Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of the Company's financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors that may affect its future results. In addition, unless expressly stated otherwise, the comparisons presented in this MD&A refer to the same period in the prior year. The Company's MD&A is presented in seven sections:

	·	Overview
	·	SUI Treasury Management Activity
	·	Investment Activity
	·	Results of Operations
	·	Liquidity and Capital Resources
	·	Critical Accounting Estimates
	·	Off-Balance Sheet Arrangements

OVERVIEW

Sui Group Holdings Limited ("the Company") was originally incorporated as Mill City Ventures III, Ltd. in the State of Minnesota on January 10, 2006. Since 2020, we operated as a publicly traded specialty finance company focused on short-term, non-bank lending solutions, generating revenue primarily from interest income, transaction fees, and capital appreciation from related investments.

Beginning in 2025, the Company undertook a strategic shift in its business model to establish a digital asset treasury strategy focused on holding and managing SUI tokens, the native cryptocurrency of the SUI blockchain ("SUI"). Under this strategy, SUI has become the principal asset held in the Company's treasury. In connection with this shift, the Company entered into a strategic relationship with the Sui Foundation, an independent organization supporting the development and adoption of the SUI network, pursuant to which the Company acquired SUI tokens and participates in staking and other protocol-level activities.

On August 26, 2025, the Company changed its corporate name to Sui Group Holdings Limited, following an amendment to its Articles of Incorporation filed with the Officer of the Minnesota Secretary of State. In conjunction with the name change and the rebranding, we changed our ticker symbol from "MCVT" to "SUIG", aligning our public identity with our core blockchain initiatives.

The Company's strategy is centered on maximizing SUI per-share value while supporting the broader growth of the SUI ecosystem. To execute this strategy, the Company acquires SUI tokens through a combination of open-market purchases, negotiated transactions, and other institutional-grade sourcing arrangements, including an agreement with the Sui Foundation. In addition to holding SUI, the Company seeks to enhance the productivity of its SUI holdings through protocol-level activities, including staking. During the three months ended March 31, 2026, the Company also engaged in selective decentralized finance ("DeFi") activities, including liquid staking, protocol-level deployments, stablecoin-related arrangements conducted through third-party platforms operating on the SUI blockchain. Subsequent to March 31, 2026, the Company unwound all of its DeFi activities and recovered all amounts involved therein in response to security incidents affecting certain DeFi ecosystems.

As of March 31, 2026, the Company held approximately 93.7 million SUI tokens in our treasury, representing $81.8 million in digital assets. The SUI tokens together with the underlying SUI in the digital asset receivables, but excluding the SuiUSDe in the Ember Protocol equates to approximately 1.34 SUI per share of Common Stock and pre-funded warrants outstanding. The Company actively manages its digital asset holdings to balance liquidity requirements, risk exposure, and return objectives, including the use of third-party asset managers to deploy portions of its holdings into approved blockchain-native strategies during the three months ended March 31, 2026, all of which were unwound subsequent to quarter-end.

The Company's principal sources of income currently include staking rewards from our SUI holdings, yield earned from deployed digital assets, realized and unrealized gains or losses on digital assets, and rewards associated with participating in blockchain protocol, and, to a lesser extent, income or valuation changes from other investments. The Company continues to hold the legacy lending assets, which generate interest and fee income; however, they represent a reduced share of the Company's overall asset base and results of operations compared to prior periods.

Our operating expenses reflect the Company's transition to a digital asset treasury model and include professional fees, payroll, custody and infrastructure costs related to blockchain asset management, and insurance, and other general administrative expenses. The Company seeks to achieve enhanced operational leverage as it scales its digital asset treasury operation.

This MD&A should be read in conjunction with (i) the accompanying unaudited condensed financial statements and the related notes included in Part I, Item 1 of this Report, (ii) the audited financial statements and related notes for the year ended December 31, 2025 included in our Annual Report and (iii) other publicly available information. All amounts herein are unaudited. In addition, the following discussion of our results of operations and financial condition should be read in the context of this overview.

