BITMINE IMMERSION TECHNOLOGIES, INC.

BITMINE IMMERSION TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except for shares and per share data)

NOTE 1 –NATURE OF THE BUSINESS

About Bitmine Immersion Technologies, Inc.

Bitmine Immersion Technologies, Inc. its and its wholly owned subsidiary (“Bitmine” or the “Company”) operates in the digital asset industry with a strategic focus on acquiring, holding, and managing digital assets as part of its treasury management activities. During 2025, the Company refined its business strategy to emphasize digital asset treasury operations, reflecting a transition from primarily mining and hosting activities toward the long-term accumulation and optimization of digital asset holdings. Bitmine continues to maintain ancillary mining, leasing, and consulting operations; however, its primary objective is to manage digital assets as long-term strategic reserves to support liquidity, and capital formation. The Company’s activities also include investing in digital assets and higher-risk, early-stage blockchain opportunities (“moonshot” investments) and participating in staking arrangements to earn staking rewards.

The Company’s year-end is August 31st.

Basis of Presentation

These interim unaudited condensed consolidated financial statements (the “Interim Statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) and do not include all of the information and footnotes required by U.S. GAAP for complete financial statements as certain information has been condensed or omitted. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, these Interim Statements include all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. These Interim Statements should be read in conjunction with the audited consolidated financial statements and notes contained in the Company’s Annual Report on Form 10-K for the period ended August 31, 2025, as filed with the SEC (“2025 Annual Report”).

The number of common shares outstanding as of August 31, 2025 and November 30, 2025 has been revised from 234,712,324 shares to 232,312,324 shares and from 408,578,823 shares to 405,398,823 shares, respectively. The revision was required because the Company previously included shares based on the trade date rather than the settlement date. This revision does not represent the correction of a material error requiring prior-period restatement. The revision has no effect on the basic or diluted earnings per share for the periods impacted and does not affect consolidated results of operations, shareholders’ equity, or cash flows.

For purposes of clarity and ease of presentation, all dollar amounts in these financial statements have been rounded to the nearest whole number. However, the underlying data used in the calculations are not rounded, and the totals presented may differ slightly due to rounding. These differences are considered immaterial and do not affect the overall financial position or results of operations.

Principles of Consolidation

The Interim Statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany account balances and transactions have been eliminated in the Interim Statements.

Reverse Stock Split

On May 15, 2025, the Company effected a 1-for-20 reverse stock split of its common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective by filing an amendment to the Company’s certificate of incorporation. The Reverse Stock Split was necessary to enable the Company to meet the initial minimum share price requirements of a national securities exchange. The Company did not issue any fractional shares as a result of the reverse split. Instead, shareholders received cash equal to the market value of their fractional shares.

The information in this report as of August 31, 2024, and for the period ended February 28, 2025, and all references thereto have been retroactively adjusted to reflect the split.

Reclassifications

During the current quarter, the Company revised the presentation of certain income statement captions to provide a more streamlined and consolidated view of its financial statements. Prior-period amounts have been reclassified to conform to the current presentation. Operating expense categories previously presented separately have been combined into “General and administrative expenses,” on the condensed consolidated statements of operations. In addition, the loss on extinguishment of debt and bad debt expense recorded for the three and six months ended February 28, 2025 have been reclassified to other income (expense) to conform to current presentation. These changes did not have a material effect on the Company’s financial condition or results of operations as previously reported.

NOTE 2 –SUMMARY OF SIGNIFICANT POLICIES

The Company’s significant accounting policies are disclosed in “Note 2. Summary of Significant Accounting Policies” in our 2025 Annual Report and are supplemented by the notes included in this Quarterly Report on Form 10-Q (the “Quarterly Report”).

