ETHZilla Corp

ETHZilla CORPORATION,FORMERLY 180 LIFE SCIENCES CORP. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1 - BUSINESS ORGANIZATION AND NATURE OF OPERATIONS

ETHZilla CORPORATION, formerly 180 Life Sciences Corp., formerly known as KBL Merger Corp. IV (“180LS”, or together with its subsidiaries, the “Company”), was a blank check company organized under the laws of the State of Delaware on September 7, 2016. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination withone or more businesses.

180 Life Corp. (“180”, f/k/a 180 Life Sciences Corp. and CannBioRx Life Sciences Corp.) is a wholly-owned subsidiary of the Company and was incorporated in the State of Delaware on January 28, 2019. The Company is located in the United States (“U.S.”) and is a medical pharmaceutical company focused upon unmet medical needs in the areas of inflammatory diseases, fibrosis, and chronic pain by employing innovative research and, where appropriate, combination therapies, through 180’s three wholly-owned subsidiaries, 180 Therapeutics L.P. (“180 LP”), CannBioRex Pharmaceuticals Corp. (“CBR Pharma”), and Katexco Pharmaceuticals Corp. (“Katexco”). 180 LP, CBR Pharma and Katexco are together, the “180 Subsidiaries.” Katexco was incorporated on March 7, 2018 and CBR Pharma was incorporated on March 8, 2018, under the provisions of the British Corporation Act of British Columbia. 180 LP was formed as a limited partnership on September 6, 2013, in Delaware. Additionally, 180’s wholly-owned subsidiaries Katexco Callco, ULC, Katexco Purchaseco, ULC, CannBioRex Callco, ULC, and CannBioRex Purchaseco, ULC were formed in the Canadian Province of British Columbia on May 31, 2019 to facilitate the acquisition of Katexco, CBR Pharma and 180 LP. On July 1, 2021, the assets and liabilities of the Canadian companies (Katexco and CBR Pharma) were transferred to their respective subsidiaries, which are Katexco Pharmaceuticals Corp. (“Katexco U.S.”) and CannBioRex Pharma Limited (“CBR Pharma U.K.”).

Historically, he Company had been a clinical stage biotechnology company focused on the development of therapeutics for unmet medical needs in chronic pain, inflammation, fibrosis, and other inflammatory diseases,

In November 2024, the biotechnology related to α7nAChR was returned to Stanford University and the Company is currently evaluating strategic options for the TNF and CBD programs, including but not limited to a sale or disposition, return of these assets to the underlying owners or other strategic alternatives. While there are several parties conducting preliminary due diligence, no formal bids have been received to date, and the Company has not yet made a final determination with respect to these assets.

On September 29, 2024, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Elray Resources, Inc. (“Elray”). Pursuant to the Purchase Agreement, Elray agreed to sell us certain source code and intellectual property relating to a “back-end technology platform” which is a key component of creating an online blockchain casino (the “Purchased Assets”). Elray agreed to provide support and assistance to the Company in connection with the building and launching of a fully operational casino utilizing the Purchased Assets.

At the time of the closing of the Purchase Agreement, the Company planned to use this technology platform to establish a blockchain-based business aimed at the global iGaming market. However, during the three months ended September 30, 2025, the Company made a strategic shift in its operations and determined it would no longer pursue the commercialization of its “back-end” gaming platform, which incorporates blockchain technology and cryptocurrency operability, which we acquired in September 2024 (the “Gaming Technology Platform”), and its pharmaceutical research business. As a result, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205, the assets and operations relating to the Gaming Technology Platform and the pharmaceutical research business are reflected on the September 30, 2025 and December 31, 2024 Consolidated Balance Sheets as “assets or liabilities of discontinued operations” and the results of operations are reflected in the Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2025 and 2024 as “net loss from discontinued operations”. See Note 3 and 15.

NOTE 2 - GOING CONCERN AND MANAGEMENT’S PLANS

In the consolidated financial statements as of and for the three months ended June 30, 2025 and prior periods, management disclosed substantial doubt about the Company’s ability to continue as a going concern. Due to the significant fundraising events undertaken by the Company during the three months ended September 30, 2025, as disclosed below in Notes 8 and 13, management determined that the Company will have sufficient cash flows to meet its obligations over the next 12 months, and as such the substantial doubt about the Company’s ability to continue as a going concern has been alleviated.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with U.S. GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the three and nine months ended September 30, 2025, are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2025. For further information, refer to the financial statements and footnotes included in the Company’s annual financial statements for the fiscal year ended December 31, 2024, which are included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2025.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the condensed consolidated financial statements. The Company’s significant estimates and assumptions used in these condensed consolidated financial statements include, but are not limited to, the fair value of financial instruments including staking receivables and convertible debt, the valuation of the Company’s digital assets, warrants, option, and embedded derivatives. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and may cause actual results to differ from those estimates.

Foreign Currency Translation

The Company’s reporting currency is the United States dollar. The functional currency of certain subsidiaries was the British Pound (“GBP”). Equity accounts are translated at historical exchange rates. The resulting translation adjustments are recognized in stockholders’ equity as a component of accumulated other comprehensive income.

Comprehensive income is defined as the change in equity of an entity from all sources other than investments by owners or distributions to owners and includes foreign currency translation adjustments as described above.

Foreign currency gains and losses resulting from transactions denominated in foreign currencies, including intercompany transactions, are included in results of operations. Such amounts have been classified within general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss.

Cash, cash equivalents and restricted cash equivalents

We consider all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents, including certificates of deposits and United States Treasury securities. As of September 30, 2025 and December 31, 2024, our cash and cash equivalents totaled $53,309,509 and $4,567,251, respectively. Restricted cash equivalents of $505,591,875 included cash equivalents pledged as collateral against the Company’s convertible debt. See note 10.

Concentrations of Credit Risk

The Company is subject to concentration of credit risk arising from its cash, cash equivalents, digital assets, and counterparties, including financial institutions, custodians, and Ethereum blockchain (“ETH”), liquid staking tokens (“LST”), and liquid staking incentive tokens. The Company maintains cash balances with financial institutions that, at times, may exceed federally insured limits. The Company manages this risk by placing its cash with high-credit-quality institutions.

The Company holds significant balances of digital assets, including ETH, with third-party custodians. The Company’s risk is mitigated by using reputable, regulated custodians and by monitoring their financial health and operational controls. However, the failure of any custodian could result in a loss of some or all digital assets held.

In addition, the Company participates in liquid staking arrangements, whereby ETH is deposited intothird-party protocols (such as ether.fi or Puffer) in exchange for liquid staking tokens. These protocols may not be subject to the same regulatory oversight as traditional financial institutions, and the Company is exposed to risks including, but not limited to:

The Company regularly evaluates the creditworthiness and security practices of its custodians and protocol operators, and may diversify holdings across multiple platforms to mitigate concentration risk. The Company also monitors regulatory developments that may affect the safety and recoverability of its digital assets.

Intangible Assets

Intangible assets consist of licensed patents as well as technology licenses acquired in connection with the Reorganization. Licensed patents are amortized over the remaining life of the patent. Technology licenses represent the fair value of licenses acquired for the development and commercialization of certain licenses and knowledge. The technology licenses are amortized on a straight-line basis over the estimated useful lives of the underlying patents. It will be necessary to monitor and possibly adjust the useful lives of the licensed patents and technology licenses depending on the results of the Company’s research and development activities.

In addition, the Company acquired the Gaming Technology Platform from Elray in 2024. Both the licensed patents and Gaming Technology Platform are classified as discontinued operations in accordance with ASC 205. See Note 15.

Digital Assets

The Company’s digital assets include Ether, the native cryptocurrency of the Ethereum blockchain (“ETH”), liquid staking tokens(“LST”), and liquid staking incentive tokens.

Crypto assets within the scope of ASC 350-60 Intangibles—Goodwill and Other—Crypto Assets(“ASC 350-60):

ETH and liquid staking incentive tokens have been determined to fall within the scope of ASC 350-60. The company reflects crypto assets held at fair value on the consolidated balance sheets within the Digital Assets line item. Changes in the fair value of crypto assets are recognized in income, reflected within the Digital asset gains and losses within the consolidated statement of operations.

In determining the fair value of digital assets in accordance with ASC 820,Fair Value Measurement (“ASC 820”). The Company utilizes Coinbase as the principal market. The Company uses a first-in, first-out methodology to assign costs to digital assets.

Non-monetary receivable with an embedded derivative within the scope of ASC 310, Receivables (“ASC 310”) and ASC 815-15, Derivatives and Hedging – Embedded Derivatives (“815-15”):

The Company’s LST, comprised of weETH and pufETH, has been determined to fall within the scope of ASC 310 and ASC 815-15 and is accounted for as a non-monetary receivable with an embedded derivative. The host contract represents the holder’s right to receive ETH denominated in USD and is carried at cost.

The embedded derivative component is measured at fair value at each reporting date, using observable prices in the principal market in accordance with ASC 815-15 and ASC 820, Fair Value Measurement (“ASC 820”). Where quoted prices are directly available in active markets, the embedded derivatives are classified as Level 1 within the fair value hierarchy; if observable market prices are not available, management utilizes other relevant inputs and valuation techniques, which may result in Level 2 or Level 3 classification.

Upon redemption of liquid staking tokens for ETH, the Company derecognizes both the receivable and the embedded derivative, recognizing ETH at fair value. Any difference between the carrying amount and the fair value of ETH received is recognized as a gain or loss, which amounted to $24,199,453 for the period.

Management has exercised judgment in determining the principal market, fair value hierarchy, and bifurcation of embedded derivatives. There is diversity in industry practice regarding the measurement and recognition of liquid staking tokens and related rewards. The Company continually evaluates the principal market and the reliability of inputs to ensure that fair value measurements reflect current market conditions.

ETH Staking

Beginning in August 2025, the Company used the proceeds from its capital raising activities to acquire and deploy ETH in staking activities, which can include native staking, liquid staking and restaking. The Company has entered into separate contractual agreements with various third-party entities to facilitate its ETH staking activities. The Company commenced both native staking in August of 2025 and commenced liquid staking in September 2025. The Company intends for staking to become a primary yield generation strategy of the Company within the current fiscal year.

The Company utilized one third-party asset manager to manage and stake ETH on its behalf as of September 30, 2025. Under these arrangements, the Company’s ETH is held by a qualified custodian and staked in the Ethereum protocol through a third-party validator operator (e.g., Coinbase). The validator operator manages the staking process and delegates the Company’s ETH to network validators. When selected by the Ethereum network, these validators earn staking rewards and transaction fees proportional to the amount of stake delegated.

ETH used in native staking is retained on the Company’s balance sheet as a crypto asset measured at fair value in accordance with ASC 350-60. The Company does not derecognize ETH when participating in native staking because it retains the ability to direct the use of the asset and obtain substantially all benefits.

The validator operator (e.g., Coinbase) is considered the customer, as it receives the Company’s staking capacity (the performance obligation) and, in exchange, provides staking rewards. The contract duration for native staking is typically determined by the daily reward cycle, consistent with the period in which enforceable rights and obligations exist under the Company’s agreements with validator operators. The Company has determined that a new contract is effectively renewed each day, such that contract inception changes daily. Revenue from native staking is recognized over time because the customer simultaneously receives and consumes the benefit of the Company’s performance throughout the daily reward cycle.

Revenue from native staking is recognized at the end of each daily period, when the Company’s right to staking rewards becomes determinable (i.e., when the constraint is lifted). The amount of revenue recognized is measured at the fair value of rewards at contract inception for that day, net of validator commissions, in accordance with ASC 606,Revenue from Contracts with Customers (“ASC 606”) and ASC 820. Rewards represent noncash consideration and are measured using quoted prices in the principal market at contract inception. Subsequent changes in the fair value of ETH after initial recognition are recorded as unrealized gains or losses.

Because the Company is not the principal to the block validation service, but rather provides staking capacity to third parties, it does not control the full output of the reward-generating activity and instead receives net staking rewards after validator commissions are deducted. Staking revenue is presented on a net basis, reflecting only the portion of protocol rewards to which the Company is entitled. Asset manager fees are presented as separate operating expenses.

The Company participates in liquid staking arrangements, whereby ETH is deposited into third-party protocols (such as ether.fi or Puffer) in exchange for liquid staking tokens (e.g., weETH, pufETH). These tokens represent the right to redeem underlying ETH and accrued rewards, and may be transferred, traded, or used in other decentralized finance (DeFi) transactions, providing ongoing liquidity and access to additional yield opportunities. In certain arrangements, liquid staking tokens may also be restaked into additional protocols to earn incremental rewards.

Upon deposit, the Company derecognizes the ETH and recognizes a non-financial receivable with an embedded derivative, reflecting the right to receive ETH and protocol rewards. The host contract is measured at cost (the value of ETH deposited), while the embedded derivative is bifurcated and measured at fair value through earnings, reflecting exposure to ETH price and protocol yield variability, in accordance with ASC 310 and ASC 815-15. Subsequent changes in the fair value of liquid staking tokens and embedded derivatives after initial recognition are not included in revenue but are recognized separately in earnings as unrealized gains or losses. Gains or losses realized upon redemption or sale of liquid staking tokens are recognized in accordance with ASC 610-20,Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”).

The protocol or platform (e.g., ether.fi or Puffer) to which the Company delegates its ETH is considered the customer, as it receives the Company’s staking capacity (the performance obligation) and, in exchange, provides staking rewards and incentive tokens (based on hitting certain ETH deposit thresholds). The contract duration for liquid staking is based on the ability of either party to terminate with 30 days’ notice; for accounting purposes, a new contract is considered to begin each day, reflecting the daily renewal of enforceable rights and obligations (i.e., a new 30 day contract is renewed on a daily basis). Revenue from liquid staking is recognized over time because the customer simultaneously receives and consumes the benefit of the Company’s performance throughout the duration of the contract.

Revenue from liquid staking is recognized at the end of each daily period, when the Company’s right to staking rewards and incentive tokens (e.g., PUFFER, ETHFI) becomes determinable (i.e., when the constraint is lifted). The amount of revenue recognized is measured at the fair value of rewards and incentive tokens at contract inception for that day, net of validator commissions, in accordance with ASC 606 and ASC 820. Rewards represent noncash consideration and are measured using quoted prices in the principal market at contract inception. Fair value for liquid staking tokens is determined based on the underlying ETH and accrued rewards to which the Company is entitled, rather than the quoted token price, because the redemption ratio between ETH and liquid staking tokens (e.g., weETH, pufETH) fluctuates over time as rewards accrue and protocol fees apply.

Because the Company is not the principal to the block validation service, but rather provides staking capacity to third parties, it does not control the full output of the reward-generating activity and instead receives net staking rewards after validator commissions are deducted. Asset manager or protocol fees are presented as separate operating expenses.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606.

To determine revenue recognition for contracts with customers, the Company performs the following five steps:

The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange.

