XML 20 R8.htm IDEA: XBRL DOCUMENT
v3.26.1

Summary of Significant Accounting Policies | 3 Months Ended
--- | ---
Mar. 31, 2026
Summary of Significant Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of the Company and entities in which the Company has a controlling financial interest. They have been prepared in accordance with GAAP. The Company reports financial results in U.S. dollars. The Company consolidates entities in which it holds a controlling financial interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. As of March 31, 2026, the Company conducts its continuing operations directly through the parent entity. All intercompany transactions and balances have been eliminated in consolidation. The Condensed Consolidated Financial Statements, in the opinion of management, reflect all adjustments, which include normal and recurring adjustments, necessary to fairly state the Company’s financial position, results of operations, and cash flows for the periods presented herein. Additional information regarding the Company’s significant accounting policies is included in the Company’s Annual Report. Use of Estimates The preparation of accompanying financial statements, in conformity with GAAP, requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates and assumptions used in these Condensed Consolidated Financial Statements include, but are not limited to, the fair value of financial instruments (including staking receivables and convertible debt), the valuation of the Company’s digital assets, warrants, options, and embedded derivatives. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and may cause actual results to differ from those estimates. Digital Assets The Company accounts for crypto assets within the scope of ASC 350-60, Intangibles – Goodwill and Other – Crypto Assets (“ASC 350-60”), at cost with subsequent measurement at fair value, with changes in fair value recognized in earnings. Certain liquid staking arrangements are accounted for as non-monetary receivables with embedded derivatives, which are separated and accounted for under ASC 815, Derivatives and Hedging (“ASC 815”). Cash, Cash Equivalents and Restricted Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents, including certificates of deposits and United States Treasury securities. As of March 31, 2026 and December 31, 2025, cash and cash equivalents totaled $65.9 million and $8.0 million, respectively. As of March 31, 2026, the Company had no restricted cash equivalents, as the $1.0 million of restricted cash equivalents previously pledged as collateral against the Company’s convertible debt were held in controlled accounts at December 31, 2025, and were released to the Company in January 2026. Concentrations of Credit Risk The Company is subject to concentration of credit risk arising from its cash and cash equivalents, digital assets, and related counterparties, including financial institutions, custodians, and participants in liquid staking protocols. Cash balances may, at times, exceed federally insured limits. The Company mitigates this risk by placing cash with high-credit-quality financial institutions. The Company also holds digital assets, including ETH, with third-party custodians and participates in liquid staking arrangements through third-party protocols. These arrangements expose the Company to risks related to counterparty nonperformance, custodian insolvency, and protocol-level events. As of March 31, 2026, the Company’s maximum exposure to loss related to these concentrations, assuming complete nonperformance by counterparties and no recovery of collateral, consists primarily of (i) cash and cash equivalents, including restricted cash equivalents, with a carrying value of approximately $65.9 million, and (ii) digital assets held with third-party custodians with a carrying value of approximately $28.3 million. The Company has not recognized an allowance for credit losses related to cash and receivable-type balances, including staking receivables, as of March 31, 2026. Segment Reporting ASC 280, Segment Reporting (“ASC 280”), requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker (the “CODM”) in deciding how to allocate resources and assess performance. Segment information is prepared on the same basis that the Company’s Chief Executive Officer (“CEO”), who serves as the CODM, manages the business, evaluates financial results, and makes key operating decisions. The Company has a single reportable operating segment based on how the CODM reviews financial performance and allocates resources. All assets of the Company’s continuing operations are managed on a consolidated basis. The CODM uses net income to evaluate and make key operating decisions. Because the Company has a single reportable segment and the measure of segment profit or loss is consolidated net income, the required disclosures under ASC 280 are presented on a consolidated basis. Accordingly, no additional disaggregated segment disclosures are required. Aircraft Engine Acquisition The Company, through its wholly-owned subsidiary, ETHZilla Aerospace LLC, acquired three aircraft engines and related equipment in transactions accounted for as asset acquisitions. The aircraft engines are recorded at cost, including transaction costs directly attributable to the acquisition, and are presented within “Property and equipment, net” on the Condensed Consolidated Balance Sheets. At the time of acquisition, the aircraft engines were subject to existing lease arrangements, which were assumed by the Company in connection with the transactions. The Company retained the prior classification of the leases as operating leases. Accordingly, the aircraft engines are depreciated on a straight-line basis over their estimated useful lives. Management reviews estimated useful lives and residual values periodically and revises such estimates prospectively, when appropriate. Lease revenue is recognized in accordance with ASC 842, Leases (“ASC 842”). Lease income consists of fixed lease payments and variable consideration based on engine usage. Fixed lease payments are recognized on a straight-line basis over the lease term, while variable lease payments are recognized in the period in which the underlying usage occurs. Lease revenue is recognized only from the date control of the aircraft engines transfers to the Company and is presented within “Aircraft engine rental revenue” in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company has entered into third-party servicing arrangements related to the aircraft engines. Fees associated with these servicing arrangements are expensed as incurred. The aircraft engines are evaluated for impairment in accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”) whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized to the extent the carrying value exceeds the estimated fair value of the asset. Eurus Aero Tokens The Company, through its wholly owned subsidiary, ETHZilla Aerospace LLC, issued profit participation interests