Franklin Solana Trust: Form 10-Q for the period ended Jun 30, 2026

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

This information should be read in conjunction with the financial statements and notes included in Item 1 of Part I of this Form 10-Q. This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements involve risks and uncertainties. All statements (other than statements of historical fact) included in this Form 10-Q that address activities, events or developments that may occur in the future, the Trust’s and Fund’s operations, the Sponsor’s plans and references to the Trust’s and Fund’s future success and other similar matters are forward-looking statements. Words such as “could,” “would,” “may,” “expect,” “intend,” “estimate,” “predict,” and variations on such words or negatives thereof, and similar expressions that reflect our current views with respect to future events and Fund performance, are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those discussed. Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed therein. We express our estimates, expectations, beliefs, and projections in good faith and believe them to have a reasonable basis. However, we make no assurances that management’s estimates, expectations, beliefs, or projections will be achieved or accomplished. These forward-looking statements are based on assumptions about many important factors that could cause actual results to differ materially from those in the forward-looking statements. We do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future, except as required by the federal securities laws.

Organization and Trust Overview

The Franklin Solana Trust (the “Trust”) was formed as a Delaware statutory trust on February 10, 2025 and is governed by the provisions of a Third Amended and Restated Agreement and Declaration of Trust (“Declaration of Trust”) dated as of November 21, 2025. The Trust is not registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and is not a commodity pool for purposes of the Commodity Exchange Act (“CEA”). The Trust currently offers a single series, the Franklin Solana ETF (the “Fund”), which is the sole series of the Trust. The Sponsor of the Trust and the Fund (the “Sponsor”) is Franklin Holdings, LLC. The Sponsor is not subject to regulation by the U.S. Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator with respect to the Fund, or a commodity trading advisor with respect to the Fund. The Fund issues Shares (the “Shares”), which represent units of fractional undivided beneficial interest in and ownership of the Fund. The Shares of the Fund are listed on the NYSE Arca, Inc. (the “NYSE Arca” or “Exchange”).

Coinbase Crypto Services, LLC (“Coinbase Crypto” or “Staking Provider”) serves as the Staking Provider for the Fund.

On September 22, 2025, Franklin Resources Inc. (the "Seed Capital Investor"), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at a per-Share price equal to $25.00 (the "Initial Seed Shares"). Delivery of the Initial Seed Shares was made on September 22, 2025. Total proceeds to the Fund from the sale of the Initial Seed Shares were $100,000. On November 25, 2025, the Initial Seed Shares were redeemed for $100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 8,500 Solana per Creation Unit (or 0.17 Solana per Share), for a total of 17,000 Solana (the "Seed Creation Units"). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 17,000 Solana at the price of $136.65 per Solana on November 25, 2025 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to Solana, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $2,323,133.80 (an amount representing 17,000 Solana). Further, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. The Seed Capital Investor acted as a statutory underwriter with respect to the Seed Creation Units.

Shares of the Fund were first listed and began trading on December 3, 2025.

The Fund seeks to reflect generally the performance of the price of Solana and rewards from staking as much of the Fund’s Solana as is practicable (i.e., up to 100%) (“Staking Rewards”) to the extent the Sponsor in its sole discretion determines that the Fund may do so without undue legal or regulatory risk, such as without limitation, by adversely affecting the Fund’s status as a grantor trust for U.S. federal income tax purposes (the “Staking Requirement”). The Fund seeks to reflect such performance before payment of the Fund’s expenses and liabilities. The Shares are intended to offer a convenient means of making an investment similar to an investment in Solana relative to acquiring, holding and trading Solana directly on a peer-to-peer or other basis or via a digital asset platform. The Shares have been designed to remove obstacles associated with the complexities and operational burdens involved in a direct investment in Solana by providing an investment with a value that reflects the price of the Solana owned by the Fund at such time, less the Fund's expenses and liabilities. The Fund is not a proxy for a direct investment in Solana. Rather, the Shares are intended to provide a cost-effective alternative means of obtaining investment exposure through the securities markets that is similar to an investment in Solana. The Fund is a passive investment vehicle and is not a leveraged product. The Sponsor does not actively manage the Solana held by the Fund. This means that the Sponsor does not sell Solana at times when its price is in the expectation of future price increases. The Fund will not utilize leverage, derivatives or similar instruments or transactions in seeking to meet its investment objective.

