Bitmine Immersion Technologies Inc.
11/10/2026 | Press release | Distributed by Public on 11/10/2026 16:24
Annual Report for Fiscal Year Ending August 31, 2026 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read together with our audited financial statements and the related notes included elsewhere in this Annual Report on Form 10-K and with our interim financial statements incorporated by reference. Further, for discussion and analysis on activity between 2024 and 2025, please refer to our 2025 Annual Report filed November 21, 2025. This MD&A is intended to provide investors with an understanding of our results of operations, financial condition, liquidity and capital resources, and critical accounting estimates through the eyes of management. It includes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements due to a number of factors, including those discussed under "Risk Factors" and elsewhere in this Annual Report on Form 10-K. The numbers below are presented in millions except for percentages as well as share and per share amounts.
Overview
We are a digital asset focused, blockchain infrastructure technology company. Beginning in the third calendar quarter of 2025, management expanded its existing digital asset business to primarily focus on the Ethereum blockchain and ETH as the digital asset. This included expanding toward an asset light operating model centered on Ethereum adjacent services (including advisory) and disciplined digital asset treasury management. Our results are now driven primarily by operating efficiency in a lower capex model, and Ethereum market conditions, including their impact on client activity, staking rewards generated from ETH holdings and the value of any ETH held in our treasury.
In June and July 2025, we strengthened our liquidity through an underwritten public offering of common stock, private placements, and the establishment of our ATM Program permitting sales of up to $24.5 billion of our common stock from time to time. During the fiscal year ended August 31, 2026, we sold 395.1 million shares of common stock under the ATM Program for aggregate gross proceeds of $13,201.5 million and net proceeds of $12,940.8 million. We also uplisted our common stock to the NYSE American in June 2025. On April 9, 2026, we further uplisted our common stock to the New York Stock Exchange. In June 2026, we issued 3,500,000 shares of Redeemable Preferred Stock at $80.00 per share and received gross proceeds of $280.0 million and net proceeds of $271.5 million after issuance costs. We used the proceeds for the purchase of ETH, to invest in our Moonshots portfolio, to make grants to critical participants in the Ethereum ecosystem and for general working capital.
Unless otherwise indicated, period to period comparisons are presented for the two most recent fiscal years consistent with Item 303 of Regulation S-K, as amended.
ETH Treasury Strategy, Drivers and Outlook
Our operating model is now anchored by our ETH Treasury Strategy and capital-light ecosystem services. The key drivers of our results include (i) ETH market conditions, which affect the value of our holdings and the economics of any staking or staking-adjacent activities; (ii) security, custody and compliance expenditures necessary to support institutional-grade treasury operations; and (iii) access to capital to opportunistically acquire ETH and invest in enabling infrastructure.
Treasury and yield framework. Our objective is to grow our net ETH position over time, subject to risk and liquidity constraints. We evaluate staking and related mechanisms based on security, liquidity, counterparty and regulatory profiles. We expect staking yields to evolve with validator participation rates, protocol parameters and market conditions. Where we deploy ETH to staking or analogous activities, we intend to size exposures conservatively, prioritize best-in-class custody and validator operations (including multi-client diversity and performance monitoring), and maintain appropriate unencumbered liquidity to meet corporate needs. We may rebalance or unwind positions in response to changes in risk, reward, or regulatory context.
Operating expenditures and investment priorities. As an ETH-focused company, we expect a mix shift in operating expenses toward cybersecurity, custody, treasury operations, compliance and technology enablement for advisory and analytics. Capital expenditures are expected to remain modest relative to a mining-centric model. We intend to maintain a flexible cost structure aligned with services activity and treasury scale.
Key trends and uncertainties. We are monitoring (i) protocol upgrades on Ethereum's roadmap and their implications for staking yields, fee markets and network security; (ii) growth in L2 activity and cross-chain interoperability; (iii) institutional adoption trends, including tokenization initiatives and regulated market-structure
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developments; (iv) availability and terms of regulated custodial services; and (v) evolving U.S. and non-U.S. regulatory frameworks applicable to digital assets and staking.
Liquidity considerations. Our liquidity planning considers ETH price volatility, the liquidity profile of any staked positions, and our ability to access capital markets through our shelf registration and at-the-market program. We intend to maintain sufficient liquidity to support operations, regulatory compliance, and security investments, while seeking opportunities to increase ETH holdings when market conditions are attractive.
Known events reasonably likely to affect future results. Our future results may be materially affected by changes in ETH prices and staking economics; regulatory developments pertaining to ETH, staking and custody; counterparty or custodian developments; cybersecurity investments and events; and market structure changes affecting liquidity and capital access for digital-asset issuers.
Key Performance Drivers
Key performance drivers include ETH market conditions and staking economics; staking revenue and staking as a service; share price performance; our ability to create and enhance shareholder value; and access to capital under our shelf and ATM Program. We focus on treasury security and liquidity, sizing of staking or staking adjacent activities, and maintaining flexibility to rebalance positions as risk return or regulatory contexts evolve. Given our pivot to an asset light, ETH focused model, energy use metrics from prior mining operations are no longer deemed useful, are immaterial and have been excluded from MD&A.