in the form of cryptographic digital tokens (the “Eurus Aero Tokens”) that entitle holders to receive pro rata cash distributions derived from net cash flows generated by specified aircraft engines, including lease income and proceeds from a potential liquidity event. The Eurus Aero Tokens do not represent equity interests in the Company and do not convey voting or governance rights. Proceeds received from the issuance of the Eurus Aero Tokens are initially recorded as a liability, as the tokens represent contractual obligations to remit future cash flows to token holders. The liability is reduced as distributions are paid or become payable in accordance with the token documentation. Warehouse Facility The Company, through its wholly owned subsidiary, ETHZilla Auto Loans LLC (“ETHZilla Auto Loans”), provides a revolving warehouse credit facility (the “Warehouse Facility”) to Anchored Finance, LLC (“Anchored Finance”) which is engaged in the business of funding auto loan receivables. Advances under the Warehouse Facility are secured by a first-priority perfected security interest in the underlying eligible receivables and related proceeds. The Company determined that advances made under the Warehouse Facility are classified as held for investment. As such, the loans will be reported on the balance sheet at their amortized cost basis. In accordance with ASC 310, Receivables (“ASC 310”), loan receivables are recognized when advances are funded and are subsequently measured at amortized cost, net of an allowance for expected credit losses, as applicable. Interest income on funded advances is recognized over time using the effective interest method and presented as “Interest income” in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Warehouse Facility also provides for commitment fees on the unfunded portion of the commitment, which are recognized as income over the commitment period. Loan receivables arising under the Warehouse Facility are derecognized upon repayment or settlement of the related advance, including repayment in connection with take-out of the pledged receivables. The Company evaluates these loan receivables for expected credit losses in accordance with ASC 326, Financial Instruments – Credit Losses (“ASC 326”), including consideration of historical experience, current conditions, reasonable and supportable forecasts, and the nature and value of collateral securing the advances. Zippy Manufactured Home Loans The Company, through its wholly owned subsidiary, ETHZilla Modular Mortgage LLC (“ETHZilla Modular Mortgage”), acquires manufactured and modular home loan receivables (the “Zippy Loans”). During the three months ended March 31, 2026, the Company acquired a portfolio of manufactured home loan receivables pursuant to a loan purchase agreement and entered into additional purchase and servicing arrangements that provide a framework to acquire additional loans from time to time. The Company determined that the Zippy Loans transaction represents the purchase of financial assets rather than a secured financing because control of the loans is transferred to the Company and the sale criteria under ASC 860, Transfer and Servicing are met. Accordingly, the Zippy Loans are accounted for as loan receivables under ASC 310. The Company also determined the transaction represents an asset acquisition under ASC 805, Business Combinations. Zippy Loans are recognized when the Company obtains control of the loans and the contractual rights to principal and interest cash flows. The loans are initially recorded at cost, which includes the purchase price and directly attributable transaction costs, and are subsequently measured at amortized cost, net of an allowance for expected credit losses. Purchase price premiums or discounts that are integral to the loans’ yield are accreted or amortized into interest income over the expected life of the loans using the effective interest method. Interest income earned on the Zippy Loans is presented as “Interest income” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company evaluates the Zippy Loans for expected credit losses in accordance with ASC 326 and records an allowance for expected credit losses upon acquisition and reassesses the allowance at each reporting date. The Zippy Loans include Community Recourse Loans which management considers in assessing credit risk characteristics and estimating expected credit losses. In estimating expected credit losses, the Company considers the extent to which contractual recourse provisions mitigate the Company’s exposure to credit losses and evaluates expected credit losses based on the amounts expected to be collected from borrowers and, as applicable, from counterparties providing recourse. Zippy Loans, LLC (or an affiliate) services the loans pursuant to a servicing arrangement. Servicing fees are recognized as incurred and included in “Loans receivable.” Loan purchases under the forward-flow arrangements are evaluated and accounted for as separate transactions at the time of acquisition, and the forward-flow arrangements do not, in and of themselves, result in recognition of loan receivables or liabilities prior to settlement. The Company determined that customary representations and warranties, indemnification, repurchase, recourse, and side letter provisions do not provide the seller with effective control over the transferred loans and do not give rise to separate liabilities at acquisition. Recently Issued Accounting Pronouncements In﻿ November 2024, the FASB issued ASU No. 2024-04, Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”), which amends ASC 470-20, Debt - Debt with Conversions and Other Option. ASU 2024-04 clarifies the requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. The Company adopted ASU 2024-04 effective January 1, 2026. As the Company did not have any convertible debt outstanding during the period, the adoption of ASU 2024-04 did not have a material impact on the Company’s Condensed Consolidated Financial Statements or related disclosures. In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”), which amends ASC 220-40, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (“ASC 220-40”). In January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”), which also amends ASC 220-40 and clarifies the effective date of ASU 2024-03. ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement, including specific information about certain costs and expenses. As clarified by ASU 2025-01, the amendments are effective for the Company for annual reporting beginning in fiscal 2028 and interim reporting beginning in fiscal 2029, applied prospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting these standards on its Condensed Consolidated Financial Statements and related disclosures.

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/235/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483426/235-10-50-1 + Details
Name: | us-gaap_SignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration