Financial Analysis

Note 10. Short-Term Treasury Debt, Cygnet Subsidiary Notes Payable, Promissory Notes, and Convertible Notes Short-Term Treasury Debt The following table summarizes the Companys short-term treasury debt as of June 30, 2026 and 2025: Maturity June 30, Date 2026 2025 Short-Term Treasury Debt: BitGo Credit Facility, 11.50% interest rate per annum. The term of the credit facility is for one year and is renewable for successive one-year options. Maturity $ 57,295,723 $ 20,000,000 The Company entered into a credit facility with BitGo Prime, LLC (BitGo). Pursuant to a Master Loan Agreement, as of June 30, 2026, there was no remaining availability under the credit facility, which bears interest at a rate of 11.50% per year. The term of the credit facility is for one year and is renewable for successive one-year options. Each individual loan under the facility is negotiable as to the amount, term prepayment or recall (payment demand). The loans shall be collateralized by the Companys treasury assets, already held at BitGo. The initial availability is based on a 260% collateral level and a margin call level of 175%. There are no requirements or fees for non-use of the credit facility and the facility can be increased in the future based on the value of the assets BitGo is the custodian of for the Company. At June 30, 2026 and 2025, the outstanding balance of the credit facility was $57,295,723 and $20,000,000, respectively. The credit facility was used for the purchase of SOL. Cygnet Su …

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Year Ended June 30, 2026 2025 Primary geographical markets: United States of America $ 7,361,175 $ 14,566,766 Other 207,647 259,570 Total $ 7,568,822 $ 14,826,336 Product source: Internally manufactured $ 4,529,886 $ 9,262,857 Contract manufactured 2,957,210 2,786,828 Purchased as finished good 81,726 2,776,651 Total $ 7,568,822 $ 14,826,336

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Note 13. Stock-Based Compensation The Company maintains the 2019 Equity Incentive Plan (the 2019 Plan), which provides for the grant of stock-based awards to employees, officers, directors, consultants, and other service providers. The 2019 Plan is administered by the Compensation Committee of the Board of Directors (or such other committee designated by the Board of Directors), which has authority to determine the recipients and terms and conditions of awards granted under the 2019 Plan. Awards may include stock options, restricted stock units, and other stock-based awards authorized under the 2019 Plan. As of June 30, 2026, 25,000,000 shares of the Companys common stock were authorized for issuance under the 2019 Plan. Stock Options A summary of stock option activity for the years ended June 30, 2026 and 2025 is as follows: Weighted Average Average Remaining Aggregated Options Exercise Contractual Intrinsic Outstanding Price Life (Years) Value Outstanding at June 30, 2024 200,714 $ 57.40 5.83 $ - Granted 620,000 2.36 - - Forfeited or cancelled (192,083 ) 55.13 - - Exercised (7,278 ) 3.46 - - Outstanding at June 30, 2025 621,353 $ 3.39 5.66 $ 374,500 Granted 125,000 4.63 - - Forfeited or cancelled (82,153 ) 10.74 - - Exercised - - - - Outstanding at June 30, 2026 664,200 $ 2.64 4.64 $ - Options exercisable at June 30, 2026 (vested) 637,450 2.63 4.65 - Options exercisable at June 30, 2025 (vested) 600,311 3.42 5.52 - The average fair value of stock options granted was estimat …

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Note 15. Income Taxes The components of income tax benefit (expense) for the years ended June 30, 2026 and 2025 are as follows: Year Ended June 30, 2026 2025 Current tax provision $ 13,558 $ 13,558 Deferred tax provision (13,558 ) (13,558 ) Income tax benefit (expense) $ - $ - The reconciliation of the U.S. federal statutory income tax rate to the Companys effective income tax rate for the year ended June 30, 2026 is as follows: Amount Percentage U.S. federal statutory income tax $ (51,629,649 ) 21.00 % State and local income taxes, net of federal benefit (13,871,476 ) 5.65 % Foreign tax effects - - % Effect of changes in tax laws or rates - - % Effect of cross-border tax laws - - % Tax credits - - % Changes in valuation allowance 69,709,798 (28.36 )% Nontaxable or nondeductible items 29,670 (0.01 )% Changes in unrecognized tax benefits - - % Other, net (4,238,343 ) 1.72 % Income tax benefit (expense) $ - - % The reconciliation of the U.S. federal statutory income tax rate to the Companys effective income tax rate for the years ended June 30, 2026 and 2025 is as follows: Year Ended June 30, 2026 2025 U.S. federal statutory income tax rate 21.00 % 21.00 % State taxes, net of federal benefit 5.47 % 4.80 % Nondeductible expenses (0.01 )% (0.03 )% Return-to-provision adjustment - % - % State tax rate change 0.18 % 0.25 % Other, net 1.72 % 3.81 % Valuation allowance (28.36 )% (29.83 )% Effective income tax rate - % - % The components of the Companys net deferred tax asset as of Ju …

