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

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes of Greenlane Holdings, Inc. and its consolidated subsidiaries ("Greenlane" and, collectively with the Operating Company and its consolidated subsidiaries, the "Company", "we", "us" and "our") for the quarterly period ended March 31, 2026 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and related notes of Greenlane Holdings, Inc. for the year ended December 31, 2025, which are included in our Annual Report on Form 10-K.

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q ("Form 10-Q") contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties that could cause actual results to differ materially, including those described under "Risk Factors" and elsewhere in this report. The Company undertakes no obligation to update forward-looking statements except as required by law. Many of the forward-looking statements are located in Part I, Item 2 of this Form 10-Q under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could" and similar expressions. Examples of forward-looking statements include, without limitation:

	●	our possible or assumed future results of operations;
	●	our business strategies;
	●	the success of our new digital asset treasury policy;
	●	the volatile and unpredictable changes in the price of BERA;
	●	the expected growth of the BERA ecosystem;
	●	the effects of future regulation;
	●	our compliance with Nasdaq listing requirements;
	●	our competitive position, industry environment and potential growth opportunities;
	●	our cash needs and financing plans;
	●	macroeconomic conditions, capital market disruptions, geopolitical developments, inflation, and cryptocurrency volatility;
	●	new or additional governmental regulation; and
	●	the other factors described in the "Risk Factors" section of this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Factors that might cause such a difference include those discussed in our filings with the SEC, under the heading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "2025 Annual Report") and in other documents that we file from time to time with the Securities and Exchange Commission (the "SEC").

Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances, or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, those listed below and those discussed in greater detail in Part I, Item 1A of the 2025 Annual Report under the heading "Risk Factors."

	●	our strategy, outlook, and growth prospects;
	●	general economic trends, trends in the industry, and the competitive markets in which we operate;
	●	our ability to raise capital on favorable terms, or at all, to support the continued growth of the business, including high inflation and increasing interest rates;
	●	the impact of governmental laws and regulations and the outcomes of regulatory or agency proceedings;
	●	fluctuations in U.S. federal, state, local, and foreign tax obligations and changes in tariffs;
	●	failure of our information technology systems to support our current and growing business;
	●	our ability to prevent and recover from Internet security breaches;
	●	our sensitivity to global economic conditions and international trade issues;
	●	the onset of an economic recession in the United States or other countries, including the impact of the ongoing wars, and their impact on the economy generally;
	●	the potential delisting of our Class A common stock from Nasdaq;
	●	increased costs as a result of being a public company; and
	●	our failure to maintain adequate internal controls over financial reporting.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.

The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Consequently, you should not place undue reliance on forward-looking statements.

Business Transformation Overview

Fiscal year 2025 represented a significant strategic transition for the Company, as it shifted its primary capital allocation focus from wholesale and distribution operations to a digital asset treasury strategy centered on BERA.

Historically, operating results were driven by warehouse-based wholesale and direct-to-consumer sales. During 2025, the Company materially reduced that legacy footprint, substantially exited warehouse inventory, and transitioned the remaining commerce business to an asset-light, drop-ship model. While the Company continues to operate a scaled-down wholesale / distribution business, its financial profile is substantially influenced by digital asset activity.

On June 26, 2025 and April 6, 2026, the Company completed reverse stock splits to maintain compliance with Nasdaq listing requirements. All share and per share amounts presented herein reflect the impact of these reverse stock splits for all periods presented.

In the fourth quarter of 2025, the Company completed a private placement with digital asset-focused investors. Transaction consideration consisted of cash, U.S. dollar-denominated stablecoins, and BERA, and the transaction established the capital base for the Company's digital asset treasury strategy while also supporting residual legacy operations.

As a result, period-over-period comparability is impacted by both the decline in legacy operating activity and the introduction of fair value accounting for digital assets.

Overview

Greenlane Holdings, Inc. is a publicly traded company with a digital asset treasury strategy focused on the acquisition, management, and strategic deployment of BERA, the native token of the Berachain blockchain network.

