# Sharplink, Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [Sharplink, Inc.](/companies/sbet.md) (CIK 1981535)
- Form: 10-Q
- Filed: 2025-08-14
- Accepted by EDGAR: Aug 14, 2025, 16:48 ET
- Period: 2025-06-30
- Accession: 0001641172-25-024107
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1981535/000164117225024107/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1981535/000164117225024107/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $697.3k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $1.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $488.2k | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $1.1m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | $209.1k | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-01-01 to 2025-06-30 | $340.9k | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $2.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2025-01-01 to 2025-06-30 | $3.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | −$103.4m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | −$104.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $27.3k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $30.1k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$103.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$104.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$4.27 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$8.05 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$4.27 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$8.04 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 24,202,467 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 12,989,772 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$2.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $2.5k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-06-30 | $5.1m | us-gaap:Cash |
| Current assets | at 2025-06-30 | $9.5m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $453.9m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $1.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $1.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-06-30 | $452.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 55,578 characters.

### 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 strategy, competition, future operations, future financial position, 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 I, Item 1A, “Risk Factors” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, 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”). 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

*Although we are responsible for all disclosure contained in this Quarterly Report on Form 10-Q, in some cases we have relied on certain market and industry data obtained from third-party sources that we believe to be reliable. Market estimates are calculated by using independent industry publications in conjunction with our assumptions regarding the Ethereum industry and market. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings “Cautionary Note Regarding Forward-Looking Statements,” Part I, Item 1A, “Risk Factors” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as amended, and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q.*

*The following discussion of SharpLink Gaming, Inc. and its wholly owned subsidiaries (collectively, “SharpLink Gaming,” “SharpLink,” “our Company,” the “Company,” “we,” “our,” and “us”), highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion should be read in conjunction with our condensed consolidated financial statements and the related notes included in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission on March 14, 2025 and the Form 10-K/A filed on March 17, 2025. As discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.*

*In this Quarterly Report on Form 10-Q, unless the context indicates otherwise, references to “SharpLink Gaming,” “SharpLink,” “SharpLink US,” “our Company,” “the Company,” “we,” “our,” “ours” and “us” refer to SharpLink Gaming, Inc., a Delaware corporation, and its wholly owned subsidiaries. References to “SharpLink Israel” refer to SharpLink Gaming, Ltd., an Israel limited liability company, with which SharpLink US completed a domestication merger in February 2024.*

### Business Overview

Headquartered in Minneapolis, SharpLink, a Delaware corporation, recently undertook a significant strategic shift by becoming one of the world’s largest publicly traded companies to adopt Ether (“ETH”) as its primary treasury asset. This strategy reflects the Company’s commitment to align the corporate treasury with the future of programmable finance, digital capital markets and decentralized infrastructure. The Company also operates an online performance marketing company that delivers unique fan activation solutions to its sportsbook and online casino gaming partners.

In tandem with this transformation, SharpLink has streamlined its business-building operations around two distinct reportable segments: Ethereum Staking and Affiliate Marketing.

Our Ethereum Staking segment seeks to benefit from any price appreciation in the value of ETH and ETH-based yield generated by participating in the Ethereum network’s staking protocol. As part of Ethereum’s proof-of-stake consensus mechanism, staking enables network participants to help validate transactions and secure the blockchain in exchange for staking rewards paid in ETH. SharpLink delegates our ETH holdings to validators in accordance with the protocol’s staking requirements, thereby earning consistent, protocol-level rewards. These staking rewards represent an operationalized form of yield generation that is both blockchain-native and capital-efficient. Our staking operations are designed to be transparent, compliant and institutionally scalable, with infrastructure and security protocols built to meet the performance and custodial standards of a publicly traded company.

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.

### 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.**

In May 2025, our Board adopted a Treasury Reserve Policy, with ETH serving as the primary treasury reserve asset on an ongoing basis, subject to market conditions and anticipated needs of the business. As a result of the Treasury Reserve Policy, in future periods, we may purchase additional ETH and increase our overall holdings of ETH or sell our ETH and decrease our overall holdings of ETH.

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

A key aspect of our ETH treasury strategy is to raise capital to be used to increase our ETH position in a manner which is accretive to shareholders. This can come in the form of equity, equity-linked debt or other forms of offerings designed to maximize shareholder exposure to ETH within a prudent risk management framework. We have not set a specific target for the maximum amount of ETH we seek to hold.

SharpLink diligently tracks and routinely reports key performance indicators designed to offer investors transparency and insight into the execution and effectiveness of our ETH treasury strategies. Among these metrics, the Company’s ETH concentration (“ETH Concentration”) has emerged as a central performance benchmark and “north star” metric by which we gauge our progress. ETH Concentration, which is calculated by dividing the Company’s total ETH holdings by every 1,000 Assumed Diluted Shares outstanding, reflects both the scale of SharpLink’s ETH accumulation efforts and the capital efficiency of our treasury operations. By prioritizing this metric, we underscore our commitment to driving long-term shareholder value, rather than short-term fluctuations in asset prices or market capitalization.

Assumed Diluted Shares Outstanding represents the sum of (i) SharpLink’s actual shares of common stock issued and outstanding as of the end of each reporting period, plus (ii) the additional shares that would be issued upon the assumed exercise or settlement of all outstanding warrants, pre-funded warrants, stock option awards, and restricted stock units. Assumed Diluted Shares Outstanding is not calculated using the treasury stock method. It does not account for equity award vesting conditions, stock option exercise prices, or contractual restrictions limiting the convertibility of debt instruments. Additionally, it excludes any assumed share repurchases that would ordinarily be considered under the treasury stock method.

By systematically acquiring and staking ETH, we are engaged in building a resilient, Ethereum-native treasury designed to generate sustainable yield through staking rewards while maintaining significant upside exposure to any ETH price appreciation.

Importantly, SharpLink’s ETH treasury strategy is complemented by our active participation in the Ethereum ecosystem. We are a founding member of the Linea Consortium, a leading governance body supporting the development of Ethereum’s most aligned Layer 2 blockchain network. Our participation in the consortium enables us to help steer capital allocation toward high-impact infrastructure, public goods and innovation pipelines that are intended to strengthen the long-term utility and defensibility of the Ethereum network, reinforcing the intrinsic value of our own ETH treasury assets.

To further institutionalize our ETH-centered strategy, SharpLink has bolstered its leadership team with executives who bring deep expertise in both traditional and decentralized finance. In July 2025, we appointed former BlackRock senior executive and digital asset leader Joseph Chalom as Co-Chief Executive Officer, who greatly complements the May 2025 appointment of Joseph Lubin, Co-Founder of Ethereum and Founder and CEO of Consensus, as SharpLink’s new Chairman of the Board. This structure affirms our intent to build a deeply experienced leadership team across global institutional finance and Ethereum ecosystems.

### Continuing Operations – Affiliate Marketing

In December 2021, SharpLink 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. In fact, PAS won industry recognition as the European online gambling industry’s Top Affiliate Manager, Top Affiliate Website and Top Affiliate Program for four consecutive years by both igambingbusiness.com and igamingaffiliate.com. The strategic acquisition of FourCubed brought SharpLink talent with proven experience in affiliate marketing services and recurring net gaming revenue (“NGR”) contracts with many of the world’s leading online casino gambling companies, including Party Poker, bwin, UNIBET, GG Poker, 888 poker, betfair, World Poker Tour and others.

As part of our strategy to expand our affiliate marketing services to the emerging American sports betting market, in November 2022, we began a systematic roll-out of our U.S.-focused performance-based marketing business with the launch of 15 state-specific, content-rich affiliate marketing websites. Our user-friendly, state-specific domains are designed to attract, acquire and drive local sports betting and casino traffic directly to our sportsbook and casino partners’ which are licensed to operate in each respective state. As of January 2024, 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). As more states legalize sports betting, our portfolio of state-specific affiliate marketing properties may expand to include them. We largely utilize search engine optimization and programmatic advertising campaigns to drive traffic to our direct-to-player (“D2P”) sites.

