Sharplink, Inc.: Form 10-Q for the period ended Jun 30, 2026

Cautionary Note Regarding Forward-Looking Statements

The discussions in this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions with respect to the future and management’s current expectations, involve certain risks and uncertainties and are not guarantees. These forward-looking statements include, but are not limited to, statements concerning our treasury strategy, capital allocation, expectations for the Ethereum network and the broader digital asset market, competition, future operations, future financial position, staking and yield activity, future revenues, projected costs, profitability, expected cost reductions, capital adequacy, expectations regarding demand and acceptance for our technologies, growth opportunities and trends in the markets in which we operate, prospects and plans and objectives of management. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” “predicts” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Future results may differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, as amended, and that are otherwise described or updated from time to time in our other filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2025. The discussion of such risks is not an indication that any such risks have occurred at the time of this filing. We do not assume any obligation to update any forward-looking statements.

Industry and Market Data

We are responsible for all information contained in this Quarterly Report on Form 10-Q. In some cases, we have relied on market and industry data from third-party sources we believe to be reliable. These market estimates combine independent industry publications with our own assumptions about the Ethereum industry and broader market. Although we are not aware of any material inaccuracies in this data, it involves risks, uncertainties, and is subject to change based on various factors and these factors may be outside of the control of the Company. These factors include those discussed under “Cautionary Note Regarding Forward-Looking Statements,” Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q.

This section discusses the key factors that have shaped the financial condition, results of operations, liquidity and capital resources of Sharplink, Inc. and its wholly owned subsidiaries (collectively, “Sharplink,” the “Company,” “we,” “our,” or “us”). You should read this discussion together with our condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission on March 9, 2026.

As noted under “Cautionary Note Regarding Forward-Looking Statements,” this discussion includes forward-looking statements that involve risks, uncertainties, and assumptions. Actual results could differ materially from those expressed or implied by these statements.

Unless the context indicates otherwise, references in this Quarterly Report on Form 10-Q to “Sharplink,” “Sharplink US,” “our Company,” “we,” “our,” and “us” refer to Sharplink, Inc., a Delaware corporation, and its wholly owned subsidiaries.

Business Overview

Headquartered in Miami, Florida, Sharplink undertook a significant strategic shift in June 2025 by becoming one of the world’s largest publicly traded companies to adopt Ether (“ETH”), the native token of the Ethereum blockchain, as its primary treasury asset. The strategy is designed to combine disciplined public-market capital allocation with active, risk-managed treasury operations to increase ETH held per share over time and support long-term shareholder value. The Company also operates an online affiliate marketing company that delivers fan activation solutions to sportsbook and online casino gaming partners.

Sharplink has concurrently realigned its corporate structure to support this strategic transition by organizing its activities into two distinct reportable segments. This segmentation is intended to enhance transparency into the Company’s operating performance and provide investors with clearer insight into the underlying drivers of revenue, expenses and capital allocation priorities across the business. As the ETH treasury and related revenue platform scale, management also expects this structure to support disciplined capital deployment and greater operating leverage across the Company’s corporate infrastructure.

1) ETH Treasury Management

The Company seeks to benefit from its ETH-focused treasury strategy through two primary drivers: (i) yield and other returns generated from staking and related on-chain treasury activities and (ii) through potential appreciation in the market value of ETH. Through qualified custodians, the Company participates in native staking by delegating ETH to third-party validators operating on Ethereum’s proof-of-stake (“PoS”) network, earning protocol-level rewards in accordance with prevailing network conditions.

The Company also utilizes liquid staking and restaking arrangements, whereby ETH is deployed into third-party protocols in exchange for liquid staking tokens (“LSTs”) and liquid restaking tokens (“LRTs”), including instruments such as LsETH and weETH. These arrangements allow the Company to maintain exposure to underlying staked ETH while accessing additional on-chain liquidity and yield opportunities. In certain cases, the Company earns incentive-based revenue from third-party programs designed to promote ecosystem participation, including rewards tied to maintaining total value locked (“TVL”) within specific blockchain environments.

On December 18, 2025, the Company entered into a Strategic Partnership Agreement (the “SPA”) with ether.fi, EigenCloud, Linea Consortium (“Linea”), a related party, and Consensys Software, Inc. (“Consensys”), a related party, pursuant to which the Company agreed to bridge and maintain weETH from its treasury on Linea, a zero-knowledge Ethereum Virtual Machine (“zkEVM”) Layer 2 network, over an initial 24-month period through Anchorage Digital Bank N.A., its qualified custodian. Consensys will not receive any fees or commission on the Company’s deployment of ETH on Linea. In addition to the staking and restaking rewards reflected in the weETH conversion rate, the Company is entitled under the SPA to monthly protocol incentives funded by ether.fi, Linea and EigenCloud based on month-end TVL metrics, subject to contractual caps and payable in the form of ETH and weETH. The Company accounts for the protocol incentives as revenue under ASC 606 because ether.fi, Linea and EigenCloud provide consideration in exchange for the Company’s service of providing and maintaining TVL on Linea. Revenue is recognized over each monthly service period as the Company satisfies its performance obligation and the amount of consideration becomes determinable and is no longer constrained; subsequent changes in the fair value of the digital assets attributable solely to the form of consideration are recognized separately in earnings.

The Company’s staking infrastructure, custody relationships and operational controls are structured to meet the governance, security and oversight standards expected of a public company. These arrangements are intended to support safe participation in Ethereum’s PoS network and related protocols while maintaining compliance with applicable regulatory, risk-management and financial-reporting requirements.

2) Affiliate Marketing

Our Affiliate Marketing segment is focused on performance-based customer acquisition services for leading sportsbooks and online casino gaming operators worldwide. Through our iGaming affiliate marketing network, known as PAS.net, Sharplink focuses on driving qualified traffic and player acquisitions, retention and conversions to U.S. regulated and global iGaming operator partners worldwide. In addition, we own and operate a portfolio of direct-to-player, state-specific, affiliate marketing websites designed to attract, acquire and drive local sports betting and online casino gaming traffic to its valued partners which are licensed to operate in each respective state.

Key Growth Strategies

Sharplink’s growth strategy is focused on disciplined capital allocation, compounding ETH Concentration, increasing the productivity of its ETH treasury and leveraging its scale while preserving strategic flexibility as the Ethereum ecosystem and digital asset treasury segment evolve. The Company seeks to support long-term shareholder value through the following key initiatives:

• Active Treasury Management and ETH-Denominated Return Generation. Sharplink seeks to make its ETH productive through native staking, liquid staking and restaking, protocol incentives and selected on-chain treasury activities, where appropriate and consistent with our risk-management objectives. We may pursue these activities internally and through select third-party protocols, qualified custodians and other partners. Staking provides a foundational return, while selected treasury activities are intended to generate incremental, risk-adjusted ETH-denominated rewards or other returns above that baseline while maintaining liquidity, security and operational controls. These activities are subject to market, protocol, counterparty, smart-contract, liquidity and other risks and may not generate returns above the native-staking baseline.
• Institutional-Grade ETH Staking and Asset Utilization. Sharplink has developed processes and oversight frameworks for participating in Ethereum’s PoS network through qualified custodians and third-party validators and for evaluating liquid staking, restaking and related asset-utilization opportunities. We seek to enhance the productivity of our ETH holdings while maintaining institutional standards for custody, liquidity, risk management, compliance and financial reporting. We believe the operating experience developed through these activities may improve our ability to evaluate and execute future treasury opportunities.
• Balance Sheet Optimization and Capital Formation. Our balance sheet and access to public capital markets provide flexibility to pursue growth through equity issuances, equity-linked or other financings and other capital-allocation actions, subject to market conditions. We may also elect to pledge a portion of our ETH as collateral in select loan transactions when management determines that the terms are appropriate and consistent with our treasury strategy. Capital raised may be used to acquire ETH, support treasury or strategic initiatives or meet other corporate needs, and we may repurchase shares when management believes doing so is accretive, subject to available capital, applicable law and other considerations. We evaluate these decisions based on their expected long-term impact on ETH Concentration, liquidity, risk and shareholder value. Any ETH-secured borrowing would expose us to collateral-maintenance, repayment and liquidation risks.
• Strategic Expansion of ETH Holdings. We intend to grow our ETH treasury through disciplined deployment of capital and, where appropriate, capital formation, subject to market conditions, risk-management parameters, liquidity needs and internal governance policies. We evaluate ETH acquisitions, treasury deployment and share repurchases based on their expected long-term effect on ETH Concentration and shareholder value.
• Positioning Within Expanding Institutional Use of Ethereum. The Company manages its ETH treasury with an awareness of broader institutional and enterprise adoption of Ethereum-based infrastructure, including for stablecoin settlement, tokenization of real-world assets, institutional decentralized finance and emerging agentic finance. While Sharplink does not operate Ethereum or control its adoption, we believe an ETH-focused treasury aligns our balance sheet with a network that is increasingly used within institutional and commercial ecosystems. We may also selectively support independent organizations and strategic partnerships when management believes doing so may strengthen Ethereum’s utility, resilience or institutional readiness and provide potential long-term benefits to our treasury; such organizations operate independently of us.
• Strategic Mergers, Acquisitions and Consolidation Opportunities. As the digital asset treasury segment matures, we may evaluate mergers, acquisitions, investments or other business combinations that could increase scale, add complementary assets or treasury capabilities, acquire operating businesses that may benefit from our ETH holdings and balance sheet, or consolidate participants in a fragmented market. Our balance sheet scale, internal treasury capabilities and access to liquidity may provide flexibility to pursue such opportunities; however, there can be no assurance that any transaction will be identified or completed or that any completed transaction will achieve its anticipated benefits.
• Operational and Governance Differentiation. We seek to strengthen our competitive position through disciplined treasury policies, qualified custody, transparent disclosure, internal controls and governance practices tailored to digital asset treasury management. As investor and regulatory scrutiny of digital asset exposure evolves, we believe consistent execution, risk-management discipline and institutional-grade controls may support broader market acceptance and long-term shareholder value. As the treasury and related revenue platform grow, we also seek to leverage our corporate infrastructure across a larger asset and revenue base.
• Adaptation to Market, Technology and Regulatory Developments. Sharplink regularly monitors digital asset markets, Ethereum protocol developments and applicable laws and regulations and intends to adjust its strategy as appropriate. Such adjustments may include changes to treasury deployment, staking and restaking activities, protocol participation, custody arrangements, collateral practices, liquidity management or capital allocation to reflect evolving technology, market structure, risk and regulatory requirements.