As of March 31, 2026, a substantial majority of the Company's balance sheet consisted of digital assets and U.S. dollar cash and dollar-pegged stablecoins, which are classified within cash and cash equivalents on the consolidated balance sheets. The Company's financial condition, liquidity profile, and results of operations are therefore significantly influenced by digital asset market conditions, including the fair value of its BERA holdings.

In addition to our digital asset treasury activities, the Company continues to operate a legacy lifestyle accessories commerce platform through vapor.com and related channels. Following the strategic transition in 2025, the legacy business was materially reduced in scale, warehouse operations were substantially exited, and the operating model shifted to an asset-light drop-ship structure.

Strategic Transformation

Greenlane historically operated as a distributor of lifestyle accessories and consumer products. Beginning in October 2025, management executed a strategic transformation following the closing of a $110.7 million private investment in public equity transaction led by crypto-native investors and supported by the Berachain Foundation (the "BERA Private Placement").

The BERA Private Placement provided the capital foundation for the new digital asset treasury strategy (the "BERA Strategy"). In connection with the transaction:

● The Company received cash and stablecoin proceeds and BERA tokens.

● The Board was reconstituted to include digital asset and capital markets expertise.

● A Digital Assets Committee was formed to oversee treasury strategy and risk management.

● The Company adopted a capital allocation model centered on BERA accumulation and deployment.

This transformation shifted the Company's principal activity from a predominately operating distribution infrastructure to managing a digital asset treasury strategy. As of December 31, 2025, the Company no longer maintained warehouse inventory and had transitioned the remaining commerce business to a drop-ship operating model.

The BERA Strategy

The Company has implemented a treasury policy that sets guidelines for digital asset diversification, liquidity, and risk management, and is overseen by the Board's Digital Asset Committee. The Company's digital asset treasury strategy, subject to these guidelines, consists of five core components:

1. Capital Deployment

The Company seeks to deploy capital raised through equity offerings and other transactions to acquire BERA through open market purchases or negotiated transactions. Capital deployment is governed by a disciplined strategy aimed at increasing long-term BERA-per-share.

2. Network Participation

The Company participates in Berachain's Proof of Liquidity ("PoL") consensus mechanism through staking and validator infrastructure. These activities may generate staking rewards denominated in BERA, which are variable and not guaranteed.

3. Governance Participation

Through ongoing participation in the Berachain ecosystem, the Company may earn Berachain Governance Token ("BGT"), a non-transferable governance token. BGT may provide governance influence within the ecosystem, subject to protocol rules. The Company does not control protocol governance and cannot assure that BGT will confer any anticipated influence or economic benefit.

4. Risk-Adjusted Yield Participation

The Company may selectively deploy BERA or stablecoins into decentralized finance ("DeFi") protocols within the Berachain ecosystem, subject to internal risk controls. Such activities involve smart contract risk, liquidity risk, counterparty risk, and regulatory uncertainty.

5. Capital Allocation Discipline

The Company may pursue strategic initiatives aligned with its digital asset treasury model, including validator partnerships, infrastructure investments, and capital markets transactions intended to enhance net asset value per share. There can be no assurance that such initiatives will generate positive returns.

BERA and the Berachain Ecosystem

Berachain is a decentralized, open-source, EVM-compatible layer-1 blockchain engineered for high throughput, low latency, and full compatibility with Ethereum tooling, smart contracts, and infrastructure. Berachain utilizes a novel PoL consensus mechanism that integrates network security with active liquidity provisioning. BERA is the native digital asset of the Berachain network and is used for transaction fees, staking, validator participation, and ecosystem incentives.

BERA is not legal tender, is not backed by any government or central bank, and may be subject to significant price volatility, regulatory uncertainty, and technological risk.

The Berachain ecosystem includes decentralized exchanges, lending protocols, liquidity pools, validator infrastructure providers, and governance mechanisms. The Company does not control the Berachain protocol, validator selection outcomes, or governance decisions. Protocol parameters, incentive structures, and token mechanics may change over time.

The Company's strategy assumes continued ecosystem development and network adoption. There can be no assurance that the Berachain ecosystem will achieve sustained adoption or that the PoL mechanism will perform as intended.

Treasury Holdings and Liquidity

The Company's liquidity is primarily derived from cash and cash equivalents on hand and is supplemented by digital asset holdings, which are subject to market volatility and liquidity constraints.