Native Staking Revenue

The validator operator (e.g., Coinbase) is considered the customer, as it receives the Company’s staking capacity (the performance obligation). The Company acts as an agent in native staking transactions, delegating ETH to third-party validator operators who perform the technical validation responsibilities.

The contract duration for native staking is defined by the daily reward cycle under the Company’s agreements. Native staking rewards are recognized as revenue over time and at the end of each contract period (typically daily) when the Company’s share of rewards is determinable. The fair value of staking rewards, which are received as noncash consideration, is measured using quoted prices from the principal market at contract inception of each daily period, in accordance with ASC 606 and ASC 820. Subsequent changes in the fair value of ETH after initial recognition are recorded as unrealized gains or losses. The amount of revenue recognized is presented net of validator or other protocol fees.

Liquid Staking Revenue

The protocol or platform (e.g., ether.fi or Puffer) is considered the customer, as it receives the Company’s staking capacity (the performance obligation). The Company acts as an agent in liquid staking transactions, delegating ETH to third-party protocols or platforms who perform the technical validation responsibilities.

The contract duration for liquid staking is based on the ability of either party to terminate the contract with 30 days’ notice without cause. The Company has determined that a new 30-day contract is effectively renewed each day, such that contract inception changes daily. Revenue from staking rewards and incentive tokens is recognized over time and at the end of each day when the Company’s proportional share of rewards is determinable, measured at fair value at contract inception for that day, net of validator commissions. Fair value is based on the underlying ETH and accrued rewards, not the market price of the liquid staking tokens. The ratio between ETH and liquid staking tokens changes over time as rewards accrue and protocol economics adjust; this variability does not affect the timing of revenue recognition but is considered in determining fair value at contract inception. Rewards represent noncash consideration and are measured using quoted prices in the principal market at contract inception.

Segment Reporting

ASC Topic 280, “Segment Reporting,” requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure.” The ASU updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The amendments do not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments. The Company adopted ASU No. 2023-07 on January 1, 2025.

Segment information is prepared on the same basis that the Company’s CEO, who is the Chief Operating Decision Maker (“CODM”), manages the business, evaluates financial results, and makes key operating decisions. The Company has a single reportable operating segment, digital asset operations, the primary activity from which the Company earns revenue. All assets of the Company’s continuing operations are related to the digital asset operations. The CODM uses net income to evaluate and make key operating decisions of the business. As such, no further segment disclosures are presented within the consolidated financial statements and footnotes.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with U.S. GAAP. For certain of our financial instruments, including cash, accounts payable, accrued expenses, and short-term loans, the carrying amounts approximate fair value due to their short maturities. The Company elected to account for its convertible notes payable under the fair value option available under ASC 820. See Note 10.

We follow accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

The Company adopted the provisions of FASB ASC 820 (the Fair Value Topic) which defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements.

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if the common share equivalents had been issued (computed using the treasury stock or if converted method), if dilutive.

Discontinued Operations

In September 2025 the Company decided to cease the operations of 180 Life Corp. (f/k/a 180 Life Sciences Corp.) (“180”), Katexco Pharmaceuticals Corp. (“Katexco”), CannBioRex Pharmaceuticals Corp. (“CBR Pharma”), 180 Therapeutics L.P. (“180 LP” and together with Katexco, CBR Pharma and 180 Life Sciences Corp, the “180 Parties”). As such, the 180 Parties are reported as discontinued operations in the financial statements included herein. Additionally, the Gaming Technology Platform will no longer be part of the Company’s future business strategy and are also included in discontinued operations.

The assets and liabilities of the discontinued operations are aggregated and reported separately as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024. The results of the discontinued operations are aggregated and presented separately in the Condense Consolidated Statements of Operations and Comprehensive Loss as net income (loss) from discontinued operations for the three and nine months ended September 30, 2025 and 2024. The cash flows of the discontinued operations are reflected as cash flows of discontinued operations within the Company’s Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024.

Amounts presented in discontinued operations have been derived from our condensed consolidated financial statements and accounting records using the historical basis of assets, liabilities, results of operations, and cash flows of 180 Parties and the Gaming Technology Platform. The discontinued operations exclude general corporate allocations.

Subsequent Events

The Company has evaluated events that have occurred after the balance sheet date but before these condensed consolidated financial statements were issued. Based upon that evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed in Note 16.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standard Board (“FASB”) issued ASU 2023-07,* Improvements to Reportable Segment Disclosures*, which amends the existing segment reporting guidance (ASC Topic 280) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The Company adopted this standard effective January 1, 2025.

In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversions and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”). 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.

NOTE 4 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following as of September 30, 2025 and December 31, 2024:

NOTE 5 – DIGITAL ASSETS

The Company holds ETH and liquid staking incentive tokens (both in scope of ASC 350-60), as well as liquid staked ETH (in scope of ASC 310 and ASC 815-15). The following presents a summary of the Company’s digital asset holdings as of September 30, 2025, and activity for the nine months then ended. For detailed accounting policies related to digital assets, refer to Note 3.

Crypto assets within the scope of ASC 350-60:

The following table presents the Company’s significant crypto assets holdings as of September 30, 2025:

The following table presents a rollforward of the Company’s ETH for the nine months ended September 30, 2025:

During the nine months ended September 30, 2025, the Company recognized cumulative realized gains of $26,774,061 upon the deposit of ETH into liquid staking.

The following table presents a rollforward of the Company’s incentive tokens for the nine months ended September 30, 2025:

Non-monetary receivable with an embedded derivative within the scope of ASC 310-10 and ASC 815-15:

As described in Note 3, the Company accounts for liquid staked ETH as a non-monetary receivable with an embedded derivative. The host contract is measured at cost, and the embedded derivative is measured at fair value through earnings.

As of September 30, 2025, the carrying amount of the host contract (representing the 48,800 deposited ETH into ether.Fi and 10,575 PufETH) was $257,604,249, and the fair value of the embedded derivative was $12,110,657. For the nine months ended September 30, 2025, the Company recognized unrealized gains of $11,437,846 on the embedded derivative and staking rewards of $672,811 related to liquid staking activities. Changes in the fair value of embedded derivatives associated with liquid staking tokens are recognized within the statement of operations as part of Digital Asset gains and losses, separate from revenue.

The total of the host contract and embedded derivative, together with any accrued staking rewards (i.e., native staking and liquid staking), are collectively presented as “Staking Receivables” on the Consolidated Balance Sheet. Accordingly, “Staking Receivables” reflects the combined fair-value changes and reward accruals arising from both native staking and liquid staking arrangements.

NOTE 6 - ACCRUED EXPENSES

Accrued expenses consist of the following as of September 30, 2025 and December 31, 2024:

During the nine months ended September 30, 2025, the Company issued 75,288 share of common stock for the settlement of liabilities. SeeNote 12 – Commitments and Contingencies.

NOTE 7 – REVENUE RECOGNITION

As of September 30, 2025, the Company had native staked 12,845 ETH on the Ethereum blockchain. For the nine months ended September 30, 2025, the Company recognized revenue from native staking rewards of $173,428.

As of September 30, 2025, the Company had liquid staked 59,375 ETH on the Ethereum Blockchain. For the nine months ended September 30, 2025, the Company earned $672,811 as staking rewards through liquid staking protocols, and $3,263,930 incentive tokens, both recognized within revenue on the income statement.

NOTE 8 - DEBT

Loans Payable

The following table summarizes the activity of loans payable during the nine months ended September 30, 2025:

Initial Senior Convertible Note Sales

On August 8, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with investment funds managed by an institutional investor (the “Investor”), under which the Company agreed to sell and issue to the Investor senior secured convertible notes (the “August 2025 Convertible Notes”) in an aggregate principal amount of $156,250,000 (the “Principal Amount”) in exchange for cash equal to 96.0% of the Principal Amount (the “Debt Financing”). The Company closed the Debt Financing simultaneously with the signing of the Securities Purchase Agreement (the “August 2025 Note Funding Date”).

The August 2025 Convertible Notes bear interest at a rate of 0.00% per annum for the first six months, and 4.00% per annum for the following six months through the maturity date, which is the third year anniversary of the issuance date of the August 2025 Convertible Notes or earlier conversion or redemption date. The interest rate will increase to a rate of 18.0% per annum upon the occurrence and during the continuance of an event of default under the August 2025 Convertible Notes. The August 2025 Convertible Notes are secured by $44.5 million of Ether (ETH) (the “August 2025 ETH Collateral”) and approximately $156.25 million in cash (the “August 2025 Cash Collateral”), which is included in restricted cash equivalents on the Company’s consolidated balance sheet.

At any time following the nine-month anniversary of the August 2025 Note Funding Date, the Investor has the right to require that the Company redeem all or any part of the outstanding August 2025 Convertible Notes. If at any time after the August 2025 Note Funding Date,(i) the loan to value ratio of the August 2025 Convertible Notes is greater than 85%, or (ii) upon the occurrence of any Trigger Event (as defined in the August 2025 Convertible Notes), the Investor has the right to require that the Company redeem all or any part of the outstanding note in cash at a price equal to 100% of the amount of such August 2025 Convertible Note being redeemed.

The August 2025 Convertible Notes provide that the Investor may convert all or any portion of the principal amount of such August 2025 Convertible Note, together with any accrued and unpaid interest thereon, at an initial conversion price of $34.45 (the “August 2025 Conversion Price”), which is subject to a one-time, downward only reset after the nine-month anniversary of the issuance date (the “One-Time Reset Date”) equal to the closing bid price of the common stock on the One-Time Reset Date to the extent such price is less than the August 2025 Conversion Price. The Investor is not permitted to convert the August 2025 Convertible Notes to the extent that the shares of common stock deliverable upon conversion thereof would exceed 19.99% of the Company’s outstanding shares immediately prior to executing the Securities Purchase Agreement (the “August 2025 Exchange Cap”) without prior stockholder approval. We were also required to seek stockholder approval for the issuance of the shares of common stock upon conversion of the August 2025 Convertible Notes in accordance with the Securities Purchase Agreement. On October 7, 2025, the stockholders of the Company approved the issuance of shares of common stock in excess of the August 2025 Exchange Cap.

The August 2025 Convertible Notes provide for certain covenants, including that the Company shall maintain, at all times,(i) a balance of $5 million or more held in accounts other than the controlled securities account entered into at the consummation of this transaction and (ii) a loan-to-value ratio of no more than 100%, in addition to other customary covenants and events of default that are typical for transactions of this type and certain affirmative and negative covenants.

Pursuant to the Securities Purchase Agreement, the Company has agreed to certain obligations to register and maintain the registration of the shares of common stock underlying the August 2025 Convertible Notes, including filing within 15 calendar days of the Closing Date, a resale registration statement to register for resale the shares underlying the August 2025 Convertible Notes, which was timely filed and has been declared effective to date.

The security documents consist of (i) a Pledge and Security Agreement entered into by the Company, certain subsidiaries of the Company and the collateral agent, which is an affiliate of the Investor (the “Collateral Agent”); (ii) a control agreement in respect of the August 2025 ETH Collateral entered into by the Company, the Collateral Agent and the custodian of such account, (iii) a control agreement in respect of the August 2025 Cash Collateral entered into by the Company, the Collateral Agent and the custodian of such account, and (iv) a guaranty agreement entered into by certain subsidiaries of the Company in favor of the Investor. In addition, the Company paid $150,000 in legal fees of the Investor’s counsel. The control agreement requires the Company to maintain cash and cash equivalents in an aggregate amount of approximately $504,000,000, which the Company is not allowed to withdraw without consent of the Collateral Agent. The Collateral Agent also has the right to direct activities related to any staking of the August 2025 ETH Collateral.

Clear Street LLC (“Clear Street”) provided us placement agent services in connection with the Debt Financing. As compensation for serving as the Company’s placement agent, the Company (i) paid Clear Street a total cash fee equal to 4% of the aggregate gross proceeds raised in the Debt Financing, and (ii) reimbursed certain reasonable and documented fees and expenses of legal counsel for Clear Street and other out-of-pocket expenses. In addition, the Company agreed to issue to Clear Street or its designees shares of Common Stock of the Company equal to 2.0% of the aggregate shares of common stock initially issuable upon conversion of the August 2025 Convertible Notes, with the Company issuing 90,711 shares of common stock in August 2025.

Registration Rights Agreement

On the August 2025 Note Funding Date, the Company entered into a Registration Rights Agreement (the “RRA”) with the Investor pursuant to which, among other things, and subject to certain limitations set forth therein, the Investor has customary demand registration rights and the Company was obligated to prepare and file a registration statement registering the offer and sale of all of the Investor’s common stock, which registration statements have been timely filed and declared effective to date.

New Senior Convertible Note Sales

On September 22, 2025, the Company entered into an Amendment and Waiver Agreement with the Investor (the “Amendment Agreement”), pursuant to which, among other things (a) the Company agreed to sell a new series of senior secured convertible notes to the Investor (the “September 2025 Convertible Notes”, and together with the August 2025 Convertible Notes, the “Convertible Notes”); (b) the Company and the Investor agreed to partially waive and modify certain terms of the August 2025 Convertible Notes and the Securities Purchase Agreement, including: (i) to reduce the interest rate from 4% to 2% (ii) excluding the September 2025 Convertible Notes from the anti-dilutive provisions of the August 2025 Convertible Notes, except in connection with the Existing Note Conversion Price Adjustment (defined and described below), (iii) permitting the Company to Stake (as defined in the Security Purchase Agreement) the collateral held in the Company’s crypto control accounts, (iv) allowing the Company to use the yield of any cash held in the controlled accounts (less the accrued and unpaid interest on the Convertible Notes and any other amounts then due and payable to the Investor), in the ordinary course of business, and (v) to permit during the 90 day period following the August 22, 2025 effective date of a resale registration statement filed to register the resale of shares of common stock issuable upon conversion of the August 2025 Convertible Notes, pursuant to which the Company was previously restricted from taking certain actions, one or more additional subsequent placements (not including any variable rate transaction) solely consisting of the sale of common stock (x) with gross proceeds not in excess of an aggregate of $1 billion, subject to certain pre-requisites, or (y) at any time if such applicable purchase price exceeds $4.00 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events).

The September 2025 Convertible Notes were sold to the Investor on September 23, 2025, in the aggregate principal amount of $360 million (the “New Principal Amount”) in exchange for cash equal to 97.25% of the New Principal Amount (the “New Debt Financing”).

The Company closed the New Debt Financing on September 23, 2025 (the “New Debt Funding Date”).

The September 2025 Convertible Notes bear interest at a rate of 2.00% per annum through the maturity date, which is August 8, 2028 or earlier conversion or redemption date. The interest rate will increase to a rate of 18.0% per annum upon the occurrence and during the continuance of an event of default under the September 2025 Convertible Notes. The September 2025 Convertible Notes are secured by $50,000,000 of Ether (ETH) (the “September 2025 ETH Collateral”) and approximately $348,180,800 in restricted cash equivalents (the “September 2025 Cash Collateral”). Total restricted cash equivalents securing the August 2025 Convertible Notes and the September 2025 Convertible Notes was $505,591,875 as of September 30, 2025.

