Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ("Report"), including "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements, within the federal securities laws, including the Private Securities Litigation Reform Act of 1995, regarding future events and the future results of the Company that are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the management of the Company. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Report, including under "Risk Factors", and in other reports the Company files with the Securities and Exchange Commission ("SEC"), including the Company's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 31, 2025 (under the heading "Risk Factors" and in other parts of that report), and include, but are not limited to, statements about:

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The need for additional capital, dilution caused by future offerings, the availability of such offerings and the terms thereof;

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our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

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the Company's ability to fully comply with numerous federal, state and local laws and regulatory requirements;

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changing rates of inflation and interest rates, and economic downturns, including potential recessions, as well as macroeconomic, geopolitical, health and industry trends, pandemics, acts of war (including the ongoing Ukraine/Russian conflict, and Israel/Hamas conflict) and other large-scale crises;

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our ability to maintain our listing of our common stock on the Nasdaq Capital Market;

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the Company's reliance on its management;

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the potential effect of economic downturns, recessions, tariffs, changes in interest rates and inflation, and market conditions, including recessions on the Company's operations and prospects as a result of increased inflation, tariffs, increasing interest rates, global conflicts and other events;

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the Company's ability to protect its proprietary information and intellectual property (IP);

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the effect of current and future regulation, the Company's ability to comply with regulations (both current and future) and potential penalties in the event it fails to comply with such regulations and changes in the enforcement and interpretation of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our business;

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other risks and uncertainties, including those described under "Risk Factors", herein.

All forward-looking statements speak only as of the date of the filing of this Report. The reader should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Report are reasonable, we provide no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Report and our Annual Report on Form 10-K for the year ended December 31, 2024, as amended by Amendments No. 1 and 2 thereof, filed with the Securities and Exchange Commission on April 25, 2025 and May 8, 2025, respectively. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Reverse Stock Split

Effective on October 20, 2025 at 12:01 a.m. Eastern Time (the "Effective Time"), we affected a 1-for-10 reverse stock split of our then outstanding common stock (the "Reverse Stock Split"). No fractional shares were issued in connection with the Reverse Stock Split, and stockholders who would otherwise be entitled to receive a fractional share instead received cash in lieu of such fractional share, based upon the closing sale price of the common stock on the trading day immediately prior to the effective time of the Reverse Stock Split, as reported on the Nasdaq Capital Market.

In connection with the Reverse Stock Split discussed above, all outstanding options, warrants, and other securities entitling their holders to purchase or otherwise receive shares of common stock were adjusted, as required by the terms of each security. The number of shares available to be awarded under the Company's equity incentive plans were also appropriately adjusted. Following the Reverse Stock Split, the par value of the common stock remained unchanged at $0.0001 par value per share. The Reverse Stock Split did not change the authorized number of shares of common stock or preferred stock.

The effects of the Reverse Stock Split have been retroactively reflected throughout this Report.

General Information

The following discussion is based upon our unaudited Condensed Consolidated Financial Statements included elsewhere in this Report, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in other reports we file with the SEC, and in our most recent Annual Report on Form 10-K. All references to years relate to the calendar year ended December 31st of the particular year.

This information should be read in conjunction with the interim unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and "Part II. Other Information - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations", contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on March 31, 2025, as amended by Amendments No. 1 and 2 thereof, filed with the Securities and Exchange Commission on April 25, 2025 and May 8, 2025, respectively (the "Annual Report").

Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited condensed consolidated financial statements included above under "Part I - Financial Information" - "Item 1. Financial Statements".

Our logo and some of our trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service marks that are the property of others. Solely for convenience, trademarks, tradenames and service marks referred to in this Report may appear without the ®, ™ and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies' trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

The market data and certain other statistical information used throughout this Report are based on independent industry publications, reports by market research firms or other independent sources that we believe to be reliable sources. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information and have not commissioned any such information. We are responsible for all of the disclosures contained in this Report, and we believe these industry publications and third-party research, surveys and studies are reliable. While we are not aware of any misstatements regarding any third-party information presented in this Report, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under, and incorporated by reference in, the section entitled "Item 1A. Risk Factors" of this Report. These and other factors could cause our future performance to differ materially from our assumptions and estimates. Some market and other data included herein, as well as the data of competitors as they relate to the Company, is also based on our good faith estimates.

See also "Cautionary Statement Regarding Forward-Looking Statements", above, which includes information on forward-looking statements used herein and other matters which are applicable to this Report, including, but not limited to this "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations."

Unless the context requires otherwise, references to the "Company," "we," "us," "our," "ETHZilla", and "ETHZilla Corporation" refer specifically to ETHZilla Corporation, formerly 180 Life Sciences Corp. and its consolidated subsidiaries. References to "KBL" refer to the Company prior to the November 6, 2020 Business Combination.

In addition, unless the context otherwise requires and for the purposes of this Report only:

"CAD" refers to Canadian dollars;

"Exchange Act" refers to the Securities Exchange Act of 1934, as amended;

"£" or "GBP" refers to British pounds sterling;

"SEC" or the "Commission" refers to the United States Securities and Exchange Commission; and

"Securities Act" refers to the Securities Act of 1933, as amended.

Additional Information

We file annual, quarterly, and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC's website at www.sec.gov and are available for download, free of charge, soon after such reports are filed with or furnished to the SEC, on the "Investors"-"SEC Filings" page of our website at https://ethzilla.com. Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report. Our website address is https://ethzilla.com.The information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered a part of this Report.

The Company uses, and will continue to use, its website (https://ethzilla.com), press releases, and various social media channels, including its X account (x.com/ETHZilla_ETHZ) and its LinkedIn account (https://www.linkedin.com/company/ethzilla/), as additional means of disclosing public information to investors, the media and others interested in the Company. It is possible that certain information that the Company posts on its website, disseminated in press releases and on social media could be deemed to be material information, and the Company encourages investors, the media and others interested in the Company to review the business and financial information that the Company posts on its website, disseminates in press releases and on the social media channels identified above, as such information could be deemed to be material information. The contents on the Company's website and its social media channels are not incorporated by reference in this Current Report on Form 8-K.

Going Concern and Management Liquidity Plans

In the consolidated financial statements as of and for the three months ended June 30, 2025 and prior periods, management disclosed substantial doubt about the Company's ability to continue as a going concern. Due to the significant fundraising events undertaken by the Company during the three months ended September 30, 2025, as disclosed under "Part I - Item 1. Financial Statements" in the Notes to Condensed Consolidated Financial Statements in "Note 8 - Debt" and "Note 13 - Stockholders' (Deficit) Equity", above, management determined that the Company will have sufficient cash flows to meet its obligations over the next 12 months, and as such the substantial doubt about the Company's ability to continue as a going concern has been alleviated.

Organization of MD&A

Our Management's Discussion and Analysis of Financial Condition and Results of Operations (the "MD&A") is provided in addition to the accompanying condensed consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:

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Business Overview and Recent Events. A summary of the Company's business and certain material recent events.

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Significant Financial Statement Components. A summary of the Company's significant financial statement components.

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Results of Operations. An analysis of our financial results comparing the three and nine months ended September 30, 2025 and 2024.

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Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows and discussion of our financial condition.

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Critical Accounting Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

Business Overview

Our Company

ETHZilla is a technology company in the decentralized finance industry ("DeFi") seeking to connect financial institutions, businesses and organizations worldwide by enabling secure, accessible blockchain transactions through Ethereum network protocol implementations. In August 2025, we adopted an Ethereum-focused treasury management strategy and have since continued our strategic shift towards implementation of our business plans designed to generate recurring revenues through various DeFi protocols that improve Ethereum network integrity and security. Through our proprietary protocol implementations, we facilitate DeFi transactions and asset digitization across multiple Layer 2 Ethereum networks. In the future, we plan to offer tokenization solutions, DeFi protocol integration, blockchain analytics, traditional-to-digital asset conversion gateways, and other DeFi services.

In addition, (i) we own certain source code and intellectual property relating to an online blockchain casino, our "back-end" gaming platform, which incorporates blockchain technology and cryptocurrency operability (the "Gaming Technology Platform"), and (ii) have two legacy biotechnology programs that are focused on different diseases or medical conditions, and that target different factors, molecules or proteins. These operations are classified as discontinued operations under ASC 205, as discussed in greater detail under "Part I - Item 1. Financial Statements" in the Notes to Condensed Consolidated Financial Statements in "Note 1 - Business Organization and Nature of Operations", "Note 3 - Summary of Significant Accounting Policies" and "Note 15 - Discontinued Operations".

Our Ethereum Treasury Strategy

In August 2025, our Board of Directors implemented an Ethereum-focused treasury strategy, with Ether ("ETH") serving as the primary treasury reserve asset on an ongoing basis, subject to market conditions and anticipated needs of the business. Our goal is to acquire and grow our overall ETH position and utilize professional treasury strategies to significantly increase our ETH holdings. We have not set a specific target for the maximum amount of ETH we seek to hold.

Our treasury strategy focuses on increasing the amount of ETH through a combination of capital raising activities and treasury activities including staking, restaking, liquid staking and other DeFi activities. We expect that ETH will serve as our primary treasury reserve asset in the future. We aim to maximize ETH accumulation and value accretion, while maintaining robust controls and oversight over these digital assets.

ETHZilla's decision to accumulate ETH as a core treasury asset is grounded in a forward-looking view of the evolving global financial ecosystem. We believe Ethereum's unparalleled programmability, security and developer momentum will make it a foundational layer for the next generation of decentralized financial applications. Ethereum's transition to a Proof-of-Stake ("PoS") consensus mechanism and the rise of Layer 2 blockchain networks with high scalability have transformed ETH into a yield-bearing, productive digital asset with increasing institutional adoption and intrinsic network value. We believe that ETH's value proposition at its core is a digital trust commodity and that an investment in ETH represents an asymmetric long-term growth opportunity as more stablecoins and other tokenized real-world assets are secured by the Ethereum ecosystem.

Our treasury is designed with the goal of bringing value to our stockholders in a variety of ways. We plan to raise capital to be used to increase our ETH position in a manner which is accretive to shareholders. This can come in the form of equity, equity-linked debt or other forms of offerings designed to maximize shareholder exposure to ETH within a prudent risk management framework. We plan to continue to deploy the majority of the ETH in our treasury across staking, lending, and advanced DeFi protocols to generate yields and turn the treasury into a productive asset. As of September 30, 2025, over 70% of our ETH treasury has been deployed, and we intend to maintain a similar or higher percentage going forward. We do not hedge our ETH and do not currently have plans to hedge our ETH in the future. In addition, if the price of ETH increases in the future, the value of our ETH treasury will rise, which would also benefit our stockholders.

WE ARE NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND STOCKHOLDERS DO NOT HAVE THE PROTECTIONS ASSOCIATED WITH OWNERSHIP OF SHARES IN A REGISTERED INVESTMENT COMPANY NOR THE PROTECTIONS AFFORDED BY THE COMMODITIES EXCHANGE ACT OF 1936, AS AMENDED.

How We Purchase or Sell Digital Assets

Our management team reviews the Company's short term obligations and excess cash available to dedicate to the ETH treasury strategy. When it is determined that the Company has excess cash available to dedicate to the treasury strategy, we deploy that capital into one of our custodians and through acquisition strategies with the custodians and our asset manager, and we acquire the ETH over several days or weeks to maximize the number of ETH that is acquired with the deployed capital. If it is determined that the treasury needs to liquidate part of its ETH, the same process of selling the ETH into the market would be used. The Company has not reduced its treasury or sold any of its ETH staking rewards to date.

Our ETH Deployment Strategy

Pursuant to our treasury strategy, we actively deploy our ETH in the treasury across staking, lending, and advanced DeFi protocols to generate yields. Through our proprietary protocol implementations, we facilitate DeFi transactions and asset digitization across multiple Layer 2 Ethereum networks. We have partnered with innovators such as Electric Capital and liquid restaking leaders like Puffer and etherFi, which enable us to better optimize returns on our ETH reserves while providing security and capital efficiency to stakeholders.

Our staking revenues are derived from the rewards we earn by actively participating in the Ethereum network's PoS consensus mechanism. Specifically, ETHZilla delegates its ETH holdings to validators that process and verify transactions on the blockchain. In return, the Company receives protocol-level rewards in ETH, typically proportional to the amount staked and the network's overall activity and performance.

