SUI Group Holdings Ltd.

NOTE 1 – ORGANIZATION

Sui Group Holdings Limited (the “Company”, “Sui Group”, or “we”), formerly known as Mill City Ventures III, Ltd., is a Minnesota corporation headquartered in Wayzata, Minnesota. The Company changed its name to Sui Group Holdings Limited on August 26, 2025, following an amendment to our Articles of Incorporation filed with the Office of the Minnesota Secretary of State. This name change and concurrent rebranding coincide with a change in strategy toward digital asset treasury management.

Prior to the rebrand, the Company operated under the name Mill City Ventures III, Ltd. as a publicly traded specialty finance company listed on Nasdaq under the ticker symbol “MCVT”. Its legacy business centered on issuing short-term, collateralized loans to small businesses and individuals, with a focus on generating high-yield returns.

To support the digital asset treasury strategy, the Company completed a $450 million private placement in July 2025 (the “Private Placement”). Following the Private Placement, the Company began implementing its SUI treasury strategy, acquiring over 74 million SUI tokens and generating 1.6 million SUI tokens from staking and other lending activities in addition to the 33 million tokens received as in-kind consideration from the Private Placement.

To further institutionalize its position within the Sui ecosystem, the Company formalized its relationship with the Sui Foundation through the Digital Asset Purchase and Sale Agreement (the “Digital Asset Purchase Agreement”), under which the Sui Foundation agreed to sell 44 million SUI tokens at a discounted purchase price equal to 85% of the twenty-four-hour time-weighted average price (“TWAP”) of SUI tokens on July 31, 2025. The Digital Asset Purchase Agreement provides formal recognition of the Company as a digital asset treasury company with backing from the Sui Foundation. In connection with this strategy, the Company changed its ticker symbol to “SUIG” and transitioned its operations to focus on institutional-grade exposure to the SUI digital asset.

The Company’s strategy is to maximize the value of SUI per-share and support the growth of the Sui ecosystem through scalable, transparent, and long term value creation strategies. Its Common Stock remains listed on the Nasdaq Capital Market and continues to be available for options trading on Cboe Global Markets.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

***Basis of presentation:***The accompanying unaudited condensed financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of the Company, the foregoing interim statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of March 31, 2026 and December 31, 2025, as well as its results of operations for the three months ended March 31, 2026 and 2025. The condensed balance sheet as of December 31, 2025 has been derived from the audited financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by rules and regulations of the SEC. Accordingly, the condensed financial statements do not include all information and footnotes required by GAAP for a complete financial statement presentation. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2026 (the “Annual Report”).

***Use of estimates:***The preparation of financial statements in conformity with GAAP requires management and the independent members of the Company’s board of directors (the “Board”) to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Significant estimates and assumptions include, but are not limited to, the determination of the fair value of investment assets, impairment assessment of equity investments in privately held companies, fair value of embedded derivatives associated with equity investments, digital asset loans, digital asset receivable, impairment assessment of certain digital asset receivable, and the allowance of credit losses on digital assets subject to the current expected credit loss model. Actual results could differ from those estimates.

***Cash and cash equivalents:***The Company maintains the cash balances in financial institutions and with regulated financial investment brokers. The Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Cash equivalents as of March 31, 2026 include $1.8 million of USD Coins (USDC), a stablecoin that is highly liquid and readily redeemable into the U.S. dollar.

Digital assets: The Company accounts for its digital assets, including SUI tokens, in accordance with ASC 350-60,Goodwill and Other – Crypto Assets, which requires eligible cryptocurrency assets to be measured at fair value, with changes in fair value recognized in net income. Fair value is determined in accordance with ASC 820,Fair Value Measurement, using quoted prices in active markets. The Company has designated Coinbase as its principal market based on the volume and level of activity.

Changes in fair value are reflected as unrealized gain or loss on digital assets and realized gains and losses from the derecognition are recognized upon disposition using the specific identification method.

For digital assets not in scope of ASC 350-60, impairment is recognized when events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment losses are measured based on the excess of the carrying amount over the fair value of the digital asset, which is determined using the lowest observable market price during the period in which the impairment is identified.

Purchases and sales of digital assets are classified as investing activities in the statement of cash flows. Certain transfers of digital assets may be reflected as non-cash investing activities, as applicable.