At any time after May 8, 2026, the Investor shall have the right to require that the Company redeem all or any part of the outstanding September 2025 Convertible Notes. If at any time after the New Debt Funding Date,(i) the loan to value ratio of the September 2025 Convertible Notes is greater than 85%, or (ii) upon the occurrence of any Trigger Event (as defined in the September 2025 Convertible Notes), the Investor shall have the right to require that the Company redeem all or any part of the outstanding note in cash at a price equal to 100% of the amount of such September 2025 Convertible Note being redeemed.

The September 2025 Convertible Notes provide that the Investor may convert all or any portion of the principal amount of such September 2025 Convertible Notes, together with any accrued and unpaid interest thereon, at an initial conversion price of $30.50 (the “Conversion Price”), which is subject to a downward only reset on May 8, 2026, and each three month anniversary thereafter (each a “Reset Date”) equal to the closing bid price of the common stock on each such Reset Date, to the extent such price is less than the Conversion Price. The Investor is not permitted to convert the September 2025 Convertible Notes to the extent that the shares of common stock deliverable upon conversion thereof would exceed 19.99% of the Company’s outstanding shares immediately prior to executing the Amendment Agreement (the “September 2025 Exchange Cap”) without prior stockholder approval. We are also required to seek stockholder approval for the issuance of the shares of common stock upon conversion of the September 2025 Convertible Notes in accordance with the Amendment Agreement.

As a result of the Conversion Price of the September 2025 Convertible Notes being less than the conversion price of the August 2025 Convertible Notes, the conversion price of the August 2025 Convertible Notes automatically adjusted to the Conversion Price on the New Debt Funding Date (the “Existing Note Conversion Price Adjustment”).

The September 2025 Convertible Notes also provide that, at any time after March 22, 2026, the Company may require holders to convert all or a portion of the outstanding principal into shares of common stock (a “Mandatory Conversion”) if certain conditions are satisfied. Specifically, the volume-weighted average price (“VWAP”) of the Company’s common stock on its principal trading market must exceed $44.785 (as adjusted for stock splits and similar events) for 30 consecutive trading days and no Equity Conditions (defined below) failure may exist. The Company may not effect more than one Mandatory Conversion during any 20-trading-day period and may not exercise its right if an event of default has occurred and is continuing. A Mandatory Conversion is subject to cancellation if the stock price falls below the minimum conversion price or if an Equity Conditions failure occurs prior to the conversion date, unless waived by the holder. In lieu of conversion of any portion of the notes that cannot be converted due to a failure of Equity Conditions, the Company may instead require the holder to exchange such portion into the right to receive the same number of shares issuable upon conversion, pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended, on mutually agreeable terms. The “Equity Conditions” generally require, among other things, that the Company’s registration statement registering the resale of the common stock issuable upon conversion of the September 2025 Convertible Notes is effective or the shares are otherwise eligible for resale, that the common stock remains listed and tradable on an eligible market, that no event of default or material breach exists, that certain specific volume requirements have been met, that sufficient authorized shares are available, that no material, non-public information or unresolved disputes exist, and that the stockholders of the Company have approved the issuance of shares of common stock in excess of the September 2025 Exchange Cap.

Additionally, the September 2025 Convertible Notes provide that, if at any time and from time to time on or after the issuance date thereof, there occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Company’s common stock, other than the 1-for-10 reverse stock effective October 20, 2025 (each, a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”) and the Event Market Price (as defined below) is less than the Conversion Price then in effect (after giving effect to certain adjustments), then on the 16th Trading Day (as defined in the September 2025 Convertible Notes) immediately following such Stock Combination Event Date, the Conversion Price then in effect on such sixteenth (16th) Trading Day (after giving effect to certain adjustments) shall be reduced (but in no event increased) to the Event Market Price. “Event Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum of the volume weighted average prices (VWAP) of the Company’s common stock for each of the five Trading Days with the lowest VWAP of the Company’s common stock during the 15 consecutive Trading Day period ending and including the Trading Day immediately preceding the 16th Trading Day after such Stock Combination Event Date, divided by (y) five.

Additionally, if the Company issues or sells shares of common stock after the New Debt Funding Date, at a price lower than the then-current conversion price of the September 2025 Convertible Notes, subject to certain excepted issuances, the conversion price of the September 2025 Convertible Notes will be adjusted downward to match the price of such newly issued shares.

Finally, if the Company issues or enters into an agreement to issue common stock, options, or convertible securities with a price that varies or may vary with the market price of the common stock (excluding certain at-the-market offerings and customary anti-dilution adjustments), subject to certain customary exceptions, the holders of the September 2025 Convertible Notes have the right, but not the obligation, to elect to use such “Variable Price” for purposes of converting the September 2025 Convertible Notes. The holder may make this election on a per-conversion basis and is not required to rely on the Variable Price for any future conversions.

The September 2025 Convertible Notes provide for certain covenants, including that the Company shall maintain, at all times,(i) a balance of $5 million or more held in accounts other than the controlled securities account entered into at the consummation of the transaction and (ii) a loan-to-value ratio of no more than 100%, in addition to other customary covenants and events of default that are typical for transactions of this type and certain affirmative and negative covenants.

Pursuant to the Amendment Agreement, the Company has agreed to certain obligations to register and maintain the registration of the shares of common stock underlying the September 2025 Convertible Notes, which shares have been registered to date.

The September 2025 Convertible Notes are secured by the same August 8, 2025 security agreements as discussed above.

Clear Street provided the Company placement agent services in connection with the New Debt Financing. As compensation therewith, the Company (i) paid Clear Street a total cash fee equal to 1% of the aggregate gross proceeds raised in the New Debt Funding, and (ii) reimbursed certain reasonable and documented fees and expenses of legal counsel for Clear Street and other out-of-pocket expenses.

In aggregate, the Company incurred professional fees and expenses of $8,575,412 in connection with the Convertible Notes, which are included in general and administrative expenses.

The Company made an accounting election to account for the Convertible Notes at fair value with changes in fair value recognized in earnings.

As of September 30, 2025, the fair value of the convertible debt balance was $496,276,461. The Company recognized a gain of $3,724,344 related to the changes in fair value of the convertible debt during the three months ended September 30, 2025. The August 2025 Convertible Notes had a fair value at issuance of $150,000,000, and the September 2025 Convertible Notes had a fair value at issuance of $348,086,949 The Company also recognized $1,913,856 in gain related to the difference in pre and post amendment Convertible Note fair value upon issuance of the September 2025 Convertible Notes.

The Company estimated the fair value of the convertible debt using a Monte Carlo Simulation in a risk-neutral framework and the following inputs: estimated volatility of 65%, risk-free rate of 3.67-3.61%, dividend yield of 0%, a probability of shareholder conversion approval of 65% and a discount for lack of marketability of 24%-32%.

For the three months ended September 30, 2025 and 2024, the Company recognized interest expense associated with the Convertible Notes of $319,909 and $0, respectively. For the nine months ended September 30, 2025 and 2024, the Company recognized interest expense associated with convertible debt of $319,909 and $0, respectively. As of September 30, 2025 and December 31, 2024, the Company had accrued interest associated with the Convertible notes of $319,909 and$0, respectively.

Collateralized Loan Agreement

On September 8, 2025, the Company entered into a collateralized loan agreement with Cumberland DRW LLC (“Cumberland”). Under the agreement, the Company transferred 11,673 ETH as collateral in exchange for $50,000,000. The Company is obligated to repay $51,326,284 and receive back the 11,673 ETH on December 8, 2025. The Company is exposed to ETH price risk and counterparty credit risk. The agreement requires additional collateral if the price of ETH declines by 20% or more and includes early termination provisions.

The Company accounts for the arrangement as a single collateralized loan in accordance with ASC 815, Derivatives and Hedging, and the AICPA Practice Aid, Accounting and Auditing of Digital Assets. The Company recorded a liability equal to $50,000,000 that will accrete interest of $1.3 million to maturity. As of September 30, 2025, the carrying amount of the liability was $50,000,000. The transferred ETH collateral is derecognized, and a receivable is recognized for the right to receive ETH in the future; a realized gain of $2,574,607 was recognized upon derecognition, representing the difference between the carrying value of the ETH and the initial measurement of the receivable. As of September 30, 2025, the fair value of the ETH receivable was $50,485,550, which is included in Digital Assets on the Company’s consolidated balance sheet. For the nine months ended September 30, 2025, unrealized losses were $2,089,409, which is included in Digital asset gains and losses in the consolidated statement of operations.

In accordance with ASC 326,Financial Instruments – Credit Losses, the Company recognizes an allowance for expected credit losses on the crypto asset loan receivable. The allowance is determined based on management’s assessment of counterparty credit risk and reasonable and supportable forecasts.

Digital asset gains and losses, including both realized gains and losses recognized upon derecognition of digital assets (such as sales, conversions, or transfers in liquid staking arrangements) and unrealized gains and losses resulting from changes in fair value of digital assets held at period end, are presented in a single line item in the consolidated statements of operations.

NOTE 9 – FAIR VALUE

The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of September 30, 2025, and December 31, 2024:

NOTE 10 – Earnings Per Share

The computation of net loss per share is as follows:

For the three and nine months ended September 30, 2025, the weighted average common shares outstanding included 1,555,574 shares of common stock underlying pre-funded warrants which have a nominal exercise price.

The outstanding securities that were excluded from the computation of diluted loss per share attributable to common stockholders for the periods presented was because including them would have been antidilutive are as follows:

NOTE 11 – SERIES B CONVERTIBLE PREFERRED STOCK

On September 29, 2024, the Company entered into an Asset Purchase Agreement with Elray Resources, Inc. (“Elray”). Pursuant to the Asset Purchase Agreement, Elray agreed to sell us certain source code and intellectual property relating to a “back-end technology platform” which is a key component of creating an online blockchain casino (the “Purchased Assets”) in consideration for 1,000,000 shares of then newly designated Series B Convertible Preferred Stock (the “Preferred Stock”, and the shares of common stock issuable upon conversion thereof, the “Conversion Shares”) and warrants to purchase 300,000 shares of common stock of the Company (the “Purchase Warrants” and the shares of common stock issuable upon exercise thereof, the “Purchase Warrant Shares”).

On September 30, 2024, in contemplation of the closing of the transactions contemplated by the Purchase Agreement, and pursuant to the power provided to the Company by the Certificate of Incorporation of the Company, as amended, the Company’s Board of Directors (the “Board”) approved the adoption of, and filing of, a Certificate of Designations of the Company. Establishing the Designations, Preferences, Limitations and Relative Rights of Its Series B Convertible Preferred Stock (the “Series B Designation”), which was filed with, and became effective with, the Secretary of State of Delaware on the same date. The Series B Designation designated 1,000,000 shares of Series B Convertible Preferred Stock which were issued to Elray on September 30, 2024. The Series B Designation designated 1,000,000 shares of Series B Convertible Preferred Stock, with a par value of $0.0001 per share and a stated value of $17.30 per share.

The purchase of the Purchased Assets closed on September 30, 2024.

Based on the terms of the Series B Convertible Preferred Stock and the Purchase Agreement, and in accordance with FASB ASC 480-10, at issuance, the Series B Convertible Preferred Stock was accounted for as a liability due to the variable number of shares issuable under the agreement pursuant to the conversion terms, with an initial value of $2,772,695. The Company estimated the fair value of the Series B Convertible Preferred Stock based on the market value of the underlying common shares into which the Series B Convertible Preferred stock is convertible into at the transaction date, and an estimated fair value of the liquidation preference using option pricing models for scenarios of the liquidation preference being in effect or conversion of the Series B Convertible Preferred Stock by the holder. The Company recognized a gain/loss on the change in fair value of the Series B Convertible Preferred Stock of $1,577,305 during the year ended December 31, 2024. On December 27, 2024 (the “Stockholder Approval Date”), the Conversion Rate (defined below) was fixed at 0.1318 or 131,800 total shares of common stock. As a result, the fair value of the Series B Convertible Preferred Stock was reclassified within shareholders’ equity.

The Purchase Warrants have an exercise price of $16.80 per share, the closing stock price of the Company’s common stock on the last trading day prior to the parties’ entry into the Purchase Agreement (as adjusted for the Reverse Stock Split), and a term ofseven years (through September 30, 2031). The Purchase Warrants also provide for cashless exercise rights. No shares of common stock may be issued upon exercise of the Purchase Warrants until or unless the Company has received approval from its stockholders for the issuance of such shares of common stock upon exercise of the Purchase Warrants, which was received in December 2024.

On March 27, 2025, Elray Resources, Inc., the sole holder of the Series B Convertible Preferred Stock of the Company converted all 1,000,000 outstanding shares of Series B Convertible Preferred Stock of the Company into 131,800 shares of common stock (0.1318 shares of common stock for each share of Series B Convertible Preferred Stock converted), in accordance with the terms of such preferred stock and the optional conversion right set forth therein.

On July 27, 2025, the Purchase Warrants were exercised in full. See Note 13.

The below is a summary of the rights and preferences of the Series B Convertible Preferred Stock:

Voting Rights. Until such time, if ever, as the shareholders of the Company approved the issuance of shares of common stock upon the conversion of the Series B Convertible Preferred Stock (“Stockholder Approval”), the Series B Convertible Preferred Stock only had rights to vote on amendments to the Series B Designation (which are subject to the approval of a simple majority of the holders of Series B Convertible Preferred Stock), and the Protective Provisions, discussed below.

The Series B Convertible Preferred Stock requires the consent of the holders of at least a majority of the issued and outstanding shares of Series B Convertible Preferred Stock to (a) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series B Convertible Preferred Stock of the Company; (b) adopt or authorize any new designation of any Preferred Stock or amend the Certificate of Incorporation of the Company in a manner which (i) provides any holder of common stock or preferred stock any rights upon a liquidation of the Company which are prior and superior to those of the holders of the Series B Convertible Preferred Stock; or (ii) adversely affect the rights, preferences and privileges of the Series B Convertible Preferred Stock; (c) effect an exchange, or create a right of exchange, cancel, or create a right to cancel, of all or any part of the shares of another class of shares into shares of Series B Convertible Preferred Stock; (d) alter or change the rights, preferences or privileges of the shares of Series B Convertible Preferred Stock so as to affect adversely the shares of such series; and (e) issue any shares of Series A Preferred Stock or Series B Convertible Preferred Stock, other than the Preferred Stock issued pursuant to the Purchase Agreement (collectively, the “Protective Provisions”).

