Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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

The following discussion and analysis of the financial condition and results of operations of StablecoinX includes information that StablecoinX's management believes is relevant to an assessment and understanding of StablecoinX's consolidated results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q ("Quarterly Report") and our audited financial statements, unaudited pro forma financial statements and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" filed as Exhibits 99.1, 99.2, 99.3, 99.4, 99.5 and 99.6, respectively, to our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the "SEC") on July 2, 2026 (the "Super 8-K"). This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. StablecoinX's actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Cautionary Note Regarding Forward-Looking Statements" in this Quarterly Report and the section titled "Risk Factors" in the final prospectus, dated February 17, 2026, as supplemented on May 29, 2026 (the "proxy statement/prospectus"), filed with the SEC, as updated by the factors disclosed in the section titled "Risk Factors" in our Super 8-K and in this Quarterly Report.

Business Combination Agreement:

On July 21, 2025, StablecoinX entered into a business combination agreement (as amended, the "Business Combination Agreement") with TLGY, SC Assets, StablecoinX, SPAC Merger Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of StablecoinX ("SPAC Merger Sub"), and StablecoinX Company Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of StablecoinX ("Company Merger Sub"). On June 25, 2026 (the "Closing"), the parties consummated the transactions contemplated by the Business Combination Agreement and the related agreements (collectively, the "Business Combination"), pursuant to which, among other things, (1) SPAC Merger Sub merged with and into TLGY, with TLGY continuing as the surviving company (the "SPAC Merger"), and (2) immediately following the SPAC Merger, Company Merger Sub merged with and into SC Assets, with SC Assets continuing as the surviving company (the "Company Merger", and together with the SPAC Merger, the "Mergers"). As a result of the Business Combination, TLGY and SC Assets became wholly-owned subsidiaries of StablecoinX and StablecoinX became a publicly traded company.

Unless the context otherwise requires, all references in this section to "we", "us", "our", "StablecoinX", or the "Company" refer to SC Assets prior to the consummation of the Business Combination, and after the consummation of the Business Combination, StablecoinX and its subsidiaries.

Accounting for the Mergers

The mergers between the Company, SC Assets and TLGY were accounted for as a reverse recapitalization, with TLGY being treated as the "acquired" company for financial reporting purposes. For accounting purposes, the reverse recapitalization is the equivalent of SC Assets issuing stock for the net assets of TLGY, accompanied by a recapitalization. The net assets of TLGY are stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the reverse recapitalization are those of SC Assets. At Closing, StablecoinX became the parent company of SC Assets as well as the reporting entity. SC Assets shareholders were issued 700,000 shares of StablecoinX Class A common stock, par value $0.0001 per share (the "Class A Common Stock") and 700,000 shares of StablecoinX Class B common stock, par value $0.0001 per share (the "Class B Common Stock").

Overview

The Company is focused on building an integrated infrastructure platform within the Ethena ecosystem. The Company's operations are organized across three complementary business lines: (i) Infrastructure Services, (ii) Infrastructure Software, and (iii) Distribution Services, and are supported by a strategic ENA treasury position.

The Company became a publicly traded company following the closing of the Business Combination on June 25, 2026. The Company operates an integrated platform consisting of live Infrastructure Services and the ongoing development of its Infrastructure Software and Distribution Services businesses. Its Infrastructure Services business includes the operation of validator infrastructure and a decentralized verifier node ("DVN") platform supporting cross-chain activity within the Ethena ecosystem. In parallel, the Company is advancing the development and phased commercialization of its Infrastructure Software and Distribution Services businesses, which are intended to expand the utility and institutional adoption of Ethena digital dollar products over time.

The Company's operating model is designed to function as an integrated ecosystem in which each business line reinforces the others. Infrastructure Services provide live network participation and technical validation capabilities; Infrastructure Software is intended to provide middleware functionality that simplifies enterprise adoption of Ethena digital dollar products; and Distribution Services are intended to facilitate institutional access and capital formation related to Ethena products. The Company believes that increased adoption and usage within the Ethena ecosystem may, over time, increase activity across each of these business lines and may also be associated with changes in the market value and strategic utility of the Company's ENA treasury holdings.