Revenue Recognition

Revenue from Staking

The Company stakes its own ETH to validator nodes on the Ethereum blockchain. No third-parties are able to contribute ETH to the Company’s validators. The Company operates all validator nodes through third-party infrastructure providers acting at the Company’s direction and instruction. Staking rewards earned from these activities represent an output of the Company’s ordinary activities

The Company recognizes revenue from native staking in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) by following the five steps -- identify the contract, identify the performance obligation, determine the transaction price, allocate the transaction price to the performance obligation and determine when to recognize revenue. Revenue is recognized upon transfer of control of promised products or services (i.e., performance obligations) to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services.

The Company earns staking rewards in the form of ETH from self-staking. A contract with enforceable rights and obligations exists when the Company stakes its tokens to the validator and starts solving blocks on the Ethereum blockchain, which is the customer by analogy. The contract term is the length of each staking epoch, which is approximately 6.4 minutes. Staking rewards are recognized as revenue when the Company satisfies its performance obligations (i.e., successfully validates blocks or transactions as determined by the protocol) ratably over the contract term. The ETH earned are non-cash consideration and therefore measured at fair value at the inception of each contract.

The Company’s staking revenue is subject to cost of sales, which primarily comprises direct expenses associated with the ETH staking business, including service fees payable to the service provider.

Because the Company does unilaterally control the validator, the Company is the principal to the validation service. As such, the Company presents staking rewards as revenue on a net basis, reflecting only the portion of protocol rewards to which it is entitled.

Contract Liabilities

The Company’s contract liabilities represent advance payments from customers relating to consulting and leasing activities. As of February 28, 2026 and August 31, 2025, the Company’s contract liability balance amounted to $169 and $1,067, respectively. The entire balance as of August 31, 2025 was recognized as revenue during the six-month period ended February 28, 2026. The changes to contract liabilities at February 28, 2026 are as follows:

Leases

A lease is a contract, or part of a contract, that conveys the right to both (i) obtain economic benefits from and (ii) direct the use of an identified asset for a period of time in exchange for consideration. The Company evaluates its contracts to determine if they contain a lease and classifies any lease components identified as an operating or finance lease. For each lease component, the Company recognizes a right-of-use (“ROU”) asset and a lease liability. ROU assets and lease liabilities are presented separately for operating and finance leases; however, the Company currently has no finance leases. The Company’s operating leases are primarily related to office space in the United States.

In a contract that contains a lease, a component is an item or activity that transfers a good or service to the lessee. Such contracts may be comprised of lease components, non-lease components, and elements that are not components. Each lease component represents a lessee’s right to use an underlying asset in the contract if the lessee can benefit from the right of use of the asset either on its own or together with other readily available resources and if the right of use is neither highly dependent nor highly interrelated with other rights of use. Non-lease components include items such as common area maintenance and utilities provided by the lessor. The Company has elected the practical expedient to not separate lease components from non-lease components for office space. For each lease within this asset class, the non-lease components and related lease components are accounted for as a single lease component.

Operating lease liabilities are initially and subsequently measured at the present value of unpaid lease payments, discounted at the discount rate of the lease. Operating lease ROU assets are initially measured as the sum of the initial lease liability, any initial direct costs incurred, and any prepaid lease payments, less any lease incentives received. The ROU asset is amortized over the term of the lease. The amortization of operating lease ROU assets is included in “Non cash lease expense” within the operating activities section of the condensed consolidated statements of cash flows. A single lease expense is recorded within operating expenses in the condensed consolidated statements of operations on a straight-line basis over the lease term. Variable lease payments that are not included in the measurement of the lease liability are recognized in the period when the obligations for those payments are incurred.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its incremental borrowing rate, which is based on an estimate of the Company’s secured borrowing rate. ROU assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both ROU assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants.

The Company does not recognize lease liabilities or ROU assets for any short-term leases with a non-cancellable lease term of 12 months or less. Instead, the lease payments for these short-term leases are expensed on a straight-line basis over the lease term, and any variable payments are recognized in the period when the obligations for those payments are incurred. The Company believes that, using this methodology, the expense recorded reasonably reflects the Company’s short-term lease commitments.