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Results of Operations
Comparison of Results of Operations for Fiscal Years Ended August 31, 2026 and 2025.
|
Fiscal Year Ended August 31,
|
|||||||||||||||||
|
2026
|
2025
|
% Change
|
|||||||||||||||
|
Revenue from staking and validation
|
$
|
121.4
|
$
|
-
|
NM
|
||||||||||||
|
Revenue from self-mining
|
1.4
|
3.1
|
(56.7
|
%)
|
|||||||||||||
|
Revenue from consulting
|
0.6
|
0.2
|
NM
|
||||||||||||||
|
Revenue from leasing
|
1.5
|
1.9
|
(18.3
|
%)
|
|||||||||||||
|
Revenue from the sale of mining equipment
|
-
|
0.8
|
(100.0
|
%)
|
|||||||||||||
| Total Revenue |
124.8
|
6.1
|
NM
|
||||||||||||||
| Cost of Sales |
18.3
|
5.8
|
NM
|
||||||||||||||
|
Operating expenses (income):
|
|||||||||||||||||
| General and administrative expenses |
376.9
|
361.1
|
4.4
|
%
|
|||||||||||||
| Unrealized loss (gain) from the digital assets holdings |
6,229.1
|
(805.0)
|
NM
|
||||||||||||||
| Total operating expenses |
6,606.0
|
(443.9)
|
NM
|
||||||||||||||
|
Income (loss) from operations
|
(6,499.5)
|
444.2
|
NM
|
||||||||||||||
|
Other income (expense):
|
|||||||||||||||||
| Change in fair value of warrant liability |
257.9
|
-
|
NM
|
||||||||||||||
| Loss on derivative contracts, net |
(143.7)
|
-
|
NM
|
||||||||||||||
| Issuance costs related to warrant offering |
(9.4)
|
-
|
NM
|
||||||||||||||
| Change in the fair value of equity method investment |
(22.9)
|
-
|
NM
|
||||||||||||||
| Interest income (expense), net |
12.5
|
(0.2)
|
NM
|
||||||||||||||
| Other expense |
(0.6)
|
(3.1)
|
(79.7
|
%)
|
|||||||||||||
|
Pre-tax income (loss)
|
(6,405.7)
|
440.9
|
NM
|
||||||||||||||
| Income taxes (benefit) |
(92.3)
|
92.3
|
NM
|
||||||||||||||
|
Net Income (loss)
|
(6,313.4)
|
348.6
|
NM
|
||||||||||||||
For the results of operations we have included the respective percentage of changes, unless greater than 100% or less than (100)%, in which case we have denoted such changes as not meaningful ("NM").
Revenues
During the fiscal year ended August 31, 2026, revenues were $124.8 million, compared to $6.1 million during the fiscal year ended August 31, 2025. The increase in revenue was a result of the following:
•Revenue from staking and validation. During the fiscal year ended August 31, 2026, revenue from staking and validation was $121.4 million, while there was no revenue from staking and validation in the fiscal year ended August 31, 2025. The increase was a result of the Company initiating native staking in November 2025, with the intent for staking to become a primary yield generation strategy of the Company during the current fiscal year. Further, the Pier Two acquisition accounted for $10.8 million in staking revenue for the year ended August 31, 2026.
•Revenue from self-mining. During the fiscal year ended August 31, 2026, revenue from self-mining was $1.4 million, compared to $3.1 million in the fiscal year ended August 31, 2025. The Company is maintaining its small
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BTC mining operations. However, mining revenue declined partially due to the suspension of self-mining operations during relocation in the year ended August 31, 2026.
•Revenue from consulting. During the fiscal year ended August 31, 2026, revenue from consulting was $0.6 million, compared to $0.2 million in the fiscal year ended August 31, 2025. All of the consulting revenue in 2026 was derived from the Company's consulting agreement with KULR Technology Group, Inc., under which the Company is obligated to provide various operational, maintenance and consulting services from May 16, 2025 to May 15, 2026. After completion of this contract, the Company does not expect to generate any further revenue from this source.
•Revenue from leasing. During the fiscal year ended August 31, 2026, revenue from the leasing of miners was $1.5 million, as compared to $1.9 million during the fiscal year ended August 31, 2025. This was due to less activity within its leasing contracts with KULR Technology Group, Inc. for the year ended August 31, 2026. After completion of this contract, the Company does not expect to generate any further revenue from this source.
•Revenue from the sale of mining equipment. During the fiscal year ended August 31, 2026, there was no revenue from the sale of mining equipment, as compared to $0.8 million during the fiscal year ended August 31, 2025. The revenue recognized during the fiscal year ended August 31, 2025 was primarily related to the sale of ten transformers.
Cost of Sales
Major components of cost of sales include rent to house mining and hosting equipment, electricity, depreciation, and supplies. During the fiscal year ended August 31, 2026, cost of sales was $18.3 million, compared to $5.8 million during the fiscal year ended August 31, 2025. The increase in cost of sales was primarily attributable to costs associated with the Company's staking and validation operations. The Company initiated native staking in November 2025, with the intent for staking to become a primary yield generation strategy of the Company during the current fiscal year, resulting in increased cost of sales associated with staking. This was partially offset by the Company continuing its strategy of winding down its proprietary self-mining exposure and deferring new site buildouts during the fiscal year ended August 31, 2026 and the costs incurred during the fiscal year ended August 31, 2025.
