Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements."

These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions.

Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Business Overview

C2 Blockchain, Inc. is a development-stage blockchain infrastructure company focused on digital asset-related initiatives and other blockchain-related opportunities.

The Company's primary current focus has been maintaining holdings of DOG Coin and evaluating potential digital asset-related opportunities. DOG Coin is a Bitcoin-native token issued on the Runes protocol and is distinct from Dogecoin ("DOGE"). Digital asset markets are highly volatile and subject to substantial fluctuations in value, which may materially impact the Company's financial condition and operating results.

As of March 31, 2026, the Company's cryptocurrency holdings had a carrying value of approximately $661,192 and were recorded on the balance sheet as intangible assets - cryptocurrency.

During the quarter, the Company also generated limited revenue through the sale of DOG-themed collectible silver medallions. Inventory as of March 31, 2026, consisted entirely of such silver medallions. Management does not currently expect these merchandise activities to continue as a material ongoing business operation, as the sales were primarily conducted as a limited investor and community engagement initiative.

The collectible silver medallions were custom produced through third-party vendors and manufacturers. No related parties were involved in the sourcing, manufacturing, marketing, or sale of the medallions, and no sales were made to insiders or related parties.

Cryptocurrency mining operations have not commenced. The Company continues to evaluate potential mining-related initiatives and opportunities, and no mining operations were active during the quarter.

The Company previously explored development of an AI-powered crypto chatbot project; however, the Company has ceased further development efforts relating to that initiative and it is no longer an active business project.

The Company currently has one officer and director, Levi Jacobson, who serves as Chief Executive Officer, Chief Financial Officer, President, Treasurer, and sole director. The Company's business activities, financing decisions, digital asset acquisitions, and strategic direction are directed solely by Levi Jacobson.

Revenues

For the three months ended March 31, 2026, the Company generated total revenue of $17,523 compared to $13 for the three months ended March 31, 2025. Revenue during the three months ended March 31, 2026, consisted entirely of sales of collectible silver medallions.

For the nine months ended March 31, 2026, the Company generated total revenue of $17,567 compared to $13 for the nine months ended March 31, 2025. Revenue during the nine months ended March 31, 2026, consisted primarily of sales of collectible silver medallions, with the remaining amount consisting of nominal staking rewards.

Cost of Sales and Gross Profit

Cost of sales for the three months ended March 31, 2026, and 2025 were $8,162 and $0, respectively. Cost of sales for the nine months ended March 31, 2026, and 2025 were $8,162 and $0, respectively. Cost of sales for the three and nine months ended March 31, 2026, consisted entirely of costs associated with collectible silver medallion sales.

Gross profit for the three months ended March 31, 2026, and 2025 was $9,361 and $13, respectively. Gross profit for the nine months ended March 31, 2026, and 2025 was $9,405 and $13, respectively. The increases in revenue and gross profit were primarily attributable to collectible silver medallion sales.

Operating Expenses

Total operating expenses totaled $19,316,202 for the three months ended March 31, 2026, compared to $100,624 for the three months ended March 31, 2025. Total operating expenses totaled $19,781,825 for the nine months ended March 31, 2026, compared to $113,188 for the nine months ended March 31, 2025.

The increase in operating expenses for the three and nine months ended March 31, 2026, was primarily attributable to stock-based compensation expense, consulting expenses, professional fees, and expenses associated with the Company's operations and digital asset activities.

During the nine months ended March 31, 2026, the Company issued 45,000,000 shares of common stock to Mendel Holdings LLC, an entity controlled by the Company's sole officer and director, in connection with services rendered to the Company. The Company also issued 4,500,000 shares of Series A Preferred Stock to the Company's sole officer and director in connection with services rendered to the Company and the restructuring and realignment of existing ownership and control interests.

The Company also incurred consulting expenses of approximately $215,900 payable to Simple Simon Says LLC, an entity controlled by the father of the Company's sole officer and director.

Other Income (Loss)

Total other income for the three months ended March 31, 2026, totaled $28,377 compared to $0 for the three months ended March 31, 2025. Total other income during the three months ended March 31, 2026 consisted primarily of a $626,354 non-cash gain from the change in fair value of derivative liabilities associated with convertible instruments, partially offset by $375,203 of interest expense related to convertible notes and amortization of debt discounts, a $221,223 loss from the change in fair value of cryptocurrency holdings, and a $1,551 loss on sale of a company vehicle.

Total other loss for the nine months ended March 31, 2026, totaled $1,963,509 compared to $0 for the nine months ended March 31, 2025. Total other loss during the nine months ended March 31, 2026 consisted primarily of $1,052,026 of interest expense related to convertible notes and amortization of debt discounts, a $1,334,547 loss from the change in fair value of cryptocurrency holdings, and a $12,729 loss on the sale of cryptocurrency, partially offset by a $437,344 non-cash gain from the change in fair value of derivative liabilities associated with convertible instruments.

