Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

Forum Markets, Incorporated is a financial technology company focused on developing infrastructure that supports the origination, financing, and distribution of RWAs through blockchain-enabled capital markets.

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 the first two quarters of disclosure under the new strategy.

The Company operates as a single reportable operating segment under Accounting Standards Codification (ASC) 280. The Company's operations are focused on blockchain infrastructure and operations, which are primarily related to holding, deploying, and managing digital assets and tokenization activities. These operations represent the Company's primary revenue-generating activities, and all assets of the Company's continuing operations are related to this single operating segment.

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 ETH 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.

Performance of Real-World Asset Investments

The Company's results are increasingly affected by its investments in income-generating real-world assets, including aircraft engines subject to operating leases and acquired loan portfolios. Revenue and cash flows from these assets depend on lessee and borrower performance, lease and loan terms, utilization, collateral values, and the timing and scale of additional asset acquisitions. Deterioration in credit quality, lessee or borrower default, or declines in asset or collateral values could adversely affect the Company's results of operations.

Digital Asset Price Volatility

The Company's results are sensitive to fluctuations in the market price of Ether (ETH), the cryptocurrency that powers the Ethereum blockchain, 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

Reinitiation of Share Repurchase Program

On April 15, 2026, the Company's Board of Directors unanimously authorized the reinitiation of the Company's share repurchase program, effective April 15, 2026, including authorization for repurchases in volumes that may exceed the limitations of the Rule 10b-18 safe harbor under the Exchange Act.

On June 29, 2026, the Board of Directors approved an amendment to the Company's existing share repurchase program (the "Repurchase Program"), which was scheduled to terminate on June 30, 2026. Pursuant to the amendment, the Repurchase Program has been extended for one year, through June 30, 2027. The Board of Directors also approved expanding the program to expressly authorize the Company to effect repurchases through derivative transactions, in addition to other methods of repurchase that may be available to the Company from time to time. The Board of Directors also reduced the aggregate repurchase authorization under the Repurchase Program from $250 million to $100 million.

The Board of Directors will determine the actual timing, number, and value of any shares repurchased under the Repurchase Program in its discretion using factors such as, but not limited to, stock price, trading volume, general market conditions, and the ongoing assessment of the Company's capital needs. There is no assurance of the number or aggregate price of any shares that the Company will repurchase. The Repurchase Program may be extended, suspended, or terminated at any time by the Board of Directors.

Special Committee and Review of Strategic Alternatives

On April 17, 2026, the Company announced that the Board of Directors had established a special committee (the "Special Committee") comprised entirely of independent directors to evaluate proposals aimed at narrowing the gap between the Company's current market value and the intrinsic value of its business and to identify an optimal outcome for stockholders. The Special Committee has been authorized to examine a full range of value-maximizing pathways available to the Company, including potential mergers with or acquisitions of private companies, the sale of the Company or material assets, partnerships with new capital partners to accelerate growth and platform development, or the return of substantially all of the Company's capital and assets to stockholders, in an orderly fashion and in a form to be determined, if no other proposal meets the Special Committee's valuation threshold.

Participation in AI Chip Infrastructure Financing

On April 8, 2026, the Company participated in an arrangement to deploy capital into short-term bridge loans financing the acquisition and deployment of NVIDIA Artificial Intelligence ("AI") chips - the graphics processing units that power modern AI data centers. Under the arrangement, a third-party AI infrastructure bridge credit originator may present the Company with short-duration financing opportunities, and the Company is not obligated to participate in any transaction. The arrangement is intended to target annualized returns in the mid-teens. The first contemplated transaction is expected to involve a U.S.-based neocloud operator, with the Company considering a commitment of $25 million to $50 million.

Second Amended and Restated Sales Agreement

As previously reported, on August 13, 2025, the Company entered into the Initial Sales Agreement with Clear Street to sell from time to time through Clear Street, acting as sales agent for the Company's ATM program, shares of the Company's Common Stock pursuant to the June Registration Statement and the Initial Prospectus Supplement. On August 22, 2025, the Company entered into the Amended Sales Agreement with Clear Street to, among other things, change the registration statement and prospectus supplement pursuant to which sales of the Common Stock were to be made to the WKSI Registration Statement and the WKSI Prospectus Supplement. On November 14, 2025, the Company entered into the Second Amended Sales Agreement with Clear Street and TCBI Securities, Inc., doing business as Texas Capital Securities ("Texas Capital Securities"), and together with Clear Street, the Agents, which, among other things, amended and restated the Amended Sales Agreement to include Texas Capital Securities as a sales agent.

