Stablecoin Development Corp

Previous wording

Stablecoin Development Corporation, formerly known as NovaBay Pharmaceuticals, Inc., is an on-chain holding company focused on long-duration participation in protocol-aligned digital asset ecosystems and providing public market access to the stablecoin economy. The Company’s initial digital asset focus is the Sky Protocol ecosystem, with SKY as its core holding. Through staking and other on-chain activities, the Company seeks to generate protocol-level economic exposure while maintaining governance, risk management, and public-company discipline. On April 2, 2026, the Company's corporate name change from NovaBay Pharmaceuticals, Inc. to Stablecoin Development Corporation became legally effective, and on April 6, 2026, the Company's common stock commenced trading on the NYSE American under the ticker symbol “SDEV.” See Note 16, “Subsequent Events,” for additional information.

Current wording

Stablecoin Development Corporation, formerly known as NovaBay Pharmaceuticals, Inc., is an on-chain holding company focused on long-duration participation in protocol-aligned digital asset ecosystems and providing public market access to the stablecoin economy. The Company’s initial digital asset focus is the Sky Protocol ecosystem, with SKY as its core holding. Through staking and other on-chain activities, the Company seeks to generate protocol-level economic exposure while maintaining governance, risk management, and public-company discipline. On April 2, 2026, the Company's corporate name change from NovaBay Pharmaceuticals, Inc. to Stablecoin Development Corporation became legally effective, and on April 6, 2026, the Company's common stock commenced trading on the NYSE American under the ticker symbol “SDEV.”

Previous wording

Stablecoin adoption has expanded across payments, settlement, and on-chain capital markets in recent years, and stablecoin supply has grown significantly. Regulatory frameworks in the United States and internationally continue to develop, which may provide greater clarity for stablecoin issuers and users. The Sky Protocol, through which the Company’s primary digital asset holdings are deployed, is one of the longest-operating decentralized stablecoin platforms, with USDS and DAI supply exceeding $11 billion as of March 31, 2026. The Sky Protocol generates revenue through borrowing fees, savings yields, and on-chain settlement volume. The Company’s SKY staking rewards are derived from a portion of these protocol-level revenues. The Company may evaluate additional digital asset investments that provide exposure to stablecoin infrastructure and related financial services, subject to approval by the Digital Asset Strategy Advisory Committee and the Board of Directors, and any applicable Purchaser consent rights under the Securities Purchase Agreement. See Note 8, “Financing Activities,” for additional information.

Current wording

Stablecoin adoption has expanded across payments, settlement, and on-chain capital markets in recent years, and stablecoin supply has grown significantly. Regulatory frameworks in the United States and internationally continue to develop, which may provide greater clarity for stablecoin issuers and users. The Sky Protocol, through which the Company’s primary digital asset holdings are deployed, is one of the longest-operating decentralized stablecoin platforms, with USDS and DAI supply exceeding $10 billion as of June 30, 2026. The Sky Protocol generates revenue through borrowing fees, savings yields, and on-chain settlement volume. The Company’s SKY staking rewards are derived from a portion of these protocol-level revenues. The Company may evaluate additional investments that provide exposure to stablecoin infrastructure, financial services, and infrastructure assets subject to approval by the Digital Asset Strategy Advisory Committee and the Board of Directors, and any applicable Purchaser consent rights under the Securities Purchase Agreement. See Note 8, “Financing Activities,” for additional information.

Previous wording

The Company’s financial results are primarily driven by (i) the market price of SKY, which affects the fair value of the Company’s digital asset holdings and the magnitude of unrealized gains or losses recognized each period; (ii) staking economics, including the level of staking rewards generated by the Sky Protocol and the proportion of the Company’s holdings deployed in staking activities; (iii) the Company’s access to capital, including through its ATM Program, to fund additional SKY acquisitions; and (iv) operating expenditures required to support the Company’s digital asset holdings, including custody, compliance, legal, and accounting costs associated with maintaining public-company discipline around a digital asset-focused business model. Because the Company’s digital asset holdings constitute substantially all of its assets, changes in the market price of SKY are expected to be the most significant driver of the Company’s reported financial results in any given period.

Current wording

The Company’s financial results and financial condition are primarily driven by (i) the market price of SKY, which affects the fair value of the Company’s digital asset holdings and the magnitude of unrealized gains or losses recognized each period; (ii) staking economics, including the level of staking rewards generated by the Sky Protocol and the proportion of the Company’s holdings deployed in staking activities; (iii) the Company’s access to capital, including through its ATM Program, to fund additional SKY acquisitions; and (iv) operating expenditures required to support the Company’s digital asset holdings, including custody, compliance, legal, and accounting costs associated with maintaining public-company discipline around a digital asset-focused business model. Because the Company’s digital asset holdings constitute substantially all of its assets, changes in the market price of SKY are expected to be the most significant driver of the Company’s reported financial results and financial condition in any given period.