Our ETH staking activities may include native staking, as well as liquid staking. In native staking, the Company, through its agreements with custodians and asset managers, stakes assets with third-party validators. Participants stake ETH through these validator nodes and, when chosen as validators by the network, earn staking rewards and transaction fees proportional to their staked amount. Liquid staking is similar to native staking, however, one key difference and intended benefit of this method is the ability to provide the Company with tokens representing digital assets in exchange for its ETH. Additionally, as part of the "activating" and "exiting" processes of ETH staking, any staked ETH may be inaccessible for a period of time determined by a range of factors, resulting in certain liquidity risks that we manage.

We view our staking operations and activities as a core strategic pillar of its broader alignment with the Ethereum ecosystem. Our participation is expected to yield economic return while also contributing directly to Ethereum's decentralization, scalability, and security. Moreover, we believe staking is foundational to a new generation of blockchain-native capital structures that enable corporations to earn yield without relying on traditional debt instruments, equities, or centralized intermediaries. Our staking efforts are focused on maximizing yield, managing risk and ensuring that the Company's operations meet institutional standards for transparency and efficiency.

Deployment Process

If it is determined to reduce the amount of the ETH deployed or it is determine to change the allocation of ETH, we will initiate an unstaking process, which effectively reverses the delegation or deployment of the ETH from the applicable validator, protocol or network.

Native ETH staking has a cooldown period known as the "deactivation period," which is the time it takes for the unstaked ETH to become unbonded and fully liquid. During this period, the tokens are not actively earning rewards, but they are also not yet available for transfer or use. The length of this period can vary based on network conditions, which is generally expected to be 10 days or less, but has been over 45 days recently. Once the cooldown period is complete, the Company will have complete control over the ETH, including the ability to hold, sell, transfer, restake or otherwise deploy the ETH as determined by management.

Liquidity Management

The Company's native staking program involves the temporary loss of the ability to transfer, assign a new validator or otherwise dispose of the ETH. We maintain a certain amount of liquid ETH in the treasury and a certain amount of cash to ensure that the Company is able to satisfy its current obligations.

ETH and the Ethereum Network

ETH is a digital asset, also referred to as a digital currency or cryptocurrency, which serves as the unit of account on the open-source, decentralized, peer-to-peer Ethereum network. Ethereum launched in 2015 to expand blockchain's potential beyond simple payments-enabling permissionless platforms for finance, gaming, social media, digital identity, and more. The Ethereum network represents one of the world's most prominent blockchain ecosystems, distinguished by its ability to run decentralized applications and smart contracts on an open, distributed ledger. Ethereum is the foundation of digital finance and settlement layer for the majority of stablecoins, DeFi, and tokenized assets.

ETH

ETH is the network's native cryptocurrency, used for transaction fees (known as "gas"), validator incentives, and diverse digital activities. ETH can be transferred in direct peer-to-peer transactions through the direct sending of ETH over the Ethereum blockchain from one ETH address to another. Among end-users, ETH can be used to pay other members of the Ethereum network for goods and services under what resembles a barter system. Consumers can also pay merchants and other commercial businesses for goods or services through direct peer-to-peer transactions on the Ethereum blockchain or through third-party service providers.

In addition to using ETH to engage in transactions, investors may purchase and sell ETH to speculate as to the value of ETH in the ETH market, or as a long-term investment to diversify their portfolio. The value of ETH within the market is determined, in part, by the supply of and demand for ETH in the global ETH market, market expectations for the adoption of ETH as a store of value, the number of merchants that accept ETH as a form of payment, and the volume of peer-to-peer transactions, among other factors. As of September 30, 2025, with a total market capitalization of approximately $495 billion, ETH is the second largest cryptocurrency by market capitalization behind bitcoin.

The Ethereum network has no formal cap on the total supply of ETH. The Ethereum network does, however, feature several mechanisms that, individually and in aggregate, have the effect of limiting the total supply of ETH outstanding.

New ETH is issued through the PoS process, where validators who help secure the network by locking up their ETH earn newly created ETH as rewards for validating transactions. The rate of new ETH issuance has dropped significantly since Ethereum switched from Proof-of-Work ("PoW") to PoS in September 2022 (the "Merge"). The issuance rate varies based on the number of validators on the network and other factors.

At the same time, Ethereum features a burning mechanism introduced in connection with the Merge, which destroys a portion of transaction fees (known as the "base fee"), permanently removing that ETH from circulation. When network activity is high, this burn rate can sometimes exceed the rate of new issuance, causing the total supply of ETH to decrease temporarily (deflationary periods). The actual net supply growth is determined by the balance between new issuance to validators and ETH burned from transaction fees.

During the nine months ended September 30, 2025, the total ETH supply fluctuated between approximately 120.3 million and 120.7 million, with annual net supply changes expected to typically be at around 0% to 1%. There is no annual hard cap on the total supply of ETH, but the protocol's economic design makes runaway inflation unlikely under normal circumstances.

The change from PoW to PoS also limits the total supply of ETH in circulation by effectively locking staked ETH for certain period of time, making the staked ETH temporarily unavailable for trading or selling.

Ethereum Network

No single entity owns or operates the Ethereum network. The Ethereum network is accessed through software and governs ETH's creation and movement. The source code for the Ethereum network is open-source, and anyone can contribute to its development. The Ethereum network is governed by a set of rules that are commonly referred to as the "Ethereum protocol."

As part of the Merge, Ethereum transitioned from PoW to PoS, a consensus mechanism where validators stake ETH to secure the network, process transactions, and propose new blocks. The Merge was designed to dramatically reduce Ethereum's energy use while maintaining security and decentralization. Developers can write smart contracts in programming languages ensuring that agreement terms are enforced transparently and without third-party oversight. Ethereum's architecture allows for rapid iteration, robust interoperability with other chains, and widespread deployment of programmable digital assets-such as stablecoins, non-fungible tokens, and tokenized real-world assets.

We believe the potential of Ethereum is substantial: it has become the backbone of modern DeFi, facilitating lending, borrowing, trading, and earning yields without traditional intermediaries. Its programmable smart contracts are used for everything from automated insurance payouts to decentralized autonomous organizations and global capital markets. Ongoing upgrades (like sharding and Layer 2 scaling) are anticipated to continue to improve its scalability, versatility, and affordability, making Ethereum a foundation for the next generation of internet and financial infrastructure worldwide.

Although there are many alternatives, the Ethereum network is the oldest and largest smart contract platform in terms of market capitalization, availability of decentralized applications, and development activity. Smart contracts can be utilized across several different applications ranging from art to finance. Currently, one of the most popular applications is the use of smart contracts for underpinning the operability of DeFi, which consists of numerous highly interoperable protocols and applications. DeFi offers many opportunities for innovation and has the potential to create an open, transparent, and immutable financial infrastructure, with democratized access.

Staking

Staking on the Ethereum network is the process by which ETH holders participate in the blockchain's PoS system by locking up their ETH to both secure the network and earn rewards. Validators are chosen to propose and attest to new blocks, facilitated by the ETH they have staked as collateral, which is designed to ensure the integrity of transactions and the overall security of the protocol. To operate a validator node directly, a minimum of 32 ETH is required, though smaller holders may participate through staking pools or via centralized platforms that aggregate deposits.

Rewards earned by ETH stakers depend on several factors, including the total amount of ETH staked on the network, validator uptime, overall network activity, and whether advanced reward mechanisms are used. The average annual percentage yield for ETH staking generally ranges from approximately 2% to 5%, depending on the staking method and platform. Rewards are distributed in ETH, compounding over time as new blocks are validated and transactions processed. Stakers who fail to maintain proper uptime or act maliciously may face penalties or even lose portions of their deposited ETH through "slashing," a process designed to disincentivize bad behavior and maintain network trust.

Traditional staking involves locking ETH directly on the Ethereum protocol, where coins become temporarily inaccessible until unstaking or withdrawal periods are completed. Solo validators hold complete control but are responsible for technical maintenance, security, and managing the risks of downtime and slashing. Participating through trusted staking pools or custodial exchanges allow holders to stake without the technical burden or heavy capital requirements, though these options often involve trusting third-party operators and may introduce additional risks.

Liquid staking of ETH differs fundamentally from traditional staking methods by allowing stakers to retain liquidity and access their capital while still earning validation rewards. The process begins when the holder deposits their ETH into a liquid staking protocol, which then stakes those tokens with trusted network validators on their behalf. In exchange, the holder receives liquid staking tockets that represent both their staked position and accrued staking rewards. These LSTs can be freely moved, traded, and deployed across various DeFi applications, enabling broader utility than traditional staking where assets are locked and inaccessible until unbonding.

The primary benefits of liquid staking include uninterrupted access to the underlying asset's value and the ability to earn additional yields without forgoing staking rewards. Holders can use LSTs as collateral in lending protocols, participate in yield farming, or trade them on decentralized exchanges, all while accumulating rewards from the underlying stake. This flexibility enables increased capital efficiency and opens up opportunities for portfolio diversification, as holders can simultaneously secure the protocol's network and enhance returns through multifaceted DeFi strategies. Moreover, liquid staking often lowers staking minimums, making network participation more accessible. However, liquid staking introduces new risks, such as reliance on smart contracts, potential "depegging" of LSTs from the underlying value of ETH, and higher systemic dependence on protocol integrity. While traditional staking mainly carries validator or slashing risks, liquid staking compounds this with additional protocol and market risks.

The timeline for liquid staking is highly streamlined and user-oriented. After connecting a crypto wallet and depositing tokens, the platform rapidly issues LSTs (often within minutes) that incrementally accrue rewards. Holders may withdraw their ETH stake at any time by returning the LSTs, with most platforms offering near-instant or short processing windows compared to traditional staking's lengthy deactivation periods.

Use of Custodians and Storage of ETH Tokens

We do not self-custody and only utilize third-party qualified custodians to hold our Ethereum (the "Custodians") that utilize risk management and operational best practices around items like hot vs. cold storage, access controls, custody technology and insurance.

We maintain multiple Custodians to reduce the risk of a single failure and we may expand to additional custodians as our treasury grows. Our accounts with a Custodian are all opened by the Company, this segregates our assets into an individual account owned by the Company and access is monitored and controlled by the Company. Our asset manager is given access to the Custodian accounts with established controls to ensure transactions require consensus of a minimum of two individuals when assets are being transferred between wallets and additional controls if an asset of the treasury is moved out of the Custodians' control. The assets go through the Custodians' trust company, which maintains its own insurance and is regulated by their respective state where the trust is incorporated in.

Management reviews the account balances and the total value held with a Custodian to allocate the Company's holdings between multiple accounts and Custodians as part of our risk management process.

Hot storage and cold storage refer to different methods of storing ETH (and other cryptocurrencies) based on their internet connectivity and security profiles. Hot storage are software wallets connected to the internet, making them convenient for frequent transactions, sending, and receiving ETH. Cold storage maintain ETH private keys completely offline, offering significantly more protection from online threats. The Custodians hold a majority of ETH in cold storage and provide a user interface for the Company to manage the allocation of ETH between cold and hot storage for the wallets. The Company maintains more than 90% of its ETH treasury in cold wallets.

The Custodians have multiple, redundant cold storage sites, which are geographically distributed, including sites within the United States. The Custodians' cold storage locations are monitored by 24x7 on-site security, video surveillance and alarms, hardened room structures, and access to these facilities is controlled by multi-person controls, multi-team access rules, and multi-factor authentication. The locations of the cold storage sites may change at the discretion of the Custodian and are kept confidential by the Custodian for security purposes.

The Custodians also maintain geographically dispersed backups of private keys, which are cryptographically generated into shards and stored in separate locations; multiple locations must be accessed to reconstruct a single key. The storage facilities are highly secured, and include 24x7 on-premises security presence, video surveillance, and alarms for unexpected entry. Access to facilities is controlled by multi-person controls, multi-team access rules, and multi-factor authentication.

All of our Custodians have SOC type 2 reports that the Company has reviewed and we get regular bridge reports from our Custodians to help ensure the controls are being maintained. Our Custodians maintain their own insurance policies to cover our loss, which is in addition to the policies that we maintain ourselves. We currently have two qualified Custodians that we have approved for our treasury use and we are in the process of onboarding a third as part of our risk management process.

The Company is charged for storage fees, staking fees and transaction fees for services specifically requested by the Company or its Asset Manager. The contract terms of the agreements are typically for one to three years and can be terminated upon 30 days' notice and payment of all fees due and one month of additional fees.

Government Regulation

The laws and regulations applicable to ETH and other digital assets are evolving and subject to interpretation and change.

Governments around the world have reacted differently to digital assets. Certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in some jurisdictions, such as the U.S., digital assets are subject to overlapping, uncertain and evolving regulatory requirements.