On April 8, 2026, the Company entered into the Second Amended and Restated Sales Agreement with the Agents to cease all sales of Common Stock pursuant to the WKSI Registration Statement and WKSI Prospectus Supplement and to transition the program back to the June Registration Statement and Initial Prospectus Supplement. From and after the date of the Second Amended and Restated Sales Agreement, the Company will not sell any Common Stock pursuant to the WKSI Registration Statement and WKSI Prospectus Supplement, and any future sales will be made pursuant to the June Registration Statement and Initial Prospectus Supplement. There were no other material changes to the terms of the Second Amended Sales Agreement as a result of such amendments.

Side Letter Amendment No. 2 with Zippy

On June 30, 2026, the Company and Zippy, Inc. ("Zippy") entered into Side Letter Amendment No. 2 (the "Second Amendment") to the Series B-3 Preferred Stock Purchase Agreement, dated as of December 9, 2025, as previously amended by the Side Letter Amendment dated March 25, 2026 (as so amended, the "Zippy Purchase Agreement"). As further detailed below, the Company and Zippy entered into the Second Amendment in furtherance of the parties' ongoing strategic partnership, to provide both parties with greater flexibility with respect to the timing and measurement of the Final Make Whole Amount (as defined below) and to spread the risk associated with the performance of the Company's common stock by replacing the single true-up determination date with three separate measurement and payment dates.

Under the Zippy Purchase Agreement as previously in effect, the Company was obligated to pay Zippy a single "Final Make Whole Amount," measured as of a single true-up determination date of June 30, 2026 (the "Original True-Up Determination Date"), equal to the difference, if any, between the value of the Retained Stock (as defined in the Zippy Purchase Agreement) based on a per share price of $10.50 and the value of the Retained Stock based on the volume-weighted average price of the Company's common stock for the ten (10) trading days prior to that date.

The Second Amendment amends Section 6.2 of the Zippy Purchase Agreement to replace the single Original True-Up Determination Date with a trifurcated true-up framework consisting of three separate measurement and payment dates, a first true-up date of July 31, 2026, a second true-up date of September 30, 2026, and a third true-up date of December 31, 2026, each with its own independent make-whole calculation and payment obligation. During a corresponding sell period to each true-up date, Zippy may sell, in its sole discretion, up to a designated number of shares of the Company's common stock (up to 285,714 shares per period), and any eligible shares not sold during a prior period that are carried forward and become eligible for sale in the following period(s). After each true-up date, Zippy is required to deliver to the Company a written settlement statement, and the Company is required to pay the applicable make-whole amount, if any, in cash by wire transfer of immediately available funds within ten (10) business days after its receipt of the settlement statement (and in no event later than ten (10) business days after the applicable true-up date).

For each of the first two sell periods, the applicable make-whole amount equals the number of eligible shares actually sold during that period multiplied by the $10.50 per share price, less the aggregate gross proceeds Zippy received from those sales; no amount is payable with respect to unsold shares, and the make-whole amount is zero if gross proceeds equal or exceed the guaranteed amount. For the third true-up period, the make-whole amount is calculated both with respect to shares sold during the third sell period (measured against gross proceeds) and with respect to shares retained by Zippy through December 31, 2026 (measured against the volume-weighted average price of the Company's common stock for the ten (10) trading days prior to December 31, 2026), with Zippy able to elect sale or retention treatment for shares in any combination in its sole discretion. The Second Amendment provides that the three make-whole amounts are calculated on distinct, non-overlapping pools of shares so that no double recovery occurs, and that the Company's aggregate make-whole obligation will not exceed the amount necessary for Zippy to receive, in the aggregate, proceeds equivalent to $10.50 per share for each share originally comprising the stock consideration.