SUI TREASURY MANAGEMENT ACTIVITY

In late July 2025, we formally launched our SUI treasury strategy, establishing SUI, the native token of the SUI blockchain, as a core component of our digital asset treasury platform. Since that time, our strategy has focused on building and actively managing a SUI-based treasury designed to support long term value creation while enhancing the productivity of our digital assets through protocol-level participation and selective yield-generating activities.

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SUI is a next-generation Layer 1 blockchain designed to deliver the scalability, speed, and security required to power decentralized applications and real-world crypto use cases across finance, gaming, artificial intelligence, stablecoins, and more.

As of March 31, 2026, we held 93.7 million SUI tokens, valued at $81.8 million based on a market price of $0.9 per token.

During the current quarter, substantially all of our SUI holdings were deployed in staking or staking related arrangements. Approximately 99% of SUI holdings are staked, generating an estimated annualized yield of 1.8%. For the three months ended March 31, 2026, we earned $0.5 million in staking rewards, representing 425,318 SUI tokens, compared to no staking rewards earned during the three months ended March 31, 2025. We believe this staking strategy enhances the productivity of our treasury while maintaining exposure to potential SUI price appreciation.

In addition to staking, we selectively deployed portions of our SUI holdings into Defi arrangements through a third-party asset manager during the three months ended March 31, 2026. These activities included Defi lending and liquid staking strategies on SUI blockchain-native protocols, as well as subsequent deployment of liquid staking tokens into additional Defi platforms. In connection with these activities, the Company recorded digital asset receivable representing its contractual rights to the economic value of assets deployed and related yield. These arrangements are intended to generate incremental returns while supporting liquidity and activity within the SUI ecosystem. After the reporting period, the Company unwound all of its DeFi activities and recovered all amounts involved therein.

We have also participated in ecosystem initiatives related to the deployment and promotion of SUI-native stablecoins ("SuiUSDe") in partnership with third-party platforms and SUI Foundation-supported programs. These initiatives are intended to support on-chain liquidity, transactional use cases, and broader adoption of the SUI network. To date, these activities are primarily strategic in nature and are designed to support ecosystem growth rather than serve as a primary source of near-term revenue.

Our SUI treasury strategy is supported by our official relationship with the Sui Foundation, an independent organization dedicated to the development and adoption of the SUI ecosystem. We believe this relationship, together with our active participation in staking, lending, and other protocol-level activities, positions us to benefit from continued expansion of the SUI network while providing shareholders with exposure to SUI through a publicly traded corporate structure.

We continue to monitor developments in the Sui ecosystem, including advancements in staking infrastructure, validator expansion, and adoption of SUI-native applications. These developments are expected to further support the intrinsic value of our SUI holdings and reinforce our strategic positioning.

INVESTMENT ACTIVITY

While our primary focus has shifted from our legacy finance operations, the business objective of our legacy business is to generate revenues from the interest and fees we charge, and capital appreciation from any related investments we make.

During the three months ended March 31, 2026, we made $6.0 million of investment purchases and had $0.9 million of redemptions and repayments, resulting in net investments at amortized cost of $13.5 million at the end of the period. The Company recorded an unrealized loss of $11.2 million reflecting the borrower's financial difficulty and uncertainty regarding the collection of principal and interest, resulting in a carrying value of $8.5 million as of March 31, 2026. In addition, the Company recorded a full reserve against accrued interest on this short-term loan arrangement totaling $0.9 million.

During the three months ended March 31, 2025, we made $3.4 million of investment purchases and had $4.1 thousand of redemptions and repayments, resulting in net investments at amortized cost of $17.5 million at the end of that period.