As digital assets have grown in both popularity and market size, the U.S. Executive Branch, Congress and a number of U.S. federal and state agencies, including the Financial Crimes Enforcement Network, the Commodity Futures Trading Commission ("CFTC"), the SEC, the Financial Industry Regulatory Authority, the Consumer Financial Protection Bureau, the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the IRS, and state financial regulators, have been examining the operations of digital asset networks, digital asset users and digital asset exchanges, with particular focus on the extent to which digital assets can be used to violate state or federal laws, including to facilitate the laundering of proceeds of illegal activities or the funding of criminal or terrorist enterprises, and the safety and soundness and consumer-protective safeguards of exchanges or other service-providers that hold, transfer, trade or exchange digital assets for users. Many of these state and federal agencies have issued consumer advisories regarding the risks posed by digital assets to investors. In addition, federal and state agencies, and other countries have issued rules or guidance regarding the treatment of digital asset transactions and requirements for businesses engaged in activities related to digital assets.

Depending on the regulatory characterization of ETH, the markets for ETH and cryptocurrency in general, and our activities in particular, our business and our Ethereum strategy may be subject to regulation by one or more regulators in the United States and globally. Ongoing and future regulatory actions may alter, to a materially adverse extent, the nature of digital assets markets, the participation of industry participants, including service providers and financial institutions in these markets, and our ability to pursue our Ethereum strategy. Additionally, U.S. state and federal and foreign regulators and legislatures have taken action against industry participants, including digital assets businesses, and enacted restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity stemming from digital assets activity.

The CFTC takes the position that some digital assets fall within the definition of a "commodity" under the Commodities Exchange Act of 1936, as amended (the "CEA"). Under the CEA, the CFTC has broad enforcement authority to police market manipulation and fraud in spot digital assets markets in which we may transact. Beyond instances of fraud or manipulation, the CFTC generally does not oversee cash or spot market exchanges or transactions involving digital asset commodities that do not utilize margin, leverage, or financing. In addition, CFTC regulations and CFTC oversight and enforcement authority apply with respect to futures, swaps, other derivative products and certain retail leveraged commodity transactions involving digital asset commodities, including the markets on which these products trade.

The SEC and its staff have taken the position that certain other digital assets fall within the definition of a "security" under the U.S. federal securities laws. Public statements made by senior officials and senior members of the staff at the SEC indicate that the SEC does not consider specific digital assets, like Bitcoin, to be a security under the federal securities laws. However, such statements are not official policy statements by the SEC and reflect only the speakers' views, which are not binding on the SEC or any other agency or court and cannot be generalized to any other digital assets.

In addition, because transactions in ETH provide a degree of anonymity, they are susceptible to misuse for criminal activities, such as money laundering. This misuse, or the perception of such misuse, could lead to greater regulatory oversight of ETH and Ethereum platforms, and there is the possibility that law enforcement agencies could close or blacklist such Ethereum platforms or other Ethereum-related infrastructure with little or no notice and prevent users from accessing or retrieving ETH held via such platforms or infrastructure. For example, the U.S. Treasury Department's Office of Foreign Assets Control has issued updated advisories regarding the use of virtual currencies, added a number of digital asset exchanges and service providers to the Specially Designated Nationals and Blocked Persons list and engaged in several enforcement actions, including a series of enforcement actions that have either shut down or significantly curtailed the operations of several smaller digital asset exchanges associated with Russian and/or North Korean nationals. Additionally, in January 2025, the Consumer Financial Protection Bureau announced that it is seeking public input on privacy protections and surveillance in digital payments, particularly those offered through large technology platforms.

As noted above, activities involving ETH and other digital assets may fall within the jurisdiction of more than one financial regulator and various courts and such laws and regulations are rapidly evolving and increasing in scope. In the U.S., regulation on stablecoins was recently signed into U.S. federal law through the GENIUS Act which established the first comprehensive regulatory framework specifically for "payment stablecoins" - digital assets designed to maintain a stable value pegged to a fiat currency (typically the U.S. dollar) and intended for use in payments or transfers. The GENIUS Act aims to foster innovation in the stablecoin sector while ensuring financial stability, consumer protection, and compliance with anti-money laundering standards.

The regulatory landscape for digital assets continues to evolve rapidly across different jurisdictions, and we may become subject to new laws and regulations that could materially affect our business operations, compliance obligations, and financial performance. For a comprehensive discussion of the risks that existing and future regulations pose to our business, including specific regulatory developments that may materially affect our operations, see the section entitled "Risk Factors" in this Report.

Recent Events

Increases in Authorized Shares and Name Change

On July 24, 2025, at the 2025 Annual Meeting of the Company, the stockholders of the Company approved, among other things, an amendment to the Company's Second Amended and Restated Certificate of Incorporation to increase the Company's authorized number of shares of common stock from one hundred million (100,000,000) shares to one billion (1,000,000,000) shares.

On July 24, 2025, immediately following the Annual Meeting, the Company filed a Certificate of Amendment to the Company's Second Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, which became effective on the same date, immediately upon filing. As a result of such filing, the Company's authorized shares of common stock increased from 100,000,000 shares to 1,000,000,000 shares.

The Board of Directors (the "Board") of the Company, approved an amendment to the Company's Second Amended Restated Certificate of Incorporation, to change the Company's name to ETHZilla Corporation (the "Name Change"). On August 12, 2025, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation, which went at 12:01 a.m. on August 18, 2025. Pursuant to Section 242(d)(1) of the General Corporation Law of the State of Delaware ("DGCL"), the Name Change did not require approval of the Company's stockholders and did not affect the rights of the Company's security holders.

At a special meeting of stockholders held on October 7, 2025, the stockholders of the Company approved an amendment to the Company's Second Amended and Restated Certificate of Incorporation, to increase the Company's authorized number of shares of common stock, par value $0.0001 per share from one billion (1,000,000,000) shares to five billion (5,000,000,000) shares.

On October 8, 2025, we filed a Certificate of Amendment to our Second Amended and Restated Certificate of Incorporation, as amended with the Secretary of State of the State of Delaware to increase the Company's authorized number of shares of common stock, par value $0.0001 per share from one billion (1,000,000,000) shares to five billion (5,000,000,000) shares, which became effective when filed on October 8, 2025.

Securities Purchase Agreement

As discussed in greater above under "Part I - Item 1. Financial Statements" in the Notes to Condensed Consolidated Financial Statements in "Note 13 - Stockholders' (Deficit) Equity", under "Securities Purchase Agreement", on July 29, 2025, we entered into a securities purchase agreement (the "SPA") with certain accredited institutional investors (the "Purchasers") pursuant to which the Company agreed to sell and issue to the Purchasers in a private placement an aggregate of (i) 14,393,417 shares of common stock of the Company, par value $0.0001 per share, at an offering price of $26.50 per share (the "Stock Purchase Price"), and (ii) $26.499 per pre-funded warrant (collectively, the "Pre-Funded Warrants") to purchase up to an aggregate of 1,749,585 shares of common stock (the "Pre-Funded Warrant Shares") (together, the "Private Placement").

Strategic Advisor Agreements and Warrants

As discussed in greater above under "Part I - Item 1. Financial Statements" in the Notes to Condensed Consolidated Financial Statements in "Note 13 - Stockholders' (Deficit) Equity", under "Securities Purchase Agreement", on July 29, 2025, and in connection with the launch of the Company's digital asset treasury strategy, the Company entered into a Strategic Advisor Agreement with each of Pink Sands Group, LLC, Cyber, Moode LLC, Moon Cat, LLC, Zorba Investments LLC, Purple Poseidon LLC, Tentacle Holdings LLC, PCAO LLC, Johnny Foxtrot LLC and New Island Advisors LLC (collectively, the "Strategic Advisors" and the "Strategic Advisor Agreements"). Pursuant to the Strategic Advisor Agreements, the Strategic Advisors agreed to provide the Company advice from time to time regarding the ETH treasury strategy, including on ETH purchase and staking strategies and such other areas as may be mutually determined by the Strategic Advisor and the Company from time to time (the "Services"). In consideration for agreeing to provide the Services, the Company granted on the same day the Strategic Advisors warrants to purchase an aggregate of 4,557,225 shares of the Company's common stock (the "Initial Strategic Advisor Warrants"). Additionally, in the event the Company consummated a debt offering within sixty (60) days of the closing of the Private Placement, the Company agreed to grant additional warrants to purchase shares of the Company's common stock to the Strategic Advisors pursuant to the Strategic Advisor Agreements, which debt funding occurred and which additional warrants were granted, as discussed in greater detail below.

The per share exercise price of each Strategic Advisor Warrant is equal to $27.75, which is $1.25 above the Stock Purchase Price.

Asset Management Agreement

As discussed in greater above under "Part I - Item 1. Financial Statements" in the Notes to Condensed Consolidated Financial Statements in "Note 13 - Stockholders' (Deficit) Equity", under "Securities Purchase Agreement", in connection with the Private Placement, at the Closing (the "AMA Effective Date"), the Company entered into an Asset Management Agreement (the "Asset Management Agreement") with Electric Treasury Edge, LLC (the "Asset Manager"). Pursuant to the Asset Management Agreement, the Asset Manager will provide discretionary investment management services with respect to, among other assets (including without limitation certain subsequently raised funds), the majority of the Company's proceeds from the Private Placement (the "Account Assets") in accordance with the terms of the Asset Management Agreement. The Asset Manager will pursue a long-bias strategy of digital assets primarily focused on Ethereum (the "ETH Strategy"). The custodians under the Asset Management Agreement will consist of cryptocurrency wallet providers mutually acceptable to the Company and the Asset Manager.

The Company shall pay the Asset Manager a monthly asset-based fee (the "Asset-based Fee") equal to 2% per annum of the average daily net asset value of the Account Assets under management, payable in advance on the first business day of each calendar month; provided, however, that the minimum Asset-based Fee to be paid to the Asset Manager shall be $2,000,000 per year. Fees are prorated for partial periods. Staked or liquid-staked assets are not treated differently for fee purposes.

Amendment to Securities Purchase Agreements and Warrants

On July 28, 2025, the Company entered into an amendment to (i) the Securities Purchase Agreement, dated February 19, 2021, by and among the Company and the investors party thereto and (ii) the Securities Purchase Agreement, dated August 19, 2021, by and among the Company and the investors party thereto, by which the investors purchased at least a 50.1% interest in the shares of common stock based on the subscription amounts thereto, to remove a prohibition on variable rate transactions and reduce the exercise price of warrants (the "Existing Warrants") to $26.50 (collectively, the "Amendments").

Initial Senior Convertible Note Sales

As discussed in greater above under "Part I - Item 1. Financial Statements" in the Notes to Condensed Consolidated Financial Statements in "Note 8 - Debt", under "Initial Senior Convertible Note Sales", on August 8, 2025, the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with investment funds managed by an institutional investor (the "Investor"), under which the Company agreed to sell and issue to the Investor senior secured convertible notes (the "August 2025 Convertible Notes") in an aggregate principal amount of $156,250,000 (the "Principal Amount") in exchange for cash equal to 96.0% of the Principal Amount (the "Debt Financing"). The Company closed the Debt Financing simultaneously with the signing of the Securities Purchase Agreement (the "August 2025 Note Funding Date"). The August 2025 Convertible Notes were issued in a private placement in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act.

The August 2025 Convertible Notes bear interest at a rate of 0.00% per annum for the first six months, and 4.00% per annum for the following six months through the maturity date, which is the third year anniversary of the issuance date of the August 2025 Convertible Notes or earlier conversion or redemption date. The interest rate will increase to a rate of 18.0% per annum upon the occurrence and during the continuance of an event of default under the August 2025 Convertible Notes. The August 2025 Convertible Notes are secured by $44.5 million of Ether (ETH) (the "August 2025 ETH Collateral") and approximately $156.25 million in cash (the "August 2025 Cash Collateral") which is included in restricted cash equivalents on our consolidated balance sheet.

At any time following the nine-month anniversary of the August 2025 Note Funding Date, the Investor has the right to require that the Company redeem all or any part of the outstanding August 2025 Convertible Notes. If at any time after the August 2025 Note Funding Date, (i) the loan to value ratio of the August 2025 Convertible Notes is greater than 85%, or (ii) upon the occurrence of any Trigger Event (as defined in the August 2025 Convertible Notes), the Investor has the right to require that the Company redeem all or any part of the outstanding note in cash at a price equal to 100% of the amount of such Convertible Note being redeemed.

