upxi_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _______

Commission File Number 001-40535

UPEXI, INC.

(Exact name of registrant as specified in its charter)

Delaware

83-3378978

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

3030 North Rocky Point Drive

Tampa, FL

33607

(Address of principal executive offices)

(Zip Code)

(727) 287-2800

(Registrant’s telephone number, including area code)

_______________________________________________________________

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.00001	UPXI	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 12, 2025 the registrant had 59,918,609 shares of common stock, par value $0.00001 per share, outstanding.

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PART I - FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	41

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.	Defaults Upon Senior Securities	43

Item 4.	Mine Safety Disclosures	43

Item 5.	Other Information	43

Item 6.	Exhibits	44

SIGNATURES		45

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FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

Our unaudited condensed consolidated financial statements are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to shares of our common stock.

As used in this quarterly report, the terms “we”, “us”, “our” and “our Company” mean Upexi, Inc., unless otherwise indicated.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

UPEXI, INC.

Condensed Consolidated Financial Statements (Unaudited)

		Page

Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and June 30, 2025		5

Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2025 and 2024 (Unaudited)		6

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended September 30, 2025 and 2024 (Unaudited)		7

Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2025 and 2024 (Unaudited)		8

Notes to the Condensed Consolidated Financial Statements (Unaudited)		9

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UPEXI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	September 30,		June 30,
	2025		2025
	(Unaudited)
ASSETS
Current assets
Cash	$	2,237,223	$	2,975,150
Accounts receivable, net		284,261		157,515
Inventory, net		1,035,680		1,152,870
Due from VitaMedica transition		471,380		228,017
Prepaid expenses and other receivables		1,480,227		350,836
Current digital assets at fair value		212,832,396		49,913,655
Purchase price receivable - VitaMedica		2,000,000		2,000,000
Total current assets		220,341,167		56,778,043

Property and equipment, net		1,931,498		2,052,573
Intangible assets, net		143,923		163,113
Goodwill		848,854		848,854
Deferred tax asset		5,948,858		5,948,858
Investment in digital company		750,000		-
Digital assets at fair value, net of current		187,993,435		56,083,525
Other assets		200,690		192,123
Right-of-use asset, net		1,569,742		1,739,755
Total other assets		199,387,000		67,028,801

Total assets	$	419,728,167	$	123,806,844

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	2,184,897	$	1,039,370
Accrued compensation		3,176,969		3,470,296
Deferred revenue		51,347		13,155
Accrued liabilities		947,076		356,064
Accrued interest		1,545,481		792,449
Acquisition payable		260,652		260,652
Current portion of promissory notes		560,000		560,000
Short-term treasury debt		50,000,000		20,000,000
Current portion of Cygnet subsidiary notes payable		5,380,910		5,380,910
Current portion of operating lease payable		521,702		691,010
Total current liabilities		64,629,034		32,563,906

Operating lease payable, net of current portion		1,145,439		1,145,440
Convertible notes payable		143,161,862		-

Total long-term liabilities		144,307,301		1,145,440

Stockholders' equity
Preferred stock, $0.00001 par value, 10,000,000 shares authorized, and 150,000 and 150,000 shares issued and outstanding, respectively		2		2
Common stock, $0.00001 par value, 300,000,000 shares authorized, and 58,893,261 and 38,270,571 shares issued and outstanding, respectively		589		383
Additional paid in capital		204,586,941		150,640,935
Retain earnings (accumulated deficit)		6,204,300		(60,543,822	)
Total stockholders' equity		210,791,832		90,097,498

Total liabilities and stockholders' equity	$	419,728,167	$	123,806,844

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UPEXI, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended September 30,
	2025			2024

Revenue
Revenue	$	3,156,128		$	4,356,515
Digital asset revenue		6,083,617			-
Total revenue		9,239,745			4,356,515

Cost of revenue		956,745			1,426,447

Gross profit		8,283,000			2,930,068

Operating expenses
Sales and marketing		1,067,555			1,041,425
Distribution costs		887,596			1,455,725
General and administrative		9,257,208			1,367,690
Unrealized (gain) on digital assets		(77,996,124	)		-
Share-based compensation		5,756,398			141,298
Amortization of acquired intangible assets		19,190			19,190
Depreciation		135,902			239,905
		(60,872,275	)		4,265,233