Previous wording

As of March 31, 2026, the Company held 2,153,141,678 SKY tokens, representing approximately 9% of the total supply of SKY. Since the closing of the January 2026 Private Placement, the Company has acquired approximately 1.2 billion additional SKY tokens on the open market at an average purchase price of approximately $0.065 per SKY token. All SKY tokens acquired outside of the January 2026 Private Placement have been purchased through open-market transactions, consistent with the Company's digital asset policies. Since commencing on-chain staking activities, the Company has earned approximately 35.3 million SKY tokens in cumulative staking rewards. The majority of the Company's SKY holdings remain deployed in staking activities within the Sky Protocol ecosystem, through which the Company participates in on-chain governance of the Sky Protocol. Staking rewards are determined by protocol governance parameters, participation levels, and other factors, and are subject to variability over time.

Current wording

As of June 30, 2026, the Company held 2,286,511,374 SKY tokens, representing approximately 10% of the total supply of SKY. Since the closing of the January 2026 Private Placement, the Company has acquired approximately 1.3 billion additional SKY tokens on the open market at an average purchase price of approximately $0.066 per SKY token. All SKY tokens acquired outside of the January 2026 Private Placement have been purchased through open-market transactions, consistent with the Company's digital asset policies. Since commencing on-chain staking activities, the Company has earned approximately 67.1 million SKY tokens in cumulative staking rewards. Substantially all of the Company's SKY holdings remain deployed in staking activities within the Sky Protocol ecosystem, through which the Company participates in on-chain governance of the Sky Protocol. Staking rewards are determined by protocol governance parameters, participation levels, and other factors, and are subject to variability over time.

Previous wording

Because staking the Company’s SKY tokens requires on-chain deployment that cannot be executed from a custodial account, the substantial majority of the Company’s SKY tokens are held in self-custody using the MPC key management platform provided by Fireblocks. Fireblocks does not hold digital assets, does not act as a custodian, and does not have unilateral control over the Company’s digital assets.

Current wording

Because staking the Company’s SKY tokens requires on-chain deployment that cannot be executed from a custodial account, substantially all of the Company’s SKY tokens are held in self-custody using the MPC key management platform provided by Fireblocks. Fireblocks does not hold digital assets, does not act as a custodian, and does not have unilateral control over the Company’s digital assets.

Previous wording

The principal counterparty risk associated with our SKY holdings relates to these service providers' performance under our custody and platform agreements. We hold our SKY across multiple service providers to diversify our exposure, and we continually evaluate and seek to engage additional digital asset custodians and infrastructure providers to further diversify risk. We may, in the future, discontinue or change the use of one or more third-party service providers or utilize alternative custody arrangements. Under our agreements, each of Kraken and Fireblocks may engage third-party service providers, affiliates, or subcontractors to assist in performing their respective obligations.

Current wording

The principal counterparty risk associated with our SKY holdings relates to these service providers' performance under our custody and platform agreements. We hold our SKY across multiple service providers to diversify our exposure, and we continually evaluate and seek to engage additional digital asset custodians and infrastructure providers to further diversify risk. We may, in the future, discontinue or change the use of one or more third-party service providers or utilize alternative custody arrangements. Under our agreements, each of Kraken and Fireblocks may engage third-party service providers, affiliates, or subcontractors to assist in performing their respective obligations. Our service provider agreements contain customary limitations of liability that may limit our ability to recover losses in the event of service provider failure, security breach, or other adverse events.

Previous wording

As part of the comprehensive realignment of the Company's business during 2025, the Company completed the Avenova Asset Divestiture and the PhaseOne Divestiture and decided to exit its involvement in the China NeutroPhase product line. The historical financial results of these businesses are reflected as discontinued operations in the Unaudited Condensed Consolidated Financial Statements included in this report. See Note 13, “DivestituresDivestitures,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report for additional details.

Current wording

As part of the comprehensive realignment of the Company's business during 2025, the Company completed the Avenova Asset Divestiture and the PhaseOne Divestiture and decided to exit its involvement in the China NeutroPhase product line. The historical financial results of these businesses are reflected as discontinued operations in the Unaudited Condensed Consolidated Financial Statements included in this report. See Note 13, “Divestitures,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report for additional details.