In addition, cost of sales as a percentage of revenue decreased during the fiscal year ended August 31, 2026 primarily due to the expansion of the Company's staking and validation operations as this revenue stream is less cost intensive compared to self-mining, leasing, and sale of mining equipment.
Operating Expenses
•General and administrative expenses. General and administrative expenses were $376.9 million in the fiscal year ended August 31, 2026, compared to $361.1 million in the fiscal year ended August 31, 2025. The increase is primarily related to ETH custodian fees related to treasury operations and treasury management associated with the strategy to shift to staking revenue being the primary source of revenue. Part of the increase in general and administrative expenses was due to the increase in both employee and Board member monetary and stock-based compensation, and other corporate overhead expenses incurred in connection with the Company's expansion of operations and strategic initiatives. These increases were partially offset by the absence of a non-recurring warrant expense recognized during fiscal 2025, as well as lower bank and custody fees during fiscal 2026.
•Unrealized loss (gain) from the digital assets holdings. The Company's unrealized loss (gain) from the digital assets holdings was a loss of $6,229.1 million for the fiscal year ended August 31, 2026, as compared to an unrealized gain of $805.0 million for the fiscal year ended August 31, 2025. This is related to changes in the fair value of our digital asset holdings. As part of the digital asset treasury operations, the Company started acquiring ETH in addition to its BTC holdings especially during the last quarter of fiscal year 2025. The unrealized loss is a result of the downward movement in prices of digital assets during fiscal year 2026.
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Other Income (Expense)
During the fiscal year ended August 31, 2026, the Company recognized other income of $93.8 million, as compared to other expense of $3.3 million in the fiscal year ended August 31, 2025, which was driven by:
•Change in fair value of warrant liability. The Company recognized a gain of $257.9 million during the fiscal year ended August 31, 2026. This gain reflects the change in fair value of the liability classified warrants in the current fiscal year, which is presented in other income within the consolidated statements of operations and comprehensive income (loss). See "Note 8. Stockholders' Equity" of the Consolidated Financial Statements for additional information.
•Loss on derivative contracts, net. Loss on derivative contracts, net were $143.7 million in the fiscal year ended August 31, 2026. This was primarily due to derivative strategies the Company entered into during fiscal year 2026. There were no open derivative contracts as of August 31, 2026. The Company had no derivative related activity during the fiscal year ended August 31, 2025.
•Issuance costs related to warrant offering. Issuance costs related to warrant offering were $9.4 million in fiscal year ended August 31, 2026. These costs were incurred in connection with the offering of warrants completed during the current fiscal year. There was no corresponding offering or related costs in the prior year.
•Change in the fair value of equity method investment. The Company recognized an unrealized loss of $22.9 million during the fiscal year ended August 31, 2026. This loss reflects the change in fair value of investment in equity shares of Eightco. The Company did not have any equity method investments in the prior year. See "Note 6. Investments and Notes Receivables" of the Consolidated Financial Statements for additional information.
•Interest income (expense), net. During the fiscal year ended August 31, 2026, the Company had interest income of $12.5 million, as compared to an interest expense of $0.2 million during the fiscal year ended August 31, 2025. The 2025 interest expense related to the debt during the fiscal year ended August 31, 2025, which was extinguished during the fiscal 2025. The interest income was earned in relation to higher average bank balance due to ATM offerings, RDO, Preferred stock offerings.
•Other income (expense). The Company recognized other income (expense) of $0.6 million during the fiscal year ended August 31, 2026, as compared to $3.1 million during the fiscal year ended August 31, 2025. The decrease was primarily attributable to losses recognized in the prior year on the extinguishment of debt related to the Company's Hash Rate Sale Agreement and Luxor financings, as well as losses recognized on the disposal of equipment and the Company's investment in the Roc Mining joint venture.
Income Taxes
During the fiscal year ended August 31, 2026, the Company recognized an income tax benefit of $92.3 million compared to an income tax expense of $92.3 million for the fiscal year ended August 31, 2025. This was primarily attributable to the reversal of the deferred tax liabilities, as a result of reversal of unrealized gains on digital assets holdings recognized in prior periods (due to significant unrealized losses on digital asset holdings in fiscal year 2026). The unrealized losses resulted in the recognition of deferred tax assets, against which the Company recorded a 100% valuation allowance.
Non-GAAP Financial Measures
The following tables present Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") and Adjusted Earnings Per Share ("EPS"). These are non-U.S. GAAP financial measures within the meaning of Regulation G dictated by the Securities and Exchange Commission. Adjusted EBITDA is defined as EBITDA excluding the impact of certain non-cash items for the period presented. Adjusted EPS is defined as EPS in accordance with US GAAP excluding the impact of certain non-cash items for the period presented.
The Company uses Adjusted EBITDA and Adjusted EPS in explaining its results to shareholders and the investment community and in its internal evaluation and management of its businesses. The Company's management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures (a) permit investors to view the Company's performance using the same tools that management uses to evaluate the
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Company's past performance, (b) permit investors to compare the Company with its peers, and (c) provide consistent period-to-period comparisons of the results.