As of December 31, 2025, the Company's treasury holdings consisted of BERA, cash, and U.S. dollar-denominated stablecoins.

U.S. dollar-denominated stablecoins held directly in Company-controlled wallets that are readily convertible into U.S. dollars and subject to insignificant risk of changes in value are classified as cash equivalents. Stablecoins and stablecoin-related instruments deployed into DeFi protocols, staking arrangements, lending arrangements, synthetic yield strategies, or other activities that limit immediate redemption or introduce more than insignificant liquidity, counterparty, protocol, market structure, yield-strategy, or valuation risk are not classified as cash equivalents.

In connection with the October 2025 PIPE transaction, the Company agreed to certain contractual transfer restrictions on a portion of its BERA holdings. As of December 31, 2025, while these contractual provisions were in place, no operational lockup mechanism had been implemented, and the Company retained the ability to utilize such BERA for staking and other activities. An operational lockup mechanism was implemented in mid-February 2026, with restrictions scheduled to expire on April 23, 2026. Management concluded that, as of December 31, 2025, these contractual provisions did not impact the fair value measurement or classification of the Company's BERA holdings.

Legacy Distribution Business

The Company's legacy business consists of lifestyle accessories and consumer products historically distributed through wholesale and direct-to-consumer channels.

Revenue from the legacy segment declined significantly during fiscal 2025 and is expected to represent a decreasing proportion of overall Company activity.

The legacy business is currently managed to preserve liquidity and fulfill contractual obligations. The Company does not currently prioritize expansion of this segment. As of December 31, 2025, the Company no longer maintained warehouse inventory and had transitioned the remaining business to a drop-ship operating model supported by its existing e-commerce platform, vapor.com.

Regulatory Considerations

The regulatory framework for digital assets remains evolving and uncertain. For a discussion of risks related to digital assets and the Company's operations, see "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Reverse Stock Splits

On June 26, 2025, we filed a Certificate of Amendment to the A&R Charter with the Secretary of State for the State of Delaware ("SSSD"), which effected a one-for-seven hundred and fifty (1-for-750) reverse stock split (the "2025 Reverse Stock Split") of our issued and outstanding shares of Common Stock at 5:01 PM Eastern Time on June 26, 2025. As a result of the 2025 Reverse Stock Split, every seven hundred and fifty shares of common stock issued and outstanding were converted into one share of common stock. In lieu of fractional shares we rounded up to the next whole share, and accordingly, no fractional shares were issued in connection with the 2025 Reverse Stock Split.

The 2025 Reverse Stock Split did not change the par value of the Common Stock or the authorized number of shares of Common Stock. All outstanding options, restricted stock awards, warrants and other securities entitling their holders to purchase or otherwise receive shares of our Common Stock have been adjusted as a result of the 2025 Reverse Stock Split, as required by the terms of each security. The number of shares available to be awarded under our Amended and Restated 2019 Equity Incentive Plan have also been appropriately adjusted. See "Note 8 - Stockholders' Equity" for more information.

On April 2, 2026, we filed a Certificate of Amendment to the A&R Charter with the Secretary of State of the State of Delaware, which effected a one-for-eight reverse stock split of our issued and outstanding shares of Common Stock, effective April 6, 2026 (the "2026 Reverse Stock Split, and, together with the 2025 Reverse Stock Split, the "Reverse Stock Splits"). As a result of the 2026 Reverse Stock Split, every eight shares of Common Stock issued and outstanding were converted into one share of Common Stock. No fractional shares were issued in connection with the 2026 Reverse Stock Split. In lieu of fractional shares, stockholders otherwise entitled to receive a fractional share received a cash payment equal to such fraction multiplied by the closing sales price of the Common Stock as reported on the Nasdaq Capital Market on the trading day immediately preceding the effective date of the 2026 Reverse Stock Split.

All share and per-share amounts presented in this Quarterly Report have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Splits.