Previous wording

Following the establishment of the Company's digital asset treasury strategy in October 2025 and the closing of the January 2026 Private Placement, the Company has transitioned its operations to focus on the accumulation, holding, and deployment of digital assets, with an initial focus on SKY tokens. As of March 31, 2026, the Company held 2,153,141,678 SKY tokens with an aggregate fair value of $160.1 million. See also “Financial Condition, Liquidity and Capital Resources” below.

Current wording

Following the establishment of the Company's digital asset treasury strategy in October 2025 and the closing of the January 2026 Private Placement, the Company has transitioned its operations to focus on the accumulation, holding, and deployment of digital assets, with an initial focus on SKY tokens. As of June 30, 2026, the Company held 2,286,511,374 SKY tokens with an aggregate fair value of $119.2 million, representing approximately 94% of the Company’s total assets. This concentration in a single digital asset exposes the Company to significant price volatility and related risks. See “Quantitative and Qualitative Disclosures About Market Risk” below and “Financial Condition, Liquidity and Capital Resources” below for additional information.

Previous wording

The Company has access to its ATM Program, under which it may sell shares of common stock from time to time at prevailing market prices. During the three months ended March 31, 2026, the Company used net proceeds from the ATM Program, together with other available capital, to acquire SKY tokens on the open market. The pace and magnitude of any future ATM sales and SKY purchases will depend on a number of factors, including prevailing market conditions, SKY pricing, the Company’s liquidity position, and the availability of shares under the ATM Program. The Company may also pursue additional financing transactions, subject to market conditions and Board approval. There can be no assurance that the Company will be able to sell shares under the ATM Program or that any future financing transactions will be completed on favorable terms, or at all.

Current wording

The Company has access to its ATM Program, pursuant to which it was initially authorized to sell up to $100.0 million of shares of common stock from time to time at prevailing market prices. As of June 30, 2026, approximately $84.5 million of common stock remained available for issuance under the ATM Program. During the six months ended June 30, 2026, the Company used net proceeds from the ATM Program, together with other available capital, to acquire SKY tokens on the open market. The pace and magnitude of any future ATM sales and SKY purchases will depend on a number of factors, including prevailing market conditions for the Company's common stock, SKY token pricing and liquidity, the Company's cash position and operating cash requirements, and the availability of shares under the ATM Program. The Company may also pursue additional financing transactions, subject to market conditions and Board approval. There can be no assurance that the Company will be able to sell shares under the ATM Program on favorable terms, or at all, or that any future financing transactions will be completed on favorable terms, or at all.

Previous wording

While the Company's significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report, the Company believes that the accounting estimates of the fair value of the January 2026 Pre-Funded Warrants issued in conjunction with the 2026 Private Placement are the most critical to fully understanding and evaluating its reported financial results as discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

While the Company's significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report, the Company believes that the fair value measurement of its digital assets and the accounting for the January 2026 Pre-Funded Warrants issued in connection with the January 2026 Private Placement are the most critical to fully understanding and evaluating its reported financial results as discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Previous wording

The intrinsic value of the January 2026 Pre-Funded Warrants at issuance exceeded the cash and other consideration received in the January 2026 Private Placement by approximately $5.3 billion, resulting in the recognition of a non-cash loss on fair value of warrant liabilities in excess of proceeds at issuance. Changes in the Company's common stock price during the three months ended March 31, 2026 resulted in a non-cash gain on changes in fair value of warrant liabilities of approximately $5.8 billion. Following stockholder approval obtained on March 12, 2026, the warrant liability recorded for the January 2026 Pre-Funded Warrants was reclassified to stockholders' equity at fair value on that date, and no further fair value adjustments will be recorded with respect to those warrants in future periods. The October 2025 Pre-Funded Warrants remain classified as a liability as of March 31, 2026 because they are not considered indexed to the Company's own stock under ASC 815, as a result of certain anti-dilution provisions, and will continue to be remeasured at fair value at each reporting date. As of March 31, 2026, the fair value of the October 2025 Pre-Funded Warrants was $33.7 million. See Note 10, “Common Stock Warrants and Warrant Liabilities,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Current wording