The Second Amendment also makes certain conforming changes, including (i) providing that the Company's obligation to pay the Final Make Whole Amount for purposes of the forfeiture provisions of the Zippy Purchase Agreement will be deemed satisfied if the Company timely pays each of the three true-up make-whole amounts, while confirming that the Company's failure to timely pay any such amount constitutes a failure to timely pay a cash amount for purposes of the "ETHZ Forfeiture Event" definition under the Zippy Purchase Agreement, and (ii) extending Zippy's monthly stock transaction reporting covenant through December 31, 2026 and applying it separately with respect to each true-up determination date.

Components of Results of Operations

Revenue

Aircraft engine rental revenue consists of lease income earned from leasing the Company's aircraft engines to third-party lessees, comprising fixed lease payments recognized on a straight-line basis over the lease term and variable payments based on engine usage. 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.

Cost of Revenue

Cost of revenue consists of cost related to the Company's aircraft engine rental agreements, including engine servicing agreements and depreciation on the aircraft engines.

General and Administrative

General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation, as well as professional fees (such as legal, accounting, and consulting services).

Other general and administrative expenses include 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 includes interest income recognized on loan receivables related to the Zippy loan portfolio and warehouse facility.

Interest Expense

Interest expense consists of interest incurred on outstanding debt obligations, primarily the Equities First loan and the Aave loan.

Other Expense

Other expense consists primarily of the reversal of previously recognized reward revenue associated with protocol-based incentive arrangements.

Change in Fair Value of Derivative Instruments

Change in Fair Value of Derivative Instruments consists of net realized and unrealized gains and losses on the Company's ETH-denominated derivative instruments. Gains and losses arise from changes in market prices and changes in fair value and settlement of the instruments, as applicable.

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.

Gain (Loss) on Make Whole Provision

Gain (loss) on make whole provision represents the estimated make whole amount pursuant to the Zippy shares in accordance with the Zippy Purchase Agreement.

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.

Consolidated Results of Operations

For the Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

The following table presents the results of our operations (in thousands) for the three months ended June 30, 2026 and 2025:

		Three Months Ended June 30,								Change
		2026				2025				$				%
Revenue:
Aircraft engine rental revenue		$	1,365			$	-			$	1,365				100
Total Revenue			1,365				-				1,365				100
Cost of Revenue:
Aircraft engine rental			967				-				967				100
Total Cost of Revenue			967				-				967				100
Gross Profit			398				-				398				100
Operating Expenses:
General and administrative			10,340				1,353				8,987				664
Total Operating Expenses			10,340				1,353				8,987				664
Loss From Operations			(9,942	)			(1,353	)			(8,589	)			(635	)
Other (Expense) Income:
Dividend income			418				-				418				100
Interest income			377				-				377				100
Other income			-				7				(7	)			(100	)
Interest expense			(238	)			-				(238	)			(100	)
Change in fair value of derivative instruments			636				-				636				100
Change in fair value of available for sale securities			80				-				80				100
Digital asset gains and losses			(6,437	)			-				(6,437	)			(100	)
Gain on make whole provision			2,685				-				2,685				100
Total other income (expense), net			(2,479	)			7				(2,486	)			(35,514	)
Loss Before Income Taxes			(12,421	)			(1,346	)			(11,075	)			(823	)
Income tax benefit			-				-				-				-
Net Loss From Continuing Operations			(12,421	)			(1,346	)			(11,075	)			(823	)
Net Loss From Discontinued Operations			(397	)			(381	)			(16	)			(4	)
Net Loss		$	(12,818	)		$	(1,727	)		$	(11,091	)			(642	)

Revenue

Revenue for the three months ended June 30, 2026 was $1.4 million. There was no revenue for the three months ended June 30, 2025. The increase compared to the prior period 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. Current revenues are primarily derived from aircraft engine leasing activities. Over time, the Company expects revenue generation to expand through the continued development of its tokenization strategies and related investment activities. The following discussion disaggregates total revenue into two primary revenue streams.

The following discussion disaggregates total revenue into two primary revenue streams.

i.

Aircraft engine rental revenue. Aircraft engine rental revenue was $1.4 million for the three months ended June 30, 2026. There was no aircraft rental revenue for the three months ended June 30, 2025. The increase was attributable to the acquisition of aircraft engines subject to operating lease arrangements during the period. Aircraft rental revenue is generally driven by the contractual lease rates, the timing of lease commencement, and the number of engines under lease during the period.