*Digital asset receivable: *The Company recognizes a digital asset receivable for digital assets that are held in wallets controlled by third parties. The receivable represents contractual rights to receive specified digital assets. Depending on the nature of the underlying digital asset and the associated settlement mechanics, the receivable may contain an embedded feature that requires evaluation under ASC 815. In circumstances where the underlying digital asset is not readily convertible to cash, the embedded feature may not meet the definition of a derivative.

As a result, the Company applies different subsequent measurement approaches based on the substance of the underlying rights. Digital asset receivable arising from decentralized lending pool arrangements are remeasured at fair value each reporting period, as the receivable represents rights to receive SUI tokens and contain embedded derivatives that require bifurcation. In contrast, the digital asset receivable representing rights to receive liquid staking tokens or vault tokens do not contain embedded derivatives and are therefore carried at cost and assessed for impairment, as applicable.

***Credit losses:***Digital asset loan and certain digital asset receivables are subject to credit exposure and are evaluated for expected credit losses in accordance with ASC 326,Financial Instruments—Credit Losses. The allowance for credit losses is based on management’s evaluation of historical experience, current conditions, and reasonable and supportable forecasts.

***Equity investments:***The Company accounts for equity investments in which it does not have significant influence in accordance with ASC 321,Investments — Equity Securities.

Equity securities with readily determinable fair values are measured at fair value, with unrealized gains and losses recognized in net income in the period of the change. Fair value is determined in accordance with ASC 820,Fair Value Measurement. Dividends are recognized in earnings when the right to receive payment is established.

For equity investments that do not have a readily determinable fair value, the Company has elected the measurement alternative available under ASC 321. These investments are recorded at cost, less impairment, and adjusted for observable price changes in orderly transactions for identical or similar investments, with adjustments recognized in earnings in the period of the change. The Company evaluates these investments for impairment when indicators exist and records an impairment loss if the carrying amount is not recoverable. Gains or losses on disposals are recognized in earnings when realized.

***Debt investments:***The Company accounts for its debt investments in accordance with ASC 825,Financial Instruments, and has elected the fair value option for its debt investments, with changes in fair value recognized in earnings each reporting period.

Fair value is determined in accordance with ASC 820, using valuation techniques and inputs that reflect market participant assumptions. Because the fair value option has been elected, these debt investments are not evaluated for impairment or expected credit losses.

Interest income, including amounts attributable to payment-in-kind (“PIK”) features, is recognized based on the contractual terms of the instruments and recorded on an accrual basis when earned. Interest income recognition is suspended on loans on non-accrual status when collectability of principal or interest is not reasonably assured. Realized gains or losses on the disposition of debt investments are recognized in earnings upon sale.

***Fair value measurement of investments:***Investments measured at fair value are valued in accordance with ASC Topic 820,Fair Value Measurements, with changes in fair value recognized in earnings each reporting period.

Fair value is generally based on quoted market prices provided by independent pricing services, broker or dealer quotations, or alternative price sources. When such observable inputs are not available, fair value is determined using valuation techniques that incorporate management judgment and consider all relevant facts and circumstances, consistent with the Company’ valuation policies and procedures.

Investments measured at fair value are classified within the fair value hierarchy based on the observability of the inputs used in the valuation. The determination of fair value, particularly for Level 3 investments, involves significant judgment. Due to the inherent uncertainty associated with valuation, actual results may differ materially from the values recorded.

**Income taxes:**The Company accounts for income taxes under the asset and liability method in accordance with ASC 740,Income Taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect for the tax year in which the differences are expected to reverse.

Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will be realized. The Company’s assessment of realizability requires significant judgment.

The Company accounts for income taxes in interim periods using the estimated annual effective tax rate method. Under this method, the Company estimates its annual effective tax rate and applies that rate to year‑to‑date pre‑tax income or loss, with discrete income tax items recorded in the period in which they occur.

***SUI staking revenue:***Beginning in August 2025, the Company commenced SUI staking activities, including native staking, liquid staking and restaking. The Company delegates SUI tokens to third-party validator nodes to participate in proof-of-stake blockchain protocols and earns staking rewards in the form of additional SUI tokens.