The August 2025 Convertible Notes provide that the Investor may convert all or any portion of the principal amount of such Convertible Note, together with any accrued and unpaid interest thereon, at an initial conversion price of $34.45 (the "August 2025 Conversion Price"), which is subject to a one-time, downward only reset after the nine-month anniversary of the issuance date (the "One-Time Reset Date") equal to the closing bid price of the common stock on the One-Time Reset Date to the extent such price is less than the August 2025 Conversion Price. The Investor is not permitted to convert the August 2025 Convertible Notes to the extent that the shares of common stock deliverable upon conversion thereof would exceed 19.99% of the Company's outstanding shares immediately prior to executing the Securities Purchase Agreement (the "August 2025 Exchange Cap") without prior stockholder approval. We were also required to seek stockholder approval for the issuance of the shares of common stock upon conversion of the August 2025 Convertible Notes in accordance with the Securities Purchase Agreement. On October 7, 2025, the stockholders of the Company approved the issuance of shares of common stock in excess of the August 2025 Exchange Cap.

The August 2025 Convertible Notes provide for certain covenants, including that the Company shall maintain, at all times, (i) a balance of $5 million or more held in accounts other than the controlled securities account entered into at the consummation of this transaction and (ii) a loan-to-value ratio of no more than 100%, in addition to other customary covenants and events of default that are typical for transactions of this type and certain affirmative and negative covenants.

Pursuant to the Securities Purchase Agreement, the Company has agreed to certain obligations to register and maintain the registration of the shares of common stock underlying the August 2025 Convertible Notes, including filing within 15 calendar days of the Closing Date, a resale registration statement to register for resale the shares underlying the August 2025 Convertible Notes, which was timely filed and has been declared effective to date.

The security documents consist of (i) a Pledge and Security Agreement entered into by the Company, certain subsidiaries of the Company and the collateral agent, which is an affiliate of the Investor (the "Collateral Agent"); (ii) a control agreement in respect of the August 2025 ETH Collateral entered into by the Company, the Collateral Agent and the custodian of such account, (iii) a control agreement in respect of the August 2025 Cash Collateral entered into by the Company, the Collateral Agent and the custodian of such account, and (iv) a guaranty agreement entered into by certain subsidiaries of the Company in favor of the Investor. The control agreement requires the Company to maintain cash and cash equivalents in an aggregate amount of approximately $504,000,000, which the Company is not allowed to withdraw without consent of the Collateral Agent. The Collateral Agent also has the right to direct activities related to any staking of the August 2025 ETH Collateral. In addition, the Company paid $150,000 in legal fees of the Investor's counsel.

New Senior Convertible Note Sales

As discussed in greater above under "Part I - Item 1. Financial Statements" in the Notes to Condensed Consolidated Financial Statements in "Note 8 - Debt", under "New Senior Convertible Note Sales", on September 22, 2025, the Company entered into an Amendment and Waiver Agreement with the Investor (the "Amendment Agreement"), pursuant to which, among other things (a) the Company agreed to sell a new series of senior secured convertible notes to the Investor (the "September 2025 Convertible Notes", and together with the August 2025 Convertible Notes, the "Convertible Notes"); (b) the Company and the Investor agreed to partially waive and modify certain terms of the August 2025 Convertible Notes and the Securities Purchase Agreement, including: (i) to reduce the interest rate from 4% to 2% (ii) excluding the September 2025 Convertible Notes from the anti-dilutive provisions of the August 2025 Convertible Notes, except in connection with the Existing Note Conversion Price Adjustment (defined and described below), (iii) permitting the Company to Stake (as defined in the Security Purchase Agreement) the collateral held in the Company's crypto control accounts, (iv) allowing the Company to use the yield of any cash held in the controlled accounts (less the accrued and unpaid interest on the Convertible Notes and any other amounts then due and payable to the Investor), in the ordinary course of business, and (v) to permit during the 90 day period following the August 22, 2025 effective date of a resale registration statement filed to register the resale of shares of common stock issuable upon conversion of the August 2025 Convertible Notes, pursuant to which the Company was previously restricted from taking certain actions, one or more additional subsequent placements (not including any variable rate transaction) solely consisting of the sale of common stock (x) with gross proceeds not in excess of an aggregate of $1 billion, subject to certain pre-requisites, or (y) at any time if such applicable purchase price exceeds $40.00 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events).

The September 2025 Convertible Notes were sold to the Investor on September 23, 2025, in the aggregate principal amount of $360 million (the "New Principal Amount") in exchange for cash equal to 97.25% of the New Principal Amount (the "New Debt Financing").

The Company closed the New Debt Financing on September 23, 2025 (the "New Debt Funding Date"). The September 2025 Convertible Notes were issued in a private placement in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act.

The September 2025 Convertible Notes bear interest at a rate of 2.00% per annum through the maturity date, which is August 8, 2028 or earlier conversion or redemption date. The interest rate will increase to a rate of 18.0% per annum upon the occurrence and during the continuance of an event of default under the September 2025 Convertible Notes. The September 2025 Convertible Notes are secured by $50 million of Ether (ETH) (the "September 2025 ETH Collateral") and approximately $348,180,800 in cash (the "September 2025 Cash Collateral") which is included in restricted cash equivalents on our consolidated balance sheet.

At any time after May 8, 2026, the Investor shall have the right to require that the Company redeem all or any part of the outstanding September 2025 Convertible Notes. If at any time after the New Debt Funding Date, (i) the loan to value ratio of the September 2025 Convertible Notes is greater than 85%, or (ii) upon the occurrence of any Trigger Event (as defined in the September 2025 Convertible Notes), the Investor shall have the right to require that the Company redeem all or any part of the outstanding note in cash at a price equal to 100% of the amount of such New Convertible Note being redeemed.

The September 2025 Convertible Notes provide that the Investor may convert all or any portion of the principal amount of such September 2025 Convertible Notes, together with any accrued and unpaid interest thereon, at an initial conversion price of $30.50 (the "Conversion Price"), which is subject to a downward only reset on May 8, 2026, and each three month anniversary thereafter (each a "Reset Date") equal to the closing bid price of the common stock on each such Reset Date, to the extent such price is less than the Conversion Price. The Investor is not permitted to convert the September 2025 Convertible Notes to the extent that the shares of common stock deliverable upon conversion thereof would exceed 19.99% of the Company's outstanding shares immediately prior to executing the Amendment Agreement (the "September 2025 Exchange Cap") without prior stockholder approval. We are also required to seek stockholder approval for the issuance of the shares of common stock upon conversion of the September 2025 Convertible Notes in accordance with the Amendment Agreement.

As a result of the Conversion Price of the September 2025 Convertible Notes being less than the conversion price of the August 2025 Convertible Notes, the conversion price of the August 2025 Convertible Notes automatically adjusted to the Conversion Price on the New Debt Funding Date (the "Existing Note Conversion Price Adjustment").

The September 2025 Convertible Notes also provide that, at any time after March 22, 2026, the Company may require holders to convert all or a portion of the outstanding principal into shares of common stock (a "Mandatory Conversion") if certain conditions are satisfied. Specifically, the volume-weighted average price ("VWAP") of the Company's common stock on its principal trading market must exceed $44.785 (as adjusted for stock splits and similar events) for 30 consecutive trading days and no Equity Conditions (defined below) failure may exist. The Company may not effect more than one Mandatory Conversion during any 20-trading-day period and may not exercise its right if an event of default has occurred and is continuing. A Mandatory Conversion is subject to cancellation if the stock price falls below the minimum conversion price or if an Equity Conditions failure occurs prior to the conversion date, unless waived by the holder. In lieu of conversion of any portion of the notes that cannot be converted due to an Equity Conditions Failure, the Company may instead require the holder to exchange such portion into the right to receive the same number of shares issuable upon conversion, pursuant to Section 3(a)(9) of the Securities Act, on mutually agreeable terms. The "Equity Conditions" generally require, among other things, that the Company's registration statement registering the resale of the common stock issuable upon conversion of the September 2025 Convertible Notes is effective or the shares are otherwise eligible for resale, that the common stock remains listed and tradable on an eligible market, that no event of default or material breach exists, that certain specific volume requirements have been met, that sufficient authorized shares are available, that no material, non-public information or unresolved disputes exist, and that the stockholders of the Company have approved the issuance of shares of common stock in excess of the September 2025 Exchange Cap.

Additionally, the Convertible Notes provide that, if at any time and from time to time on or after the issuance date thereof, there occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Company's common stock, other than the 1-for-10 reverse stock split effective October 20, 2025 (each, a "Stock Combination Event", and such date thereof, the "Stock Combination Event Date") and the Event Market Price (as defined below) is less than the Conversion Price then in effect (after giving effect to certain adjustments), then on the 16th Trading Day (as defined in Convertible Notes) immediately following such Stock Combination Event Date, the Conversion Price then in effect on such sixteenth (16th) Trading Day (after giving effect to certain adjustments) shall be reduced (but in no event increased) to the Event Market Price. "Event Market Price" means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum of the volume weighted average prices (VWAP) of the Company's common stock for each of the five Trading Days with the lowest VWAP of the Company's common stock during the 15 consecutive Trading Day period ending and including the Trading Day immediately preceding the 16th Trading Day after such Stock Combination Event Date, divided by (y) five.

Additionally, if the Company issues or sells shares of common stock after the New Debt Funding Date, at a price lower than the then-current conversion price of the September 2025 Convertible Notes, subject to certain excepted issuances, the conversion price of the September 2025 Convertible Notes will be adjusted downward to match the price of such newly issued shares.

Finally, if the Company issues or enters into an agreement to issue common stock, options, or convertible securities with a price that varies or may vary with the market price of the common stock (excluding certain at-the-market offerings and customary anti-dilution adjustments), subject to certain customary exceptions, the holders of the September 2025 Convertible Notes have the right, but not the obligation, to elect to use such "Variable Price" for purposes of converting the September 2025 Convertible Notes. The holder may make this election on a per-conversion basis and is not required to rely on the Variable Price for any future conversions.

The September 2025 Convertible Notes provide for certain covenants, including that the Company shall maintain, at all times, (i) a balance of $5 million or more held in accounts other than the controlled securities account entered into at the consummation of the transaction and (ii) a loan-to-value ratio of no more than 100%, in addition to other customary covenants and events of default that are typical for transactions of this type and certain affirmative and negative covenants.

Subsequent Strategic Advisor Warrants

As discussed in greater above under "Part I - Item 1. Financial Statements" in the Notes to Condensed Consolidated Financial Statements in "Note 8 - Debt", under "Initial Senior Convertible Note Sales", on September 22, 2025, the Company granted on the same day the Strategic Advisors warrants to purchase an aggregate of 4,557,225 shares of the Company's common stock. We also agreed that in the event the Company consummated a debt offering within sixty (60) days of the closing of the transactions contemplated by that certain Securities Purchase Agreement entered into on July 29, 2025, which transactions closed on August 4, 2025, to grant additional warrants to purchase shares of the Company's common stock to the Strategic Advisors pursuant to the Strategic Advisor Agreements with an exercise price equal to the greater of (i) the conversion price of such debt offering and (ii) the minimum price required by Nasdaq at the time of execution of any such debt offering plus $1.25.

Effective with the closing of the Debt Financing, we granted additional warrants to purchase an aggregate of 907,111 shares of the Company's common stock to the Strategic Advisors (the "Subsequent Strategic Advisor Warrants").

The per share exercise price of each Subsequent Strategic Advisor Warrant is equal to $34.45, which was the August 2025 Conversion Price of the August 2025 Convertible Notes.

Subsequent Strategic Advisor Warrants to purchase 95,700 shares of common stock were granted to PCAO, of which Mr. McAndrew Rudisill, the then Executive Chairman of the Company (current Executive Chairman and Chief Executive Officer), is the founder and managing partner, and therefore deemed to beneficially own the securities held by such entity.

ATM Sales Agreement

On August 13, 2025, the Company entered into a Sales Agreement (the "Sales Agreement") to sell shares of the Company's common stock, par value $0.0001 per share from time to time through Clear Street, acting as sales agent. Pursuant to the prospectus supplement dated August 13, 2025 (the "Prospectus Supplement") filed by the Company with the SEC, which supplements the base prospectus included in the Company's shelf registration statement on Form S-3 (File No. 333-288194), initially filed with the SEC on June 20, 2025 and declared effective on June 26, 2025, the Company was able to offer and sell up to $500,000,000 of its shares of common stock through Clear Street pursuant to the Sales Agreement.

Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, Clear Street could sell the common stock in negotiated transactions or transactions that are deemed to be an "at the market offering" as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on the principal market on which the common stock is listed or any other existing trading market for the common stock.