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RESULTS OF OPERATIONS

Our operating results for the three months ended March 31, 2026 and March 31, 2025 were as follows:

		For the Three Months Ended March 31,								Increase				Percentage
		2026				2025				(Decrease)				Change
Revenues
Investment income		$	-			$	778,027			$	(778,027	)			(100	)%
Digital lending interest income			70,449				-				70,449				n/a
SUI staking revenue			523,448				-				523,448				n/a
Total Revenues			593,897				778,027				(184,130	)			(24	)%
Operating Expenses:
Professional fees			1,779,501				142,656				1,636,845				1,147	%
Stock-based compensation			1,993,824				-				1,993,824				n/a
Asset and strategic management fees			340,189				-				340,189				n/a
Compensation expense			451,162				193,269				257,893				133	%
Insurance			450,665				23,771				426,894				1,796	%
Unrealized loss on digital assets			18,604,938				-				18,604,938				n/a
Realized loss on digital assets			34,854,553				-				34,854,553				n/a
Impairment of digital asset receivables			1,367,236				-				1,367,236				n/a
Provision for credit losses			1,151,335				-				1,151,335				n/a
Net realized and unrealized gain on investments			-				(162,502	)			(162,502	)			100	%
Other general and administrative			104,565				20,087				84,478				421	%
Total Operating Expenses			61,097,968				217,281				60,555,683				27,870	%
Operating Income (Loss)		$	(60,504,071	)		$	560,746			$	60,371,553				10,766	%

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

SUI staking revenue

For the three months ended March 31, 2026, we generated $0.5 million in staking rewards from our SUI token holdings, compared to none for the three months ended March 31, 2025. This income reflects the accrual of 425,318 SUI tokens earned on 93,186,427 SUI tokens staked, representing approximately 99% of our total SUI holdings during the period. The staking yield remains consistent with our estimated annualized return of 1.8%, and rewards were accrued daily in accordance with our treasury management strategy. Due to the change in operations to our SUI strategy, there was no staking income for the three months ended March 31, 2025.

Digital lending interest income

During the three months ended March 31, 2026, our digital lending interest income was $70.4 thousand, compared to none for the three months ended March 31, 2025. This pertains to the interest income on digital asset lent to the borrowers, as well as yield earned on deployed digital assets as digital asset receivable. Additional information regarding these arrangements is included in Note 4 - Digital Asset Loan Receivable and Note 5 - Digital Asset Receivable to the accompanying unaudited condensed financial statements. Due to the change in operations to our SUI strategy, there was no lending income for the three months ended March 31, 2025.

Investment income

For the three months ended March 31, 2026, our total investment income was $0, compared to $0.8 million for the three months ended March 31, 2025. The variance is attributable to the Company's change in accounting presentation following its cessation of investment company accounting under ASC 946. Accordingly, investment income for the three months ended March 31, 2026, is classified within other income and totaled $0.7 million.

Professional fees

During the three months ended March 31, 2026, and 2025, we had professional fees expense amounting to $1.8 million and $0.1 million, respectively. The increase was driven primarily by higher professional costs associated with the Company's strategic transition and expanded public-company activities, including professional fees related to recruiting, accounting and audit-related services, marketing and public relations in connection with the Company's rebranding and investor communications, and legal fees related to SEC reporting and regulatory compliance.

Stock-based compensation

During the three months ended March 31, 2026, and 2025, we had stock-based compensation amounting to $2.0 million and $0, respectively. The increase was attributable to non-cash compensatory expenses incurred in connection with the issuance of warrants in the Private Placement to certain members of management and a director in the third quarter of 2025 and first quarter of 2026.

Asset and strategic management fees

During the three months ended March 31, 2026, we incurred $0.3 million in asset and strategic management fees under our strategic and asset management arrangements, compared to $0 during the three months ended March 31, 2025. These fees were calculated based on a tiered schedule applied to our average daily AUM, which includes SUI, cash, and cash equivalents, but excludes assets from our short-term lending business. Fees are calculated monthly in arrears and pro-rated for partial periods due to asset contributions or withdrawals. Due to the change in operations to our SUI strategy, there were no asset and strategic management fees for the three months ended March 31, 2025.