After Stockholder Approval, which has occurred to date, in addition to the above voting rights, each holder of outstanding shares of Series B Convertible Preferred Stock shall be entitled to cast the number of votes in connection with the Series B Convertible Preferred Stock shares held by such holder equal to the number of whole shares of common stock into which the shares of Series B Convertible Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as-converted to common stock basis (after aggregating all fractional shares into which shares of Series B Convertible Preferred Stock held by each holder could be converted) shall be rounded down to the nearest whole share. Except as provided by law or by the other provisions of the Certificate of Incorporation or the Series B Designation, holders of Series B Convertible Preferred Stock shall vote together with the holders of common stock as a single class and there shall be no series voting.

Dividend Rights. None, except that if the Company declares a dividend or makes a distribution of cash (or any other distribution treated as a dividend under Section 301 of the Internal Revenue Code) on its common stock, each holder of Shares of Series B Convertible Preferred Stock is entitled to participate in such dividend or distribution in an amount equal to the largest number of whole shares of common stock into which all shares of Series B Convertible Preferred Stock held of record by such holder are convertible as of the record date for such dividend or distribution or, if there is no specified record date, as of the date of such dividend or distribution. Notwithstanding the foregoing, holders shall have no right of participation in connection with dividends or distributions made to the common stock stockholders consisting solely of shares of common stock.

Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary (each a “Liquidation Event”), the holders of Series B Convertible Preferred Stock are entitled to receive prior and in preference to any distribution of any of the assets of the Company to the holders of the common stock or securities junior to the Series B Convertible Preferred Stock (other than the common stock) by reason of their ownership of such stock, but after any required distribution to any holders of Series B Convertible Preferred Stock, an amount in cash per share of Series B Convertible Preferred Stock for each share of Series B Convertible Preferred Stock held by them equal to the greater of (x) one times the Stated Value; and (y) the total amount of consideration that would have been payable on such share upon a Liquidation Event, had such share of Series B Convertible Preferred Stock been converted into common stock, immediately prior to such Liquidation Event (as applicable, the “Liquidation Preference”). The “Stated Value” is $17.30 per share of Series B Convertible Preferred Stock, for a total aggregate Liquidation Preference of $17,300,000 when aggregating all 1,000,000 shares of Series B Convertible Preferred Stock originally issued.

Conversion Rights. None prior to Stockholder Approval. After Stockholder Approval, at the option of the holder(s) thereof, each share of Series B Convertible Preferred Stock is convertible into a number of shares of common stock of the Company as equals the Conversion Rate. The “Conversion Rate” was initially 0.0685 (or 68,500 shares in aggregate, which would represent 40% of the Company’s then outstanding shares of common stock), as equitably adjusted, as applicable for stock splits and recapitalizations; provided that if at any time after the original issuance date of the Series B Convertible Preferred Stock and prior to the Stockholder Approval Date, the Company shall actually issue any additional shares of common stock of the Company (each a “Dilutive Issuance”), the Conversion Rate shall be increased to a value equal to (x)(i) the total outstanding shares of common stock (“Total Outstanding Shares”) on the date immediately following such Dilutive Issuance, divided by (ii)60%, minus (iii) the Total Outstanding Shares on the date immediately following such Dilutive Issuance, divided by (y)1,000,000, rounded to the thousands place, as equitably adjusted, as applicable for stock splits and recapitalizations (each a “Dilutive Adjustment”); provided that in no event will the Conversion Rate be greater than ten. The effect of any change in the Conversion Rate shall not be retroactive and shall only apply for conversions of Series B Convertible Preferred Stock following the date of any Dilutive Adjustment. The Conversion Rate is designed to result in the holders of the Series B Convertible Preferred Stock receiving 40% of the then outstanding shares of common stock upon conversion of the Series B Convertible Preferred Stock, subject to a maximum of 10 million shares of common stock, and further subject to such conversion ratio being fixed upon Stockholder Approval. The Conversion Rate of the Series B Convertible Preferred Stock was fixed at 0.1318 or 131,800 total shares of common stock on December 27, 2024, the Stockholder Approval Date.

Based on the terms of the Series B Convertible Preferred Stock and the Purchase Agreement, and in accordance with FASB ASC 480-10, the Series B Convertible Preferred Stock was accounted for as a liability at its issuance date due to the variable number of shares issuable under the agreement pursuant to the conversion terms, with an initial fair value of $2,772,695. On the Stockholder Approval Date, the Conversion Rate was fixed at 0.1318 or 131,800 total shares of common stock. As a result, the estimated fair value of the Series B Convertible Preferred Stock of $4,350,000 was reclassified within shareholders’ equity. During the three months ended March 31, 2025, the Series B Convertible Preferred Stock was fully converted into 131,800 shares of common stock.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Litigation and Other Loss Contingencies

The Company records liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company has no liabilities recorded for loss contingencies as of September 30, 2025.

The Company through its United Kingdom subsidiary is registered for Value Added Tax (VAT) in the United Kingdom under the accrual accounting scheme. Under this scheme, VAT output tax becomes due when invoices are issued, irrespective of cash settlement.

As of the reporting date, management has identified that the settlement of certain existing liabilities could give rise to an obligation to remit additional VAT to HM Revenue & Customs (HMRC) in respect of VAT already invoiced or collected.

The amount of any such payment cannot be reliably estimated at this time, and the likelihood of settlement remains uncertain. Accordingly, no provision has been recognized in the financial statements. Management will continue to monitor this situation and will make further disclosures or recognize a liability when the settlement becomes probable and can be reasonably estimated.

Legal Matters

Declaratory Relief Action Against the Company by AmTrust International

On June 29, 2022, AmTrust International Underwriters DAC (“AmTrust”), which was the premerger directors’ and officers’ insurance policy underwriter for KBL, filed a declaratory relief action against the Company in the U.S. District Court for the Northern District of California (the “Declaratory Relief Action”) seeking a declaration that AmTrust is not obligated to reimburse the Company for fees advanced by the Company to Dr. Krauss and George Hornig under the directors’ and officers’ insurance policy.

On, and effective on, April 6, 2025 (the “Effective Date”), the Company entered into a Confidential Settlement Agreement and Release (the “AmTrust Settlement Agreement”) with AmTrust, and its wholly-owned subsidiary, AmTrust Financial Services, Inc. (“AFSI”). Pursuant to the AmTrust Settlement Agreement, the Company and AmTrust agreed to resolve the ongoing litigation and disputes discussed above, relating to the Company’s pre-merger directors’ and officers’ insurance policy (the “Coverage Action”).

Pursuant to the terms of the AmTrust Settlement Agreement, the Company agreed to (i) pay AmTrust a cash payment of $250,000 (the “Settlement Sum”) within 20 days of the Effective Date, which has been paid to date, and (ii) issue AFSI 50,971 shares of the Company’s common stock (the “AmTrust Settlement Shares”), within three business days of the Effective Date, which have been issued to date. The AmTrust Settlement Shares had a fair value of $441,406 (the “Shares Value”), based on the closing price of the Company’s common stock on the Effective Date, and are subject to customary anti-dilution protections, including adjustments for stock splits, combinations, and stock dividends. The Company recognized a loss on settlement of $691,406 included within general and administrative expenses on the consolidated statements of operations for the nine months ended September 30, 2025 relating to the AmTrust Settlement Agreement.

Within ten days after delivery of both the Settlement Sum and the AmTrust Settlement Shares, the parties agreed to file a joint stipulation of dismissal with prejudice of the Coverage Action, which has been filed to date, and was granted on April 30, 2025.

In connection with the settlement, the Company and AmTrust provided each other broad mutual releases of all claims, known and unknown, arising out of or relating to, among other things, the Coverage Action, certain claims relating to an SEC investigation of certain of the Company’s pre-merger officers, including Dr. Krauss, a lawsuit filed by the Company against Dr. Krauss, certain cross claims made by the Company against AmTrust, and related insurance claims and matters, including any claims for bad faith, breach of the implied covenant of good faith and fair dealing, or alleged unfair insurance practices. These releases extend to affiliates, officers, directors, employees, agents, and other related parties of both entities. The AmTrust Settlement Agreement expressly provides that it does not release the parties from obligations arising under the AmTrust Settlement Agreement itself.

In connection with the issuance of the AmTrust Settlement Shares and pursuant to the AmTrust Settlement Agreement, the Company agreed to provide AFSI with certain registration rights. Specifically, the Company was obligated to use commercially reasonable efforts to file a registration statement on Form S-1 (or Form S-3, if available) with the SEC within 45 days of the Effective Date (i.e., prior to May 21, 2025) to register the resale of the AmTrust Settlement Shares (the “Resale Registration Statement”) and use commercially reasonable efforts to cause the Resale Registration Statement to be declared effective within 60 days following the Effective Date, or, in the event of SEC notice that the Registration Statement will not be reviewed, by the third business day thereafter, which Resale Registration Statement was timely filed and has become effective to date, within the time period set forth in the AmTrust Settlement Agreement.

The Company is required to keep the Resale Registration Statement continuously effective until such time as AFSI no longer holds any AmTrust Settlement Shares, and to bear all related costs and expenses in connection with such registration, excluding AFSI’s legal fees. Additionally, the Company must provide legal opinion coverage at its expense, if necessary, to enable AFSI to rely on Rule 144 resale exemptions after six months.

If the prospectus included in the Resale Registration Statement can no longer be relied upon, or if the Company fails to maintain the effectiveness of the Resale Registration Statement (each, a “Registration Statement Failure Event”), the Company is required to pay liquidated damages equal to 3.0% of the Shares Value for each such failure and for each month such failure continues, subject to a cap of 33.0% of the Shares Value.

Elray and Luxor Settlement Agreement

On April 28, 2025, the Company entered into a Settlement and Mutual Release Agreement (the “Elray Settlement Agreement”) with Elray, and Luxor Capital, LLC (“Luxor”). Elray and Luxor are both controlled by Anthony Brian Goodman, the father of the Company’s then director, Jay Goodman. The Elray Settlement Agreement and related arrangements discussed below resolved certain disputes which had arisen between the parties relating to among other things, certain potential acquisitions.

Pursuant to the Elray Settlement Agreement: (a) the Company agreed to acquire all 131,800 of the shares of its common stock (the “Elray Shares”) held by Elray, which were issued in March 2025, upon the conversion of 1,000,000 shares of Series B Convertible Preferred Stock which Elray then held (representing 23.1% of the Company’s then outstanding shares of common stock), in exchange for an aggregate settlement payment of $1 million, consisting of*(i)* $350,000 payable to Elray within five business days of the Elray Settlement Agreement (the “Elray Payment”), which has been paid to date, and*(ii)* $650,000 payable to Luxor (“Luxor Payment”). Amounts due to Luxor will be payable by way of 20% of the proceeds raised by the Company in future capital raises until paid in full, but shall be paid no later than April 28, 2026 which payments have been paid to date); and (b) the Company, Elray, and Luxor exchanged mutual general releases from claims arising from prior negotiations and agreements, with limited exceptions for obligations under the Elray Settlement Agreement and confidentiality requirements.

In connection with the settlement, Elray agreed to deliver five stock powers authorizing cancellation of the Elray Shares, to be held in escrow and released proportionally at the option of the Company, as settlement payments are made, with all remaining shares canceled once the full amounts of the Elray Payment and Luxor Payment are made. The stock powers are to be released in tranches, with the stock power relating to the initial 46,130 Elray Shares eligible to be released from escrow upon payment of the Elray Payment, and the remaining four stock powers, each providing for the transfer of 21,418 shares, to be released upon the payment by the Company to Luxor of each additional $162,500. During the three months ended September 30, 2025 the Elray Shares were returned to the Company and cancelled.

Luxor also agreed to indemnify the Company against any claims brought by a third party related to certain prior negotiations involving an online casino asset acquisition.

The Elray Settlement Agreement included customary representations and warranties of the parties and confidentiality requirements. The Elray Settlement Agreement also provides a restriction on Elray’s sale or transfer of any of the Elray Shares.

The Elray Settlement Agreement also required Elray to enter into a Voting Agreement with the Company. Pursuant to the Voting Agreement, which was entered into on April 28, 2025, by Elray, the Company, and Blair Jordan, the Company’s then Chief Executive Officer, solely for the benefit of the Company, Elray agreed to vote any Elray Shares which it continued to hold, as recommended by the Board of Directors of the Company, at any meeting of stockholders or via any written consent of stockholders, which may occur prior to April 28, 2026. In order to enforce the terms of the Voting Agreement, and solely for the benefit of the Company, Elray provided Mr. Jordan (or his assigns) an irrevocable voting proxy to vote the Elray Shares pursuant to the guidelines set forth above at any meeting of stockholders or via any written consent of stockholders.

The Elray Settlement Agreement and related transactions were approved by the Board of Directors of the Company, as well as the Company’s Audit Committee, with Mr. Jay Goodman (a then member of the Board of Directors) abstaining. The Elray Settlement Agreement was determined to be a forward purchase contract, and was recognized as a liability under ASC 480. The settlement payment was at a price per share below fair market value, and therefore no loss was recognized. The Company recognized the $1,000,000 repurchase amount in treasury stock.

Other Commitments

Woody Separation Agreement

On May 7, 2024, Dr. James N. Woody resigned as Chief Executive Officer (Principal Executive Officer), and as a member of the Board of Directors, of the Company effective the same date, and entered into a Separation and Release Agreement with the Company (the “Woody Separation Agreement”).

On February 5, 2025, the Company entered into a First Amendment to Separation and Release Agreement with Dr. Woody (the “First Amendment”). Pursuant to the First Amendment, Dr. Woody agreed to amend the terms of the Woody Separation Agreement, to terminate the prior requirement of the Company to pay the Future Contingent Payment. Instead, pursuant to the First Amendment, Dr. Woody agreed to accept $60,000 in shares of restricted common stock of the Company (or 4,317 shares of common stock, based on the closing sales price of the Company’s common stock on February 5, 2025, which closing price was $13.90 per share, the “Separation Shares”), in lieu of the Future Contingent Payment which obligation was terminated. The Separation Shares include piggyback registration rights for a resale registration statement relative to the Separation Shares for a period of six (6) months.

The First Amendment also required Dr. Woody to enter into a Voting Agreement with the Company. Pursuant to the Voting Agreement, which was entered into on February 5, 2025, by Dr. Woody, the Company, and Blair Jordan, the Company’s Chief Executive Officer, solely for the benefit of the Company, Dr. Woody agreed to vote the Separation Shares as recommended by the Board of Directors of the Company, at any meeting of stockholders or via any written consent of stockholders, which may occur prior to February 5, 2026; the date after August 5, 2025, that Dr. Woody has sold all of the Separation Shares; or the date that the Company terminates the Voting Agreement. In order to enforce the terms of the Voting Agreement, and solely for the benefit of the Company, Dr. Woody provided Mr. Jordan (or his assigns) an irrevocable voting proxy to vote the Separation Shares pursuant to the guidelines set forth above at any meeting of stockholders or via any written consent of stockholders. The Voting Agreement also provides a restriction on Dr. Woody’s sale or transfer of any of the Separation Shares until August 5, 2025. The Voting Agreement expired pursuant to its terms on August 21, 2025.