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Note 8. Leases We have entered into various non-cancellable operating and finance lease agreements for certain of our offices, manufacturing, technology, and equipment. We determine if an arrangement is a lease, or contains a lease, at inception, and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. As of June 30, 2026, no option to extend the lease was recognized as right-of-use (ROU) assets and lease liabilities. We have lease agreements with lease and non-lease components, and non-lease components are accounted for separately and not included in our ROU assets and corresponding liabilities. We have elected not to present short-term leases in the Consolidated Balance Sheets as these leases have a lease term of 12 months or less at lease inception. Operating leases are included in operating ROU assets. Current and non-current operating lease liabilities, and finance leases are included in property, plant and equipment, accrued expenses and other current liabilities, and other liabilities in the Consolidated Balance Sheets. The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized in the Consolidated Balance Sheet as of June 30, 2026: 2027 $ 319,932 2028 329,051 2029 42,027 Total undiscounted fut …

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Recent Accounting Pronouncements - From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, (FASB), or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are applicable and not yet effective will not have a material impact on the Companys financial position or results of operations upon adoption. What follows below are accounting pronouncements adopted or issued but not yet adopted. In November 2024, the FASB issued ASU 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures ( ASU 2024-03) requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: (1) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)(e), (2) include certain amounts that are already required to be disclosed under current GAAP in the …

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Note 11. Related Party Transactions In March 2025, Allan Marshall purchased 125,000 shares of Series A preferred shares from the Company at a per share price of $2.60 per preferred share. This purchase was settled through the cancellation of a $400,000 related party advance. There are no advances due to Allan Marshall at June 30, 2026 and 2025. On April 1, 2024, the Company entered into a lease agreement with MFA 2510 Merchant LLC, which is owned by our CEO, Allan Marshall. The lease is for approximately 10,000 square feet of warehouse and office space, located in Odessa, Florida for $20,060 per month. The initial term of the lease is five years. The Company is responsible for real estate taxes, utilities, and repairs under the terms of certain of the operating leases and accounted for as non-lease components and not part of what we include in ROU assets. The Company spent $611,768 in leasehold improvements to prepare the facility for product manufacturing, which will be amortized over the five-year lease term. Product manufacturing was at full capacity and fully moved from the Nevada facility as of August 1, 2024. During the years ended June 30, 2026 and 2025, the Company recognized lease expense related to this lease of $186,536 and $320,050, respectively. As a result of the Companys course of action to terminate the CBD gummy and other operations, a loss on disposal of leasehold improvements of approximately $477,000 was recorded during the year ended June 30, 2026. No suc …

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"Note 2. Significant Accounting Policies The significant accounting policies followed are: Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates underlying the Companys reported financial position and results of operations include the allowance for credit losses, useful lives of property and equipment, impairment of long-lived assets, inventory valuation, fair value of stock-based compensation, fair value of digital assets, fair value of the Phantom Stock Unit compensation, and valuation allowance on deferred tax assets. Cash - The Company considers all highly liquid investment instruments with a maturity of three months or less to be cash equivalents. Cash is maintained at financial institutions and at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. Accounts Receivable - Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within a specified time from the invoice date. The t …

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Note 12. Equity Transactions Convertible Preferred Stock The Company has 150,000 shares of preferred stock issued and outstanding to Allan Marshall, CEO. The preferred stock is convertible into 138,889 shares of the Companys common stock at the holders option, has preferential liquidation rights and the preferred stock shall vote together with the common stock as a single class on all matters to which shareholders of the Company are entitled to vote at the rate of ten votes per share of preferred stock. Common Stock During the year ended June 30, 2026: 7,889,266 pre-funded warrants were exercised for 7,889,266 shares of common stock in connection with the private placement offering occurring in April 2025 in which the Company issued 35,970,383 shares of common stock at an offering price of $2.28 per share. In connection with a private placement offering of equity in July 2025, 12,457,186 shares of common stock were issued. In connection with the notice of conversion relating to convertible debt in July 2025, 276,238 shares of common stock were issued. In connection with the cashless exercises of warrants, 678,352 shares of common stock were issued. In connection with the exercise of warrants for cash, 33,334 shares of common stock were issued. In connection with the vesting of restricted stock units, 533,665 shares of common stock were issued. In connection with the Companys at-the-market offering program, the Company issued 6,581,559 shares of common stock for aggregate gros …

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Note 19. Subsequent Events During August 2026, subsequent to the year ended June 30, 2026, in connection with the Companys at-the-market offering program, the Company issued approximately 2.5 million shares of common stock for aggregate gross proceeds of approximately $2.5 million. During September 2026, subsequent to the year ended June 30, 2026, the Company amended the terms of its existing credit facility with BitGo. Pursuant to the amendment, the interest rate on the outstanding borrowings was reduced from 11.50% to 7.50% per year. At the time of the amendment, approximately $57.3 million was outstanding under the credit facility. …

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