The Company evaluated its staking arrangements in accordance with ASC 606*, Revenue from Contracts with Customers*, and determined that it acts as an agent as it does not control the validation services provided by the third-party validators. Accordingly, staking rewards are recognized on a net basis.

Staking rewards are recognized as non-cash consideration at the fair value of the SUI token earned on the date the rewards are earned, limited to the portion attributable to the Company for delegating its tokens.

Stock-based compensation: The Company’s stock-based compensation consists of stock options and warrants issued to certain employees, non-employees and directors of the Company. The Company recognizes compensation expense based on an estimated grant date fair value using the Black-Scholes option-pricing model or Monte Carlo simulation. If the factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. The Company recognizes stock-based compensation expense for these options and warrants on a straight-line basis over the requisite service period. The Company has elected to account for forfeitures as they occur.

**Warrants:The Company evaluates warrants to determine whether they should be classified as equity or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815,Derivatives and Hedging. Warrants issued as compensation are accounted for in accordance with ASC 718, Compensation - Stock Compensation. Such warrants are measured at fair value on the grant date and recognized as compensation expense over the requisite service period.

Reclassifications**:** Certain prior‑period amounts have been reclassified to conform to the current financial statement presentation. These reclassifications primarily relate to the aggregation of previously separate operating expense line items into a single financial statement line within the statements of operations. The reclassifications had no impact on previously reported total assets, total liabilities, shareholders’ equity, net income (loss), or cash flows, and no changes were made to the underlying prior‑year balances.

NOTE 3 – DIGITAL ASSETS

During the three months ended March 31, 2026, the Company continued to hold SUI tokens acquired pursuant to the Digital Asset Purchase and Sale Agreement with the Sui Foundation, which remain subject to contractual transfer restrictions through July 31, 2027. The Company is permitted to stake the restricted SUI tokens during the restriction period.

The discount associated with the acquisition of 32,613,028 restricted SUI tokens is recorded as deferred income and is recognized on a straight‑line basis over the restriction period as an adjustment to gains or losses on digital assets. As of March 31, 2026, the Company recorded deferred income related to the acquisition discount of $16.8 million, of which $11.9 million was classified as current and $4.9 million was classified as non‑current. For the three months ended March 31, 2026, the Company recognized $3.0 million of amortized deferred income, which was recorded as a reduction to realized loss on digital assets in the statements of operations.

The following table presents the activities in digital assets for the three months ended March 31, 2026:

Digital assets were transferred to the Company’s asset manager for participation in decentralized finance arrangements through third‑party protocols on the SUI blockchain. See Note 5 – Digital Asset Receivable for further detail.

Digital assets are measured at fair value on a recurring basis in accordance with ASC 820,Fair Value Measurement, using quoted prices in active markets (Level 1 inputs).

For the three months ended March 31, 2026, we incurred $340 thousand in asset and strategic management fees under our strategic and asset management arrangements.

NOTE 4 – DIGITAL ASSET LOAN RECEIVABLE

The Company has entered into digital asset loan arrangements pursuant to which it has lent SUI tokens to third parties in exchange for stated fees payable in digital assets.

Under a digital asset loan arrangement entered into in September 2025 with Galaxy Digital LLC (“Galaxy Digital”), the Company lent SUI tokens under an evergreen facility that may be terminated with seven days’ notice at the Company’s election. The Company earns fees based on a stated annual rate, payable in SUI tokens. Repayment may be made either in kind or in cash equal to the fair value of the digital assets loaned.

In October 2025, the Company entered into a separate digital asset loan agreement with BlueFin Labs Inc. (“BlueFin”), pursuant to which the Company lent SUI tokens in exchange for fees based on a percentage of revenues generated by BlueFin’s decentralized exchange, payable in SUI tokens. This agreement has an initial term of three years and will automatically renew for successive three-year periods unless terminated in accordance with its terms. The loaned digital assets are required to be returned in kind at maturity or upon earlier termination.

Neither of the above-mentioned arrangements contain a collateral requirement.

Digital asset loan receivable activity for the three months ended March 31, 2026, is as follows.

Digital asset loan receivable are measured at fair value on a recurring basis in accordance with ASC 820,Fair Value Measurement, using quoted prices in active markets (Level 1 inputs).