While Infrastructure Services are currently live and generating early-stage activity, Infrastructure Software and Distribution Services remain under development and are expected to be commercialized on a phased basis. There can be no assurance regarding the timing, scope, or success of commercialization of these business lines or that the Company will generate meaningful or sustainable revenue.

The Company's ability to generate revenue and achieve profitability will depend on a number of factors, including continued growth and adoption of the Ethena ecosystem, successful deployment and scaling of its infrastructure and software products, regulatory developments applicable to digital assets and stablecoins, and broader market conditions affecting blockchain infrastructure, digital asset liquidity, and institutional participation.

Other Arrangements Consummated upon the Closing:

Ethena Contribution

Upon the consummation of the Business Combination and pursuant to the Contribution Agreement entered into by TLGY, Ethena, SC Assets, and StablecoinX on July 21, 2025, Ethena contributed 284,954,407.29 ENA Tokens with a value of $23,417,531.14 as of June 25, 2026 in exchange for 1,813,164 shares of StablecoinX Class A Common Stock and 1,813,164 shares of StablecoinX Class B Common Stock. The ENA tokens contributed by Ethena are locked as of June 30, 2026 and will be unlocked over a period of up to 48 months.

Given the related party nature of Ethena for accounting purposes as of the Closing, ENA Tokens received upon the close of the Merger did not fall within the scope of ASU 2023-08 and will be accounted for under the intangible assets model.

PIPE Shares

Upon the consummation of the Business Combination and pursuant to the PIPE Subscription Agreements entered into by the Company, TLGY, certain investors and SC Assets, on July 21, 2025, the Company received 1,405,754,435.84 ENA Tokens with a value of $115,524,790.73 as of June 25, 2026 and $1,734,252 in cash in exchange for 9,159,293 shares of StablecoinX Common Stock.

Additionally, upon the consummation of the Business Combination and pursuant to the PIPE Subscription Agreements entered into by the Company, TLGY, certain investors and SC Assets, on September 5, 2025, the Company received 1,340,695,577.81 ENA Tokens with a value of $110,178,258.81 as of June 25, 2026 and $16,000,000 in cash in exchange for 11,615,979 shares of StablecoinX Class A Common Stock.

Warrants

Upon the consummation of the Business Combination, 11,500,000 of previously outstanding TLGY warrants, each exercisable for one class A ordinary share of TLGY, automatically became 11,500,000 StablecoinX warrants, each exercisable for one share of StablecoinX Class A Common Stock, and each private placement warrant became one (1) warrant to purchase StablecoinX Class A Common Stock. Immediately following the Mergers, TLGY insiders exchanged an aggregate of (i) 5,449,700 TLGY Class A ordinary shares and (ii) all of the 11,259,500 Private Placement Warrants for 644,590 shares of StablecoinX Class A Common Stock and 644,590 shares of StablecoinX Class B Common Stock.

Emerging Growth Company Status

The Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, (the "Securities Act"), as modified by the Jumpstart our Business Startups Act of 2012, (the "JOBS Act"), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

The Company expects to remain an emerging growth company until the earlier of (i) the last day of the fiscal year (1) following the fifth anniversary of the consummation of the Business Combination, (2) in which the Company has total annual gross revenue of at least $1.235 billion, or (3) in which the Company is deemed to be a large accelerated filer, which means the market value of Company stock that is held by non-affiliates equaled or exceeded $700 million as of the end of that year's second fiscal quarter, and (ii) the date on which the Company has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. The Company expects to remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of the Company's common stock held by non-affiliates is equal to or exceeds $250 million as of the end of that year's second fiscal quarter, or (ii) its annual revenues is equal to or exceeds $100 million during such completed fiscal year and the market value of the Company's common stock held by non-affiliates is equal to or exceeds $700 million as of the end of that year's second fiscal quarter.