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Emerging Growth Areas for the Ethereum Ecosystem

We track four areas of growth for the Ethereum ecosystem that we believe may support long-term demand for ETH: stablecoins, tokenization of RWAs, institutional decentralized finance and agentic finance. During the second quarter, stablecoin settlement volume expanded; established market infrastructure providers continued moving tokenized securities toward production; institutional participation in on-chain strategies grew; and agent-initiated payment activity increased. Management views these four areas as complementary sources of potential network activity rather than independent or guaranteed drivers of demand.

Agentic finance refers to activity in which software agents transact, pay for data and services, and coordinate with other agents using programmable wallets, stablecoins, identity tools and verifiable settlement. Management believes Ethereum and its Layer 2 networks are positioned to provide elements of this infrastructure. During the first half of 2026, third parties reported continued growth in agent-initiated stablecoin micropayment activity on Ethereum Layer 2 networks. According to Crypto Briefing, Coinbase’s x402 went from near zero in mid-2025 to more than 100 million cumulative transactions by the first quarter of 2026. By late April 2026, Coinbase reported approximately 69,000 active agents, 165 million transactions and approximately $50 million in cumulative volume. Separately, the Ethereum network reached record levels of daily active addresses and transactions during the first half of 2026, including 3.6 million daily transfers across approximately 600,000 daily active wallets. Much of the reported x402 activity occurred on Base, an Ethereum Layer 2 network rather than Ethereum mainnet, and some third-party analysts have indicated that early volume may include testing or speculative activity. Accordingly, management views agentic finance as an emerging, not yet mature, contributor to on-chain activity. Currently the Company is not actively participating in agentic finance either within its operations or as part of our ETH Treasury Management Strategy.

ETH Treasury Management Strategy

WE ARE NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940, 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.

Our 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 programmability, security and active developer ecosystem position it as foundational infrastructure for programmable financial activity. With Ethereum’s PoS consensus mechanism and the growth of scalable Layer 2 networks, ETH can be deployed productively through staking and related activities while retaining exposure to network growth. Management believes Ethereum entered a more mature phase of institutional adoption during the period. We seek to participate in that adoption cycle as a disciplined, long-term holder and productive steward of ETH, with an objective of compounding ETH Concentration over time.

We view ETH Treasury Management as a core operating business. Our strategy combines a foundational staking layer with selective treasury activities intended to generate incremental, risk-adjusted ETH-denominated rewards and other returns above the staking baseline. As our treasury grows, scale is expected to improve our ability to access institutional capital, negotiate deployment opportunities and leverage our corporate infrastructure across a larger asset and revenue base. Our staking and treasury activities are designed to support Ethereum’s decentralization, scalability and security while meeting institutional standards for custody, transparency, risk management and governance.

Our capital allocation framework is designed to increase shareholder exposure to ETH within a prudent risk-management framework. We evaluate capital issuance, ETH accumulation, treasury deployment and share repurchases dynamically based on market conditions and the expected long-term effect on ETH Concentration and shareholder value. Capital may be raised through equity, equity-linked debt, debt or other contracts or arrangements intended to fund the purchase of ETH, whether or not classified as a liability, debt or equity (collectively, “Financings”). We may seek to access capital when terms are attractive, acquire ETH at prices management considers attractive, and repurchase shares when management believes they trade below its assessment of underlying value, subject in each case to available capital, applicable law and other considerations. We have not set a specific target for the maximum amount of ETH we seek to hold.

We track and report key performance indicators (“KPIs”) designed to provide transparency into the execution and effectiveness of our ETH Treasury Management strategy. Among these, ETH Concentration and its growth over time are central measures by which we evaluate progress. ETH Concentration is calculated by dividing total ETH holdings by Basic-Equivalent Shares Outstanding and expressing the result per 1,000 shares. The metric reflects both the scale of our ETH accumulation and the capital efficiency of our treasury operations. By prioritizing this metric, we focus on long-term shareholder value rather than short-term fluctuations in asset prices or market capitalization.

We view disciplined capital allocation and treasury productivity as complementary sources of potential compounding. Capital allocation can expand the ETH base, while native staking, liquid staking, restaking and selected on-chain treasury activities can generate additional ETH-denominated rewards or other returns on that base. We evaluate such activities on a risk-adjusted basis, with emphasis on liquidity, qualified custody, operational controls and institutional governance.

Basic-equivalent shares outstanding consist of common shares outstanding plus shares issuable upon exercise of pre-funded warrants, which carry a nominal exercise price. We currently generate yield on our ETH holdings through native staking and liquid staking and restaking arrangements, which include participation in protocols that issue LSTs, such as LsETH, and LRTs, such as weETH. In native staking, our ETH is deposited into the Ethereum smart contract while withdrawal credentials remain controlled by our custodian, and the underlying ETH is not derecognized. Rewards earned from native staking are recognized as revenue is earned. Revenue is also recognized for amounts earned under third-party arrangements to provide and maintain TVL or similar protocol services (“protocol incentives”), which are accounted for separately under applicable revenue recognition guidance.

In liquid staking and restaking arrangements, we deposit ETH into third-party protocols and receive LsETH or weETH, respectively, which are redeemable receipt tokens representing a claim on the underlying staked ETH and related rewards. Upon staking ETH through the liquid staking and restaking protocols, the ETH is derecognized and the LsETH and weETH token received concurrently are then recognized. Any gain or loss on the staking transaction is recognized based on the difference between the carrying amount of the ETH staked and the fair value of the LsETH and weETH received; and included in “Realized gain on crypto assets, net” in the Company’s condensed consolidated statements of operations. The LsETH or weETH received is recognized as an indefinite-lived intangible asset accounted for at cost less impairment.

These receipt tokens may increase in value over time due to protocol-based reward mechanisms reflected in changes in exchange rates relative to ETH; however, such increases do not represent revenue and are not recognized in our financial statements until realized through redemption or sale. Revenue is also recognized for incentives earned from third-party arrangements, which are accounted for separately under applicable revenue recognition guidance.

The accounting models applicable to ETH, LsETH and weETH may cause period-to-period results to include unrealized fair-value changes or impairment charges that do not represent realized cash gains or losses and do not, by themselves, change the number of digital asset units held. Accordingly, management evaluates reported results together with the quantity and composition of digital assets held, ETH-denominated rewards and protocol incentives earned, and related cash flows.

During the quarter and shortly thereafter, several independent organizations focused on protocol research, institutional adoption and privacy and compliance infrastructure were launched or advanced, as described under “Ecosystem Stewardship.” At the same time, we observed continued development across four areas that management believes may support long-term demand for ETH: stablecoin settlement, tokenization of real-world assets (“RWAs”), institutional decentralized finance and agentic finance. We view these developments as part of a broader, increasingly specialized institutional ecosystem around Ethereum.

Since initiating our ETH Treasury Management operations, we have accumulated approximately 888,938 in total ETH holdings, comprised of 634,255 in native ETH and 181,748 and 72,935 in ETH on an as if redeemed basis from LsETH and weETH, respectively, as of August 3, 2026. The ETH holdings were derived through purchases of ETH, receipts of ETH from investors and ETH rewards. For the three and six months ended June 30, 2026, revenues generated from native staking rewards totaled $8,575 and $18,693 (in thousands). These native staking rewards represent the ETH-based rewards accumulated through the delegation of ETH to staking validators, which we expect to scale in future quarters in correlation with growth in our treasury balance and broader ETH market performance. Our revenue does not include staking rewards generated from our LsETH or weETH holdings. These receipt tokens increase in value over time due to protocol-based reward mechanisms reflected in changes in exchange rates relative to ETH; however, such increases do not represent revenue and are not recognized in our financial statements until realized through redemption or sale. See “Liquid Staking Protocol” disclosure below.

ETH Productivity

Our ETH Treasury Management segment includes native staking, liquid staking, restaking activities and protocol incentives.

Liquid Staking Protocol

As part of our ETH Treasury Management strategy, we participate in liquid staking through the Liquid Collective protocol, a decentralized, enterprise-focused liquid staking network that enables participants to stake ETH through a set of approved node operators while maintaining liquidity via a transferable receipt token. In a liquid staking arrangement, we transfer ETH to the protocol and receive LsETH, a fungible ERC-20 receipt token, that represents a proportional interest in the protocol’s pool of staked ETH. LsETH is accounted for as an indefinite-lived intangible asset under ASC 350-30, and recorded at historical cost, less any impairment losses.

The Liquid Collective protocol establishes a daily Protocol Conversion Rate (“PCR”), which reflects the amount of ETH into which a unit of LsETH is redeemable. The PCR is calculated by dividing the total ETH held by the protocol, including accumulated staking rewards (net of penalties or slashing fees), by the total number of LsETH tokens in circulation. The PCR is updated daily through the protocol’s on-chain infrastructure and is publicly accessible. The PCR is not a market trading price.

The process of redeeming LsETH for ETH is subject to the validator exit queue, bonding periods and other mechanics that may affect the timing and execution of redemption. As a result, we may not be able to redeem our holdings immediately.

As of June 30, 2026, we held 163,083 LsETH tokens. The following table presents a roll-forward of our LsETH holdings, including relevant details related to LsETH purchases, redemptions and impairment losses within the periods presented. Amounts are presented in thousands of U.S. dollars, except for shares, units, and per-share and per-unit amounts, and except where amounts are specifically denoted in millions or billions. Certain amounts presented in thousands may not sum precisely due to rounding; per-share and per-unit amounts are calculated from underlying unrounded figures.

• (a) Earned through rebates offered by protocol provider.