Cost of Revenue

Cost of revenues for the three months ended June 30, 2026 was $1.0 million. There was no cost of revenue for the three months ended June 30, 2025. The increase in cost of revenue compared to the prior year was attributable to depreciation and other costs related to our aircraft engine lease arrangements.

General and Administrative

General and administrative expenses for the three months ended June 30, 2026 were $10.3 million, compared to $1.4 million for the three months ended June 30, 2025.

The increase in general and administrative expenses compared to the prior year was driven primarily by higher professional fees of $4.0 million, consisting mainly of consulting, accounting, and legal costs incurred in connection with the Company's strategic initiatives. The increase was also attributable to higher marketing and public relations costs of $0.7 million, stock-based compensation expense of $3.7 million related to equity awards granted during the period, and higher public company costs of $0.3 million, including audit, SEC filing, and transfer agent fees.

Dividend Income

Dividend income for the three months ended June 30, 2026 was $0.4 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 period, as the Company did not have a significant USD balance to invest in securities.

Interest Income

Interest income for the three months ended June 30, 2026 was $0.4 million, reflecting interest earned on cash and interest-bearing accounts following the Company's capital-raising activities during 2025. Interest income also reflects interest earned on loan receivables. During the three months ended June 30, 2026, interest income recognized on loan receivables related to the Zippy loan portfolio and warehouse facility was approximately $0.3 million and $0.07 million, respectively.

There was no comparable interest income in the prior period, as these balances were generated during the current period.

Interest Expense

Interest expense for the three months ended June 30, 2026 was $0.2 million, primarily reflecting interest incurred on the Equities First Loan. There was no comparable, meaningful interest expense in the prior period.

Change in Fair Value of Derivative Instruments

Change in fair value of derivative instruments for the three months ended June 30, 2026 was $0.6 million, primarily reflecting the change in fair value of the Company's ETH-denominated derivative instruments entered into during the period in connection with the Company's disposition of digital asset holdings, as well as settlement and early termination of certain contracts during the period. There was no comparable change in the prior year, as the Company did not enter into or hold similar derivative instruments during that period.

Change in Fair Value of Available for Sale Securities

Change in fair value of available-for-sale securities for the three months ended June 30, 2026 was $0.08 million, reflecting unrealized gains and losses resulting from changes in market prices of equity investment securities acquired during the period. There was no comparable, meaningful change in the prior period, as these investments were not held previously.

Digital Asset Gains and Losses

Digital asset losses for the three months ended June 30, 2026 were $6.4 million, primarily reflecting approximately $6.4 million of unrealized losses resulting from changes in market prices of ETH and liquid staking incentive tokens held during the period. There were no digital assets held in the prior period.

Gain on Make Whole Provision

Gain 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 $2.5 million gain for the three months ended June 30, 2026, primarily driven by changes in the Company's stock price relative to the agreed valuation terms during the period. There was no comparable activity for the three months ended June 30, 2025.

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 Gaming Technology Platform. Accordingly, the results of these operations are presented as discontinued operations for all periods presented.

Net loss from discontinued operations for the three months ended June 30, 2026 was $0.4 million, primarily reflecting operating losses related to the Company's former pharmaceutical research operations, compared to net loss from discontinued operations of $0.4 million for the three months ended June 30, 2025.

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.

For the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

The following table presents the results of our operations (in thousands) for the six months ended June 30, 2026 and 2025:

		Six Months Ended June 30,								Change
		2026				2025				$				%
Revenue:
Aircraft engine rental revenue		$	2,453			$	-			$	2,453				100
Staking revenue			1,771				-				1,771				100
Total Revenue			4,224				-				4,224				100
Cost of Revenue:
Aircraft engine rental			1,473				-				1,473				100
Total Cost of Revenue			1,473				-				1,473				100
Gross Profit			2,751				-				2,751				100
Operating Expenses:
General and administrative			17,326				3,320				14,006				422
Total Operating Expenses			17,326				3,320				14,006				422
Loss From Operations			(14,575	)			(3,320	)			(11,255	)			(339	)
Other (Expense) Income:
Dividend income			472				-				472				100
Interest income			481				-				481				100
Other income			-				13				(13	)			(100	)
Interest expense			(1,238	)			-				(1,238	)			(100	)
Other expense			(2,231	)			-				(2,231	)			(100	)
Change in fair value of derivative instruments			(10,374	)			-				(10,374	)			(100	)
Change in fair value of available for sale securities			126				-				126				100
Digital asset gains and losses			(12,779	)			-				(12,779	)			(100	)
Change in fair value of long-term receivable derivative			(48,637	)			-				(48,637	)			(100	)
Loss on make whole provision			(1,200	)			-				(1,200	)			(100	)
Total other income (expense), net			(75,380	)			13				(75,393	)			(579,946	)
Loss Before Income Taxes			(89,955	)			(3,307	)			(86,648	)			(2,620	)
Income tax benefit			-				-				-				-
Net Loss From Continuing Operations			(89,955	)			(3,307	)			(86,648	)			(2,620	)
Net Income (Loss) From Discontinued Operations			873				(789	)			1,662				211
Net Loss		$	(89,082	)		$	(4,096	)		$	(84,986	)			(2,075	)

Revenue

Revenue for the six months ended June 30, 2026 was $4.2 million. There was no revenue for the six months ended June 30, 2025. The increase compared to the prior period 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 and the aircraft engine leasing activity.

The following discussion disaggregates total revenue into two primary revenue streams.

i.

Staking revenue. Staking revenue consists of native staking revenue, liquid staking revenue and reward revenue, each as more fully described below.

a.

Native staking revenue. Native staking revenue was $1.5 million for the six months ended June 30, 2026. There was no native staking revenue for the six months ended June 30, 2025. The increase was attributable to the commencement of the Company's native ETH staking activities during the second half of 2025. Native staking revenue is generally driven by the amount of ETH staked, applicable staking reward rates and validator arrangements, and the market price of ETH at the time rewards are earned and or received.

b.

Liquid staking revenue. Liquid staking revenue was $0.3 million for the six months ended June 30, 2026. There was no liquid staking revenue for the six months ended June 30, 2025. The increase was attributable to the commencement of the Company's liquid staking activities during the second half of 2025. Liquid staking revenue is generally driven by the amount of ETH deposited into liquid staking protocols, applicable protocol reward rates and incentive structures, and the market price of ETH at the time rewards are earned and or received.

ii.

Aircraft engine rental revenue. Aircraft engine rental revenue was $2.5 million for the six months ended June 30, 2026. There was no aircraft rental revenue for the six months ended June 30, 2025. The increase was attributable to the acquisition of aircraft engines subject to operating lease arrangements during the period. Aircraft rental revenue is generally driven by the contractual lease rates, the timing of lease commencement, and the number of engines under lease during the period.

Cost of Revenue

Cost of revenue for the six months ended June 30, 2026 was $1.5 million. There was no cost of revenue for the six months ended June 30, 2025. The increase in cost of revenue compared to the prior year was attributable to depreciation and other costs related to our aircraft engine lease arrangements.

General and Administrative

General and administrative expenses for the six months ended June 30, 2026 were $17.3 million, compared to $3.3 million for the six months ended June 30, 2025.

The increase in general and administrative expenses compared to the prior year was driven primarily by higher professional fees of $8.0 million, consisting mainly of consulting, accounting, and legal costs incurred in connection with the Company's strategic initiatives. The increase was also attributable to higher marketing and public relations costs of $1.6 million, stock-based compensation expense of $3.2 million related to equity awards granted during the period, and higher public company costs of $1.2 million, including audit, SEC filing, and transfer agent fees.

Dividend Income

Dividend income for the six months ended June 30, 2026 was $0.5 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 period, as the Company did not have a significant USD balance to invest in securities.

Interest Income

Interest income for the six months ended June 30, 2026 was $0.5 million, reflecting interest earned on cash and interest-bearing accounts following the Company's capital-raising activities during 2025. Interest income also reflects interest earned on loan receivables. During the six months ended June 30, 2026, interest income recognized on loan receivables related to the Zippy loan portfolio and warehouse facility was approximately $0.4 million and $0.1 million, respectively.

There was no comparable interest income in the prior period, as these balances were generated during the current period.