Former Chief Executive Officer and Consulting Agreement

On February 20, 2025, the Company entered into an Executive Consulting Agreement with Mr. Blair Jordan dated February 21, 2025, and Blair Jordan Strategy and Finance Consulting Inc. (an entity owned by Mr. Jordan) (“Jordan Consulting” and the “February 2025 Jordan Agreement”). The February 2025 Jordan Agreement replaced and superseded a prior consulting agreement between the parties. On June 17, 2025, the Company entered into an Amended and Restated Executive Consulting Agreement with Mr. Jordan, and Jordan Consulting, dated June 17, 2025 (as amended from time to time, the “Jordan Agreement”). The Jordan Agreement replaced and superseded the February 2025 Jordan Agreement.

The Jordan Agreement provided for Mr. Jordan to act as Chief Executive Officer of the Company, and to be paid $240,000 per year in consideration for services rendered to the Company (the “Fee”), which Fee shall increase to $350,000 per year in the event the Company completes any material transaction.

The agreement also allowed the Company to pay Mr. Jordan or Jordan Consulting an incentive bonus of up to 100% (but not less than 50% (pursuant to the amended terms)) of the Fee per year, in the form of cash or equity, in the discretion of the Compensation Committee and the Board. Any additional bonus payments in 2025, if any, and subsequent bonus payments in 2026 and 2027 from the Company to Mr. Jordan or Jordan Consulting, if any, will be based on criteria to be determined by the Compensation Committee of the Board. The Board and Compensation Committee may also pay Mr. Jordan or Jordan Consulting bonuses from time to time in cash or equity, in their sole discretion, with any bonus earned being paid by March 15th of the year following the date it is earned.

The Company also agreed to grant 16,000 shares of restricted common stock to Jordan Consulting under the Company’s Third Amended and Restated 180 Life Sciences Corp. 2022 Omnibus Incentive Plan (the “Incentive Plan”), with such shares evidenced and documented by a Notice of Restricted Stock Grant and Restricted Stock Grant Agreement entered into between Jordan Consulting and the Company, and subject to vesting as follows: (a)8,000 shares vest on January 1, 2026, subject to Jordan Consulting and Mr. Jordan’s continued service to the Company on such vesting date; and (b) 8,000 shares vest on December 31, 2026, subject to Jordan Consulting and Mr. Jordan’s continued service to the Company on such vesting date, provided that the Board of Directors accelerated the vesting of all such shares on June 17, 2025. The Company recognized $204,800 of stock-based compensation related to these shares during the nine months ended September 30, 2025.

On September 4, 2025, Mr. Blair Jordan, the then Chief Executive Officer of the Company, and Jordan Consulting entered into a Separation and Release Agreement with the Company (the “Jordan Separation Agreement”).

Pursuant to the Jordan Separation Agreement, the Company agreed to (a) pay Jordan Consulting $1,350,000 in cash, which would be the amount payable to Jordan Consulting pursuant to the terms of the Jordan Agreement, as amended, in the event the Board of Directors of the Company decided that Mr. Jordan should step down from the role of Chief Executive Officer of the Company, and such departure was not considered a termination for just cause by the Company or a resignation for good reason by Mr. Jordan under the Jordan Consulting Agreement; (b) execute an assignment in order to transfer any and all rights and ownership to the design or domain of “Volaro” to Jordan Consulting; and (c) confirm that certain of Jordan Consulting’s options that have been granted were fully vested subject to stockholder approval.

Under the Jordan Separation Agreement, Mr. Jordan, Jordan Consulting and the Company, provided each general releases; the Company agreed to continue to indemnify and hold Mr. Jordan and Jordan Consulting harmless against any claims relating to the performance of the Jordan Consulting Agreement; and Mr. Jordan and Jordan Consulting agreed to certain confidentiality, non-disclosure, non-solicitation, non-disparagement (which were mutual), and cooperation covenants.

Executive Employment Agreement with McAndrew Rudisill

On September 15, 2025, the Company entered into an Executive Employment Agreement with Mr. McAndrew Rudisill, the Company’s Chief Executive Officer and Executive Chairman (the “Rudisill Employment Agreement”).

Pursuant to the Rudisill Employment Agreement, the Company agreed to continue to engage Mr. Rudisill as Chairman of the Board and Chief Executive Officer of the Company, during the term of the agreement, which continues until the earlier of (i) Mr. Rudisill providing the Company 30 days written notice of his termination of the Rudisill Employment Agreement, or (ii) December 31, 2028; subject to up to two additional years of automatic renewals, if neither party provides the other intent of its non-renewal prior to December 31, 2028 or if automatically renewed, December 31, 2029.

In consideration for agreeing to provide services under the Rudisill Employment Agreement, we agreed: (a) to pay Mr. Rudisill a base salary of $450,000 per year, with such amount to be reviewed by the Board with the recommendation of the Compensation Committee, at least annually, and may be increased if the Board deems appropriate; (b) that Mr. Rudisill would be eligible to earn an annual discretionary bonus as established by the Board or Compensation Committee, which may consist of restricted stock units (RSUs) and/or cash payments; and (c) that Mr. Rudisill would be entitled to a change of control payment, equal to two percent (2%) of the greater of (i) the market capitalization of the Company on the closing date of a Change in Control (as defined below) or (ii) the total enterprise value (defined by the Company’s market capitalization on the closing date of a Change of Control, plus all outstanding debt, less cash). This Change in Control payment may consist of both RSU’s and/or cash, as determined by the Board or Compensation Committee. For the purposes of the Rudisill Employment Agreement, a “Change in Control” means either (i) a merger or consolidation involving the Company (or one of its subsidiaries where the Company issues shares), unless the transaction is solely for changing the Company’s domicile or results in the Company’s stockholders retaining more than 50% of the voting power in the surviving or parent corporation immediately after the transaction, or (ii) the sale, lease, transfer, exclusive license, or other disposition of all or substantially all of the Company’s or its subsidiaries’ assets or equity, including through the sale or disposition of subsidiaries holding substantially all such assets, except where the transfer is to a wholly-owned subsidiary, provided that transactions carried out principally for bona fide equity financing purposes, where the Company receives cash or debt is cancelled or converted (or a combination thereof), will not constitute a Change in Control.

Separately, upon termination of the Rudisill Employment Agreement for any reason, the Company must promptly, and no later than 30 days after termination (or sooner if required by law), pay Mr. Rudisill (or his surviving spouse or estate) a lump sum covering any portion of his then current salary due through the termination date and reimbursement of eligible expenses incurred. Additionally, if Mr. Rudisill has been employed for more than 12 months, he will also receive a severance payment equal to two times his base salary at the time of termination. In addition, if his employment ends within 36 months of the start date (September 15, 2025), he will receive a payment, payable in stock and/or cash as determined by the Board, equal to the greater of (a)1% of the Company’s market capitalization; or (b)1% of the total enterprise value (market capitalization plus debt, less cash) of the Company, at the time of termination. Payment of these severance benefits are conditioned on Mr. Rudisill executing a general release of claims against the Board relating to his employment or service with the Company.

The Rudisill Employment Agreement also contains customary confidentiality obligations and work made for hire language. In addition, Mr. Rudisill is eligible to receive certain employee benefits, including profit sharing, medical, disability and life insurance plans and programs, that are established and made generally available by the Company from time to time to its employees, subject, however, to the applicable eligibility requirements and other provisions of such plans and programs (including, without limitation, requirements as to position, tenure, location, salary, age and health).

Notwithstanding the terms of the Rudisill Employment Agreement, as discussed above, the Board and/or Compensation Committee may from time to time, in their discretion, increase Mr. Rudisill’s base salary or award discretionary bonuses to Mr. Rudisill, which may take the form of cash consideration or equity.

The Rudisill Employment Agreement superseded the offer letter previously provided to Mr. Rudisill to serve on the Company’s Board of Directors.

Appointment of Chief Accounting Officer and Consulting Agreement

Effective on February 15, 2025, the Company appointed Eric R. Van Lent as the Chief Accounting Officer (Principal Accounting/Financial Officer) of the Company (the “Appointment”), which Appointment was effective as of the same date. As a result of the Appointment, Blair Jordan, the Chief Executive Officer (Principal Executive Officer) of the Company, who had served as the Principal Accounting/Financial Officer of the Company since October 16, 2024, stepped down from such role, also effective on February 15, 2025. Effective on February 15, 2025, the Company entered into an Executive Consulting Agreement dated January 30, 2025 with Mr. Van Lent and EVL Consulting, LLC (an entity owned by Mr. Van Lent) (“EVL Consulting” and the “EVL Consulting Agreement”). Pursuant to the EVL Consulting Agreement, the Company agreed to engage EVL Consulting to provide the services of Mr. Van Lent to the Company as Chief Accounting Officer of the Company. The EVL Consulting Agreement has a term through July 30, 2025, unless otherwise terminated pursuant to the terms of the agreement (discussed below) and provides for Mr. Van Lent to act as Chief Accounting Officer of the Company, and to be paid $8,000 per month for an average of 10 hours of work per week, with any hours in excess of that amount being compensated at the rate of $200 per hour, only if preapproved in writing by the Company. Notwithstanding the above, the Board of Directors, with the recommendation of the Compensation Committee, may grant Mr. Van Lent bonuses from time to time in its discretion, in cash or equity. The EVL Consulting Agreement includes customary confidentiality, non-disclosure and proprietary right requirements of EVL Consulting and Mr. Van Lent, and a prohibition on EVL Consulting and Mr. Van Lent competing against us during the term of the agreement.

On July 12, 2025, and effective July 31, 2025, the Company, Mr. Van Lent and EVL Consulting entered into a First Amendment to Consulting Agreement, which amended the EVL Consulting Agreement to (a) extend the term of such agreement through December 31, 2025; and (b) increase the termination fee to $25,000.

The Company has the right to terminate the EVL Consulting Agreement at any time, provided that it pays EVL Consulting $25,000 upon such termination, payable within 60 days of such termination date.

The Company is also able to terminate the EVL Consulting Agreement at any time, without notice upon: (a) the death or physical or mental incapacity of Mr. Van Lent if as a result of which Mr. Van Lent is unable to perform services for a period in excess of 30 days; (b) in the event Mr. Van Lent or a related party to Mr. Van Lent ceases to own or control 100% of EVL Consulting; or (c) “just cause”, which means any of the following events: (i) any material or persistent breach by EVL Consulting or Mr. Van Lent of the terms of the agreement; (ii) the conviction of EVL Consulting or Mr. Van Lent of a felony offence, or the equivalent in a non-American jurisdiction, or of any crime involving moral turpitude, fraud or misrepresentation, or misappropriation of money or property of the Company or any affiliate of the Company; (iii) a willful failure or refusal by EVL Consulting or Mr. Van Lent to satisfy its respective obligations to the Company under the agreement including without limitation, specific lawful directives, reasonably consistent with the agreement, or requests of the Board; (iv) any negligent or willful conduct or omissions of EVL Consulting or Mr. Van Lent that directly results in substantial loss or injury to the Company; (v) fraud or embezzlement of funds or property, or misappropriation involving the Company’s assets, business, customers, suppliers, or employees; (vi) any failure to comply with any of the Company’s written policies and procedures, including, but not limited to, the Company’s Corporate Code of Ethics and Insider Trading Policy, provided that subject to certain limited exceptions, we must first give written notice to EVL Consulting and Mr. Van Lent, as applicable, advising them of the acts or omissions that constitute failure or refusal to perform their obligations and that failure or refusal continues after EVL Consulting and Mr. Van Lent, as applicable, has had thirty (30) days to correct the acts or omissions as set out in the notice.

If the Company terminates the EVL Consulting Agreement for just cause, we are required to pay EVL Consulting any unpaid fees and/or unpaid and unreimbursed expenses accrued but unpaid prior to the effective termination date.

Non-Executive Director Compensation

Effective on May 7, 2024, the Board of Directors set the compensation payable to non-executive members of the Board of Directors for services on the Board of Directors, at (a) $50,000 per year for service on the Board; (b) $15,000 for each Chairperson of a committee of the Board of Directors (provided that only one additional $15,000 payment shall be made even if the Director chairs multiple committees); and $25,000 additional for each member of the Strategy and Alternatives Committee of the Board of Directors, provided that effective October 24, 2024, the Board determined that the members of the Strategy and Alternatives, Risk, Safety and Regulatory Committee (which committee was formed by the combination of the Strategy and Alternatives Committee and the Risk, Safety and Regulatory Committee), would not receive any additional consideration for services on such committee other than their standard compensation for service on the Board.

On February 4, 2025, the Board of Directors of the Company appointed independent director Ryan Smith, as Lead Independent Director of the Company, and agreed to pay Mr. Smith an additional $20,000 per year for his services in such role.

Board of Directors Adoption of 180 Life Sciences Corp. 2025 Option Incentive Plan

On June 17, 2025, the Board of Directors of the Company, with the recommendation of the Compensation Committee of the Board of Directors, adopted the Company’s 2025 Option Incentive Plan (the “2025 Plan”). Notwithstanding such adoption, in accordance with the rules of the Nasdaq Capital Market, following the date of adoption, but prior to the Shareholder Approval Date (as defined below), (i) no stock options granted thereunder can be exercised, and (ii) if Shareholder Approval (as defined below) is not received, the 2025 Plan is to be unwound, and the outstanding stock options granted thereunder cancelled (the “Nasdaq Pre-Approval Requirements”). As discussed above, the 2025 Plan was approved by the Board of Directors, but has not yet been approved by the Company’s stockholders, in accordance with the rules of The Nasdaq Capital Market, which allow the Company to adopt an equity arrangement and grant options thereunder prior to obtaining stockholder approval, provided that (i) no options can be exercised prior to obtaining stockholder approval, and (ii) the plan can be unwound, and the outstanding options cancelled, if stockholder approval is not obtained.

Shareholder approval of the 2025 Plan is to be obtained in accordance with the Company’s Second Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws, each as amended and applicable laws, within twelve (12) months of the date of adoption (the “Shareholder Approval” and the date of such Shareholder Approval, the “Shareholder Approval Date”). Additionally, the grant of incentive stock options under the 2025 Plan is subject to Shareholder Approval.

The Plan provides an opportunity for any employee, officer, director or consultant of the Company, subject to the terms of the 2025 Plan (including as discussed above and any limitations provided by federal or state securities laws), to receive (i) incentive stock options (to eligible employees only); or (ii) nonqualified stock options. Incentive stock options granted under the 2025 Plan are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Nonqualified (non-statutory stock options) granted under the 2025 Plan are not intended to qualify as incentive stock options under the Code.

A total of 100,000 shares of common stock are reserved for awards under the 2025 Plan.

