Hyperliquid Strategies Inc

Previous wording

References in this report (the “Quarterly Report”) to “we,” “our,” “us,” “HSI” or the “Company” refer to Hyperliquid Strategies Inc, and references to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations as of December 31, 2025 and for the three and six months ended December 31, 2025 should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report.

Current wording

References in this report (the “Quarterly Report”) to “we,” “our,” “us,” “HSI” or the “Company” refer to Hyperliquid Strategies Inc, and references to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations as of March 31, 2026 and for the three and nine months ended March 31, 2026 should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report.

Previous wording

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of our final prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 27, 2025 in connection with the Transaction (as defined below) (the “Final Prospectus”). Our securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Current wording

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of our final prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 27, 2025 in connection with the Transaction (as defined below) (the “Final Prospectus”), and in other documents we may file from time to time with the SEC. Our securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Previous wording

We are a Delaware corporation and U.S. publicly listed cryptocurrency treasury company. We are working to provide our stockholders with value through accumulating HYPE, the native token of the Hyperliquid Layer-1 blockchain ecosystem, which we believe to be one of the largest and fastest growing revenue pools in digital assets. While HYPE digital asset treasury serves as our primary focus, our existing business operations leveraging Sonnet’s expertise in biotech will continue.

Current wording

We are a Delaware corporation and U.S. publicly listed digital asset treasury company. Our primary business is accumulating HYPE, the native token of the Hyperliquid Layer-1 blockchain ecosystem, on behalf of our stockholders. We believe Hyperliquid has established a significant and growing on-chain revenue base and that HYPE offers a long-term value proposition for our stockholders.

Previous wording

We operate as a HYPE digital asset treasury reserve company. Our primary focus is building, managing, and optimizing our treasury with HYPE tokens, which are the native digital assets of the Hyperliquid Layer-1 blockchain. Our core operations include accumulating our long-term HYPE position and staking HYPE tokens, which we expect will generate ongoing staking rewards. While staking remains our central focus, secondary initiatives may include decentralized finance (DeFi) activities within the ecosystem to enhance long-term growth and income generation. Our aim is to provide capital-efficient and productive access to the HYPE token for U.S. and institutional investors, generating stockholder returns that individual holders may not be able to replicate through staking, yield optimization, and active ecosystem engagement.

Current wording

Our primary focus is building, managing, and optimizing our treasury with HYPE tokens, which are the native digital assets of the Hyperliquid Layer-1 blockchain. Our core operations include accumulating our long-term HYPE position and staking HYPE tokens, which we expect will generate ongoing staking rewards. While staking remains our central focus, secondary initiatives may include decentralized finance (DeFi) activities within the ecosystem to enhance long-term growth and income generation. Our aim is to provide capital-efficient and productive access to the HYPE token for U.S. and institutional investors, generating stockholder returns that individual holders may not be able to replicate through staking, yield optimization, and active ecosystem engagement.

Previous wording

PIPE and the Contributions consisted of $299.9 million of cash and 12,517,592 HYPE tokens valued at $580.5 million based on the fair value of the shares issued for the tokens for an aggregate fair value of $880.4 million, before deducting the allocated transaction costs. At the Closing, the shares of Sonnet common stock and membership interests in Rorschach issued pursuant to the Closing PIPE and the Contributions, respectively, were converted into an aggregate of 123,354,259 shares of HSI common stock (“Common Stock”) and 166,173 shares of HSI Series A preferred stock (“Series A Preferred Stock”). The gross proceeds amount of $880.4 million was recorded to Common Stock and Series A Preferred Stock based on the respective par values, with the excess of the gross proceeds above par values recorded to additional paid-in capital. Additional paid-in capital was reduced for the impact of cash paid for transaction costs of $2.3 million related to the PIPE financing. Additionally, as noted in Note 5 of the accompanying financial statements, on the Closing Date, such approximately 12.5 million HYPE tokens were valued at $411.3 million, resulting in a loss on commitment of $169.2 million recognized by the Company on the HYPE tokens. The majority of net proceeds from the Transaction are intended to establish our HYPE treasury strategy. In December 2025, we purchased an additional 321,224 HYPE tokens with an estimated total value of approximately $9.0 million at the respective times of purchase.