### Continuing Operations – Ethereum Staking

In June 2025, SharpLink formally launched its ETH-centered treasury strategy and established staking as a dedicated operating segment, recognizing its potential to deliver recurring, yield-based revenue. Our staking revenues are derived from the rewards we earn by actively participating in the Ethereum network’s proof-of-stake consensus mechanism. Specifically, SharpLink delegates its ETH holdings to validators that process and verify transactions on the blockchain. In return, the Company receives protocol-level rewards in ETH, typically proportional to the amount staked and the network’s overall activity and performance.

It is noteworthy to mention that the Company’s ETH Staking segment includes both native and liquid staking activities. In native staking, the Company utilized two third-party asset managers to manage and stake ETH on its behalf as of June 30, 2025. This strategy allows the Company, through its agreements with custodians and asset managers, to stake assets with third party validators. Participants stake ETH through these validator nodes and, when chosen as validators by the network, earn staking rewards and transaction fees proportional to their staked amount. Liquid staking is similar to native staking; however, one key difference and intended benefit of this method is the ability to provide the Company with tokens representing digital assets in exchange for its ETH. Liquid staking rewards are accumulated through the protocol conversion rate for the LsETH and will be recognized as gains or losses within other income upon redemption or sale of the LsETH.

Since initiating our staking operations on June 2, 2025, we have accumulated approximately 598,800 ETH as of August 10, 2025. For the three and six months ended June 30, 2025, revenues generated from native staking rewards totaled $28,534 for both reporting periods, as staking only commenced two-thirds of the way through the second quarter of this year. These figures represent the ETH-based rewards accumulated through the delegation of ETH to staking validators, which we expect to scale materially in future quarters in correlation with growth in our treasury balance and broader ETH market performance.

SharpLink views its staking operations as a core strategic pillar of its broader alignment with the Ethereum ecosystem. Our participation not only yields economic return but also contributes directly to Ethereum’s decentralization, scalability, and security. Moreover, we believe staking is foundational to a new generation of blockchain-native capital structures that enable corporations to earn yield without relying on traditional debt instruments, equities, or centralized intermediaries. Our staking efforts are focused on maximizing yield, managing risk and ensuring that SharpLink’s operations meet institutional standards for transparency and efficiency.

### Sales of Business - SHGN and Sports Gaming Client Services

SharpLink’s business-building platform previously included the provision of Free-To-Play (“F2P”) sports game and mobile app development services to a marquis list of customers, which included several of the biggest names in sports and sports betting, including Turner Sports, NBA, NFL, PGA TOUR, NASCAR and BetMGM, among others. In addition, we previously owned and operated a variety of proprietary real-money fantasy sports and sports simulation games and mobile apps through our SHGN sports business unit, which also owned and operated LeagueSafe, one of the fantasy sports industry’s most trusted sources for collecting and protecting private fantasy league dues.

On January 18, 2024, SharpLink sold all of the issued and outstanding membership interests, as applicable, in our Sports Gaming Client Services and SHGN business units to RSports for $22.5 million in an all-cash transaction, pursuant to the signing of a purchase agreement and other related agreements. Nearly all of the employees of these acquired business units moved to RSports to help ensure a seamless transition.

The historical results of our Sports Gaming Client Services and SHGN businesses have been reflected as discontinued operations in our condensed consolidated financial statements for all periods prior to the Sale of Business.

### Regaining Compliance with Nasdaq Continued Listing Standards

As previously reported on Form 10-K in the Company’s Annual Report for the year ended December 31, 2024, filed with the SEC by the Company on March 14, 2025 and 10-K/A filed with the SEC by the Company on March 17, 2025, the Company received a letter on July 17, 2024 from Nasdaq notifying the Company that, because of the closing bid price for its common stock had been below $1.00 per share for 30 consecutive trading days, it was not compliant with the Minimum Bid Price Requirement (the “Bid Price Deficiency Notice”). In accordance with Nasdaq Marketplace Rule 5810 (c)(3)(A), the Company had a period of 180 calendar days, or until January 7, 2025, to regain compliance with the Minimum Bid Price Requirement. Further, as previously reported on the Company’s Current Report on Form 8-K filed with SEC on November 22, 2024, the Nasdaq Staff notified the Company that it did not comply with the $2.5 million minimum stockholders’ equity requirement, as set forth in Nasdaq Listing Rule 5550(a)(2). The Company had 45 calendar days to submit a plan to regain compliance or until January 6, 2025.

O n June 4, 2025, the Company received formal notification from Nasdaq confirming the Company had regained compliance with the Nasdaq Listing Rules. The Company will be subject to a mandatory panel monitor for a period of one year from June 4, 2025. If, within that one-year monitoring period, the Nasdaq Listing Qualifications staff (the “Staff”) finds the Company is again out of compliance with the Equity Rule, then the Staff will issue a delist determination letter, and the Company will have an opportunity to request a new hearing with the initial Nasdaq hearing panel (the “Panel”) or a newly convened hearing panel if the initial Panel is unavailable. Notwithstanding Nasdaq Listing Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to a deficiency under the Equity Rule that arises during the one-year monitoring period, and the Staff will not be permitted to grant additional time for the Company to regain compliance with respect to such deficiency.

### Redomestication from Israel to Delaware

On February 13, 2024, SharpLink Israel completed its previously announced domestication merger (“Domestication Merger”), pursuant to the terms and conditions set forth in an Agreement and Plan of Merger (the “Domestication Merger Agreement”), dated June 14, 2023 and amended July 24, 2023, among SharpLink Israel, SharpLink Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of SharpLink US (“Domestication Merger Sub”) and SharpLink Gaming, Inc. (“SharpLink US”). The Domestication Merger was achieved through a merger of Domestication Merger Sub with and into SharpLink Israel, with SharpLink Israel surviving the merger and becoming a wholly owned subsidiary of SharpLink US. The Domestication Merger was approved by the shareholders of SharpLink Israel at an extraordinary special meeting of shareholders held on December 6, 2023. SharpLink US’s Common Stock commenced trading on the Nasdaq Capital Market under the same ticker symbol, SBET, on February 14, 2024.

### Exchange of Series A-1 Preferred Stock and Series B Preferred Stock for Common Stock and Prefunded Warrants

On April 2, 2025, SharpLink entered into an exchange agreement (“Exchange Agreement”) with Alpha Capital Anstalt (“Alpha”), whereby, pursuant to the terms and conditions set forth in the Exchange Agreement and in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), 600 shares of the Company’s Series A-1 Preferred Stock and 1,040 shares of the Company’s Series B Preferred Stock (collectively, the “Existing Securities”) held by Alpha were exchanged for 38,683 shares of SharpLink’s common stock (“Common Stock”) and 44,650 prefunded warrants to purchase shares of SharpLink’s common stock (“Alpha Prefunded Warrants”) at an exercise price of $0.012. With the exchange of Alpha’s Existing Securities for Common Stock and Alpha Prefunded Warrants, SharpLink no longer has any Series A-1 Preferred Stock or Series B Preferred Stock issued and outstanding.

### Acquisition of 10% Equity Stake in Armchair Enterprises

On February 24, 2025, SharpLink entered into a subscription agreement (“Subscription Agreement”) with U.K.-based Armchair Enterprises Limited (“Armchair”), which owns and operates CryptoCasino.com. The acquisition of a 10% equity stake in Armchair was made for $500,000 in cash, along with a right of first refusal to acquire a controlling interest in Armchair. The investment was recorded at cost and will be measured at cost minus impairment, adjusted for any observable price changes. There was no impairment as of June 30, 2025.

### Reverse Stock Split

On May 5, 2025, the Company effected a one-for-twelve (1:12) reverse stock split of all the Company’s share capital, whereby the Company decreased the number of issued and outstanding shares of common stock from 7,916,206 to 659,684. Proportional adjustments for the reverse stock split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retrospectively adjusted as of the earliest period presented in the financial statements to reflect the reverse stock split.