Income (loss) from operations		69,155,275			(1,335,165	)

Other income (expense), net
Interest expense, net		(2,699,383	)		(290,412	)
Other income, net		292,230			-
Other expense, net		(2,407,153	)		(290,412	)

Income (loss) on operations before income tax		66,748,122			(1,625,577	)


Income tax benefit (expense)		-			-

Net income (loss) from continuing operations	$	66,748,122		$	(1,625,577	)

Basic income (loss) per share:
Income (loss) per share	$	1.21		$	(1.55	)

Diluted income (loss) per share:
Income (loss) per share	$	0.76		$	(1.55	)

Basic weighted average shares outstanding		55,340,634			1,045,429
Fully diluted weighted average shares outstanding		88,479,950			1,045,429

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UPEXI, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)


	Preferred Stock		Preferred Stock		Common Stock		Common Stock		Additional Paid		Accumulated			Total Stockholders'
	Shares*		Par* **		Shares*		Par* **		In Capital		Deficit			Equity
FY 2025
Balance, June 30, 2024		25,000	$	1		1,045,429	$	11	$	53,375,502	$	(46,859,613	)	$	6,515,901

Stock based compensation		-		-		-		-		141,298		-			141,298

Net loss for the three months ended September 30, 2024		-		-		-		-		-		(1,625,577	)		(1,625,577	)

Balance, September 30, 2024		25,000	$	1		1,045,429	$	11	$	53,516,800	$	(48,485,190	)	$	5,031,622

FY 2026
Balance, June 30, 2025		150,000	$	2		38,270,571	$	383	$	150,640,935	$	(60,543,822	)	$	90,097,498

Stock based compensation		-		-		-		-		5,756,398		-			5,756,398

Exercise of pre-funded warrants		-		-		7,889,266		79		7,810		-			7,889

July 2025 private placement		-		-		12,457,186		125		47,007,790		-			47,007,915

Issuance of stock for conversion of debt		-		-		276,238		2		1,174,008		-			1,174,010

Net income for the three months ended September 30, 2025		-		-		-		-		-		66,748,122			66,748,122

Balance, September 30, 2025		150,000	$	2		58,893,261	$	589	$	204,586,941	$	6,204,300		$	210,791,832

* Common stock has been restated to reflect the 1 for 20 reverse split

** Common stock par value has been adjusted to $0.00001

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UPEXI, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three months ended September 30,
	2025			2024
Cash flows from operating activities
Net income (loss) from operations	$	66,748,122		$	(1,625,577	)

Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
Depreciation and amortization		155,092			259,095
Unrealized (gain) on digital assets		(77,996,124	)		-
Digital asset revenue		(6,083,617	)		-
Amortization of loan costs		-			2,571
Bad debt reserve for Amazon receivable		229			-
Amortization of deferred financing costs		794,681			-
Stock based compensation		5,756,398			141,298
Changes in assets and liabilities
Accounts receivable		(126,975	)		(194,557	)
Inventory		117,190			(204,863	)
Prepaid expenses and other assets		(1,381,321	)		170,455
Operating lease assets and liabilities, net		(7,079	)		28,795
Accounts payable and accrued liabilities		2,204,991			(494,570	)
Deferred revenue		38,192			(57,239	)
Net cash used in operating activities		(9,780,221	)		(1,974,592	)

Cash flows from investing activities
Proceeds from the sale of the building, net		-			4,005,516
Proceeds from the sale of E-core		-			2,000,000
Acquisition of digital assets		(29,579,741	)		-
Investment in digital assets company		(750,000	)		-
Acquisition of property and equipment		(14,827	)		(167,410	)
Net cash (used in) provided by investing activities		(30,344,568	)		5,838,106

Cash flows from financing activities
Payment of equity issuance costs		(2,992,085	)		-
Proceeds from issuance of stock		50,000,000			-
Proceeds from exercise of pre-funded warrants		7,889			-
Repayment of related party advance		-			(100,000	)
Payments of debt issuance costs		(7,628,942	)		-
Repayment on note payable on building		-			(2,634,538	)
Net cash provided by (used in) financing activities		39,386,862			(2,734,538	)