2025 Supplemental Option Plan

On July 29, 2025, the Board of Directors of the Company, with the recommendation of the Compensation Committee of the Board of Directors, adopted the Company’s 2025 Supplemental Option Incentive Plan (the “2025 Supplemental Plan”). Notwithstanding such adoption, in accordance with the rules of The Nasdaq Capital Market, following the date of adoption, but prior to the Shareholder Approval Date (as defined below), (i) no stock options granted thereunder could be exercised, and (ii) if stockholder approval for the 2025 Supplemental Plan was not received, the 2025 Supplemental Plan was to be unwound, and the outstanding stock options granted thereunder cancelled.

The 2025 Supplemental Plan provides an opportunity for any employee, officer, director or consultant of the Company, subject to the terms of the 2025 Supplemental Plan (including as discussed above and any limitations provided by federal or state securities laws), to receive (i) incentive stock options (to eligible employees only); or (ii) nonqualified stock options. Incentive stock options granted under the 2025 Supplemental Plan are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Nonqualified (non-statutory stock options) granted under the 2025 Supplemental Plan are not intended to qualify as incentive stock options under the Code.

A total of 919,761 shares of common stock are reserved for awards under the 2025 Supplemental Plan.

2025 Supplemental Option Plan Option Grants

Effective July 29, 2025, the Board of Directors of the Company, with the recommendation of the Compensation Committee of the Board of Directors, approved (i) the grant of stock options to purchase 390,898 shares of common stock to Blair Jordan, the then Chief Executive Officer of the Company; (ii) the grant of stock options to purchase 390,898 shares of common stock to Ryan Smith, the Lead Director of the Company; (iii) the grant of stock options to purchase 91,976 shares of common stock to Stephen Shoemaker, a then independent member of the Board of Directors of the Company; and (iv) the grant of stock options to purchase 45,988 shares of common stock to the Company’s outside legal counsel (collectively, the “2025 Supplemental Plan Options”).

The 2025 Supplemental Plan Options were granted under the 2025 Plan and have a term often (10) years, subject in all cases to the terms and conditions of the 2025 Plan and the award agreements entered into to evidence such grants. The 2025 Supplemental Plan Options have an exercise price of $29.20 per share, which was $0.10 above the closing sales price of the Company’s common stock on The Nasdaq Capital Market on July 28, 2025.

Accelerated Vesting of Executive Award

Effective June 17, 2025, the Board of Directors of the Company, with the recommendation of the Compensation Committee of the Board of Directors, approved the accelerated vesting of 16,000 shares of restricted common stock originally issued to Jordan Consulting for Blair Jordan, the Company’s Chief Executive Officer, in February 2025, which were to vest at the rate of 1/2 of such shares on each of January 1, 2026 and December 31, 2026, subject to Mr. Jordan’s continued service to the Company, and instead provided for such shares to vest in full as of June 17, 2025.

Executive Option Grants

Effective June 17, 2025, the Board of Directors of the Company, with the recommendation of the Compensation Committee of the Board of Directors, approved the grant of stock options to certain individuals, including awards to the following named executive officers: (a) Jordan Consulting for Blair Jordan, the Chief Executive Officer of the Company (options to purchase 41,000 shares); and (b) Eric R. Van Lent, the Chief Accounting Officer of the Company (options to purchase 2,500 shares), each in consideration for services rendered and to be rendered to the Company.

The options were granted under the 2025 Plan and have a term often years, subject in all cases to the terms and conditions of the 2025 Plan and the award agreements entered into to evidence such grants, and each officer’s continued service with the Company. The options vest at the rate of 1/2 of such options on each of the six and twelve month anniversaries of the grant date. The options have an exercise price of $9.29 per share, the closing sales price of the Company’s common stock on the Nasdaq Capital market on June 17, 2025.

Executive Restricted Stock Awards

Effective on June 17, 2025, the Company issued, after recommendation by the Compensation Committee of the Company’s Board of Directors and approval by the Board of Directors,16,758 shares of restricted common stock to Jordan Consulting for Blair Jordan, Chief Executive Officer of the Company and 817 shares of restricted common stock to Eric R. Van Lent, Chief Accounting Officer of the Company, which vest at the rate of 1/2 of such shares on each of the six and twelve month anniversaries of the grant date, subject to such persons continued service to the Company on the applicable vesting dates. The grants were evidenced by Notice of Restricted Stock Grants and Restricted Stock Grant Agreements entered into between the Company and each recipient. The grants were made under, and subject to the terms of, the Company’s Third Amended and Restated 2022 Omnibus Incentive Plan (the “2022 Plan”).

Accelerated Vesting of Prior Awards

Effective June 17, 2025, the Board of Directors of the Company, with the recommendation of the Compensation Committee of the Board of Directors, approved the accelerated vesting of 6,500 shares of Restricted Common Stock held by each of Stephen H. Shoemaker, Dr. Lawrence Steinman and Ryan Smith, each non-executive members of the Board of Directors, and 3,000 shares of Restricted Common Stock issued to the Company’s outside legal counsel, which were to vest at the rate of 1/2 of such shares on each of July 1, 2025 and December 31, 2025, subject to such persons continued service to the Company and provided instead for such shares to vest in full as of June 17, 2025.

Non-Executive Director Option Awards

Effective June 17, 2025, the Board of Directors of the Company, with the recommendation of the Compensation Committee of the Board of Directors, approved the grant of stock options to the non-executive members of the Board of Directors as follows: Ryan Smith, Lead Director, options to purchase 25,500 shares of common stock; Stephen H. Shoemaker, director, options to purchase 16,500 shares of common stock; and Dr. Lawrence Steinman, director, options to purchase 11,000 shares of common stock, each in consideration for services rendered and to be rendered to the Company.

The options were granted under the 2022 Plan and have a term often years, subject in all cases to the terms and conditions of the 2022 Plan and the award agreements entered into to evidence such grants, and each director’s continued service with the Company. The options vest at the rate of 1/2 of such options in each of the six and twelve month anniversaries of the grant date. The options have an exercise price of $9.29 per share, the closing sales price of the Company’s common stock on the Nasdaq Capital market on June 17, 2025.

Attorney Compensation Option Award

Effective on June 17, 2025, the Company issued, after recommendation by the Compensation Committee of the Company’s Board of Directors and approval by the Board of Directors, approved the grant of stock options to purchase 3,500 shares of common stock to the Company’s outside legal counsel, in consideration for services rendered and to be rendered to the Company. The options were granted under the 2025 Plan and have a term often years, subject in all cases to the terms and conditions of the 2025 Plan and the award agreement entered into to evidence such grant, and the recipient’s continued service with the Company. The options vest at the rate of 1/2 of such options in each of the six and twelve month anniversaries of the grant date. The options have an exercise price of $9.29 per share, the closing sales price of the Company’s common stock on the Nasdaq Capital market on June 17, 2025.

Non-Executive Director Restricted Stock Awards

Effective on June 17, 2025, the Company issued, after recommendation by the Compensation Committee of the Company’s Board of Directors and approval by the Board of Directors,10,218 shares of restricted common stock to Ryan Smith, Lead Director,6,744 shares of restricted common stock to Stephen H. Shoemaker, director, and 4,496 shares of common stock to Dr. Lawrence Steinman, director, which vest at the rate of 1/2 of such shares on each of the six and twelve month anniversaries of the grant date, subject to such persons continued service to the Company on the applicable vesting dates (the “June 2025. The grants were evidenced by Notice of Restricted Stock Grants and Restricted Stock Grant Agreements entered into between the Company and each recipient. The grants were made under, and subject to the terms of, the 2022 Plan.

Attorney Compensation Restricted Stock Award

Effective on June 17, 2025, the Company issued, after recommendation by the Compensation Committee of the Company’s Board of Directors and approval by the Board of Directors,1,839 shares of restricted common stock to the Company’s outside legal counsel, which vest at the rate of 1/2 of such shares on each of the six and twelve month anniversaries of the grant date, subject to such person’s continued service to the Company on the applicable vesting dates. The grant was evidenced by a Notice of Restricted Stock Grant and Restricted Stock Grant Agreement entered into between the Company and the recipient. The grant was made under, and subject to the terms of, the 2022 Plan.

Accelerated Vesting

On July 29, 2025, the Board, with the recommendation of the Compensation Committee of the Board, Effective on July 11, 2025 and July 12, 2025, the Board of Directors of the Company, approved the accelerated vesting of the shares and options, respectively, granted on June 17, 2025, which vested in full on such dates. The Company recognized additional stock-based compensation of $348,019 related to the acceleration of vesting.

2025 Supplemental Option Plan Grants

On July 29, 2025, the Board, with the recommendation of the Compensation Committee of the Board, approved (i) the grant of stock options to purchase 390,898 shares of common stock to Blair Jordan, the then Chief Executive Officer of the Company; (ii) the grant of stock options to purchase 390,898 shares of common stock to Ryan Smith, the Lead Director of the Company; (iii) the grant of stock options to purchase 91,976 shares of common stock to Stephen Shoemaker, a then member of the Board; and (iv) the grant of stock options to purchase 45,988 shares of common stock to the Company’s outside legal counsel with an exercise price of $29.20 per share pursuant to the 2025 Supplemental Option Incentive Plan. If stockholder approval for the 2025 Supplemental Plan was not received, the 2025 Supplemental Option Incentive Plan was to be unwound, and the outstanding options cancelled; however, such plan was subsequently approved by stockholders.

2025 Second Supplemental Option Plan Grants

Effective August 8, 2025, the Board of Directors of the Company, with the recommendation of the Compensation Committee of the Board of Directors, approved (i) the grant of stock options to purchase 77,104 shares of common stock to Blair Jordan, the Chief Executive Officer of the Company at such time; (ii) the grant of stock options to purchase 77,104 shares of common stock to Ryan Smith, the Lead Director of the Company; (iii) the grant of stock options to purchase 18,142 shares of common stock to Stephen Shoemaker, a then independent member of the Board; and (iv) the grant of stock options to purchase 9,077 shares of common stock to the Company’s outside legal counsel. The options were granted pursuant to the Company’s 2025 Second Supplemental Option Incentive Plan. The options were granted at an exercise price of $30.10 per share. If stockholder approval is not received, the 2025 Second Supplemental Option Incentive Plan shall be unwound, and the outstanding options cancelled. If stockholder approval for the 2025 Supplemental Plan was not received, the 2025 Supplemental Option Incentive Plan was to be unwound, and the outstanding options cancelled; however, such plan was subsequently approved by stockholders.

RSU Grant

Effective on August 8, 2025, the Board, with the recommendation of the Compensation Committee, approved the grant of 33,333 restricted stock units (“RSUs”) to an employee of the Company, in consideration for services rendered, which vest at the rate of ½ of the RSUs on each of the first and second anniversaries of the grant date, subject to the recipient’s continued service with the Company on such vesting dates. The RSUs were granted under the Company’s 2022 Omnibus Incentive Plan, as amended.

Indemnification Agreements

The Company has entered into Indemnity Agreements (each an “Indemnification Agreement”) with each of its directors and officers (each an “Indemnitee”), to provide for indemnification to the officers and directors under Delaware law. Among other things, consistent with the Company’s Bylaws, each Indemnification Agreement generally requires that the Company (i) indemnify the Indemnitee from and against all expenses and liabilities with respect to proceedings to which Indemnitee may be subject by reason of the Indemnitee’s service to the Company to the fullest extent authorized or permitted by Delaware law and (ii) advance all expenses incurred by the Indemnitee in connection with the investigation, defense, settlement or appeal of any proceeding, and in connection with any proceeding to enforce the Indemnitee’s rights under the Indemnification Agreement. The Indemnification Agreement also establishes various related procedures and processes and generally requires the Company to maintain directors’ and officers’ liability insurance coverage.

NOTE 13 - STOCKHOLDERS’ (DEFICIT) EQUITY

Reverse Stock Splits

On October 14, 2025, we filed a Certificate of Amendment to our Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split of the Company’s common stock, in a ratio of 1-for-10, effective as of 12:01 a.m. Eastern Standard Time on October 20, 2025 (then “Reverse Stock Split”). Accordingly, each holder of common stock owned fewer shares of common stock as a result of the Reverse Stock Split. However, the Reverse Stock Split affected all holders of common stock uniformly and did not affect any stockholder’s percentage ownership interest in the Company, except to the extent that the Reverse Stock Split resulted in an adjustment to a stockholders’ ownership of common stock due to the treatment of fractional shares in the Reverse Stock Split. Therefore, voting rights and other rights and preferences of the holders of common stock were not affected by the Reverse Stock Split (other than as a result of the treatment of fractional shares, which were repurchased for cash by the Company). Common stock issued pursuant to the Reverse Stock Split remained fully paid and nonassessable, without any change in the par value per share.

No fractional shares were issued as a result of the Reverse Stock Split. Instead, each stockholder received a cash payment equal to the fraction of which such stockholder was otherwise entitled multiplied by the closing price per share of the common stock on the last trading day prior to the Effective Time as reported by Nasdaq (as adjusted to give effect to the Reverse Stock Split). The common stock began trading on a Reverse Stock Split-adjusted basis on The Nasdaq Capital Market on October 20, 2025. No change was made to the trading symbol for the Company’s shares of common stock or public warrants (since expired), “ETHZ” and “ETHZW”, respectively, in connection with the Reverse Stock Split.

In addition, the number of shares of common stock issuable upon exercise of stock options and other equity awards (including shares reserved for issuance under the Company’s equity compensation plans), and the number of shares of common stock issuable upon exercise of warrants were proportionately adjusted, using the 1-for-10 ratio. In addition, the exercise price for each outstanding stock option and warrant was increased in inverse proportion to the 1-for-10 split ratio such that upon an exercise, the aggregate exercise price payable by the optionee or warrant holder to the Company for the shares subject to the option or warrant will remain approximately the same as the aggregate exercise price prior to the Reverse Stock Split, subject to the terms of such securities.

On February 16, 2024, at a Special Meeting of the Stockholders of the Company, the stockholders of the Company approved an amendment to the Company’s Second Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of our issued and outstanding shares of our common stock, par value $0.0001 per share, by a ratio of between one-for-four to one-for-forty, inclusive, with the exact ratio to be set at a whole number to be determined by the Company’s Board of Directors or a duly authorized committee thereof in its discretion, at any time after approval of the amendment and prior to February 16, 2025.

On February 16, 2024, the Company’s Board approved a reverse stock split of the Company’s common stock at a ratio of 1-for-19 (the “2024 Reverse Stock Split” and together with the Reverse Stock Split, the “Reverse Stock Splits”). The 2024 Reverse Stock Split was effective on February 28, 2024 and the shares of the Company’s common stock began trading on Nasdaq on a post-split basis on February 28, 2024.

