Stablecoin Development Corp

Previous wording

The following discussion of our financial condition and results of operations should be read together with our Unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item 1 of this report and with our Consolidated Financial Statements and related notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our 2025 Annual Report on Form 10-K, as amended. This discussion contains forward-looking statements that involve risks and uncertainties. Words such as“expects,”* “anticipated,” “will,” “may,” “goals,” “plans,” “believes,” “estimates,” “concludes,” “determines,” variations of these words, and similar expressions are intended to identify these forward-looking statements. As a result of the significant changes that have occurred to us and our business, including the establishment of our digital asset treasury strategy, as well as other factors, including those set forth under the section entitled*“Risk Factors”* in Part I, Item 1A. of our 2025 Annual Report on Form 10-K, as amended, and elsewhere in our SEC filings, our actual results may differ materially from those anticipated in these forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions based upon assumptions made that we believe to be reasonable at the time and are subject to risks and uncertainties. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Except as required by law, we undertake no obligation to publicly revise or update any forward-looking statements after the date of this report, even if new information becomes available in the future.*

Current wording

The following discussion of our financial condition and results of operations should be read together with our unaudited condensed financial statements and related notes included in Part I, Item 1 of this report and with our financial statements and related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our 2025 Annual Report on Form 10-K, as amended. This discussion contains forward-looking statements that involve risks and uncertainties. Words such as“expects,”* “anticipated,” “will,” “may,” “goals,” “plans,” “believes,” “estimates,” “concludes,” “determines,” variations of these words, and similar expressions are intended to identify these forward-looking statements. As a result of the significant changes that have occurred to us and our business, including the establishment of our digital asset strategy, as well as other factors, including those set forth under the section entitled*“Risk Factors”* in Part I, Item 1A. of our 2025 Annual Report on Form 10-K, as amended, and elsewhere in our SEC filings, including our Current Report on Form 8-K filed on October 5, 2026, our actual results may differ materially from those anticipated in these forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions based upon assumptions made that we believe to be reasonable at the time and are subject to risks and uncertainties. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Except as required by law, we undertake no obligation to publicly revise or update any forward-looking statements after the date of this report, even if new information becomes available in the future.*

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.”

Current wording

Stablecoin Development Corporation (the “Company,” “our,” “we,” or “us”), 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

Pursuant to oversight by our Board of Directors and our Digital Asset Strategy Advisory Committee established by our Board of Directors, our core business consists of the accumulation, holding, and deployment of operating digital assets for use within blockchain-based networks to support protocol-level services, including staking, governance participation, validation, and related activities. These activities may generate protocol-defined incentives, rewards, or service-based fees in accordance with network rules and governance-approved parameters. Our initial focus is on SKY, the protocol token of the decentralized Sky Protocol.

Current wording

Pursuant to oversight by our Board of Directors (the “Board”) and recommendations from our Investment Advisory Committee, our core business consists of the accumulation, holding and deployment of operating digital assets for use within blockchain-based networks to support protocol-level services, including staking, governance participation, validation, and related activities. The Investment Advisory Committee, chartered by the Board on September 2, 2026 (replacing what had previously been referred to as our Digital Asset Strategy Advisory Committee), is an advisory committee established by the Board to provide strategic guidance, risk oversight and expert recommendations to the Board and management with respect to the Company’s investment strategy, including the acquisition, holding, management, deployment and disposition of the Company’s investments and digital assets and the Company’s exercise of governance and voting rights associated with those holdings. The Investment Advisory Committee is not a committee of the Board within the meaning of Section 141(c) of the Delaware General Corporation Law or the Company’s Bylaws and has no authority to act for, or bind, the Company.

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 $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.

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 of approximately $9.7 billion as of September 30, 2026. The Sky Protocol generates revenue through borrowing fees, savings spread, and settlement activity. 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 the recommendation of the Investment Advisory Committee and subsequent approval by the Board, and any applicable Purchaser consent rights under the Securities Purchase Agreement. The Investment Advisory Committee’s mandate is not limited to digital assets, but SKY remains the only asset approved by the Board under the framework. See Note 8, “Financing Activities,” for additional information.