The following table shows the number of LsETH held at the end of these periods, as well as market value calculations of our LsETH holdings based on the lowest, highest, and ending market prices of one LsETH on the Coinbase exchange (our principal market):

• (b) The “Lowest Market Price of LsETH During the Quarter” represents the lowest market price for one LsETH reported on the Coinbase exchange during the respective quarter, without regard to when we purchased any of our LsETH.
• (c) The “Market Value of LsETH Held Using Lowest Market Price” represents a mathematical calculation consisting of the lowest market price for one LsETH reported on the Coinbase exchange during the respective quarter multiplied by the number of LsETH held by us at the end of the applicable period.
• (d) The “Highest Market Price of LsETH During the Quarter” represents the highest market price for one LsETH reported on the Coinbase exchange during the respective quarter, without regard to when we purchased any of our LsETH. Due to the illiquidity and volatility of LsETH, the highest market price shown reflects a brief intraday dislocation on a de minimis quantity of fractional tokens.
• (e) The “Market Value of LsETH Held Using Highest Market Price” represents a mathematical calculation consisting of the highest market price for one LsETH reported on the Coinbase exchange during the respective quarter multiplied by the number of LsETH held by us at the end of the applicable period.
• (f) The “Market Price of LsETH at End of Quarter” represents the market price of one LsETH on the Coinbase exchange at midnight UTC on the last day of the respective quarter.
• (g) The “Market Value of LsETH Held at End of Quarter” represents a mathematical calculation consisting of the market price of one LsETH on the Coinbase exchange at midnight UTC on the last day of the respective quarter multiplied by the number of LsETH held by us at the end of the applicable period.

The amounts reported as “Market Value” in the table above represent only a mathematical calculation consisting of the number of LsETH tokens held by us at the end of the applicable period multiplied by the market price of LsETH as reported on the Coinbase Exchange.

The LsETH token is relatively new and the market for LsETH may be subject to manipulation, limited transparency, inconsistent pricing sources and episodic illiquidity. The price information referenced may not reflect actionable market depth or executable prices, and there is no assurance that we would be able to sell our LsETH holdings at the Market Value amounts indicated above, at the quoted market price, or at all. The market infrastructure supporting LsETH remains nascent, and future developments in protocol mechanics, exchange support, or regulatory oversight may materially impact pricing, liquidity and valuation methodologies. Accordingly, the Market Value amounts reported above may not accurately reflect the fair market value of LsETH, and the actual realizable value of our holdings could differ materially from the calculated figures.

Liquid Restaking Protocol

As noted previously, on December 18, 2025, the Company executed the definitive agreement providing for allocation of at least $200 million in ETH for deployment on Linea. Our digital assets, including ETH and weETH, are held in our name by Anchorage Digital Bank N.A., our qualified custodian, on both Ethereum and Linea.

Upon depositing ETH into the ether.fi protocol and minting weETH, we derecognize the ETH transferred and recognize weETH as a new unit of account at its fair value on the mint date. The difference between the fair value of weETH received and the carrying amount of the ETH transferred is recognized as a realized gain or loss in the condensed consolidated statement of operations. Because weETH provides the holder with an enforceable, pro rata claim on ETH and accumulated rewards held by the ether.fi protocol, weETH does not meet the scope criterion in ASC 350-60-15-1(b), which requires that a crypto asset not provide the holder with enforceable rights to or claims on underlying goods, services or other assets. Accordingly, weETH is outside the scope of ASC 350-60 and is accounted for as an indefinite-lived intangible asset under ASC 350-30.

The liquid restaking protocol uses a floating conversion rate, or PCR, between the receipt token and staked tokens, reflecting accrued network rewards, penalties and fees associated with the staked ETH. The conversion rate between weETH and ETH increases over time as staking rewards accrue to the protocol; no new or additional tokens are received. In addition to the core weETH accretion, we are entitled to monthly protocol incentives funded by ether.fi, Linea and EigenCloud under a strategic partnership agreement (“SPA”), with Consensys acting as program administrator. We have concluded that ether.fi, Linea and EigenCloud are each customers under ASC 606 because they provide consideration in exchange for our service of providing and maintaining TVL on Linea, which is an output of our ongoing treasury operations. Consensys is a conduit and is not considered a customer.

Each protocol incentive is variable consideration based on month-end TVL metrics, subject to contractual caps and payable in noncash form. We estimate variable consideration using the expected-value method, and noncash consideration is measured at fair value at contract inception in accordance with ASC 606-10-32-21; subsequent changes in the fair value of the underlying tokens attributable solely to the form of consideration do not adjust the transaction price. We apply the variable-consideration allocation exception in ASC 606-10-32-40, allocating each month’s variable consideration to the distinct monthly service period to which it relates. At each month-end, we recognize a receivable for the protocol incentives earned for that period, measured at the fair value of the tokens to be received. Because settlement occurs in digital assets whose fair value fluctuates between the date the receivable is recognized and the settlement date, we have concluded that the receivable contains an embedded derivative. The embedded derivative is subsequently measured at fair value through earnings until settlement. Upon receipt of the tokens, we reclassify the receivable and embedded derivative to the applicable crypto asset account.

As of June 30, 2026, we held 66,267 weETH tokens. The following table presents a roll-forward of our weETH holdings, including relevant details related to weETH purchases and impairment losses within the periods presented. Amounts are presented in thousands of U.S. dollars, except for shares, units, and per-share and per-unit amounts, and except where amounts are specifically denoted in millions or billions. Certain amounts presented in thousands may not sum precisely due to rounding; per-share and per-unit amounts are calculated from underlying unrounded figures.

(a) Value of initial staked ETH into ether.fi and earned incentives.

The following table shows the number of weETH held at the end of this period, as well as market value calculations of our weETH holdings based on the lowest, highest, and ending market prices of one weETH using observable prices across multiple active exchanges. As the volume of weETH trades can significantly fluctuate between multiple decentralized and centralized exchanges, the Company periodically assesses the principal market for weETH.

• (b) The “Lowest Market Price of weETH During the Quarter” represents the lowest market price for one weETH reported for the respective quarter, without regard to when we purchased any of our weETH.
• (c) The “Market Value of weETH Held Using Lowest Market Price” represents a mathematical calculation consisting of the lowest market price for one weETH reported during the respective quarters multiplied by the number of weETH held by us at the end of the applicable periods.
• (d) The “Highest Market Price of weETH During the Quarter” represents the highest market price for one weETH reported during the respective quarters, without regard to when we purchased any of our weETH.
• (e) The “Market Value of weETH Held Using Highest Market Price” represents a mathematical calculation consisting of the highest market price for one weETH reported during the respective quarters multiplied by the number of weETH held by us at the end of the applicable periods.
• (f) The “Market Price of weETH at End of Quarter” represents the market price of one weETH at midnight UTC on the last day of the respective quarters.
• (g) The “Market Value of weETH Held at End of Quarter” represents a mathematical calculation consisting of the market price of one weETH at midnight UTC on the last day of the respective quarters multiplied by the number of weETH held by us at the end of the applicable periods.

Carrying Value versus Market Value

As described in our condensed consolidated financial statements, our LsETH and weETH are outside the scope of ASC 350-60, Intangibles—Goodwill and Other—Accounting for and Disclosure of Crypto Assets, and are accounted for as indefinite-lived intangible assets under ASC 350-30, Intangibles—Goodwill and Other—General Intangibles Other Than Goodwill, recorded at cost, less any impairment recognized since acquisition.

Under this cost-less-impairment model, we recognize an impairment loss whenever the observable market price of an LsETH or weETH token falls below its carrying value at any time since we acquired that token, and the reduced amount becomes the token’s new cost basis. Once an asset has been impaired, its carrying value is not adjusted for any subsequent recovery or appreciation in market price. As a result, the carrying amounts of these assets on our condensed consolidated balance sheet may be less than their current market value, and our financial statements do not reflect any unrealized appreciation on these holdings. Appreciation, if any, would only be recognized in earnings upon a derecognition event, such as the redemption of the receipt token for ETH, a sale, or an exchange measured as the difference between the consideration received and the asset’s carrying amount, in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.

The following table compares the carrying value of our crypto assets accounted for at historical cost less impairment to the calculated market value of those assets as of June 30, 2026. The market-value amounts are determined using the mathematical calculations described in the LsETH and weETH tables above (see footnotes (f) and (g)) — the number of tokens held at period end multiplied by the applicable end-of-period market price. These amounts do not represent fair value for purposes of financial-statement recognition and do not represent amounts we would realize upon sale or redemption. These calculations are presented solely as supplemental information. They are not a substitute for the amounts presented in our financial statements that are stated in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

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Galaxy Sharplink Onchain Yield Fund

On May 11, 2026, Sharplink announced a non-binding memorandum of understanding with Galaxy Digital to establish the Galaxy Sharplink Onchain Yield Fund. On August 7, 2026, the Company and Galaxy Digital executed definitive agreements establishing the Galaxy Sharplink Onchain Yield Fund, LP, a $125.0 million institutional investment vehicle designed to deploy ETH into professionally managed onchain yield strategies. The Fund launched with $125.0 million in committed capital, including a $100.0 million commitment from the Company’s staked ETH treasury and a $25.0 million commitment from Galaxy. Galaxy serves as the Fund’s investment manager and is responsible for opportunity sourcing, risk management and capital deployment. The Fund is designed to maintain exposure to ETH and underlying staking rewards while deploying capital into targeted onchain yield strategies. The Company also intends to leverage the Fund’s institutional investment process and risk management framework as a framework for evaluating additional external treasury strategies. The launch of the Fund represents an important milestone in the Company’s broader ETH treasury management strategy by expanding beyond passive ownership of ETH into institutional-grade onchain capital deployment designed to generate additional risk-managed returns. See Note 14 – Subsequent Events.

Ecosystem Stewardship

During the quarter and shortly thereafter, the Company selectively allocated capital to independent organizations addressing three complementary areas of Ethereum’s institutional development: protocol research through Ethlabs, institutional adoption through Ethereum Institutional, and privacy and compliance infrastructure through EthSystems. Management views these as strategic capital allocations because strengthening Ethereum’s utility and institutional readiness may support long-term demand for ETH, the Company’s primary reserve asset. Each organization operates independently of Sharplink, and the Company does not direct its research agenda, operations or day-to-day priorities. All contributions and the investment described below were funded from the Company’s balance sheet, including capital raised during the period, as further detailed under “Liquidity and Capital Resources.”

Ethlabs

Ethlabs is an independent nonprofit research and development organization formed in June 2026 to advance the Ethereum protocol for the next phase of institutional adoption. Co-founded by former senior Ethereum Foundation researchers, its work focuses on settlement speed, interoperability, mainnet capacity and research into the monetary properties of ETH. Sharplink is one of several funders, alongside Bitmine Immersion Technologies, Sharplink Chairman Joseph Lubin and more than 50 other participants. The funding structure is intended to preserve the organization’s independence. Contributions flow through an independent grants administrator that handles screening, valuation and disbursement. Funders receive quarterly reporting and an independent annual audit but do not direct the research agenda; final decisions on research priorities and technical direction rest with Ethlabs leadership. Research is published openly.