The Company will designate the maximum amount of common stock to be sold through Clear Street in any placement under the Sales Agreement. Subject to the terms and conditions of the Sales Agreement, Clear Street has agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations, to sell on the Company's behalf all of the shares of common stock requested to be sold by the Company. The Company may instruct Clear Street not to sell common stock if the sales cannot be effected at or above a price designated by the Company in a placement notice. The Company or Clear Street may suspend the offering of common stock pursuant to the Sales Agreement upon proper notice to the other party. The Company and Clear Street each have the right, by giving 10 days' notice as specified in the Sales Agreement, to terminate the Sales Agreement in each party's sole discretion at any time. Clear Street, subject to mutual agreement between Clear Street and the Company, may also sell shares of common stock sold to it as principal by any other method permitted by law, including, but not limited to, privately negotiated transactions and block trades. The Company also may sell shares of common stock to Clear Street as principal for its own account, at a price agreed upon at the time of sale. If the Company sells common stock to Clear Street as principal, it will enter into a separate terms agreement setting forth the terms of such transaction.

The Sales Agreement provides that Clear Street will be entitled to aggregate compensation for its services of up to 3.0% of the gross sales price per share of all shares sold through Clear Street under the Sales Agreement. The Company has no obligation to sell any shares under the Sales Agreement. In addition, the Company has agreed to reimburse certain legal expenses incurred by Clear Street in connection with execution of the Sales Agreement in an amount up to $75,000, in addition to certain ongoing legal expenses.

Stock Repurchase Program

On August 22, 2025, the Board of Directors of the Company authorized and approved a stock repurchase program for up to $250.0 million of the currently outstanding shares of the Company's common stock. Subject to any future extension in the discretion of the Board of Directors of the Company, the repurchase program is scheduled to expire upon the earliest of (i) June 30, 2026, (ii) when a maximum of $250.0 million of the Company's common stock has been repurchased, or (iii) when such program is discontinued by the Board of Directors.

Under the stock repurchase program, shares may be repurchased from time to time in the open market or through negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws, including Rule 10b-18 of the Exchange Act. Repurchases will be made at management's discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of shares, general market conditions, cost of capital, the trading price of the common stock, alternative uses for capital, and the Company's financial performance. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws.

The repurchase program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase a particular number of, or any, shares. There is no guarantee as to the exact number or value of shares that will be repurchased by the Company, if any.

The repurchase program is expected to be funded using the Company's working capital and from funds raised in "at-the-market" offerings or other future financings.

During the three months ended September 30, 2025, a total of 645,072 shares of common stock, for aggregate cost of $16,069,448 were repurchased by the Company. Subsequent to September 30, 2025, a total of 1,454,400 shares of common stock for an aggregate cost of $30,141,810 were repurchased by the Company.

Amended and Restated ATM Sales Agreement

As discussed above, on August 13, 2025, the Company entered into the Sales Agreement with Clear Street, acting as sales agent for the Company's "at the market offering" program. On August 22, 2025, the Company entered into an Amended and Restated Sales Agreement (the "A&R Sales Agreement") to sell from time to time through Clear Street, acting as sales agent, shares of the Company's common stock, par value $0.0001 per share, having an aggregate offering price of up to $10.0 billion. The shares of common stock will be issued pursuant to the Company's automatic shelf registration statement on Form S-3 (File No. 333-289811), filed with the SEC on August 22, 2025, a base prospectus dated August 22, 2025, included as part of the registration statement, and a prospectus supplement dated August 22, 2025, filed by the Company with the SEC pursuant to Rule 424(b) under the Securities Act.

Upon delivery of a placement notice and subject to the terms and conditions of the A&R Sales Agreement, Clear Street may sell the common stock in negotiated transactions or transactions that are deemed to be an "at the market offering" as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on the principal market on which the common stock is listed or any other existing trading market for the common stock.

The Company will designate the maximum amount of common stock to be sold through Clear Street in any placement under the A&R Sales Agreement. Subject to the terms and conditions of the A&R Sales Agreement, Clear Street has agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations, to sell on the Company's behalf all of the shares of common stock requested to be sold by the Company. The Company may instruct Clear Street not to sell common stock if the sales cannot be effected at or above a price designated by the Company in a placement notice. The Company or Clear Street may suspend the offering of common stock pursuant to the A&R Sales Agreement upon proper notice to the other party. The Company and Clear Street each have the right, by giving 10 days' notice as specified in the A&R Sales Agreement, to terminate the A&R Sales Agreement in each party's sole discretion at any time. Clear Street, subject to mutual agreement between Clear Street and the Company, may also sell shares of common stock sold to it as principal by any other method permitted by law, including, but not limited to, privately negotiated transactions and block trades. The Company also may sell shares of common stock to Clear Street as principal for its own account, at a price agreed upon at the time of sale. If the Company sells common stock to Clear Street as principal, it will enter into a separate terms agreement setting forth the terms of such transaction.

The A&R Sales Agreement provides that Clear Street will be entitled to aggregate compensation for its services of up to 3.0% of the gross sales price per share of all shares sold through Clear Street under the A&R Sales Agreement. The Company has no obligation to sell any shares under the A&R Sales Agreement. In addition, the Company has agreed to reimburse certain legal expenses incurred by Clear Street in connection with execution of the A&R Sales Agreement in an amount up to $75,000, in addition to certain ongoing legal expenses.

The A&R Sales Agreement contains customary representations, warranties and covenants by the Company. The Company also agreed to provide indemnification and contribution to Clear Street against certain liabilities, including under the Securities Act and the Exchange Act. From time to time, in the ordinary course of business, Clear Street has provided, and in the future may provide, various financial advisory and investment banking services to the Company, for which they have received or will receive customary fees and reimbursement of expenses.

Either party can terminate the Sales Agreement under certain conditions, such as material adverse changes, failure to perform obligations, trading suspensions, or other market or regulatory events. Both the Company and Clear Street can also end the agreement at any time with 10 days' notice.

During the three months ended September 30, 2025, we sold an aggregate of 739,050 shares of our common stock under the Sales Agreement for gross proceeds of approximately $40,990,338. The Company also paid a $1,513,000 fee to Clear Street related to the A&R Sales Agreement which is reflected as cost of capital.

Since September 30, 2025, we have sold an aggregate of 410,403 shares of our common stock (of which 405,735 have been issued) under the Sales Agreement for net proceeds of approximately $6,861,299, after deducting commissions.

Separation and Release Agreement with Blair Jordan and Jordan Consulting

On September 4, 2025, Mr. Blair Jordan, the then Chief Executive Officer of the Company, and Blair Jordan Strategy and Finance Consulting Inc. (an entity owned by Mr. Jordan)("Jordan Consulting") entered into a Separation and Release Agreement with the Company (the "Jordan Separation Agreement").

Pursuant to the Jordan Separation Agreement, the Company agreed to (a) pay Jordan Consulting $1,350,000 in cash, which would be the amount payable to Jordan Consulting pursuant to the terms of an Executive Consulting Agreement between the Company, Mr. Jordan and Jordan Consulting (the "Jordan Consulting Agreement"), in the event the Board of Directors of the Company decided that Mr. Jordan should step down from the role of Chief Executive Officer of the Company, and such departure was not considered a termination for just cause by the Company or a resignation for good reason by Mr. Jordan under the Jordan Consulting Agreement; (b) execute an assignment in order to transfer any and all rights and ownership to the design or domain of "Volaro" to Jordan Consulting; and (c) confirm that certain of Jordan Consulting's options that have been granted were fully vested subject to stockholder approval.

Under the Jordan Separation Agreement, Mr. Jordan, Jordan Consulting and the Company, provided each general releases; the Company agreed to continue to indemnify and hold Mr. Jordan and Jordan Consulting harmless against any claims relating to the performance of the Jordan Consulting Agreement; and Mr. Jordan and Jordan Consulting agreed to certain confidentiality, non-disclosure, non-solicitation, non-disparagement (which were mutual), and cooperation covenants.

Transaction Agreement

On September 8, 2025, 180 SPV Treasury Vehicle I LLC, a wholly-owned subsidiary of the Company ("180 SPV"), entered into A Physically-Settled Spot and Forward Transaction Agreement (the "Transaction Agreement") with Cumberland DRW LLC ("Counterparty"), to obtain up to $50.0 million from a Counterparty pursuant to the terms of the Transaction Agreement. The Transaction Agreement has a forward rate of 9.90% per annum through the settlement date, which is December 8, 2025 (the "Settlement Date"). The transaction was collateralized by approximately $80.8 million of ETH.

The proceeds from the Transaction Agreement have been used, and are expected to continue to be used by the Company to fund repurchases under the Company's previously announced $250.0 million stock repurchase program. The Company has obtained a waiver from the holders of certain convertible notes issued by the Company on August 8, 2025 of certain of such holders' rights such that the execution of the Transaction Agreement by 180 SPV will not result in the redemption of, or an event of default under, such convertible notes.

Resignation of Stephen H. Shoemaker

On September 15, 2025, Stephen H. Shoemaker resigned as a member of the Board, which resignation was not the result of a disagreement with the Company on any matter relating to the registrant's operations, policies or practices.

In connection with his resignation, the Board, with the recommendation of the Compensation Committee of the Board (the "Compensation Committee"), approved an extension of the expiration date of options to purchase 16,500 shares of common stock at an exercise price of $9.29 per share (the "Options"), which were previously granted to Mr. Shoemaker, and which, absent such extension, would have expired three months after his resignation, to June 17, 2035, the ten year anniversary of the grant date of such Options.

The Company also entered into a consulting agreement with Mr. Shoemaker on September 15, 2025 (the "Consulting Agreement"). Pursuant to the Consulting Agreement, Mr. Shoemaker agreed to provide consulting services as reasonably requested by the Company during the term of the Consulting Agreement, which is for three months, unless extended by the mutual agreement of the parties. In consideration for providing the services under the Consulting Agreement, the Company agreed to pay Mr. Shoemaker $29,166.66 per month, which is payable by way of the issuance of (a) shares of common stock of the Company equal to $14,583.33, divided by the closing sales price of the Company's common stock on each monthly anniversary of the effective date of the Consulting Agreement during the term of the Consulting Agreement (or if such date is not a trading day, the last trading day prior to each such applicable date) (collectively, the "Consulting Shares"); and (b) $14,583.33 in cash. The Consulting Agreement contains customary confidentiality and other representations of Mr. Shoemaker.

Executive Employment Agreement with McAndrew Rudisill

On September 15, 2025, the Company entered into an Executive Employment Agreement with Mr. McAndrew Rudisill, the Company's Chief Executive Officer and Executive Chairman (the "Rudisill Employment Agreement").

Pursuant to the Rudisill Employment Agreement, the Company agreed to continue to engage Mr. Rudisill as Chairman of the Board and Chief Executive Officer of the Company, during the term of the agreement, which continues until the earlier of (i) Mr. Rudisill providing the Company 30 days written notice of his termination of the Rudisill Employment Agreement, or (ii) December 31, 2028; subject to up to two additional years of automatic renewals, if neither party provides the other intent of its non-renewal prior to December 31, 2028 or if automatically renewed, December 31, 2029.

In consideration for agreeing to provide services under the Rudisill Employment Agreement, we agreed: (a) to pay Mr. Rudisill a base salary of $450,000 per year, with such amount to be reviewed by the Board with the recommendation of the Compensation Committee, at least annually, and may be increased if the Board deems appropriate; (b) that Mr. Rudisill would be eligible to earn an annual discretionary bonus as established by the Board or Compensation Committee, which may consist of restricted stock units (RSUs) and/or cash payments; and (c) that Mr. Rudisill would be entitled to a change of control payment, equal to two percent (2%) of the greater of (i) the market capitalization of the Company on the closing date of a Change in Control (as defined below) or (ii) the total enterprise value (defined by the Company's market capitalization on the closing date of a Change of Control, plus all outstanding debt, less cash). This Change in Control payment may consist of both RSU's and/or cash, as determined by the Board or Compensation Committee. For the purposes of the Rudisill Employment Agreement, a "Change in Control" means either (i) a merger or consolidation involving the Company (or one of its subsidiaries where the Company issues shares), unless the transaction is solely for changing the Company's domicile or results in the Company's stockholders retaining more than 50% of the voting power in the surviving or parent corporation immediately after the transaction, or (ii) the sale, lease, transfer, exclusive license, or other disposition of all or substantially all of the Company's or its subsidiaries' assets or equity, including through the sale or disposition of subsidiaries holding substantially all such assets, except where the transfer is to a wholly-owned subsidiary, provided that transactions carried out principally for bona fide equity financing purposes, where the Company receives cash or debt is cancelled or converted (or a combination thereof), will not constitute a Change in Control.