Interest Expense

Interest expense for the six months ended June 30, 2026 was $1.2 million, primarily reflecting interest incurred on the Equities First loan and the Aave loan, the latter of which was repaid during the first quarter of 2026. There was no comparable, meaningful interest expense in the prior period.

Other Expense

Other expense for the six months ended June 30, 2026 was $2.2 million, primarily reflecting the reversal of previously recognized reward revenue associated with the early exit from a protocol-based incentive arrangement. This expense was recognized during the first quarter of 2026, with no corresponding expense recognized during the three months ended June 30, 2026. Upon exit, the Company retained a pro rata portion of the incentive tokens earned during the participation period and returned a portion of previously granted tokens. There was no comparable expense in the prior-year period, as the Company did not participate in these arrangements until the second half of 2025.

Change in Fair Value of Derivative Instruments

Change in fair value of derivative instruments for the six months ended June 30, 2026 was $10.4 million, primarily reflecting the change in fair value of the Company's ETH-denominated derivative instruments entered into during the period in connection with the Company's disposition of digital asset holdings, as well as settlement and early termination of certain contracts during the period. There was no comparable change in the prior year, as the Company did not enter into or hold similar derivative instruments during that period.

Change in Fair Value of Available for Sale Securities

Change in fair value of available-for-sale securities for the six months ended June 30, 2026 was $0.1 million, reflecting unrealized gains and losses resulting from changes in market prices of equity investment securities acquired during the period. There was no comparable, meaningful change in the prior period, as these investments were not held previously.

Digital Asset Gains and Losses

Digital asset losses for the six months ended June 30, 2026 were $12.8 million, primarily reflecting approximately $124.6 million of realized losses recognized upon the sale, transfer, or redeployment of ETH, partially offset by approximately $111.8 million of unrealized gains resulting from changes in market prices of ETH and liquid staking incentive tokens held during the period. 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 period.

Change in Fair Value of Long-Term Receivable Derivative

The change in fair value of the long-term receivable derivative for the six months ended June 30, 2026 was $48.6 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. There was no comparable activity for the six months ended June 30, 2025.

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 $1.2 million loss for the six months ended June 30, 2026, primarily driven by changes in the Company's stock price relative to the agreed valuation terms during the period. There was no comparable activity for the six months ended June 30, 2025.

Net Income from Discontinued Operations

During the year ended December 31, 2025, the Company made a strategic decision to discontinue its pharmaceutical research operations and Gaming Technology Platform. Accordingly, the results of these operations are presented as discontinued operations for all periods presented.

Net income from discontinued operations for the six months ended June 30, 2026 was $0.9 million, primarily reflecting operating losses of approximately $0.5 million related to the Company's former pharmaceutical research operations and gain on settlement of liabilities of approximately $1.4 million related to a settlement with a former consultant.

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.

Non-GAAP Financial Measures

Although we believe that net income or loss, as determined in accordance with 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 is 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 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 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 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 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 Company defines EBITDA as earnings before interest, taxes, depreciation, and amortization, and Adjusted EBITDA as EBITDA plus stock-based compensation.

The reconciliation of Net loss from continuing operations, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA (in thousands) for the three and six months ended June 30, 2026 and 2025, is as follows:

		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2026				2025				2026				2025
Net Loss From Continuing Operations		$	(12,421	)		$	(1,346	)		$	(89,955	)		$	(3,307	)
Interest			238				-				1,238				-
Taxes			-				-				-				-
Depreciation and Amortization			936				-				1,409				-
EBITDA			(11,247	)			(1,346	)			(87,308	)			(3,307	)
Stock-based compensation1			3,813				103				3,917				681
Adjusted EBITDA		$	(7,434	)		$	(1,243	)		$	(83,391	)		$	(2,626	)

(1)

Represents non-cash stock-based compensation expense associated with employee and non-employee equity awards, including restricted stock units and performance stock units granted to directors and management, included in "General and administrative" expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Liquidity and Capital Resources

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 June 30, 2026 and December 31, 2025, the Company had $4.1 and $8.0 million of cash and cash equivalents on hand, respectively, and $44.0 million and $4.4 million of marketable securities, respectively.