Ethereum Institutional

Ethereum Institutional is an independent nonprofit launched in July 2026 to serve as a dedicated, neutral point of entry for institutions adopting Ethereum. It builds on institutional engagement work previously led by the Ethereum Foundation’s go-to-market team and maintains relationships across banks, asset managers, custodians and market infrastructure providers. Sharplink is one of the anchoring funders, alongside Bitmine Immersion Technologies, Sharplink Chairman Joseph Lubin and dozens of other contributors. The organization operates under a stated mandate of credible neutrality and does not favor any single scaling path or deployment. Its board of directors is comprised of Sharplink Chief Executive Officer Joseph Chalom and Bitmine Chairman Thomas Lee, along with the founding assembly members David Walsh, who will serve as Executive Director and President of the Board of Directors, Marius Smith and Matthew Dawson.

EthSystems

EthSystems is a for-profit engineering and research company building privacy and compliance technology intended to allow banks, asset managers and other regulated institutions to transact on Ethereum at scale without exposing sensitive information such as trade details or client identities. Its approach uses cryptographic methods, including zero-knowledge proofs, encrypted computation and privacy-focused networks built on Ethereum. It was founded by the team that built and led the Ethereum Foundation’s Institutional Privacy Task Force, whose members have worked directly with central banks, regulators and financial institutions and whose backgrounds span the Ethereum Foundation, Goldman Sachs and Status. The company launched with a year of open-source work already published. Together with Ethlabs and Ethereum Institutional, EthSystems addresses the privacy and compliance layer of the emerging institutional ecosystem around Ethereum.

Subsequent to the close of the quarter, in July 2026, the Company participated as an investor in the launch financing of EthSystems, alongside Bitmine Immersion Technologies and Sharplink Chairman Joseph Lubin. Management views the investment as consistent with its belief that increased institutional activity on Ethereum may support demand for ETH and that institutional-grade privacy is an important prerequisite for that activity.

Regulatory Developments

During the second quarter of 2026, the SEC advanced its regulatory posture toward digital assets by adding three crypto-specific rulemaking initiatives to its July 7, 2026 regulatory agenda. These initiatives – which are focused on crypto asset offerings, broker-dealer custody and financial responsibility requirements, and digital asset market structure – represent a shift toward more formalized and comprehensive oversight of U.S. digital asset markets. Management believes this development marks a meaningful evolution from the historically enforcement-driven approach toward one that may provide clearer expectations for market participants, including issuers, custodians, trading venues and institutional investors.

For companies that maintain digital asset treasuries, including those that hold ETH as a primary reserve asset, the SEC’s agenda may provide additional clarity regarding the regulatory environment in which treasury operations evolve. The proposed broker-dealer amendments and market-structure rules may influence how custodial partners manage digital assets, how liquidity is accessed across regulated venues, and how digital asset holdings are integrated into traditional financial-reporting and risk-management frameworks. While the rulemaking process remains ongoing, management views the SEC’s agenda as consistent with the continued maturation of regulated digital asset markets and the Company’s strategy to align its treasury practices with institutional standards.

On March 17, 2026, the U.S. Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) issued a joint interpretation addressing the application of federal securities and commodities laws to certain digital assets and related transactions. The guidance establishes a functional taxonomy for digital assets, distinguishes among various categories of digital assets, and provides additional clarity regarding the application of the federal securities laws to matters such as investment contracts involving digital assets, airdrops, protocol mining, protocol staking and the wrapping of non-security digital assets. The agencies also stated that the CFTC intends to administer the Commodity Exchange Act in a manner consistent with the SEC’s interpretation, where applicable.

During the second quarter of 2026, Congress also continued to advance legislation intended to establish a comprehensive federal regulatory framework for digital assets, including proposed legislation that would allocate regulatory authority between the SEC and the CFTC and establish a statutory framework for digital asset market structure. Although such legislation had not been enacted as of June 30, 2026, these developments reflect continued progress toward greater regulatory clarity for the digital asset industry.

Management continues to evaluate the impact of these regulatory developments on our business, including our digital asset treasury activities and protocol staking operations. Based on Sharplink’s operations and information available as of the date of this Quarterly Report, management does not believe these developments have had, or are reasonably likely to have, a material effect on the Company’s business, results of operations, financial condition or condensed consolidated financial statements. The Company will continue to monitor regulatory and legislative developments and will update its disclosures, as appropriate.

Affiliate Marketing

In December 2021, we acquired certain assets of FourCubed, including FourCubed’s online casino gaming-focused affiliate marketing network, known as PAS.net (“PAS”). For more than 18 years, PAS has focused on delivering quality traffic and player acquisitions, retention and conversions to regulated and global casino gaming operator partners worldwide.

As part of our strategy to expand our affiliate marketing services to the emerging American sports betting market, we rolled-out of our U.S.-focused performance-based marketing business with content-rich affiliate marketing websites. As of July 2026, we are licensed to operate in 18 jurisdictions and own and operate sites serving 17 U.S. states (Arizona, Colorado, Iowa, Illinois, Indiana, Kansas, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Wyoming). We largely utilize search engine optimization and programmatic advertising campaigns to drive traffic to our direct-to-player (“D2P”) sites.

Capital Markets and Public Market Developments

$75 Million Registered Direct Offering

On June 22, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”) to sell in a registered direct offering (the “June 2026 Offering”) an aggregate of 10,013,351 shares (the “Shares”) of the Company’s Common Stock, par value $0.0001 per share (the “Common Stock”). Under the Purchase Agreement, the Company also issued the Investor 10,013,351 warrants to purchase up to 10,013,351 shares of Common Stock (the “Warrants” and the shares underlying the Warrants, the “Warrant Shares”). Each Warrant has an exercise price of $8.15 per share, is immediately exercisable and will expire four years from the date of issuance. If the Warrants are fully exercised, the Company will receive approximately $81.6 million in additional aggregate gross proceeds. The price per unit was $7.49, and the gross proceeds from the June 2026 Offering, before deducting the placement agent fees and offering expenses, were approximately $75.0 million, with net proceeds of $73.3 million after deducting placement agent fees and offering expenses of $1.7 million, which were recorded in additional paid in capital. The Offering closed on June 23, 2026. The Company intends to use the net proceeds received from the June 2026 Offering to acquire ETH, repurchase shares of Common Stock and general working capital purposes. The Warrants Shares issued in the June 2026 Offering were classified as an equity instrument, valued at $28.5 million using the relative fair value method and recorded in additional paid in capital. The remaining $46.5 million of the $75.0 million proceeds were allocated to Common Stock and also recorded in additional paid in capital, see Note 7 - Warrants.

In connection with the Offering, on June 22, 2026, the Company entered into a placement agent agreement (the “Placement Agent Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”), as sole placement agent (the “Placement Agent”), pursuant to which the Company engaged the Placement Agent as exclusive placement agent in connection with the Offering. Under the Placement Agent Agreement, the Company paid the Placement Agent a cash fee equal to 2.0% of the aggregate gross proceeds from the Securities sold in the Offering.

At-The-Market (“ATM”) Offerings

On May 1, 2024, we entered into an ATM Sales Agreement (the “2024 ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P”) pursuant to which we may offer and sell, from time to time, through A.G.P., as sales agent and/or principal, shares of our Common Stock having an aggregate offering price of up to $1.7 million, subject to certain limitations on the amount of Common Stock that may be offered and sold by us set forth in the 2024 ATM Sales Agreement (the “2024 ATM Offering”).

On May 30, 2025, we entered into a second ATM Sales Agreement (the “May 2025 ATM Sales Agreement”) with A.G.P. relating to the sale of shares of our Common Stock from time to time, having an aggregate offering price of up to $1.0 billion (the “May 2025 ATM Offering”). On July 17, 2025, we entered into an Amendment to the May 2025 ATM Sales Agreement (the “Amendment”) to (i) increase the number of shares that may be sold in the May 2025 ATM Offering to $6.0 billion; and (ii) to permit the forward sale of shares to be sold in the May 2025 ATM Offering pursuant to Master Forward Confirmation Letter Agreements.

Addition of Sales Agents to ATM Offering

On August 19, 2025, the Company entered into an Amended and Restated Sales Agreement (the “Amended and Restated ATM Sales Agreement”) (which amended and restated the May 2025 ATM Sales Agreement) by and among the Company, A.G.P., Canaccord Genuity LLC (“Canaccord Genuity”), Societe Generale, B. Riley Securities, Inc. (“B. Riley”), and Citizens JMP Securities, LLC (“Citizens”) to add Canaccord Genuity, Societe Generale, B. Riley, and Citizens as additional sales agents and to make certain conforming changes.

In line with management’s efforts to dynamically implement prudent capital markets strategy, we elected not to conduct any sales under our ATM programs during the three and six months ended June 30, 2026. See Note 6 - Equity for results from recently closed capital market offerings.

Meetings of Stockholders

April 2026 Annual Meeting of Stockholders

On April 10, 2026, Sharplink convened its 2026 Annual Meeting of Stockholders (the “Annual Meeting”) virtually via live webcast. Only stockholders of record at the close of business on March 6, 2026, the record date for the Annual Meeting, were entitled to vote at the Annual Meeting. As of the record date, 197,161,623 shares of the Company’s Common Stock were outstanding and entitled to vote at the Annual Meeting. Based on the certified final voting results received from the Inspector of Election, present at the meeting or by proxy were holders of 109,754,580 shares of the Company’s Common Stock, which represented approximately 56% of the voting power of all shares of Common Stock as of the record date and constituted a quorum for the transaction of business at the Annual Meeting. The stockholders of the Company voted and approved on the following three proposals at the Annual Meeting: 1) To elect Joseph Lubin, Joseph Chalom, Leslie Bernhard, Obie McKenzie, and Robert Gutkowski to serve as directors until the next annual meeting of stockholders or until their successors have been duly elected and qualified; 2) To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026; and 3) To approve, on an advisory basis, the compensation of the Company’s named executive officers.