Plan of Operations and Expected Revenue Sources

Following the Closing, the Company is actively operating its Infrastructure Services business and is continuing to develop its Infrastructure Software and Distribution Services businesses. The Company expects its near-term operations to be driven primarily by its live validator and DVN infrastructure, while longer-term growth is expected to be driven by commercialization of its StablecoinX Harness platform and expansion of institutional distribution activities.

Infrastructure Services (Live Operations)

The Company currently generates revenue through its live Validator Services and DVN Services offerings.

Validator Services consist of a full-stack Ethereum validator node utilizing staked ETH collateral, which supports blockchain transaction validation, block production, and network consensus functions. The Company may expand validator operations to additional blockchain networks over time, subject to commercial opportunities and technical feasibility. The Company may also decide to scale down its Ethereum validator operations if it does not fit strategically with its mandate.

DVN operations provide cross-chain verification services for Ethena ecosystem assets using LayerZero messaging infrastructure. The Company is entitled to receive fees, paid in ENA tokens, under a DVN Services Agreement with Ethena OpCo Ltd. ("Ethena OpCo") based on aggregate cross-chain transaction volume processed through its DVN infrastructure. The Company expects DVN activity to scale with increased cross-chain usage of Ethena digital dollar products across supported blockchain networks.

Together, these infrastructure services are intended to provide scalable, usage-linked revenue streams that grow in correlation with ecosystem activity.

Infrastructure Software (Under Continued Development)

The Company continues to develop the StablecoinX Harness, a middleware software platform designed to provide a unified API layer enabling enterprises and institutions to integrate Ethena digital dollar products into payments, treasury management, liquidity operations, and related financial workflows.

The StablecoinX Harness is being developed as a phased product. On July 2, 2026, the Company launched Phase 1 of its StablecoinX Harness which includes payment routing functionality and gas abstraction features, with subsequent releases expected to expand functionality to include treasury management, settlement infrastructure, liquidity optimization, reporting tools, and compliance-related capabilities.

The Company expects to monetize the StablecoinX Harness through transaction-based fees, Software-as-a-Service subscription arrangements, and potentially other enterprise software pricing models. The platform is not yet commercially available, and there can be no assurance regarding timing, adoption, or future revenue generation.

The StablecoinX Harness is designed to operate in conjunction with the Company's DVN infrastructure, enabling cross-chain verification and settlement processes. If successfully implemented, this integration is expected to increase utilization of DVN services as platform usage expands.

Distribution Services (Under Development)

The Company is developing a Distribution Services business intended to facilitate institutional adoption of Ethena digital dollar products, including USDe and USDtb.

This business may include capital formation activities, structured financing transactions, and the potential sponsorship of investment vehicles, including exchange-traded products and other pooled investment structures providing exposure to Ethena digital dollar products. These activities remain subject to regulatory approval, market conditions, and execution of definitive agreements.

The Company has entered into a distribution partnership agreement with Ethena OpCo (the "Distribution Partnership Agreement") pursuant to which it may act as a non-exclusive distribution partner for Ethena digital dollar products. The Company expects to earn fees based on the volume of Ethena products acquired through distribution activities, subject to agreed pricing terms.

There can be no assurance that the Company will successfully implement its Distribution Services strategy or generate material revenues from these activities.

ENA Treasury Strategy

The Company maintains a strategic treasury position in ENA tokens intended to align its long-term economic interests with the growth of the Ethena ecosystem.

The Company expects its ENA holdings to be utilized across multiple operational functions, including supporting validator operations, securing DVN infrastructure, and potentially participating in other protocol-aligned activities as they become available. The Company may also seek to increase its ENA holdings over time, including through potential discounted acquisitions under its collaboration agreement with the Ethena Foundation (the "Collaboration Agreement"), subject to availability and market conditions.