Nasdaq Minimum Bid Price Compliance

On March 25, 2026, Greenlane Holdings, Inc. (the "Company") received a written notice (the "Notice") from the Nasdaq Listing Qualifications Department of the Nasdaq Stock Market LLC ("Nasdaq") indicating that Nasdaq staff had determined to delist the Company's Class A common stock, par value $0.01 per share (the "Common Stock") from the Nasdaq Capital Market since it failed to maintain a minimum bid price of $1.00 per share for 30 consecutive business days, in violation of Nasdaq Listing Rule 5550(a)(2). The Company requested a hearing, which stayed the suspension of trading pending the outcome of the hearing.

On April 21, 2026, the Company was notified by Nasdaq that the Company has regained compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) and that the Company is therefore in compliance with the Nasdaq Capital Market's listing requirements.

As a result, the Company's hearing that had been scheduled for May 5, 2026, has been cancelled, and this matter is now closed. The Common Stock will continue to be listed and traded on The Nasdaq Capital Market.

Critical Accounting Estimates

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience, outside advice from parties believed to be experts in such matters, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. See "Note 2-Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a description of the significant accounting policies and methods used in the preparation of our consolidated financial statements.

Fair value measurement of digital assets

Beginning in the fourth quarter of 2025, crypto assets within the scope of ASU 2023-08 are measured at fair value with changes recognized in earnings. The Company primarily uses quoted prices in active markets for identical assets when available (Level 1 inputs). When such prices are not available, the Company utilizes observable market data from secondary sources, including pricing aggregators and broker quotes (Level 2 inputs). Management applies judgment in determining the principal market and evaluates the reliability of pricing sources, including volume, accessibility, and consistency across exchanges. In periods of market dislocation or limited liquidity, alternative valuation approaches may be applied. Differences in these assumptions could materially impact reported fair values and results of operations.

The Company also maintains supporting schedules of significant crypto assets and performs daily to monthly reconciliations between wallet activity and the general ledger. Stablecoins held in Company-controlled wallets that are readily convertible to U.S. dollars are classified as cash equivalents based on management's assessment of their high liquidity, short-term nature, and minimal risk of changes in value. This classification reflects the Company's conclusion that such holdings are economically equivalent to cash and are used in treasury management activities. The Company evaluates counterparty risk, redemption mechanisms, and market liquidity in determining this classification. Stablecoins and stablecoin-related instruments deployed into decentralized finance ("DeFi") protocols, staking arrangements, lending arrangements, synthetic yield strategies, or other activities that limit immediate redemption or introduce more than insignificant liquidity, counterparty, protocol, market structure, yield-strategy, or valuation risk are not classified as cash equivalents and are presented separately based on their nature and risk profile.

Digital asset fair value adjustments are non-cash and may significantly impact reported net income independent of operating performance of the wholesale and distribution segment.

Legal Contingencies

In the ordinary course of business, we are involved in legal proceedings involving a variety of matters. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We evaluate the associated developments on a regular basis and accrue a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine there is a reasonable possibility that we may incur a loss and the loss or range of loss can be estimated, we disclose the possible loss in the accompanying notes to the consolidated financial statements to the extent material.

We review the developments in our contingencies that could affect the amount of the provisions that have been previously recorded, and the matters and related reasonably possible losses disclosed. We make adjustments to our provisions and changes to our disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability of loss and the estimated amount of loss.

The outcome of these matters is inherently uncertain. Therefore, if one or more legal proceedings were resolved against us for amounts in excess of management's expectations, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected. See "Note 5-Commitments and Contingencies" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for additional information regarding these contingencies.

Recent Accounting Pronouncements

See "Note 2 - Summary of Significant Accounting Policies" of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a description of the significant accounting policies and methods used in the preparation of our condensed consolidated financial statements.

Results of Operations

The following table presents operating results for the three months ended March 31, 2026 and 2025, respectively:

		Three Months Ended March 31,
										% of Net revenue								Change
		2026				2025				2026				2025				$				%
Net revenue		$	448				1,469				100.0	%			100.0	%		$	(1,021	)			(69.5	)%
Cost of sales			231				748				51.6	%			50.9	%			(517	)			(69.1	)%
Gross profit			217				721				48.4	%			49.1	%			(504	)			(69.9	)%
Operating expenses:
Salaries, benefits and payroll taxes			1,434				1,267				320.1	%			86.3	%			167				13.2	%
Stock-based compensation - strategic advisory warrants			240				-				53.6	%			-				240				100	%
General and administrative			3,989				2,823				890.4	%			192.2	%			1,166				41.3	%
Depreciation and amortization			126				106				28.1	%			7.2	%			20				18.9	%
Total operating expenses			5,789				4,196				1,292.2	%			285.7	%			1,593				38.0	%
Loss from operations			(5,572	)			(3,475	)			(1,243.8	)%			(236.6	)%			(2,097	)			60.3	%
Other income (expense), net:
Interest income (expense), net			34				(391	)			7.6	%			(26.6	)%			425				(108.7	)%
Change in fair value of digital assets			(12,869	)			-				(2,872.5	)%			-				(12,869	)			100	%
Other income (expense), net			196				(1	)			43.7	%			(0.1	)%			197				(19,699.1	)%
Total other income (expense), net			(12,639	)			(392	)			(2,821.2	)%			(26.7	)%			(12,247	)			3,124.2	%
Loss before income taxes			(18,211	)			(3,867	)			4,065.0	%			(263.3	)%			(14,344	)			370.9	%
Provision for (benefit from) income taxes			-				-				-	%			-	%			-				-	%
Net loss			(18,211	)			(3,867	)			(4,065.0	)%			(263.3	)%			(14,344	)			370.9	%
Less: Net income attributable to non-controlling interest			149				-				33.3	%			-	%			149				100	%
Net loss attributable to Greenlane Holdings, Inc.		$	(18,360	)			(3,867	)			(4,098.2	)%			(263.3	)%		$	(14,493	)			374.8	%

Consolidated Results of Operations

Beginning in the fourth quarter of 2025, the Company's results reflect two reportable segments: the Wholesale and Distribution Segment and the Digital Asset Segment. Net revenue includes both net sales from the Company's legacy wholesale and distribution business and staking revenue generated from the Company's digital asset treasury activities. Cost of sales relates to the Wholesale and Distribution Segment, as staking revenue from the Digital Asset Segment does not currently have associated cost of revenue. Operating expenses are reviewed by management by reportable segment, as further described in "Note 11 - Segment Reporting."

Digital Asset Operations

Beginning in October 2025, the Company transitioned to a digital asset treasury strategy following a $110.7 million private investment in public equity transaction, which included cash, stablecoins, and BERA, the principal token of the Berachain ecosystem. During the remainder of 2025 and the three months ended March 31, 2026, the Company deployed a portion of its cash and stablecoin balances to acquire additional BERA.

During the fourth quarter of 2025 and into the first quarter of 2026, digital asset markets experienced broad-based volatility and price declines. The Company's BERA holdings were also impacted by market volatility. For the three months ended March 31, 2026, the Company recognized a fair value loss on digital assets of approximately $12.9 million. The Company also recognized approximately $0.4 million of staking revenue during the period.

Wholesale and Distribution Operations

During 2025, the Company reduced the scale of its warehouse-based wholesale and distribution activities and transitioned the remaining commerce business to an asset-light, drop-ship model supported by its existing e-commerce platform, vapor.com. The Company continues to operate this business, but at a reduced scale compared to the prior-year period.

Net Revenue

For the three months ended March 31, 2026, net revenue was approximately $0.4 million, compared to approximately $1.5 million for the same period in 2025, representing a decrease of approximately $1.0 million, or 70%. Net revenue for the three months ended March 31, 2026 included approximately $27 thousand of net sales from the Wholesale and Distribution Segment and approximately $417 thousand of staking revenue from the Digital Asset Segment. The year-over-year decrease was primarily attributable to lower sales volume, reduced inventory availability, and the transition of the legacy business to a lower-scale operating model, partially offset by staking revenue generated from the Digital Asset Segment. See "Note 11 - Segment Reporting" for additional information.

Cost of Sales and Gross Margin

For the three months ended March 31, 2026, cost of sales was approximately $0.2 million, compared to approximately $0.7 million for the same period in 2025, representing a decrease of approximately $0.5 million, or 69%. Cost of sales for both periods related exclusively to the Wholesale and Distribution Segment and did not include costs associated with staking revenue from the Digital Asset Segment. The decrease was primarily driven by lower legacy wholesale and distribution sales volume and the Company's transition to a reduced-scale, asset-light operating model.