While the Company believes that these measures are useful in evaluating the Company's performance, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these measurements may differ from similar measures presented by other companies. A reconciliation of Adjusted EBITDA and Adjusted EPS is detailed below.
The reconciliation of Adjusted EBITDA for the years ended August 31, 2026 and 2025 is as follows:
| Fiscal Year Ended | ||||||||||||||
| August 31, 2026 | August 31, 2025 | |||||||||||||
| Net Income (loss) | $ | (6,313.4) | $ | 348.6 | ||||||||||
| Interest expense (income) | (12.5) | 0.2 | ||||||||||||
| Income tax expense (benefit) | (92.3) | 92.3 | ||||||||||||
| Depreciation and amortization expense | 0.9 | 0.8 | ||||||||||||
| EBITDA | $ | (6,417.3) | $ | 441.9 | ||||||||||
| Adjustments | ||||||||||||||
|
Stock based compensation(1)
|
59.0 | 2.4 | ||||||||||||
|
Loss on sale and impairment of property and equipment(2)
|
0.2 | 3.4 | ||||||||||||
|
Change in the fair value of equity method investment(3)
|
22.9 | - | ||||||||||||
|
Issuance costs related to warrant offering(4)
|
9.4 | - | ||||||||||||
|
Change in fair value of warrant liability(5)
|
(257.9) | - | ||||||||||||
|
Warrant expense(6)
|
- | 349.0 | ||||||||||||
|
Loss on the extinguishment of debt(7)
|
- | 0.3 | ||||||||||||
|
Unrealized loss (gain) from the digital assets holdings(8)
|
6,229.1 | (805.0) | ||||||||||||
|
One time consulting and legal fees(9)
|
200.0 | - | ||||||||||||
| Adjusted EBITDA | $ | (154.5) | $ | (8.0) | ||||||||||
| (1) Stock based compensation represents the non-cash expense recorded for the Company's restricted stock units and restricted stock awards. This includes the impact of the modification that occurred during the year ended August 31, 2026 as well the vesting of existing awards. | ||||||||||||||
| (2) Represents a non-cash charge recorded during the period to reduce the carrying value of certain assets to their estimated fair value. | ||||||||||||||
| (3) Represents the change in fair value of the company's held investment in Eightco's common stock for the year ended August 31, 2026. | ||||||||||||||
| (4) Represents one-time costs incurred in connection with the issuance of warrants for the year ended August 31, 2026. | ||||||||||||||
| (5) Represents the change in fair value of the company's liability classified warrants for the year ended August 31, 2026. | ||||||||||||||
| (6) Warrant Expense represents non-recurring and non-cash cost associated with the Strategic Advisor Agreement. | ||||||||||||||
| (7) Represents non-recurring charges incurred in connection with the early settlement of the Company's line of credit from IDI and the Hash Rate Sale Agreement. | ||||||||||||||
| (8) Removes the impact of unrealized changes in fair value of our digital asset holdings from net income. | ||||||||||||||
| (9) Represents one time capital raising, advisory, legal and other consulting fees incurred during the period. | ||||||||||||||
The reconciliation of Adjusted EPS for the year ended August 31, 2026 and 2025 is as follows:
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|
Fiscal Year Ended
|
||||||||||||||
|
August 31, 2026
|
August 31, 2025
|
|||||||||||||
|
Pre-tax income (loss)
|
$
|
(6,405.7)
|
$
|
440.9
|
||||||||||
|
Adjustments:
|
||||||||||||||
|
Stock based compensation(1)
|
59.0
|
2.4
|
||||||||||||
|
Loss on sale and impairment of property and equipment(2)
|
0.2
|
3.4
|
||||||||||||
|
Change in the fair value of equity method investment(3)
|
22.9
|
-
|
||||||||||||
|
Issuance costs related to warrant offering(4)
|
9.4
|
-
|
||||||||||||
|
Change in fair value of warrant liability(5)
|
(257.9)
|
-
|
||||||||||||
|
Warrant expense(6)
|
-
|
349.0
|
||||||||||||
|
Loss on the extinguishment of debt(7)
|
-
|
0.3
|
||||||||||||
|
Unrealized loss (gain) from the digital assets holding(8)
|
6,229.1
|
(805.0)
|
||||||||||||
|
One time consulting and legal fees(9)
|
200.0
|
-
|
||||||||||||
|
Adjusted net income (loss) before income tax provision
|
$
|
(142.9)
|
$
|
(9.0)
|
||||||||||
|
Income tax provision (benefit) (as reported)
|
(92.3)
|
92.3
|
||||||||||||
|
Income tax provision adjustment(10)
|
30.0
|
1.9
|
||||||||||||
|
Adjusted income tax provision (benefit)
|
$
|
(62.3)
|
$
|
94.2
|
||||||||||
|
Adjusted net income (loss)
|
$
|
(80.7)
|
$
|
(103.2)
|
||||||||||
|
Deemed dividend on Series A Preferred Stock
|
-
|
(3.0)
|
||||||||||||
|
Allocation to participating preferred stock
|
-
|
(17.5)
|
||||||||||||
|
Cumulative dividend for redeemable preferred stock
|
(7.9)
|
-
|
||||||||||||
|
Adjusted net income (loss) attributable to common stockholders
|
$
|
(88.6)
|
$
|
(123.6)
|
||||||||||
|
Diluted weighted average common shares outstanding
|
482,292,553
|
24,515,226
|
||||||||||||
|
Adjusted diluted net income (loss) per common share
|
$
|
(0.18)
|
$
|
(5.04)
|
||||||||||
| (1) Stock based compensation represents the non-cash expense recorded for the Company's restricted stock units and restricted stock awards. This includes the impact of the modification that occurred during the year ended August 31, 2026 as well the vesting of existing awards. | ||||||||||||||
| (2) Represents a non-cash charge recorded during the period to reduce the carrying value of certain assets to their estimated fair value. | ||||||||||||||
| (3) Represents the change in fair value of the company's held investment in Eightco's common stock for the year ended August 31, 2026. | ||||||||||||||