In addition, the number of shares of common stock issuable upon exercise of stock options and other equity awards (including shares reserved for issuance under the Company’s equity compensation plans), and the number of shares of common stock issuable upon exercise of warrants were proportionately adjusted, using the 1-for-19 ratio. In addition, the exercise price for each outstanding stock option and warrant was increased in inverse proportion to the 1-for-19 split ratio such that upon an exercise, the aggregate exercise price payable by the optionee or warrant holder to the Company for the shares subject to the option or warrant will remain approximately the same as the aggregate exercise price prior to the 2024 Reverse Stock Split, subject to the terms of such securities.

The rights and privileges of the holders of shares of common stock are substantially unaffected by the Reverse Stock Splits.

All share and per share data in the accompanying condensed consolidated financial statements and accompanying notes have been retroactively adjusted to reflect the effect of the Reverse Stock Splits.

Shares issued for Services

On March 7, 2025, the Compensation Committee and the Board approved the grant of 6,500 shares of restricted common stock to each of the current non-executive members of the Board of Directors as long-term compensation which shall vest to the holders thereof at the rate of ½ of such shares on each of July 1, 2025 and December 31, 2025, subject to continued service with the Company on such vesting dates. The Company also granted 3,000 shares of restricted common stock to an attorney which shall vest to the holder thereof at the rate of ½ of such shares on each of July 1, 2025 and December 31, 2025, subject to continued service with the Company on such vesting dates. Effective June 17, 2025, the Board of Directors of the Company, with the recommendation of the Compensation Committee of the Board of Directors, approved the accelerated vesting of 6,500 shares of Restricted Common Stock held by each of Stephen H. Shoemaker, Dr. Lawrence Steinman and Ryan Smith, each non-executive members of the Board of Directors, which were to vest at the rate of 1/2 of such shares on each of July 1, 2025 and December 31, 2025, subject to such persons continued service to the Company, as well as 3,000 shares of restricted common stock to an attorney which were to vest to the holder thereof at the rate of ½ of such shares on each of July 1, 2025 and December 31, 2025, subject to continued service with the Company on such vesting dates, and provided instead for such shares to vest in full as of June 17, 2025. The Company recognized an aggregate of $577,584 of stock-based compensation related to these shares during the six months ended June 30, 2025.

Effective on June 17, 2025, the Company issued, after recommendation by the Compensation Committee of the Company’s Board of Directors and approval by the Board of Directors, (a)16,758 shares of restricted common stock issue to Jordan Consulting for Blair Jordan, Chief Executive Officer of the Company; (b)817 shares of restricted common stock issued to Eric R. Van Lent, Chief Accounting Officer of the Company; (c)10,218 shares of restricted common stock issued to Ryan Smith, Lead Director; (d)6,744 shares of restricted common stock issued to Stephen H. Shoemaker, director; (e)4,496 shares of common stock issued to Dr. Lawrence Steinman, director; and (f)1,839 shares of common stock issued to the Company’s outside legal counsel, which grants were approved by the Board of Directors effective on June 17, 2025. The Company recognized an aggregate of $31,641 of stock-based compensation related to these shares during the six months ended June 30, 2025.

Shares cancelled

On January 30, 2025, the Company cancelled 239 shares previously issued to Tyche Capital LLC.

On June 12, 2025, under the terms of a release agreement, Mr. Jay Goodman, a former director of the Company, confirmed that the 6,500 shares of common stock which he held which were subject to vesting and forfeiture were forfeited in connection with his resignation, and the Company has since canceled such shares.

Shares issued for settlement of liabilities

During the nine months ended September 30, 2025, the Company issued 75,287 share of common stock for the settlement of liabilities. SeeNote 12 – Commitments and Contingencies.

Conversion of Series B Convertible Preferred Stock

On March 27, 2025, Elray Resources, Inc., the sole holder of the Series B Convertible Preferred Stock of the Company converted all then 1,000,000 outstanding shares of Series B Convertible Preferred Stock of the Company into 131,800 shares of common stock. SeeNote 8 – Series B Convertible Preferred Stock.

Stock Options

A summary of the option activity during the nine months ended September 30, 2025 is presented below:

A summary of outstanding and exercisable stock options as of September 30, 2025 is presented below:

On September 15, 2025, Stephen H. Shoemaker resigned as a member of the Board of Directors. In connection with his resignation, the Board, with the recommendation of the Compensation Committee of the Board, approved an extension of the expiration date of options to purchase 165,000 shares of common stock at an exercise price of $0.929 per share (the “Options”), which were previously granted to Mr. Shoemaker, and which, absent such extension, would have expired three months after his resignation, to June 17, 2035, the ten year anniversary of the grant date of such Options. The extension was accounted for as an option modification. The incremental value of the option modification of $141,519 was recorded as an expense

The fair value of stock options granted during the nine months ended September 30, 2025 was estimated using the Black-Sholes option pricing model and the following key assumptions range: 1) volatility of 172.04% -176.85% ; 2) an expected term of 5.4 years using the plain-vanilla simplified method; 3) dividend yield of 0%; and 4) a risk-free rate of 3.90% -3.99%. The options had an aggregate fair value of $34,945,873 at the grant date. The Company recognized stock-based compensation expense of $34,055,362 for the three months ended September 30, 2025 and $34,945,873 for the nine months ended September 30, 2025, related to the amortization of stock options; which is included within general and administrative expenses on the condensed consolidated statements of operations for the three and six-month periods. The Company recognized stock-based compensation expense of $16,456 and $274,826 for the three and nine months ended September 30, 2024, respectively, related to the amortization of stock options; expense of $15,156 and $269,627 is included within general and administrative expenses on the condensed consolidated statements of operations for the three and nine month period. As of September 30, 2025, there was $0 of unrecognized stock-based compensation expense related to stock options.

Warrants

A summary of the common stock underlying the warrants activity (including both liability and equity classified instruments) during the nine months ended September 30, 2025 is presented below:

A summary of outstanding and exercisable common stock underlying the warrants as of September 30, 2025 is presented below:

On July 27, 2025, Elray Resources, Inc., the holder of warrants to purchase 300,000 shares of Common Stock with an exercise price of $16.80 per share (the “Elray Warrants”), exercised all of such Elray Warrants on a cashless basis and was issued a net of 132,000 shares of Common Stock, after surrendering 168,000 warrant shares to the Company for cancellation in order to pay the aggregate exercise price in connection therewith, based on a fair market value of Common Stock on July 27, 2025, of $30.00 per share.

Securities Purchase Agreement

On July 29, 2025, the Company entered into a securities purchase agreement (the “SPA”) with certain accredited institutional investors (the “Purchasers”) pursuant to which the Company agreed to sell and issue to the Purchasers in a private placement an aggregate of (i)14,288,217 shares of common stock of the Company, par value $0.0001 per share (the “Common Stock”), at an offering price of $26.50 per share (the “Stock Purchase Price”), and (ii) $26.499 per pre-funded warrant (collectively, the “Pre-Funded Warrants”) to purchase up to an aggregate of 1,749,585 shares of Common Stock (the “Pre-Funded Warrant Shares”) (together, the “Private Placement”). The SPA provides that no Purchaser, together with its affiliates or anyone acting as a group with such purchaser, may beneficially own in excess of 19.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the shares of Common Stock and/or Pre-Funded Warrants to such person on the Closing Date (as defined below). Pursuant to the SPA, the Purchasers could elect to pay the total purchase amount due for their Common Stock and Pre-Funded Warrants, in either cash, ETH (determined by dividing the aggregate purchase price payable, by the spot exchange rate for ETH on the business day immediately preceding the execution of the Purchase Agreement) or any combination thereof. The Company received aggregate ETH holdings of 41,685.60 ETH, with a value under the SPA of $171,287,512. The Company received gross cash proceeds of $253,712,496 and paid fees and commissions of $1,681,000 which were reflected as costs of capital. The Company also issued 322,643 shares of common stock to a the placement agent.

The unfunded exercise price of each Pre-Funded Warrant will equal $0.0001 per underlying Pre-Funded Warrant Share. The exercise price and the number of shares of Common Stock issuable upon exercise of each Pre-Funded Warrant is subject to appropriate adjustment in the event of certain stock dividends, stock splits, stock combinations, or similar events affecting the Common Stock. The Pre-Funded Warrants are exercisable in cash or by means of a cashless exercise and will not expire until the date the Pre-Funded Warrants are fully exercised. The Pre-Funded Warrants may not be exercised if the aggregate number of shares of Common Stock beneficially owned by the holder thereof (together with its affiliates or anyone acting as a group with such holder) immediately following such exercise would exceed a specified beneficial ownership limitation; provided, however, that a holder may increase or decrease the beneficial ownership limitation by giving prior written notice to the Company (61 days’ notice for increases), but not to any percentage in excess of 19.99%.

Strategic Advisor Agreements and Warrants

On July 29, 2025, and in connection with the launch of the Company’s digital asset treasury strategy, the Company entered into a Strategic Advisor Agreement with each of Pink Sands Group, LLC, Cyber, Moode LLC, Moon Cat, LLC, Zorba Investments LLC, Purple Poseidon LLC, Tentacle Holdings LLC, PCAO LLC, Johnny Foxtrot LLC and New Island Advisors LLC (collectively, the “Strategic Advisors” and the “Strategic Advisor Agreements”). Pursuant to the Strategic Advisor Agreements, the Strategic Advisors agreed to provide the Company advice from time to time regarding the ETH treasury strategy, including on ETH purchase and staking strategies and such other areas as may be mutually determined by the Strategic Advisor and the Company from time to time (the “Services”). In consideration for agreeing to provide the Services, the Company granted on the same day the Strategic Advisors warrants to purchase an aggregate of 4,557,233 shares of the Company’s Common Stock (the “Strategic Advisor Warrants”). In the event the Company consummates a debt offering within sixty (60) days of the closing of the August 4, 2025 private placement, the Company agreed to grant additional warrants to purchase shares of the Company’s Common Stock to the Strategic Advisors pursuant to the Strategic Advisor Agreements with an exercise price equal to the greater of (i) the conversion price of such Debt Offering and (ii) the minimum price required by Nasdaq at the time of execution of any such Debt Offering plus $1.25.

The Strategic Advisor Agreements include customary restrictions on the use of confidential information, limits of liability of each party, and customary representations and warranties of the parties. The Strategic Advisor Agreements have a term of 30 months, unless otherwise terminated with the mutual agreement of the parties, or by either party, upon the breach of the agreement by the other, and failure to cure within ten (10) days.

The per share exercise price of each Strategic Advisor Warrant is equal to $27.75, which is $1.25 above the Stock Purchase Price. The exercise price and the number of shares of Common Stock issuable upon exercise of each of the Strategic Advisor Warrants is subject to appropriate adjustment in the event of certain stock dividends, stock splits, stock combinations, or similar events affecting the Common Stock. The Strategic Advisor Warrants are exercisable any time after Closing in cash or by means of a cashless exercise and will not expire until the date the Strategic Advisor Warrants are fully exercised. The Strategic Advisor Warrants may not be exercised if the aggregate number of shares of Common Stock beneficially owned by the holder thereof (together with its affiliates or anyone acting as a group with such Strategic Advisor) immediately following such exercise would exceed a specified beneficial ownership limitation; provided, however, that a holder may increase or decrease the beneficial ownership limitation by giving prior written notice to the Company (61 days’ notice for increases), but not to any percentage in excess of 19.99%.

In connection with the September 2025 Convertible Notes, the Company granted additional warrants to purchase an aggregate of 907,111 shares of the Company’s Common Stock (the “Subsequent Strategic Advisor Warrants”). The per share exercise price of each Subsequent Strategic Advisor Warrant is equal to $34.45, which is the Conversion Price of the September 2025 Convertible Notes. The exercise price and the number of shares of Common Stock issuable upon exercise of each of the Subsequent Strategic Advisor Warrants is subject to appropriate adjustment in the event of certain stock dividends, stock splits, stock combinations, or similar events affecting the Common Stock. The Subsequent Strategic Advisor Warrants are exercisable any time in cash or by means of a cashless exercise and will not expire until the date the Subsequent Strategic Advisor Warrants are fully exercised. The Strategic Advisor Warrants may not be exercised if the aggregate number of shares of Common Stock beneficially owned by the holder thereof (together with its affiliates or anyone acting as a group with such Strategic Advisor)

The fair value of the Strategic Advisor Warrants and the Subsequent Strategic Advisor Warrants granted during the nine months ended September 30, 2025 was estimated using the Black-Sholes option pricing model and the following key assumptions range: 1) volatility of 194.3% -194.37% ; 2) an expected term of 10 years; 3) dividend yield of 0%; and 4) a risk-free rate of 4.27% -4.34%. The options had an aggregate fair value of $158,216,522 at the grant date which was recognized as stock-based compensation expense for the three months ended September 30, 2025.

In connection with the Private Placement and the Strategic Advisor Agreements, the Company, the Purchasers and the Strategic Advisors (collectively, the “Registration Rights Holders”) have entered into a Registration Rights Agreement (the “Registration Rights Agreement”), providing for the registration for resale of the shares of Common Stock sold pursuant to the SPA and upon exercise of the Pre-Funded Warrants, and the shares of Common Stock issuable upon exercise of the Strategic Advisor Warrants (provided that the Placement Shares (defined below), also have the same registration rights as those securities), pursuant to a registration statement to be filed with the SEC no later than thirty (30) calendar days after the closing date of the sale of the September 2025 Convertible Notes, provided that the Company has agreed to use commercially reasonable efforts to effect such filing within fifteen (15) calendar days after the closing date of the sale of the September 2025 Convertible Notes. The Company has agreed to use reasonable best efforts to cause the Registration Statement to be declared effective as promptly as possible, but in no event later than sixty (60) days after the Closing of the Private Placement (which shall be extended by fifteen (15) days if the SEC shall issue more than one comment letter on the Registration Statement), if the SEC shall review the Registration Statement, or within five (5) business days after the Company is notified that the SEC will not review the Registration Statement or has no further comments thereon. The Company has agreed to keep the Registration Statement continuously effective from the date on which the SEC declares the Registration Statement to be effective until (i) the date on which such Registration Rights Holders shall have resold all the registrable securities covered thereby; and (ii) the date on which the registrable securities may be resold by each Registration Rights Holder without registration and without regard to any volume, holding period or manner-of-sale limitations by reason of Rule 144 of the Securities Act, without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 under the Securities Act or any other rule of similar effect.

Asset Management Agreement

In connection with the Private Placement, at the Closing (the “AMA Effective Date”), the Company entered into an Asset Management Agreement (the “Asset Management Agreement”) with Electric Treasury Edge, LLC (the “Asset Manager”). Pursuant to the Asset Management Agreement, the Asset Manager will provide discretionary investment management services with respect to, among other assets (including without limitation certain subsequently raised funds), the majority of the Company’s proceeds from the Private Placement (the “Account Assets”) in accordance with the terms of the Asset Management Agreement. The Asset Manager will pursue a long-bias strategy of digital assets primarily focused on Ethereum (the “ETH Strategy”). The custodians under the Asset Management Agreement will consist of cryptocurrency wallet providers mutually acceptable to the Company and the Asset Manager.