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Compensation expense

During the three months ended March 31, 2026, and 2025, we had compensation expense amounting to $0.5 million and $0.2 million, respectively. The increase was primarily to the appointment of three new directors in connection with the Company's strategic transition.

Insurance expense

During the three months ended March 31, 2026, and 2025, we had insurance expense amounting to $0.5 million and $24 thousand, respectively. The increase was due to additional directors and officers' insurance policies that the Company deemed necessary due to our change in strategy.

Unrealized loss on digital assets and receivable

During the three months ended March 31, 2026, we recognized an unrealized loss, net of $18.6 million compared to $0 during the three months ended March 31, 2025. The net amount reflects a gross unrealized loss of $21.3 million on our digital asset and receivable holdings, partially offset by $3.0 million of amortized deferred income related to the discount received on the purchase of SUI tokens as discussed in "Note 3 - Digital Assets" of our financial statements. The remaining deferred income balance of $16.8 million will amortize on a straight-line basis over the period to August 30, 2027. This is due to decrease in the price of Sui token during the current reporting period. Due to the change in operations to our SUI strategy, there were no unrealized gains or losses for the three months ended March 31, 2025.

Realized loss on digital assets

During the three months ended March 31, 2026, we recognized a realized loss of $34.9 million compared to $0 during the three months ended March 31, 2025. The realized loss in the current period reflects the transfer of 11,900,024 SUI tokens to Galaxy Digital, in its capacity as the Company's asset manager, to deploy the tokens in connection with blockchain protocol participation and stablecoin-related strategies, including selective decentralized finance activities. The transfer resulted in the derecognition of the transferred digital assets from the Company's balance sheet, as the assets were no longer directly controlled or held by the Company. Accordingly, the difference between the carrying value of the digital assets transferred and the fair value at the time of transfer was recognized as a realized loss. Additional information regarding these arrangements is included in Note 5 - Digital Asset Receivable to the accompanying unaudited condensed financial statements. Due to the change in operations to our SUI strategy, there were no realized gains or losses for the three months ended March 31, 2025.

Net realized and unrealized gain/loss on investment

During the three months ended March 31, 2026, our net realized and unrealized gain on investment was $0, compared to $0.2 million for the three months ended March 31, 2025. The decrease primarily reflects the Company's change in accounting presentation following its cessation of investment company accounting under ASC 946 during the quarter ended September 30, 2025. As a result, realized and unrealized gains and losses are no longer presented within this line item and are instead reflected within other income (expense).

During the three months ended March 31, 2026, net realized and unrealized loss on investment of $11.2 million was recognized within other income, primarily reflecting downward fair value adjustments on certain legacy investment and loan-related positions due to increased credit risk and uncertainly arising from borrower delinquencies, and refinancing delays which outwaited mitigating factors such as guarantor support and prior repayment history as of March 31, 2026.

Impairment of digital asset receivable

During the three months ended March 31, 2026, the Company recognized impairment charges of $1.4 million on its digital asset receivable, primarily attributable to declines in the fair value of SUI below the cost basis of certain receivable positions held with DeFi protocols. No such impairment was recognized during the three months ended March 31, 2025, as the Company did not hold digital asset receivable during the comparable prior-year period.

Provision for credit losses

During the three months ended March 31, 2026, the Company recognized a provision for credit losses of $1.2 million compared to $0 for the three months ended March 31, 2025. The increase was primarily attributable to the establishment of credit loss estimates associated with the Company's receivable positions. No comparable provision was recognized during the three months ended March 31, 2025, as these arrangements were not in place during the prior-year period.

Other general and administrative

During the three months ended March 31, 2026, and 2025, we had other general and administrative expenses amounting to $0.1 million and $20.1 thousand, respectively. The increase was due to additional custody fees incurred due to digital asset activity increases.