| (4) Represents one-time costs incurred in connection with the issuance of warrants for the year ended August 31, 2026. | ||||||||||||||
| (5) Represents the change in fair value of the company's liability classified warrants for the year ended August 31, 2026. | ||||||||||||||
| (6) Warrant Expense represents non-recurring and non-cash cost associated with the Strategic Advisor Agreement. | ||||||||||||||
| (7) Represents non-recurring charges incurred in connection with the early settlement of the Company's line of credit from IDI and the Hash Rate Sale Agreement. | ||||||||||||||
| (8) Removes the impact of unrealized changes in fair value of our digital asset holdings from net income. | ||||||||||||||
| (9) Represents one time capital raising, advisory, legal and other consulting fees incurred during the period. | ||||||||||||||
| (10) The income tax provision adjustment is calculated by multiplying "Adjusted income (loss) before income tax provision" by the Company's applicable tax rate of 21%. | ||||||||||||||
Known Trends, Events and Uncertainties
Our financial condition and results of operations have changed significantly as a result of our transition from a business focused primarily on Bitcoin mining and related activities to an operating model centered on our ETH Treasury Strategy
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and blockchain infrastructure services, including staking and validation services provided through MAVAN. Consequently, our historical results, including the results of our former mining, equipment leasing and consulting activities, may not be indicative of our future operating results, cash flows or financial condition. Management currently considers the following trends, events and uncertainties to be reasonably likely to have a material effect on our future results of operations, liquidity or financial condition.
ETH prices and the concentration of our assets in ETH. As of August 31, 2026, we held 5,901,837 ETH with a fair value of approximately $14.6 billion, representing substantially all of our digital asset holdings and a significant majority of our total assets. During the fiscal year ended August 31, 2026, we recognized approximately $6.2 billion of unrealized losses on our digital asset holdings, primarily as a result of declines in the fair value of ETH. Because our digital assets are measured at fair value, with changes in fair value recognized in earnings, changes in ETH prices are expected to continue to cause significant volatility in our reported results, stockholders' equity and financial condition. Such changes may be material even when we have not sold the underlying ETH and may cause our reported results to differ significantly from the cash flows generated by our operations.
ETH price volatility also affects the U.S. dollar value of staking rewards earned, the amount of liquidity that may be obtained through the sale of digital assets, investor demand for our securities and our access to capital. A sustained decline in ETH prices could reduce the value of our asset base and staking revenue, limit our ability to raise capital on acceptable terms and require us to sell ETH or other assets to satisfy operating or liquidity requirements. Conversely, increases in ETH prices may increase reported earnings and the value of our holdings but may also increase custody, security, insurance and treasury-management costs.
Staking yields and the expansion of staking and validation operations. Staking and validation revenue was $121.4 million and represented approximately 97% of our total revenue for the fiscal year ended August 31, 2026. Our future revenue and cash generation are therefore expected to depend substantially on the amount of ETH staked, ETH prices, validator performance and prevailing staking yields. Staking yields are not fixed and may fluctuate based on the total amount of ETH staked across the network, validator participation, network activity, priority fees, protocol parameters and upgrades, and broader digital asset market conditions.
A decline in staking yields or ETH prices could materially reduce the U.S. dollar value of our staking revenue even if the amount of ETH staked or the number of ETH rewards earned remains unchanged. In addition, validator downtime, slashing, cybersecurity incidents, software defects, infrastructure failures or protocol changes could reduce rewards, result in the loss of staked ETH or adversely affect our ability to provide staking services. We expect to continue incurring infrastructure, personnel, cybersecurity, custody, compliance and monitoring costs as we expand these activities. The timing and amount of such costs may not correspond with the timing or amount of staking revenue, which could adversely affect margins and operating cash flows.
Integration of Pier Two and development of MAVAN. We acquired Pier Two on March 24, 2026 and integrated its blockchain infrastructure and validator operations into MAVAN. Since the acquisition date, MAVAN contributed approximately $10.8 million of revenue and a net loss of approximately $0.2 million through August 31, 2026. The future contribution of MAVAN will depend on our ability to integrate personnel, infrastructure, technology, customer relationships, systems and controls; maintain validator reliability and security; retain existing customers and key employees; and expand services to additional institutional customers.