The Company does not currently maintain formal policies governing the sale of ENA tokens and does not intend to actively trade its ENA holdings. However, the Company may, in the future, convert portions of its ENA holdings, and fees received in ENA tokens, to cash to fund operating expenses, capital expenditures, or liquidity needs, subject to market conditions and contractual restrictions, including those forth in the Collaboration Agreement. During the term of the Collaboration Agreement, the Company and its affiliates may not (i) sell, transfer, pledge or otherwise encumber any ENA Tokens held by it or its affiliates or (ii) provide any substantially similar services to any other third party or any other crypto-based decentralized network or protocol without the consent of Ethena, or in any event, attempt to launch a token, either directly or indirectly. In addition, the Company's Investment Committee will have authority over capital allocation decisions of StablecoinX, including the timing, size, price and frequency of purchases of ENA Token, material borrowings and any other transaction outside the normal course of StablecoinX's business, among other things.

Principal Factors Affecting Our Results of Operations and Material Trends

Our results of operations and financial performance are influenced by, and are expected to continue to be influenced by, the growth and adoption of the Ethena ecosystem, demand for blockchain infrastructure and stablecoin-related services, and our ability to scale and commercialize our Infrastructure Services, Infrastructure Software, and Distribution Services businesses. Our business model is designed to generate revenue primarily through infrastructure and software services, supported by a strategic ENA treasury position that aligns our long-term interests with the Ethena ecosystem.

The Company currently operates live Infrastructure Services, including validator infrastructure and a DVN platform, and is actively developing its Infrastructure Software and Distribution Services businesses. While Infrastructure Services currently represent the Company's only operational revenue-generating activities, future results will depend on the successful scaling of these services and the commercialization of the Company's software and distribution initiatives.

A portion of the Company's infrastructure strategy is linked to the continued expansion of Ethena ecosystem activity across multiple blockchain networks and increasing usage of Ethena digital dollar products, including USDe and USDtb. Growth in cross-chain activity, institutional adoption, and protocol-level transaction volume is expected to directly impact DVN utilization, validator participation opportunities, and potential software demand. However, there can be no assurance that such growth will occur at anticipated levels or at all.

The Company also expects to generate revenue from the future commercialization of its StablecoinX Harness platform, which remains under development. The StablecoinX Harness is designed to provide a unified middleware API for payments, treasury management, liquidity operations, and related financial workflows. The timing and success of commercialization will depend on development progress, customer adoption, regulatory considerations, and broader market conditions.

In addition, the Company is developing a Distribution Services business intended to facilitate institutional access to Ethena digital dollar products. This business may include capital formation activities, structured financing arrangements, and potential sponsorship of investment vehicles. These activities remain subject to regulatory approvals, market conditions, and execution of definitive arrangements, and there can be no assurance regarding timing, scale, or profitability.

The Company expects that its ENA treasury will continue to play a strategic role in supporting its operations and aligning its incentives with ecosystem growth. ENA holdings may be utilized in connection with validator and DVN operations or other protocol-aligned activities, subject to applicable network rules, governance decisions, and market conditions. The Company does not currently engage in active trading of ENA and does not expect to rely solely on token price appreciation as a source of operating revenue; however, fluctuations in the price of ENA may materially impact the Company's financial condition and results of operations due to the size and nature of its treasury holdings.

The primary factors that are expected to influence our results of operations and present both opportunities and risks include the following:

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Price of ENA Token: The Company's financial results are expected to be materially affected by the market price of ENA, which is historically volatile. Changes in ENA price may affect the value of the Company's treasury holdings and any protocol-linked activities.

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Regulation: Regulatory developments affecting digital assets, stablecoins, blockchain infrastructure, and related financial services may materially impact our operations, compliance obligations, and market opportunities.

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Institutional Adoption of Ethena Products: Increased institutional adoption of USDe, USDtb, and related Ethena products may drive higher transaction volumes, cross-chain activity, and demand for infrastructure and middleware services.

