Balance Labs, Inc. (OTC Pink: BLNC) 2025 Annual Report: Key Highlights, Risks, and Shareholder Considerations

Executive Summary

Balance Labs, Inc., a digital asset advisory firm incorporated in 2014 in Delaware, has released its Annual Report for the year ended December 31, 2025. The company is positioning itself at the intersection of digital asset advisory services and plans to deploy a rules-based digital asset treasury, subject to capital availability. The following article details important financial, operational, and governance developments, along with potential risks and shareholder considerations that may impact the company’s valuation and share price.

Key Business Developments and Strategic Initiatives

• Advisory Services: Balance Labs provides consulting services to institutions navigating the digital asset economy. The company’s advisory engagements include both retainer-based and project-based arrangements covering digital asset product development and treasury strategy. The company generated approximately \$6,000 in advisory services revenue in Q4 2025 and recognized \$40,000 in advisory revenue in Q1 2026, marking initial traction in its business model.
• Digital Asset Treasury Initiative: The company intends to establish a rules-based digital asset corporate treasury, aiming to provide diversified exposure to digital assets. However, as of the report date, deployment is contingent on raising sufficient capital. There is no guarantee that financing will be available on acceptable terms or at all.
• Treasury Implementation Plans (Subject to Capital Raise):
  • Deploy a rules-based digital asset treasury consisting of assets selected under predefined inclusion criteria.
  • Implement rebalancing using proprietary methodologies.
  • Explore staking and yield-generating protocols on select proof-of-stake networks.
  • Evaluate third-party providers for custody, market data, execution, staking infrastructure, and accounting/tax reporting.
  • Recruit key personnel for digital asset treasury management and develop institutional-grade reporting infrastructure.
• Corporate and Compliance Initiatives:
  • Expand risk management frameworks and internal controls to meet public company obligations.
  • Increase resources in accounting, audit, compliance, and management to meet SEC reporting and control requirements.
  • Pursue capital formation activities as needed, subject to market conditions and securities laws.
  • Consider uplisting to a national securities exchange and appointing independent directors to strengthen governance.

Financial Results and Capital Structure

• Revenue: The Company generated \$6,000 in advisory revenue in Q4 2025 and \$40,000 in Q1 2026. Operations remain minimal, with the company only recently commencing revenue generation.
• Stock-Based Compensation and Losses: Major non-cash charges in 2025 included \$12.7 million in stock-based compensation, \$16.6 million loss on debt settlement, and \$3.4 million loss on derivative recognition, offset by a \$1.5 million gain on derivative remeasurement.
• Share Issuances: In 2025, the company issued 7,730,267 shares to employees, executives, directors, and consultants for services and equity awards, including 780,264 shares to CEO Alan Campbell. These shares were issued without registration under Section 4(a)(2) of the Securities Act.
• Marketable Securities: At year-end, the company held 26,573 shares of NextNRG (formerly EZFill Holdings, Inc.), worth \$38,531, reported as marketable securities – related party. The Chairman, Michael Farkas, beneficially owns 49% of NextNRG.
• Stockholders’ Deficit: Improved from \$(5.1) million in 2024 to \$(3.4) million in 2025. However, the accumulated deficit stands at \$(37.7) million, largely due to non-cash charges.
• Liquidity: The company does not currently have sufficient funds to support operations and will require additional capital. There are no firm financing arrangements in place, and the company warns that inability to raise financing may result in ceasing operations or bankruptcy.

Market Information and Shareholder Structure

• Trading: Balance Labs’ common stock is quoted on OTC Pink, not on a national securities exchange. In 2025, quarterly share prices ranged from a low of \$0.15 to a high of \$6.04, with higher volatility in later quarters.
• Dividends: The company has never declared or paid dividends and does not anticipate paying any in the foreseeable future.
• Preferred Stock: The Board is authorized to issue up to 50 million shares of preferred stock with rights that could impact common stockholders, though no such plans exist currently.
• Control: The largest shareholder, Balance Holdings, LLC (controlled by Chairman Michael D. Farkas), owns 25.38% of common stock, with entities he controls collectively holding over 27%. This concentration gives Mr. Farkas significant influence over all major corporate actions, including director elections and potential changes in control.

Risks and Price-Sensitive Issues

• Going Concern: The company’s survival depends on raising additional capital. Failure to secure funding may result in severe adverse outcomes, including liquidation or bankruptcy.
• Dilution Risk: Any future financing through equity or convertible debt will dilute existing shareholders and may involve securities with preferences senior to common stock.
• Regulatory Uncertainty: The company’s business and planned treasury activities face significant regulatory uncertainties at both federal and state levels. Changes in digital asset regulation could materially affect operations, costs, and strategy execution.
• Internal Controls: Management concluded that internal controls over financial reporting were ineffective as of year-end 2025 due to small staff size and lack of segregation of duties. Failure to remedy these weaknesses could harm share price and investor confidence.
• Penny Stock Rules: The shares are subject to SEC “penny stock” rules (trading below \$5.00), which impose additional burdens on broker-dealers and may limit liquidity and investor participation.
• Market Risks: If the planned digital asset treasury is implemented, the company will face exposure to extreme volatility in digital asset prices, which could materially affect financial results and share price.
• Limited Public Market: The lack of a national exchange listing significantly limits liquidity and may affect the company’s ability to raise capital or use its stock for strategic transactions.
• Management Experience: The management team has limited experience in operating a public company, which increases compliance and execution risk.
• Dependence on Key Personnel: Loss of key executives, especially CEO Alan Campbell and Chairman Michael D. Farkas, could materially impair operations.

Conclusion

Shareholders and prospective investors should note that Balance Labs, Inc. is at a pivotal stage. The company’s future depends critically on its ability to raise capital and successfully execute its digital asset treasury strategy. The potential for significant dilution, regulatory headwinds, and internal control weaknesses, combined with a highly volatile stock price and lack of exchange listing, represent material risks that could substantially impact the company’s valuation and share price. Any positive developments in revenue growth, capital formation, or regulatory clarity could move the stock; equally, failure to raise funds or adverse regulatory outcomes could result in significant downside, including the possibility of bankruptcy.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with professional advisors before making investment decisions. The information herein is based on the company’s 2025 Annual Report and may be subject to change. The company’s shares involve significant risk, including the potential loss of your entire investment.

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