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Cash Flows for the Three Months Ended March 31, 2026 and 2025

Cash flows used in or provided by operating activities are affected primarily by net income or loss, adjusted for non-cash items including realized and unrealized loss on digital assets and investment, stock-based compensation, and changes in working capital.

For the three months ended March 31, 2026, net cash used in operating activities was $1.8 million, compared to $3.6 million for the three months ended March 31, 2025. The decrease in net cash used in operating activities period over period was driven primarily by differences in accounting classification and non-cash adjustments between the periods.

Although the Company generated a net loss of $65.1 million during the three months ended March 31, 2026, operating cash flows were favorably impacted by non-cash items, including $53.5 million of realized and unrealized losses on digital assets and digital asset receivable, $2.0 million of stock-based compensation expense, $1.4 million of impairment of digital asset receivable, and a $11.2 million net realized loss on investments. These non-cash losses reduced net income but did not result in corresponding cash outflows during the period. Because two of the Company's short-term loan receivable assets are presently non-performing, management expects that the Company will in future periods likely obtain less cash flow from those assets than anticipated and expected in comparison with prior periods. By comparison, during the three months ended March 31, 2025, the Company generated net income of $0.5 million, but cash used in operating activities was higher due primarily to cash outflows associated with purchases of investments, which were classified as operating activities under the Company's former accounting treatment as an investment company under ASC 946.

Cash flows used in investing activities are affected primarily by purchases and dispositions of digital assets and investments. For the three months ended March 31, 2026, net cash used in investing activities was $15.1 million, compared to $0 during the three months ended March 31, 2025. Cash used in investing activities during the current period was primarily attributable to purchases of SuiUSDe under the Company's SUI treasury strategy, as well as new investments in equity securities.

For the three months ended March 31, 2026, net cash provided by financing activities was $0, compared to $0.6 million of cash used in financing activities during the three months ended March 31, 2025. Cash used in financing activities during the three months ended March 31, 2025 related primarily to the repurchase of shares of the Company's common stock pursuant to the Company's stock repurchase program.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2026, we had cash and cash equivalents of $5.0 million, a decrease of $17.0 million from $22.0 million as of December 31, 2025. The decrease was driven primary by cash outflows related to purchases of SuiUSDe and other investing activities during the period.

The primary uses of the Company's existing liquidity and any funds raised in the future are expected to support the Company's SUI strategy and for other general corporate purposes, including funding operating expenses or to service debt to the extent we borrow or issue senior securities. In addition to cash and cash equivalents, the Company's investments may include temporary investments, consisting of cash equivalents (including stablecoins such as USDC), U.S. government securities, and high-quality debt securities with maturities of one year or less from the time of investment.

To support our ongoing liquidity and capital needs, we also have access to additional financing under the equity line of credit established pursuant to our purchase agreement with A.G.P./Alliance Global Partners ("A.G.P."). Subject to the terms and conditions of the agreement, we may, from time to time at our discretion, direct A.G.P. to purchase shares of our Common Stock, providing us with a flexible source of capital to fund operations or strategic initiatives. Any sales of Common Stock under the agreement will be made at our discretion and are subject to customary limitations, including share volume restrictions and conditions relating to market pricing and effectiveness of our registration statement. The A.G.P. purchase agreement provides additional optional capacity up to $500 million that we may utilize if needed to supplement liquidity.

Management believes our existing liquidity sources, together with the cash general from operations, will be sufficient to meet our liquidity needs in the short and long term. However, we recognize that a significant portion of our assets consist of SUI tokens, which are less liquid than cash and cash equivalents. As of March 31, 2026, approximately 99% of our SUI holdings are staked and subject to a one-day unbonding period, which may limit our ability to rapidly access liquidity from these assets. While we view our SUI holdings as long term strategic assets and do not currently expect to need to sell SUI to meet our operating liquidity requirements over the next twelve months, we may periodically sell SUI for general corporate purposes, including to generate cash for treasury management, acquisitions, or strategies that generate tax benefits in accordance with applicable law.