Derivatives – Option Contracts

During the quarter ended February 28, 2026, the Company began entering into ETH-denominated option contracts, primarily through the sale of put options, as part of its digital asset treasury strategy. These contracts meet the definition of derivative instruments under ASC 815, Derivatives and Hedging. The Company does not designate any derivative instruments as hedging instruments for accounting purposes.

Upon execution of an option contract, premiums received are recorded as a derivative liability on the consolidated balance sheet. Derivative assets and liabilities are subsequently measured at fair value at each reporting date, with changes in fair value recognized in earnings. If an option is exercised, the derivative liability is derecognized upon settlement. If an option expires unexercised, the related derivative liability is derecognized, with the resulting premium recorded in income.

Gains and losses related to ETH option contracts, including the effects of fair value remeasurement and settlements, are recorded within Other income (expense) in the condensed consolidated statements of operations.

The fair value of ETH option contracts is determined using observable market inputs where available, including quoted prices for similar instruments, ETH spot prices, implied volatility, time to expiration, and counterparty credit considerations. These inputs are classified within Level 2 of the fair value hierarchy.

As of February 28, 2026, the Company recorded a derivative liability of $2,211 on the condensed consolidated balance sheet, classified within “Other Current Liabilities.” The balance represents the fair value of outstanding ETH option contracts. For the three and six months ended February 28, 2026, the Company recognized $24,090 of premium income, along with an unrealized loss of $65,272, attributable to changes in the fair value of open option positions. The company had no derivative trading during the three and six-months February 28, 2025.

Equity Security Investment

The Company accounts for its equity security investment in which it does not have significant influence under ASC 321. For investments that do not have a readily determinable fair value, the Company has elected the measurement alternative to account for the investment. Such investments are recorded at cost and subsequently measured at cost, less impairment, and adjusted for changes in the fair value of the investment for any observable transactions in orderly markets for identical or similar investments; adjustments are recognized in earnings in the period of the change. The Company evaluates these investments for impairment when indicators exist and records an impairment loss if the carrying amount is not recoverable. Dividends are recognized in earnings when the Company’s right to receive payment is established, and gains or losses on disposals are recognized in earnings when realized.

Recent Accounting Pronouncements

The Company has not adopted any new accounting pronouncements since the audited consolidated financial statements for the year ended August 31, 2025. See the 2025 Annual Report for information pertaining to the effects of recently adopted and other recent accounting pronouncements.

New Accounting Standards and Accounting Standards Not Yet Adopted

In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with U.S. generally accepted accounting principles. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. The update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We are assessing the effect of this update on our Interim Statements and related disclosures.

In January 2025, the FASB issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). ASU No. 2025-01 amends the effective date of ASU No. 2024-03 to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31, referred to as non-calendar year end entities. All public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The amendments should be applied prospectively with retrospective applications also permitted. Additionally, in December 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The update improves financial reporting by requiring that public business entities disclose additional information about certain costs and expenses categories: (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization in the notes to financial statements at interim and annual reporting periods. This update is effective for fiscal years beginning after December 15, 2026, and early adoption is permitted. The amendments should be applied prospectively with retrospective applications also permitted. The Company is currently evaluating the impact the standard will have on its consolidated financial statements and related disclosures.

NOTE 3 –DIGITAL ASSETS

The Company accounts for its digital assets, which are comprised of BTC and ETH as indefinite-lived intangible assets in accordance with ASC 350-60,Intangibles—Goodwill and Other-Crypto Assets. The Company has ownership of and control over its BTC and ETH and uses third-party custodial services at multiple locations that are geographically dispersed to store its digital assets. The Company’s digital assets are initially recorded at cost. Subsequently, they are measured at fair value, with the gain or loss associated with remeasurement of the digital assets reported in net income.

