Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the results of operations and financial condition of Forum Markets, Incorporated (the “Company,” “we,” “us,” or “our”) as of and for the years ended December 31, 2025 and 2024 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. See “Cautionary Statement Regarding Forward-Looking Information” above. Actual results could differ materially because of the factors discussed in “Item 1. Risk Factors” of this Report, and other factors that we may not know.
Business Overview
The Company underwent a significant strategic shift in 2025, including a rebranding and transition away from its legacy biotechnology and gaming operations toward a digital asset-focused business model centered on treasury, investment, and tokenization activities. As a result, the Company’s current operations, financial profile, and key performance drivers differ materially from prior periods, and several areas of this MD&A represent first-year disclosures under the new strategy.
The Company operates as a single reportable operating segment under ASC 280. Its operations are focused on digital asset operations, which represent the Company’s primary revenue-generating activities, and all assets of the Company’s continuing operations are related to this single operating segment.
Our Company
Forum Markets, Incorporated is a digital asset–focused company whose operations are primarily related to holding, deploying, and managing digital assets and tokenization activities.
The Company has undergone several significant transformations over its operating history. Originally formed in 2016 as a clinical-stage biotechnology company operating under the name 180 Life Sciences Corp., the Company previously focused on the development of therapeutics for unmet medical needs. In subsequent periods, the Company expanded into software-enabled gaming initiatives, including the acquisition of certain blockchain-based gaming technology.
In August 2025, the Company rebranded as ETHZilla Corporation, reflecting an initial shift away from its legacy operations during which the Company completed a broader strategic transition, exiting its legacy biotechnology and gaming activities and refocusing its business on digital asset treasury management, investment activities, and tokenization-related strategies. The Company’s treasury activities are primarily centered on acquiring, holding, and deploying Ethereum to generate returns through staking and other yield-generating arrangements.
In early 2026, the Company completed a further rebrand to Forum Markets, Incorporated, aligning its name with its evolving strategy and business model. Under its current strategy, the Company focuses on digital asset activities and the development of tokenization-related investments. The Company is pursuing tokenization initiatives involving income-generating assets, which are expected to generate returns through asset yields, fees, and investment income over time. Revenues, expenses, and cash flows are influenced by digital asset market conditions, capital allocation decisions, and the timing of investment and tokenization activities.
As a result of this strategic transformation, the Company’s current operations, revenue drivers, expense profile, and risk exposures differ materially from prior periods, and financial results for historical periods may not be comparable to those of the current period.
Key Factors Affecting Performance
The Company’s operating results, financial condition, and cash flows are influenced by a number of trends and uncertainties related to its digital asset–focused business model, several of which are expected to continue to affect performance in future periods.
Digital Asset Price Volatility
The Company’s results are sensitive to fluctuations in the market price of ETH and other digital assets held or deployed in its operations. Changes in digital asset prices may materially affect reported earnings, the fair value of assets, and the timing and availability of liquidity, and may contribute to increased volatility in results of operations.
Staking Yield Variability
Revenue generated from staking activities is subject to variability based on network conditions, protocol economics, validator performance, and other factors outside the Company’s control. Changes in staking reward rates, protocol rules, or the performance of third-party service providers may affect revenue levels and operating results.
Growth of Tokenization Initiatives
The Company is in the early stages of developing and scaling its RWA tokenization strategy. The timing, magnitude, and sustainability of revenues from tokenization activities may affect future results of operations and cash flows and will depend on factors such as market adoption, regulatory considerations, and the availability of distribution and secondary trading infrastructure.
Evolving Regulatory Environment
The regulatory framework applicable to digital assets, staking activities, and tokenized securities continues to evolve in the United States and other jurisdictions. Changes in laws, regulations, enforcement priorities, or regulatory interpretations could increase compliance costs, restrict certain activities, or require modifications to the Company’s treasury or tokenization strategies. Regulatory developments may also affect market participation and investor demand, which could impact future operating results and cash flows.
Recent Events
Notes Offering Increase; Mandatory Redemption
On December 9, 2025, the Company entered into a Note Mandatory Redemption Agreement pursuant to which the Company agreed to redeem all outstanding Convertible Notes for an amount equal to 117% of the outstanding principal amount, plus accrued and unpaid interest and other amounts due under the governing documents. On December 30, 2025, the Company redeemed all outstanding Convertible Notes, and the related agreements were terminated. See “Item 13. Certain Relationships and Related Transactions, and Director Independence—Related Party Agreements—Promissory Notes” for additional information regarding the Convertible Notes.
Reverse Stock Split
On October 14, 2025, the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation, as amended, to effect a 1-for-10 reverse stock split of the Company’s issued and outstanding common stock. The Reverse Stock Split became effective October 20, 2025 at 12:01 a.m. Eastern Time. No fractional shares were issued, and stockholders otherwise entitled to a fractional share received cash in lieu thereof. Outstanding equity awards, warrants and other securities convertible into, or exercisable for, common stock were proportionately adjusted in accordance with their terms. All share and per share data in the accompanying Consolidated Financial Statements and accompanying notes have been retroactively adjusted to reflect the effect of the Reverse Stock Splits.
Satschel Purchase and Subscription Agreement
On October 22, 2025, the Company entered into a Purchase and Subscription Agreement (the “ Satschel Purchase Agreement ”) with Satschel. Satschel owns Liquidity.io, a regulated broker-dealer and one of only a handful of SEC-registered digital alternative trading system platform.