Current wording

Concurrently with the execution of the BCA, (i) certain accredited investors entered into subscription agreements with us and Sonnet, pursuant to which Sonnet agreed to issue, and the subscribers agreed to purchase, immediately prior to the Closing, shares of Sonnet common stock, pursuant to a private placement in accordance with Section 4(a)(2) of the Securities Act (the “Closing PIPE”) and(ii) certain accredited investors entered into contribution agreements with Rorschach, pursuant to which such investors agreed to contribute HYPE tokens and/or cash to Rorschach immediately prior to the Closing (the “Contributions”). The gross proceeds received from the Closing PIPE and the Contributions consisted of $299.9 million of cash and 12,517,592 HYPE tokens valued at $580.5 million based on the fair value of the shares issued for the tokens for an aggregate fair value of $880.4 million, before deducting the allocated transaction costs. At the Closing, the shares of Sonnet common stock and membership interests in Rorschach issued pursuant to the Closing PIPE and the Contributions, respectively, were converted into an aggregate of 123,354,259 shares of HSI common stock (“Common Stock”) and 166,173 shares of HSI Series A preferred stock (“Series A Preferred Stock”). The gross proceeds amount of $880.4 million was recorded to Common Stock and Series A Preferred Stock based on the respective par values, with the excess of the gross proceeds above par values recorded to additional paid-in capital. Additional paid-in capital was reduced for the impact of cash paid for transaction costs of $2.3 million related to the PIPE financing. Additionally, as noted in Note 5 of the accompanying financial statements, on the Closing Date, such approximately 12.5 million HYPE tokens were valued at $411.3 million, resulting in a loss on commitment of $169.2 million recognized by the Company on the HYPE tokens. The majority of net proceeds from the Transaction are intended to establish our HYPE treasury strategy. In December 2025, we purchased an additional 321,224 HYPE tokens for approximately $9.0 million at the respective times of purchase. During the three months ended March 31, 2026, we purchased an additional 5,884,940 HYPE tokens for approximately $160.4 million at the respective times of purchase.

Previous wording

$1.0 billion of shares of our Common Stock. Sales of our Common Stock to Chardan under the Purchase Agreement, and the timing of any sales, will be determined by us from time to time in our sole discretion and will depend on a variety of factors, including, among other things, market conditions, the trading price of our Common Stock and determinations by us regarding the use of proceeds from any sale of such Common Stock. The net proceeds from any sales under the facility will depend on the frequency with, and prices at which the shares of our Common Stock are sold to Chardan. To the extent we sell shares under the Purchase Agreement, we currently plan to use any proceeds therefrom for general corporate purposes, including potential purchases of HYPE tokens.

Current wording

On October 22, 2025, we entered into an agreement (the “Purchase Agreement”) to purchase up to $1.0 billion of shares of our Common Stock with Chardan Capital Markets LLC (“Chardan”). Pursuant to and upon the terms and subject to the conditions and limitations set forth in the Purchase Agreement, beginning on the later of the Closing Date and the date the registration statement registering the resale of such shares is effective (the “Commencement Date”), we have the right from time to time at our option to direct Chardan to purchase up to $1.0 billion of shares of our Common Stock. Sales of our Common Stock to Chardan under the Purchase Agreement, and the timing of any sales, will be determined by us from time to time in our sole discretion and will depend on a variety of factors, including, among other things, market conditions, the trading price of our Common Stock and determinations by us regarding the use of proceeds from any sale of such Common Stock. The net proceeds from any sales under the facility will depend on the frequency with, and prices at which the shares of our Common Stock are sold to Chardan. To the extent we sell shares under the Purchase Agreement, we currently plan to use any proceeds therefrom for general corporate purposes, including potential purchases of HYPE tokens.

Previous wording

Per the requirements of the Purchase Agreement, we paid total fees of $0.3 million to Chardan for the three and six months ended December 31, 2025. Additional commitment fees will be required depending on the amount of shares sold by us, including $0.3 million payable once we have received an aggregate of $25.0 million in proceeds from sales of Common Stock under the Purchase Agreement and $0.6 million payable once we have received an aggregate of $50.0 million proceeds from sales of Common Stock under the Purchase Agreement.

Current wording

Per the requirements of the Purchase Agreement, we paid total fees of $0.0 million and $0.3 million to Chardan for the three and nine months ended March 31, 2026. Additional commitment fees will be required depending on the amount of shares sold by us, including $0.3 million payable once we have received an aggregate of $25.0 million in proceeds from sales of Common Stock under the Purchase Agreement and $0.6 million payable once we have received an aggregate of $50.0 million proceeds from sales of Common Stock under the Purchase Agreement.