Separately, upon termination of the Rudisill Employment Agreement for any reason, the Company must promptly, and no later than 30 days after termination (or sooner if required by law), pay Mr. Rudisill (or his surviving spouse or estate) a lump sum covering any portion of his then current salary due through the termination date and reimbursement of eligible expenses incurred. Additionally, if Mr. Rudisill has been employed for more than 12 months, he will also receive severance payment equal to two times his base salary at the time of termination. In addition, if his employment ends within 36 months of the start date (September 15, 2025), he will receive a payment, payable in stock and/or cash as determined by the Board, equal to the greater of (a) 1% of the Company's market capitalization; or (b) 1% of the total enterprise value (market capitalization plus debt, less cash) of the Company, at the time of termination. Payment of these severance benefits are conditioned on Mr. Rudisill executing a general release of claims against the Board relating to his employment or service with the Company.

The Rudisill Employment Agreement also contains customary confidentiality obligations and work made for hire language. In addition, Mr. Rudisill is eligible to receive certain employee benefits, including profit sharing, medical, disability and life insurance plans and programs, that are established and made generally available by the Company from time to time to its employees, subject, however, to the applicable eligibility requirements and other provisions of such plans and programs (including, without limitation, requirements as to position, tenure, location, salary, age and health).

Notwithstanding the terms of the Rudisill Employment Agreement, as discussed above, the Board and/or Compensation Committee may from time to time, in their discretion, increase Mr. Rudisill's base salary or award discretionary bonuses to Mr. Rudisill, which may take the form of cash consideration or equity.

The Rudisill Employment Agreement superseded the offer letter previously provided to Mr. Rudisill to serve on the Company's Board.

Purchase and Subscription Agreement

On October 22, 2025, we entered into a Purchase and Subscription Agreement (the "Satschel Agreement") with Satschel, Inc., a Delaware corporation ("Satschel"). Satschel owns Liquidity.io, a regulated broker-dealer and operator of a Digital Alternative Trading System (ATS) platform (the "Platform").

Pursuant to the Satschel Agreement, Satschel sold us shares of its Class A Common Stock representing 15% of its fully-diluted capitalization (the "Satschel Securities"), in consideration for (a) $5 million in cash; and (b) 556,174 shares of our common stock with an agreed value of $10 million, which are subject to a six month lock-up (the "Satschel Shares").

The Satschel Agreement includes (i) customary representations of each of the parties; (ii) positive and negative covenants required to be met by Satschel following the Closing (defined below), relating to required quarterly budgets, financial reporting, minimum cash balances and notification of key personnel changes, as well as budget compliance, and restrictions on new business lines, capital expenditures, compensation adjustments, indebtedness, sales or dispositions of assets and operations, public listings and reverse mergers, issuances of securities, and amendments to Satschel's governing documents, without the prior written consent of the Company, subject to certain exceptions; and (iii) customary indemnification requirements of the parties, subject to a $50,000 deductible and a $2 million cap, subject to certain customary exceptions.

The Satschel Agreement also provides certain additional rights to the Company following the Closing, including (a) the exclusive right in perpetuity to list any digital tokens or assets issued on Ethereum Layer 2 protocols on the Platform; (b) a right of first refusal until the earlier of (i) five years following the Closing Date; and (ii) the date that Satschel becomes publicly-traded, to acquire any equity securities of Satschel that it may offer or sell; and (c) the right to appoint one member of the Board of Directors of Satschel, for so long as the Company owns any equity interests of Satschel.

The acquisition contemplated by the Satschel Agreement closed on October 22, 2025.

Liquidity.io delivers a fully regulated marketplace for trading private assets, combining Securities and Exchange Commission (SEC)-licensed exchange infrastructure with Ethereum L2 tokenization. The Platform enables institutional and accredited investors to access private secondaries, structured credit, and real-world assets (RWAs) through a single compliant marketplace with instant settlement and liquidity.

We believe this relationship with Satschel establishes a foundation for our anticipated future growth and delivers several key strategic benefits, including:

●

Expanded liquidity and market access: Enables the Company to leverage Liquidity.io's ATS to convert future Company-issued tokenized RWAs into compliant, tradable instruments with both primary and secondary market liquidity.

●

Regulatory integration: Supports end-to-end regulatory oversight, investor onboarding, and settlement, aligning the Company's on-chain products with institutional compliance requirements.

●

Strategic alignment: As part of the transaction, and as discussed above, the Company has invested $15 million (of cash and stock) to acquire a 15% interest in Satschel, with a right of first refusal to acquire additional equity in future funding rounds. In addition, we secured the exclusive right to list Ethereum L2 tokens on the Platform.

Assignment and Settlement Agreement

On November 6, 2025, the Company and CannBioRex Pharma Limited, a company incorporated under the laws of England and Wales and an indirect wholly-owned subsidiary of the Company ("CannBioRex"), entered into an Assignment and Settlement Agreement (the "Oxford Assignment Agreement") dated November 5, 2025, with the Chancellor, Masters and Scholars of the University of Oxford ("Oxford") and Oxford University Innovation Limited, a wholly-owned subsidiary of Oxford University ("OUI"). Pursuant to the Agreement, we have agreed to (i) terminate a 2013 license agreement between OUI and the Company (then known as 180 Life Sciences Corp.), pursuant to which we were granted certain rights under OUI's patent related to the treatment of Dupuytrens's Disease (the "OUI Patent") and the use of clinical data generated by Oxford in clinical trials; (ii) assign all of our intellectual property rights relating primarily to the treatment of Dupuytrens's Disease, including a patent relating to the Dupuytren's Contracture indication (the "Company IP"), to OUI; and (iii) terminate a series of research sponsorship, research support, and studentship agreements between Oxford, the Company, and CannBioRex (collectively, the "Research Agreements").

The Oxford Assignment Agreement requires us to pay Oxford, within seven days after execution, an initial payment of $500,000 which has been paid, to be applied toward the repayment of $1,675,500 in unpaid research fees owed by CannBioRex to Oxford pursuant to the Research Agreements (the "Research Fees"). Pursuant to the Oxford Assignment Agreement, OUI has agreed to use its commercially reasonable best endeavors to promptly negotiate and finalize (and will not intentionally delay or interfere with) the sale of the OUI Patent and Company IP. If any party acquires ownership or exclusive rights in the Company IP within 36 months of the date of the Agreement, OUI will apply the amount received from such sale, first to the full repayment of the balance of the Research Fees to Oxford, and thereafter fifty percent of the remaining net revenues to the Company, up to a maximum net revenue share of $5 million.

The Oxford Assignment Agreement includes a mutual release and settlement of claims, customary representations of each of the parties, and mutual confidentiality provisions. In addition, we have agreed to indemnify OUI and Oxford against any third party claims against them by our shareholders or by Glenn Larsen (former chief executive officer of our subsidiary, 180 Therapeutics L.P.) arising from the Oxford Assignment Agreement, the termination of the License Agreement and Research Agreements, or the assignment of the Company IP to OUI.

Significant Financial Statement Components

General and Administrative

General and administrative expenses consist primarily of salaries and other staff-related costs, including stock-based compensation for shares of common stock issued and options granted to founders, directors, and personnel in executive, commercial, finance, accounting, legal, investor relations, facilities, business development, and human resources functions that include vesting conditions.

Other significant general and administrative costs include costs relating to overhead costs, legal fees relating to corporate and patent matters, litigation, SEC filings, insurance, investor relations costs, fees for accounting and consulting services, stock-based compensation and other general and administrative costs. General and administrative costs are expensed as incurred, and we accrue amounts for services provided by third parties related to the above expenses by monitoring the status of services provided and receiving estimates from our service providers and adjusting our accruals as actual costs become known.

It is expected that the general and administrative expenses will increase over the next several years to support our continued research and development activities related to the iGaming business (as described above), the launch of commercial iGaming operations and the increased costs of operating as a public company. These increases are anticipated to include increased costs related to the hiring of additional personnel, developing commercial infrastructure, fees to outside consultants, lawyers and accountants, and increased costs associated with being a public company, as well as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC requirements, insurance and investor relations costs.

Other Income

Other income primarily represents fees earned for research and development work performed for other companies, some of which are related parties.

Interest Expense

Interest expense consists primarily of interest expense related to debt instruments.

Digital Asset Gains and Losses

Digital Asset Gains and losses represent unrealized and realized gains and losses from our digital asset holdings.

CONSOLIDATED RESULTS OF OPERATIONS

For the Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

		For the Three Months Ended September 30,
		2025				2024
Revenue:
Revenue		$	4,110,169			$	-
Total Revenue			4,110,169				-
Operating Expenses:
General and administrative			224,604,532				596,172
Total Operating Expenses			224,604,532				596,172
Loss From Operations			(220,494,363	)			(596,172	)
Other (Expense) Income:
Dividend income			616,725				-
Interest income			327,211				-
Other income			-				76,639
Interest expense			(319,909	)			(10,552	)
Change in fair value of convertible debt			3,724,344				-
Change in fair value of available for sale securities			(74,788	)			-
Digital asset gains and losses			7,549,815				-
Loss on settlement of liabilities			-				(2,304	)
Total other income, net			11,823,398				63,783
Loss Before Income Taxes			(208,670,965	)			(532,389	)
Income tax benefit			-				-
Net Loss From Continuing Operations			(208,670,965	)			(532,389	)
Net Loss From Discontinued Operations			(8,071,091	)			(304,331	)
Net Loss		$	(216,742,056	)		$	(836,720	)

During the three months ended September 30, 2025, the Company made a strategic shift in its operations to no longer pursue its pharmaceutical research operations or the Gaming Technology Platform. As such, these operations are presented as discontinued operations in the Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024.

General and Administrative

We incurred general and administrative expenses of $224,604,532 and $596,172 for the three months ended September 30, 2025 and 2024, respectively, representing an increase of $224,008,360 for the 2025 period, compared to the 2024 period. The increase in general and administrative expense was mainly due to an approximately $208,000,000 increase in stock compensation related to the issuance of options and warrants during the period. Additionally, the increase comprised of $9,000,000 due to adjustment in fair value for the Convertible Notes, $1,700,000 in bonus payment to prior management, $1,600,000 increase in director fees, a $900,000 increase in legal fees, a $900,000 increase in rent and lease expense, and a $596,000 increase in insurance expenses.

Other Income (Expense), Net

We incurred other income, net of $11,823,398 during the three months ended September 30, 2025, as compared to other income, net of $63,783 for the three months ended September 30, 2024, representing an increase in other income, net of $11,759,615. The increase is primarily attributable to a $7,549,815 change in value of digital assets, a $3,724,344 change in fair value of convertible debt, $616,725 in dividend income, and $327,211 in interest income which were offset by interest expense of $319,909 and change in available for sale securities of $74,788.

Net Loss

We had a net loss from continuing operations of $208,670,965 for the three months ended September 30, 2025, compared to a net loss of $532,389 for the three months ended September 30, 2024, representing an increase in net loss of $208,138,576, for the reasons discussed above.

For the Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

		For the Nine Months Ended September 30,
		2025				2024
Revenue:
Revenue		$	4,110,169			$	-
Total Revenue			4,110,169				-
Operating Expenses:
General and administrative			227,954,479				3,471,965
Total Operating Expenses			227,954,479				3,471,965
Loss From Operations			(223,844,310	)			(3,471,965	)
Other (Expense) Income:
Dividend income			616,725				-
Interest income			340,085				-
Other income			-				1,789,443
Interest expense			(319,909	)			(28,977	)
Change in fair value of convertible debt			3,724,344				-
Change in fair value of available for sale securities			(74,788	)			-
Digital asset gains and losses			7,549,815				-
Change in fair value of derivative liabilities			-				58
Gain on settlement of liabilities			-				52,695
Total other income, net			11,836,272				1,813,219
Income (Loss) Before Income Taxes			(212,008,038	)			(1,658,746	)
Income tax benefit			-				-
Net Loss From Continuing Operations			(212,008,038	)			(1,658,746	)
Net Loss From Discontinued Operations			(8,829,854	)			(235,937	)
Net Loss		$	(220,837,892	)		$	(1,894,683	)

During the three months ended September 30, 2025, the Company made a strategic shift in its operations to no longer pursue its pharmaceutical research operations or the Gaming Technology Platform. As such, these operations are presented as discontinued operations in the Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024.