Pursuant to the Satschel Purchase Agreement, Satschel sold us shares of its Class A Common Stock representing 15% of its fully-diluted capitalization in consideration for (i) $5.0 million in cash; and (ii) 556,174 shares of our common stock with an agreed value of $10.0 million, which are subject to a six month lock-up (the “ Satschel Shares ”).
Karus Purchase and Subscription Agreement
On December 2, 2025, the Company entered into (i) a Purchase and Subscription Agreement (the “ Karus Purchase Agreement ”) with Karus, (ii) separate Stock Purchase Agreements (collectively, the “ Karus Stock Purchase Agreements ”) with certain stockholders of Karus (the “ Karus Stockholders ”); and (iii) a Series A Preferred Stock Rights Agreement with Karus and certain significant stockholders of Karus. Karus operates a proprietary AI-powered data analytics platform for use by underwriters and lenders in the consumer auto finance industry.
Pursuant to the Karus Purchase Agreement, Karus sold us 1,421,464 shares of its Class A Preferred Stock representing 16% of Karus’ fully-diluted capitalization in consideration for (i) $3.0 million in cash; and (ii) 453,721 shares of our common stock with an agreed value of $5.0 million, of which half are subject to a three month lock-up and half are freely transferrable, subject to applicable federal and state securities laws (the “ Karus Shares ”).
Pursuant to the Karus Stock Purchase Agreements, the Karus Stockholders sold us 310,945 shares of Karus common stock and 44,420 shares of Karus Series Seed-3 Preferred Stock representing an aggregate of 4% of Karus’ fully-diluted capitalization in consideration for 181,488 shares of our common stock with an agreed value of $2.0 million, which are subject to a six month lock-up (the “ Karus Stockholder Shares ” and together with the Karus Shares, the “ Karus Registrable Securities ”).
As a result of the Karus Purchase Agreement and the Karus Stock Purchase Agreements (collectively, the “ Karus Purchase Agreements ”), which closed on December 2, 2025, on December 31, 2025, the Company held an aggregate of approximately 20% of the fully-diluted capitalization of Karus (collectively, the “ Karus Securities ”).
The Karus Purchase Agreements also granted registration rights to Karus and the Karus Stockholders, pursuant to which the Company was required to use its reasonable best efforts to file a registration statement with the SEC covering the resale of the Karus Registrable Securities. On December 18, 2025, the Company filed a registration statement on Form S-3 (the “ December 2025 Registration Statement ”) relating to the possible resale or other disposition of, among other securities, the Satschel Shares, the Karus Registrable Securities and the Zippy Registrable Securities (as defined below). The December 2025 Registration Statement was declared effective December 30, 2025 (the “ Registration Statement Effectiveness Date ”).
Zippy Purchase Agreement
On December 9, 2025, the Company entered into (i) a Series B-3 Preferred Stock Purchase Agreement (the “ Zippy Purchase Agreement ”) with Zippy; (ii) separate Stock Purchase Agreements (the “ Zippy Stock Purchase Agreements ”) with certain stockholders of Zippy (the “ Zippy Stockholders ”); (iii) a Registration Rights Agreement with Zippy and the Zippy Stockholders (the “ Zippy Registration Rights Agreement ”); (iv) a Third Amended and Restated Investors’ Rights Agreement with Zippy and certain significant investors and stockholders of Zippy (collectively, the “ Major Holders ” and such agreement, the “ Zippy Rights Agreement ”); (v) a Third Amended and Restated Right of First Refusal and Co-Sale Agreement with Zippy and the Major Holders (the “ Zippy ROFR Agreement ”); and (vi) a Third Amended and Restated Voting Agreement with Zippy and the Major Holders (the “ Zippy Voting Agreement ”). Zippy, through its subsidiaries Zippy Loans, LLC, Zippy Insurance Services, LLC and Zippy Technology, LLC, provides mortgage loans, loan servicing, homeowner insurance services and related software services for manufactured home buyers.
Pursuant to the Zippy Purchase Agreement, Zippy sold us 2,905,064 shares of its Series B-3 Preferred Stock representing 13.492% of Zippy’s fully-diluted capitalization as of December 9, 2025 in consideration for (i) $5.0 million in cash; and (ii) 1,333,332 shares of our common stock (the “ Zippy Shares ”) with an agreed value of approximately $14.0 million, based on a price per share of $10.50 (the “ Per-Share Price ”).
The Zippy Shares are subject to lock-up restrictions, from which 25% of the Zippy Shares have been or will be released on each of the Registration Statement Effectiveness Date, and the 1-month (the “ Second Lock-Up Release Date ”), 2-month and 3-month anniversaries of the Registration Statement Effectiveness Date, provided that all Zippy Shares will be released from the lock-up on the earlier of (i) the 3-month anniversary of the Registration Statement Effectiveness Date, (ii) the date on which the Company’s common stock trades at or above two times the Per-Share Price on Nasdaq or (iii) upon a change of control of the Company.