Consolidated gross margin was approximately 48% for the three months ended March 31, 2026, compared to approximately 49% for the same period in 2025. The consolidated gross margin percentage reflects the inclusion of approximately $421 thousand of staking revenue from the Digital Asset Segment, which does not currently have associated cost of revenue, together with the reduced-scale Wholesale and Distribution Segment, which generated approximately $27 thousand of net revenue and approximately $231 thousand of cost of sales. Accordingly, consolidated gross margin is not directly comparable to the gross margin of the legacy wholesale and distribution business on a stand-alone basis. See "Note 11 - Segment Reporting" for additional information.

Salaries, Benefits and Payroll Taxes

Salaries, benefits and payroll taxes were approximately $1.4 million for the three months ended March 31, 2026, compared to approximately $1.3 million for the same period in 2025. The increase was primarily attributable to stock-based compensation expense related to employee equity awards granted in October 2025, partially offset by lower headcount and reduced legacy operating activity.

Stock based compensation - strategic advisory warrants

Stock-based compensation expense related to strategic advisory warrants was approximately $0.2 million for the three months ended March 31, 2026, compared to $0 for the same period in 2025. The increase was attributable to strategic advisory warrants issued in connection with the Company's digital asset treasury transition. These awards are accounted for under ASC 718, and the related grant-date fair value is recognized over the applicable service periods. The expense is non-cash in nature and is presented separately within operating expenses.

General and Administrative Expenses

General and administrative expenses were approximately $4.0 million for the three months ended March 31, 2026, compared to approximately $2.8 million for the same period in 2025. The increase was primarily attributable to higher legal, professional, advisory, insurance and public company costs. The 2026 period included approximately $2.3 million of elevated legal, professional, and advisory costs related to Nasdaq compliance and delisting appeal matters, reverse stock split activities, employment and compensation matters, legacy facility exits, and the termination of the new facility lease. These costs were elevated during the period and are not expected to recur at the same level in future periods.

Depreciation and Amortization Expense

Depreciation and amortization expense was approximately $0.1 million for each of the three months ended March 31, 2026 and 2025. Depreciation and amortization expense remained relatively consistent year over year as there were no significant additions to fixed assets during the period.

Interest income (expense), net

Interest income, net was approximately $34 thousand for the three months ended March 31, 2026, compared to approximately $0.4 million interest expense for the same period in 2025. The improvement was primarily attributable to the repayment of the Company's outstanding debt in February 2025.

Change in fair value of digital assets

Digital assets consisted primarily of BERA held in the Company's digital asset treasury. These assets are remeasured to fair value at the end of each reporting period, with changes recognized in earnings. For the three months ended March 31, 2026, the Company recognized a fair value loss of approximately $12.9 million, primarily driven by market fluctuations in BERA. As of March 31, 2026, the fair value of digital assets on the condensed consolidated balance sheet was approximately $34.2 million.

Other Income (Expense), Net

Other income (expense), net was an expense of approximately $0.2 million for the three months ended March 31, 2026, compared to approximately $0 for the same period in 2025. The increase in expense was primarily attributable to foreign currency remeasurement and related legacy balance sheet cleanup activity.

Liquidity and Capital Resources

As of March 31, 2026, the Company had approximately $13.3 million of cash and cash equivalents, $4.0 million in stablecoin-related instruments, $34.2 million in digital asset holdings, and working capital of approximately $13.8 million, compared to $32.5 million of cash and cash equivalents and working capital of approximately $28.9 million as of December 31, 2025. The decrease in working capital was primarily attributable to cash used in operations and purchases of digital assets during the quarter.

The Company's primary sources of liquidity to meet near-term operating needs are cash and cash equivalents, including qualifying U.S. dollar-denominated stablecoins, and proceeds from equity issuances. Stablecoin-related instruments that do not qualify as cash equivalents are excluded from cash and cash equivalents and presented based on their nature and risk profile.

Digital assets are subject to price volatility and market liquidity constraints, which may impact the Company's ability to convert such assets into cash at expected values or within desired timeframes.