General and Administrative

We incurred general and administrative expenses of $227,954,479 and $3,471,965 for the nine months ended September 30, 2025 and 2024, respectively, representing an increase of $224,482,514 for the 2025 period, compared to the 2024 period. The increase in general and administrative expense was mainly due to an approximately $209,000,000 increase in stock compensation related to the issuance of options and warrants during the period. Additionally, the increase included $9,000,000 due to the adjustment in fair value of our Convertible Notes, $1,700,000 in bonus payment to prior management, $1,800,000 of increase in director fees, $1,100,000 in legal fees, and a $900,000 increase in rent and lease expense.

Other Income (Expense), Net

We incurred other income, net of $11,836,272 during the nine months ended September 30, 2025, as compared to other income, net of $1,813,219 for the nine months ended September 30, 2024, representing an increase in other income, net of $10,023,053. The increase is primarily attributable to $7,549,815 change in value of digital assets, a $3,724,344 change in fair value of Convertible Notes, $616,725 in dividend income, and $340,085 in interest income which were offset by a decrease in other income of $1,789,443 related to proceeds received from AmTrust International Underwriters DAC ("AmTrust"), which was our premerger directors' and officers' insurance policy, in the prior year, interest expense of $319,909 and change in available for sale securities of $74,788.

Net Loss From Continuing Operations

We had a net loss from continuing operations of $212,008,038 for the nine months ended September 30, 2025, compared to a net loss of $1,658,746 for the nine months ended September 30, 2024, representing an increase in net loss of $210,349,292, for the reasons discussed above.

Non-GAAP Financial Measures

Although we believe that net income or loss, as determined in accordance with U.S. GAAP, is the most appropriate earnings measure, we use EBITDA and Adjusted EBITDA as key profitability measures to assess the performance of our business. We believe these measures help illustrate underlying trends in our business and we use these measures to establish budgets and operational goals, and communicate internally and externally, in managing our business and evaluating its performance. We also believe these measures help investors compare our operating performance with its results in prior periods in a way that is consistent with how management evaluates such performance. EBITDA is a non-GAAP profitability measure that represents net income or loss for the period before the impact of the interest expense, income tax expense (benefit) and depreciation and amortization of property, plant and equipment and intangible assets. EBITDA eliminates potential differences in performance caused by variations in capital structures (affecting financing expenses), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense).

Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, we exclude from Adjusted EBITDA certain costs that are required to be expensed in accordance with GAAP, including non-cash stock-based compensation, business development and integration expenses, offering costs, non-cash adjustments to the fair value of earnout consideration, and non-cash adjustments to the fair value of outstanding warrants. Our management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future.

Each of the profitability measures described below are not recognized under GAAP and do not purport to be an alternative to net income or loss determined in accordance with GAAP as a measure of our performance. Such measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for our results as reported under U.S. GAAP. EBITDA and Adjusted EBITDA exclude items that can have a significant effect on our profit or loss and should, therefore, be used only in conjunction with our GAAP profit or loss for the period. Our management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, these measures may not be comparable to other similarly titled measures of other companies.

EBITDA and Adjusted EBITDA are unaudited, and have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under U.S. GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, or future or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, capital expenditures or working capital needs; EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments; although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. In addition, other companies in this industry may calculate EBITDA and Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure. The Company's presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable U.S. GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable U.S. GAAP financial measure. For more information on these non-GAAP financial measures, please see the below reconciliation of these non-GAAP financial measures to their GAAP counterparts.

The reconciliation of Net loss from continuing operations, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024 is as follows:

Net Loss From Continuing Operations		$	(208,670,965	)		$	(532,389	)		$	(212,008,038	)		$	(1,658,746	)
Interest			319,909				10,552				319,909				28,977
Taxes			-				-				-				-
Depreciation and amortization
EBITDA			(208,351,056	)			(521,837	)			(211,688,129	)			(1,629,769	)
Stock-based compensation (1)			208,241,459				16,456				208,922,667				274,826
Convertible debt offering costs (2)			8,575,412				-				8,575,412				-
Adjusted EBITDA		$	8,465,815			$	(505,381	)		$	5,809,950			$	(1,354,943	)

	(1)	Represents non-cash stock-based compensation expense associated with employee and non-employee equity awards, including Strategic Advisor Warrants and Additional Strategic Advisor Warrants, and employee stock options awarded in connection with closing the Private Placement, included in general and administrative expenses on the consolidation statements of operations and comprehensive income.

(2)

Represents professional fees incurred in connection with the Convertible Notes which are included in general and administrative expenses on the consolidation statements of operations and comprehensive income.

Liquidity and Capital Resources

As of September 30, 2025 and December 31, 2024, we had cash, cash equivalents and restricted cash equivalents balances of $558,901,384 and $4,567,251, respectively, and a working capital of $506,159,940 and $1,636,486, respectively.

For the nine months ended September 30, 2025, cash used in operating activities from continuing operations totaled $18,286,323 compared to cash used in operating activities from continuing operations of $531,565 for the nine months ended September 30, 2024. Cash used in operating activities was $18,418,600 and cash used in operating activities was $546,177 for the nine months ended September 30, 2025 and 2024, respectively. Our cash used in operations for the nine months ended September 30, 2025 was primarily attributable to our net loss from continuing operations of $212,008,038, adjusted for non-cash expenses in the aggregate amount of $193,613,127 (mainly due to $208,922,667 of stock based compensation), as well as $108,588 of net cash used to fund changes in the levels of operating assets and liabilities. Our cash provided by operations for the nine months ended September 30, 2024 was primarily attributable to our net loss from continuing operation of $1,658,746, adjusted for non-cash expenses in the aggregate amount of $222,073 as well as $905,108 of net cash used to fund changes in the levels of operating assets and liabilities.

For the nine months ended September 30, 2025, cash used in investing activities from continuing operations totaled $252,370,414 compared to cash used in investing activities from continuing operations of $0 for the nine months ended September 30, 2024. Cash used in investing activities related to the purchase of marketable securities of $8,890,596 and $243,479,818 for the purchase of cryptocurrency.

For the nine months ended September 30, 2025, cash provided by financing activities from continuing operations totaled $825,274,591 compared to cash used in financing activities from continuing operations of $996,005 for the nine months ended September 30, 2024. Cash used in financing activities from discontinued operations was $151,444, compared to cash used in financing activities of $13,973 from discontinued operations for the nine months ended September 30, 2024. Cash provided by financing activities was $825,123,147 and cash used in financing activities was $1,009,978 for the nine months ended September 30, 2025 and 2024, respectively. Cash provided by financing activities primarily related to cash proceeds from shares issued for cash and warrants, net of $286,843,926 (mainly due to the Private Placement), proceeds from convertible debt, net of $500,000,000 (in connection with the sale of the Convertible Notes), proceeds from collateralized loan of $50,000,000 and cash proceeds from the exercise of warrants of $5,605,706, which were offset by treasury stock purchases of $16,121,428 and repayment of loan payable - related party of $1,000,000 for the nine months ended September 30, 2025. Cash used in financing activities primarily related to the repayment of loan payable of $996,494 for the nine months ended September 30, 2024.

See also the Notes to Consolidated Financial Statements in "Part I - Item 1. Financial Statements", for a more detailed discussion of our debt and obligations, including "Note 8 - Debt".

In August 2025, our Board of Directors implemented an Ethereum-focused treasury strategy, with ETH serving as the primary treasury reserve asset on an ongoing basis, subject to market conditions and anticipated needs of the business. Our goal is to acquire and grow our overall ETH position and utilize professional treasury strategies to significantly increase our ETH holdings. We have not set a specific target for the maximum amount of ETH we seek to hold. Our treasury strategy focuses on increasing the amount of ETH through a combination of capital raising activities and treasury activities including staking, restaking, liquid staking and other DeFi activities. We expect that ETH will serve as our primary treasury reserve asset in the future. We aim to maximize ETH accumulation and value accretion, while maintaining robust controls and oversight over these digital assets. While our new strategy is expected to generate significant revenue and operating cash flow, there are no assurances that we will be successful with this strategy

We may also pursue additional offering transactions as needed to fund our operations and financing obligations. Future offering transactions may include common stock, warrant coverage, or other convertible securities, with such terms as approved by the Board of Directors of the Company, again, subject in all cases to applicable Nasdaq stockholder approval rules and guidance where applicable. Notwithstanding the above, as of the date of this Report, the Company has not agreed to any definitive funding terms or finalized any offering structures.

Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

Recent Financing Transactions

Warrant Inducement Agreement and Related Transactions

On October 16, 2024, we entered into a warrant inducement agreement (the "Inducement Agreement") with a holder (the "Holder") of warrants to purchase up to 47,706 shares of common stock and (i) warrants to purchase up to 1,614 shares of common stock issued in July 2022; (ii) warrants to purchase up to 13,534 shares of common stock issued in December 2022; (iii) warrants to purchase up to 8,267 shares of common stock issued in April 2023; and (iv) warrants to purchase up to 24,292 shares of common stock issued in August 2023, each with an exercise price of $32.30 per share (collectively, the "Exercised Warrants"), pursuant to which the Holder agreed to exercise for cash the Exercised Warrants to purchase an aggregate of 95,007 shares of common stock at an exercise price of $34.80 per share ($2.50 greater than the $32.30 per share exercise price of such Exercised Warrants) during the period from the date of the Inducement Agreement until 1:15 p.m., Eastern Time, on October 16, 2024. On October 16 and 17, 2024, the Exercised Warrants were exercised in full for cash by the Holder and the Company received $3,306,240 before deducting financial advisory fees and other expenses payable by us.

In consideration of the Holder's agreement to exercise the Exercised Warrants in accordance with the Inducement Agreement, the Company agreed to issue new unregistered Warrants to Purchase Shares of Common Stock (the "New Warrants") to purchase a number of shares of common stock equal to 200% of the number of shares of common stock issued upon exercise of the Exercised Warrants, i.e., warrants to purchase up to 190,014 shares of common stock (the "New Warrant Shares"). The New Warrants were immediately exercisable and had a term of exercise of five years.

The New Warrants had an exercise price of $15.00 per share. The exercise price and the number of shares of common stock issuable upon exercise of each New Warrant are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. In addition, in certain circumstances, upon a fundamental transaction, a holder of New Warrants will be entitled to receive, upon exercise of the New Warrants, the kind and amount of securities, cash or other property that such holder would have received had they exercised the New Warrants immediately prior to the fundamental transaction.

The Company may not affect the exercise of New Warrants, and the applicable Holder will not be entitled to exercise any portion of any such New Warrant, which, upon giving effect to such exercise, would cause the aggregate number of shares of common stock beneficially owned by the holder of such New Warrant (together with its affiliates) to exceed 4.99% or 9.99%, as applicable, of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of such New Warrants.

The Company engaged A.G.P./Alliance Global Partners ("A.G.P.") to provide exclusive financial services in connection with the transactions summarized above and, pursuant to a Financial Advisory Agreement between the Company and A.G.P., paid A.G.P. a financial advisory fee of $232,000, and an alternative transaction fee of $100,000. In addition, we reimbursed A.G.P. for its accountable legal expenses in connection with the exercise of the Exercised Warrants and the issuance of the Inducement Warrants of $65,000 and $10,000 non-accountable expenses. In addition, we paid A.G.P. $29,923, half of the financial advisory fees due in connection with a December 2023 warrant inducement. As of October 31, 2024, a total of $436,923 related to the aforementioned transaction has been paid to A.G.P and there is no balance outstanding.

December 2024 Offering

On December 27, 2024, we entered into a Securities Purchase Agreement with certain accredited investors, including the Holder (the "SPA"). Pursuant to the terms of the SPA, the Company agreed to sell, in a registered direct offering, an aggregate of 120,000 shares of the Company's common stock (the "December 2024 Shares") and, in a concurrent private placement, warrants to purchase up to 120,000 shares of common stock (the "December 2024 Warrants"). The combined purchase price per December 2024 Share and December 2024 Warrant was $24.10. The offerings closed on December 30, 2024.

The December 2024 Warrants were immediately exercisable on their grant date at an exercise price of $22.80 per share and expire five and a half years following the initial exercise date.

Pursuant to a placement agency agreement dated as of December 27, 2024, between the Company and Maxim Group LLC (the "Placement Agent"), the Company engaged the Placement Agent to act as the Company's sole placement agent in connection with the registered direct offering. Pursuant to the placement agency agreement, the Company agreed to pay the Placement Agent a cash fee equal to seven percent (7.0%) of the gross proceeds received by the Company from the sale of the December 2024 Shares and December 2024 Warrants and to reimburse the Placement Agent for certain of its expenses in an aggregate amount of $50,000.