With respect to any Zippy Shares continuously held by Zippy between the closing of the Zippy Purchase Agreement and June 30, 2026 (the “ Retained Shares ” and the “ True-Up Determination Date ”, respectively), Zippy will be entitled to receive a true-up payment in cash, equal to the difference, if any, between the value of the Retained Shares based on the Per-Share Price and the value of the Retained Shares based on the volume-weighted average price of the Company’s common stock for the 10 trading days prior to the True-Up Determination Date (the “ Final Make Whole Amount ”). Additionally, the Company will owe Zippy a true-up in cash equal to the positive difference, if any, between the aggregate gross proceeds received by Zippy from the sale of up to 476,191 Zippy Shares during the thirty day period following February 28, 2026 (the “ Midpoint True-Up Window ”), and the value of such shares based on the Per-Share Price, and if Zippy is unable to sell any or all Zippy Shares during the 30 days following the Second Lock-Up Release Date, we are required to repurchase such number of Zippy Shares that are eligible to be sold, out of the number eligible to be sold, for cash at the Per-Share Price.
Pursuant to the Zippy Stock Purchase Agreements, the Zippy Stockholders sold us 324,728 shares of Zippy common stock, representing an aggregate of 1.508% of Zippy’s fully-diluted capitalization as of December 9, 2025 in consideration for 202,268 shares of our common stock with an agreed value of $10.50 per share, which are subject to certain lock-up restrictions as described in greater detail in the Zippy Stock Purchase Agreements (the “ Zippy Stockholder Shares ” and together with the Zippy Shares, the “ Zippy Registrable Securities ”). As a result of the Zippy Purchase Agreement and the Zippy Stock Purchase Agreements (collectively, the “ Zippy Purchase Agreements ”), the Company held an aggregate of 15% of Zippy’s fully-diluted capitalization as of December 31, 2025.
In accordance with its obligations under the Zippy Registration Rights Agreement, the Company filed the December 2025 Registration Statement (defined below) covering, among other things, the resale of the Zippy Registrable Securities.
Pursuant to the Zippy Purchase Agreement, if the Company fails to (i) comply with its obligation to maintain the registration of and deliver the Zippy Registrable Securities in accordance with the Zippy Registration Rights Agreement, (ii) pay Zippy the Final Make Whole Amount as and to the extent required by the Zippy Purchase Agreement, or (iii) pay Zippy any liquidated damages as and to the extent required by the Registration Rights Agreement, the Company will be deemed to have forfeited its rights under Zippy’s Certificate of Incorporation, the Zippy Rights Agreement, the Zippy ROFR Agreement and the Zippy Voting Agreement (as described above) and will be required to pay Zippy an amount equal to approximately $14.0 million (representing the agreed value of the Zippy Shares purchased by Zippy) less (A) the amount of any gross proceeds received by Zippy from the sale of the Zippy Shares and (B) the amount of any liquidated damages received by Zippy pursuant to the Zippy Registration Rights Agreement (the “ Forfeiture Make Whole Amount ”). At the Company’s option, the Forfeiture Make Whole Amount may be paid either in cash or by surrendering that number of Zippy Series B-3 Shares having an equivalent value, based on an agreed value of $6.5403 per Zippy Series B-3 Share. If the Company pays Zippy the Make Whole Amount, Zippy will surrender any remaining Zippy Shares then held by Zippy for and Zippy will have no further right to the Zippy Shares or any associated payment obligations, other than accrued but amounts then due and owing.
The acquisition contemplated by the Purchase Agreements closed on December 9, 2025.
Aircraft Engine Purchase Agreement
On January 17, 2026, the Company, through a newly formed wholly-owned subsidiary, acquired two CFM56-7B24 aircraft engines (together with related records and equipment) from an unaffiliated seller pursuant to an Engine Sale and Purchase Agreement. The engines were acquired for an aggregate purchase price of $12.2 million in cash, subject to certain adjustments. The engines are subject to lease arrangements that were assigned to the Company as part of the acquisition, and the Company entered into a servicing agreement with an affiliate of the seller to manage the engines during the lease term, in exchange for a monthly fee.
Zippy Manufactured Home Loan Portfolio Acquisition
On January 30, 2026, the Company, through its wholly-owned subsidiary ETHZilla Modular Mortgage LLC, (“ EMM ”) acquired 95 manufactured and modular home loans (together with the related first-lien mortgages) from Zippy Manufactured Home Credit Fund I L.P. pursuant to a Loan Purchase Agreement, for an aggregate purchase price of $4.7 million in cash (equal to 104% of the outstanding principal balance as of January 29, 2026). The loans are serviced by Zippy Loans, LLC (“ Zippy Loans ”), an affiliate of the seller, and the Company currently intends to tokenize the loans into a manufactured home loan token and make it available on Liquidity.io.
Eurus Aero Token I Offering
On February 12, 2026, ETHZilla Aerospace LLC, the Company’s wholly-owned subsidiary, launched a private offering of up to approximately $11.7 million in profit participation interests issued as cryptographic digital tokens on the Arbitrum Ethereum Layer 2 network. The Aero Tokens provide holders with contractual rights to pro rata distributions from the net cash flows generated by two CFM56-7B24 aircraft engines. Payments are derived from monthly lease collections and, upon a liquidity event, proceeds from the sale of the engines. The obligations are secured by collateral that includes the engines, related lease receivables, reserves, and insurance proceeds.
Change in Company Name
On February 24, 2026, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation, as amended, to effect a change of its name from “ETHZilla Corporation” to “Forum Markets, Incorporated.” Effective March 2, 2026, the Company’s common stock began trading on Nasdaq under the ticker symbol “FRMM,” replacing the ticker symbol “ETHZ.”
Warehouse Facility Agreement
On March 5, 2026, the Company, through its wholly-owned subsidiary ETHZilla Auto Loans LLC, entered into a Warehouse Facility Agreement with Anchored Finance, LLC for a revolving warehouse credit facility of up to $10.0 million to finance eligible auto loan receivables originated through Automatic USA. The facility has an initial 12-month term and will automatically renew for successive six-month periods unless either party provides written notice of non-renewal.