### $4.5 Million Registered Offering

On May 20, 2025, SharpLink entered into a securities purchase agreement (the “May 20 Purchase Agreement”) pursuant to which the Company agreed to sell and issue, in a reasonable best efforts registered offering (the “May 20 Offering”), an aggregate of 34,000 shares (the “May 20 Shares”) of the Company’s common stock and Pre-Funded Warrants (the “May 20 Pre-Funded Warrants”) to purchase up to 1,496,612 shares of Common Stock (the “May 20 Pre-Funded Warrant Shares”). The May 20 Shares were offered at an offering price of $2.94 per May 20 Share. The gross proceeds from the May 20 Offering, before deducting the placement agent fees and offering expenses, were approximately $4.5 million. A.G.P./Alliance Global Partners acted as the sole placement agent for the May 20 Offering.

### $425 Million Registered Offering

On May 26, 2025, we entered into a securities purchase agreement for a private placement in public entity (the “May 26 PIPE”), raising gross proceeds of $425,000,000 funded in a combination of fiat and Ether. On June 2, 2025, SharpLink announced the closing of the May 26 PIPE was May 30, 2025, and launched our treasury reserve strategy to hold the native cryptocurrency of the Ethereum blockchain, commonly referred to as “Ether” or “ETH,” as the Company’s primary treasury reserve asset. Consensys Software Inc. acted as the lead investor in the May 26 PIPE, along with prominent crypto venture capital firms and infrastructure providers, with an intent to assist the Company in earning distinction as one of the largest ETH-focused treasury strategies in the public markets. A.G.P./Alliance Global Partners acted as the sole placement agent in connection with the May 26 PIPE.

### Board Expansion and Election of New Chairman of the Board

On May 26, 2025, the Board approved the increase of the size of the Company’s Board from four to five directors. The Board elected Joseph Lubin as a director to fill the newly created director position. The Board also elected Mr. Lubin as Chairman of the Board.

### At-The-Market (“ATM”) Offerings

On May 1, 2024, the Company entered into an ATM Sales Agreement (the “2024 ATM Sales Agreement”) with A.G.P./Alliance Global Partners (the “Agent”) pursuant to which the Company may offer and sell, from time to time, through the Agent, as sales agent and/or principal, shares of its common stock having an aggregate offering price of up to $1,676,366, subject to certain limitations on the amount of Common Stock that may be offered and sold by the Company set forth in the ATM Sales Agreement (the “2024 ATM Offering”).

On May 30, 2025, SharpLink entered into a second ATM Sales Agreement (the “Second ATM Agreement”) with the Agent relating to the sale of shares of our Common Stock from time to time, having an aggregate offering price of up to $1,000,000,000. On July 17, 2025, the Company entered into an Amendment to the Second ATM Agreement (the “Amendment”) to (i) increase the number of Shares that may be sold in the ATM Offering to $6,000,000,000 (the “ATM Sales Increase”); and (ii) to permit the forward sale of Shares to be sold in the ATM Offering pursuant to Master Forward Confirmation Letter Agreements (the “Forward Sales Agreements,” and each a “Forward Sales Agreement”).

As of June 30, 2025, SharpLink had raised total net proceeds of $126,045,108 from sales of Shares under our ATM Sales Agreements.

### Liquid Staking Protocol

As part of its ETH-based treasury strategy, the Company participates in liquid staking through the Liquid Collective protocol. In a liquid staking arrangement, the Company transfers ETH to the protocol and receives 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. As such, LsETH is recorded at cost, less any impairment losses.

The Company evaluates LsETH for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. When an indicator of impairment is present, an impairment loss is recognized by the amount the carrying amount of LsETH exceeds its fair value. Impairment losses are not reversible under U.S. GAAP. Increases in the fair value of LsETH are not recognized until a redemption or sale of LsETH occurs. For the period ending June 30, 2025, the Company recognized an impairment loss of $87,813,295 on its LsETH holdings, reducing the carrying value of LsETH to $382,422,632.

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, the Company may not be able to redeem its holdings immediately.

As of June 30, 2025, the Company held 164,731 LsETH tokens. The following table presents a rollforward of our LsETH holdings, including relevant details related to LsETH purchases and impairment losses within the periods presented. We have not sold or redeemed any LsETH as of June 30, 2025.

|  | Source of capital used to purchase LsETH | LsETH original cost basis | LsETH impairment losses | LsETH carrying value | Number of LsETH held | Approx. average purchase price per LsETH | Weighted Average LsETH Conversion Rate at Acquisition | LsETH Conversion Rate at End of Period |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **Balance at March 31, 2025** |  | **$-** | **$-** | **$-** | **-** | **$-** |  |  |
| LsETH acquisitions | (a),(b) | 470,235,927 |  | 470,235,927 | 164,731 | 2,855 |  |  |
| LsETH impairment losses |  |  | (87,813,295) | (87,813,295) |  |  |  |  |
| **Balance at June 30, 2025** |  | 470,235,927 | (87,813,295) | 382,422,632 | 164,731 | 2,855 | 1.081800756 | 1.083328763 |

**(a)** A private-investment-in-public-equity financing executed under Securities Purchase Agreements dated May 26, 2025.

**(b)** At-the-Market Sales Agreement to offer and sell shares of its common stock with an aggregate offering price of up to $1 billion.

33

The following table shows the number of LsETH held at the end of each respective period, 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) for each respective period:

| Period End Date | Number of LsETH Held at End of Quarter | Lowest Market Price of LsETH During the Quarter (c) | Market Value of LsETH held using Lowest Market Price (d) | Highest Market Price of LsETH During the Quarter (e) | Market Value of LsETH held using Highest Market Price (f) | Market Price of LsETH at End of Quarter (g) | Market Value of LsETH Held at End of Quarter (h) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **March 31, 2025** | **-** | **n/a** | **n/a** | **n/a** | **n/a** | **n/a** | **n/a** |
| **June 30, 2025** | 164,731 | $1,542 | $254,084,660 | $3,097 | $510,114,386 | $2,727 | $449,288,671 |

**(c)** 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.

**(d)** 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.

**(e)** 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.

**(f)** 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.

**(g)** 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.

**(h)** 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 the Company 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 the Company would be able to sell its 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 the Company’s holdings could differ materially from the calculated figures.

### Results of Operations

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

|  | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | Change | % Change | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $697,291 | $981,272 | $(283,981) | -28.9% | $1,439,022 | $1,957,218 | $(518,196) | -26.5% |
| Cost of Revenues | 488,202 | 701,142 | (212,940) | -30.4% | 1,098,138 | 1,389,876 | (291,738) | -21.0% |
| Gross profit | 209,089 | 280,130 | (71,041) | -25.4% | 340,884 | 567,342 | (226,458) | -39.9% |
| Gross profit percentage | 30.0% | 28.5% |  |  | 23.7% | 29.0% |  |  |
| Selling, general, and administrative expenses | 2,333,167 | 1,484,680 | 848,487 | 57.1% | 3,390,506 | 3,456,755 | (66,249) | -1.9% |
| Stock-based compensation, related party | 16,379,368 | - | 16,379,368 | 100.0% | 16,379,368 | - | 16,379,368 | 100.0% |
| Impairment on digital intangible assets | 87,813,295 | - | 87,813,295 | 100.0% | 87,813,295 | - | 87,813,295 | 100.0% |
| Realized gains on crypto assets, net | (5,373,583) | - | (5,373,583) | 100.0% | (5,373,583) | - | (5,373,583) | 100.0% |
| Unrealized loss on crypto assets | 2,437,026 | - | 2,437,026 | 100.0% | 2,437,026 | - | 2,437,026 | 100.0% |
| Operating loss | (103,380,184) | (1,204,550) | (102,175,634) | 8482.5% | (104,305,728) | (2,889,413) | (101,416,315) | 3509.9% |
| Total other income | 36,935 | 330,990 | (294,055) | -88.8% | 48,555 | 260,716 | (212,161) | -81.4% |
| Net loss before income taxes | (103,343,249) | (873,560) | (102,469,689) | 11730.1% | (104,257,173) | (2,628,697) | (101,628,476) | 3866.1% |
| Income tax (expense) | (27,286) | (43,104) | 15,818 | -36.7% | (30,094) | (48,778) | 18,684 | -38.3% |
| Net loss from continuing operations | (103,370,535) | (916,664) | (102,453,871) | 11176.8% | (104,287,267) | (2,677,475) | (101,609,792) | 3795.0% |
| Net income (loss) from discontinued operations, net of tax | (52,192) | 453,706 | (505,898) | -111.5% | (110,361) | 14,564,872 | (14,675,233) | -100.8% |
| Net income (loss) | $(103,422,727) | $(462,959) | $(102,959,768) | 22239.5% | $(104,397,628) | $11,887,397 | $(116,285,025) | -978.2% |

### For the Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

For the three months ended June 30, 2025, revenues declined 28.9% to $697,291 compared to $981,272 reported for the same three-month period in the prior year. The decrease is primarily due to the market conditions softening, changes in customer pricing structures and the loss of customers due primarily to evolving regulatory environments in certain foreign markets which affected our affiliate marketing segment, offset by new revenues of $28,534 generated through our ETH staking strategies which commenced on June 2, 2025.