The fair value of the Company’s digital assets is determined based on the quoted price in its principal market, CoinBase, at the time of measurement (midnight UTC). The Company determines its principal market as the market that it has access to and has the greatest volume and level of orderly transactions in accordance with ASC 820,Fair Value Measurement. The Company tracks the cost of its digital assets using the first-in-first-out (FIFO) method. During both three and six months ended February 28, 2026 and 2025, the Company realized gains from the sale of digital assets of $0 and $0, respectively.

Digital assets earned by the Company through its mining activities are included within operating activities on the accompanying condensed consolidated statements of cash flows. The sales of digital currencies are included within investing activities in the accompanying condensed consolidated statements of cash flows and any realized gains or losses from such sales are included in operating expense in the condensed consolidated statements of operations.

The Company holds its BTC in an account at Bitgo Trust (“Bitgo”), a well-known BTC custodian, which it also uses to liquidate its BTC when necessary. The Company also has an account with Gemini Trust Company, LLC, which is regulated by the New York Department of Financial Services as a backup facility.

Additionally, the Company has strategically invested in ETH, becoming the largest corporate holder of ETH, with over 4,473,459 tokens valued at approximately $8,793,210 as of February 28, 2026. These purchases were made through major OTC desks like Bitgo and Galaxy Digital. The Company views ETH as a long-term reserve asset, central to its positioning in the AI and digital asset investment cycles and aims to eventually hold 5% of the total ETH supply.

See “Note 3. Digital Assets”, for further information regarding the Company’s purchases and sales of digital assets during the reporting period.

The following table sets forth the units held, cost basis, and fair value of both BTC and ETH held, as shown on the balance sheet as of February 28, 2026:

Cost basis is equal to the cost of the digital asset, net of any transaction fees, if any, at the time of purchase or upon receipt. Fair value represents the quoted digital assets prices within the Company’s principal market at the time of measurement (midnight UTC). The following table presents a reconciliation of BTC held as of February 28, 2026 and February 28, 2025:

The Company acquired ETH as a part of a strategic business shift during fiscal year 2025. The following table presents a reconciliation of ETH held as of February 28, 2026:

Note: The Company did not hold any ETH as of February 28, 2025.

NOTE 4 –PROPERTY AND EQUIPMENT

The following tables set forth the components of the Company’s property and equipment at February 28, 2026 and August 31, 2025:

For the three months ended February 28, 2026 and 2025, the Company recorded depreciation expense of $124 and $228, and for the six months ended February 28, 2026 and 2025, the Company recorded depreciation expense of $248 and $358, respectively, recorded within “cost of sales self-mining” in the condensed consolidated statement of operations.

The Company did not record any impairment charges during the three months ended February 28, 2026 or 2025. For the six months ended February 28, 2026, the Company recognized impairment charges of $200, with no impairment charges recorded during the comparable prior-year period. Impairment charges are recorded within “general and administrative expenses” in the condensed consolidated statement of operations.

NOTE 5 –ACCRUED LIABILITIES

As of February 28, 2026 and August 31, 2025, accrued liabilities are composed of the following:

NOTE 6 –INVESTMENTS

Investment in Beast Industries

During the three months ended February 28, 2026, the Company completed a strategic minority investment in Beast Industries Co. (“Beast Industries”), a privately held Delaware corporation. On January 15, 2026, the Company acquired 3,974,167 shares of Series C preferred stock of Beast Industries at a purchase price of $40.26 per share, for total cash consideration of approximately $160,000, pursuant to a Series C Preferred Stock Purchase Agreement. In addition, on the same date, the Company acquired 709,672 shares of common stock in a secondary transaction from an existing shareholder for cash consideration of approximately $20,000. The common shares acquired were originally issued as Class B common stock and automatically converted into Class A common stock upon transfer to the Company in accordance with Beast Industries’ certificate of incorporation. Collectively, these transactions resulted in total cash consideration of approximately $180,000. As part of the investment, the Company also capitalized $6,024 of transaction costs directly related to the transaction. In connection with the Series C investment, the Company also entered into a side letter agreement pursuant to which Beast Industries has the right, exercisable for a limited period, to notify the Company of its election to sell up to $20,000 of additional preferred equity to the Company at the Series D preferred stock price, with the same rights, preferences, and priorities as the Series C preferred stock. Upon receipt of such notice, the Company has a 30-day period to elect to purchase the additional preferred equity. As of February 28, 2026, Beast Industries has not exercised its notification right, and the Company has not purchased any additional preferred equity under the agreement.