Zippy Master Loan Purchasing Agreement, Master Loan Servicing Agreement and Initial Purchase Commitment
On March 23, 2026, the Company, through EMM, entered into a Master Loan Purchase Agreement (the “ MLPA ”) and a Master Loan Servicing Agreement (the “ MLSA ”) with Zippy Loans. Zippy, in which the Company holds approximately 15% of the fully-diluted ownership, is the parent company and sole owner of Zippy Loans.
Pursuant to the MLPA, EMM has, subject to conditions precedent, committed to purchase on an ongoing revolving basis as those loans are originated, manufactured home chattel loan receivables originated by Zippy Loans (the “ Loans ”), together with the related security interests in the manufactured homes securing such Loans, up to an aggregate commitment amount of $150.0 million over a five-year term. Loans will be purchased at a price equal to a fixed percentage of the outstanding principal balance of each Loan as of the applicable purchase cut-off date, as set forth in the MLPA. Each Loan purchased under the MLPA must satisfy minimum eligibility criteria relating to, among other things, FICO score, loan-to-value ratio, loan size, loan term and geographic concentration.
The MLPA includes, among other things, representations and warranties of Zippy Loans with respect to each Loan sold thereunder, repurchase obligations of Zippy Loans upon the occurrence of certain repurchase events, eligibility criteria governing Loans eligible for purchase, and customary indemnification and confidentiality provisions. The MLPA has an initial term of five years from March 23, 2026, subject to earlier termination in accordance with its terms.
Concurrently with the execution of the MLPA, EMM and Zippy Loans entered into the first Purchase Commitment under the MLPA, covering the period from March 23, 2026 through June 30, 2026, with a commitment amount of up to $15.0 million. On March 23, 2026, FRMM acquired 31 manufactured home chattel loans (the “ Initial Loans ”), together with the related security interests in the manufactured homes securing the Initial Loans, for a total purchase price of approximately $1.4 million. The acquisition was funded with cash on hand.
Pursuant to the MLSA, Zippy Loans will service the Loans purchased by EMM under the MLPA in accordance with accepted servicing practices for manufactured home chattel loans as set forth in the MLSA. The servicing fee payable to Zippy Loans is calculated on a per annum basis as a percentage of the aggregate outstanding loan balance of the serviced Loans, tiered by FICO score, and is subject to a minimum monthly servicing fee. Zippy Loans is required to deposit all collections into a segregated servicing account and remit such collections (net of servicing fees and reimbursable expenses) to EMM on each monthly payment date. The MLSA provides for customary servicer events of default and, upon the occurrence of a servicer event of default, EMM has the right to terminate the servicing arrangement and transfer servicing to a successor servicer. The MLSA remains in effect until all Loans have been paid in full, discharged or otherwise liquidated, subject to earlier termination in accordance with its terms.
Zippy Side Letter
On March 25, 2026, the Company and Zippy entered into a Side Letter Amendment (the “ Zippy Side Letter Amendment ”) to the Zippy Purchase Agreement. The Zippy Side Letter Amendment extends the Midpoint True-Up Window, originally scheduled to expire on March 30, 2026, to the earlier of (i) April 30, 2026, or (ii) 30 days following the termination of the Company’s year-end insider trading blackout period. The extension was effectuated to ensure regulatory compliance, account for the overlap between the Midpoint True-Up Period and the Company’s mandatory blackout period associated with the filing of this Report.
Jagdeep Nanchahal Settlement
On March 30, 2026, the Company, CannBioRex Pharma Limited (a subsidiary of the Company) (“ CannBioRex ”), and Jagdeep Nanchahal (a former consultant of the Company) entered into a Confidential Settlement and Release Agreement. The parties disputed compensation due and the status of certain consultancy agreements dating back to February 2021. Under the terms of the settlement, CannBioRex agreed to pay Mr. Nanchahal a total of £120,000 (inclusive of VAT) in exchange for a full release of all claims and the mutual termination of all prior consultancy agreements. The settlement does not constitute an admission of liability by any party. At the time of the settlement, the Company had accrued liabilities of $1.5 million related to these consultancy agreements. Therefore, this settlement is expected to result in a gain of approximately $1.34 million, which will be recorded in the first quarter of 2026.
March 2026 Aircraft Engine Purchase Agreement
On March 27, 2026, the Company, through its wholly-owned subsidiary, Eurus Aerospace Token 1 LLC (“ Eurus Aerospace ”), acquired one CFM International model CFM56-5B5/P aircraft engine, together with all parts, engine records and engine stands associated therewith (the “ Engine ”), from Aero Engine Solutions, Inc. (“ Servicer ”), pursuant to the terms of an Engine Sale and Purchase Agreement dated March 27, 2026. The Engine was acquired for $6.35 million, which was payable in cash.
Eurus Aerospace entered into certain Lease Agreements with a major airline, as lessee, following the acquisition of the Engine, to evidence the lease of such Engine to that airline.