The intrinsic value of the January 2026 Pre-Funded Warrants at issuance exceeded the cash and other consideration received in the January 2026 Private Placement by approximately $5.3 billion, resulting in the recognition of a non-cash loss on fair value of warrant liabilities in excess of proceeds at issuance. Changes in the Company's common stock price during the three months ended March 31, 2026 resulted in a non-cash gain on changes in fair value of warrant liabilities of approximately $5.8 billion. Following stockholder approval obtained on March 12, 2026, the warrant liability recorded for the January 2026 Pre-Funded Warrants was reclassified to stockholders' equity at fair value on that date, and no further fair value adjustments will be recorded with respect to those warrants in future periods. The October 2025 Pre-Funded Warrants remained classified as a liability for a portion of the period because they are not considered indexed to the Company's own stock under ASC 815, as a result of certain anti-dilution provisions, and required remeasurement at fair value at each reporting date. On June 12, 2026 and June 15, 2026, the October 2025 Pre-Funded Warrants were modified, and all outstanding October 2025 Pre-Funded Warrants were exercised in full on a cashless basis on June 15, 2026, resulting in a non-cash gain of approximately $9.3 million. Following the exercise, there were no warrant liabilities outstanding as of June 30, 2026, and no further fair value estimates will be required with respect to these warrants in future periods. See Note 10, “Common Stock Warrants and Warrant Liabilities,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Previous wording

Staking revenue was $2.5 million for the three months ended March 31, 2026, compared to no staking revenue for the three months ended March 31, 2025. Staking revenue is attributable to staking rewards earned on the Company's SKY token holdings during the period, with no comparable result for the three months ended March 31, 2025, as the Company did not hold digital assets or conduct staking activities during the prior year period. The Company received 35,386,649 SKY tokens for staking rewards during the three months ended March 31, 2026.

Current wording

Staking revenue was $2.2 million for the three months ended June 30, 2026, compared to no staking revenue for the three months ended June 30, 2025. Staking revenue is attributable to staking rewards earned on the Company's SKY token holdings during the period, with no comparable result for the three months ended June 30, 2025, as the Company did not hold digital assets or conduct staking activities during the prior year period. The Company received 31,746,251 SKY tokens for staking rewards during the three months ended June 30, 2026.

Previous wording

General and administrative expenses were $2.8 million for the three months ended March 31, 2026, compared to $2.7 million for the three months ended March 31, 2025, an increase of approximately $0.1 million or 5%. While total expenses were comparable period over period, the underlying composition shifted significantly. Expenses for the three months ended March 31, 2026 consisted primarily of costs incurred in connection with the Company's continued transformation into a digital asset treasury company and the initiation of its digital asset treasury activities, as well as public company costs, including legal and professional services, the March 2026 special meeting of stockholders, and director and officer liability insurance. By comparison, expenses for the three months ended March 31, 2025 consisted primarily of outside services costs related to non-recurring strategic initiatives, including the Avenova Asset Divestiture and the pursuit of a potential dissolution as a strategic option for the Company, as well as one-time severance costs relating to the departure of employees in connection with completing the Avenova Asset Divestiture.

Current wording

General and administrative expenses were $5.4 million for the three months ended June 30, 2026, compared to $1.9 million for the three months ended June 30, 2025, an increase of approximately $3.5 million or 186%. The increase was primarily attributable to $3.2 million of stock-based compensation expense and a $0.4 million increase in director and officer liability insurance costs, both associated with the Company's continued transformation into a digital asset treasury company. Expenses for the three months ended June 30, 2026 also included public company costs such as legal and professional services. By comparison, expenses for the three months ended June 30, 2025 consisted primarily of outside services costs related to non-recurring strategic initiatives, including the Avenova Asset Divestiture and the pursuit of a potential dissolution as a strategic option for the Company, as well as one-time severance costs relating to the departure of employees in connection with completing the Avenova Asset Divestiture.

Previous wording

The Company recognized an unrealized gain on digital assets of $22.7 million for the three months ended March 31, 2026, with no comparable result for the three months ended March 31, 2025, as the Company did not hold digital assets during the prior year period. Because the Company held no digital assets at the beginning of the period, the unrealized gain represents the excess of the fair value of the Company's SKY token holdings at March 31, 2026 over the aggregate cost basis at which those holdings were initially recognized during the period. SKY tokens are measured at fair value at each reporting date, with changes in fair value recognized in earnings. The fair value of digital assets may be subject to significant volatility, and the Company expects that changes in the fair value of its SKY token holdings will continue to result in unrealized gains or losses in future periods, which may have a material impact on the Company's results of operations. For additional information, see Note 5, “Digital Assets,” in the Notes to Unaudited Condensed Consolidated Financial Statements (unaudited), in Part I, Item 1 of this report.

