Quarterly Report for Quarter Ending December 31, 2025 (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. Our primary current activity is maintaining a digital asset treasury consisting of DOG Coins, a Bitcoin-native token issued on the Runes protocol. DOG Coins are distinct from Dogecoin ("DOGE"). Digital asset markets are highly volatile and subject to significant price fluctuations, which may materially affect the Company's financial condition and results of operations.

As of December 31, 2025, our cryptocurrency holdings had a carrying value of $597,465 and are recorded on the balance sheet as intangible assets - cryptocurrency.

All decisions regarding the purchase, sale, or management of digital assets are made solely by our sole officer and director, Levi Jacobson, who does not hold formal financial or investment accreditations. There can be no assurance that such decisions will be profitable.

The Company launched a proprietary AI-powered crypto chatbot in beta during May 2025; however, development has been paused while resources are directed toward other priorities. The chatbot has not generated revenue, and no patents or other intellectual property protections have been filed.

We are also evaluating additional initiatives, including establishing a 14-megawatt Bitcoin mining facility and exploring potential acquisitions in the digital asset and blockchain infrastructure sector. These initiatives remain in preliminary stages and have not generated revenue.

The Company has engaged in limited ancillary activities, including the sale of collectible silver coins featuring DOG-themed artwork. These items are memorabilia only and do not confer rights to digital assets. We do not expect such sales to represent a material portion of revenues.

The Company has one executive officer and director, Levi Jacobson, who serves as President, Chief Executive Officer, Chief Financial Officer, Treasurer, and sole director.

Revenues

The Company generated no revenue for the three months ended December 31, 2025 and December 31, 2024. For the six months ended December 31, 2025, the Company generated revenue of $44 from staking rewards. The Company generated no revenue for the six months ended December 31, 2024.

Operating Expenses

Operating expenses totaled $162,691 for the three months ended December 31, 2025, compared to $4,780 for the same period in 2024. For the six months ended December 31, 2025, operating expenses totaled $465,624, compared to $12,564 for the six months ended December 31, 2024.

The increase in operating expenses was primarily attributable to higher general and administrative costs, including consulting expenses and costs associated with financing activities.

Other Income (Loss)

Other income totaled $75,206 for the three months ended December 31, 2025, compared to $0 for the three months ended December 31, 2024. Other income for the three months ended December 31, 2025 consisted primarily of a $744,870 non-cash gain from the change in fair value of derivative liabilities associated with convertible instruments, partially offset by $34,703 of interest expense related to convertible notes and amortization of debt discounts and a $634,961 loss from the change in fair value of cryptocurrency.

For the six months ended December 31, 2025, other loss totaled $1,991,885, compared to $0 for the six months ended December 31, 2024. Other loss for the six months ended December 31, 2025 consisted primarily of $676,823 of interest expense related to convertible notes and amortization of debt discounts, a $189,009 loss from the change in fair value of derivative liabilities, and a $1,126,053 loss from the change in fair value of cryptocurrency.

Net Loss

The Company reported a net loss of $87,485 for the three months ended December 31, 2025, compared to a net loss of $4,780 for the three months ended December 31, 2024.

For the six months ended December 31, 2025, the Company reported a net loss of $2,457,466, compared to a net loss of $12,564 for the six months ended December 31, 2024. The increased net loss was primarily attributable to higher operating expenses, interest expense, derivative-related fair value adjustments, and losses associated with changes in the fair value of cryptocurrency.

Liquidity and Capital Resources

As of December 31, 2025, the Company had cash and cash equivalents of $1,177, compared to $9 as of June 30, 2025. The Company's limited cash resources reflect its development-stage operations and reliance on external financing to fund operations and strategic initiatives.

Total current assets were $3,677 as of December 31, 2025, compared to $13,077 as of June 30, 2025. Current liabilities totaled $1,100,628 as of December 31, 2025, compared to $84,000 as of June 30, 2025. The increase in current liabilities was primarily attributable to accrued expenses, convertible notes payable, derivative liabilities, and obligations related to the Company vehicle loan.

Total assets were $659,713 as of December 31, 2025, compared to $75,551 as of June 30, 2025. The increase in total assets was primarily attributable to the acquisition of cryptocurrency holdings and the purchase of a company vehicle.

As of December 31, 2025, we had stockholders' equity (deficit) of $(440,915), compared to $(8,449) as of June 30, 2025. The change reflects net losses during the period, partially offset by proceeds from the issuance of common stock.

Cash Flows

Net cash used in operating activities for the six months ended December 31, 2025 was $453,201, compared to $12,564 for the six months ended December 31, 2024. Cash used in operating activities was primarily attributable to net loss adjusted for non-cash expenses and changes in working capital.

Net cash used in investing activities for the six months ended December 31, 2025 was $1,721,634, compared to $0 for the six months ended December 31, 2024. Cash used in investing activities consisted primarily of the purchase of cryptocurrency and the purchase of a company vehicle.

Net cash provided by financing activities for the six months ended December 31, 2025 was $2,176,003, compared to $12,554 for the six months ended December 31, 2024. Cash provided by financing activities during the current period was primarily attributable to proceeds from the sale of common stock, proceeds from convertible notes, and funds received in connection with the Company vehicle loan.

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 consist of DOG Coins. As of December 31, 2025, these holdings had a carrying value of $597,465 and are 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 position. During the six months ended December 31, 2025, the Company recognized losses from changes in the fair value of cryptocurrency, 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 a decline 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 ability to continue operations and could result in the loss of some or all of our stockholders' investment.

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 insignificant revenue. These conditions raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that these financial statements are issued.

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

The accompanying financial statements do not include any adjustments that might be required if the Company is unable to continue as a going concern, including adjustments to the recoverability and classification of assets or the amounts and classification of liabilities.