#### Gross Profit

For the three months ended June 30, 2025, gross profit totaled $209,089, reflecting a 25.4% decrease from a gross profit of $280,130 for the three months ended June 30, 2024. Our gross profit margin rose to 30.0% from 28.5% for the three months ended June 30, 2025 and 2024, respectively. These fluctuations represent changes in customer pricing structures during the three months ended June 30, 2025.

#### Digital and Crypto Assets

For the three months ended June 30, 2025, the Company recognized an impairment loss on LsETH digital intangible assets of $87,813,295 compared to $0 for the three months ended June 30, 2024. The Company recognized a gain on crypto assets of $(5,373,583) and recorded an unrealized loss on crypto assets of $2,437,026 for the three months ended June 30, 2025 as compared to $0, respectively for the same three-month period in the prior year. The increase was generated through our ETH staking strategies which commenced on June 2, 2025.

#### Total Operating Expenses

For the three months ended June 30, 2025, total selling, general and administrative expenses increased 57.1% to $2,333,167 from $1,484,680 reported for the same three-month period in the prior year. The increase was directly attributable to $16,379,368 asset manager fees of $377,841 which related to our ETH treasury management strategy, higher compensation costs and additional expense incurred to establish our ETH treasury management strategy.

#### Net Income (Loss) from Continuing Operations

Largely attributable to the impairment on digital intangible assets of LsETH of $87,813,295 and the stock-based compensation expense of $16,379,368 for warrants issued in conjunction with the advisory agreement with Consensys, loss from continuing operations increased -11176.8% to $(103,370,535) for the three months ended June 30, 2025, compared to a net loss from continuing operations of $(916,664) reported for the same three-month period in 2024.

#### Net Income (Loss) from Discontinued Operations, Net of Tax

For the three months ended June 30, 2025, net loss from discontinued operations, net of tax decreased 111.5% to $(52,192), which compared to a net income from discontinued operations, net of tax of $453,706 for the three months ended June 30, 2025. The decrease to net loss in discontinued operations is due to a gain on the wind down of certain MTS business expenses which occurred in the second quarter of 2024.

#### Net Income (Loss)

As a result of the aforementioned reasons, net loss for the three months ended June 30, 2025 totaled $(103,422,727), declining 22239.5% when compared to net loss of $(462,959) reported for three months ended June 30, 2024.

### For the Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

For the six months ended June 30, 2025, revenues declined 26.5% to $1,439,022 compared to $1,957,218 reported for the same six-month period in the prior year. The decrease is primarily due to market conditions softening in our Affiliate Marketing segment, which was driven by changes in customer pricing structures and the loss of customers caused by evolving regulatory environments in certain foreign markets. The decrease was offset by revenues of $28,534 generated from our ETH staking strategies which commenced on June 2, 2025.

#### Gross Profit

For the six months ended June 30, 2025, gross profit totaled $340,884, reflecting a 39.9% decrease from a gross profit of $567,342 for the six months ended June 30, 2024. Our gross profit margin declined to 23.7% from 29.0% for the six months ended June 30, 2025 and 2024, respectively. The decline represents changes in customer pricing structures and government regulations that have unfavorably impacted gross margin in our Affiliate Marketing segment. Further, SharpLink has been impacted by higher casino payouts due to large winnings by players compared to the same six-month period for the period in the prior year. For the online casino business, as increasing payouts are made to winners, this has the impact of reducing gross profit.

#### Crypto Assets and Digital Intangible Assets

For the six months ended June 30, 2025, the Company recognized an impairment loss on LsETH digital intangible assets of $87,813,295 compared to $0 for the six months ended June 30, 2024. The Company recognized a gain on crypto assets of $(7,376,641) and recorded an unrealized loss on crypto assets of $2,437,026 for the six months ended June 30, 2025 as compared to $0, respectively for the same six-month period in the prior year.

#### Total Operating Expenses

For the six months ended June 30, 2025, total selling, general and administrative expenses decreased 1.9% to $3,390,506 from $3,456,755 reported for the same six-month period in the prior year. The slight decrease was attributable due to certain costs incurred from the sale of the SHGN and Sports Gaming Client Services business operations in the first quarter of 2024 and the Company’s redomestication in February 2024.

#### Net Income (Loss) from Continuing Operations

Largely attributable to the impairment on digital intangible assets of LsETH of $87,813,295 and the aforementioned stock based compensation expense for advisory warrants, net loss from continuing operations increased 3795.0% to $(104,287,267) for the six months ended June 30, 2025, compared to a net loss from continuing operations of $(2,677,475) reported for the same six month period in 2024.

#### Net Income (Loss) from Discontinued Operations, Net of Tax

For the six months ended June 30, 2025, net loss from discontinued operations, net of tax decreased -100.8% to $(110,361), which compared to a net income from discontinued operations, net of tax of $14,564,872 for the six months ended June 30, 2025. The decrease to a net loss in discontinued operations is due to the gain on the sale of the SHGN and Sports Gaming Client Services business operations in the first quarter of 2024.

#### Net Income (Loss)

As a result of the aforementioned reasons, net loss for the six months ended June 30, 2025 totaled $(104,397,628), declining 978.2% when compared to net income of $11,887,397 reported for six months ended June 30, 2024.

### Cash Flows

### Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

As of June 30, 2025, cash on hand was $5,071,744, a 253.0% increase when compared to cash on hand of $1,436,729 as of December 31, 2024. The increase was due to net proceeds from the ATM offering in effect during June 2025.

For the six months ended June 30, 2025, net cash used in operating activities from continuing operations totaled $(1,933,542) compared to net cash used in operating activities from continuing operations of $(3,952,960) in the prior year. Net cash used in operating activities from discontinued operations was $(204,931), which compared to net cash used in operating activities of $(17,002,007) from discontinued operations for the same six-month period in 2024. Overall, net cash used in operating activities was $(2,138,473) and $(20,954,967) for the six months ended June 30, 2025 and 2024, respectively. The change in the operating cashflows was largely attributable to the sale of the Company’s SHGN and Sports Gaming Client Services businesses in January 2024.

For the six months ended June 30, 2025, net cash used in the Company’s investing activities from continuing operations totaled $(406,319,197), an increase of 274119.7% when compared to cash provided by investing activities from continuing operations of $148,281 for the same six-month period in 2024. For the six months ended June 30, 2025 and 2024, net cash used in investing activities from discontinued operations was $- and $(18,857,834), respectively. The increase in net cash used in investing activities for the six months ended June 30, 2025 versus 2024 was due to the Company’s new ETH Treasury Management Strategy and the related purchases of $405,816,679 of ETH crypto assets. The decrease in total cash used in investing activities for discontinued operations is due to cash received from the sale of business in January 2024 of $22,500,000, net of the cash transferred of $41,357,834. The majority of the cash transferred of $41,357,834 was reflected in discontinued operations customer deposits liability and deferred revenue of $36,959,573 and $4,888,704, respectively.

For the six months ended June 30, 2025, net cash generated by financing from continuing operations was $412,018,574 a 3439.5% increase when compared to net cash used by financing activities from continuing operations of $(12,337,694) for the same six-month period in 2024. Net cash generated by financing activities related to cash proceeds from the ATM offering of $130,217,148, and net capital raise on May 20, 2025 of $3,848,000 and net cash proceeds from the $425.0 million private placement offering of $281,707,589. For the six months ended June 30, 2025 net cash used in financing activities from discontinued operations was $- compared to net cash used by financing activities of $(5,835,352) for the six months ended June 30, 2024.