At the time of the transaction, the Company owned approximately 4% of the equity interest in Beast Industries, which is not a majority equity interest or otherwise control of Beast Industries. Further, the Company does not have the ability to exercise significant influence over Beast Industries’ operating or financial policies. The Series C preferred stock and Class A common stock represent equity securities within the scope of ASC 321, Investments - Equity Securities. Because the securities are not publicly traded and do not have a readily determinable fair value, the Company has elected the measurement alternative under ASC 321.

As of February 28, 2026 the investment in Beast was $186,024 and recorded as an asset within “equity investment measured at cost” in the condensed consolidated balance sheet. There was no impairment recorded for the three months ended February 28, 2026.

Investment in Eightco

On September 8, 2025, the Company entered into a Securities Purchase Agreement as part of a private investment in public equity transaction led by Eightco Holdings Inc. (“Eightco”). Pursuant to the agreement, Bitmine invested $20,000 in Eightco through the purchase of Eightco common stock at a purchase price of $1.46 per share. The transaction closed on September 9, 2025.

As of February 28, 2026 the trading price of Eightco was $1.05. As a result, the Company recorded an Unrealized loss from trading securities of $21,507 and $5,616 for the three and six months ended February 28, 2026, respectively, in its condensed consolidated statements of operations.

At the time of the transaction, the Company owned approximately 7% of the equity interest in Eightco, which is not a majority equity interest or otherwise control of Eightco. The Company accounts for its ownership interest in Eightco as an equity security with a readily determinable fair value in accordance with ASC 321. Under this method, the investment is recorded at fair value with changes in fair value recognized in earnings.

NOTE 7 –LEASES

The Company leases office space in the United States under operating lease agreements. During the three months ended February 28, 2026, the Company commenced leasing an office in Norwalk, Connecticut, effective as of February 18, 2026, which will serve as its corporate headquarters going forward. Office space represents the Company’s only material underlying asset class subject to operating leases, and the Company has no finance leases. The Company recorded operating lease costs for the six months ended February 28, 2026 of $5. The Company’s operating right-of-use assets and lease liabilities are as follows:

The current portion of the Company’s operating lease liabilities are recorded within “Other current liabilities” on the condensed consolidated balance sheet. The weighted average lease term and discount rate as of February 28, 2026 and August 31, 2025 are as follows:

The following table presents other lease details for the periods indicated:

The following table presents the maturities of the Company’s operating lease liabilities as of February 28, 2026:

NOTE 8 –STOCKHOLDERS’ EQUITY

Common Stock

As of February 28, 2026, the Company had 493,905,227 shares of common stock outstanding.

On January 15, 2026, the Company’s stockholders approved an amendment to increase the total number of shares of common stock the Company is authorized to issue from 500,000,000 shares to 50,000,000,000 shares.

On July 9, 2025, the Company entered into a Controlled Equity Offering Sales Agreement with each of Cantor Fitzgerald & Co. and ThinkEquity LLC, pursuant to which the Company, from time to time, at its option may offer and sell shares of its common stock (the “ATM Offering”). For further information regarding the ATM Offering, refer to “Note 9. Stockholders’ Equity” of the 2025 Annual Report. As of February 28, 2026, the Company sold 253,492,664 shares of common stock pursuant to the ATM Offering and received cash proceeds of $10,068,914 net of the commission of $122,357.

During the three and six months ended February 28, 2026, the Company paid cash dividends totaling $4,258 ($0.01 per share) to holders of common stock. These dividends were recorded as a reduction to accumulated deficit.