Current wording

The Company recognized an unrealized loss on digital assets of $28.0 million for the six months ended June 30, 2026, with no comparable result for the six months ended June 30, 2025, as the Company did not hold digital assets during the prior year period. The unrealized loss represents the excess of the aggregate cost basis at which the Company's SKY token holdings were initially recognized during the period over the fair value of those holdings at June 30, 2026. SKY tokens are measured at fair value at each reporting date, with changes in fair value recognized in earnings. The fair value of digital assets may be subject to significant volatility, and the Company expects that changes in the fair value of its SKY token holdings will continue to result in unrealized gains or losses in future periods, which may have a material impact on the Company's results of operations. For additional information, see Note 5, “Digital Assets,” in the Notes to Unaudited Condensed Consolidated Financial Statements (unaudited), in Part I, Item 1 of this report.

Previous wording

There were no impairments of long-lived assets recorded during the three months ended March 31, 2026. During the quarter ended March 31, 2025, the Company recorded one-time impairments for right-of-use assets associated with leases of $559 thousand and $30 thousand for fixed assets including leasehold improvements due to the uncertainty at the time associated with our future operations and our strategic direction as we were exploring a dissolution of the Company and other potential strategic alternatives that were available to us.

Current wording

There were no impairments of long-lived assets recorded during the six months ended June 30, 2026. During the six months ended June 30, 2025, the Company recorded one-time impairments for right-of-use assets associated with leases of $559 thousand and $30 thousand for fixed assets including leasehold improvements due to the uncertainty at the time associated with our future operations and our strategic direction as we were exploring a dissolution of the Company and other potential strategic alternatives that were available to us.

Previous wording

During the three months ended March 31, 2026, the Company recognized a non-cash loss of $5.3 billion with no comparable results for the three months ended March 31, 2025. The issuance-date fair value of the January 2026 Pre-Funded Warrants exceeded the proceeds received, resulting in a non-cash loss on warrant issuance. For additional information, please see Note 10, “Common Stock Warrants and Warrant Liabilities,” in the Notes to Unaudited Condensed Consolidated Financial Statements (unaudited) in Part I, Item 1 of this report.

Current wording

During the six months ended June 30, 2026, the Company recognized a non-cash loss of $5.3 billion with no comparable results for the six months ended June 30, 2025. The issuance-date fair value of the January 2026 Pre-Funded Warrants exceeded the proceeds received, resulting in a non-cash loss on warrant issuance. For additional information, please see Note 10, “Common Stock Warrants and Warrant Liabilities,” in the Notes to Unaudited Condensed Consolidated Financial Statements (unaudited) in Part I, Item 1 of this report.

Previous wording

Adjustments to the fair value of warrant liabilities resulted in a gain of $5.8 billion for the three months ended March 31, 2026 with no comparable adjustment for the three months ended March 31, 2025. This gain related to the October 2025 Pre-Funded Warrants and the January 2026 Pre-Funded Warrants, which were initially classified as liabilities and recorded at fair value at each reporting date. Following stockholder approval obtained on March 12, 2026, the warrant liability recorded for the January 2026 Pre-Funded Warrants was reclassified to stockholders' equity at their fair value on that date, and no further fair value adjustments will be recorded with respect to those warrants in future periods. The October 2025 Pre-Funded Warrants remain classified as a liability as of March 31, 2026, with a fair value of $33.7 million, and will continue to be remeasured at fair value at each reporting date with changes in fair value recognized in earnings. For additional information regarding warrant liabilities and their valuation, please see Note 3, “Fair Value Measurements” and Note 10, “Common Stock Warrants and Warrant Liabilities” in the Notes to Unaudited Condensed Consolidated Financial Statements, (unaudited) in Part I, Item 1 of this report.

Current wording

Adjustments to the fair value of warrant liabilities resulted in a gain of $5.8 billion for the six months ended June 30, 2026 with no comparable adjustment for the six months ended June 30, 2025. This gain related to the October 2025 Pre-Funded Warrants and the January 2026 Pre-Funded Warrants, which were initially classified as liabilities and recorded at fair value at each reporting date. Following stockholder approval obtained on March 12, 2026, the warrant liability recorded for the January 2026 Pre-Funded Warrants was reclassified to stockholders' equity at their fair value on that date, and no further fair value adjustments will be recorded with respect to those warrants in future periods. The October 2025 Pre-Funded Warrants remained classified as a liability because they were not considered indexed to the Company's own stock under ASC 815, as a result of certain anti-dilution provisions. On June 12, 2026, the October 2025 Pre-Funded Warrants held by R01 were modified, and on June 15, 2026, the October 2025 Pre-Funded Warrants held by Framework were modified. All outstanding October 2025 Pre-Funded Warrants were exercised in full on a cashless basis on June 15, 2026. In connection with the amendments, the October 2025 Pre-Funded Warrants were remeasured at intrinsic value immediately prior to exercise, consistent with the Company's existing quarterly measurement policy for these warrants; the resulting change in fair value was not attributable to the terms of the amendments themselves. Accordingly, there were no warrant liabilities outstanding as of June 30, 2026. For additional information regarding warrant liabilities and their valuation, please see Note 3, "Fair Value Measurements" and Note 10, "Common Stock Warrants and Warrant Liabilities" in the Notes to Unaudited Condensed Consolidated Financial Statements (unaudited) in Part I, Item 1 of this report.