We recognized approximately $21.7 million of goodwill and $8.1 million of net intangible assets in connection with the Pier Two acquisition. The purchase price allocation remained preliminary as of August 31, 2026 and may be adjusted during the measurement period as additional information becomes available. If MAVAN does not achieve the operating performance, customer growth or anticipated benefits considered in the acquisition analysis, or if market conditions deteriorate, we may be required to record impairment charges or additional measurement-period adjustments. We also have approximately $12.0 million of deferred consideration, measured at fair value, payable over 36 months, of which 75% is payable in cash and 25% in shares of our common stock, together with potential contingent consideration tied to specified performance conditions.
Effective September 3, 2026, we terminated the prior management services agreement relating to MAVAN without incurring an early termination penalty. Effective September 4, 2026, MAVAN Holdings entered into a services agreement with American Validator LLC under which American Validator provides advisory services related to our Ethereum staking operations in exchange for a monthly fee equal to 1.5% of eligible native staking rewards. We expect this arrangement to reduce and simplify the fee structure applicable to the covered staking activities, although the actual fees will vary with staking rewards and the amount of eligible ETH staked.
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Redeemable Preferred Stock dividend requirements. In June 2026, we issued 3,500,000 shares of our 9.50% Redeemable Series A Preferred Stock. The Redeemable Preferred Stock has a stated amount and liquidation preference of $100 per share and provides for cumulative cash dividends at an annual rate of 9.50%, payable weekly after declaration by our Board. Based on the shares outstanding and current dividend rate, the annual dividend requirement is approximately $33.3 million. During the fiscal year ended August 31, 2026, we declared dividends of approximately $7.9 million and paid approximately $7.3 million on the preferred stock.
The preferred stock creates a recurring cash requirement that is senior to dividends on our common stock. Our ability to pay such dividends depends on available cash, the amount and U.S. dollar value of staking rewards, operating expenses, capital-allocation decisions and access to capital. A concurrent decline in ETH prices and staking yields could reduce our available cash generation and dividend coverage. Although the Board retains discretion regarding the declaration of dividends, unpaid dividends are cumulative and may compound at increasing rates, subject to a maximum annual rate of 15%. Accordingly, a failure to pay dividends when expected could increase our obligations, adversely affect the market price of the preferred stock and limit our financial flexibility.
Access to capital and capital-allocation activities. Our ETH accumulation and strategic investment activities have been funded primarily through equity offerings. During the fiscal year ended August 31, 2026, we received approximately $13.6 billion of net proceeds from equity financing transactions and used approximately $12.6 billion to purchase digital assets. Our ability to continue acquiring ETH, funding MAVAN, making strategic investments and repurchasing common stock will depend in part on our ability to access capital on acceptable terms.
Our ability to raise capital through the ATM Program or other offerings is affected by the market price and trading volume of our common stock, the value of our ETH holdings, investor sentiment toward digital asset treasury companies, regulatory developments and general capital-market conditions. If our common stock trades at a price that management considers unattractive relative to the value of our assets, issuing additional shares may result in greater dilution or may not be an economically acceptable source of capital. We are not obligated to issue securities or acquire additional ETH, and the timing and amount of future capital-raising, digital asset purchases and share repurchases will depend on market conditions, liquidity requirements and management's assessment of risk-adjusted returns.
Strategic investments and other financial instruments. In addition to ETH, we hold strategic investments in public and private companies. As of August 31, 2026, our investment in Beast Industries had a carrying amount of approximately $186.0 million, and our investment in Eightco had a fair value of approximately $77.1 million. These investments may be illiquid, may require additional funding and may introduce earnings volatility unrelated to ETH prices. In particular, changes in the quoted market price of Eightco are recognized in earnings because we elected the fair value option for that investment.
During fiscal 2026, we also entered into ETH-referenced derivative contracts and recognized a net loss of approximately $143.7 million. Although we had no open derivative contracts as of August 31, 2026, we may enter into similar arrangements in the future. Such activities may expose us to market, liquidity, collateral, settlement and counterparty risks and may result in gains or losses that are significant relative to the related premium income.
Regulatory developments. The regulatory treatment of digital assets, ETH, staking, validator services, custody and related activities continues to evolve in the United States and other jurisdictions in which we operate. Changes in laws, regulations, judicial decisions, regulatory interpretations or enforcement priorities could require us or our service providers to obtain registrations or licenses, modify custody or operating arrangements, restrict the customers or jurisdictions we serve, incur additional compliance costs, or suspend or discontinue certain staking, treasury or other digital asset activities.
Our acquisition of Pier Two also expanded our operations outside the United States, including in Australia, and MAVAN may provide services to customers in other jurisdictions. As a result, we may become subject to additional licensing, tax, sanctions, anti-money laundering, data protection, consumer protection and reporting requirements. The timing and effect of future regulatory developments cannot be predicted, but such developments may materially affect our costs, revenue opportunities, liquidity and ability to execute our ETH Treasury Strategy.
Custody, cybersecurity and counterparty concentration. The scale of our digital asset holdings increases the potential financial impact of a custody failure, cybersecurity incident, loss or compromise of private keys, validator failure, smart-contract exploit, counterparty default or service-provider interruption. We use third-party custodians, infrastructure providers, advisors and other counterparties in conducting our treasury and staking operations. Although we evaluate the financial condition, controls, security practices and insurance arrangements of material providers, insurance may be unavailable or insufficient to cover losses, and multiple providers may rely on common technology, cloud infrastructure or other systems. We expect the costs of custody, cybersecurity, insurance, monitoring and compliance to remain significant and to increase as the scale and complexity of our operations grow.