### Liquidity and Capital Resources

As of June 30, 2025, we had working capital of $8,119,867. For the three and six months ended June 30, 2025, we had a net loss from continuing operations of $(103,370,535) and $(104,287,267) compared to a net loss from continuing operations of $(916,664) and $(2,677,475) respectively, reported for the same three and six months in 2024.

### Principal Sources of Liquidity

Our principal sources of liquidity are our cash and cash equivalents balances, cash flow from operations, and proceeds from equity financing transactions, including pursuant to our at-the-market offering facility under the amended Second ATM Agreement with AGP.

On May 2, 2024, Company entered into an ATM Sales Agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“AGP” or the “Agent”) pursuant to which the Company may offer and sell, from time to time, through the Agent, as sales agent and/or principal, shares (“Common Stock”), having an aggregate offering price of up to $1,676,366, subject to certain limitations on the amount of Common Stock that may be offered and sold by the Company set forth in the ATM Sales Agreement (the “Offering”). On February 4, 2025, the Company, under the terms of the ATM Sales Agreement, filed a prospectus supplement that amended the number shares of Common Stock having an aggregate offering price of up to $1,835,052.

On May 30, 2025, SharpLink entered into a second ATM Sales Agreement with the Agent relating to the sale of shares of our Common Stock from time to time, having an aggregate offering price of up to $1,000,000,000.

As of June 30, 2025, SharpLink raised total net proceeds of $126,045,108 from sales of Shares under our ATM Sales Agreements. The proceeds were used to further the Company’s ETH treasury reserve strategy as well as provide for working capital.

Under our 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, 2025 and December 31, 2024, we held approximately 24,704 and 0 ETH in crypto assets, respectively, all of which are unencumbered. As of June 30, 2025 and December 31, 2024, we held approximately 164,731 and 0 LsETH in digital intangible assets, respectively. As of August 10th we held approximately 598,800 ETH, all of which are unencumbered. As discussed further below, although we do not anticipate needing to use our ETH to meet our obligations in the next 12 months, we believe our substantial ETH holdings can serve as a source of liquidity, if necessary.

### 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 twelve months. We expect that our cash and cash equivalents as of June 30, 2025, together with cash and cash equivalents generated by our operations, may not be sufficient to satisfy these needs over the next months. However, we anticipate being able to use proceeds from equity or debt financings to meet these needs. Our ability to obtain equity and debt financing is subject to market conditions and other factors outside of our control, and we may not be able to obtain equity or debt financing in a timely manner, on favorable terms, or at all. Although we do not anticipate needing to use our ETH to meet our short-term liquidity needs, to the extent necessary, we would seek to use proceeds from the sale of our ETH 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, 2025, together with cash and cash equivalents generated by our operations, will not be sufficient to satisfy these needs. As a result, we would seek to satisfy these needs through various options that we expect to be available to us, such proceeds from equity or debt financings, or the sale of our ETH. 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 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

On June 30, 2025, 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. Since our inception, except for standard operating leases accounted for prior to January 1, 2022, 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 six months ended June 30, 2025.

### 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

### Recently Issued Accounting Pronouncements Not Yet Adopted

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. The Company is currently evaluating the potential impact of this guidance on its 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 us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 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 consolidated financial statements and disclosures.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires enhanced disclosures surrounding income taxes, particularly related to rate reconciliation and income taxes paid information. In particular, on an annual basis, companies will be required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Companies will also be required to disclose, on an annual basis, the amount of income taxes paid, disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions above a quantitative threshold. The standard is effective for the Company for annual periods beginning January 1, 2025 on a prospective basis, with retrospective application permitted for all prior periods presented. The Company will adopt ASU 2023-09 for the annual period ending December 31, 2025 and is currently evaluating the impact of this guidance on its disclosures.

## Market risk

As filed, 143 characters.

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.

## Controls and procedures

As filed, 2,418 characters.

### Evaluation of Disclosure and Control Procedures

In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The Company’s Chief Executive Officer and the Company’s Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2025 and concluded that the Company’s disclosure controls and procedures are effective. The term disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is accumulated, recorded, processed, summarized and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure to be reported within the time periods specified in the SEC’s rules and forms.

### Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2025, beginning with the implementation of our ETH treasury strategy, we implemented new internal controls surrounding the acquisition, safeguarding, custody, accounting and reporting of our digital assets. Other than these new controls over our digital assets, there have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three and six months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. June 30, 2025

The Company’s management has concluded its internal control over financial reporting was effective as of the end of the period covered by this report. The Company continues to monitor and assess its internal controls related to digital asset transactions and reporting, and will continue to evaluate the effectiveness of these controls as the business evolves. The Company’s management is committed to ensuring the effectiveness of its internal controls and compliance with applicable regulatory requirements.

## Risk factors

As filed, 54,716 characters.

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 strategy and related exposures.

***The launch of central bank digital currencies (“CBDCs”) may adversely impact our business.***

The introduction of a government-issued digital currency could eliminate or reduce the need or demand for private-sector issued crypto currencies, or significantly limit their utility. National governments around the world could introduce CBDCs, which could in turn limit the size of the market opportunity for cryptocurrencies, including ETH.

***Absent federal regulations, there is a possibility that ETH may be classified as a “security.” Any classification of ETH as a “security” would subject us to additional regulation and could materially impact the operation of our business.***

Neither the SEC nor any other U.S. federal or state regulator has publicly stated whether they agree that ETH is a “security.” Despite the Executive Order titled “Strengthening American Leadership in Digital Financial Technology” which includes as an objective, “protecting and promoting the ability of individual citizens and private sector entities alike to access and … to maintain self-custody of digital assets,” ETH has not yet been classified with respect to U.S. federal securities laws. Therefore, while (for the reasons discussed below) we believe that ETH is not a “security” within the meaning of the U.S. federal securities laws, and 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, we acknowledge that a regulatory body or federal court may determine otherwise. Our belief, even if reasonable under the circumstances, would not preclude legal or regulatory action based on such a finding that ETH is a “security” which would require us to register as an investment company under the Investment Company Act.

We have also adapted our process for analyzing the U.S. federal securities law status of ETH and other cryptocurrencies over time, as guidance 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 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 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.

We acknowledge, however, that the SEC, a federal court or another relevant entity could take a different view. The regulatory treatment of ETH is such that it has drawn significant attention from legislative and regulatory bodies, in particular the SEC which has previously stated it deemed ETH a security. Application of securities laws to the specific facts and circumstances of digital assets is complex and subject to change. Our conclusion, even if reasonable under the circumstances, would not preclude legal or regulatory action based on a finding that ETH, or any other digital asset we might hold is a “security.” As such, we are at risk of enforcement proceedings against us, which could result in potential injunctions, cease-and-desist orders, fines, and penalties if Ether was determined to be a security by a regulatory body or a court. Such developments could subject us to fines, penalties, and other damages, and adversely affect our business, results of operations, financial condition and prospects.

***If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated.***

Under Sections 3(a)(1)(A) and (C) of the Investment Company Act, a company generally will be deemed to be an “investment company” if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding, or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) on an unconsolidated basis. Rule 3a-1 under the Investment Company Act generally provides that notwithstanding the Section 3(a)(1)(C) test described in clause (ii) above, an entity will not be deemed to be an “investment company” for purposes of the Investment Company Act if no more than 45% of the value of its assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) consists of, and no more than 45% of its net income after taxes (for the past four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees’ securities companies, securities issued by qualifying majority owned subsidiaries of such entity, and securities issued by qualifying companies that are controlled primarily by such entity. We do not believe that we are an “investment company” as such term is defined in either Section 3(a)(1)(A) or Section 3(a)(1)(C) of the Investment Company Act.