The Company also entered into a Service Agreement Supplement with the Servicer in connection with the purchase, whereby the Servicer agreed to manage the Engine on behalf of the Company during the duration of the above referenced leases, in exchange for a monthly servicing fee, and also provided for the right of the Company (but not the obligation) to require the Servicer (or the Servicer’s designated affiliate) to purchase the Engine from the Company for a $3.0 million option price, following the expiration or earlier termination of the leases with respect to such Engine; and the right of the Servicer (but not the obligation) to require the Company to sell the Engine to the Servicer (or the Servicer’s designated affiliate) for $3.0 million, following the expiration or earlier termination of the leases with respect to such Engine, in each case provided that such Engine is in the condition required by the terms of the agreement.
Components of Results of Operations
Revenue
Staking revenue consists of our share of rewards earned from native and liquid ETH staking arrangements through third-party validator operators and staking protocols. Incentive revenue consists of incentive tokens earned from participation in certain liquid staking protocols based on deposited ETH and program-specific incentive structures.
Revenue for prior periods, if any, reflects the Company’s legacy pharmaceutical research operations and does not reflect the Company’s current digital asset-focused revenue-generating activities.
General and Administrative
General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation, which represent the most significant component of general and administrative expenses.
Other general and administrative expenses include professional fees (such as legal, accounting, and consulting services), office-related and overhead expenses (including rent, utilities, software, insurance, and dues and subscriptions), marketing and investor relations costs, bank charges, travel and entertainment expenses, and public company costs such as audit fees and SEC filing fees.
Dividend Income
Dividend income consists of cash distributions received from marketable securities that the Company holds as part of its strategic investment portfolio.
Interest Income
Interest income consists of interest earned on cash balances and short-term investments held by the Company, including interest earned on U.S. Treasury securities and interest-bearing accounts.
Interest income also reflects interest earned on cash and restricted cash equivalents held in interest-bearing accounts, including restricted cash securing the Company’s senior secured convertible debt arrangements.
Other Income
Other income relates to the legacy pharmaceutical business and primarily reflects non-recurring, non-operating gains arising from settlements and recoveries associated with discontinued R&D activities.
Interest Expense
Interest expense consists of interest incurred on outstanding debt obligations, including the interest incurred on the Convertible Notes entered into during the year.
Change in Fair Value of Convertible Debt
Change in fair value of convertible debt consists of non-cash fair value adjustments recognized on the Convertible Notes. These changes reflect remeasurement of the notes arising from issuances, amendments, redemptions, and settlements, as well as changes in valuation assumptions applicable to the instruments.
Change in Fair Value of Available for Sale Securities
Change in fair value of available-for-sale securities reflects unrealized gains and losses resulting from changes in market prices of investment securities held by the Company.
Digital Asset Gains and Losses
Digital asset gains and losses consist of realized and unrealized gains and losses on ETH and liquid staking incentive tokens held by the Company. Gains and losses arise from changes in market prices, and the sale, transfer, or redeployment of ETH.
Change in Fair Value of Long-Term Receivable Derivative
Change in fair value of long-term receivable derivative represents the change in fair value of the cryptocurrency holdings under liquid staking protocols.
Loss on Make Whole Provision
Loss on make whole provision represents the estimated make whole amount pursuant to the Zippy Shares in accordance with the Agreement.
Gain (Loss) on Settlement of Liabilities
Gain or loss on settlement of liabilities consists of gains or losses recognized upon the extinguishment or modification of debt and other obligations. These amounts include gains and losses recognized upon the redemption of the Convertible Notes and the settlement of collateralized loan arrangements.
Income Tax Expense (Benefit)
Income tax expense consists primarily of state income taxes and deferred income tax effects. The Company maintains valuation allowances against certain deferred tax assets where realization is not considered more likely than not.
Net Loss from Discontinued Operations
Net loss from discontinued operations reflects the results of operations of business components that have been disposed of or otherwise exited and are no longer part of the Company’s continuing operations. The results of discontinued operations are presented separately from continuing operations to provide comparability across periods. Discontinued operations include all revenues, expenses, gains, and losses directly attributable to those exited activities.
Deemed Dividend
Deemed dividend represents amounts recognized from an October 2024 warrant inducement related to the legacy pharmaceutical business.
Consolidated Results of Operations
The following table presents the results of our operations (in thousands) for the years ended December 31, 2025 and 2024:
Years Ended December 31,
Change
Revenue:
Revenue
Total Revenue
Operating Expenses:
General and administrative
Total Operating Expenses
Loss From Operations
Other (Expense) Income:
Dividend income
Interest income
Other income
Interest expense
Change in fair value of convertible debt
Change in fair value of available for sale securities
Change in fair value of cryptocurrency
Change in fair value of long-term receivable derivative
Loss on make whole provision
Gain on settlement of liabilities
Total other income (expense), net
Loss Before Income Taxes
Income tax benefit
Net Loss From Continuing Operations
Net Loss From Discontinued Operations
Deemed dividend
Net Loss
Revenue
Revenue for the year ended December 31, 2025 was $6.5 million, reflecting staking and related incentive activity generated following the Company’s strategic transition in the second half of 2025. The increase compared to the prior year was driven by the Company’s shift to a digital asset focused business model, as the Company did not generate revenue under its legacy operations. Going forward, revenues are expected to be driven primarily by the continued development of the Company’s tokenization strategies.
Staking revenue totaled $2.6 million, representing rewards earned from native and liquid staking activities, and incentive revenue totaled $3.9 million, representing additional tokens earned through participation in certain liquid staking protocols.
General and Administrative
General and administrative expenses for the year ended December 31, 2025 were $240.0 million, compared to $4.4 million for the year ended December 31, 2024.