Previous wording

On January 16, 2026, pursuant to the January 2026 Private Placement, the Company completed a private placement of pre-funded warrants to purchase an aggregate of 167,539,227 shares of common stock for aggregate gross proceeds of approximately $134.0 million, consisting of approximately $25.0 million in cash and approximately $109.0 million in SKY tokens and stablecoins. The January 2026 Private Placement provided the initial capital base for the Company's digital asset treasury strategy and resulted in the Company's initial holdings of SKY tokens.

Current wording

On January 16, 2026, pursuant to the January 2026 Private Placement, the Company completed a private placement of pre-funded warrants to purchase an aggregate of 167,539,227 shares of Common Stock for aggregate gross proceeds of approximately $134.0 million, consisting of approximately $25.0 million in cash and approximately $109.0 million in SKY tokens and stablecoins. The January 2026 Private Placement provided the initial capital base for the Company’s digital asset strategy and resulted in the Company’s initial holdings of SKY tokens.

Previous wording

The Company holds digital assets as part of a long-term capital allocation strategy and does not engage in short-term speculative trading, proprietary trading strategies, margin arrangements, or derivatives transactions referencing digital assets unless expressly authorized by the Digital Asset Strategy Advisory Committee and supported by appropriate risk management, compliance, and liquidity controls. Within this framework, our approach anticipates that we may:

Current wording

The Company holds digital assets as part of a long-term capital allocation strategy and does not engage in short-term speculative trading, margin transactions, or derivatives referencing digital assets absent recommendation by the Investment Advisory Committee and subsequent approval by the Board. Within this framework, our approach anticipates that we may:

Previous wording

The execution and scope of this strategy are subject to prevailing market conditions, risk limits established by our Digital Asset Strategy Advisory Committee, the availability of suitable commercial opportunities, and regulatory, legal, and tax considerations.

Current wording

The execution and scope of this strategy are subject to prevailing market conditions, risk limits approved by the Board following consideration of recommendations of the Investment Advisory Committee, the availability of suitable commercial opportunities, and regulatory, legal and tax considerations.

Previous 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.

Current wording

As of September 30, 2026, the Company held 2,321,079,862 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 purchased outside of the January 2026 Private Placement have been purchased in open-market transactions through unaffiliated third-party execution venues, consistent with the Company’s digital asset policies. Since commencing on-chain staking activities, the Company has earned approximately 101.7 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, and the Company’s staked SKY carries governance voting rights in the Sky Protocol. The Company has historically staked substantially all of its SKY holdings and expects to continue deploying a substantial majority of its holdings in staking, while retaining discretion to reduce staked amounts to meet liquidity needs, manage risk or execute dispositions within its approved strategy; the Company has not adopted a fixed target percentage. Staking rewards are determined by protocol governance parameters, participation levels, and other factors, and are subject to variability over time.

Previous wording

SKY tokens are a network-native digital asset that may be acquired, transferred, and held through digital wallets that rely on public/private key pairs, and may be exchanged on trading venues that support SKY trading pairs against fiat currencies or other digital assets.

Current wording

SKY tokens are a network-native digital asset that may be acquired, transferred, and held through digital wallets that rely on public/private key pairs, and may be exchanged on trading venues that support SKY pairs against fiat currencies or other digital assets.

Previous wording

The Sky Protocol is a decentralized finance platform that evolved from MakerDAO, one of the earliest projects in the digital asset ecosystem. The protocol is implemented through open-source smart contracts deployed on the Ethereum blockchain and enables the creation and use of USDS, a decentralized stablecoin designed to maintain a soft peg to the U.S. dollar, serving as foundational financial infrastructure for lending, savings, and on-chain capital markets. SKY is the governance token of the Sky Protocol ecosystem; holders participate in protocol governance through an open, transparent on-chain voting process. The protocol generates revenue from borrowing fees and other economic activity, which is used to fund open-market buybacks of SKY tokens that are allocated between distributions to staking participants, including the Company, and a protocol-level surplus buffer. SKY has a fixed total supply of approximately 23.5 billion tokens, based on current protocol parameters. Unlike many digital assets that rely on inflationary issuance to incentivize participation, SKY derives its economic characteristics from protocol-generated revenues associated with stablecoin issuance, collateralized lending, and other on-chain financial services.