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Change in fiscal year-end and related reporting requirements. On July 9, 2026, our Board approved a change in our fiscal year-end from August 31 to December 31. We expect to file a transition report on Form 10-KT for the four-month period from September 1, 2026 through December 31, 2026 and a quarterly report on Form 10-QT for the three months ended November 30, 2026. The shortened transition period and change in reporting calendar may adversely affect the comparability of our financial information and increase accounting, audit, tax and compliance costs. These requirements coincide with the ongoing integration of Pier Two and MAVAN, implementation of new systems and controls, remediation of material weaknesses in internal control over financial reporting and the transition to a new independent registered public accounting firm. These concurrent activities may place additional demands on management and financial-reporting personnel and increase the risk of delays or errors in our reporting processes.
Ecosystem funding commitments and new commercial arrangements. Subsequent to August 31, 2026, we entered into agreements providing for up to $9.5 million of aggregate ecosystem funding commitments, including funding to support the development and adoption initiatives. These commitments are generally subject to specified milestones and may result in cash expenditures as those milestones are achieved. There can be no assurance that these initiatives will result in commercially successful technology, revenue or other anticipated strategic benefits.
In addition, in September 2026, MAVAN Inc. entered into a non-custodial validation services agreement uner which it is entitled to a service fee based on net rewards generated from certain staking services. The amount and timing of revenue, if any, will depend on factors including assets delegated, staking activity, protocol rewards, validator performance and market conditions, and therefore the contribution of this arrangement to future revenue cannot currently be determined.
Except as described above and elsewhere in this Annual Report, management is not aware of any other known trend, demand, commitment, event or uncertainty that is reasonably likely to have a material effect on our financial condition, results of operations or liquidity.
Liquidity and Capital Resources
Current liquidity position
As of August 31, 2026, the Company had $545.1 million in cash on hand and working capital of $528.1 million. Our primary sources and uses of liquidity during the period included:
•net proceeds of $13,564.6 million from equity financing transactions, including issuances under the Company's ATM equity program, RDO financings, and Redeemable Preferred Stock offerings;
•acquire additional ETH and other digital assets as part of its digital asset treasury strategy;
•deployment of capital through strategic investments in equity securities of eligible businesses, which are intended to complement its broader investment strategy and create opportunities for long-term value creation;
•used cash to repurchase shares of our common stock under authorized share repurchase programs. These repurchases were undertaken as part of management's capital allocation strategy and reflect its commitment to enhancing shareholder value.
Sources and uses of cash
| Fiscal Year Ended August 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash used in operating activities | $ | (305.1) | $ | (4.1) | |||||||
| Net cash used in investing activities | (12,855.1) | (7,432.0) | |||||||||
| Net cash provided by financing activities | 13,193.4 | 7,947.7 | |||||||||
| Net increase in cash and cash equivalents | $ | 33.1 | $ | 511.5 | |||||||
Net cash used in operating activities was $305.1 million for the fiscal year ended August 31, 2026, compared to $4.1 million for the fiscal year ended August 31, 2025. The Company incurred a net loss of $6,313.4 million during the period, primarily comprised of $6,229.1 million of non-cash unrealized loss on digital assets held, $257.9 million of change in fair value of warrant liabilities. Operating cash outflows were primarily attributable to cash expenditures for general and
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administrative activities, including professional fees, consulting costs, and other operating expenses incurred to support the Company's growth initiatives and digital asset treasury operations. These cash outflows were partially offset by increases in accrued liabilities, while staking revenue was non-cash as it was received in digital assets.
Net cash used in investing activities was $12,855.1 million for the fiscal year ended August 31, 2026, compared to $7,432.0 million for the fiscal year ended August 31, 2025. The investing cash outflow was primarily driven by the purchase of additional ETH and other digital assets of $12,553.6 million. Further, investing cash outflows were on account of the Company's investments in Beast Industries Co. ("Beast Industries") of $186.0 million and Eightco Holdings Inc. ("Eightco") of $100.0 million.
Net cash provided by financing activities was $13,193.4 million for the fiscal year ended August 31, 2026, compared to $7,947.7 million for the fiscal year ended August 31, 2025. This increase was primarily driven by the proceeds received from the ATM Offerings. Additional financing cash inflows were generated from the underwritten public offering of 3,500,000 shares of Redeemable Preferred Stock in June 2026, which resulted in net proceeds of approximately $271.5 million. The increase in financing cash inflows was partially offset by cash payments related to the retirement of common stock amounting to $353.8 million. Refer to "Note 8. Stockholder's Equity" and "Note 10. Redeemable Preferred Stock" within the financial statements for further details regarding offerings and share buyback.