The Fund issues and redeems Shares only to eligible financial institutions called Authorized Participants and only in one or more blocks of 50,000 Shares (“Creation Units”). Creation Units are redeemable only by Authorized Participants. Creation Units are issued and redeemed in exchange for Solana and/or cash. Individual Shares will not be redeemed by the Fund but the Shares are listed and traded on the Exchange under the ticker symbol “SOEZ”. The market price of the Shares may be different than the Fund’s NAV per Share. The Fund issues and redeems Shares in Creation Units on a continuous basis at the applicable NAV per Share on the transaction order date. Except when aggregated in Creation Units, the Shares are not redeemable securities.

The Fund’s ordinary recurring expense are staking fee and Sponsor’s fee. In exchange for the Sponsor’s fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Fund, including but not limited to the following: the fees charged by the Administrator, the Marketing Agent, the Custodians and the Trustee, Exchange listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees and expenses, and up to $500,000 per annum in ordinary legal fees and expenses. The Sponsor paid the costs of the Fund’s organization and the initial offering costs, and may not seek reimbursement of such costs.

The Sponsor’s fee is accrued daily at an annualized rate equal to 0.19% (i.e., 0.19%/365 days) of the net asset value of the Fund and is payable at least quarterly in arrears in U.S. dollars. For a period commencing on the day the Shares are initially listed on the Exchange to May 31, 2026, the Sponsor waived the entire Sponsor’s Fee on the first $5.0 billion of the Fund’s assets. The Sponsor may, at its sole discretion and from time to time, waive all or a portion of the Sponsor’s fee for stated periods of time. There are no specific circumstances under which the Sponsor may determine it will waive the fee. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. The Fund will sell Solana as needed to pay the Sponsor’s fee. The Fund bears transaction costs, including any Solana network fees or other similar transaction fees, in connection with any sales of Solana necessary to pay the Sponsor’s fee, as well as other Fund expenses (if any) that are not assumed by the Sponsor (expenses assumed by the Sponsor are specified above). Any Solana network fees and similar transaction fees incurred in connection with the creation or redemption of Creation Units are borne by the Authorized Participant. For the period ended June 30, 2026, the Sponsor fee was $4,303 which was offset with the fee waiver of $3,069. In the future, if the Sponsor decides to waive all or a portion of the Sponsor’s Fee, Shareholders will be notified in a prospectus supplement, in the Fund’s periodic reports and/or on the Fund’s website. In consideration for staking services, the Fund pays an aggregate fee equal to 8.0% of the gross Staking Rewards, which compensates the Staking Provider, the Solana Custodian, and the Sponsor. For the period from listing through May 31, 2026, the Sponsor has instituted a temporary waiver/expense reimbursement that reduces total Staking Expenses to 5.0% of the gross Staking Rewards.

The Trust is an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act (the “JOBS Act”), subject to reduced public company reporting requirements under U.S. federal securities laws.

The NAV of the Trust is used by the Trust in its day-to-day operations to measure the net value of the Trust’s assets. The NAV is calculated on each business day and is equal to the aggregate value of the Trust’s assets less its liabilities based on the Index price. In determining the NAV of the Trust on any business day, the Administrator will calculate the price of the Solana held by the Trust as of 4:00 PM ET on such day. The Administrator will also calculate the “NAV per Share” of the Trust, which equals the NAV of the Trust divided by the number of outstanding Shares. For purposes of making these calculations, a business day means any day other than a day when the Exchange is closed for regular trading.

The Administrator will rely on the Index as the index price to be used when determining NAV. However, determining the value of the Trust’s Solana using the Index is not in accordance with GAAP, and therefore is not used in the Trust’s financial statements. The Trust’s Solana are carried, for financial statement purposes, at fair value, as required by GAAP. The Trust determines the fair value of Solana based on the price provided by the Solana market that the Trust considers its “principal market” as of 11:59:59 PM, ET on the valuation date (the "Principal Market Price"). The net asset value of the Trust determined on a GAAP basis is referred to as the “Principal Market NAV” and the net asset value of the Trust per Share determined on a GAAP basis is referred to as the “Principal Market NAV per Share”.

The Sponsor identifies and determines the Fund’s principal market (or in the absence of a principal market, the most advantageous market) for Solana consistent with the application of fair value measurement framework in FASB ASC 820-10. The principal market is the market where the reporting entity would normally enter into a transaction to sell the asset or transfer the liability. The principal market must be available to and be accessible to the reporting entity. The reporting entity is the Trust, on behalf of the Fund.

Under ASC 820-10, a principal market is generally the market with the greatest volume and activity level for the asset or liability. The determination of the principal market will generally be based on the market with the greatest volume and level of activity that can be accessed.