Recently, we have begun focusing on pursuing opportunities to expand our portfolio into digital assets. With respect to Section 3(a)(1)(A), following the PIPE Offering, the proceeds of the PIPE Offering are expected to used to acquire ETH, which will result in our ownership or holding of ETH in excess of 40% of our total assets. Since we believe ETH is not an investment security, we do not hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting, or trading in securities within the meaning of Section 3(a)(1)(A) of the Investment Company Act.

With respect to Section 3(a)(1)(C), we believe we satisfy the elements of Rule 3a-1 and therefore are deemed not to be an investment company under, and we intend to conduct our operations such that we will not be deemed an investment company under, Section 3(a)(1)(C). We believe that we are not an investment company pursuant to Rule 3a-1 under the Investment Company Act because, on a consolidated basis with respect to wholly-owned subsidiaries but otherwise on an unconsolidated basis, no more than 45% of the value of the Company’s total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) consists of, and no more than 45% of the Company’s net income after taxes (for the last four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees’ securities companies, securities issued by qualifying majority owned subsidiaries of the Company, and securities issued by qualifying companies that are controlled primarily by the Company.

ETH and other digital assets, as well as new business models and transactions enabled by blockchain technologies, present novel interpretive questions under the Investment Company Act. There is a risk that assets or arrangements that we have concluded are not securities could be deemed to be securities by the SEC or another authority for purposes of the Investment Company Act, which would increase the percentage of securities held by us for Investment Company Act purposes. The SEC has requested information from a number of participants in the digital assets’ ecosystem, regarding the potential application of the Investment Company Act to their businesses. For example, in an action unrelated to the Company, in February 2022, the SEC issued a cease-and-desist order under the Investment Company Act to BlockFi Lending LLC, in which the SEC alleged that BlockFi was operating as an unregistered investment company because it issued securities and also held more than 40% of its total assets, excluding cash, in investment securities, including the loans of digital assets made by BlockFi to institutional borrowers.

If we were deemed to be an investment company, Rule 3a-2 under the Investment Company Act is a safe harbor that provides a one-year grace period for transient investment companies that have a bona fide intent to be engaged primarily, as soon as is reasonably possible (in any event by the termination of such one-year period), in a business other than that of investing, reinvesting, owning, holding, or trading in securities, with such intent evidenced by the company’s business activities and an appropriate resolution of its board of directors. The grace period is available not more than once every three years and runs from the earlier of (i) the date on which the issuer owns securities and/or cash having a value exceeding 50% of the issuer’s total assets on either a consolidated or unconsolidated basis or (ii) the date on which the issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Accordingly, the grace period may not be available at the time that we seek to rely on Rule 3a-2; however, Rule 3a-2 is a safe harbor and we may rely on any exemption or exclusion from investment company status available to us under the Investment Company Act at any given time. Furthermore, reliance on Rule 3a-2, Section 3(a)(1)(C), or Rule 3a-1 could require us to take actions to dispose of securities, limit our ability to make certain investments or enter into joint ventures, or otherwise limit or change our service offerings and operations. If we were to be deemed an investment company in the future, restrictions imposed by the Investment Company Act — including limitations on our ability to issue different classes of stock and equity compensation to directors, officers and employees and restrictions on management, operations, and transactions with affiliated persons — likely would make it impractical for us to continue our business as contemplated, and could have a material adverse effect on our business, results of operations, financial condition, and prospects.

***ETH is created and transmitted through the operations of the peer-to-peer Ethereum network, a decentralized network of computers running software following the Ethereum protocol. If the Ethereum network is disrupted or encounters any unanticipated difficulties, the value of Ethereum could be negatively impacted.***

If the Ethereum network is disrupted or encounters any unanticipated difficulties, then the processing of transactions on the Ethereum network may be disrupted, which in turn may prevent us from depositing or withdrawing ETH from our accounts with our custodian or otherwise effecting ETH transactions. Such disruptions could include, for example: the price volatility of ETH; the insolvency, business failure, interruption, default, failure to perform, security breach, or other problems of participants, custodians, or others; the closing of ETH trading platforms due to fraud, failures, security breaches, or otherwise; or network outages or congestion, power outages, or other problems or disruptions affecting the Ethereum network.

In addition, although we do not currently intend to mine ETH, digital asset validating operations can consume significant amounts of electricity, which may have a negative environmental impact and give rise to public opinion against allowing, or government regulations restricting, the use of electricity for validating operations. Additionally, validators may be forced to cease operations during an electricity shortage or power outage.

Our ETH treasury strategy exposes us to various risks, including risks associated with ETH.

Our ETH strategy exposes us to various risks, including the following:

*ETH is a highly volatile asset.* ETH is a highly volatile asset that has traded below $1,500 per ETH and above $4,000 per ETH on the Coinbase exchange (our principal market for ETH) in the 12 months preceding the date of this Quarterly Report on Form 10-Q. The trading price of ETH decreased following the launch of our ETH treasury strategy to the end of this quarter, and such declines may occur again in the future.

*Our ETH holdings significantly impact our financial results and the market price of our listed securities.* Our ETH holdings could significantly affect our financial results and if we continue to increase our overall holdings of ETH in the future, they will have an even greater impact on our financial results and the market price of our listed securities.

*Our assets are concentrated in ETH.* The vast majority of our assets are concentrated in our ETH holdings or receipt tokens (i.e., LsETH) from liquid staking of ETH. The concentration of our assets in ETH limits our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of treasury assets. If there is a significant decrease in the price of ETH, we may experience a more pronounced impact on our financial condition than if we invested our cash in a more diverse portfolio of treasury assets.

*We primarily purchase ETH using proceeds from equity financings.* Our ability to achieve the growth objectives of our ETH strategy depends in significant part on our ability to continue raising capital to purchase ETH. If we are unable to obtain equity, equity-linked or debt financing on favorable terms or at all, we may not be able to successfully execute on our ETH strategy.

*Our ETH strategy has not been tested over an extended period of time or under different market conditions.* We are continually examining the risks and rewards of our strategy to acquire and hold ETH and to stake such ETH to generate staking rewards. This strategy has not been tested over an extended period of time or under different market conditions. For example, although we believe ETH has the potential to serve as a hedge against inflation in the long term, the short-term price of ETH declined in recent periods during which the inflation rate increased. If ETH prices were to decrease or our ETH strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our listed securities would be materially adversely impacted.

*Our ETH staking activities could result in “slashing risks” and loss of staked ETH.* ETH staking exposes us to slashing risks, defined as a punitive mechanism built into the Ethereum network, designed to penalize validators and their delegators for misbehavior or failing to follow network rules, which could result in the loss of our staked ETH.

*We are subject to provider and counterparty risks, including risks relating to our custodians.* Although we have implemented various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the ETH and LsETH we own in custody accounts at U.S.-based, institutional-grade custodians and negotiating contractual arrangements intended to establish that our property interest in custodially-held ETH and LsETH is not subject to claims of our custodians’ creditors, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts. If our custodially-held ETH were nevertheless considered to be the property of our custodians’ estates in the event that any such custodians were to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership rights with respect to such ETH, or delaying or hindering our access to our ETH holdings or LsETH holdings, and this may ultimately result in the loss of the value related to some or all of such ETH and LsETH, which could have a material adverse effect on our financial condition as well as the market price of our listed securities.

*The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of ETH.* A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry have highlighted the counterparty risks applicable to owning and transacting in digital assets. Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our ETH or LsETH, nor have such events adversely impacted our access to our ETH or LsETH, they have, in the short-term, likely negatively impacted the adoption rate and use of ETH. Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of ETH, limit the availability to us of financing collateralized by ETH, or create or expose additional counterparty risks.

*Changes in the accounting treatment of our ETH holdings or LsETH holdings could have significant accounting impacts, including increasing the volatility of our results.* We have adopted ASU 2023-08 as of January 1, 2025, which requires us to measure our ETH holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our ETH in net income each reporting period beginning January 1, 2025. ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our ETH holdings. Due in particular to the volatility in the price of ETH, we expect the measurement at fair value to have a material impact on our financial results in future periods, increase the volatility of our financial results, and affect the carrying value of our ETH on our balance sheet. ASU 2023-08 could also have adverse tax consequences. These impacts could in turn have a material adverse effect on our financial results and the market price of our listed securities. Additionally, our LsETH holdings as of June 30, 2025 are accounted for as digital intangible assets within the scope of ASC 350-30 at cost-less-impairment. Significant declines in the price of LsETH may result in material impairment within our financial results.