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In the short term, we expect to meet our operating expenses, investment activities, and working capital needs through our existing cash and cash equivalents and cash generated from operations.

We do not have material contractual obligations that we believe would impair our ability to meet our liquidity needs or otherwise impact our short- or long term financial condition. Our existing contractual arrangements, including our strategic advisory agreement with Karatage, advisory agreement with the Sui Foundation and agreements with key executives are not expected to materially affect our liquidity.

In the long term, our liquidity will depend on our ability to generate cash from operations, the performance and realizable value of our SUI holdings, and our ability to access capital markets or secure additional financing arrangements.

Summary cash flow data is as follows:

		For the Three Months Ended March 31,
Cash flows provided (used) by:		2026				2025
Operating activities		$	(1,799,772	)		$	(3,646,585	)
Investing activities			(15,130,000	)			-
Financing activities			-				(630,436	)
Net increase (decrease) in cash			(16,929,772	)			(4,277,021	)
Cash, beginning of period			21,936,274				6,026,110
Cash, end of period		$	5,006,502			$	1,749,089

CRITICAL ACCOUNTING ESTIMATES

Our financial statements are prepared in conformity with the Generally Accepted Accounting Principles in the United States of America ("GAAP"), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management's most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods.

In preparing the financial statements, management utilizes available information-including historical performance, industry benchmarks, and current economic conditions-to inform its estimates and judgments, with appropriate consideration of materiality. Actual results may differ materially from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.

As our operations have evolved to include blockchain-native treasury management, our critical accounting policies now encompass both legacy finance and digital asset activities. The critical accounting policies include fair value measurement of digital assets and digital asset receivable, digital asset loan receivable, as well as the application of the current expected credit loss ("CECL") model to digital asset receivable and digital asset loan receivable. The most significant estimates affecting the Company's results of operations and financial position currently relate to the following:

	·	Investment valuation: We continue to hold certain short-term, secured loans and equity-linked investments from our specialty finance operations. These assets are measured at fair value and are evaluated quarterly for impairment. Valuation inputs include expected cash flows, collateral assessments, and market comparables, with oversight from management and the Audit Committee.
	·	CECL: The Company estimates expected credit losses on digital asset loan receivable and digital asset receivable using a forward-looking CECL model. Significant judgments include counterparty creditworthiness, collateral coverage and volatility of the underlying digital assets, structure and duration of the arrangements, and current and forecasted market conditions. Changes in these assumptions could materially affect the allowance for expected credit losses and related results of operations.
	·	Impairment assessment of equity investments in privately held companies: The Company evaluates equity investments in privately held companies without readily determinable fair values for impairment based on qualitative factors, including the financial condition and operating results of the investee, changes in business strategy, market conditions, recent financing activities, and other company-specific events.
	·	Fair value of embedded derivatives associated with equity investments: Certain equity investments contain embedded derivative features that are required to be separately accounted for at fair value. The determination of fair value requires management to apply judgment in selecting valuation methodologies and key assumptions, including volatility, probability-weighted outcomes, and other inputs that may not be directly observable.
	·	Impairment assessment of certain digital asset receivables: The Company evaluates certain digital asset receivables carried at cost, net of impairment, for recoverability based on observable market data and qualitative factors, including volatility in the market prices of the underlying digital assets, protocol performance, liquidity conditions, counterparty considerations, and other relevant events or changes in circumstances.

We will continue to evaluate and disclose additional critical accounting policies as our operations expand and as new standards or interpretations emerge. For further detail, refer to our Annual Report.

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OFF-BALANCE-SHEET ARRANGEMENTS

During the three months ended March 31, 2026, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.