NAV and NAV per Share are not measures calculated in accordance with GAAP and are not intended as substitute for Principal Market NAV and Principal Market NAV per Share, respectively.

Critical Accounting Policy

The Trust's and the Fund's financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements relies on estimates and assumptions that impact the Fund’s as well as the Trust's financial position and results of operations. These estimates and assumptions affect the Fund’s as well as the Trust's application of accounting policies. A description of the valuation of Solana, a critical accounting policy that is important to understanding the results of operations and financial position presented herein, is provided in the sections entitled “Calculation of Net Asset Value” and “Valuation of Solana,” above. Please refer to Note 2 to the financial statements included in this report for further discussion of the Trust’s and the Fund’s accounting policies.

Discussion of Operations (Financing Activities)

On September 22, 2025, Franklin Resources Inc. (the "Seed Capital Investor"), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at a per-Share price equal to $25.00 (the "Initial Seed Shares"). Delivery of the Initial Seed Shares was made on September 22, 2025. Total proceeds to the Fund from the sale of the Initial Seed Shares were $100,000. On November 25, 2025, the Initial Seed Shares were redeemed for $100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 8,500 Solana per Creation Unit (or 0.17 Solana per Share), for a total of 17,000 Solana (the "Seed Creation Units"). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 17,000 Solana at the price of $136.65 per Solana on November 25, 2025 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to Solana, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $2,323,133.80 (an amount representing 17,000 Solana). Further, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. The Seed Capital Investor acted as a statutory underwriter with respect to the Seed Creation Units. Shares of the Fund were first listed and began trading on December 3, 2025.

At June 30, 2026, the Custodian held 113,067.0655 Solana on behalf of the Fund, with a market value of $8,521,865 (cost: $12,227,591) based on the Principal Market Price at quarter end.

The Fund made a $66,090 cash distribution of income generated from its Staking activities during the quarter.

Results of Operations for the three months ended June 30, 2026*

For the quarter ended June 30, 2026, no Shares were issued or redeemed. The Fund’s NAV per Share began the period at $14.41 and ended the period at $13.10. The 9.09% decrease in the Fund's NAV from $14.41 at March 31, 2026 to $13.10 at June 30, 2026 is directly related to the 9.60% decrease in the price of Solana. The Fund's NAV decreased slightly less than the price of Solana on a percentage basis due to the investment income from Solana staking rewards, which was $128,150.

* No comparative period presented as the Fund’s operations commenced on December 3, 2025.

Net realized and change in unrealized loss on investment in Solana for the three months ended June 30, 2026, was approximately $905,653 which consists of a realized loss of $26,368 and a net change in unrealized depreciation on investment in Solana of approximately $879,285. Net decrease in net assets resulting from operations was approximately ($785,925) for the three months ended June 30, 2026, which consisted of the net realized and change in unrealized loss on investment in Solana of $905,653, offset by the net of investment income from Solana staking rewards of $128,150 less $8,422 of expenses.

Liquidity and Capital Resources

The Fund is not aware of any trends, demands, commitments, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs.

The Fund’s ordinary recurring expense are staking fee and Sponsor’s fee. In exchange for the Sponsor’s fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Fund, including but not limited to the following: the fees charged by the Administrator, the Marketing Agent, the Custodians and the Trustee, Exchange listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees and expenses, up to $500,000 per annum in ordinary legal fees and expenses. The Sponsor also paid the costs of the Fund’s organization and the initial offering costs, and may not seek reimbursement of such costs. The Sponsor is not required to pay any extraordinary or non-routine expenses.

The Sponsor's Fee is accrued daily at an annualized rate of 0.19% (i.e., 0.19%/365 days) of the net asset value of the Fund and is paid at least quarterly in arrears in U.S. dollars. The Sponsor may, at its discretion and from time to time, waive all or a portion of the Sponsor's Fee for stated periods of time. There are no specific circumstances under which the Sponsor may determine it will waive the fee. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. For a period commencing on the day the Shares are initially listed on the Exchange to May 31, 2026, the Sponsor will waive the entire Sponsor's Fee on the first $5.0 billion of the Fund's assets. In the future, if the Sponsor decides to waive all or a portion of the Sponsor's Fee, Shareholders will be notified in a prospectus supplement, in the Fund's periodic reports, and/or on the Sponsor's website for the Fund. For the quarter ended June 30, 2026, the Fund accrued the Sponsor's Fee of $4,303, which was offset by the waiver of $3,069. Accordingly, Sponsor fees due during the period were $1,234. In consideration for staking services, the Fund pays an aggregate fee equal to 8.0% of the gross Staking Rewards, which due to the application of the waiver, compensates the Staking Provider, the Solana Custodian, and the Sponsor. For the period from listing through May 31, 2026, the Sponsor has instituted a temporary waiver/expense reimbursement that reduces total Staking Expenses to 5.0% of the gross Staking Rewards.