Previous wording

On December 8, 2025, we announced that our Board had authorized a stock repurchase program of up to $30 million of the Company’s outstanding Common Stock that will be in place for up to 12 months. Through December 31, 2025, a total of 2,941,557 shares of Common Stock were repurchased by us for a total of approximately $10.1 million. At December 31, 2025, approximately $0.7 million remained payable by us, and is included on our condensed consolidated balance sheets as a part of “Other current liabilities.”

Current wording

On December 8, 2025, we announced that our Board had authorized a stock repurchase program of up to $30 million of the Company’s outstanding Common Stock that will be in place for up to 12 months. Through March 31, 2026, a total of 3,067,097 shares of Common Stock were repurchased by us for a total of approximately $10.6 million.

Previous wording

HYPE digital assets are initially recorded at cost and then subsequently remeasured at fair value as of the balance sheet date with changes in fair value recognized as unrealized gains or losses in operating income (expense). Upon derecognition of HYPE digital assets, we recognize realized gains or losses in operating income (expense) on the condensed consolidated statements of operations, based upon the fair value of HYPE digital assets on the date of derecognition.

Current wording

Digital assets are initially recorded at cost and then subsequently remeasured at fair value as of the balance sheet date with changes in fair value recognized as unrealized gains or losses in operating income (expense). Upon derecognition of the digital assets, we recognize realized gains or losses in operating income (expense) on the condensed consolidated statements of operations, based upon the fair value of digital assets on the date of derecognition.

Previous wording

We recognize revenue by applying the guidance in ASC 606, Revenue from Contracts with Customers (“ASC 606”). HYPE tokens earned from validator operations, in the form of staking rewards, are recognized as revenue when we satisfy our performance obligations (i.e., providing our tokens to the validator in order to validate blocks or transactions as determined by the protocol) ratably over the contract term. The HYPE tokens earned are non-cash consideration and therefore measured at fair value at the inception of each contract.

Current wording

We recognize revenue by applying the guidance in ASC 606, Revenue from Contracts with Customers (“ASC 606”). HYPE tokens earned from validators, in the form of staking rewards, are recognized as revenue when we satisfy our performance obligations (i.e., providing our tokens to the validator in order to validate blocks or transactions as determined by the protocol) ratably over the contract term. The HYPE tokens earned are non-cash consideration and therefore measured at fair value at the inception of each contract.

Previous wording

We hold a portion of our capital in highly liquid money market funds in addition to cash deposits placed with financial institutions of high credit quality. These allocations offer liquidity while providing a yield in the form of interest income. This income is classified as “Interest income” on our condensed consolidated statement of operations.

Current wording

We hold a portion of our capital in highly liquid money market funds and short term treasury bills in addition to cash deposits placed with financial institutions of high credit quality. These allocations offer liquidity while providing a yield in the form of interest income. This income is classified as “Interest income” on our condensed consolidated statements of operations.

Previous wording

Selling, general and administrative and research and development expenses consist primarily of payroll and related expenses, legal and other professional services, insurance expense, and expenses related to the Equity Facility. We anticipate that our general and administrative expenses will decrease in the short term as requirements to support our continued research and development and commercial activities decline subsequent to the establishment of our treasury strategy, in addition to the completion of the BCA, discussed in Note 5 of the accompanying financial statements.

Current wording

Selling, general and administrative and research and development expenses consist primarily of payroll and related expenses, legal and other professional services, insurance expense, and expenses related to the Equity Facility. We anticipate that our general and administrative expenses will decrease in the short term as requirements to support our continued research and development and commercial activities decline subsequent to the establishment of our treasury strategy, in addition to the completion of the BCA and APA, discussed in Note 5 of the accompanying financial statements.

Previous wording

The Company has selected June 30 as its fiscal year end. The following is a summary of the Company’s results of operations for the fiscal quarter and six months ended December 31, 2025.

Current wording

The Company has selected June 30 as its fiscal year end. The following is a summary of the Company’s results of operations for the fiscal quarter and nine months ended March 31, 2026.

Previous wording

Revenue for the three months ended December 31, 2025 totaled $0.5 million, which was net staking revenue. As noted above, we present staking rewards as revenue on a net basis. Thus, there was no cost of revenue for the three months ended December 31, 2025.