Current wording

The Sky Protocol is a decentralized finance platform that evolved from MakerDAO, one of the earliest projects in the digital asset ecosystem. The protocol is implemented through open-source smart contracts deployed on the Ethereum blockchain and enables the creation and use of USDS, a decentralized stablecoin designed to maintain a soft peg to the U.S. dollar, serving as foundational financial infrastructure for lending, savings, and on-chain capital markets. SKY is the governance token of the Sky Protocol ecosystem; holders participate in protocol governance through an open, on-chain voting process. The protocol generates revenue from borrowing fees and other economic activity, a portion of which is used to fund open-market buybacks of SKY tokens that are allocated between distributions to staking participants, including the Company, and the protocol’s surplus buffer. The maximum and total supply of SKY is approximately 23.46 billion tokens. Unlike many digital assets that rely on inflationary issuance to incentivize participation, SKY derives its economic characteristics from protocol-generated revenues associated with stablecoin issuance, collateralized lending, and other on-chain financial services.

Previous wording

The market price of SKY is determined by supply and demand across network-based markets, including individuals, institutions, market makers, and custodial service providers, and may be volatile. Liquidity, spreads, and volumes vary by venue and geography. Prices may fluctuate due to factors including protocol changes, governance decisions, market sentiment, macroeconomic conditions, third-party platform events, and broader digital asset market dynamics.

Current wording

The price of SKY is determined in network-based markets by supply and demand among market participants, including individuals, institutions, market makers, and custodial service providers, and may be volatile. Liquidity, spreads, and volumes vary by venue and geography. Prices may fluctuate due to factors including protocol changes, market sentiment, macroeconomic conditions, third-party platform events, and broader digital asset market dynamics.

Previous wording

The Sky Protocol ecosystem includes open-source developers, wallet infrastructure providers, custodians, trading venues, market makers, and data and analytics providers. The breadth, maturity, and reliability of these third-party services may affect liquidity, price discovery, and the Company's operational resilience. As adoption of the Sky Protocol and related infrastructure evolves, the Company expects the availability and capabilities of these services to change over time.

Current wording

The Sky Protocol ecosystem includes open-source developers, node operators, wallet providers, custodians, trading venues, market makers, data and analytics providers, payment facilitators, and software and hardware vendors. The breadth, maturity, and reliability of third-party services may affect liquidity, price discovery, and the Company’s operational resilience. As adoption of the Sky Protocol and related infrastructure evolves, the Company expects service availability to change, including execution, clearing arrangements, and enterprise-grade integration tools.

Previous 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.

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 through Company-controlled wallets secured by 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 Company maintains the ability to custody digital assets with Kraken and may reallocate assets among service providers from time to time. None of the Company’s custodial or infrastructure service providers are related parties of the Company.

Current wording

The Company maintains the ability to custody digital assets with Kraken Financial and may reallocate assets among service providers from time to time. None of the Company’s custodial or infrastructure service providers are related parties of the Company.

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. 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.

Current wording

The principal counterparty risk associated with our SKY holdings relates to these service providers’ performance under our custody and platform agreements. As of September 30, 2026, substantially all (more than 99%) of the Company’s SKY was deployed in the Sky Protocol’s staking smart contract rather than held at rest in a wallet, and that position is controlled through the Company’s MPC-secured wallets, in which no complete private key exists on any single device or system at any time and every transfer of assets requires multi-party quorum approval under the Company’s transaction policy engine and address allow-listing, characteristics the Company considers comparable to warm storage. In the future, we may 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 Financial 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

The regulatory framework applicable to blockchain-based networks and digital assets continues to evolve in the United States and internationally. Regulatory developments affecting trading venues, custodians, or service providers may impact access, liquidity, or pricing of digital assets held by the Company. We monitor regulatory developments and adjust our policies, counterparties, and controls as appropriate.