Liability Classified Warrants

On September 22, 2025, the Company entered into a securities purchase agreement with an institutional investor, pursuant to which it issued (i)5,217,715 shares of common stock at a price of $70 per share and (ii) warrants to purchase up to 10,435,430 shares of common stock at an exercise price of $87.50 per share. The warrants are immediately exercisable and expire on March 22, 2027. The exercise price and number of shares issuable upon exercise are subject to adjustment for certain corporate events, including stock dividends, splits, and fundamental transactions. The warrants contain standard anti-dilution provisions and may be adjusted in connection with certain fundamental transactions. In the event of a fundamental transaction, the holder may be entitled to receive cash, securities, or other property, consistent with the terms of the warrant agreement.

The warrants are classified as liabilities in accordance with ASC 815, as they contain provisions that could require net cash settlement in circumstances not solely within the Company’s control. Upon issuance, the warrant liability was measured at fair value using a Black-Scholes valuation model. The warrant liability is remeasured at fair value at each reporting date, with changes in fair value recognized in earnings.

At February 28, 2026, the fair value of the warrant liability was $18,575. The fair value was determined using the Black-Scholes option pricing model, with the following key inputs:

For the three and six months ended February 28, 2026, the Company recognized a gain of $80,040 and $238,252, respectively related to changes in the fair value of the warrant liability. During the six months ended February 28, 2026, no liability classified warrants were exercised and all remained outstanding as of February 28, 2026. There were no liability classified warrants held as of August 31, 2025

Series A and B Convertible Preferred Stock

The Company is authorized to issue 500 shares of Series A and Series B Convertible Preferred Stock. All outstanding shares of Series A and Series B Convertible Preferred Stock were converted into common stock during the year ended August 31, 2025. No preferred shares were outstanding as of February 28, 2026.

NOTE 9 –STOCK-BASED COMPENSATION

Restricted Stock Awards (“RSAs”)

All RSAs were vested as of August 31, 2025 and the Company did not issue any additional RSAs for the six months ended February 28, 2026.

During the three months ended February 28, 2026 and 2025, the company recognized compensation expenses of $0 and $201, respectively. For the six months ended February 28, 2026 and 2025, the Company recognized compensation expenses of $0 and $672 for RSAs, respectively.

Restricted Stock Units (“RSUs”)

Awards of RSUs are generally subject to forfeiture if employment terminates prior to vesting. The Company’s RSU’s consist of time-based and performance-based units, that are settled in shares of the Company’s common stock upon vesting.

On September 1, 2025, the Company executed employment agreements with select executives, committing to issue RSUs with a total annual fair value of $1,694 for the duration of their anticipated employment term. The quantity of RSUs granted each year will be determined on September 1, based on the prevailing price of the Company’s common stock on that date. These RSUs will vest in four equal installments over one year following September 1. The estimated employment term for these executives is two years. The RSUs are classified as equity awards, as settlement occurs in shares and the number of shares delivered upon vesting is set. The aggregate grant date fair value of the RSUs issued is $2,263, and this amount will be recognized on a straight-line basis over the two-year period.

On September 1, 2025, the Company granted an initial tranche of 38,830 RSUs, determined using a stock price of $43.62 as of that date. These RSUs are scheduled to vest over the course of one year commencing on September 1, 2025. As of February 28, 2026, all of these executives were terminated which resulted in vesting of 11,083 RSUs issued.

On December 9, 2025, the Company granted in aggregate 16,000 time-based RSUs to two former Directors, which were fully vested on the grant date.

During the three months ended February 28, 2026, the Company granted in aggregate 51,591 time-based RSUs to two employees of the Company, which vest in quarterly installments over the 12 months following the grant date. Both employees would receive annual RSUs upon approval of the Board of Directors of the Company (the “Board”) every year.

The Company also granted annual time-based RSUs in an aggregate grant date fair value of $250,000 to an employee of the Company, which vest in quarterly installments over the 12 months following the grant date. This RSU is classified as liability as the fixed monetary value with variable RSUs settlement was granted.