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Market Perception and Ecosystem Confidence: Perceptions of the Ethena ecosystem, including confidence in its stability, governance, and adoption trajectory, may significantly influence usage levels, network activity, and ENA valuation.

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Monetary and Macroeconomic Conditions: Interest rates, inflation, liquidity conditions, and broader capital market trends may affect demand for digital assets and the Company's ability to raise capital for infrastructure expansion and ENA accumulation.

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Technological Development and Innovation: Advances in blockchain scalability, interoperability, and security may enhance infrastructure efficiency, while protocol vulnerabilities, competing technologies, or technical failures may adversely affect adoption and network usage.

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Competition: Competition from alternative stablecoins, blockchain networks, and infrastructure providers may reduce transaction volumes, compress margins, or limit growth opportunities across validator, DVN, and software-related activities.

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Protocol and Governance Changes: Changes to Ethena protocol design, tokenomics, governance, or cross-chain architecture may materially affect infrastructure demand, DVN utilization, and the economic characteristics of ENA.

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Liquidity and Market Volatility: Limited liquidity or extreme volatility in ENA or other digital assets may impact the Company's ability to manage its treasury, raise capital, or efficiently fund operations.

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Cybersecurity and Operational Risks: Our infrastructure relies on cloud-based and third-party systems, exposing us to risks of outages, cyberattacks, and operational disruptions. Any such events could materially affect service availability and financial performance.

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Fee Mechanisms and Protocol Economics: Future protocol-level fee mechanisms, including any potential revenue-distribution arrangements, remain uncertain in timing, structure, and regulatory viability.

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Listing and Compliance Requirements: Continued compliance with Nasdaq listing standards and SEC reporting obligations is required to maintain our public listing. Failure to meet these requirements could adversely affect liquidity, capital access, and market perception.

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Key Personnel Risk: Our ability to execute our strategy depends on retaining experienced technical and executive personnel. Loss of key individuals could impair operations and development timelines.

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Macroeconomic and Market Conditions: Broader economic instability, financial market volatility, or geopolitical events may reduce investor appetite for digital assets and negatively affect ecosystem activity.

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Legal and Regulatory Risk: We may be subject to regulatory inquiries, litigation, or enforcement actions related to our operations or participation in the digital asset ecosystem, which could result in financial or reputational harm.

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Cost Structure and Public Company Expenses: Costs associated with operating as a public company, including compliance, legal, and advisory expenses, may impact liquidity and reduce capital available for growth initiatives.

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Ownership Structure and Governance: Following the Business Combination, the Company has a dual-class structure and Ethena holds a controlling voting interest, which may affect governance dynamics and investor perception.

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Other Risks: Additional operational, financial, regulatory, technological, and market risks-including unforeseen changes in blockchain infrastructure standards, smart contract vulnerabilities, or rapid shifts in digital asset market structure-may materially affect our results of operations.

These factors are not exhaustive, and additional risks and uncertainties described in the section entitled "Risk Factors" in the proxy/statement prospectus may also materially affect the Company's results of operations

Risks and Uncertainties Affecting Future Results

The Company operates an emerging infrastructure platform with a limited operating history in its current business configuration, which may make it difficult to accurately predict future performance. The Company's results of operations will depend on its ability to scale its Infrastructure Services business, successfully develop and commercialize its Infrastructure Software and Distribution Services businesses, and expand participation within the Ethena ecosystem.

A significant portion of the Company's future revenue is expected to be linked to ecosystem activity within the Ethena network, including cross-chain transaction volume and institutional adoption of Ethena digital dollar products. As a result, changes in ecosystem growth, user adoption, or underlying protocol activity may materially affect the Company's financial performance.

The Company's business strategy also depends on access to sufficient capital to fund operations, infrastructure expansion, and potential acquisitions of ENA tokens. While the Company may seek to raise additional capital through equity or debt financings, there can be no assurance that such financing will be available on favorable terms, or at all.