Current wording

The legal and regulatory landscape applicable to blockchain-based networks and digital assets continues to evolve in the United States and internationally. Multiple regulators have asserted jurisdiction over aspects of digital asset markets, including anti-money laundering compliance, market integrity and manipulation, consumer protection, tax reporting, commodities and derivatives regulation, and sanctions. Regulatory actions affecting trading venues, custodians, or other service providers could impair access, liquidity, or pricing for SKY. We monitor developments and adjust our counterparties, controls, and policies accordingly.

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, “Divestitures,” 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 (each, as defined in Note 13 to the Company’s unaudited condensed financial statements included in this report) 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 financial statements included in this report. See Note 13, “Divestitures,” in the Notes to unaudited condensed financial statements in Part I, Item 1 of this report for additional details.

Previous wording

A substantial portion of the Chief Executive Officer's potential compensation under the CEO PSU awards is tied to the growth of the Company's Digital Asset NAV, which is affected by the Company's decisions to acquire, hold, stake, or dispose of digital assets. The CEO PSU awards were designed and approved by the Compensation Committee of the Board of Directors, which is composed entirely of independent directors. In addition, the Purchasers in the January 2026 Private Placement hold consent rights over any material amendment, modification, addition, or revocation of the Company's digital asset strategy. As a result, that strategy cannot be changed without the consent of such Purchasers and cannot be directed unilaterally by the Chief Executive Officer; within that Board- and Committee-approved strategy, the Company retains discretion over individual acquisitions, dispositions, and staking of digital assets. The VWAP RSU tranche vests only upon the Company's stock price increasing from approximately $1.05 (the closing price on June 30, 2026) to at least $1.70 per share, an increase of approximately 62%, and the NAV RSU tranche vests only upon Digital Asset NAV increasing from $119.2 million to at least $250.0 million, an increase of approximately 110%. See Note 12 and Note 15 to the unaudited condensed consolidated financial statements for additional information.

Current wording

A substantial portion of the Chief Executive Officer’s potential compensation under the CEO PSUs depends on the Company’s stock price and on the growth of the Company’s Digital Asset NAV. Digital Asset NAV is affected by the Company’s decisions to acquire, hold, stake, or dispose of digital assets. Digital Asset NAV, as defined in the award agreement, is the fair market value, as reflected in the Company’s financial statements, of all digital assets and related investments within the Company’s approved strategy, as determined by the Board (or the applicable committee), excluding cash, cash equivalents and stablecoin holdings, and subject to any required investor consent rights. As of September 30, 2026, the Company’s digital assets within its approved strategy consisted solely of SKY, and Digital Asset NAV was $180.2 million, equal to the carrying value of digital assets reported on the Company’s unaudited condensed balance sheet as of that date. The CEO PSUs were designed and approved by the Compensation Committee of the Board, which is composed entirely of independent directors. In addition, under the Securities Purchase Agreement, each Purchaser in the January 2026 Private Placement (including R01, an affiliate of the Chief Executive Officer, as described in Note 15 to the unaudited condensed financial statements) holds, for a period of 24 months following the closing and for so long as it retains at least 50% of the securities it purchased, a consent right over any material amendment, modification, addition to or revocation of the Company’s digital asset strategy. As a result, a material change to the strategy requires the consent of the Purchasers holding that right and cannot be effected by the Chief Executive Officer alone. Within the strategy recommended by the Investment Advisory Committee and subsequently approved by the Board, the Company retains discretion over individual acquisitions, dispositions, and staking of digital assets.

Previous wording

The Company continued its acquisition of SKY tokens on the open market during the three months ended June 30, 2026, using proceeds from the ATM Program and available cash. The Company continued to stake substantially all of its SKY holdings within the Sky Protocol during the quarter, earning staking revenue of $2.2 million from protocol rewards. Staking rewards are determined by Sky Protocol governance parameters and represent a share of protocol-level revenues generated from USDS stablecoin issuance, collateralized lending, and other on-chain financial services.

Current wording

The Company did not purchase SKY tokens during the three months ended September 30, 2026; all additions to its SKY holdings during the quarter were received as staking rewards. The Company continued to stake substantially all of its SKY holdings within the Sky Protocol during the quarter, receiving 34,568,488 SKY tokens and recognizing staking revenue of $2.1 million. Staking rewards are determined by Sky Protocol governance parameters and represent a share of protocol-level revenues generated from USDS stablecoin issuance, collateralized lending, and other on-chain financial services.