NOTE 5 – DIGITAL ASSET RECEIVABLE

During the three months ended March 31, 2025, with the assistance of its asset manager, Galaxy Digital, the Company participated in decentralized finance (“DeFi”) protocols built on the SUI blockchain, including liquid staking pools, decentralized lending pools, and vault‑based arrangements governed by on‑chain smart contracts.

Prior to deployment, the Company’s digital assets were transferred to wallets controlled by Galaxy Digital. In liquid staking arrangements, Galaxy Digital deposited SUI tokens into staking smart contracts and receives liquid staking tokens (“LSTs”) that represent the Company’s beneficial interest in the underlying staked SUI and accumulated rewards. Through Galaxy Digital, the Company also provided liquidity to decentralized lending protocols by depositing SUI tokens or LSTs and is entitled to earn yield that accrues on‑chain based on the terms of the applicable protocols. In addition, the Company has deployed suiUSDe, a native synthetic U.S. dollar stablecoin, into a vault operated by Ember Protocol and receives vault tokens representing its proportional interest in the assets and activities of the vault.

Because Galaxy Digital controls the wallets that hold LSTs, vault tokens, and the other assets deployed into DeFi protocols, and the Company does not retain direct access to the associated private keys and these wallets are not protected from Galaxy Digital’s creditors, digital assets held by Galaxy Digital on the Company’s behalf are recognized as a digital asset receivable. Due to differences in the nature of the underlying rights associated with the receivable, the Company applies different subsequent measurement approaches.

The receivable related to decentralized lending pools are subsequently remeasured at fair value, as they represent rights to receive SUI and contain embedded derivatives that require bifurcation, with fair value determined using quoted prices in active markets (Level 1 inputs), and changes in fair value recognized in earnings. In contrast, the receivable representing rights to receive LSTs or vault tokens do not include embedded derivatives and are therefore carried at cost, net of impairment, as applicable. The impairment was recognized as a result of volatility of SUI during the three months ended March 31, 2026 and an observable decline in the market prices of the underlying digital assets below the carrying value of the related receivable. The impairment was measured based on the estimated recoverable amount of the receivable as of the assessment date, determined with reference to quoted prices for the underlying digital assets in active markets (Level 2 inputs), with the carrying value written down accordingly.

The digital asset receivable is subject to counterparty, protocol, liquidity, and operational risks. The Company evaluates these exposures at each reporting date and records allowances for expected credit losses in accordance with the current expected credit loss model.

Digital asset receivable activity for the three months ended March 31, 2026, is as follows:

Digital asset receivables as of December 31, 2025 included staking accruals, substantially all of which were collected during the three months ended March 31, 2026, with an outstanding accrual balance of $6 thousand as of March 31, 2026.

NOTE 6 – INVESTMENTS

During the three months ended March 31, 2026, the Company executed the following investments in private entities.

In March 2026***,***the Company entered into a Simple Agreement for Future Equity ("SAFE") with a private entity for total cash consideration of $3.0 million. The SAFE provides the Company with the right to convert the investment to equity interests upon the occurrence of specified triggering events, including an equity financing, liquidity event, or dissolution event. The investment contains two embedded derivative features requiring bifurcation, but no value was attributed to them as of March 31, 2026 due to the remoteness of the contingent events.

During the same period, the Company also invested $3.0 million through a contractual alternative investment vehicle (the "Fund") to acquire a beneficial interest in the preferred shares of a privately held corporation. Legal title is held by a nominee entity on bare trust for the Company's benefit. The Company capitalized $30 thousand of directly related transaction costs.

The Company does not have the ability to exercise significant influence over either investee, and neither of the two investments have a readily determinable fair value. Accordingly, each investment is carried at the alternative measurement available under ASC 321. As of March 31, 2026, the Company had not recorded any impairment or other adjustments required under ASC 321 related to these investments.

Investments as of March 31, 2026 and December 31, 2025, are as follows:

Fair value measurement

The following table presents the fair value measurements of our investments by major class, as of March 31, 2026, according to the fair value hierarchy:

The following table presents the fair value measurements of our investments by major class, as of December 31, 2025, according to the fair value hierarchy:

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 investment assets for the three months ended March 31, 2026:

The following table lists our Level 3 investments held as of March 31, 2026 and the unobservable inputs used to determine their valuation:

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 investment assets for the year ended December 31, 2025:

The following table lists our Level 3 investments held as of December 31, 2025 and the unobservable inputs used to determine their valuation:

There were no transfers between Level 1, Level 2, or Level 3 of the fair value hierarchy during the reporting period.