Net (decrease) increase in cash		(737,927	)		1,128,976

Cash, beginning of period		2,975,150			661,415
Cash, end of period	$	2,237,223		$	1,790,391

Supplemental Cash Flow Disclosures
Interest paid	$	1,946,351		$	84,362
Income tax paid	$	-		$	-
Non-cash Investing and Financing Activities
Issuance of common stock for the repayment of convertible notes payable	$	1,174,010		$	-
Issuance of convertible debt for digital assets acquired	$	151,169,169		$	-
Issuance of short-term debt for digital assets acquired	$	30,000,000		$	-

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UPEXI, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1. Company Information and Basis of Presentation

Nature of Operations

Upexi, Inc., is a Delaware corporation, originally formed as a Nevada corporation in 2018. The Company is made up of seven active subsidiaries. We are in the cryptocurrency industry and the management of cash assets through a cryptocurrency portfolio, primarily focused in Solana tokens and staking of those tokens. We continue to be a brand owner specializing in the development, manufacturing, and distribution of consumer products.

Solana Treasury Strategy. We diversified into the cryptocurrency industry and cash management of assets through a cryptocurrency portfolio, primarily focused in Solana tokens and staking of those tokens. Early in 2025, we updated and modified our cash management and treasury strategy to include holding digital currency assets directly on our balance sheet. This was a shift from holding excess cash primarily in FDIC-insured interest-bearing accounts. We adopted this strategy to obtain the highest yield on excess cash. Under our new approach, our treasury policy focuses primarily on Solana (“SOL”) an asset that is considered earlier in its lifecycle, with respect to both development and usage, as well as institutional adoption. This strategy involves applying a public-market treasury model similar to what has been done with Bitcoin. Management will focus its resources to this digital asset strategy and a significant portion of the balance sheet will be the Company’s Solana digital asset treasury. Currently our treasury is exclusively dedicated to the SOL digital asset and currently we do not intend to dedicate any of the treasury allocated capital to other digital assets.

Our products are distributed in the United States of America and internationally through multiple entities and managed through our locations in Florida.

Upexi operates from our corporate location in Tampa, Florida, where direct to consumer, wholesale and Amazon sales are driven by on-site and remote teams for all brands. The Tampa location also supports all the other locations with accounting, corporate oversight, day-to-day finances, business development and operational management operating from this location.

MW Products operates from our corporate headquarters, managing direct to consumer, wholesale and Amazon sales for multiple brands and develops new products through our research and development team in Henderson, Nevada and distributes products through our Tampa, Florida warehouse.

Lucky Tail operates from our Tampa, Florida warehouse with sales and marketing driven by on-site and remote teams that operate the Amazon sales strategy and daily business operations.

HAVZ, LLC, d/b/a/ Steam Wholesale operates manufacturing and/or distribution centers in Odessa, Florida, supporting our health and wellness products, including those products manufactured with hemp ingredients and our overall distribution operations. We have continued to manage these operations with corporate focus on larger opportunities that have warranted the majority of corporate focus and investments for the future.

Upexi Distribution operates from our Tampa, Florida warehouse providing warehousing, distribution and other services in support of our product sales.

Basis of Presentation and Principles of Consolidation - The Company’s condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of September 30, 2025 and 2024.

In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are eliminated in consolidation. However, the results of operations included in such financial statements may not necessarily be indicative of annual results.

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Note 2. Significant Accounting Policies

The significant accounting policies followed are:

Use of Estimates - The preparation of condensed 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 condensed 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 Company’s 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 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 - Amounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within a specified time from the invoice date. The trade terms vary based on the customer and typically range from prepaid to 45 days from the invoice date. Interest is not charged by the Company on past due accounts. The carrying amount of receivables is reduced by an allowance for expected credit losses, as necessary, that reflects management’s best estimate of the amount that will not be collected. This estimation takes into consideration historical experience, current conditions and as applicable, reasonable supportable forecasts. Actual results could vary from the estimate. Accounts are charged against the allowance when management deems them to be uncollectible. The net accounts receivable balances at September 30, 2025, June 30, 2025, and June 30, 2024 were $284,261, $157,515, and $606,885, respectively. Based on management’s review of accounts receivable, the allowance for credit losses was approximately $641,800 at September 30, 2025 and $636,600 at June 30, 2025. The Company had bad debt expense of $229 for the three months ended September 30, 2025 and no bad debt expense for the three months September 30, 2024.