Previous wording

The Company continued to access its ATM Program during the three months ended June 30, 2026 to fund SKY token acquisitions. The ATM Program provides the Company with flexible, low-cost access to equity capital at prevailing market prices and remains the Company’s primary tool for funding digital asset purchases. During the six months ended June 30, 2026, the Company sold 2,693,853 shares of common stock under the ATM Program for aggregate net proceeds of approximately $15.2 million. As of June 30, 2026, approximately $84.5 million of common stock remained available for issuance under the ATM Program.

Current wording

During the three months ended September 30, 2026, the Company sold 1,160,636 shares of Common Stock under the ATM Program for aggregate net proceeds of approximately $1.3 million, which the Company used to fund operating expenses and for general corporate purposes. During the nine months ended September 30, 2026, the Company sold 3,854,399 shares of Common Stock under the ATM Program for aggregate net proceeds of approximately $16.5 million. Approximately $83.2 million of Common Stock remained available for issuance under the ATM Program as of September 30, 2026.

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 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.

Current wording

Following the establishment of the Company’s digital asset 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 September 30, 2026, the Company held 2,321,079,862 SKY tokens with an aggregate fair value of $180.2 million, representing approximately 96% 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, 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.

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. Approximately $83.2 million of Common Stock remained available for issuance under the ATM Program as of September 30, 2026. During the nine months ended September 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

The Company's Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. The preparation of these Unaudited Condensed Consolidated Financial Statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Unaudited Condensed Consolidated Financial Statements, as well as the reported revenues and expenses during the reporting periods. In preparing these Unaudited Condensed Consolidated Financial Statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. On an ongoing basis, the Company evaluates its estimates and judgments. The Company bases its estimates on historical experience and on various other factors that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates.

Current wording

The Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The preparation of these unaudited condensed financial statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements, as well as the reported revenues and expenses during the reporting periods. In preparing these unaudited condensed financial statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. On an ongoing basis, the Company evaluates its estimates and judgments. The Company bases its estimates on historical experience and on various other factors that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates.

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 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.

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 financial statements in Part I, Item 1 of this report, the Company believes that the accounting for the January 2026 Pre-Funded Warrants issued in connection with the January 2026 Private Placement is 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 January 2026 Pre-Funded Warrants, which have a nominal exercise price, were measured at intrinsic value, calculated as the quoted market price of the Company's common stock less the per-share exercise price, multiplied by the number of shares of common stock issuable upon exercise. The Company's determination that intrinsic value approximates fair value for these warrants is based on their nominal exercise price and economic similarity to common stock. Given the substantial number of shares of common stock issuable upon exercise of these warrants, relatively small changes in the Company's common stock price had a significant effect on the measured fair value of the warrant liabilities and on the related non-cash gains and losses recognized in the Unaudited Condensed Consolidated Statements of Operations. The fair value of the January 2026 Pre-Funded Warrants at issuance was determined using the closing price of the Company's common stock on January 20, 2026 (the first trading day following the announcement of the January 2026 Private Placement, which was made after market close on January 16, 2026), as management concluded that this price was the most appropriate reference price reflecting the market's absorption of the dilutive impact of the announcement.

Current wording

The January 2026 Pre-Funded Warrants, which have a nominal exercise price, were measured at intrinsic value, calculated as the quoted market price of the Company’s Common Stock less the per-share exercise price, multiplied by the number of shares of Common Stock issuable upon exercise. The Company’s determination that intrinsic value approximates fair value for these warrants is based on their nominal exercise price and economic similarity to common stock. Given the substantial number of shares of Common Stock issuable upon exercise of these warrants, relatively small changes in the Company’s Common Stock price had a significant effect on the measured fair value of the warrant liabilities and on the related non-cash gains and losses recognized in the unaudited condensed statements of operations. The fair value of the January 2026 Pre-Funded Warrants at issuance was determined using the closing price of the Company’s Common Stock on January 20, 2026 (the first trading day following the announcement of the January 2026 Private Placement, which was made after market close on January 16, 2026), as management concluded that this price was the most appropriate reference price reflecting the market’s absorption of the dilutive impact of the announcement.