Other Matters

Russell Index Inclusion

Effective June 29, 2026, Sharplink was added to the Russell 2000 and Russell 3000 indexes as part of FTSE Russell’s semi-annual reconstitution. Management views the inclusion as an external marker of the Company’s increased public-market scale and expects it may broaden institutional visibility and index-linked participation; however, index inclusion does not assure any level of investment demand, trading liquidity or future performance.

Termination of Asset Management Agreements

On April 3, 2026, Sharplink entered into a mutual termination agreement (the “Galaxy Termination Agreement”) with Galaxy Digital Capital Management LP (“Galaxy”) in connection with the mutual termination of that certain asset management agreement by and between the Company and Galaxy, dated May 30, 2025, for certain discretionary investment management services with respect to the Company’s purchase of Ethereum (the “Galaxy Asset Management Agreement”). Pursuant to the Galaxy Termination Agreement, the Galaxy Asset Management Agreement will be terminated effective May 31, 2026.

On April 3, 2026, the Company also entered into a mutual termination agreement (the “ParaFi Termination Agreement” and together with the Galaxy Termination Agreement, the “Termination Agreements”), with ParaFi Capital LP (“ParaFi”) in connection with the mutual termination of that certain asset management agreement between ParaFi and the Company, dated May 30, 2025, for certain discretionary investment management services with respect to the Company’s purchase of Ethereum (the “ParaFi Asset Management Agreement”, and, together with the Galaxy Asset Management Agreement, the “Asset Management Agreements”).

Pursuant to the ParaFi Termination Agreement, the ParaFi Asset Management Agreement will be terminated effective May 31, 2026. Neither the Company nor Galaxy or ParaFi shall have any remaining or future obligations or commitments to the other party under the Asset Management Agreements other than those amounts pursuant to the Termination Agreements. Further, the Company is not required to pay Galaxy or ParaFi any termination fees or penalties in connection with the mutual termination of the Asset Management Agreements. The decision to enter into the Termination Agreements reflects the Company’s continued evolution, including the addition of internal asset management personnel, and was not the result of any disagreement with either Galaxy or ParaFi.

Adoption of Inducement Award Plan

On August 19, 2025, the Board of Directors (the “Board”) of the Company, then known as SharpLink Gaming, Inc., adopted the Sharplink Gaming, Inc. Inducement Award Plan (the “Inducement Award Plan”). The Inducement Award Plan was adopted without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4) and will be administered by the Compensation Committee of the Board or the independent members of the Board. The Board reserved 3,000,000 shares of the Company’s Common Stock for issuance under the Inducement Award Plan, subject to adjustment as provided in the plan document. The terms of the Inducement Award Plan are substantially similar to the terms of the Company’s Amended and Restated 2023 Equity Incentive Plan, with the exception that incentive stock options may not be issued under the Inducement Award Plan and equity awards under the Inducement Award Plan (including nonqualified stock options, restricted stock, restricted stock units, and other stock-based awards) may be issued only to an employee who is commencing employment with the Company or any subsidiary or who is being rehired following a bona fide interruption of employment by the Company or any subsidiary, in either case if he or she is granted such award in connection with his or her commencement of employment and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The Board also adopted a form of Restricted Stock Unit Agreement Notice of Restricted Stock Unit Grant (Time-Based Grant) (the “Inducement Time-Based RSU Grant Package”) and a form of Restricted Stock Unit Agreement Notice of Restricted Stock Unit Grant (Performance-Based Grant) (the “Inducement Performance-Based RSU Grant Package”) for use under the Inducement Award Plan.

2025 Share Repurchase Plan

On August 21, 2025, the Board approved a share repurchase program (the “2025 Repurchase Program”) providing for the repurchase of up to $1.5 billion of the Company’s outstanding shares of Common Stock. Under the 2025 Repurchase Program, the Company is authorized to repurchase shares of Common Stock through open market purchases, privately-negotiated transactions, accelerated share repurchases, or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The 2025 Repurchase Program does not obligate the Company to repurchase shares of Common Stock and the specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance metrics, market conditions, securities law limitations and other factors. In connection with the 2025 Repurchase Program, on August 21, 2025, the Company entered into an Open Market Share Repurchase Agreement (the “Repurchase Agreement”) with The Benchmark Company, LLC (the “Broker”) whereby the Broker has agreed to act as a non-exclusive agent on behalf of the Company to repurchase shares of the Company’s Common Stock in the open market pursuant to Rule 10b-18 of the Exchange Act. The Repurchase Agreement will continue in effect until terminated by either the Company or the Broker, with or without cause, upon written notice to the other party. The Company will pay Broker a commission at a rate of $0.01 for each share of Common Stock repurchased pursuant to the Repurchase Agreement. During the three months ended June 30, 2026, the Company repurchased 2,132,773 shares of its Common Stock for $10.0 million. There were no repurchases during the first quarter of 2026. All repurchased shares are recorded as treasury stock.

Results of Operations (in thousands, except for percentages)

The following table provides certain selected financial information for the periods presented:

For the Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

Revenue

For the three months ended June 30, 2026, total revenue increased 1,554% to $11,528 compared to $697 reported for the same three-month period in the prior year, respectively. The increase was due to revenues from staking generated by our ETH Treasury Management segment, launched in June 2025, which was $11,161, or 97% of our total revenues for the quarter ended June 30, 2026. The increase in revenues was offset by a -45.1% decline in revenues generated in our Affiliate Marketing Segment, which generated $367 in revenues compared to $668 for the three months ended June 30, 2026 and 2025, respectively. The decrease in affiliate marketing revenues was primarily due to continuing softening market conditions in the global iGaming industry, seasonality in which the summer months post lower activity and the loss of customers due primarily to evolving regulatory environments in certain foreign markets in which our affiliate marketing business operates.

Total Losses from Operations

For the three months ended June 30, 2026, we recognized a realized gain on crypto assets at fair value of $1,433 and recorded an unrealized loss on crypto assets at fair value, net of $(321,003) resulting from fair value accounting adjustments of $(320,921) due to the volatility in the price of ETH, and $(82) of unrealized losses on rebate and incentive rewards earned for the three month period ended June 30, 2026. The majority of the unrealized losses is due to the ETH pricing during the period. For the same three month period in the prior year, we recognized a gain on crypto assets at fair value of $5,374 and recorded an unrealized loss on crypto assets at fair value, net of $(2,437) resulting from fair value accounting adjustments due to the volatility in the price of ETH.

Total Operating Expenses

For the three months ended June 30, 2026, cost of revenues - affiliate marketing decreased $(230) to $258 from $488 compared to the same three-month period in the prior year. This decrease is directly tied to the decrease in revenues from the Affiliate Marketing Segment. For the three months ended June 30, 2026, total selling, general and administrative expenses increased 279.6% to $9,060 from $2,387 reported for the same three-month period in the prior year. The increase was primarily attributable to higher costs for the full second quarter of 2026 compared to the second quarter of 2025 as the ETH Treasury Management Strategy began at the end of May 2025. The Company experienced higher costs related to increased personnel headcount of $2,666, increased accounting, legal and compliance fees to $906 and increased custodial and banking fees to $299 during the three months ended June 30, 2026 as compared to the same period for June 30, 2025. For the three months ended June 30, 2026, we also recognized an impairment loss on LsETH and weETH crypto assets of $76,093, a decrease of $(11,720) from the prior year three month impairment loss of $87,813. These crypto assets do not meet the scope criteria of ASC 350-60. Accordingly, these crypto assets continue to be accounted for as indefinite-lived intangible assets under ASC 350-30 and are measured at historical cost less cumulative impairment, rather than at fair value. Stock-based compensation, related party decreased 100% from the prior year three month expense of $16,379 as the Company did not have any related party stock-based compensation during the second quarter of the current year.

Operating Loss

Net loss from operations increased 280.4% to $(393,453) for the three months ended June 30, 2026, compared to a net loss from operations of $(103,433) reported for the same three-month period in the prior year. This is attributable to unrealized loss on crypto assets at fair value, net of $(321,003) compared to $(2,437) for the same three-month period in 2025 due to a decline in the price of ETH during the second quarter of the current year.

Net Loss

As a result of the aforementioned reasons, net loss for the three months ended June 30, 2026 totaled $(394,274), climbing 281.2% when compared to net loss of $(103,423) reported for the three months ended June 30, 2025.

For the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

Revenue

For the six months ended June 30, 2026, total revenue increased 1,539.1% to $23,586 compared to $1,439 reported for the same six-month period in the prior year, respectively. The notable increase was due to revenues from staking generated by our ETH Treasury Management segment, launched in June 2025, which was $22,662, or 96% of our total revenues for the six-month period ended June 30, 2026. The increase in revenues was offset by a -34.5% decline in revenues generated in our Affiliate Marketing Segment, which generated $924 in revenues compared to $1,410 for the six months ended June 30, 2026 and 2025, respectively. The decrease in affiliate marketing revenues was primarily due to continuing softening market conditions in the global iGaming industry, seasonality in which the summer months post lower activity and the loss of customers due primarily to evolving regulatory environments in certain foreign markets in which our affiliate marketing business operates.

Total Losses from Operations

For the six months ended June 30, 2026, we recognized a realized gain on crypto assets at fair value of $13,438 and recorded an unrealized loss on crypto assets at fair value, net of $(827,667) resulting from fair value accounting adjustments of $(827,567) due to the volatility in the price of ETH, and $(100) of unrealized losses on rebate and incentive rewards earned for the six month period ended June 30, 2026. The majority of the unrealized losses is due to the ETH pricing during the period. For the same six month period in the prior year, we recognized a gain on crypto assets at fair value of $5,374 and recorded an unrealized loss on crypto assets at fair value, net of $(2,437) resulting from fair value accounting adjustments due to the volatility in the price of ETH.