The Company shall pay the Asset Manager a monthly asset-based fee (the “Asset-based Fee”) equal to 2% per annum of the average daily net asset value of the Account Assets under management, payable in advance on the first business day of each calendar month; provided, however, that the minimum Asset-based Fee to be paid to the Asset Manager shall be $2,000,000 per year. Fees are prorated for partial periods. Staked or liquid-staked assets are not treated differently for fee purposes. The Asset Manager will invoice the Company monthly and deduct fees directly from the account. The Asset-based Fee shall be calculated and invoiced to the Company by the Asset Manager in a commercially reasonable manner and in good faith, by reference to relevant prices on Coinbase taken at 12:00 UTC for each relevant day (or if not available, determined by the Asset Manager in a commercially reasonable manner and in good faith by reference to reputable industry sources). The Company also agreed to pay or reimburse the Asset Manager for all reasonable and documented expenses related to the operation of the account, which shall be paid or reimbursed by the Company out of the Account Assets.

The Asset Management Agreement will, unless terminated earlier in accordance with its terms, remain in effect until the fifth anniversary of the AMA Effective Date and shall thereafter automatically renew for successive one-year terms unless either party provides written notice at least thirty (30) days prior to renewal. Beginning on the first anniversary of the AMA Effective Date, the Company may terminate the Asset Management Agreement either (i) without cause upon at least 180 days’ prior written notice, subject to approval by at least eighty percent (80%) of the members of the Company’s board of directors and by at least 66-2/3% of the Company’s shareholders, or (ii) for cause (following an Asset Manager Cause Event) upon at least 60 days’ prior written notice. The Asset Manager may terminate the Agreement beginning on the first anniversary of the AMA Effective Date either (i) without cause upon at least 180 days’ prior written notice, or (ii) for cause (following a Company Cause Event) upon at least 30 days’ prior written notice. “Company Cause Events” include failure to pay fees (not cured within five business days), insolvency, or material breach (not cured within 30 business days, if curable). “Asset Manager Cause Events” include willful misconduct, gross negligence or fraud by the Asset Manager or material breaches that have a material adverse effect on the Company or the Account Assets (not cured within 30 business days, if curable), or insolvency.

If the Asset Management Agreement is terminated by the Company without an Asset Manager Cause Event, or by the Asset Manager for a Company Cause Event, prior to the fifth anniversary of the AMA Effective Date, the Asset Manager is entitled to liquidated damages in an amount equal to 85% of the fees and compensation that would have accrued through the fifth anniversary of the AMA Effective Date. In the event the Asset Management Agreement is terminated for an Asset Manager Cause Event by the Company, the Company shall be entitled to any and all damages and legal remedies arising from or in connection therewith including, but not limited to, direct, indirect, special, consequential, speculative and punitive damages, as well as lost future profits and business in the future.

If the Asset Manager becomes subject to a legal or regulatory order that prohibits it from carrying out its business as contemplated under the Asset Management Agreement, it must suspend performance and notify the Company. The parties have agreed to work together in good faith to amend the Asset Management Agreement or, if amendment is not possible, the Asset Management Agreement may be terminated upon five (5) days’ prior written notice. In such case, the Asset Manager is entitled to receive 100% of all unpaid fees and compensation accrued through the termination date.

Beginning with the AMA Effective Date, the Account Manager shall have the right to provide asset management services with respect to Account Assets that consist of at least 50% of the aggregate value of the Company’s assets until the value of the Company’s assets is $1,000,000,000.

The Company and the Asset Manager have also agreed to negotiate in good faith either a separate and distinct asset management agreement or an amended and restated Asset Management Agreement, which provides for separate services related to the management of investments in securities or commodities with a substantially similar fee schedule, provided that the Asset Manager has obtained all requisite regulatory licenses and approvals necessary to provide such services, and further provided that the parties endeavor to avoid investments that would require the registration of the Company as an investment company under the Investment Company Act of 1940, as amended, which was subsequently entered into between the parties as discussed below.

The Asset Management Agreement includes customary confidentiality and indemnification provisions, representations, warranties and acknowledgements, for an agreement of the size and scope of the Asset Management Agreement.

On September 5, 2025, the Company entered into an Amended and Restated Asset Management Agreement (the “A&R Asset Management Agreement”), which amended and restated the Asset Management Agreement. The A&R Asset Management Agreement makes certain changes to the Asset Management Agreement, including, among other things, the expansion of the scope of account assets and advisory services provided by the Asset Manager.

Sales Agreement

On August 13, 2025, the Company entered into a Sales Agreement (the “Original Sales Agreement”) to sell shares of the Company’s common stock from time to time through Clear Street LLC (“Clear Street”), acting as sales agent, which was amended and restated on August 22, 2025, by the entry into another Sales Agreement between the Company and Clear Street (the “Sales Agreement”). Sales of the common stock made pursuant to the Sales Agreement, if any, will be made under a Registration Statement on Form S-3. Subject to the terms and conditions of the Sales Agreement, Clear Street may sell the shares, if any, only by methods deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act, including without limitation sales made directly through The Nasdaq Capital Market, by means of ordinary brokers’ transactions, in negotiated transactions, to or through a market maker other than on an exchange or otherwise, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, or at negotiated prices and/or any other method permitted by law. The Company is not obligated to sell, and Clear Street is not obligated to buy or sell, any shares of common stock under the Sales Agreement.

The Sales Agreement provides that Clear Street will be entitled to aggregate compensation for its services of up to 3.0% of the gross sales price per share of all shares sold through Clear Street under the Sales Agreement. The Company has no obligation to sell any shares under the Sales Agreement. In addition, the Company has agreed to reimburse certain legal expenses incurred by Clear Street in connection with execution of the Sales Agreement in an amount up to $75,000, in addition to certain ongoing legal expenses. Either party can terminate the Sales Agreement under certain conditions, such as material adverse changes, failure to perform obligations, trading suspensions, or other market or regulatory events. Both the Company and Clear Street can also end the agreement at any time with 10 days’ notice.

No assurance can be given that the Company will sell any shares of common stock under the Distribution Agreement, or, if it does, as to the price or amount of shares of common stock that it sells or the dates when such sales will take place.

During the three months ended September 30, 2025, we sold an aggregate of 739,050 shares of our common stock under the Sales Agreement for net proceeds of approximately $39,459,338.

Stock Repurchase Program

On August 22, 2025, the Board of Directors of the Company authorized and approved a stock repurchase program for up to $250.0 million of the currently outstanding shares of the Company’s common stock. Subject to any future extension in the discretion of the Board of Directors of the Company, the repurchase program is scheduled to expire upon the earliest of (i) June 30, 2026, (ii) when a maximum of $250.0 million of the Company’s common stock has been repurchased, or (iii) when such program is discontinued by the Board of Directors.

Under the stock repurchase program, shares may be repurchased from time to time in the open market or through negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws, including Rule 10b-18 of the Exchange Act. Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of shares, general market conditions, cost of capital, the trading price of the common stock, alternative uses for capital, and the Company’s financial performance. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws.

The repurchase program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase a particular number of, or any, shares. There is no guarantee as to the exact number or value of shares that will be repurchased by the Company, if any.

The repurchase program is expected to be funded using the Company’s working capital and from funds raised in “at-the-market” offerings or other future financings.

During the three months ended September 30, 2025, a total of 645,072 shares of common stock, for aggregate proceeds of $16,121,428 were repurchased by the Company and are presented as treasury stock on the consolidated balance sheet. No shares were cancelled or reissued from treasury stock during the three months ended September 30, 2025.

NOTE 14 - RELATED PARTIES

Accounts Payable – Related Parties

Accounts payable - related parties were $20,246 and $53,380 as of September 30, 2025 and December 31, 2024, respectively, and consist of amounts due to certain officers and directors of the Company, as well as deferred compensation for certain executives.

Research and Development Expenses - Related Parties

Research and Development Expenses – Related Parties of $141,043 and $151,138 and $416,870 and $455,345 during the three and nine months ended September 30, 2025 and 2024, respectively, is related to consulting and professional fees paid to current or former officers, directors or greater than 10% investors, or affiliates thereof, and is included in net loss from discontinued operations.

NOTE 15 – DISCONTINUED OPERATIONS

During the three months ended September 30, 2025, the Company made a strategic shift in its operations to no longer pursue its pharmaceutical research operations or the Gaming Technology Platform. As such, these operations are presented as discontinued operations in accordance with ASC 205.

Summarized balance sheet information of discontinued operations is below:

The statements of operations of discontinued operations are summarized below:

NOTE 16 - SUBSEQUENT EVENTS

Subsequent to September 30, 2025, the Company sold $40,000,000 of ETH holdings

Adoption of the 2025 Omnibus Incentive Plan

On October 7, 2025, the shareholders of ETHZilla voted for the adoption of the 2025 Omnibus Incentive Plan. Pursuant to this plan, on November 12, 2025, the Company granted, after recommendation of the by the Compensation Committee of the Company’s Board of Directors,4,816,685 shares of common stock to officers, directors, employees and a consultant as compensation. The shares vest half upon grant and half on January 2, 2026. The Company issued an aggregate of 3,728,838 shares of restricted common stock, to reflect net vesting for tax withholding purposes which substantially reduces the grant award by the grantees’ effective tax rates as required by law.

Purchase and Subscription Agreement

On October 22, 2025, we entered into a Purchase and Subscription Agreement (the “Satschel Agreement”) with Satschel, Inc., a Delaware corporation (“Satschel”). Satschel owns Liquidity.io, a regulated broker-dealer and operator of a Digital Alternative Trading System (ATS) platform (the “Platform”).

Pursuant to the Satschel Agreement, Satschel sold us shares of its Class A Common Stock representing 15% of its fully-diluted capitalization (the “Satschel Securities”), in consideration for (a) $5 million in cash; and (b)556,174 shares of our common stock with an agreed value of $10 million, which are subject to a six month lock-up (the “Satschel Shares”).

The Satschel Agreement includes (i) customary representations of each of the parties; (ii) positive and negative covenants required to be met by Satschel following the Closing (defined below), relating to required quarterly budgets, financial reporting, minimum cash balances and notification of key personnel changes, as well as budget compliance, and restrictions on new business lines, capital expenditures, compensation adjustments, indebtedness, sales or dispositions of assets and operations, public listings and reverse mergers, issuances of securities, and amendments to Satschel’s governing documents, without the prior written consent of the Company, subject to certain exceptions; and (iii) customary indemnification requirements of the parties, subject to a $50,000 deductible and a $2 million cap, subject to certain customary exceptions.

The Satschel Agreement also provides certain additional rights to the Company following the Closing, including (a) the exclusive right in perpetuity to list any digital tokens or assets issued on Ethereum Layer 2 protocols on the Platform; (b) a right of first refusal until the earlier of (i) five years following the Closing Date; and (ii) the date that Satschel becomes publicly-traded, to acquire any equity securities of Satschel that it may offer or sell; and (c) the right to appoint one member of the Board of Directors of Satschel, for so long as the Company owns any equity interests of Satschel.

The acquisition contemplated by the Satschel Agreement closed on October 22, 2025.

ATM Sales Agreement

Since September 30, 2025, we have sold an aggregate of 410,403 shares of our common stock (of which 405,735 have been issued) under the Sales Agreement for net proceeds of approximately $6,861,299, after deducting commissions.

Treasury Stock Transactions

Subsequent to September 30, 2025, a total of 1,454,400 shares of common stock, for an aggregate cost of $30,141,810 after fees were repurchased by the Company.

Exercise of Options

On October 28, 2025, Jordan Consulting for Blair Jordan, the former Chief Executive Officer of the Company, exercised options to purchase 41,000 shares of common stock.

Expiration of Public Warrants

On November 6, 2025, the Company’s then outstanding public warrants expired pursuant to their terms.

License Agreement Termination

On October 29, 2025, the Kennedy Trust for Rheumatology Research (“Kennedy Trust”) provided the Company notice of the termination of a patent license agreement between the Company and the Kennedy Trust in connection with rheumatology research, which termination will become effective on December 29, 2025.

Assignment and Settlement Agreement

On November 6, 2025, the Company and CannBioRex Pharma Limited, a company incorporated under the laws of England and Wales and an indirect wholly-owned subsidiary of the Company (“CannBioRex”), entered into an Assignment and Settlement Agreement (the “Oxford Assignment Agreement”) dated November 5, 2025, with the Chancellor, Masters and Scholars of the University of Oxford (“Oxford”) and Oxford University Innovation Limited, a wholly-owned subsidiary of Oxford University (“OUI”). Pursuant to the Agreement, we have agreed to (i) terminate a 2013 license agreement between OUI and the Company (then known as 180 Life Sciences Corp.), pursuant to which we were granted certain rights under OUI’s patent related to the treatment of Dupuytrens’s Disease (the “OUI Patent”) and the use of clinical data generated by Oxford in clinical trials; (ii) assign all of our intellectual property rights relating primarily to the treatment of Dupuytrens’s Disease, including a patent relating to the Dupuytren’s Contracture indication (the “Company IP”), to OUI; and (iii) terminate a series of research sponsorship, research support, and studentship agreements between Oxford, the Company, and CannBioRex (collectively, the “Research Agreements”).

The Oxford Assignment Agreement requires us to pay Oxford, within seven days after execution, an initial payment of $500,000 which has been paid, to be applied toward the repayment of $1,675,500 in unpaid research fees owed by CannBioRex to Oxford pursuant to the Research Agreements (the “Research Fees”). Pursuant to the Oxford Assignment Agreement, OUI has agreed to use its commercially reasonable best endeavors to promptly negotiate and finalize (and will not intentionally delay or interfere with) the sale of the OUI Patent and Company IP. If any party acquires ownership or exclusive rights in the Company IP within 36 months of the date of the Agreement, OUI will apply the amount received from such sale, first to the full repayment of the balance of the Research Fees to Oxford, and thereafter fifty percent of the remaining net revenues to the Company, up to a maximum net revenue share of $5 million.

The Oxford Assignment Agreement includes a mutual release and settlement of claims, customary representations of each of the parties, and mutual confidentiality provisions. In addition, we have agreed to indemnify OUI and Oxford against any third party claims against them by our shareholders or by Glenn Larsen (former chief executive officer of our subsidiary, 180 Therapeutics L.P.) arising from the Oxford Assignment Agreement, the termination of the License Agreement and Research Agreements, or the assignment of the Company IP to OUI.

Termination of Research and License Agreement

On November 11, 2025, Yissum and the Company terminated the Research and License Agreement dated May 13, 2018 between the Company (formerly 180 Life Sciences Corp./Cannbiorex Pharmaceuticals Corp.). Pursuant to the agreement, Yissum confirmed that it agreed to the discontinuation of all of the Company’s obligations to fund the ongoing patent expenses with respect to the licensed patents and to the return of the licensed technology.