Previous wording

Other expense, net was $1.4 million for the three months ended March 31, 2026 and $40 thousand for the three months ended March 31, 2025. The 2026 result was due primarily to costs incurred in connection with the January 2026 Private Placement. There was no comparable expense related to financing activities in the 2025 period. See Note 8, “Financing Activities” in the Notes to the Unaudited Condensed Consolidated Financial Statements (unaudited), in Part I, Item 1 of this report.

Current wording

Other expense, net was $1.4 million for the six months ended June 30, 2026 and $113 thousand for the six months ended June 30, 2025. The 2026 result was due primarily to costs incurred in connection with the January 2026 Private Placement. There was no comparable expense related to financing activities in the 2025 period. See Note 8, “Financing Activities” in the Notes to the Unaudited Condensed Consolidated Financial Statements (unaudited), in Part I, Item 1 of this report.

Previous wording

Our net income from continuing operations was $552.4 million for the three months ended March 31, 2026, compared to a net loss from continuing operations of $3.3 million for the three months ended March 31, 2025. Net income from continuing operations for the three months ended March 31, 2026 was driven primarily by a non-cash gain on changes in fair value of warrant liabilities of approximately $5.8 billion, partially offset by a non-cash loss on fair value of warrant liabilities in excess of proceeds at issuance of approximately $5.3 billion, both of which related to the Company's October 2025 Pre-Funded Warrants and January 2026 Pre-Funded Warrants. Following stockholder approval obtained on March 12, 2026, the January 2026 Pre-Funded Warrant liability was reclassified to stockholders' equity at fair value on that date. The October 2025 Pre-Funded Warrants remain classified as a liability as of March 31, 2026 and will continue to be remeasured at fair value at each reporting date. See Note 10, “Common Stock Warrants and Warrant Liabilities,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Current wording

Our net income from continuing operations was $511.3 million for the six months ended June 30, 2026, compared to a net loss from continuing operations of $5.3 million for the six months ended June 30, 2025. Net income from continuing operations for the six months ended June 30, 2026 was driven primarily by a non-cash gain on changes in fair value of warrant liabilities of approximately $5.8 billion, partially offset by a non-cash loss on fair value of warrant liabilities in excess of proceeds at issuance of approximately $5.3 billion, both of which related to the Company's October 2025 Pre-Funded Warrants and January 2026 Pre-Funded Warrants. Following stockholder approval obtained on March 12, 2026, the January 2026 Pre-Funded Warrant liability was reclassified to stockholders' equity at fair value on that date. On June 12, 2026 and June 15, 2026, the October 2025 Pre-Funded Warrants were modified, and all outstanding October 2025 Pre-Funded Warrants were exercised in full on a cashless basis on June 15, 2026. Accordingly, there were no warrant liabilities outstanding as of June 30, 2026. See Note 10, “Common Stock Warrants and Warrant Liabilities,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Previous wording

As of March 31, 2026, our cash and cash equivalents were $18.4 million, compared to $8.0 million as of December 31, 2025. The increase reflects net cash proceeds received during the three months ended March 31, 2026, including (i) approximately $25.0 million in cash received in connection with the January 2026 Private Placement, (ii) approximately $13.4 million in net proceeds from sales under the ATM Program, and (iii) the conversion of approximately $51.0 million of stablecoins received in connection with the January 2026 Private Placement into U.S. dollars, a portion of which was subsequently used to acquire additional SKY tokens. See Note 8, “Financing Activities,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Current wording

As of June 30, 2026, our cash and cash equivalents were $7.0 million, compared to $8.0 million as of December 31, 2025, a decrease of approximately $1.0 million. This decrease primarily reflects approximately $84.5 million used to acquire additional SKY tokens and approximately $7.8 million used in operating activities, partially offset by net cash proceeds received during the six months ended June 30, 2026, including (i) approximately $25.0 million in cash received in connection with the January 2026 Private Placement, (ii) the conversion of approximately $51.0 million of stablecoins received in connection with the January 2026 Private Placement into U.S. dollars, a portion of which was subsequently used to acquire additional SKY tokens, and (iii) approximately $15.2 million in net proceeds from sales under the ATM Program. The remaining change reflects other financing activities, including the redemption of the Company's Series F Preferred Stock and proceeds from warrant exercises. See Note 8, “Financing Activities,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Previous wording

Following the establishment of the Company's digital asset treasury strategy and the completion of the financing transactions described above, the Company's primary sources of liquidity consist of cash and cash equivalents and access to the capital markets, including through the ATM Program. The Company's SKY token holdings represent a strategic capital allocation and are not considered a primary source of operating liquidity.