Total Operating Expenses

For the six months ended June 30, 2026, cost of revenues - affiliate marketing decreased $(408) to $690 from $1,098 compared to the same six-month period in the prior year. This decrease is the result of the decrease in revenues from the Affiliate Marketing Segment. For the six months ended June 30, 2026, total selling, general and administrative expenses increased $15,436 to $18,939 from $3,503 reported for the same six-month period in the prior year. The increase was primarily attributable to higher costs for the first half of 2026 compared to the first half of 2025 as the ETH Treasury Management Strategy began at the end of May 2025. The Company experienced higher costs related to increased personnel headcount of $5,238, increased accounting, legal and compliance fees to $2,157 and increased custodial and banking fees to $627 during the six months ended June 30, 2026 as compared to the same period for June 30, 2025. For the six months ended June 30, 2026, we also recognized an impairment loss on LsETH and weETH crypto assets of $267,763, an increase of $179,950 from the prior year six month period impairment loss of $87,813. These crypto assets do not meet the scope criteria of ASC 350-60. Accordingly, these crypto assets continue to be accounted for as indefinite-lived intangible assets under ASC 350-30 and are measured at historical cost less cumulative impairment, rather than at fair value. Stock-based compensation, related party decreased 100% from the prior year six month expense of $16,379 as the Company did not have related party stock-based compensation during the six months ended June 30, 2026.

Operating Loss

Net loss from operations increased 932.4% to $(1,078,035) for the six months ended June 30, 2026, compared to a net loss from operations of $(104,417) reported for the same six-month period in 2025. This is attributable to unrealized loss on crypto assets at fair value, net of $(827,667) compared to $(2,437) for the same six-month period in 2025 due to a decline in the price of ETH during the second quarter of the current year.

Net Loss

As a result of the aforementioned reasons, net loss for the six months ended June 30, 2026 totaled $(1,079,835), climbing 934.3% when compared to net loss of $(104,398) reported for the six months ended June 30, 2025.

Cash Flows (in thousands, except for percentages)

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

As of June 30, 2026, cash on hand was $56,195, a $27,656 increase when compared to cash on hand of $28,539 as of December 31, 2025. The increase was due to net proceeds of $73,331 raised from the registered direct offering completed in June 2026, netted against normal operating expenses, as well as ETH purchases of $16,110 and repurchases of our common stock of $10,022 which both occurred in June 2026.

For the six months ended June 30, 2026, net cash used in operating activities from operations totaled $(17,796) compared to net cash used in operating activities from operations of $(2,138) in the prior year. The change in the operating cash flows was largely attributable to cash used for normal operating expenses and payments of accounts payable, accrued expenses and prepaid expenses for the six months ended June 30, 2026 as compared to the prior period.

For the six months ended June 30, 2026, net cash used in our investing activities from operations totaled $(14,961), a decrease of -96% when compared to cash used in investing activities from operations of $(406,319) for the same six-month period in 2025. The decrease in net cash used in investing activities for the six months ended June 30, 2026 versus 2025 was due primarily to our initial investment from the May 2025 PIPE and certain ATM proceeds of $405,817 in crypto assets purchased through June of last year compared to $16,110 purchased during the six months ended June 30, 2026.

For the six months ended June 30, 2026, net cash provided by financing activities from operations was $60,413, a -85% decrease when compared to net cash provided by financing activities from operations of $412,018 for the same six-month period in 2025. Cash provided by financing activities during the first six months of 2026 related to cash payments of taxes for net share settlement of stock and repurchases of Common Stock of $10,022 offset by the net proceeds of $73,331 from the registered direct offering completed in June 2026. Cash used in financing activities during the first six months of 2025 related to proceeds from our ATM offering and the initial May 2025 PIPE investment.

Liquidity and Capital Resources (in thousands)

As of June 30, 2026, we had working capital of $51,869. For the three and six months ended June 30, 2026, we had net loss from operations of $(393,453) and $(1,078,035) compared to a net loss from operations of $(103,433) and $(104,417) reported for the same three- and six-month periods in 2025.

Principal Sources of Liquidity

Our principal sources of liquidity are our cash and cash equivalents balances and proceeds from equity financing transactions, including pursuant to our offering facility under the Amended and Restated ATM Sales Agreement with A.G.P.

Under our internal Treasury Reserve Policy, we use the vast majority of our cash, including cash generated from capital raising transactions, to acquire ETH, some of which are classified as indefinite-lived intangible assets. As of June 30, 2026 we held approximately $988,838 worth of ETH in crypto assets at fair value, all of which are unencumbered. As of June 30, 2026 we held approximately $369,148 worth of LsETH and weETH in crypto assets at cost. As of August 3, 2026, we held approximately 888,938 in total ETH holdings, comprised of 634,255 in native ETH, 181,748 in ETH as if redeemed from LsETH and 72,935 in ETH as if redeemed from weETH, all of which are unencumbered. As discussed further below, although our crypto assets are classified as non-current assets due to our long-term treasury management strategy, they represent a significant and readily accessible source of liquidity. Based on current Ethereum network conditions, we estimate that a material portion of our staked ETH could be withdrawn and converted to cash within approximately 30 days, and our entire staking portfolio within approximately 90 days. We believe this provides meaningful additional liquidity support beyond our cash and cash equivalents.

Short-Term and Long-Term Liquidity

Short-Term Liquidity — Our short-term liquidity needs include working capital requirements, anticipated capital expenditures, and contractual obligations due within the next 12 months. We expect that our cash and cash equivalents as of June 30, 2026, together with cash and cash equivalents generated by our operations, coupled with the use of a portion of proceeds earned from staking activities and redeemed for cash, and equity financings will be sufficient to satisfy these needs over the twelve months. Although we do not anticipate needing to use our ETH to meet our short-term liquidity needs, to the extent necessary, we may seek to use proceeds from the sale of our ETH, and other tokens earned and received as rewards and incentives, to meet such needs. See “Availability of ETH for Liquidity” below and “Item 1A. Risk Factors” for additional information.

Long-Term Liquidity — Beyond the next 12 months, our long-term cash needs are primarily for obligations related to working capital needs. We expect our cash and cash equivalents as of June 30, 2026, together with cash and cash equivalents, coupled with the potential use of a portion of proceeds earned from staking activities and redeemed for cash, and equity financings will be sufficient to satisfy these needs over the twelve months. See “Availability of ETH for Liquidity” below and “Item 1A. Risk Factors” for additional information.

Availability of ETH for Liquidity — We do not believe we will need to sell or engage in other transactions with respect to any of our ETH within the next 12 months to meet our liquidity needs, although we may from time to time sell or engage in other transactions with respect to our ETH, and other tokens earned and received as rewards and incentives, as part of treasury management operations, as noted above. The ETH market historically has been characterized by significant volatility in its price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of instability in the ETH market, we may not be able to sell our ETH at reasonable prices or at all. As a result, our ETH are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. In addition, upon sale of our ETH, we may incur additional taxes related to any realized gains or we may incur capital losses as to which the tax deduction may be limited. See “Item 1A. Risk Factors” for additional information.

Off-Balance Sheet Arrangements

As of June 30, 2026, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. We have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

Inflation

Our opinion is that inflation did not have a material effect on our operations for the three and six months ended June 30, 2026.

Climate Change

Our opinion is that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.

New Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-04, Debt-Debt with Conversions and Other Option. ASU 2024-04 is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. This ASU did not have an impact on the Company’s financial statements or its related footnote disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for the Company for annual reporting periods beginning in fiscal 2027 and for interim reporting periods beginning in fiscal 2028 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its condensed consolidated financial statements and disclosures.

In September 2025, the FASB issued Accounting Standards Update No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. The amendments are effective for the Company’s annual and interim reporting periods beginning January 1, 2027, with early adoption permitted. The Company is evaluating the amendments, including their application to the Company’s staking, restaking and incentive arrangements. Based on its current arrangements, the Company does not expect adoption to have a material effect on its condensed consolidated financial statements or related disclosures.

In December 2025, the FASB issued Accounting Standards Update No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments clarify the applicability of Topic 270, provide a comprehensive listing of interim disclosures required by generally accepted accounting principles and establish a principle for disclosing events occurring since the end of the most recent annual reporting period that have a material effect on an entity. The amendments are effective for the Company’s interim reporting periods within the annual reporting period beginning January 1, 2028, with early adoption permitted. The Company is evaluating the effects of adoption and currently expects the amendments to affect primarily its interim disclosure processes and related controls.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item.

Evaluation of Disclosure and Control Procedures

The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, have concluded that our disclosure controls and procedures are effective and are designed to ensure that the information we are required to disclose is recorded, processed, summarized and reported within the necessary time periods. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit pursuant to the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

You should carefully consider the risks described below before making an investment decision. The risks and uncertainties described in this section may not be the only ones we face. Additional risks and uncertainties that are not currently known to us, or that we currently deem immaterial, may also impair our business operations or financial condition. If any of the risks described below or any such additional risks actually occur, our business, financial condition, results of operations and the market price of our securities could be materially adversely affected. In particular, because we have adopted a treasury strategy centered on acquiring and holding ETH, and a substantial portion of our assets are concentrated in ETH and related digital intangible asset holdings, our financial results and the market price of our securities are subject to significant volatility and may be adversely impacted by events affecting the price, perception, regulation, or technological underpinnings of ETH. The following risk factors highlight the material risks associated with our ETH Treasury Management strategy and related exposures.

The price of ETH has historically been subject to dramatic price fluctuations and is highly volatile.

Because we intend to purchase additional ETH in future periods and increase our overall holdings of ETH, we expect that the proportion of our total assets represented by our ETH holdings will increase in the future. As a result, and in particular due to our adoption of ASU 2023-08, volatility in our earnings may be significantly more than what we experienced in prior periods.

Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our ETH holdings.

Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of ETH.

Our ETH holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

Historically, the ETH market has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our ETH at favorable prices or at all. For example, a number of ETH trading venues temporarily halted deposits and withdrawals in 2022, although the Coinbase exchange (our principal market for ETH) has, to date, not done so. As a result, our ETH holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, ETH we hold with our custodians do not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered ETH or otherwise generate funds using our ETH holdings, including in particular during times of market instability or when the price of ETH has declined significantly. If we are unable to sell our ETH, enter into additional capital raising transactions, including capital raising transactions using ETH as collateral, or otherwise generate funds using our ETH holdings, or if we are forced to sell our ETH at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.

Although the SEC and CFTC have issued joint interpretive guidance identifying ETH as a “digital commodity” rather than a “digital security,” that guidance is non-binding and could be modified or rejected by a court, and any determination that ETH is a “security” would subject us to additional regulation and could materially impact the operation of our business.