***ETH is a highly volatile asset, and fluctuations in the price of ETH are likely to influence our financial results and the market price of our listed securities.***

ETH is a highly volatile asset, and fluctuations in the price of ETH are likely to influence our financial results and the market price of our listed securities. Our financial results and the market price of our listed securities would be adversely affected, and our business and financial condition would be negatively impacted, if the price of ETH decreased substantially (as it has in the past), including as a result of:

- decreased user and investor confidence in ETH, including due to the various factors described herein;
- investment and trading activities, such as (i) trading activities of highly active retail and institutional users, speculators, miners and investors; (ii) actual or expected significant dispositions of ETH by large holders, including the expected liquidation of digital assets associated with entities that have filed for bankruptcy protection and the transfer and sale of ETH associated with significant hacks, seizures, or forfeitures; and (iii) actual or perceived manipulation of the spot or derivative markets for ETH or spot ETH exchange-traded products (“ETPs”);
- negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, ETH or the broader digital assets industry, for example, (i) public perception that ETH can be used as a vehicle to circumvent sanctions, including sanctions imposed on Russia or certain regions related to the ongoing conflict between Russia and Ukraine, or to fund criminal or terrorist activities, such as the purported use of digital assets by Hamas to fund its terrorist attack against Israel in October 2023; (ii) expected or pending civil, criminal, regulatory enforcement or other high profile actions against major participants in the ETH ecosystem; (iii) additional filings for bankruptcy protection or bankruptcy proceedings of major digital asset industry participants, such as the bankruptcy proceeding of FTX Trading and its affiliates; (iv) the actual or perceived environmental impact of ETH and related activities, including environmental concerns raised by private individuals, governmental and non-governmental organizations, and other actors related to the energy resources consumed in ETH related processes, and (v) changes in government regulations;
- changes in consumer preferences and the perceived value or prospects of ETH;
- competition from other digital assets that exhibit better speed, security, scalability, or energy efficiency, that feature other more favored characteristics, that are backed by governments, including the U.S. government, or reserves of fiat currencies, or that represent ownership or security interests in physical assets;
- a decrease in the price of other digital assets, including stablecoins, or the crash or unavailability of stablecoins that are used as a medium of exchange for ETH purchase and sale transactions to the extent the decrease in the price of such other digital assets or the unavailability of such stablecoins may cause a decrease in the price of ETH or adversely affect investor confidence in digital assets generally;
- developments relating to the ETH protocol that may impact (i) its security, speed, scalability, usability, or value, (b) failures to upgrade the protocol to adapt to security, technological, legal or other challenges, and (iii) changes to the ETH protocol that introduce software bugs, security risks or other elements that adversely affect ETH;
- disruptions, failures, unavailability, or interruptions in service of trading venues for ETH;
- the filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of digital asset custodians, trading venues, lending platforms, investment funds, or other digital asset industry participants;

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- regulatory, legislative, enforcement and judicial actions that adversely affect the price, ownership, transferability, trading volumes, legality or public perception of ETH, or that adversely affect the operations of or otherwise prevent digital asset custodians, trading venues, lending platforms or other digital assets industry participants from operating in a manner that allows them to continue to deliver services to the digital assets industry;
- reductions in staking rewards of ETH, or increases in the costs associated with ETH staking, including increases in electricity costs and hardware and software used in staking, or new or enhanced regulation or taxation of ETH staking, which could further increase the costs associated with ETH staking, any of which may cause a decline in support for the Ethereum protocol;
- transaction congestion and fees associated with processing transactions of ETH or lengthened periods to exit ETH staking or other delays to unstaking or withdrawing ETH from staking protocols;
- ETH staking exposes us to slashing risks, defined as a punitive mechanism built into the Ethereum network, designed to penalize validators and their delegators for misbehavior or failing to follow network rules, which could result in the loss of our staked ETH;
- macroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions, and fiat currency devaluations;
- changes in national and international economic and political conditions, including, without limitation, federal government policies, trade tariffs and trade disputes, the adverse impacts attributable to the current conflict between Russia and Ukraine and the economic sanctions adopted in response to the conflict, and the broadening of the Israel-Hamas conflict to other countries in the Middle East; and
- developments in mathematics or technology, including in digital computing, algebraic geometry and quantum computing, that could result in the cryptography used by the ETH blockchain becoming insecure or ineffective

A “fork” in the Ethereum protocol could adversely affect the value of the Company’s shares.

The Ethereum network operates using open-source protocols, meaning that any user can become a node by downloading the Ethereum Client and participating in the Ethereum network, and no permission of a central authority or body is needed to do so. In addition, anyone can propose a modification to the Ethereum network’s source code and then propose that the Ethereum network community support the modification. These proposed modifications to the Ethereum network’s source code, if adopted, can lead to forks.

Forks in the Ethereum protocol may lead to disruptions, security risks or declines in ETH value. A “fork” occurs when a change to the Ethereum network’s source code creates two incompatible versions of the blockchain, resulting in separate networks. Forks may be planned (e.g., upgrades to the Ethereum protocol like the Merge or Dencun) or unplanned (e.g., due to software bugs or validator disagreement). Planned forks are designed to improve performance or introduce new features, but they may introduce bugs, security vulnerabilities, or unexpected economic consequences. Unplanned forks can arise from client software inconsistencies or protocol failures, causing network instability or fragmentation. In either case, forks may result in operational outages, user confusion, replay attacks and reduced validator participation, all of which could undermine confidence in the Ethereum network and adversely affect the price of ETH. Our ETH holdings, staking activities and related treasury strategy could be materially negatively impacted in the event of such a fork.

The concentration of our ETH holdings enhances the risks inherent in our ETH treasury strategy.

While ETH concentration is monitored as the total number of ETH units (including native-staked and liquid-staked ETH) held by us divided by 1,000 assumed diluted shares outstanding and is used to evaluate our capital allocation strategy and digital asset leverage on a per-share basis, significant swings in the price of ETH may lead to increased risks in our ETH strategy.

***ETH and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.***

ETH and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and 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 ETH or the ability of individuals or institutions such as us to own or transfer ETH.

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 ETH or the ability of individuals or institutions such as us to own or transfer ETH.

It is not possible to predict whether, or when, new laws will be enacted that change the legal framework governing digital assets or provide additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation 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 laws or regulations, or changes to existing laws or regulations, might impact the value of digital assets generally and ETH specifically. The consequences of any new law or regulation relating to digital assets and digital asset activities could adversely affect the market price of ETH, as well as our ability to hold or transact in ETH, and in turn adversely affect the market price of our listed securities.

Moreover, the risks of engaging in an ETH strategy are relatively novel and have created and could continue to create complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.

The growth of the digital assets industry in general, and the use and acceptance of ETH in particular, may also impact the price of ETH and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of ETH may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to ETH, institutional demand for ETH as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for ETH as a store of value or means of payment, and the availability and popularity of alternatives to ETH. Even if growth in ETH adoption occurs in the near or medium-term, there is no assurance that ETH usage will continue to grow over the long-term.

Because ETH has no physical existence beyond the record of transactions on the Ethereum blockchain, a variety of technical factors related to the Ethereum blockchain could also impact the price of ETH. For example, malicious attacks, inadequate staking fees to incentivize validating of ETH transactions, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the Ethereum blockchain and negatively affect the price of ETH. The liquidity of ETH may also be reduced and damage to the public perception of ETH may occur if financial institutions were to deny or limit banking services to businesses that hold ETH, provide ETH-related services or accept ETH as payment, which could also decrease the price of ETH.

***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.

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

Due in part to the volatility of ETH, we incurred $87.7 million of cumulative impairment on our LsETH holdings (a receipt token from ETH liquid staking) through June 30, 2025, which losses were reflected in the financial statements for the respective period in which the losses were incurred.

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.