Current wording

Revenue for the three months ended March 31, 2026 totaled $2.6 million, which was net staking revenue. As noted above, we present staking rewards as revenue on a net basis. Thus, there was no cost of revenue for the three months ended March 31, 2026.

Previous wording

Unrealized loss on HYPE digital tokens for the three months ended December 31, 2025 was $93.2 million, resulting from the fair value changes of HYPE at December 31, 2025. Additionally, we recognized a loss on HYPE contribution commitment of $155.8 million, which was the result of a decrease in fair value of the 12.5 million HYPE tokens from the original commitment amount, as further described in Note 5 of the accompanying condensed consolidated financial statements.

Current wording

Unrealized gain on digital tokens for the three months ended March 31, 2026 was $198.4 million, resulting from the fair value changes of digital assets during the three months ended March 31, 2026.

Previous wording

Our selling, general and administrative and research and development expenses for the six months ended December 31, 2025 were $3.5 million, which includes, but is not limited to, professional fees (i.e., legal, audit, and fees related to the Equity Facility), salaries and wages, insurance, and research and development costs.

Current wording

Our selling, general and administrative and research and development expenses for the three months ended March 31, 2026 were $7.2 million, which includes professional fees, salaries and wages, insurance, and research and development costs.

Previous wording

Other income for the three months ended December 31, 2025 totaled approximately $0.9 million. Other income for the three months ended December 31, 2025 resulted from interest income, which is derived from money market funds and interest received on cash positions held with financial institutions.

Current wording

Other income for the three months ended March 31, 2026 totaled approximately $1.4 million. Other income for the three months ended March 31, 2026 primarily resulted from interest income, which is derived from money market funds, treasury assets, and interest received on cash positions held with financial institutions.

Previous wording

Revenue for the six months ended December 31, 2025 totaled $0.5 million, which was net staking revenue. As noted above, we present staking rewards as revenue on a net basis. Thus, there was no cost of revenue for the six months ended December 31, 2025.

Current wording

Revenue for the nine months ended March 31, 2026 totaled $3.1 million, which was net staking revenue. As noted above, we present staking rewards as revenue on a net basis. Thus, there was no cost of revenue for the nine months ended March 31, 2026.

Previous wording

Unrealized loss on HYPE digital tokens for the six months ended December 31, 2025 was $93.2 million, resulting from the fair value changes of HYPE at December 31, 2025. Additionally, we recognized a loss on HYPE contribution commitment of $169.2 million, which was the result of a decrease in fair value of the 12.5 million HYPE tokens from the original commitment amount, as further described in Note 5 of the accompanying condensed consolidated financial statements.

Current wording

Unrealized gain on HYPE digital tokens for the nine months ended March 31, 2026 was $105.2 million, resulting from the fair value changes of HYPE at March 31, 2026. Additionally, we recognized a loss on HYPE contribution commitment of $169.2 million, which was the result of a decrease in fair value of the 12.5 million HYPE tokens from the original commitment amount, as further described in Note 5 of the accompanying condensed consolidated financial statements.

Previous wording

We recognized a loss of $35.6 million on acquired IPR&D from the Sonnet acquisition for the six months ended December 31, 2025, as it was determined to have no alternative future use at the time of the asset acquisition.

Current wording

We recognized a loss of $35.6 million on acquired IPR&D from the Sonnet acquisition for the nine months ended March 31, 2026, as it was determined to have no alternative future use at the time of the asset acquisition.

Previous wording

Our selling, general and administrative and research and development expenses for the three months ended December 31, 2025 were $3.5 million, which includes, but is not limited to, professional fees (i.e., legal, audit, and fees related to the Equity Facility), salaries and wages, insurance, and research and development costs.

Current wording

Our selling, general and administrative and research and development expenses for the nine months ended March 31, 2026 were $10.7 million, which includes professional fees, fees related to the Equity Facility, salaries and wages, insurance, and research and development costs.

Previous wording

Other income for the six months ended December 31, 2025 totaled approximately $0.9 million. Other income for the six months ended December 31, 2025 resulted from interest income, which is derived from money market funds and interest received on cash positions held with financial institutions.

Current wording

Other income for the nine months ended March 31, 2026 totaled approximately $2.2 million. Other income for the nine months ended March 31, 2026 primarily resulted from interest income, which is derived from money market funds, treasury assets, and interest received on cash positions held with financial institutions.