Current wording

Following the establishment of the Company's digital asset treasury strategy and the completion of the financing transactions described above, the Company's primary sources of liquidity consist of cash and cash equivalents and access to the capital markets, including through the ATM Program. The Company intends to hold its SKY tokens as a long-term strategic position and does not currently plan to liquidate any portion of its digital asset holdings to fund operations. The Company would consider monetizing a portion of its SKY tokens only if it were unable to meet its liquidity needs through cash on hand, the ATM Program, or other financing transactions.

Previous wording

Based on our funds available on March 31, 2026, management believes that the Company's existing cash and cash equivalents will be sufficient to enable the Company to meet its planned operating expenses at least through May 15, 2027. Beyond twelve months, our ability to fund growth and meet obligations will depend on market conditions and access to capital on acceptable terms.

Current wording

Based on funds available as of June 30, 2026, management believes that the Company's existing cash and cash equivalents together with its ability, if needed, to monetize a portion of its unencumbered, exchange-traded SKY token holdings are expected to be sufficient to enable the Company to meet its planned operating expenses at least through July 30, 2027. The Company also has access to its ATM Program, under which approximately $84.5 million of common stock remained available for issuance as of July 27, 2026. Beyond twelve months, the Company’s ability to fund growth and meet obligations will depend on market conditions, including the Company’s ability to access capital on acceptable terms through its ATM Program or other financing sources, the volatility and liquidity of SKY tokens and the Company’s operating cash requirements.

Previous wording

Subsequent to March 31, 2026 and through May 14, 2026, the Company sold an aggregate of 398,367 shares of common stock under the ATM Program for aggregate net proceeds of approximately $0.6 million, and purchased an aggregate of approximately 86.5 million SKY tokens on digital asset exchanges for an aggregate cost of approximately $6.5 million. As of May 14, 2026, approximately $85.7 million of common stock remained available for issuance under the ATM Program. See Note 16, “Subsequent Events,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report for additional information.

Current wording

Subsequent to June 30, 2026 and through July 27, 2026, the Company sold an aggregate of 24,714 shares of common stock under the ATM Program for aggregate net proceeds of approximately $26 thousand. As of July 27, 2026, approximately $84.5 million of common stock remained available for issuance under the ATM Program.

Previous wording

Net cash used in operating activities from continuing operations was $1.8 million for the three months ended March 31, 2026, which included net income of $552.4 million. Net income was adjusted for non-cash items, including a non-cash gain on changes in fair value of warrant liabilities of $5.8 billion, a non-cash loss on fair value of warrant liabilities in excess of proceeds at issuance of $5.3 billion, an unrealized gain on digital assets of $22.7 million, staking rewards earned in SKY tokens of $2.5 million, stock-based compensation expense of $25 thousand, amortization of debt discounts on convertible notes of $3 thousand and deferred income taxes of $3.5 million. Changes in operating assets and liabilities resulted in a net cash inflow of $2.4 million, driven primarily by an increase in accounts payable and accrued liabilities of $2.5 million.

Current wording

Net cash used in operating activities from continuing operations was $7.8 million for the six months ended June 30, 2026, which included net income of $511.3 million. Net income was adjusted for non-cash items, including a non-cash gain on changes in fair value of warrant liabilities of $5.8 billion, a non-cash loss on fair value of warrant liabilities in excess of proceeds at issuance of $5.3 billion, an unrealized loss on digital assets of $28.0 million, staking rewards earned in SKY tokens of $4.7 million, and stock-based compensation expense of $3.3 million. Changes in operating assets and liabilities resulted in a net cash outflow of $1.4 million, driven primarily by decreases in operating lease liabilities of $0.7 million, including a $569 thousand payment made in connection with the early termination of the Company’s Emeryville office lease, accounts payable and accrued liabilities of $0.3 million, as well as an increase in prepaid expenses and other current assets of $0.4 million.