There are no specific circumstances under which the Sponsor has determined to waive its fees. If the Sponsor decides to waive all or a portion of the Sponsor's Fee, Shareholders will be notified of any such waiver in a prospectus supplement, in the Fund's periodic reports and/or on the Fund's website. The Fund will sell Solana on an as-needed basis to pay the Sponsor's fee. The Fund bears transaction costs, including any Solana network fees or other similar transaction fees, in connection with any sales of Solana necessary to pay the Sponsor’s fee, as well as other Fund expenses (if any) that are not assumed by the Sponsor (expenses assumed by the Sponsor are specified above). Any Solana network fees and similar transaction fees incurred in connection with the creation or redemption of Creation Units are borne by the Authorized Participant.

Off-Balance Sheet Arrangements

As of June 30, 2026, the Trust and the Fund did not have any off-balance sheet arrangements.

Analysis of Movements in the Price of Solana

As movements in the price of Solana are expected to directly affect the price of the Fund’s Shares, it is important for investors to understand and follow movements in the price of Solana. Past movements in the Solana price are not indicators of future movements.

The following chart shows movements in the price of Solana based on the CME CF Solana Reference Rate – New York Variant for the Solana – U.S. Dollar trading pair (the “CF Benchmarks Index”) in U.S. dollars per unit over the period from April 1, 2026 to June 30, 2026.

The average, high, low and end-of-period Solana prices based on the CME CF Solana Reference Rate - New York Variant for the period are as below:

(1) The end of period Solana price is the CME CF Solana Reference Rate - New York Variant on the last business day of the period

Quantitative and Qualitative Disclosures About Market Risk

The Fund is a passive investment vehicle and is not a leveraged product. The Sponsor does not actively manage the Solana held by the Fund. This means that the Sponsor does not sell Solana at times when its price is high or acquire Solana at low prices in the expectation of future price increases. The Fund will not utilize leverage, derivatives or similar instruments or transactions in seeking to meet its investment objective. The investment objective of the Fund is to seek to reflect generally the performance of the price of Solana and rewards from staking as much of the Fund's Solana as is practicable (i.e. to 100%) ("Staking Rewards") to the extent the Sponsor in its sole discretion determines that the Fund may do so without undue legal or regulatory risk, such as without limitation, by adversely affecting the Fund’s status as a grantor trust for U.S. federal income tax purposes (the “Staking Requirement”) before payment of the Fund’s expenses and liabilities.

Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Principal Executive Officer and Principal Financial Officer of the Sponsor, who performs functions similar to those that a principal executive officer and principal financial officer of the Trust would perform if the Trust had officers, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer of the Sponsor, the Sponsor conducted an evaluation of the Trust's disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e) as of June 30, 2026 and concluded that the disclosure controls and procedures operated effectively at reasonable levels of assurance.

The Trust, on behalf of the Fund, maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Trust's Exchange Act reports with respect to the Fund is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Principal Executive Officer and Principal Financial Officer of the Sponsor, who perform functions similar to those that a principal executive officer and principal financial officer of the Trust would perform if the Trust had officers, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer of the Sponsor, the Sponsor conducted an evaluation of the Trust's disclosure controls and procedures with respect to the Fund, as defined under Exchange Act Rule 13a-15(e) as of June 30, 2026 and concluded that the disclosure controls and procedures operated effectively at reasonable levels of assurance.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

Change in Internal Control Over Financial Reporting

There were no changes in the Trust’s and the Fund’s internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Trust’s and/or the Fund’s internal control over financial reporting.

Each of the Sarbanes-Oxley certifications included as exhibits to this filing apply with respect to the operations of both the Fund, as the sole series of the Trust, and the Trust as registrant.

Risk Factors

You should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended March 31, 2026, which could materially affect our business, financial condition or future results. There have been no material changes in our risk factors from those disclosed in our 2026 Annual Report on Form 10-K.

The risks described in our Annual Report on Form 10-K are not the only risks facing the Trust and the Fund. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.