In addition, the Company's results will be affected by a range of factors, including volatility in digital asset markets, regulatory developments, competitive dynamics, technological changes, and the Company's ability to successfully execute its infrastructure and software roadmap. Even if the Company achieves growth in certain periods, such growth may not be sustained and could fluctuate significantly from period to period.

Results of Operations

Since the date of its June 30, 2025 inception up to the date of the Closing, the Company's activities were limited to formation and general administrative expenses for the pending Closing. Following the Closing and to the extent our infrastructure software (StablecoinX Harness) and distribution services are successfully deployed, we expect that our results of operations will primarily depend on:

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Revenue generated from our DVN validator nodes;

	●	Staking rewards earned through validator operations, such as our ETH validators;
	●	Revenue generated from our StablecoinX Harness;
	●	Revenue generated from our Distribution Partnership Agreement; and
	●	Market performance of ENA Tokens held in the treasury.

We anticipate that our future expenses will include fees relating to our managed services agreement with Flow Labs Limited, a related party, investments in hardware, software, cybersecurity, and compensation to board members and management and other skilled personnel to establish and maintain our operations, as well as the costs of being a public company. Over time, the Company aims to achieve profitability through increased validator and DVN efficiency and the introduction of software and distribution service offerings.

For the three and six months ended June 30, 2026, the Company incurred a net loss of approximately $34.2 million and $34.6 million, respectively, primarily reflecting an impairment of digital intangible as well as general administrative expenses and research and development costs relating to the development of its StablecoinX Harness software slightly offset by changes in the fair value of liabilities recorded at fair value. See details below.

The following table sets forth the Company's unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2026 and for the period from June 30, 2025 (Inception) through June 30, 2025:

		Three Months Ended				Six Months Ended				For the period from June 30, 2025 (Inception) through
		June 30,				June 30,				June 30,
		2026				2026				2025
Revenue		$	62,372			$	63,038			$	-
Operating Expenses:
Cost of revenue (excluding amortization)			24,804				24,804				-
Selling, general and administrative			175,843				480,848				26,071
Research and development			24,804				138,711				-
Amortization expense			25,125				50,250				-
Impairment of digital intangible assets			36,201,740				36,201,740				-
Change in fair value of digital assets - restricted			17,659				46,116				-
Change in fair value of liabilities denominated in digital assets			(24,135	)			(24,135	)			-
Change in fair value of related party demand notes			(17,659	)			(46,116	)			-
Total operating expenses			36,428,181				36,872,218				26,071
Loss from operations			(36,365,809	)			(36,809,180	)			(26,071	)
Change in fair value of warrant liabilities			(2,185,000	)			(2,185,000	)
Loss before income taxes			(34,180,809	)			(34,624,180	)			(26,071	)
Provision for income taxes			-				-				-
Net loss		$	(34,180,809	)		$	(34,624,180	)		$	(26,071	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted			2,238,201				1,473,349				700,000
Net loss per share attributable to common stockholders, basic and diluted		$	(15.27	)		$	(23.50	)		$	(0.04	)

For the period from June 30, 2025 (Inception) through June 30, 2025 - StablecoinX Assets, Inc. (Predecessor)

As of and for the comparative period from June 30, 2025 (inception) through June 30, 2025, the Company had no operating history and had not generated revenue. The costs incurred were formation and general administrative expenses.

Results of Operations - StablecoinX, Inc. (Successor)

During the three and six months ended June 30, 2026, the Company recognized $904 and $1,570 in validator service revenue and $61,468 and $61,468 in DVN service revenue, respectively. Cost of revenue is comprised primarily of software development costs specific to the technology used in providing infrastructure services as well as minor costs for hosting services.