NOTE 7 – STOCK-BASED COMPENSATION

During the three months ended March 31, 2026, the Company issued compensatory warrants to a newly appointed director. These warrants are equity‑classified and measured at fair value on the grant date. The warrants vest over 24 months in different tranches and have four different exercise prices. Because exercise prices significantly exceeded the fair value of the common stock on the grant date, they contain an implicit market condition. The Company used the graded vesting method to attribute expenses associated with the award.

For the three months ended March 31, 2026, the Company recognized a total stock-based compensation expense of $2.0 million related to the outstanding compensatory warrants. As of March 31, 2026, total unrecognized compensation cost related to nonvested warrants was $9.6 million, which is expected to be recognized over a weighted average remaining vesting period of 0.71 years.

The following table summarizes warrant activity for the period ended March 31, 2026:

The weighted average issue date fair value per share for the warrants issued in Q1 2026 is $0.68. The Company used the Monte Carlo simulation method to estimate the fair value of warrants issued in Q1 2026. The following table summarizes the assumption inputs:

NOTE 8 – PER-SHARE INFORMATION

Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of Common Shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of dilutive Common Shares outstanding during the period. The Company’s potential dilutive Common Shares include stock options and warrants that are in the money. The Company uses the treasury stock method to compute the dilutive shares related to in-the-money stock options and warrants, to be included in the dilutive earning per share, when the effect is not anti-dilutive.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings (loss) per share is set forth below:

For the three months ended March 31, 2026, the following instruments were excluded from the computation of the dilutive earnings per share.

*Options and Warrants were out-of-money for the period three months ended March 31, 2026

NOTE 9 – RELATED-PARTY TRANSACTIONS

Karatage is a privately held entity co‑founded by the Company’s Chairman of the Board and the Company’s Chief Investment Officer. Accordingly, Karatage is considered a Related Party under ASC 850,Related Party Disclosures.

Under the arrangement with Karatage, to serve as a strategic advisor to support the Company’s business initiatives and long term strategic planning, the Company incurred advisory fees of $71 thousand for the three months ended March 31, 2026, which is included as part of professional fees in the statements of operations. As of March 31, 2026, $10 thousand was outstanding and is included in accounts payable and accrued liabilities on the balance sheet.

NOTE 10 – INCOME TAXES

The Company’s effective income tax rate for the three months ended March 31, 2026 and 2025 was 0.0% and 28.0% respectively. The difference in the effective income tax rate compared with the U.S. federal statutory rate of 21.0% is primarily due to the full valuation allowance recorded against its deferred tax assets.

The Company continues to assess the realizability of its deferred tax assets at each reporting date. Based on the weight of available evidence, management concluded that it is not more likely than not that the Company’s net deferred tax assets will be realized and, accordingly, the Company continues to maintain a full valuation allowance as of March 31, 2026.

NOTE 11 – SEGMENT

The Company has one reportable operating segment, which is a digital asset platform focused on maximizing SUI per share value and advancing the Sui ecosystem. The legacy financing solutions business is not considered a separate reportable segment, as the Company’s segment reporting has been to reflect the Company’s current strategic and operational decision-making.

The Company’s chief operating decision makers (“CODM”) are the Company’s Chairman and the Chief Investment Officer, who, together, manage the Company’s operations as one operating segment for the purpose of evaluating financial performance and allocating resources.

The accounting policies of the Company’s segment are the same as those described in the summary of significant accounting policies. The CODMs use revenue, unrealized gain/loss on SUI and operating income to assess performance and allocate resources. The significant segment expense categories regularly provided to the CODMs are the same as those included on the condensed statements of operations. The measure of segment assets is total assets as reported on the balance sheets.

NOTE 12 – SUBSEQUENT EVENTS

Subsequent to March 31, 2026, the Company unwound all decentralized finance (“DeFi”) positions and recovered all amounts involved therein in response to security incidents affecting certain DeFi ecosystems.