Note 3 - Digital Assets

3 Months Ended

Mar. 31, 2026

Notes to Financial Statements

Crypto Asset [Text Block]

Note 3 - Digital Assets

The Company's Cryptocurrency Asset Strategy

The Company's current primary activity is accumulating and staking TAO, and the Company allocates substantial portions of its available cash to purchase TAO with the goal of maximizing TAO holdings per outstanding common share. As of March 31, 2026, and December 31, 2025, approximately 72% and 66% of the Company's total assets (including cash) were held in TAO, respectively. The Company intends to continue allocating substantial portions of its excess cash to TAO without a formal cap on the percentage of assets invested in TAO.

The Company does not hedge its TAO exposure and does not hold any other digital assets. All TAO is staked as soon as trade settlement permits, and the Company currently spreads staking across both BitGo Trust Company, Inc. ("BitGo") and the Kraken exchange ("Kraken", and together with BitGo, the "TAO Custodians").

Digital assets are measured at their fair market value using the last close price of the day in the UTC time zone at the end of each reporting period. The unrealized gains and losses resulting from remeasurement of digital assets are recorded in other income on the Condensed Consolidated Statement of Operations. The following table summarizes the Company's digital asset holdings as of  March 31, 2026 (in thousands except for tokens):

As of March 31, 2026
Asset	Tokens		Fair Market Value		Unrealized Gain
Staked TAO		23,556.88	$	7,209	$	2,198
Un-staked TAO		—		—		—
		23,556.88	$	7,209	$	2,198

The Company recorded an unrealized gain of $2,198,000 for the three months ended March 31, 2026. As of March 31, 2026, the fair value of the Company's digital assets was $7,209,000.

The Company's Staking Program

As holders of TAO tokens, the Company can stake any amount of the liquidity it holds to a validator. The Company stakes substantially all of its TAO through its TAO Custodians, who delegate the Company's tokens to validators on the Bittensor network. Also known as “delegation”, staking supports validators because their total stake in the subnet, including stake delegated to them by others, determines their consensus power and their share of emissions. In exchange for the Company's staked TAO supporting a validator’s operations, the Company receives a proportional share of the TAO rewards earned by that validator, net of the validator’s commission (commonly referred to as the validator’s “take”). Rewards are calculated in proportion to the Company's staked digital assets relative to the total staked by all delegators to the node at that time, and distributed directly to the Company's digital wallets in the validator node's native token (TAO) by the network as part of its consensus mechanism. The Company records these rewards as revenue in its Condensed Consolidated Statement of Operations.

As of March 31, 2026, and December 31, 2025, all of the Company's TAO token holdings were staked. The Bittensor protocol does not impose lock-up periods or unbonding delays; as of March 31, 2026, all of the Company's staked TAO could be unstaked and transferred without protocol-enforced waiting periods. The Company does not currently engage in direct subnet mining or validation, but may explore such activities in the future.

During the three months ended March 31, 2026, the Company earned approximately 348.44 TAO Tokens through staking, representing approximately $86,000 in revenue. Staking yields are variable and depend on several factors, including validator performance, total network stake, and the dynamics of the specific subnets to which the Company's TAO is delegated. The following table summarizes the Company's staking rewards for the three months ended March 31, 2026, and 2025 (in thousands except for tokens):

	For the Three Months Ended March 31,
	2026				2025
Asset	Token Rewards		Revenue ($USD)		Token Rewards		Revenue ($USD)
TAO		348.44	$	86		—	$	—

The Company's cost of revenue for digital assets consists of custodian fees and advisor fees on its staked digital assets. For the three months ended March 31, 2026, the Company recorded cost of revenue of $6,000 related to digital asset staking, resulting in a gross profit of $80,000, or 93%. The following table summarizes the Company's cost of revenue for the three months ended March 31, 2026, and 2025 (in thousands):

	For the Three Months Ended March 31,
	2026				2025
Cost	Fees TAO Tokens		Fees $ USD		Fees TAO Tokens		Fees $ USD
Cash Transaction Fees		—	$	2		—	$	—
Advisory fees related to staking		—		4		—		—
		—	$	6		—	$	—

During the three months ended March 31, 2026, the Company did not purchase any TAO tokens and sold 1,457 tokens for cash proceeds of $522,000. The Company recognized a realized gain on this sale of $52,000, which is recorded in other income on the Condensed Consolidated Statement of Operations.

The following table summarizes disposition activity for the three months ended March 31, 2026 (in thousands except for tokens):

	For the Three Months Ended March 31, 2026
Asset	Tokens Sold		Proceeds $USD		Cost $USD		Realized Gain
TAO		1,457.00	$	522		470	$	52

The following table summarizes the Company's digital asset activity for the year ended December 31, 2025, and the three months ended March 31, 2026. The fair value is presented as of  March 31, 2026 (in thousands except for tokens):

	TAO Tokens			$USD
Digital asset balance on December 31, 2024		—		$	—
TAO Token Purchases		24,127.62			8,736
TAO Staking Rewards		543.96			186
Non-Cash Fees		(6.14	)		(8	)
Unrealized Gains on Fair Value Remeasurement		—			(3,519	)
Digital asset balance on December 31, 2025		24,665.44			5,395
TAO Staking Rewards		348.44			86
TAO Token Sales		(1,457.00	)		(470	)
Unrealized Gain on Fair Value Remeasurement		—			2,198
Digital asset balance on March 31, 2026		23,556.88		$	7,209