***The availability of spot ETPs for ETH and other digital assets may adversely affect the market price of our listed securities.***

Although ETH and other digital assets have experienced a surge of investor attention since ETH was invented in 2015, until recently investors in the United States had limited means to gain direct exposure to ETH through traditional investment channels, and instead generally were only able to hold ETH through “hosted” wallets provided by digital asset service providers or through “unhosted” wallets that expose the investor to risks associated with loss or hacking of their private keys. Given the relative novelty of digital assets, general lack of familiarity with the processes needed to hold ETH directly, as well as the potential reluctance of financial planners and advisers to recommend direct ETH holdings to their retail customers because of the manner in which such holdings are custodied, some investors have sought exposure to ETH through investment vehicles that hold ETH and issue shares representing fractional undivided interests in their underlying ETH holdings. These vehicles, which were previously offered only to “accredited investors” on a private placement basis, have in the past traded at substantial premiums to net asset value, possibly due to the relative scarcity of traditional investment vehicles providing investment exposure to ETH.

Although we are an operating company, and we believe we offer a different value proposition than a ETH investment vehicle such as a spot ETH ETP, investors may nevertheless view our common stock as an alternative to an investment in an ETP, and choose to purchase shares of a spot ETP instead of our common stock. They may do so for a variety of reasons, including if they believe that ETPs offer a “pure play” exposure to ETH that is generally not subject to federal income tax at the entity level as we are, or the other risk factors applicable to an operating business, such as ours.

As a result of the foregoing factors, availability of spot ETPs for ETH and other digital assets could have a material adverse effect on the market price of our listed securities.

***The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of ETH and adversely affect our business.***

As a result of our ETH strategy, our assets are concentrated in our ETH holdings. Accordingly, the emergence or growth of digital assets other than ETH may have a material adverse effect on our financial condition. There are numerous alternative digital assets and many entities, including consortiums and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets. Additionally, the Ethereum network has completed multiple major upgrades since then and may undertake additional upgrades in the future. If the mechanisms for validating transactions in other alternative digital assets are perceived as superior to the Ethereum network, those digital assets could gain market share relative to ETH.

Other alternative digital assets that compete with ETH in certain ways include “stablecoins,” which are designed to maintain a constant price because of, for instance, their issuers’ promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown rapidly as an alternative to ETH and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms.

Additionally, central banks in some countries have started to introduce digital forms of legal tender. For example, China’s CBDC project was made available to consumers in January 2022, and governments including the United States, the United Kingdom, the European Union, and Israel have been discussing the potential creation of new CBDCs. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, ETH and other digital assets as a medium of exchange or store of value. As a result, the emergence or growth of these or other digital assets could cause the market price of ETH to decrease, which could have a material adverse effect on our business, prospects, financial condition, and operating results.

***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.

***If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our ETH, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our ETH and our financial condition and results of operations could be materially adversely affected.***

Substantially all of the ETH and LsETH we own is held in custody accounts at institutional-grade digital asset custodians. Security breaches and cyberattacks are of particular concern with respect to our ETH. ETH and other blockchain-based cryptocurrencies and the entities that provide services to participants in the ETH ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. A successful security breach or cyberattack could result in:

- a partial or total loss of our ETH in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who hold our ETH;
- harm to our reputation and brand;
- improper disclosure of data and violations of applicable data privacy and other laws; or
- significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure.

Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader blockchain ecosystem or in the use of the Ethereum network to conduct financial transactions, which could negatively impact us.

Attacks upon systems across a variety of industries, including industries related to ETH, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service providers or partners. We may experience breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. In addition, certain types of attacks could harm us even if our systems are left undisturbed. For example, certain threats are designed to remain dormant or undetectable, sometimes for extended periods of time, or until launched against a target and we may not be able to implement adequate preventative measures. The risk of cyberattacks could also be increased by cyberwarfare in connection with the ongoing Russia-Ukraine and Israel-Hamas conflicts, or other future conflicts, including potential proliferation of malware into systems unrelated to such conflicts. Any future breach of our operations or those of others in the ETH industry, including third-party services on which we rely, could materially and adversely affect our business.

***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.

***We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.***

Mutual funds, ETFs and their directors and management are subject to extensive regulation as “investment companies” and “investment advisers” under U.S. federal and state law; this regulation is intended for the benefit and protection of investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of or changes to our ETH treasury strategy, the manner in which our ETH is custodied, our ability to engage in transactions with affiliated parties and our operating and investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies and investment advisers. Our board of directors has broad discretion over the investment, leverage and cash management policies it authorizes, whether in respect of our ETH holdings or other activities we may pursue, and has the power to change our current policies, including our strategy of acquiring and holding ETH.

***Due to the unregulated nature and lack of transparency surrounding the operations of many ETH trading venues, ETH trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in ETH trading venues and adversely affect the value of our ETH.***

ETH trading venues are relatively new and, in many cases, unregulated. Furthermore, there are many ETH trading venues which do not provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance. As a result, the marketplace may lose confidence in ETH trading venues, including prominent exchanges that handle a significant volume of ETH trading and/or are subject to regulatory oversight, in the event one or more ETH trading venues cease or pause for a prolonged period the trading of ETH or other digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational problems.

***Our ETH strategy exposes us to risk of non-performance by providers and counterparties.***

Our ETH strategy exposes us to the risk of non-performance by providers and counterparties, whether contractual or otherwise. Risk of non-performance includes inability or refusal of a provider or counterparty to perform because of a deterioration in the counterparty’s financial condition and liquidity or for any other reason. For example, our execution partners, custodians, or other counterparties might fail to perform in accordance with the terms of our agreements with them, which could result in a loss of ETH, a loss of the opportunity to generate funds, or other losses.

Our primary provider risk with respect to our ETH is custodian performance obligations under the various custody arrangements we have entered into. In particular, SharpLink is reliant on our custodial relationships and agreements with Anchorage Digital Bank N.A. and its affiliates, as well as Coinbase Inc. and its affiliates. Any failures of our custodians to perform could have an impact on our business, prospects, financial condition and operating results. In addition, in the event of a termination of one or more of our custody agreements, the Company would be required to contract with an alternative custodian at terms and conditions that may not be as favorable as our current custody agreements.

A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry have highlighted the perceived and actual counterparty and provider risk applicable to digital asset ownership and trading. Although these bankruptcies, closures and liquidations have not resulted in any loss or misappropriation of our ETH, nor have such events adversely impacted our access to our ETH, legal precedent created in these bankruptcy and other proceedings may increase the risk of future rulings adverse to our interests in the event one or more of our custodians becomes a debtor in a bankruptcy case or is the subject of other liquidation, insolvency or similar proceedings.

While all of our custodians are subject to regulatory regimes intended to protect customers in the event of a custodial bankruptcy, receivership or similar insolvency proceeding, no assurance can be provided that our custodially-held ETH and LsETH will not become part of the custodian’s insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings. Additionally, if we pursue any strategies to create income streams or otherwise generate funds using our ETH holdings, we would become subject to additional counterparty risks. Any significant non-performance by providers and counterparties, including in particular the custodians with which we custody substantially all of our ETH, could have a material adverse effect on our business, prospects, financial condition and operating results.

***If we are unable to recruit or retain skilled personnel, or if we lose the services of our Chairman of the Board of Directors and Co-Chief Executive Officers, our business, operating results, and financial condition could be materially adversely affected.***

Our future success depends on our continuing ability to attract and retain highly skilled personnel. Competition for employees is intense. We may not be able to retain our current key employees or attract, train, and retain other highly skilled personnel in the future. Competition for qualified employees in the technology industry has historically been high. Our future success also depends in large part on the continued service of Joseph Lubin, our Chairman of the Board of Directors, Rob Phythian and Joseph Chalom as Co-Chief Executive Officers of the Company, and Robert DeLucia, Chief Financial Officer of the Company. If we lose the services of Messrs. Lubin, Phythian, Chalom or DeLucia, or if we are unable to attract, train and retain the highly skilled personnel we need, our business, operating results and financial condition could be materially adversely affected.

Filed Aug 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001641172-25-024107. Last ingested by Listed: Oct 27, 2026, 16:57 ET. No prices; not investment advice.