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Evaluation of Liquidity and the Company’s Ability to Continue as a Going Concern
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Our audit procedures related to the going concern assessment included the following, among others:
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The Company follows “ Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ”. The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
Read in the filing ↗ Also in 10-K of Mar 26, 2026, 10-Q of May 14, 2026, 10-Q of Aug 19, 2026, 10-K of Mar 20, 2025, 10-Q of Aug 13, 2025
The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
Read in the filing ↗ Also in 10-K of Mar 26, 2026, 10-Q of May 14, 2026, 10-Q of Aug 19, 2026
The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and settlement of liabilities in the normal course of business.
Read in the filing ↗ Also in 10-Q of Aug 13, 2025
The going concern assessment was identified as a critical audit matter because of the significant judgment required by management in developing the underlying cash flow projections and the assumptions supporting the probability of executing the plans to alleviate substantial doubt. Auditing these assumptions required a high degree of auditor judgment.
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The outcome of these factors could have negative effects on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect on our business, prospects or operations as well as potentially negative effect on the value of any Ethereum or other crypto assets we hold or acquire, which would harm investors in our securities.
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Based on the Company’s cash position and liquid digital assets, consisting primarily of Ethereum held directly and not subject to long-term lockups, as of March 22, 2026, management has determined that these resources are sufficient to support its daily operations and meet its obligations for at least twelve months from the issuance date of these financial statements. Management’s assessment considers expected operating cash flows, scheduled debt service, collateral requirements associated with DeFi borrowings, and potential variability in digital asset prices. Accordingly, management has determined that there is no substantial doubt about the Company’s ability to continue as a going concern.
Read in the filing ↗ Also in 10-Q of May 14, 2026, 10-Q of Aug 19, 2026
As described in Note 13 to the financial statements, management evaluated whether conditions or events raised substantial doubt about the Company’s ability to continue as a going concern, which contemplates the continuity of operations, realization of assets, and settlement of liabilities in the normal course of business. The Company has incurred recurring net losses of $33.3 million and $1.3 million for the years ended December 31, 2025 and 2024, respectively, and has an accumulated deficit of $173.3 million as of December 31, 2025. As of December 31, 2025, the Company had approximately $1.5 million of cash and cash equivalents and working capital of approximately $150.6 million, which is comprised primarily of its liquid digital asset holdings.
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The possible crossing of the 50% threshold indicates a greater risk that a single validator could exert authority over the validation of network transactions. To the extent that a blockchain ecosystem including other validators do not act to ensure greater decentralization of validator voting power, the feasibility of a malicious actor obtaining control will increase because the botnet or malicious actor could compromise more than 50% voting power and thereby gain control of blockchain, whereas if the blockchain remains decentralized it is inherently more difficult for the botnet of malicious actor to aggregate enough voting power to gain control of the blockchain, may adversely affect an investment in our Common Stock. Such lack of controls and responses to such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any Ethereum or other crypto assets we acquire or hold, and harm investors.
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Evaluated management’s cash flow projections for the twelve-month period following the issuance date by comparing projected revenue growth rates and operating expenditure assumptions to historical trends, industry benchmarks, and available third-party market data. ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── Assessed the feasibility and probability of management’s plan to complete the proposed equity offering by reviewing the engagement letter with the underwriter, correspondence with the SEC. and the Company has historically been able to raise capital via At-the-Market equity offering. t evidence of investor interest, including a term sheet received subsequent to year-end. Evaluated the existence of digital assets by ascertaining the fair value of such assets from observable market prices. Evaluated the adequacy of the going concern disclosures in the financial statements and footnotes in accordance with ASC 205-40, including the nature of the conditions, management’s plans, and the conclusion regarding whether substantial doubt has been alleviated. Assessed management’s conclusion that substantial doubt is alleviated based on the totality of evidence gathered and the probability of the outcome of the plans described above.
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