Stablecoin Development Corp

Current report

None.

Previous report

The Company is supplementing the risk factors previously disclosed in our 2024 Annual Report with the following risk factors.

Previous report

Risks Related to Our Proposed Strategy Focusing on Assets Within Emerging Decentralized Financial Infrastructure and Network-Based Markets

Previous report

We are considering shifting a portion of our business strategy by evaluating opportunities within emerging decentralized financial infrastructure and network-based markets, which may include select blockchain based assets and we may be unable to successfully implement this new strategy.

Previous report

We are considering shifting a portion of our business strategy by evaluating opportunities within emerging decentralized financial infrastructure and network-based markets, which may include select blockchain-based assets, including through staking, restaking, liquid staking and other decentralized finance activities. The Company’s review of such opportunities is preliminary in nature, and there can be no assurance that any particular transaction, investment, or strategic initiative will be pursued or consummated. These evaluations remain subject to ongoing diligence, market conditions, regulatory considerations, and approval by the Board, as appropriate. Any potential activity in this area would be conducted in a manner consistent with the Company’s existing compliance framework and applicable laws and regulations. This strategic shift would require specialized employee skillsets and operational, technical and compliance infrastructure to support stablecoin and related staking activities. This would also require that we implement different security protocols and treasury management practices. Further, there is ongoing scrutiny and limited formal guidance from regulatory agencies, including NYSE and the SEC, with respect to the treatment of similar strategies from other public companies. There is no assurance that we will be able to execute this strategy by building out the needed infrastructure within the timeframe that we currently anticipate. Errors by key management could result in significant loss of funds and reduced rewards. As a result, our shift towards blockchain-based assets could have a material adverse effect on our business and financial condition.

Previous report

Our potential shift towards a business strategy focused on emerging decentralized financial infrastructure and blockchain-based assets would require substantial changes in our day-to-day operations and exposes us to significant operational risks.

Previous report

Our potential shift towards a strategy focused on emerging decentralized financial infrastructure and blockchain-based assets, including staking, restaking, liquid staking, and other decentralized finance activities, exposes us to significant operational risks. They may also require that we maintain constant up time to ensure that we are eligible for staking rewards and to avoid penalties. In addition, the decentralized financial infrastructure and network-based markets ecosystem rapidly evolves, with frequent upgrades and protocol changes that may require significant adjustments to our operational setup. The upgrades and protocol changes may require that we incur unanticipated costs. We may also need to employ third-party service providers in our operations, which may introduce risks outside of our control, including significant cybersecurity risks. Any of these operational risks could materially and adversely affect our ability to execute our strategy, prevent us from realizing positive returns and severely hurt our financial condition.

Previous report

Adverse changes in the regulatory treatment of blockchain-based assets could materially impair the value and liquidity of our future holdings and negatively impact our business, financial condition, and results of operations going forward.

Previous report

The legal and regulatory framework governing blockchain-based assets in the United States and in foreign jurisdictions is rapidly evolving and remains highly uncertain. Federal, state, and foreign regulators continue to issue new rules and take enforcement actions that directly or indirectly affect the classification, transferability, custody, and tax treatment of blockchain-based assets. Should any such asset we purchase, or the activities of any party critical to the blockchain ecosystem (including exchanges, validators, or custodians), be deemed to violate securities, commodities, anti-money-laundering, sanctions, consumer-protection, or other applicable laws, we could become subject to significant fines, penalties, registration requirements, trading restrictions, or forced divestiture of such blockchain-based assets. Any such development could cause a precipitous decline in the market price of such assets, impair our ability to monetize or otherwise use our blockchain-based asset treasury, and adversely impact the market price of our securities.

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Risks Related to Blockchain-Based Assets

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The blockchain-based asset trading platforms on which assets within emerging financial infrastructure and network-based markets trade are relatively new and largely unregulated or may not be complying with existing regulations.

Previous report

The blockchain-based assets that we are evaluating primarily trade on blockchain-based asset trading platforms and decentralized finance protocols which are relatively new and, in many ways, are not subject to, or may not comply with, regulation in relevant jurisdictions in a manner similar to other regulated trading platforms, such as national securities exchanges or designated contract markets. While many of these relatively new trading platforms provide the public with information regarding their ownership structure, management teams, private key management, hot/cold storage policies, on-chain activities, capitalization, corporate practices and regulatory compliance, many other relatively new trading platforms do not. In particular, those located outside the United States may be subject to significantly less stringent regulatory and compliance requirements in their local jurisdictions.

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The trading platforms on which the blockchain-based assets that we are evaluating trade may be unpredictable and susceptible to attacks.

Previous report

Significant trading may occur on systems and platforms with minimum predictability. Spot markets may impose daily, weekly, monthly or customer-specific transaction or withdrawal limits or suspend withdrawals entirely, rendering the exchange of blockchain-based assets for fiat currency difficult or impossible. Further, participation in spot markets requires users to take on credit risk by transferring blockchain-based assets from a personal account to a third-party’s account.

Previous report

Additionally, tools to detect and deter fraudulent or manipulative trading activities (such as market manipulation, front-running of trades, and wash-trading) may not be available to or employed by such trading platforms or may not exist at all. As a result, the marketplace may lose confidence in, or may experience problems relating to, these venues and the blockchain-based assets that trade on these venues. No trading platform on which blockchain-based assets trade is immune from these risks. The closure or temporary shutdown of such trading platforms due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in blockchain-based assets and other assets within emerging financial infrastructure and network-based markets and can slow down the mass adoption of it. Further, trading platform failures can have an adverse effect on blockchain-based markets and the price of blockchain-based assets and could therefore have a negative impact on the performance of our Common Stock.