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 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.

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 September 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 financial statements in Part I, Item 1 of this report.

Previous wording

Financial results related to divested assets from the Avenova Asset Divestiture and the PhaseOne Divestiture for the three months ended June 30, 2025 have been aggregated and reported for each of these periods in the line item titled “Net income (loss) from discontinued operations, net of taxes” in the table above. See additional information in Note 13, “Divestitures,” in the Notes to the Unaudited Condensed Consolidated Financial Statements (unaudited) in Part I, Item 1 of this report for additional details regarding these financial results for the periods presented. The discussions below and throughout this section apply only to results from our continuing operations except as otherwise noted.

Current wording

Financial results related to divested assets from the Avenova Asset Divestiture and the PhaseOne Divestiture for the three months ended September 30, 2025 have been aggregated and reported for each of these periods in the line item titled “Net income (loss) from discontinued operations, net of taxes” in the table above. See additional information in Note 13, “Divestitures,” in the Notes to the unaudited condensed financial statements in Part I, Item 1 of this report for additional details regarding these financial results for the periods presented. The discussions below and throughout this section apply only to results from our continuing operations except as otherwise noted.

Previous 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.

Current wording

Staking revenue was $2.1 million for the three months ended September 30, 2026, compared to no staking revenue for the three months ended September 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 September 30, 2025, as the Company did not hold digital assets or conduct staking activities during the prior year period. The Company received 34,568,488 SKY tokens for staking rewards during the three months ended September 30, 2026.

Previous 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.

Current wording

The Company recognized an unrealized gain on digital assets of $58.8 million for the three months ended September 30, 2026, with no comparable result for the three months ended September 30, 2025, as the Company did not hold digital assets during the prior year period. The unrealized gain represents the change in fair value of the Company’s SKY token holdings during the three months ended September 30, 2026, driven by fluctuations in the market price of SKY tokens. SKY tokens are measured at fair value at each reporting date, with changes in fair value recognized in earnings. Because the fair value of digital assets may be subject to significant volatility, 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 financial statements, in Part I, Item 1 of this report.

Previous 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.

Current wording

General and administrative expenses were $5.0 million for the three months ended September 30, 2026, compared to $1.2 million for the three months ended September 30, 2025, an increase of approximately $3.8 million or 313%. The increase was primarily attributable to $3.3 million of stock-based compensation expense and a $0.3 million increase in director and officer liability insurance costs, both reflecting costs associated with the Company’s digital asset strategy and its operation as a public company. Expenses for the three months ended September 30, 2026 also included public company costs such as legal and professional services. By comparison, expenses for the three months ended September 30, 2025 consisted primarily of general operating expenses, together with costs associated with the closing of the 2025 Preferred Stock Purchase Agreement.

Previous wording

There was no other expense, net for the three months ended June 30, 2026, compared to $73 thousand for the three months ended June 30, 2025. The 2025 amount consisted of interest expenses related to the unsecured convertible notes, for which there was no comparable expense in the 2026 period.

Current wording

There was no other expense, net for the three months ended September 30, 2026, compared to $77 thousand for the three months ended September 30, 2025. The 2025 amount consisted of interest expenses related to the unsecured convertible notes, for which there was no comparable expense in the 2026 period.

Previous wording

Comparison of the Six Months Ended June 30, 2026 and 2025 (dollars in thousands)

Current wording

Comparison of the Nine Months Ended September 30, 2026 and 2025 (dollars in thousands)

Previous wording

Financial results related to divested assets from the Avenova Asset Divestiture and the PhaseOne Divestiture for the six months ended June 30, 2025 have been aggregated and reported for each of these periods in the line item titled “Net income (loss) from discontinued operations, net of taxes” in the table above. See additional information in Note 13, “Divestitures,” in the Notes to the Unaudited Condensed Consolidated Financial Statements (unaudited) in Part I, Item 1 of this report for additional details regarding these financial results for the periods presented. The discussions below and throughout this section apply only to results from our continuing operations except as otherwise noted.