Net Loss

The Company reported a net loss of $19,278,464 for the three months ended March 31, 2026, compared to a net loss of $100,611 for the three months ended March 31, 2025.

The increase in net loss for the three months ended March 31, 2026 was primarily attributable to substantial non-cash stock-based compensation expense, consulting expenses, professional fees, interest expense associated with convertible instruments, and losses associated with changes in the fair value of cryptocurrency holdings, partially offset by non-cash gains from changes in the fair value of derivative liabilities.

For the nine months ended March 31, 2026, the Company reported a net loss of $21,735,929 compared to a net loss of $113,175 for the nine months ended March 31, 2025.

The increase in net loss for the nine months ended March 31, 2026, was primarily attributable to substantial non-cash stock-based compensation expense, consulting expenses, professional fees, interest expense associated with convertible instruments and debt discounts, derivative-related accounting adjustments, and losses associated with changes in the fair value of cryptocurrency holdings.

Liquidity and Capital Resources

As of March 31, 2026, the Company had cash and cash equivalents of approximately $6,305 compared to $9 as of June 30, 2025.

As of March 31, 2026, total current assets were $14,873 compared to $13,077 as of June 30, 2025. Total current liabilities were $889,375 as of March 31, 2026, compared to $84,000 as of June 30, 2025. The increase in liabilities was primarily attributable to accrued compensation, derivative liabilities, convertible notes payable, and loans payable.

As of March 31, 2026, total assets were $676,065 compared to $75,551 as of June 30, 2025. The increase in total assets was primarily attributable to acquisitions of cryptocurrency holdings.

As of March 31, 2026, the Company had a stockholders' deficit of $(213,310) compared to a stockholders' deficit of $(8,449) as of June 30, 2025.

Net cash used in operating activities during the nine months ended March 31, 2026, was $596,086 compared to $73,175 for the nine months ended March 31, 2025. Cash used in operating activities during the nine months ended March 31, 2026, was primarily attributable to operating expenses, professional fees, consulting expenses, and changes in working capital.

Net cash used in investing activities during the nine months ended March 31, 2026, was $1,933,265 compared to $19,413 for the nine months ended March 31, 2025. Cash used in investing activities during the nine months ended March 31, 2026, consisted primarily of purchases of cryptocurrency holdings.

Net cash provided by financing activities during the nine months ended March 31, 2026, was $2,535,647 compared to $113,354 for the nine months ended March 31, 2025. Cash provided by financing activities during the nine months ended March 31, 2026, was primarily attributable to proceeds from issuances of common stock, proceeds from convertible promissory notes, and loan proceeds.

Subsequent to March 31, 2026, the Company issued a convertible promissory note to Labrys Fund II, L.P. in the principal amount of $120,000, reflecting proceeds to the Company of $100,000 after an original issue discount of $20,000.

Subsequent to March 31, 2026, the Company also raised additional capital through issuances of common stock to accredited investors for aggregate proceeds of approximately $38,000.

The Company has incurred recurring losses from operations and has limited cash resources. Management believes additional financing or capital raising activities will be required to fund ongoing operations and pursue future business initiatives. The Company may also rely on future financial support, loans, or capital contributions from its sole officer and director and related parties, including entities affiliated with its sole officer and director. However, there is no binding commitment requiring such support, and there can be no assurance that additional financing or support will be available on acceptable terms, if at all.

Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes thereto. Significant estimates include the valuation of stock-based compensation, derivative liabilities, and digital asset holdings. Actual results could differ materially from such estimates.

Digital Asset Market Risk and Volatility

The Company's financial condition and results of operations are significantly influenced by the market value of its cryptocurrency holdings, which primarily consist of DOG Coins. As of March 31, 2026, the Company's cryptocurrency holdings had a carrying value of approximately $661,192 and were recorded on the balance sheet as intangible assets - cryptocurrency.

Digital asset markets are highly volatile and subject to significant price fluctuations. Changes in the fair value of the Company's cryptocurrency holdings may result in substantial gains or losses and may materially affect the Company's results of operations and financial condition. During the nine months ended March 31, 2026, the Company recognized losses associated with changes in the fair value of cryptocurrency holdings, illustrating the potential impact of market volatility.

Cryptocurrency assets are subject to additional risks, including market illiquidity, technological vulnerabilities, cybersecurity breaches, loss or theft, regulatory developments, and changes in market sentiment. Any of these factors could result in declines in the value of the Company's digital assets or impair the Company's ability to access or liquidate such assets.

Given the Company's concentration in digital assets and its early stage of operations, adverse changes in cryptocurrency markets could materially affect the Company's business, financial condition, results of operations, and ability to continue operations.

Going Concern

The Company's financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred recurring losses from operations and has generated limited revenue. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

The Company has not established a substantive source of revenue sufficient to cover operating expenses. Management intends to fund operations through equity financing, convertible instruments, related party contributions, and other financing activities. There can be no assurance that these measures will be successful.

The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty, including adjustments to the recoverability and classification of assets or the amounts and classification of liabilities.