On March 17, 2026, the U.S. Securities and Exchange Commission (“SEC”), joined by the U.S. Commodity Futures Trading Commission (“CFTC”), issued a joint interpretation (the “Joint Interpretation”) clarifying the application of the federal securities laws to crypto assets and establishing a taxonomy of five categories: “digital commodities,” “digital collectibles,” “digital tools,” “stablecoins,” and “digital securities.” The Joint Interpretation expressly identifies ETH as an example of a digital commodity, and the SEC and CFTC have each stated that they will administer their respective statutes consistent with the Joint Interpretation. The Joint Interpretation is consistent with our long-held view, described below, that ETH is not a “security” within the meaning of the U.S. federal securities laws and that registration of the Company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), is therefore not required under the applicable securities laws.

The Joint Interpretation is interpretive guidance rather than a rulemaking and does not itself have the force of law. It could be modified, withdrawn, or superseded by future SEC or CFTC leadership, narrowed or invalidated through judicial challenge, or rendered obsolete by subsequent legislation or rulemaking. Federal and state courts are not bound by the Joint Interpretation, and the ultimate legal question of whether any particular digital asset, or any particular transaction involving a digital asset, is a “security” remains subject to judicial determination under tests articulated by the U.S. Supreme Court, including in the Howey and Reves cases. In addition, the Joint Interpretation acknowledges that a crypto asset that is not itself a security may nonetheless become subject to an “investment contract” depending on the manner in which it is offered or sold, so classification of ETH as a digital commodity does not foreclose the possibility that particular transactions involving ETH could be characterized as securities transactions.

We have adapted, and expect to continue to adapt, our process for analyzing the U.S. federal securities law status of ETH and other cryptocurrencies over time, as guidance, interpretive releases, and case law have evolved. As part of our U.S. federal securities law analytical process, we take into account a number of factors, including the various definitions of “security” under U.S. federal securities laws and federal court decisions interpreting the elements of these definitions, such as the U.S. Supreme Court’s decisions in the Howey and Reves cases, as well as court rulings, reports, orders, press releases, public statements, and speeches by the SEC Commissioners and SEC Staff — including, most recently, the Joint Interpretation — providing guidance on when a digital asset, or a transaction to which a digital asset may relate, may be a security for purposes of U.S. federal securities laws. Our position that ETH is not a “security” is premised, among other reasons, on our conclusion that ETH does not meet the elements of the Howey test. Among the reasons for our conclusion that ETH is not a security is that holders of ETH do not have a reasonable expectation of profits from our efforts in respect of their holding of ETH. Also, ETH ownership does not convey the right to receive any interest, rewards, or other returns.

Notwithstanding the Joint Interpretation and our own conclusion, we acknowledge that a federal or state court, state securities regulator, future SEC or CFTC leadership, or private plaintiff could take a different view as to the status of ETH or any particular transaction involving ETH. State “blue sky” regulators are not formally bound by the Joint Interpretation, and private litigants are not bound by the views of any federal regulator. Application of securities laws to the specific facts and circumstances of digital assets is complex and subject to change. As such, we remain at risk of private litigation, state enforcement proceedings, and — in the event the Joint Interpretation is modified, withdrawn, or judicially rejected — federal enforcement proceedings, any of which could result in potential injunctions, cease-and-desist orders, fines, penalties, damages, or a requirement that we register as an investment company under the Investment Company Act, and any of which could adversely affect our business, results of operations, financial condition and prospects.

Regulatory developments regarding the classification of digital assets as “commodities” or “digital commodities” by the Commodities Futures Trading Commission (“CFTC”), including recent joint SEC-CFTC interpretive guidance and pending legislation, could subject us to additional regulatory burdens and oversight by the CFTC and could adversely affect the market price of ETH and the market price of our listed securities.

The CFTC has stated it believes, and judicial decisions involving CFTC enforcement actions have confirmed, that at least some digital assets fall within the definition of a “commodity” under the U.S. Commodities Exchange Act of 1936 (the “CEA”) and the rules promulgated by the CFTC thereunder (“CFTC Rules”). On March 17, 2026, the U.S. Securities and Exchange Commission (“SEC”), joined by the CFTC, issued a joint interpretation (the “Joint Interpretation”) clarifying the application of the federal securities laws to crypto assets and establishing a token taxonomy distinguishing “digital commodities,” “digital collectibles,” “digital tools,” “stablecoins,” and “digital securities.” The Joint Interpretation expressly identifies ETH as an example of a digital commodity, and the CFTC has stated that it will administer the CEA consistent with the Joint Interpretation.

While the CFTC has enforcement authority to police against fraud and manipulation in spot commodity markets (including the spot market for digital assets that are commodities), the CFTC continues to have regulatory and supervisory jurisdiction only with respect to “commodity interest” transactions, such as futures, options, and swaps on a commodity (including a digital asset commodity) and certain leveraged, margined, or financed transactions in commodities involving retail customers. The Joint Interpretation did not expand the CFTC’s statutory jurisdiction over spot digital asset activities. Accordingly, we are not currently regulated or supervised by the CFTC and are not subject to the legal and regulatory obligations that are applicable to CFTC-registered entities under the CEA and CFTC Rules.

The Joint Interpretation is interpretive guidance rather than a rulemaking, and it does not itself have the force of law. It could be modified, withdrawn, or superseded by future SEC or CFTC leadership, narrowed or invalidated through judicial challenge, or rendered obsolete by subsequent legislation or rulemaking. No assurance can be given that ETH will continue to be treated as a digital commodity under this or any future guidance, or that the current allocation of jurisdiction between the SEC and CFTC with respect to ETH and other digital assets will remain unchanged. A change in ETH’s regulatory classification, or in the coordinated posture between the SEC and the CFTC, could materially increase our compliance burden, restrict our ability to hold or transact in ETH, and adversely affect the market price of ETH and the market price of our listed securities.

The regulation of digital assets in the U.S. also remains subject to change through the enactment and adoption of new laws and regulations, and the Joint Interpretation is expressly intended to complement, rather than substitute for, Congressional market structure legislation. The proposed CLARITY Act passed by the U.S. House of Representatives, and other draft digital asset market structure and regulation bills, have proposed granting the CFTC additional regulatory and supervisory powers with respect to spot digital assets as “digital commodities.” While it is not possible to predict if and in what form such proposals will be adopted, if any, changes to or expansion of the jurisdiction of the CFTC with respect to activities in spot digital assets could result in the imposition of additional regulatory obligations and burdens, which could include registration, disclosure, reporting, and business conduct requirements. For example, it is possible that if the CLARITY Act were to become law as currently proposed, our ETH Treasury Management strategy could cause us to be deemed a “commodity pool” under the CEA such that our operators and advisors may need to register with the CFTC as commodity pool operators and comply with other CFTC regulations as well as the rules of the National Futures Association. Such additional regulatory burdens and oversight could materially increase the cost of our business, could adversely affect the market price of ETH, and in turn could adversely affect the market price of our listed securities.

We may be subject to regulatory developments related to digital assets and digital asset markets, which could adversely affect our business, financial condition, and results of operations.

As digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital assets is still evolving, it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of digital assets. The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of digital assets or the ability of individuals or institutions such as us to own or transfer digital assets.

On January 23, 2025, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology” (the “Executive Order”) aimed at supporting “the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy.” The Executive Order also established an interagency working group that is tasked with “proposing a Federal regulatory framework governing the issuance and operation of digital assets” in the United States. Pursuant to this Executive Order, the working group released a report in July 2025 outlining the administration’s recommendations to Congress and various agencies reflecting the administration’s “pro-innovation mindset toward digital assets and blockchain technologies.” In particular, the report recommends that Congress enact legislation regarding self-custody of digital assets, clarifying the applicability of Bank Secrecy Act obligations with respect to digital asset service providers, granting the Commodities Futures Trading Commission (the “CFTC”) authority to regulate spot markets in non-security digital assets, prohibiting the adoption of a central bank digital currency (“CBDC”), and clarifying tax laws as relevant to digital assets. In addition, the report recommends that agencies reevaluate existing guidance on digital asset activities, use existing authorities to enable the trading of digital assets at the federal level, embrace DeFi, launch or relaunch digital asset innovation efforts, and promote U.S. private sector leadership in the responsible development of cross-border payments and financial markets technologies, among others.

Consistent with the Executive Order and the July 2025 working group report, on March 17, 2026, the U.S. Securities and Exchange Commission (“SEC”), joined by the CFTC, issued a joint interpretation (the “Joint Interpretation”) clarifying the application of the federal securities laws to crypto assets. The Joint Interpretation establishes a taxonomy of five categories — “digital commodities,” “digital collectibles,” “digital tools,” “stablecoins,” and “digital securities” — and expressly identifies ETH as an example of a digital commodity. The SEC and CFTC have each stated that they will administer their respective statutes consistent with the Joint Interpretation. While we believe the Joint Interpretation provides meaningful additional clarity regarding the regulatory status of ETH, it is interpretive guidance rather than a rulemaking, does not itself have the force of law, and is not binding on federal or state courts, state securities regulators, or private litigants. The Joint Interpretation could be modified, withdrawn, or superseded by future SEC or CFTC leadership, narrowed or invalidated through judicial challenge, or rendered obsolete by subsequent legislation or rulemaking, and it also acknowledges that a crypto asset that is not itself a security may nonetheless become subject to an “investment contract” depending on the manner in which it is offered or sold.

There have also been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset markets. For example, the CLARITY Act was passed by the House of Representatives in July 2025, which would, if enacted, regulate digital asset markets and digital asset trading platforms in the United States and provide statutory backing for the allocation of jurisdiction between the SEC and CFTC reflected in the Joint Interpretation. In addition, also in July 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (the “GENIUS Act”) became the first federal law specifically regulating the issuance, custody and other stablecoin-related matters in the United States. It is difficult to predict whether, or when, the CLARITY Act or another bill that would regulate digital asset markets and digital asset trading platforms may become law or what any such bill may entail.

It is difficult to predict whether, or when, as a result of these developments, Congress will grant additional authorities to the SEC, the CFTC, or other regulators, what the nature of such additional authorities might be, how additional legislation and/or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services to the digital assets industry, or how any new regulations, changes to existing regulations, or changes to or withdrawal of existing interpretive guidance might impact the value of digital assets generally and ETH held by the Company specifically. The consequences of these potential developments, including any narrowing, modification, or withdrawal of the Joint Interpretation, could have a material adverse effect on our business, results of operations, financial condition, and prospects, as well as the market price of ETH, which in turn could adversely affect the market price of our listed securities.