Previous wording

We recognized an income tax expense of $17.8 million for the three months ended December 31, 2025 related to the creation of a deferred tax liability at the closing of the transaction partially offset by a deferred tax benefit created by the decline in value of our HYPE digital tokens since Closing.

Current wording

We recognized an income tax expense of $60.5 million for the nine months ended March 31, 2026 related to the creation of a deferred tax liability at the closing of the transaction in addition to a deferred tax liability created by the increase in value of our HYPE digital tokens during the period.

Previous wording

As disclosed in the June 30, 2025 financial statements of Rorschach, there was substantial doubt about Rorschach's ability to continue as a going concern for at least one year from the date the financial statements were issued. This was based on Rorschach having insufficient funds to pay its liabilities, absent any additional funding, which obtaining such funding was uncertain. During the three months ended December 31, 2025, we raised significant capital through the Closing PIPE, and entered into the Purchase Agreement, which has alleviated the substantial doubt about our ability to continue as a going concern.

Current wording

As disclosed in the June 30, 2025 financial statements of Rorschach, there was substantial doubt about Rorschach's ability to continue as a going concern for at least one year from the date the financial statements were issued. This was based on Rorschach having insufficient funds to pay its liabilities, absent any additional funding, which obtaining such funding was uncertain. During the nine months ended March 31, 2026, we raised significant capital through the Closing PIPE, and entered into the Purchase Agreement, which has alleviated the substantial doubt about our ability to continue as a going concern.

Previous wording

Our net losses were $304.5 million and $317.9 million for the three and six months ended December 31, 2025, respectively. As of December 31, 2025, we had an accumulated deficit of approximately $318.5 million. As of December 31, 2025, we had cash and cash equivalents of $281.9 million and HYPE digital assets with a fair value of $327.6 million, working capital (inclusive of cash and cash equivalents) of $278.0 million and stockholders’ equity of $589.8 million.

Current wording

Our net income (loss) was $152.5 million and ($165.4) million for the three and nine months ended March 31, 2026, respectively. As of March 31, 2026, we had an accumulated deficit of approximately $165.9 million. As of March 31, 2026, we had cash and cash equivalents of $113.1 million and HYPE digital assets with a fair value of $689.0 million, working capital (inclusive of cash and cash equivalents) of $111.0 million and stockholders’ equity of $743.5 million.

Previous wording

During the six months ended December 31, 2025, our sources and uses of cash were as follows:

Current wording

During the nine months ended March 31, 2026, our sources and uses of cash were as follows:

Previous wording

Net cash used by operating activities was approximately ($8.3) million, which includes a net loss of $317.9 million, offset by $315.3 million of net non-cash items and net changes in operating assets and liabilities of ($5.7) million.

Current wording

Net cash used in operating activities was approximately ($15.3) million, which includes a net loss of ($165.4) million, offset by $157.1 million of net non-cash items and net changes in operating assets and liabilities of ($7.0) million.

Previous wording

Net cash provided by investing activities for the six months ended December 31, 2025 was approximately $1.3 million, which was related to the cash acquired from the acquisition of Sonnet, offset by the purchase of HYPE digital assets.

Current wording

Net cash used in investing activities for the nine months ended March 31, 2026 was approximately ($160.9) million, which was primarily related to the cash acquired from the acquisition of Sonnet, offset by the purchase of HYPE digital assets.

Previous wording

Net cash provided by financing activities for the six months ended December 31, 2025 totaled approximately $288.9 million, which was primarily attributable to $300.6 million of net cash proceeds from the Closing PIPE, offset by $2.3 million in payments for equity issuance costs and $9.4 million in payments for the repurchase of Common Stock.

Current wording

Net cash provided by financing activities for the nine months ended March 31, 2026 totaled approximately $289.2 million, which was primarily attributable to $302.1 million of net cash proceeds from the Closing PIPE, and subsequent equity issuances, offset by $2.3 million in payments for equity issuance costs and $10.6 million in payments for the repurchase of Common Stock.

Previous wording

In the normal course of business, we enter into contracts for services. The amount owed by us as of December 31, 2025 is $9.1 million and is included in “Accounts payable” and “Other current liabilities” on the condensed consolidated balance sheet.

Current wording

In the normal course of business, we enter into contracts for services. The amount owed by us as of March 31, 2026 is $6.4 million and is included in “accounts payable” and “other current liabilities” on the condensed consolidated balance sheets.