Management monitors liquidity based on expected operating cash requirements, capital commitments and near-term obligations relative to available liquid resources and planned financing activities. Our liquidity management strategy focuses on maintaining sufficient liquidity to fund operations and support the execution of our strategic initiatives. Management also considers known uncertainties, including changes in market conditions that could affect the value and liquidity of certain assets and the timing of access to restricted balances.

The Company may also pursue additional offering transactions as needed to fund operations and financing obligations. Future offering transactions may include Common Stock (including through at-the-market sales under the Second Amended and Restated Sales Agreement), 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 business strategy, including potential periods of digital asset price volatility.

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.

We also maintain restricted cash equivalents, which are not available for general corporate purposes as they are subject to contractual restrictions (including being maintained as collateral under certain arrangements). These balances may become available for liquidity purposes upon the satisfaction of the applicable release conditions.

Cash Flows

As of June 30, 2026 and December 31, 2025, we had cash balances of $4.1 million and $8.0 million, respectively, and working capital surplus of $8.9 million and working capital deficit of $27.4 million, respectively.

Operating Activities

For the six months ended June 30, 2026, cash used in operating activities from continuing operations totaled $32.4 million compared to cash used in operating activities from continuing operations of $1.9 million for the six months ended June 30, 2025. Cash used in operating activities during the six months ended June 30, 2026 was primarily attributable to our net loss of $90.0 million, partially offset by non-cash items in the aggregate amount of $78.7 million, including a $48.6 million change in fair value of long term receivable derivative, a $10.4 million change in the fair value of derivative instruments, $12.8 million of digital asset gains and losses, and a $1.2 million loss on the make-whole provision, together with depreciation and amortization and stock-based compensation expense. Operating cash flows were also impacted by changes in operating assets and liabilities, primarily driven by a $14.0 million increase in prepaid expenses and other current assets, a $3.4 million decrease in accrued expenses, a $1.9 million decrease in accounts payable, $1.0 million increase in accounts receivable and a $0.9 million decrease in operating lease liabilities.

Our cash used in operating activities for the six months ended June 30, 2025 was primarily attributable to our net loss of $3.3 million, adjusted for non-cash expenses of $0.7 million, as well as $0.8 million of net cash provided by changes in operating assets and liabilities.

Investing Activities

For the six months ended June 30, 2026, cash provided by investing activities from continuing operations totaled $54.0 million compared to a de minimis amount of investing activity for the six months ended June 30, 2025. Cash provided by investing activities during the six months ended June 30, 2026 was primarily attributable to $128.1 million in proceeds from the sale of cryptocurrency, partially offset by $39.4 million of purchases of marketable securities, $0.8 million of purchases of digital assets, $16.8 million of purchases of aircraft engines, and $17.4 million of purchases of loan receivables. In addition, the Company had $0.4 million of cash inflows from repayments of loans receivable during the period.

Financing Activities

For the six months ended June 30, 2026, cash used in financing activities from continuing operations totaled $26.1 million compared to a de minimis amount of financing activity for the six months ended June 30, 2025. Cash used in financing activities during the six months ended June 30, 2026 was attributable to $31.3 million for the repurchase of common stock, and $0.3 million for the repayment of loans payable, offset by $5.5 million in net proceeds from shares issued for cash under the ATM Program.

Capital Requirements and Contractual Obligations

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 professional services agreements incurred in the ordinary course of business. 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 June 30, 2026, 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 12,441 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

Our Condensed Consolidated Financial Statements are prepared in accordance with GAAP and require management to apply judgment in selecting accounting policies and in making estimates and assumptions. These judgments and estimates affect the reported amounts of assets and liabilities, the recognition and presentation of revenues and expenses, and the disclosures included in these financial statements. Certain estimates are sensitive to changes in assumptions, including estimates that depend on market data and valuations, as well as the interpretation of contractual terms in our arrangements. Actual results could differ from our estimates, and those differences could impact our results of operations and financial position in future periods. There have been no material changes to our critical accounting estimates as compared to those disclosed in our Annual Report.

Significant Accounting Policies

See Note 2 - Summary of Significant Accounting Policies to our Condensed Consolidated Financial Statements included in this Report for a discussion about significant accounting policies relevant to the Company. Additional information regarding the Company's significant accounting policies is included in the Company's Annual Report.

Recently Issued Accounting Pronouncements

See Note 2 - 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.