The increase in general and administrative expenses compared to the prior year was driven primarily by an approximately $209.0 million increase in stock-based compensation recognized during the period, which reflects equity awards including options and warrants granted to executive officers, directors, employees, and consultants in connection with the Company’s strategic transition, leadership changes, strategic advisor arrangements, and financing activities. Stock-based compensation was elevated in 2025 due to the timing of large equity grants and Board of Directors-approved accelerated vesting events, resulting in the immediate recognition of expense that otherwise would have been recognized over future service periods. A significant portion of the stock-based compensation recognized in 2025 was non-recurring or front-loaded in nature.
Additionally, general and administrative expenses included approximately $9 million due to the adjustment in fair value of the Convertible Notes, $1.7 million in bonus payments to prior management, $1.8 million of increase in director fees, $2.0 million in legal fees, and a $0.9 million increase in rent and lease expense.
Dividend Income
Dividend income for the year ended December 31, 2025 was $1.2 million, reflecting returns earned on marketable securities acquired during 2025 as part of the Company’s strategic investment activities. There was no comparable dividend income in the prior year, as the Company did not have a significant USD balance to invest in securities.
Interest Income
Interest income for the year ended December 31, 2025 was $4.5 million, reflecting interest earned on cash and interest-bearing accounts following the Company’s capital-raising activities during 2025. There was no comparable interest income in the prior year, as these balances were generated during the current period.
Other Income
Other income for the year ended December 31, 2024 was $1.8 million. The was attributable to proceeds received in 2024 from AmTrust International Underwriters DAC (“ AmTrust ”) related to the Company’s pre-merger directors’ and officers’ insurance policy. There were no comparable items recognized in 2025.
Interest Expense
Interest expense for the year ended December 31, 2025 was $3.1 million, primarily reflecting interest incurred on the Convertible Notes entered into during the year. There was no comparable, meaningful interest expense in the prior year.
Change in Fair Value of Convertible Debt
Change in fair value of convertible debt totaled $103.9 million for the year ended December 31, 2025, primarily reflecting non-cash fair value adjustments associated with convertible debt instruments issued and settled during the year. There were no convertible debt instruments outstanding in the prior year.
Change in Fair Value of Available for Sale Securities
Change in fair value of available-for-sale securities for the year ended December 31, 2025 was $0.1 million, reflecting unrealized gains and losses resulting from changes in market prices of equity investment securities acquired during the year. There was no comparable, meaningful change in the prior year, as these investments were not held previously.
Digital Asset Gains and Losses
Digital asset losses for the year ended December 31, 2025 were $21.1 million, primarily reflecting approximately $4.6 million of unrealized losses resulting from changes in market prices of ETH and liquid staking incentive tokens held during the period, partially offset by approximately $16.5 million of realized losses recognized upon the sale, transfer, or redeployment of ETH. Unrealized gains and losses were driven primarily by fluctuations in the market price of ETH and changes in the quantity of digital assets held during the period. There were no digital assets held in the prior year.
Change in Fair Value of Long-Term Receivable Derivative
The change in fair value of the long-term receivable derivative for the year ended December 31, 2025 was $81.3 million, primarily driven by changes in the market price of ETH, the accrual of staking rewards under liquid staking arrangements, and changes in the quantity of assets deployed in such protocols during the period.
Loss on Make Whole Provision
Loss on make whole provision represents changes in the estimated make-whole obligation associated with the Company’s cost-method investment in Zippy, resulting in a $6.3 million loss for the year ended December 31, 2025, primarily driven by changes in the Company’s stock price relative to the agreed valuation terms during the period.
Net Loss from Discontinued Operations
During the year ended December 31, 2025, the Company made a strategic decision to discontinue its pharmaceutical research operations and iGaming technology platform. Accordingly, the results of these operations are presented as discontinued operations for all periods presented.
Net loss from discontinued operations for the year ended December 31, 2025 was $7.0 million, primarily reflecting operating losses of approximately $1.2 million related to the Company’s former pharmaceutical research operations and an impairment charge of approximately $7.6 million related to the iGaming technology platform, which were classified as discontinued operations during the year.
The exits were part of management’s strategic decision to discontinue legacy operations and focus on digital asset and tokenization activities. The Company does not expect discontinued operations to have a material impact on future results of operations or cash flows.
Deemed Dividend
Deemed dividend was $0 for the year ended December 31, 2025, compared to $8.0 million for the year ended December 31, 2024. The prior-year amount related to an October 2024 warrant inducement associated with the Company’s legacy pharmaceutical business, with no comparable activity in 2025.
Non-GAAP Financial Measures
Although we believe that net income or loss, as determined in accordance with U.S. GAAP, is the most appropriate earnings measure, we use EBITDA and Adjusted EBITDA as key profitability measures to assess the performance of our business. We believe these measures help illustrate underlying trends in our business and we use these measures to establish budgets and operational goals, and communicate internally and externally, in managing our business and evaluating its performance. We also believe these measures help investors compare our operating performance with its results in prior periods in a way that is consistent with how management evaluates such performance. EBITDA is a non-GAAP profitability measure that represents net income or loss for the period before the impact of the interest expense, income tax expense (benefit) and depreciation and amortization of property, plant and equipment and intangible assets. EBITDA eliminates potential differences in performance caused by variations in capital structures (affecting financing expenses), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense).
Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, we exclude from Adjusted EBITDA certain costs that are required to be expensed in accordance with GAAP, including non-cash stock-based compensation, business development and integration expenses, offering costs, non-cash adjustments to the fair value of earnout consideration, and non-cash adjustments to the fair value of outstanding warrants. Our management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future.