The Company had no outstanding debt as of March 31, 2026. The Company may opportunistically access capital markets, including through its at-the-market offering program, but management does not believe the Company is dependent on additional financing to meet its near-term obligations.

The Company's contractual obligations are primarily limited to short-term vendor arrangements and are not material individually or in the aggregate. The Company's liquidity may be impacted by fluctuations in digital asset prices, timing of capital deployment, and other risks described in "Risk Factors."

On January 7, 2026, the Company entered into a Sales Agreement with Yorkville Securities, LLC pursuant to which the Company may, from time to time, offer and sell shares of its Class A common stock through or to Yorkville, acting as sales agent or principal. On January 7, 2026, the Company filed a prospectus supplement in connection with the ATM Offering for up to $5.4 million of shares of Class A common stock. As of the date of this Quarterly Report, the Company has not made any sales under the ATM Offering.

During the first quarter of 2026, the Company continued executing its digital asset treasury strategy. In connection with this strategy, the Company entered into token purchase and lending arrangements with Berachain Operations Corporation to facilitate BERA acquisition activity. The Company's maximum exposure under the lending arrangement during the quarter was $5.0 million, of which approximately $0.2 million remained outstanding as of March 31, 2026. The Company monitors these arrangements through its digital asset governance framework, including Digital Assets Committee oversight and related-party review procedures.

Liquidity Outlook and Going Concern

Management has evaluated the Company's ability to continue as a going concern in accordance with ASC 205-40. Based on the Company's current cash position, cash equivalents, digital asset holdings, and expected operating cash flows, management believes that there is no substantial doubt about the Company's ability to continue as a going concern for at least twelve months from the date of issuance of these condensed consolidated financial statements.

On April 7, 2026, the board of directors of the Company authorized the repurchase by the Company of up to $2 million of the Company's outstanding shares of Class A common stock (the "Repurchase Plan"). The Company may buy back its shares of Class A common stock from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, pursuant to Rule 10b-18 of the Exchange Act, and federal and state laws governing such transactions, through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, or one or more trading plans adopted in accordance with Rule 10b5-1 of the SEC or by any combination of such methods. The Repurchase Program does not oblige the Company to acquire any specific number of shares or any shares at all, and may be modified, discontinued, or suspended at any time. As of the date hereof, the Company has not made any repurchases under the Repurchase Plan.

The Company's near-term focus is maintaining liquidity, executing its digital asset treasury strategy, and aligning operating costs against its current business model. The Company may seek additional capital opportunistically depending on market conditions and strategic priorities.

As of March 31, 2026, the Company did not have any off-balance sheet arrangements that are reasonably likely to have a material effect on its financial condition, results of operations, or liquidity.

Cash Flows

The following summary of cash flows for the periods indicated has been derived from our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q:

		Three Months Ended March 31,
(in thousands)		2026				2025
Net cash used in operating activities		$	(4,830	)		$	(3,445	)
Net cash used in investing activities			(14,363	)			(16	)
Net cash provided by financing activities			-				11,078

Net Cash (Used in) Provided by Operating Activities

During the three months ended March 31, 2026, net cash used in operating activities was approximately $4.8 million. Operating cash use was primarily driven by the Company's net loss of $18.2 million, adjusted for non-cash items, including the $12.9 million fair value loss on digital assets, stock-based compensation, depreciation and amortization, and changes in working capital.

During the three months ended March 31, 2025, net cash used in operating activities was approximately $3.4 million, primarily driven by the Company's net loss of $3.9 million, adjusted for non-cash items and changes in working capital.

Net Cash Used in Investing Activities

During the three months ended March 31, 2026, net cash used in investing activities was approximately $14.4 million, primarily related to purchases of digital assets and stablecoin-related protocol instruments as part of the Company's digital asset treasury strategy.

During the three months ended March 31, 2025, net cash used in investing activities was approximately $16,000, primarily related to capital expenditures.

Net Cash Provided by Financing Activities

During the three months ended March 31, 2026, there was no cash provided by or used in financing activities.

During the three months ended March 31, 2025, net cash provided by financing activities was approximately $11.1 million, primarily consisting of approximately $19.0 million in proceeds from the February 2025 private placement, partially offset by approximately $8.0 million in debt repayments.