Current wording

Financial results related to divested assets from the Avenova Asset Divestiture and the PhaseOne Divestiture for the nine months ended September 30, 2025 have been aggregated and reported for each of these periods in the line item titled “Net income (loss) from discontinued operations, net of taxes” in the table above. See additional information in Note 13, “Divestitures,” in the Notes to the unaudited condensed financial statements in Part I, Item 1 of this report for additional details regarding these financial results for the periods presented. The discussions below and throughout this section apply only to results from our continuing operations except as otherwise noted.

Previous wording

Staking revenue was $4.7 million for the six months ended June 30, 2026, compared to no staking revenue for the six 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 six 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 67,132,900 SKY tokens for staking rewards during the six months ended June 30, 2026.

Current wording

Staking revenue was $6.8 million for the nine months ended September 30, 2026, compared to no staking revenue for the nine months ended September 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 nine months ended September 30, 2025, as the Company did not hold digital assets or conduct staking activities during the prior year period. The Company received 101,701,388 SKY tokens for staking rewards during the nine months ended September 30, 2026.

Previous wording

The Company recognized an unrealized loss on digital assets of $50.6 million for the three months ended June 30, 2026, with no comparable result for the three months ended June 30, 2025, as the Company did not hold digital assets during the prior year period. The unrealized loss represents the change in fair value of the Company's SKY token holdings during the three months ended June 30, 2026, reflecting fluctuations in the market price of SKY tokens during the period. The loss primarily reflects the decline in fair value of SKY tokens held as of March 31, 2026, with the remainder attributable to tokens received or acquired during the three months ended 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.

Current wording

The Company recognized an unrealized gain on digital assets of $30.9 million for the nine months ended September 30, 2026, with no comparable result for the nine months ended September 30, 2025, as the Company did not hold digital assets during the prior year period. The unrealized gain represents the excess of the fair value of the Company’s SKY token holdings at September 30, 2026 of $180.2 million over their aggregate cost basis of $149.3 million. Cost basis includes the value at which tokens received in the January 2026 Private Placement and as staking rewards were initially recognized. The nine-month result reflects an increase in the market price of SKY. 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 financial statements, in Part I, Item 1 of this report.

Previous wording

General and administrative expenses were $8.3 million for the six months ended June 30, 2026, compared to $4.6 million for the six months ended June 30, 2025, an increase of approximately $3.7 million or 80%. The increase was primarily attributable to an increase in compensation expense and director and officer liability insurance costs, both associated with the Company's continued transformation into a digital asset treasury company. Expenses for the six months ended June 30, 2026 also included public company costs such as legal and professional services. By comparison, expenses for the six 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.

Current wording

General and administrative expenses were $13.3 million for the nine months ended September 30, 2026, compared to $5.8 million for the nine months ended September 30, 2025, an increase of approximately $7.5 million or 129%. The increase was primarily attributable to an increase in compensation expense and director and officer liability insurance costs, both associated with the Company’s transformation following the adoption of its digital asset strategy. Expenses for the nine months ended September 30, 2026 also included public company costs such as legal and professional services. By comparison, expenses for the nine months ended September 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

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.

Current wording

There were no impairments of long-lived assets recorded during the nine months ended September 30, 2026. During the nine months ended September 30, 2025, the Company recorded one-time impairments for right-of-use assets associated with leases of $643 thousand and $33 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 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.

Current wording

During the nine months ended September 30, 2026, the Company recognized a non-cash loss of $5.3 billion with no comparable results for the nine months ended September 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 financial statements 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 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.

Current wording

Adjustments to the fair value of warrant liabilities resulted in a gain of $5.8 billion for the nine months ended September 30, 2026 with no comparable adjustment for the nine months ended September 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 September 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 financial statements in Part I, Item 1 of this report.

Previous 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.

Current wording

Other expense, net was $1.4 million for the nine months ended September 30, 2026 and $190 thousand for the nine months ended September 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 financial statements, in Part I, Item 1 of this report.