Previous wording

Net cash used in operating activities from continuing operations was $1.3 million for the three months ended March 31, 2025, which consisted primarily of a net loss of $3.3 million, adjusted for non-cash items including stock-based compensation expense of $2 thousand, non-cash right-of-use amortization of $53 thousand, non-cash impairment of long-lived assets of $0.6 million, and amortization of debt discounts on convertible notes of $26 thousand. Changes in operating assets and liabilities resulted in a net cash inflow of $1.3 million.

Current wording

Net cash used in operating activities from continuing operations was $3.8 million for the six months ended June 30, 2025, which consisted primarily of a net loss from continuing operations of $5.3 million, adjusted by stock-based compensation expenses related to employee and director stock awards of $6 thousand, non-cash right-of-use asset amortization of $90 thousand, non-cash impairment of long-lived assets of $0.6 million, accretion of interest and amortization of debt discounts on convertibles notes of $46 thousand, and a net increase of $0.7 million in our net operating assets and liabilities of continuing operations.

Previous wording

Net cash used in investing activities from continuing operations was $25.9 million for the three months ended March 31, 2026, consisting of $76.9 million in purchases of SKY tokens, partially offset by $51.0 million in proceeds from the redemption of stablecoins received in connection with the January 2026 Private Placement.

Current wording

Net cash used in investing activities from continuing operations was $33.5 million for the six months ended June 30, 2026, consisting of $84.5 million in purchases of SKY tokens, partially offset by $51.0 million in proceeds from the redemption of stablecoins received in connection with the January 2026 Private Placement.

Previous wording

There was no cash used in, or provided by, investing activities from continuing operations during the three months ended March 31, 2025.

Current wording

There was no cash used in, or provided by, investing activities from continuing operations during the six months ended June 30, 2025.

Previous wording

Net cash provided by financing activities from continuing operations was $38.3 million for the three months ended March 31, 2026, consisting primarily of $25.0 million in proceeds from the issuance of pre-funded warrants in connection with the January 2026 Private Placement, $13.4 million in net proceeds from sales under the ATM Program, and $0.3 million in proceeds from warrant exercises, partially offset by $0.4 million in payments on redemption of Series F Preferred Stock.

Current wording

Net cash provided by financing activities from continuing operations was $40.2 million for the six months ended June 30, 2026, consisting primarily of $25.0 million in proceeds from the issuance of pre-funded warrants in connection with the January 2026 Private Placement, $15.2 million in net proceeds from sales under the ATM Program, and $0.3 million in proceeds from warrant exercises, partially offset by $0.4 million in payments on redemption of Series F Preferred Stock.

Previous wording

Net cash used in financing activities from continuing operations was $1.7 million for the three months ended March 31, 2025, which consisted primarily of $1.8 million in cash payments to repurchase outstanding warrants and a $0.5 million repayment of a bridge loan, partially offset by $0.6 million in proceeds from warrant exercises.

Current wording

Net cash used in financing activities from continuing operations was $1.9 million for the six months ended June 30, 2025, which consisted primarily of $2.0 million in cash payments to repurchase outstanding warrants and a $0.5 million repayment of the Bridge Note. Offsetting these payments were $0.6 million in proceeds from warrant exercises.

Previous wording

The Company's operating expenses primarily consist of legal, accounting, and other professional services. Inflation has not had a material effect on the Company's results of operations during the three months ended March 31, 2026. The value of the Company's digital asset holdings is subject to significant price volatility based on macroeconomic factors, market sentiment, and conditions specific to digital asset markets (which are independent of but may be indirectly influenced by inflationary pressures) and may have a material impact on the Company's results of operations and financial position.

Current wording

The Company's operating expenses primarily consist of legal, accounting, and other professional services. Inflation has not had a material effect on the Company's results of operations during the six months ended June 30, 2026. The value of the Company's digital asset holdings is subject to significant price volatility based on macroeconomic factors, market sentiment, and conditions specific to digital asset markets (which are independent of but may be indirectly influenced by inflationary pressures) and may have a material impact on the Company's results of operations and financial position.

Previous wording

In the normal course of business, the Company enters into contracts and commitments that obligate it to make payments in the future. As of March 31, 2026, the Company's contractual obligations consisted primarily of obligations under its operating lease for its corporate headquarters. Information regarding the Company's obligations under its operating lease is provided in Note 7, “Commitments and Contingencies,” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report. As of March 31, 2026, the Company had no convertible note obligations outstanding.

Current wording

In the normal course of business, the Company enters into contracts and commitments that obligate it to make payments in the future. As of June 30, 2026, the Company had no material fixed or determinable contractual payment obligations requiring disclosure in tabular form, other than as disclosed elsewhere in this report. As of June 30, 2026, the Company had no convertible note obligations outstanding.