Each of the profitability measures described below are not recognized under GAAP and do not purport to be an alternative to net income or loss determined in accordance with GAAP as a measure of our performance. Such measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for our results as reported under U.S. GAAP. EBITDA and Adjusted EBITDA exclude items that can have a significant effect on our profit or loss and should, therefore, be used only in conjunction with our GAAP profit or loss for the period. Our management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, these measures may not be comparable to other similarly titled measures of other companies.
EBITDA and Adjusted EBITDA are unaudited, and have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under U.S. GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, or future or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, capital expenditures or working capital needs; EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments; although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. In addition, other companies in this industry may calculate EBITDA and Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable U.S. GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable U.S. GAAP financial measure. For more information on these non-GAAP financial measures, please see the below reconciliation of these non-GAAP financial measures to their GAAP counterparts.
The reconciliation of Net loss from continuing operations, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA (in thousands) is as follows:
Net Loss From Continuing Operations
Interest
Taxes
Depreciation and Amortization
EBITDA
Stock-based compensation 1
Convertible debt offering costs 2
Adjusted EBITDA
Represents non-cash stock-based compensation expense associated with employee and non-employee equity awards, including the Initial Strategic Advisor Warrants and the Subsequent Strategic Advisor Warrants, and employee stock options awarded in connection with closing the Private Placement, included in general and administrative expenses on the consolidation statements of operations and comprehensive income.
Represents professional fees incurred in connection with the Convertible Notes which are included in general and administrative expenses on the consolidation statements of operations and comprehensive income.
Liquidity and Capital Resources
In prior interim periods during 2025, management identified conditions and events that raised substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of the interim financial statements. During the year ended December 31, 2025, the Company completed significant equity and debt financing transactions, generating proceeds of approximately $860.0 million, that materially improved its liquidity position and extended the maturity profile of its obligations. As of December 31, 2025, the Company had $8.0 million of cash and cash equivalents on hand.
Based on existing cash balances, the proceeds from these financings, and the Company’s current cash resources and operating plans, management has concluded that the Company has sufficient liquidity to meet its obligations as they become due for at least the next twelve months, and as such the substantial doubt about the Company’s ability to continue as a going concern has been alleviated as of December 31, 2025.
Principal and Potential Sources of Liquidity
Our principal and potential sources of liquidity consist primarily of cash and cash equivalents, cash flows from operating activities, and proceeds from financing activities. We believe that our existing sources of liquidity are, and will continue to be, sufficient to meet our working capital and capital expenditure requirements in both the short and long term.
We also hold ETH which is accounted for as a digital asset. While ETH is not considered a cash equivalent and is subject to market volatility, these holdings may be converted into cash and used as a source of liquidity if needed, subject to market conditions and strategic considerations.
Cash Flows
As of December 31, 2025 and 2024, we had cash balances of $8.0 million and $4.6 million, respectively, and a working capital deficit of $52.8 million and $1.6 million, respectively.
Operating Activities
For the year ended December 31, 2025, cash provided by operating activities from continuing operations totaled $25.3 million compared to cash used in operating activities from continuing operations of $1.1 million for the year ended December 31, 2024. Cash used in operating activities was $26.1 million and cash used in operating activities was $1.2 million for the years ended December 31, 2025 and 2024, respectively. Our cash used in operations for the year ended December 31, 2025 was primarily attributable to our net loss from continuing operations of $443.5 million, adjusted for non-cash expenses in the aggregate amount of $419.7 million (mainly due to $213.4 million of stock based compensation, $21.1 million for the change in fair value of cryptocurrency and $104.0 million for non-cash settlement expense), as well as $1.5 million of net cash used to fund changes in the levels of operating assets and liabilities. Our cash provided by operations for the year ended December 31, 2024 was primarily attributable to our net loss from continuing operation of $2.6 million, adjusted for non-cash expenses in the aggregate amount of $0.2 million as well as $1.2 million of net cash used to fund changes in the levels of operating assets and liabilities.
Investing Activities
For the year ended December 31, 2025, cash used in investing activities from continuing operations totaled $127.6 million compared to cash used in investing activities from continuing operations of $0 for the year ended December 31, 2024. Cash used in investing activities related to the purchase of marketable securities of $4.6 million, purchase of investment of $13.0 million and $244.3 million for the purchase of cryptocurrency which were offset by $134.3 million from the sale of cryptocurrency.
Financing Activities
For the year ended December 31, 2025, cash provided by financing activities from continuing operations totaled $158.3 million compared to cash used in financing activities from continuing operations of $4.1 million for the year ended December 31, 2024. Cash used in financing activities from discontinued operations was $0.2 million, compared to cash used in financing activities of $0.03 million from discontinued operations for the year ended December 31, 2024. Cash provided by financing activities was $158.3 million and $4.0 million for the years ended December 31, 2025 and 2024, respectively. Cash provided by financing activities primarily related to cash proceeds from shares issued for cash and warrants, net of $303.8 million (mainly due to the Private Placement), proceeds from convertible debt, net of $500.0 million (in connection with the sale of the Convertible Notes), proceeds from collateralized loan of $50.0 million and cash proceeds from the exercise of warrants of $5.6 million, which were offset by treasury stock purchases of $46.3 million, repayment of loan payable – related party of $1.0 million, repayment of collateralized loan of $50.0 million and the repayment of convertible debt of $603.9 million for the year ended December 31, 2025. Cash provided by financing activities during the year ended December 31, 2024, was primarily comprised of proceeds from sale of stock and warrants in December 2024 of $2.6 million and proceeds from the exercise of warrants of $2.8 million, partially offset by the repayment of loans payable of $1.3 million.
