other independent directors, as disclosed in the Company’s Current Report on Form 8-K filed in connection with the appointment.
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Professional fees increased for the 2026 Quarter and the 2026 Period compared to the respective prior year periods, primarily due to higher accounting fees reflecting the onboarding of a new audit firm and elevated annual audit billings. For the 2026 Period, legal fees also increased reflecting the Company’s ongoing operational and compliance activities. These increases were partially offset by lower investor relations costs in both the 2026 Quarter and the 2026 Period.
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Marketing expenses for the 2026 Period decreased compared to the 2025 Period, primarily due to the non-recurrence of significant one-time advertising campaigns in the 2025 Period.
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Net cash provided by (used in) investing activities was $0 during the 2026 Period, compared to net cash used in investing activities of approximately $9.4 million in the 2025 Period. The Company had no cash investing activity during the 2026 Period because deployments of digital assets into liquidity pool positions, withdrawals of digital assets from liquidity pool positions, related swaps between ETH and stablecoins undertaken to facilitate such liquidity pool activity, and the disposition of digital assets in exchange for stablecoins were settled in digital assets rather than cash and, accordingly, are excluded from investing activities on the face of the statement of cash flows and are presented within the supplemental disclosure of noncash investing and financing activities.
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The Company had no net cash provided by or used in financing activities during the 2026 Period, compared to net cash provided by financing activities of approximately $11.3 million in the 2025 Period. During the 2026 Period, the Company received approximately $1.0 million of DeFi borrowing proceeds in stablecoins, settled approximately $26.5 million of DeFi borrowing principal through digital assets and stablecoins, and settled the Loyalty Payment described in Note 11 - Dividends and Capital Distributions through a non-cash distribution of approximately $723,000 in ETH to eligible common stockholders. Because these transactions did not involve cash or cash equivalents, they are excluded from financing activities on the face of the statement of cash flows and are presented within the supplemental disclosure of noncash investing and financing activities.
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Cash financing activities during the 2025 Period primarily consisted of approximately $4.1 million of net proceeds from the Company’s at-the-market offering and approximately $7.3 million of net proceeds from the issuance of convertible notes, partially offset by approximately $0.1 million of debt issuance costs.
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Controls and procedures
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2026 because of the material weakness in internal control over financial reporting described below.
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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
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Management identified a material weakness in the design and operation of controls over the preparation and review of the Company’s statements of cash flows. Specifically, the Company’s statement-of-cash-flows worksheet did not adequately distinguish between cash and noncash investing and financing activities, and the related financial statement review controls were not designed or operating at a level of precision sufficient to verify that material investing and financing transactions involved cash or cash equivalents before inclusion on the face of the statement of cash flows.
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As a result, certain noncash DeFi borrowing and repayment transactions were presented on the face of previously issued statements of cash flows as cash investing and financing activities while also being disclosed as supplemental noncash investing and financing activities. This resulted in an immaterial correction of an error related to certain gross investing and financing cash flows for the affected periods, although the errors did not affect the Company’s reported ending cash and cash equivalents, net change in cash and cash equivalents, results of operations, or financial position.
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The material weakness resulted in revisions to the Company’s previously issued statements of cash flows for the affected periods, as described in Note 2, “Basis of Presentation,” to the unaudited condensed financial statements included in this Quarterly Report on Form 10-Q.
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Notwithstanding the material weakness, management believes that the unaudited condensed financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.
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Management has begun implementing a remediation plan designed to address the material weakness. The remediation plan includes:
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redesigning the statement-of-cash-flows worksheet to separately identify cash and noncash investing and financing activities; requiring documented verification of whether material investing and financing transactions involve cash or cash equivalents before inclusion on the face of the statement of cash flows; enhancing the review of DeFi and other digital-asset transactions to verify their appropriate cash-flow classification and presentation; reconciling investing and financing activity presented on the face of the statement of cash flows to related supplemental noncash disclosures to identify potential duplicate presentation; and enhancing the documentation and review of significant, unusual, and nonroutine digital-asset transactions affecting the statement of cash flows.
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Management’s remediation efforts are ongoing. The material weakness will not be considered remediated until the enhanced controls have been fully implemented, have operated for a sufficient period of time, and management has concluded, through testing, that the controls are designed and operating effectively.
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As noted above, subsequent to June 30, 2026, management began implementing the remediation measures described in “Remediation of the Material Weakness” above. Management will continue to evaluate and monitor the design and operating effectiveness of these measures.
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The 10-Q's risk factors against the 10-K
Item 1A of the 10-Q filed Aug 19, 2026 against Item 1A of the 10-K filed Mar 26, 2026.
A 10-Q repeats only the risks that changed, so a 10-K paragraph that is missing from it is not counted as removed.
Added is a paragraph with nothing like it in the 10-K, Reworded a sentence that is in both with several words changed,
Quiet changes a sentence in both where one to four words changed and one is a hedge or a modal
(cut words struck through, new words highlighted and underlined).
Text on the page, not a score; each links to the filing at sec.gov.
Added10-Q 2026-08-19 vs 10-K 2026-03-26
There have been no material changes in our risk factors from those disclosed in (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and (ii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. The risk factors previously disclosed in such reports constitute important cautionary statements and qualifications with respect to the forward-looking statements and other representations contained in this Quarterly Report on Form 10-Q. While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business to the extent practicable under the circumstances, some level of risk and uncertainty will always be present. The risk factors described in our Form 10-K and our Form 10-Q for the quarter ended March 31, 2026 describe some of the risks and uncertainties associated with our business, which we strongly encourage you to review. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects.
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