The net proceeds to the Company from the registered direct offering and concurrent private placement, after deducting the placement agent's fees and expenses and the Company's offering expenses were approximately $2.6 million. The Company intends to use the net proceeds from the transactions for working capital and general corporate purposes, which may include operationalizing and developing the Gaming Technology Platform and capital expenditures.

July 2025 Securities Purchase Agreement

As discussed in greater detail above under "Recent Events-Securities Purchase Agreement", on August 4, 2025, we sold the Purchasers (i) 14,393,417 shares of common stock of the Company at an offering price of $26.50 per share, and (ii) $26.499 per pre-funded warrant to purchase up to an aggregate of 1,749,585 shares of common stock in the Private Placement.

After paying the cash expenses of Clear Street and Maxim in connection with the Private Placement, we raised net proceeds of $245,035,447 in cash and $171,287,512 in contributed ETH, which we used to fund our digital asset purchases.

Amendment to Securities Purchase Agreements and Warrants

On July 28, 2025, the Company entered into an amendment to (i) the Securities Purchase Agreement, dated February 19, 2021, by and among the Company and the investors party thereto and (ii) the Securities Purchase Agreement, dated August 19, 2021, by and among the Company and the investors party thereto, by which the investors purchased at least 50.1% in interest of the shares of common stock based on the subscription amounts thereto, to remove a prohibition on variable rate transactions and reduce the exercise price of warrants to $26.50.

Convertible Note Sales

As discussed in greater detail above under "Recent Events -Initial Senior Convertible Note Sales and "-New Senior Convertible Note Sales" on August 8, 2025 and September 23, 2025, we sold $156.25 million and $360 million of Convertible Notes.

ATM Sales Agreement

As discussed in greater detail above under "Recent Events-ATM Sales Agreement"and "-Amended and Restated ATM Sales Agreement", on August 13, 2025 we entered into a Sales Agreement with Clear Street, which was amended and restated on August 22, 2025.

During the three and nine months ended September 30, 2025, we sold an aggregate of 739,050 and 739,050 shares of our common stock under the Sales Agreement for gross proceeds of approximately $40,990,338 and $40,990,338, after deducting commissions. Of this amount, $0 is expected to be received in October 2025.

Since September 30, 2025, we have sold an aggregate of 410,403 shares of our common stock under the Sales Agreement for net proceeds of approximately $6,943,380, after deducting commissions.

Transaction Agreement

As discussed in greater detail above under "Recent Events-Transaction Agreement", on September 8, 2025, we entered into the Transaction Agreement and borrowed $50 million from the Counterparty.

Critical Accounting Estimates

The Company's condensed consolidated financial statements are prepared in accordance with accounting principles that are generally accepted in the United States. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of its assets, liabilities, revenue and expenses. The Company has identified certain estimates as critical to its business operations and the understanding of its past or present results of operations related to intangible assets. These estimates are considered critical because they had a material impact, or they have the potential to have a material impact, on the Company's condensed consolidated financial statements and because they require management to make significant judgments, assumptions or estimates. The Company believes that the estimates, judgments and assumptions made when accounting for the items described below were reasonable, based on information available at the time they were made. However, actual results may differ from those estimates, and these differences may be material.

Digital Assets

The Company's digital assets include Ether, the native cryptocurrency of the Ethereum blockchain ("ETH"), liquid staking tokens("LST"), and liquid staking incentive tokens.

Crypto assets within the scope of ASC 350-60 Intangibles-Goodwill and Other-Crypto Assets("ASC 350-60):

ETH and liquid staking incentive tokens have been determined to fall within the scope of ASC 350-60. The company reflects crypto assets held at fair value on the consolidated balance sheets within the Digital Assets line item. Changes in the fair value of crypto assets are recognized in income, reflected within the Digital asset gains and losses within the consolidated statement of operations.

In determining the fair value of digital assets in accordance with ASC 820, Fair Value Measurement ("ASC 820"). The Company utilizes Coinbase as the principal market. The Company uses a first-in, first-out methodology to assign costs to digital assets.

Non-monetary receivable with an embedded derivative within the scope of ASC 310, Receivables ("ASC 310") and ASC 815-15, Derivatives and Hedging - Embedded Derivatives ("815-15"):

The Company's LST, comprised of weETH and pufETH, has been determined to fall within the scope of ASC 310 and ASC 815-15 and is accounted for as a non-monetary receivable with an embedded derivative. The host contract represents the holder's right to receive ETH denominated in USD and is carried at cost.

The embedded derivative component is measured at fair value at each reporting date, using observable prices in the principal market in accordance with ASC 815-15 and ASC 820, Fair Value Measurement ("ASC 820"). Where quoted prices are directly available in active markets, the embedded derivatives are classified as Level 1 within the fair value hierarchy; if observable market prices are not available, management utilizes other relevant inputs and valuation techniques, which may result in Level 2 or Level 3 classification.

Upon redemption of liquid staking tokens for ETH, the Company derecognizes both the receivable and the embedded derivative, recognizing ETH at fair value. Any difference between the carrying amount and the fair value of ETH received is recognized as a gain or loss, which amounted to $24,199,453 for the period.

Management has exercised judgment in determining the principal market, fair value hierarchy, and bifurcation of embedded derivatives. There is diversity in industry practice regarding the measurement and recognition of liquid staking tokens and related rewards. The Company continually evaluates the principal market and the reliability of inputs to ensure that fair value measurements reflect current market conditions.

ETH Staking

Beginning in August 2025, the Company used the proceeds from its capital raising activities to acquire and deploy ETH in staking activities, which can include native staking, liquid staking and restaking. The Company has entered into separate contractual agreements with various third-party entities to facilitate its ETH staking activities. The Company commenced both native staking in August of 2025 and commenced liquid staking in September 2025. The Company intends for staking to become a primary yield generation strategy of the Company within the current fiscal year.

Native Staking

The Company utilized one third-party asset manager to manage and stake ETH on its behalf as of September 30, 2025. Under these arrangements, the Company's ETH is held by a qualified custodian and staked in the Ethereum protocol through a third-party validator operator (e.g., Coinbase). The validator operator manages the staking process and delegates the Company's ETH to network validators. When selected by the Ethereum network, these validators earn staking rewards and transaction fees proportional to the amount of stake delegated.

ETH used in native staking is retained on the Company's balance sheet as a crypto asset measured at fair value in accordance with ASC 350-60. The Company does not derecognize ETH when participating in native staking because it retains the ability to direct the use of the asset and obtain substantially all benefits.

The validator operator (e.g., Coinbase) is considered the customer, as it receives the Company's staking capacity (the performance obligation) and, in exchange, provides staking rewards. The contract duration for native staking is typically determined by the daily reward cycle, consistent with the period in which enforceable rights and obligations exist under the Company's agreements with validator operators. The Company has determined that a new contract is effectively renewed each day, such that contract inception changes daily. Revenue from native staking is recognized over time because the customer simultaneously receives and consumes the benefit of the Company's performance throughout the daily reward cycle.

Revenue from native staking is recognized at the end of each daily period, when the Company's right to staking rewards becomes determinable (i.e., when the constraint is lifted). The amount of revenue recognized is measured at the fair value of rewards at contract inception for that day, net of validator commissions, in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606") and ASC 820. Rewards represent noncash consideration and are measured using quoted prices in the principal market at contract inception. Subsequent changes in the fair value of ETH after initial recognition are recorded as unrealized gains or losses.

Because the Company is not the principal to the block validation service, but rather provides staking capacity to third parties, it does not control the full output of the reward-generating activity and instead receives net staking rewards after validator commissions are deducted. Staking revenue is presented on a net basis, reflecting only the portion of protocol rewards to which the Company is entitled. Asset manager fees are presented as separate operating expenses.

Liquid Staking

The Company participates in liquid staking arrangements, whereby ETH is deposited into third-party protocols (such as ether.fi or Puffer) in exchange for liquid staking tokens (e.g., weETH, pufETH). These tokens represent the right to redeem underlying ETH and accrued rewards, and may be transferred, traded, or used in other decentralized finance (DeFi) transactions, providing ongoing liquidity and access to additional yield opportunities. In certain arrangements, liquid staking tokens may also be restaked into additional protocols to earn incremental rewards.

Upon deposit, the Company derecognizes the ETH and recognizes a non-financial receivable with an embedded derivative, reflecting the right to receive ETH and protocol rewards. The host contract is measured at cost (the value of ETH deposited), while the embedded derivative is bifurcated and measured at fair value through earnings, reflecting exposure to ETH price and protocol yield variability, in accordance with ASC 310 and ASC 815-15. Subsequent changes in the fair value of liquid staking tokens and embedded derivatives after initial recognition are not included in revenue but are recognized separately in earnings as unrealized gains or losses. Gains or losses realized upon redemption or sale of liquid staking tokens are recognized in accordance with ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets ("ASC 610-20").

The protocol or platform (e.g., ether.fi or Puffer) to which the Company delegates its ETH is considered the customer, as it receives the Company's staking capacity (the performance obligation) and, in exchange, provides staking rewards and incentive tokens (based on hitting certain ETH deposit thresholds). The contract duration for liquid staking is based on the ability of either party to terminate with 30 days' notice; for accounting purposes, a new contract is considered to begin each day, reflecting the daily renewal of enforceable rights and obligations (i.e., a new 30 day contract is renewed on a daily basis). Revenue from liquid staking is recognized over time because the customer simultaneously receives and consumes the benefit of the Company's performance throughout the duration of the contract.

Revenue from liquid staking is recognized at the end of each daily period, when the Company's right to staking rewards and incentive tokens (e.g., PUFFER, ETHFI) becomes determinable (i.e., when the constraint is lifted). The amount of revenue recognized is measured at the fair value of rewards and incentive tokens at contract inception for that day, net of validator commissions, in accordance with ASC 606 and ASC 820. Rewards represent noncash consideration and are measured using quoted prices in the principal market at contract inception. Fair value for liquid staking tokens is determined based on the underlying ETH and accrued rewards to which the Company is entitled, rather than the quoted token price, because the redemption ratio between ETH and liquid staking tokens (e.g., weETH, pufETH) fluctuates over time as rewards accrue and protocol fees apply.

Because the Company is not the principal to the block validation service, but rather provides staking capacity to third parties, it does not control the full output of the reward-generating activity and instead receives net staking rewards after validator commissions are deducted. Asset manager or protocol fees are presented as separate operating expenses.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606.

To determine revenue recognition for contracts with customers, the Company performs the following five steps:

1.

identify the contract with the customer,

2.

identify the performance obligations in the contract,

3.

determine the transaction price, including variable consideration to the extent it is probable a significant future reversal will not occur,

4.

allocate the transaction price to the respective performance obligations in the contract, and

5.

recognize revenue when (or as) the Company satisfies the performance obligation.

The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange.

Native Staking Revenue

The validator operator (e.g., Coinbase) is considered the customer, as it receives the Company's staking capacity (the performance obligation). The Company acts as an agent in native staking transactions, delegating ETH to third-party validator operators who perform the technical validation responsibilities.

The contract duration for native staking is defined by the daily reward cycle under the Company's agreements. Native staking rewards are recognized as revenue over time and at the end of each contract period (typically daily) when the Company's share of rewards is determinable. The fair value of staking rewards, which are received as noncash consideration, is measured using quoted prices from the principal market at contract inception of each daily period, in accordance with ASC 606 and ASC 820. Subsequent changes in the fair value of ETH after initial recognition are recorded as unrealized gains or losses. The amount of revenue recognized is presented net of validator or other protocol fees.

Liquid Staking Revenue

The protocol or platform (e.g., ether.fi or Puffer) is considered the customer, as it receives the Company's staking capacity (the performance obligation). The Company acts as an agent in liquid staking transactions, delegating ETH to third-party protocols or platforms who perform the technical validation responsibilities.

The contract duration for liquid staking is based on the ability of either party to terminate the contract with 30 days' notice without cause. The Company has determined that a new 30-day contract is effectively renewed each day, such that contract inception changes daily. Revenue from staking rewards and incentive tokens is recognized over time and at the end of each day when the Company's proportional share of rewards is determinable, measured at fair value at contract inception for that day, net of validator commissions. Fair value is based on the underlying ETH and accrued rewards, not the market price of the liquid staking tokens. The ratio between ETH and liquid staking tokens changes over time as rewards accrue and protocol economics adjust; this variability does not affect the timing of revenue recognition but is considered in determining fair value at contract inception. Rewards represent noncash consideration and are measured using quoted prices in the principal market at contract inception.

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's unaudited condensed consolidated financial statements.