Liquidity Management Strategy
Our liquidity management strategy includes maintaining the ability to convert digital assets into cash through established trading venues and counterparties, subject to market conditions, liquidity availability, and applicable controls. The timing and extent of any such conversions will depend on operational needs, market conditions, and risk management considerations.
In assessing liquidity needs, management evaluates expected operating cash requirements, capital commitments, and near-term obligations relative to available cash balances and the portion of digital asset holdings that is readily convertible to cash. In doing so, management considers practical constraints on liquidity, including staking-related lock-up periods, protocol-level withdrawal queues, market depth and trading venue limits, and internal risk management controls.
Management also considers known uncertainties, including fluctuations in digital asset prices and potential delays in accessing staked assets, and how such factors could reduce the amount or timing of liquidity available from digital assets. Prolonged access restrictions or adverse market conditions could require the Company to rely more heavily on cash balances or external financing to meet its obligations.
The Company may also pursue additional offering transactions as needed to fund operations and financing obligations. Future offering transactions may include common stock, warrant coverage or other convertible securities, subject to Board of Directors approval and applicable Nasdaq stockholder approval requirements. As of the date of this Report, the Company has not agreed to any definitive funding terms or finalized any offering structures. Future capital requirements will depend on operating performance, market conditions, and the execution of our treasury strategy, including potential periods of digital asset price volatility.
Capital Requirements and Contractual Obligation
Our capital requirements primarily relate to supporting ongoing operations, funding working capital needs, servicing existing obligations, and executing our tokenization and investment strategy. We expect to continue to incur operating losses in the near term as we execute our strategy.
Our contractual obligations are limited in nature and consist primarily of operating lease commitments and professional services agreements incurred in the ordinary course of business. As of December 31, 2025, operating lease commitments totaled approximately $0.9 million, primarily related to office facilities. In addition, the Company incurs ongoing professional services costs and custody, servicing, and asset management fees related to its digital asset activities and owned assets, which are generally short-term in nature and variable based on activity levels.
In connection with certain investment and financing arrangements, the Company may be subject to contingent or conditional obligations, including potential true-up or repurchase mechanisms, such as those related to the Zippy investment. As of December 31, 2025, management does not believe that any such contingent obligations are reasonably likely to have a material adverse effect on the Company’s liquidity or capital resources.
The Company does not have any material long-term debt maturities, other than a collateralized loan totaling $26.0 million which is secured by 8,700 ETH, material purchase obligations, or other significant contractual commitments that are reasonably likely to have a material adverse effect on its liquidity or capital resources. In addition, the Company does not have any material off-balance-sheet arrangements that are reasonably likely to have a material effect on liquidity, capital resources, or results of operations.
Critical Accounting Estimates
The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates, and assumptions that involve a high degree of uncertainty and that could have a material impact on the Company’s financial condition or results of operations. These estimates are considered “critical” because they require significant management judgment, are inherently subjective, and could change based on future events or market conditions. Actual results could differ materially from these estimates.
The Company’s most significant critical accounting estimates are described below. These estimates relate primarily to the valuation digital assets and financial instruments, revenue recognition judgments, and fair value measurements. While the underlying accounting policies are described in the notes to the Consolidated Financial Statements, the discussion below focuses on the judgments, assumptions, and uncertainties associated with these estimates.
Fair Value Measurements of Digital Assets and Financial Instruments
The Company holds certain digital assets and financial instruments that are measured at fair value on a recurring basis. The determination of fair value requires management to make assumptions regarding market inputs, valuation techniques, and liquidity conditions at the measurement date.
For assets measured using observable market prices (Level 1), fair value is based on quoted prices in active markets. For assets measured using valuation techniques that incorporate significant unobservable inputs (Level 2 or Level 3), management applies judgment in selecting appropriate valuation methodologies and assumptions, including but not limited to:
market participant assumptions,
liquidity and credit risk considerations,
pricing source selection, and
observable versus unobservable inputs.
Changes in these assumptions, including changes in market volatility or liquidity, could materially affect the reported fair values and related earnings.
Revenue Recognition Judgments
The Company applies judgment in evaluating whether it acts as a principal or an agent in certain transactions, which affects the timing and presentation of revenue. These judgments require an assessment of control, pricing discretion, and the nature of the Company’s performance obligations.
Changes in contractual arrangements, transaction structures, or business practices could impact these conclusions and result in changes to revenue recognition and presentation.
Sensitivity to Changes in Key Assumptions
The estimates described above are sensitive to changes in market conditions and key assumptions. For example, adverse movements in digital asset prices, changes in liquidity or volatility, or changes in the Company’s role in transaction flows could materially impact reported earnings, financial position, and cash flows. Management evaluates these estimates on an ongoing basis as facts and circumstances change.
Significant Accounting Policies
See Note 3 – Summary of Significant Accounting Policies to our Consolidated Financial Statements included in this Report for a discussion about significant accounting policies relevant to the Company.
Recently Issued Accounting Pronouncements
See Note 3 – Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements of our Consolidated Financial Statements included in this Report for a discussion about new accounting pronouncements issued and adopted as of the date of this Report.