The Company granted 5,747 time-based RSUs to a consultant, which vest monthly installment over 12 months following the grant date.

During the three months ended February 28, 2026, the Company granted an aggregate of 1,821,643 time-based incentives to seven members of its Board, including 1,500,000 RSUs granted to Thomas Lee, Executive Chairman of the Board, and 57,000 Options granted solely to a Director of the Company. Of the time-based RSUs granted to Directors,174,163 vested immediately on the grant date, and the remaining 90,480 time-based RSUs and all 57,000 Options vest in quarterly installments over the 12 months following the grant date. With respect to the RSUs granted to the Chairman,500,000 vested immediately on the grant date, and the remaining 1,000,000 vest in equal installments on the first and second anniversaries of the grant date.

In addition, Mr. Lee was also granted 4,500,000 performance-based RSUs, which vest upon the achievement of specified targets, including stock price, market capitalization, and total Company ETH holdings.

The following table summarizes the Company’s time-based RSU stock activities for the periods indicated:

The following table summarizes the Company’s performance-based RSU stock activities for the periods indicated:

The following table summarizes the Company’s Options activities for the periods indicated:

Share-based compensation expense is recorded in “General and administrative expenses” in the condensed consolidated statements of operations. During the three and six months ended February 28, 2026, the Company recognized compensation expenses of $24,345 and $24,487, respectively, for RSUs. During both the three and six months ended February 28, 2026, the Company recognized compensation expenses of $115,799 for Options.

Equity Classified Warrants

In June 2025, the Company issued three warrant offerings (Placement Agent Warrants, Strategic Advisor Warrants, and Representative Warrants). Each warrant offering was designated as equity classified share-based compensation in accordance with ASC 718.

During the six months ended February 28, 2026,78,500 representative warrants were exercised for a cashless exercise, and 102,702 strategic warrants were exercised at a price of $5.40 per share. As of February 28, 2026 and August 31, 2025,2,925,912 and 3,107,114 of the warrants were outstanding, respectively. No share-based compensation expense was recorded for these warrants during the three and six months ended February 28, 2026 and February 28, 2025.

NOTE 10 –INCOME TAXES

The Company accounts for income taxes in interim periods using the estimated annual effective tax rate method. Under this method, the Company estimates its annual effective tax rate for the full fiscal year and applies that rate to its year-to-date pre-tax income or loss and adjusts the provision for (or benefit from) income taxes for discrete items recorded in the period.

The Company’s effective tax rate (“ETR”) for the six months ended February 28, 2026 and 2025 was 1.01% and 0%, respectively. The ETR of 1.01% for the six months ended February 28, 2026 was lower than the US statutory rate of 21%, primarily due to the application of a valuation allowance against the Company’s deferred tax assets. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. Management determined that there is not sufficient positive evidence to conclude that it is more likely than not that Company’s net deferred tax asset will be fully realized. Therefore, the Company recognized a full valuation allowance as a discrete item for the first three months ended November 30, 2025. The Company recognizes an additional full valuation as a discrete item for subsequent the three months ended February 28,2026. The Company will continue to regularly assess the realizability of deferred tax assets.

NOTE 11 –LOSS PER SHARE

LOSS PER COMMON SHARE

The following table sets forth the components used in the computation of basic and diluted loss per share for the three months ended February 28, 2026 and 2025:

The following table sets forth the components used in the computation of basic and diluted loss per share for the six months ended February 28, 2026 and 2025:

The following table summarizes the securities that were not included in the computation of diluted income per common share:

NOTE 12 –SEGMENT REPORTING

In accordance with ASC 280-10, Segment Reporting, management has determined that the Company operates asone operating segment andone reportable segment. This conclusion reflects the manner in which the Chief Executive Officer, who serves as the Company’s Chief Operating Decision Maker (“CODM”), reviews financial performance and allocates resources, particularly focusing on Operating Income in their assessment of performance. The CODM regularly reviews condensed financial results in their entirety rather than discrete financial information by line of business, geography, or asset type. Accordingly, management concluded that the Company’s operations represent a single operating and reportable segment. Given that the Company has identified one operating and reportable segment, the segment results correspond directly to the Interim Statements.

