BTCS Labs Inc. Annual Report Summary for Investors

Welcome to an investor-focused summary of BTCS Labs Inc.'s recent annual report. This guide offers a clear, concise overview of the company's current status, performance, and future outlook, specifically tailored for retail investors considering its potential.

Crucial Investor Alert: BTCS Labs Inc. currently has no publicly traded shares. This means its shares are NOT available on any public stock exchange, and you cannot buy or sell them as a regular investor at this time. This summary is intended for those seeking to understand the company's potential should it go public, or for individuals involved in private investment discussions.

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1. Business Overview

BTCS Labs Inc. ("Labs") is a newly formed company, officially established on December 24, 2024. Its first full year of operations was 2025. The company operates with a unique dual mission:

• Public Benefit: Labs aims to support the growth and improvement of the decentralized finance (DeFi) and broader blockchain ecosystem. This includes fostering open-source projects, developing tools for blockchain scalability and security, and educating the public about this emerging technology. Essentially, Labs contributes to the foundational infrastructure of the digital economy.
• For-Profit Endeavors: Alongside its public benefit goals, Labs seeks to generate revenue by creating and offering blockchain solutions. This involves providing services for DeFi applications, operating blockchain infrastructure (such as validator nodes), and developing advanced Layer 2 protocols to enhance network speed and cost-efficiency. The company also plans to explore partnerships within the blockchain space.

2. Financial Performance (2025)

As a brand-new company in its "development stage," BTCS Labs Inc. generated no revenue or profit during its first full year of operation in 2025. The company focused on building its foundational technology and operations, not immediate sales. Since this was the company's first full year of operation, no year-over-year comparisons are available. Investors should recognize that a company at this stage typically incurs significant operating expenses (e.g., for research, development, and administrative costs), leading to substantial net losses, and relies solely on external funding.

3. Risk Factors

As an early-stage, non-public company, BTCS Labs Inc. faces several significant risks:

• No Public Market & Illiquidity: Since shares are not publicly traded, investors cannot easily buy or sell them. Any investment would be highly illiquid and difficult to value.
• Early-Stage Company Risk: Labs has no operating history, no revenue, and no proven business model. The company may never become profitable or achieve its objectives, risking a complete loss of investment.
• Potential for Significant Dilution: With 2 billion common and 100 million preferred shares authorized, the company has substantial capacity to issue new shares to raise capital. This could significantly dilute existing shareholders' ownership and share value.
• Reliance on Key Personnel: The company heavily relies on Charles Allen, its sole officer and director. His limited time and potential conflicts of interest due to other commitments pose a significant risk. The lack of a broader leadership team increases this vulnerability.
• Funding Challenges: The company's success depends entirely on its ability to raise substantial capital. There is no guarantee it can secure funding when needed or on favorable terms.
• Talent Acquisition Challenges: Failure to attract and retain skilled blockchain professionals, due to competitive compensation or other factors, could severely impede development.
• Market and Regulatory Volatility: The blockchain and DeFi industries are highly volatile, subject to rapid technological changes, intense competition, and evolving regulatory landscapes. Adverse market conditions or unfavorable regulatory changes could severely impact the company's operations and ability to raise capital.
• Execution Challenges: The company's growth strategy hinges on its ability to successfully design, develop, market, and implement complex new blockchain solutions. Failure at any stage could stall or prevent growth.

4. Management Discussion and Analysis (MD&A) Highlights

Management discusses the company's financial condition, operations, and future prospects in this section.

Operating Results: In its development stage, BTCS Labs Inc. generated no revenue for the fiscal year ended December 31, 2025. The company incurred significant operating expenses, primarily for organizational activities, research, and development, to build its foundational technology and operations. Consequently, the company reported a net loss. Management focused this initial year on establishing strategic direction, developing its core mission, and initiating preliminary technological groundwork, rather than immediate commercialization.

Liquidity and Capital: Operating with limited resources, the company relies entirely on securing future funding to achieve its objectives. Management plans to raise capital by issuing additional equity or incurring debt. The company's authorized share capital (2 billion common shares and 100 million preferred shares) provides significant flexibility for future capital raises. As of December 31, 2025, 500,000 common shares were outstanding. Management anticipates requiring substantial additional capital to fund critical research and development, expand technological infrastructure, and scale operations. There is no guarantee the company can secure such funding on favorable terms, or at all.

Key Developments and Challenges: In 2025, the company successfully formed and clearly articulated its ambitious dual mission. Labs also established a strategic direction for organic growth through proprietary solution development, avoiding acquisitions. Significant challenges include the complete absence of revenue, the capital-intensive nature of building blockchain technology, difficulty attracting and retaining top-tier blockchain talent in a competitive market, and gaining market acceptance for its nascent solutions within the rapidly evolving blockchain industry.

Leadership and Strategy: Charles Allen currently serves as BTCS Labs Inc.'s sole officer and director. He also serves as CEO and Chairman of BTCS Inc. and has other commitments. The company acknowledges a critical need to expand its leadership team by hiring additional executives and directors to execute its ambitious plans, contingent on securing sufficient capital. Labs' core strategy is organic growth, developing its own proprietary blockchain solutions and public benefit initiatives internally. It explicitly prefers not to pursue growth through mergers and acquisitions at this early stage.

Market Trends and Regulation: Management recognizes that the company's prospects are highly sensitive to broader trends and regulatory developments within the blockchain and decentralized finance (DeFi) ecosystems. Factors like significant crypto market downturns, new or evolving DeFi regulations, and general macroeconomic conditions (e.g., rising interest rates, inflation) could materially affect Labs' ability to raise capital, attract talent, and operate successfully.

5. Financial Health

BTCS Labs Inc. operates with limited resources, relying entirely on future funding to achieve its objectives. The company plans to raise capital by issuing additional equity (selling more stock) or incurring debt. Investors should assume the company will require significant future capital.

• Outstanding Shares: As of December 31, 2025, the company had 500,000 common shares outstanding. This represents a significant increase from 100 shares at the end of 2024, indicating initial capital raising from founders or private investors.
• Authorized Shares: The company has authorized a substantial number of shares for future issuance: 2 billion common shares and 100 million preferred shares. No preferred stock has been issued yet.

6. Future Outlook

BTCS Labs Inc. will immediately focus on raising additional capital to fund critical research and development, expand its technological infrastructure, and scale operations. The company aims to develop proprietary blockchain solutions for DeFi applications, infrastructure services, and Layer 2 protocols. Its future success depends entirely on securing this necessary funding and effectively building its planned offerings.

7. Competitive Position

Labs operates in the highly competitive and rapidly evolving blockchain industry. It faces competition from numerous companies, many with significantly larger financial resources and established market positions. While Labs aims to develop solutions that can complement other players (such as BTCS Inc.), direct competition is an inherent risk as the industry matures. The company expects its competitive advantage to stem from its focus on open-source contributions, specific technological innovations in DeFi and Layer 2 protocols, and strategic partnerships.