Selling, general and administrative expenses for the three and six months ended June 30, 2026 were $175,843 and $480,848, respectively. The increase over the comparative period is a direct result of the accounting and legal services incurred in connection with the Business Combination and operating costs of the Company. Specifically, for the three and six months ended June 30, 2026, the costs incurred were primarily accounting, consulting and legal fees approximating $48,000 and $287,000, business insurance approximating $85,000 and $130,000, and employee related expenses approximating $37,100 and $56,600, respectively.

Research and development expenses represent technology consultation costs incurred specific to the Company's development of its Infrastructure Software and Distribution Services under development.

For the three and six months ended June 30, 2026, the Company recognized an impairment of digital intangible assets of $36.2 million and a net loss approximating $34.2 million and $34.6 million, respectively.

The Company's ability to generate revenue sufficient to achieve profitability will depend on our ability to achieve its business objectives including the continued growth and adoption of the Ethena ecosystem, successful scaling of its infrastructure services and its deployment and scaling of its infrastructure software and distribution services. Additionally, a key factor to profitability will be the Company's ability monetize unlocked ENA tokens to support ongoing operations, regulatory developments applicable to digital assets and stablecoins, and broader market conditions affecting blockchain infrastructure, digital asset liquidity, and institutional participation.

Liquidity and Capital Resources

The following table summarizes our cash flows from operating, investing and financing activities for the three and six month periods ended June 30, 2026:

Cash flows used in operating activities

Net cash used in operating activities approximated $82,000 resulting primarily from a net loss of $34.6 million primarily offset by a non-cash impairment of $36.2 million and the net impact of the Company's operating activity for the period.

Cash flows used in investing activities

For the six months ended June 20, 2026, the Company had no investing cash flow activity.

Cash flows provided by financing activities

For the six months ended June 30, 2026, net cash provided by financing activities was $18.9 million, which primarily consisted of $18.8 million in merger and PIPE financing.

Ongoing Cash Requirements

The Company's condensed consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations for the foreseeable future. Our condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

The Company assesses its liquidity in terms of its ability to generate adequate amounts of cash to meet current and future needs which has been significantly enhanced by the completion of the Business Combination on June 25, 2026. Its expected primary uses of cash are for working capital requirements, operating expenses associated with the continuing development of infrastructure software, infrastructure services, distribution services, and general corporate purposes. Any future acquisitions of additional ENA Tokens would be subject to contractual rights, market conditions, and the Company's liquidity needs at the time. Because of the restriction placed on the Company by Ethena as well as staking or similar activities which limit the immediate liquidity of ENA Tokens, the Company intends to evaluate liquidity considerations on an ongoing basis but has not yet adopted formal policies governing minimum liquidity levels or unstaking procedures. The Company's management expects that future operating losses and negative operating cash flows may increase from historical levels because of additional costs and expenses related to the business operations and the development of market and strategic relationships with other businesses.

In order to finance its growth, the Company may need to raise additional financing. If additional financing is required from outside sources, the Company may not be able to raise such capital on terms acceptable to the Company or at all. If the Company is unable to raise additional capital when desired, the Company's business, results of operations and financial condition would be materially and adversely affected. See Note 1 to the condensed consolidated financial statements included within Item 1 of this report.

Significant Accounting Policies and Estimates

Our condensed consolidated unaudited financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report are prepared in accordance with generally accepted accounting principles ("GAAP"). The preparation of condensed consolidated unaudited financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses, and related disclosures. We base our estimates on assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

See Note 2 of the Company's condensed consolidated unaudited financial statements included elsewhere in this Quarterly Report for a description of our significant accounting policies.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources.

Contractual Obligations

As of June 30, 2026, we have outstanding sponsor notes approximating $6.9M that are in default and subject to the demand of immediate repayment. See Note 1 to the condensed consolidated financial statements included within Item 1 of this report.

Recent Accounting Pronouncements

Refer to Note 2of the Company's condensed consolidated unaudited financial statements included elsewhere in this Quarterly Report for a discussion of recent accounting pronouncements that may impact the Company.