The CODM reviews segment performance primarily based on consolidated operating income and does not regularly receive or review disaggregated expense information for purposes of assessing performance or allocating resources. Accordingly, no additional segment expense disclosures are required.

For the three and six months ended February 28, 2026, the Company derived approximately 6% and 15% of its total revenues, respectively, from one customer. The company did not generate any revenues from this one customer for the three and six months ended February 28, 2025. Additionally, the Company notes that there wereno trade accounts receivable outstanding at both February 28, 2026 and August 31, 2025, and therefore no concentration of credit risk within this population.

NOTE 13 –COMMITMENTS AND CONTINGENCIES

Commitments

During the fiscal year ended August 31, 2025, the Company entered into a Consulting Agreement with a third-party service provider to provide consulting, asset management, custody, and staking services. The Consulting Agreement has a term of ten years and may be renewed.

Under the terms of the Consulting Agreement, the Company is obligated to pay the third-party service provider a consulting fee calculated as follows:

The fee is earned daily and paid monthly, which may be settled in cash or digital assets. The aggregate fees to be incurred by the Company are expected to be in the range of $40,000 to $50,000 annually.

The Consulting Agreement is non-cancelable except under limited circumstances. If the Company terminates the Consulting Agreement without cause, the third-party service provider is entitled to 85% of all fees that would have accrued through the end of the term as liquidated damages.

During the three and six months ended February 28, 2026, the Company recorded $12,672 and $24,709, respectively in expenses related to the consulting agreement with the third-party service provider.

Contingencies

From time to time, the Company is subject to legal proceedings that arise in the ordinary course of business. While any legal proceeding or claim has an element of uncertainty, the Company believes the outcome of each lawsuit, claim or legal proceeding that is pending or threatened, or all of them combined, will not have a material adverse effect on the Company’s condensed financial position or results of operations. It is possible, however, that future results of operations could be materially and adversely affected by any new developments relating to the legal proceedings and claims. As of February 28, 2026, and August 31, 2025, no legal matters were considered probable and reasonably estimable.

NOTE 14 –SUBSEQUENT EVENTS

On March 25, 2026 the Company entered into a definitive agreement and completed the acquisition of 100% of the outstanding equity interest of Pier Two Holdings Pty Ltd, a provider of institutional grade blockchain infrastructure. The total preliminary purchase price was approximately $30.5 million, consisting of $6 million in cash and $10.5 million in fixed equity and $14.0 million in deferred compensation. In addition, the agreement includes a contingent earn-out consideration with a potential maximum payout of $11.8 million. Due to the proximity of the acquisition to the date these financial statements were issued, the initial accounting for the business combination is incomplete. The Company expects to include the preliminary purchase price allocation in its Quarterly Report on Form 10-Q for the period ending May 31, 2026. In connection with this transaction, the Company formed a subsidiary, Standard Validator LLC, to operate blockchain validation and staking activities. The subsidiary is majority-owned by the Company, with a 2% non-controlling equity interest held by Ethereum Tower LLC pursuant to the subsidiary’s operating and management agreements.

On March 12, 2026, the Company made an additional investment of approximately $80,434 in Eightco, increasing its total investment to approximately $94,818 and increasing the Company’s ownership interest to approximately 32%. In addition, the Chairman of the Company, Thomas Lee, was appointed to the Board of Directors within Eightco on conjunction with this investment. The Company is evaluating the appropriate accounting treatment for the additional investment.

Further, subsequent to February 28, 2026 and through the date of issuance of these financial statements, the Company issued 57,107,586 shares of its common stock for gross proceeds of approximately $1,187,641. Net proceeds to the Company, after deducting offering costs, were approximately $1,180,714. These shares were issued pursuant to the ATM Offering.