We may engage in decentralized finance transactions and deploy ETH using liquid staking and liquid restaking protocols, which present additional risk as opposed to simply holding our digital assets.

We intend to invest and deploy ETH using one or more decentralized finance protocols. All trading and investment activity involves risk, which is heightened in the case of decentralized finance due to the irrevocable nature of blockchain transactions and the possibility of errors in smart contracts. Decentralized finance protocols also attract hackers and persons looking to exploit flaws in or the ability to misuse smart contracts. We also may incur losses in connection with our decentralized finance activity due to human error or our inability to predict future price movements. Any losses we sustain in connection with decentralized finance activities could cause an adverse impact on our financial condition, results of operations, and the market price of our Common Stock.

Decentralized finance protocols also pose heightened regulatory concerns even beyond those that face digital asset networks and digital assets generally. The U.S. financial system is extensively regulated at both the federal and state level with a particular focus on intermediaries such as banks, broker-dealers, futures commission merchants, investment funds, investment advisers, financial asset exchanges, trading platforms, clearinghouses and custodians. U.S. laws and regulations impose specific obligations on financial services intermediaries both for the protection of their customers and for the protection of the U.S. financial system as a whole. These include, among others, capital requirements, activities restrictions, reporting and disclosure requirements and obligations to monitor the activities of their customers and to ensure that the intermediaries’ activities and the activities of their customers are conducted in accordance with applicable laws and regulations. Non-U.S. laws and regulatory requirements may impose similar obligations. By seeking to eliminate or substantially limit the role of traditional financial services intermediaries in lending, brokering, advisory, trading, clearing, custody and other financial services activities, DeFi protocols pose numerous challenges to the longstanding oversight framework developed under U.S. law and used by U.S. and other regulators. Legislative bodies and regulators may be required to adapt their regulatory models to accommodate decentralized financial activities, or take novel steps to supervise, limit or even prohibit decentralized financial activities. It is not possible to predict how or when these challenges will be resolved or what the impact on specific decentralized finance protocols will be, and it is likely that the decentralized finance industry will face a prolonged period of regulatory uncertainty. It is possible that some decentralized finance protocols will be subjected to costly and burdensome compliance regimes or even prohibited outright.

We have also deployed ETH using liquid staking and liquid restaking protocols, including by staking ETH through Liquid Collective in exchange for LsETH and through ether.fi in exchange for weETH, the wrapped, non-rebasing form of eETH. Liquid staking protocols are even newer than many decentralized finance protocols and are a novel and evolving technology, and liquid restaking protocols — which layer additional restaking and validation arrangements on top of liquid staking and use the underlying ETH (or its receipt tokens) to provide cryptoeconomic security to other protocols and services — are even more novel and have an even more limited operating history. Although the staff of the SEC’s Division of Corporation Finance has provided a statement that the staff does not generally believe liquid staking services are securities offerings, and that it does not believe receipt tokens obtained through such liquid staking services are generally securities, there is no guarantee that courts agree. That staff statement is, by its terms, addressed to liquid staking and does not directly address liquid restaking arrangements or the receipt tokens obtained from liquid restaking protocols, such as weETH; the regulatory treatment of liquid restaking arrangements under the federal securities laws therefore remains uncertain. It is also possible that the liquid staking or liquid restaking protocols we use, or specific features of those protocols, do not fit within the scope of the staff statement. If it is determined that the liquid staking or liquid restaking protocols we use, or the receipt tokens we receive (including LsETH and weETH), are securities offerings, the providers of those protocols may be required to pay fines or be subject to other third-party claims, and the ETH we have deposited with them may be available to their creditors to fulfill those claims. See “Our shift towards an ETH-focused treasury strategy requires substantial changes in our day-to-day operations and exposes us to significant operational risks” and “We face risks relating to the custody of our digital assets, including the loss or destruction of private keys required to access our digital assets and cyberattacks or other data loss relating to our digital assets and insolvency of our custodians.” There is also ongoing uncertainty as to the regulatory treatment of liquid staking and liquid restaking services from other regulators and agencies.

Liquid restaking activities also involve risks beyond those associated with native staking or liquid staking. In a liquid restaking arrangement, the underlying ETH (or its receipt token) is used to provide cryptoeconomic security not only to the Ethereum proof-of-stake protocol but also to additional services, such as the EigenCloud Autonomous Verifiable Services (“AVSs”) that we secure through ether.fi. This exposes our underlying ETH to potential slashing, forfeiture or other penalties arising from issues outside of the Ethereum staking protocol itself, including operational failures, validator or operator misconduct, or technical problems with the AVSs being secured. The AVSs and other services secured through restaking are themselves new, with limited operating history, and there can be no assurance that they will function as designed. We have deployed a portion of our ETH treasury into weETH issued by ether.fi, and any losses sustained in connection with that deployment — whether from slashing, smart contract exploits, protocol failure or otherwise — could have a material adverse effect on our financial condition, results of operations and the market price of our Common Stock. In addition, we have bridged weETH from the Ethereum mainnet to Linea, a zkEVM Layer 2 network, using ether.fi’s weETH OFT bridge powered by LayerZero v2. Cross-chain bridges have historically been a frequent target of exploits in decentralized finance, and any failure, vulnerability or exploit affecting the bridge, the messaging layer or the destination network — or any disruption to or change in the Linea sequencer, prover, governance or future upgrades — could result in delays in accessing, or partial or total loss of, the weETH we have bridged.

Both decentralized finance protocols and liquid staking and liquid restaking protocols typically rely on the use of smart contracts. Smart contracts are computer programs that run on a digital asset network or related protocol that execute automatically when certain conditions are met. Because smart contract functions typically cannot be stopped or reversed, vulnerabilities in or unforeseen consequences of their programming can have damaging effects for the underlying digital asset network or protocol and the value of digital assets that use or interact with such smart contracts. For example, in June 2016, a vulnerability in the smart contracts underlying a protocol that was deployed on the Ethereum network, The DAO, a distributed autonomous organization for venture capital funding, allowed an attack by a hacker to syphon approximately $60 million worth of ETH from The DAO into a separate account. In the aftermath of the theft, certain developers of and core contributors to the Ethereum network pursued a “hard fork” of the Ethereum network in order to erase any record of the theft. Despite these efforts, the price of ETH dropped approximately 35% in the aftermath of the attack and subsequent hard fork. In addition, in July 2017, a vulnerability in a smart contract for a multi-signature wallet software developed by Parity led to a $30 million theft of ETH, and in November 2017, a new vulnerability in Parity’s wallet software led to roughly $160 million worth of ETH being indefinitely frozen in an account.

Other smart contracts, such as bridges between separate digital asset networks, have also been manipulated, exploited or used in ways that were not intended or envisioned by their creators. Initial and continued problems with the development, design and deployment of smart contracts may have an adverse effect on the value of protocols, including liquid staking, liquid restaking and decentralized finance protocols, built on smart contract platforms or other digital assets that rely on smart contract technology, including any liquid staking or liquid restaking tokens such as LsETH and weETH. Liquid restaking tokens such as weETH are exposed not only to risks at the liquid staking protocol layer but also to risks at the additional restaking and AVS layers and, where bridged to other networks, to risks of the cross-chain bridge and the destination network. If any of the smart contracts with which we interact — whether decentralized finance, liquid staking, liquid restaking, cross-chain bridging or otherwise — suffer from such manipulation or exploit, or otherwise do not function as intended or as we anticipate, our ETH and any LsETH, weETH or similar tokens we hold may be exposed.

The AI industry is subject to developing and evolving regulatory frameworks globally, which are expected to become increasingly complex as AI continues to evolve, and our efforts to, or our failure or inability to comply with, these regulations or regulatory action against us could adversely affect our results of operations, financial condition or business.

The rapid pace of innovation in the field of AI has led to developing and evolving regulatory frameworks globally, which are expected to become increasingly complex. U.S. and regulators and lawmakers have started proposing and adopting, or are currently considering, regulations and guidance specifically on the use of AI. In the U.S., there is ongoing tension between the states and the federal government over how best to regulate the use of AI. Colorado passed a Consumer Protections for Artificial Intelligence bill introducing state-level oversight of “high-risk” AI systems. It is possible that new laws and regulations will be adopted in the U.S. and in non-U.S. jurisdictions, or that existing laws and regulations may be interpreted, in ways that would affect our operations. We may be unable to anticipate or respond to these changes, and may need to expend additional resources to adjust our offerings where legal frameworks diverge. Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations.

We face risks relating to the custody of our ETH, including the loss or destruction of private keys required to access our ETH and cyberattacks or other data loss relating to our ETH.

We hold our ETH with regulated custodians that have duties to safeguard our private keys. Our custodial services contracts do not restrict our ability to reallocate our ETH among our custodians, and our ETH holdings may be concentrated with a single custodian from time to time. In light of the significant amount of ETH we hold, we will seek to engage additional custodians to achieve a greater degree of diversification in the custody of our ETH as the extent of potential risk of loss is dependent, in part, on the degree of diversification. If there is a decrease in the availability of digital asset custodians that we believe can safely custody our ETH, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our ETH, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected.

ETH is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the ETH is held. While the ETH blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the ETH held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the ETH held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack. ETH, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.

As of the date of this filing, the insurance that covers losses of our Ether holdings may cover none or only a small fraction of the value of the entirety of our Ether holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our Ether. Moreover, our use of custodians exposes us to the risk that the Ether our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Ether. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Ether. The legal framework governing digital asset ownership and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could result in unexpected losses, protracted recovery processes or adverse treatment in insolvency proceedings.

As part of our treasury management strategy, we may engage in staking, restaking, or other permitted activities that involve the use of “smart contracts” or decentralized applications. The use of smart contracts or decentralized applications entails certain risks including risks stemming from the existence of an “admin key” or coding flaws that could be exploited, potentially allowing a bad actor to issue or otherwise compromise the smart contract or decentralized application, potentially leading to a loss of our Ether. Like all software code, smart contracts are exposed to risk that the code contains a bug or other security vulnerability, which can lead to loss of assets that are held on or transacted through the contract or decentralized application. Smart contracts and decentralized applications may contain bugs, security vulnerabilities or poorly designed permission structures that could result in the irreversible loss of Ether or other digital assets. Exploits, including those stemming from admin key misuse, admin key compromise, or protocol flaws, have occurred in the past and may occur in the future.