Material cash requirements and known liquidity risks
We expect the following material cash requirements over the next 12 months under our capital-light model:
•fees that will be incurred from industry-experienced third parties to manage the Company's multi-billion dollar ETH portfolio. The Company expects these fees to be significantly offset by projected staking fees earned from the same ETH portfolio, although there can be no assurances that the Company will be successful in doing so;
•fees payable to American Validator equal to 1.5% of staking rewards earned, effective September 4, 2026, which will represent an ongoing cash requirement associated with the Company's staking activities;
•deferred consideration related to the Pier Two acquisition of approximately $12 million, representing the present value of $14 million of undiscounted contractual payments due in quarterly installments over a 36-month period;
•working capital to support services delivery, equipment leasing, and advisory engagements of approximately $1,000 per month at current run-rate activity levels;
•public company costs, including audit and compliance, of approximately $4,000 annually; and
•cash dividend obligations related to the Company's outstanding 9.50% Series A Preferred Stock, which are expected to approximate $33.3 million over the next 12 months based on the current dividend rate and shares outstanding.
Our liquidity is less sensitive to network difficulty and power price volatility under our current model although BTC price levels can influence client demand and the value of any BTC held in treasury. We mitigate liquidity risks by (i) maintaining a flexible cost structure aligned with services activity, (ii) limiting new capex commitments, and (iii) preserving access to equity capital via our shelf and ATM facilities. We believe, based on our current operating plan, expected cash on hand, anticipated operating cash flows and access to capital under our shelf/ATM, that we will have sufficient liquidity to fund operations for at least the next 12 months. Beyond 12 months, our ability to fund growth and meet obligations will depend on market conditions, client demand for services, and access to capital on acceptable terms.
Off-balance sheet arrangements and commitments. We do not have material off-balance sheet arrangements as defined by Item 303. We do not expect to enter into new long-term power purchase or build-to-suit arrangements absent clear, low-risk returns.
Counterparty and market developments. We monitor counterparties in the digital asset ecosystem for credit and operational risks, including custodians, pool operators, hosting partners and joint venture partners. We currently do not have material assets with bankrupt or suspended counterparties, and we assess custody practices, insurance and operational controls at our partners. Disruptions in digital asset markets, regulatory developments or power market dislocations could adversely affect our liquidity, capital access and operational continuity.
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Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on the Company's financial condition, changes in financial condition, and results of operations, liquidity or capital resources.
Critical Accounting Estimates
Our financial statements are prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions affecting reported amounts of assets, liabilities, revenues, expenses and related disclosures. We consider the following to be our critical accounting estimates because they involve significant judgment, are subject to uncertainty, and could materially impact our financial results if actual results differ from our estimates. This discussion supplements, and should be read together with, the summary of significant accounting policies in our financial statement notes.
Business Combinations. Business combinations are recorded using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under this method, the purchase consideration is allocated to the tangible assets acquired, liabilities assumed, and identifiable intangible assets acquired based on their estimated fair values as of the acquisition date, with any excess recorded as goodwill.
The determination of the fair value of assets acquired and liabilities assumed requires management to make significant estimates and assumptions. The most significant judgments relate to the identification and valuation of acquired intangible assets, including estimates of future cash flows, discount rates, customer attrition rates, technology obsolescence, and the determination of useful lives used to calculate amortization expense. Changes in these assumptions could materially affect the amounts assigned to identifiable intangible assets and goodwill, as well as future amortization and impairment expense. For significant acquisitions, the Company engages third-party valuation specialists to assist management in determining the fair value of acquired intangible assets and certain acquired assets and liabilities.
Goodwill and Intangible Assets Impairment. The Company records goodwill and identifiable intangible assets in connection with business combinations. As of August 31, 2026, the Company recorded goodwill of $21.7 million and intangible assets, net, of $8.1 million, primarily related to the Pier Two acquisition. Goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate that impairment may exist, at the reporting unit level. Based on management's assessment under ASC 280 and ASC 350, the Company has identified one reporting unit for purposes of goodwill impairment testing. Definite-lived intangible assets are amortized over their estimated useful lives and reviewed for impairment when indicators of impairment are present. These assessments require significant judgment, including estimates of future cash flows, discount rates, revenue growth, useful lives, and market participant assumptions. Management did not identify any impairment of goodwill or definite-lived intangible assets during the fiscal year ended August 31, 2026
Staking and validation services revenue recognition. The Company recognizes revenue from blockchain validation and staking services in accordance with ASC 606. Revenue is earned in the form of digital assets received for validating blockchain transactions and providing staking services. The Company recognizes revenue when its performance obligation is satisfied through the successful validation of blocks or transactions on the applicable blockchain network.
Significant judgment is required in evaluating the application of ASC 606 to blockchain validation arrangements, including the identification of the customer and contract by analogy, determining when performance obligations are satisfied, and assessing whether the Company acts as principal or agent in generating staking rewards. The Company recognizes revenue on a gross basis when it controls the validation services provided to the blockchain network and is primarily responsible for fulfilling the related performance obligation. Changes in these judgments could materially affect the amount and timing of revenue recognized.
Stock-based compensation. We measure equity awards at grant-date fair value under ASC 718 using observable market prices and, where applicable, option-pricing models. Inputs include volatility, expected term and risk-free rates.
Accounting policies and estimates are reviewed periodically for consistency with SEC guidance, including the 2003 MD&A Guidance and the 2020 amendments to Item 303. We will update our critical accounting estimates as our operations evolve and additional trends and data become reasonably available.
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