Inventory - The Company reviews the inventory level of all products and raw materials quarterly. For most products that have been in the market for one year or more, we consider inventory levels of greater than one year’s sales to be excess or other items that show slower than projected sales. Due to limited market penetration for our products, we have decided to write down 50% of the cost against certain raw materials and finished products. Products that are no longer part of the current product offering are considered obsolete. The potential for re-sale of slow-moving and obsolete inventories is based upon our assumptions about future demand and market conditions. The recorded cost of obsolete inventories is then reduced to zero. The slow-moving and obsolete inventory is written off and recorded as charges to cost of goods sold. All adjustments for obsolete inventory establish a new cost basis for that inventory as we believe such reductions are permanent declines in the market price of our products. Generally, obsolete inventory is sold to companies that specialize in liquidation, while we continue to market slow-moving inventories until they are sold or become obsolete. Inventory consists of raw materials and finished goods and is stated at the lower of cost or net realizable value, cost is determined by the weighted average moving cost inventory method. Net realizable value is determined, with appropriate consideration given to obsolescence, excessive levels, deterioration, and other factors.

Digital Assets – Pursuant to ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets: Accounting for and Disclosure of Crypto Assets, codified into ASC subtopic 350-60, in-scope crypto assets are required to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard.

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The Company adopted this guidance effective April 1, 2025 as this was the start of the Company first holding digital assets. SOL tokens are measured using Level 1 inputs under ASC 820, based on quoted prices from principal market. ASC 820 defines “principal market” as the market with the greatest volume and level of activity for the asset or liability. The determination of the principal market (and, as a result, the market participants in the principal market) is made from the perspective of the reporting entity. The digital assets held by the Company are traded on a number of active markets globally. The Company determines CoinMarketCap as its principal market, as it is one of the earliest and the most trusted sources by users, institutions, and media for comparing thousands of crypto assets and selected by the U.S. government. The Company recognizes revenue by utilizing daily close prices obtained from CoinMarketCap.

Property and Equipment - Property and equipment is recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from 3 to 20 years. Leasehold improvements are amortized over the shorter of their estimated useful lives of 5 years or the related lease term. Gains and losses upon disposition are reflected in the Statements of Operations in the period of disposition. Maintenance and repair expenditures are charged to expense as incurred.

Goodwill - The Company evaluates its goodwill for possible impairment, simplifying the test for goodwill impairment at least annually and when one or more triggering events or circumstances indicate that the goodwill might be impaired. Under this guidance, annual or interim goodwill impairment testing is performed by comparing the estimated fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the carrying value of goodwill.

The Company performed its annual test as of June 30, 2025 and 2024, respectively. As of September 30, 2025 and June 30, 2025, the amount in goodwill was $848,854.

Revenue Recognition - In accordance with ASC No. 606, Revenue from Contracts with Customers, the Company recognizes revenue when we satisfy performance obligations as evidenced by the transfer of control of our products or services to customers. In general, the Company generates revenue from product sales, either directly to customers or to distributors. In determining whether a contract exists, we evaluate the terms of the agreement, the relationship with the customer or distributor and their ability to pay.

The Company recognizes revenue from sales of our products, including sales to our distributors, at a point in time, generally upon shipment or delivery to the customer or distributor, depending upon the terms of the sales order. Control is considered transferred when title and risk of loss pass, when the customer becomes obligated to pay and, where applicable, when the customer has accepted the products or upon expiration of the acceptance period. For sales to distributors, payment is due on our standard commercial terms and is not contingent upon the distributors’ resale of the products.

Shipping and handling fees billed to customers are included in revenue. Shipping and handling fees associated with inbound freight, are generally included in cost of revenue.

Our business is subject to contingencies related to customer orders, including:

Right of Return:

A large portion of our revenue comes from the sale of consumable products, which are sold in high-volume and low quantities, and are generally maintained at stock levels of less than ninety days in our facility. Customer returns have historically represented a very small percentage of sales on an annual basis. Other product sales relate to some pet products, including small mechanical devices.

Warranties:

The Company does not accept sales returns from wholesale customers, as the products are pre-approved prior to production and shipment. E-Commerce product returns must be completed within 45 days of the date of purchase. The Company accrues an allowance for refunds, returned deposits and discounts given by customer services post shipment of the product based on historical experience and management’s estimate of future expenses, including replacement, freight charges and other fulfilment expenses.

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Conditions of Acceptance:

Sales of our consumable products and pet products, generally do not have customer acceptance terms.

Revenue by Geography and Product Source:

The following table, which excludes digital asset revenue, discloses disaggregated revenue for the three months ended:

	September 30, 2025		September 30, 2024
Primary geographical markets

United States of America	$	3,091,974	$	4,280,593
Other		64,154		75,922
Total	$	3,156,128	$	4,356,515

Product source:

Internally manufactured	$	2,207,110	$	2,166,341
Contract manufactured		925,070		578,316
Purchased as finished good		23,948		1,611,858
Total	$	3,156,128	$	4,356,515

Deferred Revenue - The Company records deposits as deferred revenue when a customer pays in advance of shipping the product. Once the product is shipped, the deposit is recorded as revenue and the related commissions are paid. All products were shipped related to deposits in deferred revenue, in less than one year.

The following table discloses the deferred revenue:

September 30,

2025

June 30,

2025

Deferred revenue

51,347

13,155

We expect to recognize 100% of the deferred revenue at September 30, 2025 and June 30, 2025, as revenue in the year ended June 30, 2026.

Digital Assets Revenue, Realized and Unrealized Gains and Losses

Acquisition of Solana tokens

We acquire liquid Solana tokens through purchases. In the case of liquid bulk purchases, we recognize for cost basis as the actual price paid. In the case of liquid VWAP (volume-weighted average price) or TWAP (time-weighted average price) over multiple hour or days, we recognize the cost basis as the average price paid for all tokens purchases.

The Company is able to acquire Solana tokens that are locked through direct negotiations with the owner or a third part at a discounted price from the Solana market value price. These locked tokens will unlock over a period of time and once unlocked can be sold on several Solana exchanges. With the purchase of locked Solana, we recognize the cost basis as the actual price paid. While the tokens remain locked, the Solana is marketed to fair value based on a 14% discount to the end of the period market price and the unrealized gain or loss is recognized. The unlocking of the purchased Solana occurs over a series of dates as prescribed by the purchase agreement. At the time of unlocking, tokens can remain in the original wallet or be transferred into the wallet at our custodian or sold on an open exchange. Once the Solana is unlocked, the fair value is measured at the end of the period at the market value without a discount.

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Per ASC 350-60-45-2, gains and losses from the remeasurement of crypto assets shall be included in net income and presented separately from changes in the carrying value of other intangible assets. Pursuant to this guidance, changes in fair value are reflected on the income statement in the line item “Realized and unrealized (gain) loss on digital assets” in the operating expense section of the consolidated statements of operations. We measure changes in fair value as the difference between the cost basis and the prevailing market price of the digital asset at the date of measurement, multiplied by the quantity held of the digital asset. Our policy on prevailing market price is the last trading price prior to midnight.

Remeasurement on a recurring basis

Subsequent to the acquisitions of Solana tokens, remeasurement of change in value fair is done by taking the spot price from coinmarketcap.com at the end of a month. Our tokens are bifurcated between liquid and locked tokens. In the case of liquid tokens, the aggregate fair value is computed by taking the number of liquid tokens and multiplying by the month-end spot price. In the case of locked tokens, the aggregate fair value is computed by taking the number of locked tokens, discounted by 14%, and multiplying by the month-end spot price. As locked tokens become unlocked over time, they will be added to the count of liquid tokens and accordingly, make up less of that discount percentage over time when computing aggregate fair value on locked tokens. The discount used by management is based on the historical purchases of locked Solana management has made on behalf of the Company. Management monitors this discount percentage and adjusts when appropriate. Per ASC 350-60-45-2, gains and losses from the remeasurement of crypto assets shall be included in net income and presented separately from changes in the carrying value of other intangible assets. Pursuant to this guidance, changes in fair value are reflected on the income statement in the line item “Realized and unrealized (gain) loss on digital assets” in the operating expense section of the consolidated statements of operations.

Staking revenue

We earn staking rewards by delegating our digital assets to third-party validators on proof-of-stake blockchain networks. These tokens remain under the Company’s control and are not derecognized, as the delegation does not constitute a transfer of control under ASC 610-20 or ASC 350-60. Rewards are recognized as income when the Company obtains control of the new tokens, typically upon receipt into its wallet. While there is no explicit guidance under U.S. GAAP for staking activities, the Company applies the principles of ASC 606, Revenue from Contracts with Customers, by analogy. Management evaluates whether a contract exists, identifies the performance obligations, and determines whether the Company acts as a principal or agent in the transaction. The transaction price is measured at the fair value of the digital assets received at the time control is obtained. Due to the evolving nature of blockchain protocols and limited regulatory guidance, management exercises significant judgment in evaluating validator reliability and the risk of slashing or forfeiture. Changes in protocol rules or accounting interpretations may materially impact how staking revenue is recognized and measured. Solana tokens held by the Company, whether liquid or locked, are eligible for staking. Staking revenue is calculated based on the number of tokens earned and the month-end spot price. This revenue is reported on the Statements of Operations under the line item “Digital Asset Revenue.” Changes in fair market value of the staking revenue after the initial Digital Asset Revenue is recognized are reflected on the income statement as “Realized and unrealized (gain) loss on digital assets”.

Realized sales of the digital assets

To the extent such digital assets may be sold, unrealized gain (or loss) shall reverse and realized gain (or loss) shall be recorded for the difference between price at which the digital asset sold and cost basis.

Equity Investment (Cost Method) – The Company follows Accounting Standards Codification (“ASC”) 321, Investments – Equity Securities, to account for its ownership interest in noncontrolled entities. Under ASC 321, equity securities that do not have readily determinable fair values (i.e., non-marketable equity securities) and are not required to be accounted for under the equity method are carried at cost less impairment (i.e., cost method investments). Income is recorded for payments received to which the Company earned, such as the case in which the Company would get a certain percentage of revenues as royalties, from the noncontrolled entity subsequent to the date of investment. Payments received in excess of earnings subsequent to the date of investment are considered a return of investment and are recorded as reductions in the cost of the investment. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred.

On August 28, 2025, the Company made an initial investment of $750,000 with Cybersyn Holdings, LLC, which hosts and owns the platform for Alpha City Exchange. Under the terms of the agreement, an initial investment of $750,000 into Alpha Exchange was made in exchange for a royalty equal to 14.9% of all future gross revenue generated by the platform. For the $750,000 investment made, pursuant to ASC 321, Investments – Equity Securities, the Company recognized the investment at cost and presents it into the caption “Investment in digital company” on the balance sheet. As of September 30, 2025, there had been no change to terminate the agreement, any achievement of the subsequent milestones, nor gross revenue generated yet by the platform off which to accrue revenue.

Advertising - The Company supports its products with advertising to build brand awareness of the Company’s various products in addition to other marketing programs executed by the Company’s marketing team. The Company believes continual investment in advertising is critical to the development and sale of its branded products. Advertising costs of $639,431 and $194,774 were expensed as incurred during the three months ended September 30, 2025 and 2024, respectively.

Table of Contents

Stock Based Compensation - The Company recognizes all share-based payments to employees, including grants of employee stock options and grants of restricted shares as compensation expense in the consolidated financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period) or immediately if the share-based payments vest immediately.

Non-employee Stock-based Payments - The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Accounting Standards Codification (ASC) 2018-07, which simplifies the accounting for non-employee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Stock-based payments related to non-employees are accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Fair Value Measurements - The Company accounts for financial instruments in accordance with FASB ASC 820 “Fair Value Measurement and Disclosures” (ASC 820). ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

	·	Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

	·	Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

	·	Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

The estimated fair value of certain financial instruments, including cash, accou

SEC Form 10-Q filed by Upexi Inc.