Previous report

The trading prices of many blockchain-based assets have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in trading prices, could have a material adverse effect on the value of our common stock and the common stock could lose all or substantially all of its value.

Previous report

The trading prices of many blockchain-based assets have experienced extreme volatility in recent periods and may continue to do so. For instance, there were steep increases in the value of certain blockchain-based assets over the course of 2021, and multiple market observers asserted that blockchain-based assets were experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2022. Prices of such blockchain-based assets continued to fluctuate widely throughout 2023 and through this date.

Previous report

Extreme volatility in the future could have a material adverse effect on the value of our common stock and our common stock could lose all or substantially all of its value. Furthermore, negative perception and a lack of stability and standardized regulation in the blockchain-based economy may reduce confidence in the blockchain-based economy and may result in greater volatility in the price of blockchain-based assets, including a depreciation in value.

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2025 Preferred Stock Purchase Agreement

Previous report

On August 19, 2025, the Company entered into 2025 Preferred Stock Purchase Agreement with David E. Lazar, that provides for the Company to sell in a private placement (i) an aggregate of 481,250 shares of Series D Preferred Stock convertible into an aggregate of 77.0 million shares of Common Stock for $3.85 million and (ii) an aggregate of 268,750 shares of Series E Preferred Stock convertible into an aggregate of 43.0 million shares of Common Stock for an additional $2.15 million.

Previous report

Simultaneous to entering into the 2025 Preferred Stock Purchase Agreement on August 19, 2025, Mr. Lazar completed the Initial Series D Preferred Purchase. The 2025 Preferred Stock Purchase Agreement provided for the ability of Mr. Lazar to assign, transfer and/or sell his shares of Series D Preferred Stock, Series E Preferred Stock, and/or his right acquire such securities. As further described in Note 19, “Subsequent Events”, on October 9, 2025, Mr. Lazar entered into an agreement to effect such transfer.

Previous report

Since the Common Stock is currently listed on the NYSE American, and among these requirements are Section 713(a) and (b) of the Company Guide. Section 713(a) of the Company Guide requires stockholder approval in connection with any transaction, other than a public offering, involving the sale, issuance, or potential issuance, of common stock or securities convertible into common stock, equal to 20.0% or more of presently outstanding stock for less than the greater of book or market value. Section 713(b) of the Company Guide requires stockholder approval of a transaction, other than a public offering, involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into, or exercisable for, common stock) when the issuance or potential issuance of additional shares may result in a change of control of the issuer. As a result of the significant number of shares of Common Stock that may be issued upon the future conversion of the Series D Preferred Stock and Series E Preferred Stock compared to the currently issued and outstanding shares of Common Stock as provided above, the Company was required to obtain stockholder approval in accordance with the Company Guide Rule 713(a) and Rule 713(b) for Conversion Approval.

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Conversion Approval was obtained subsequent to September 30, 2025, on October 16, 2025.

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On October 16, 2025, subsequent to September 30, 2025 and the Conversion Approval, the Company completed the sale of 268,750 shares of Series E Preferred Stock at a price of $8.00 per share for aggregate gross proceeds of $2.15 million.

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Series E Preferred Stock Closing

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The 2025 Preferred Stock Purchase Agreement dated as of August 19, 2025 between the Company and Mr. Lazar provided for the ability of Mr. Lazar to assign, transfer and/or sell his shares of Series D Preferred Stock, Series E Preferred Stock, the shares of Common Stock underlying the Transferred Stock and/or his right acquire such securities (see Note 8, “Financing Activities”). On October 9, 2025, Mr. Lazar tendered his resignation as Chief Executive Officer and a director of NovaBay and entered into a securities purchase agreement with the Purchasers to effect such transfer. Pursuant to the agreement, Mr. Lazar agreed to assign to the Purchasers all of the Seller’s right, title and interest in (i) 441,326 outstanding shares of Series D Preferred Stock and (ii) the rights and obligations to purchase the Transferred Stock and the transactions contemplated by the Lazar Sale, each of which were purchased from the Company by Mr. Lazar pursuant to the 2025 Preferred Stock Purchase Agreement. On October 16, 2025, pursuant to the 2025 Preferred Stock Purchase Agreement, the Company filed the certificate of designations relating to the 2025 Preferred Stock Issuance. Each share of Series E Preferred Stock shall convert at the option of the holder or, otherwise, shall automatically convert 30 business days after the Stockholder Approval, into 160 shares of Common Stock, for an aggregate of 43,000,000 shares of Common Stock.

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October 2025 Pre-Funded Warrants

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On October 16, 2025, the Company issued and sold the October 2025 Pre-Funded Warrants to purchase an aggregate of 5,405,406 shares of Common Stock, to the Purchasers in two transactions for aggregate gross proceeds of approximately $6.0 million The purchase price was $1.10 per October 2025 Pre-Funded Warrant, representing 110% of the closing price of the Common Stock on the day before the issuance, less the $0.01 exercise price for each such October 2025 Pre-Funded Warrant. The October 2025 Pre-Funded Warrants are exercisable for shares of Common Stock at any time after January 1, 2026, subject to receipt of stockholder approval.