# Sharplink, Inc. (SBET) 10-Q SEC filing - Q1 FY2026 - Filed: May 8, 2026, 4:16 PM EDT - Fiscal quarter: Q1 FY2026 - Calendar quarter: Q1 2026 - Accession: 0001493152-26-021981 - OpenCapital page: https://www.opencapital.sh/filings/0001493152-26-021981 - Markdown URL: https://www.opencapital.sh/filings/0001493152-26-021981.md - Official SEC filing index: https://www.sec.gov/Archives/edgar/data/1981535/000149315226021981/0001493152-26-021981-index.htm ## Filing documents - [10-Q (form10-q.htm)](https://www.sec.gov/Archives/edgar/data/1981535/000149315226021981/form10-q.htm) --- ## 10-Q SEC source: [form10-q.htm](https://www.sec.gov/Archives/edgar/data/1981535/000149315226021981/form10-q.htm) **UNITED STATES** **SECURITIES AND EXCHANGE COMMISSION** **Washington, D.C. 20549** **Form10-Q** (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2026 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_______ to ________ **Commission file number: 001-41962** **SHARPLINK, INC.** (Exact name of registrant as specified in its charter) | Delaware | 87-4752260 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | | 200 S. Biscayne Boulevard, | | | Floor 20 Miami, Florida | 33131 | | (Address of principal executive offices) | (Zip Code) | Registrant’s telephone number, including area code: **(612) 293-0619** Securities registered pursuant to Section 12(b) of the Act: **Title of Each Class** **Trading Symbol(s)** **Name of Each Exchange on Which Registered** Common Stock SBET The Nasdaq Capital Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “emerging growth company” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of May 4, 2026, there were 197,211,412 shares of Common Stock issued and outstanding. **TABLE OF CONTENTS** | | **PAGE** | | --- | --- | | [PART I. FINANCIAL INFORMATION](#m_001) | 3 | | [ITEM 1. FINANCIAL STATEMENTS:](#m_002) | 3 | | [Condensed Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025](#m_003) | 3 | | [Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (unaudited)](#m_004) | 4 | | [Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (unaudited)](#m_005) | 5 | | [Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited)](#m_006) | 6 | | [Notes to Condensed Consolidated Financial Statements (unaudited)](#m_007) | 7 | | [ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#m_008) | 37 | | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#JA_001) | 52 | | [ITEM 4. CONTROLS AND PROCEDURES](#JA_002) | 52 | | [PART II. OTHER INFORMATION](#JA_003) | 53 | | [ITEM 1. LEGAL PROCEEDINGS](#JA_004) | 53 | | [ITEM 1A. RISK FACTORS](#m_009) | 53 | | [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](#JA_005) | 77 | | [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](#JA_006) | 77 | | [ITEM 4. MINE SAFETY DISCLOSURES](#JA_007) | 77 | | [ITEM 5. OTHER INFORMATION](#JA_008) | 77 | | [ITEM 6. EXHIBITS](#JA_009) | 78 | | [SIGNATURES](#JA_010) | 79 | 2 **PART I. FINANCIAL INFORMATION** **ITEM 1. FINANCIAL STATEMENTS** **SHARPLINK, INC.** ### CONDENSED CONSOLIDATED BALANCE SHEETS _(In thousands, except share and per share data)_ | Line item | March 31, 2026 | December 31, 2025 | | --- | --- | --- | | | (unaudited) | | | Assets | | | | Current Assets | | | | Cash | $16,875 | $28,539 | | USDC stablecoin | - | 1,882 | | Accounts receivable, net of allowance for credit losses of $0 both periods presented | 461 | 221 | | Prepaid expenses and other current assets | 689 | 329 | | Current assets from discontinued operations | - | 182 | | Total current assets | 18,025 | 31,153 | | Crypto assets at fair value | 1,239,140 | 1,899,683 | | Crypto assets at cost | 486,852 | 500,912 | | Other assets | 21 | 18 | | Total assets | $1,744,038 | $2,431,766 | | Liabilities and Stockholders’ Equity | | | | Current Liabilities | | | | Accounts payable and accrued expenses | 5,437 | 12,748 | | Current liabilities from discontinued operations | - | 1 | | Total current liabilities | 5,437 | 12,749 | | Total liabilities | 5,437 | 12,749 | | Commitments and Contingencies (Note 10) | - | | | Stockholders’ Equity | | | | Common stock, $0.0001 par value; authorized shares 2,500,000,000; issued 201,063,967 and 200,584,713, respectively; outstanding shares: 199,125,509 and 198,646,255 respectively | 20 | 20 | | Treasury stock, 1,938,458 of common stock at cost | (31,721) | (31,721) | | Additional paid-in capital | 3,268,259 | 3,263,114 | | Accumulated deficit | (1,497,957) | (812,396) | | Total stockholders’ equity | 1,738,601 | 2,419,017 | | Total liabilities and stockholders’ equity | $1,744,038 | $2,431,766 | *See accompanying notes to these condensed consolidated financial statements.* 3 **SHARPLINK, INC.** ### CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS _(UNAUDITED) · (In thousands, except share and per share data)_ | Line item | 2026 / For the Three Months Ended March 31, | 2025 / For the Three Months Ended March 31, | | --- | --- | --- | | Revenue from staking | $11,501 | - | | Revenue from affiliate marketing | 557 | 742 | | Total revenue | 12,058 | 742 | | Gains and (losses) from operations | | | | Realized gain on crypto assets, net | 12,005 | - | | Unrealized loss on crypto assets at fair value, net | (506,664) | - | | Total losses from operations, net | (494,659) | - | | Operating expenses | | | | Cost of revenues from affiliate marketing | 432 | 610 | | Selling, general, and administrative expenses | 9,876 | 1,058 | | Impairment of crypto assets at cost | 191,670 | - | | Total operating expenses | 201,978 | 1,668 | | Operating loss | (684,579) | (926) | | Other income (expense) | | | | Interest income | 203 | 12 | | Other expense | (2) | - | | Total other income, net | 201 | 12 | | Net loss before income taxes | (684,378) | (914) | | Income tax expense | (1,183) | (3) | | Net loss from continuing operations | (685,561) | (917) | | Net loss from discontinued operations, net of tax | - | (58) | | Net loss | $(685,561) | $(975) | | Numerator for net loss per share - basic and diluted: | | | | Net loss from continuing operations | $(685,561) | $(917) | | Net loss from discontinued operations | - | (58) | | Net loss | $(685,561) | $(975) | | Denominator for net loss per share - basic and diluted: | | | | Basic and diluted weighted average shares for continuing and discontinued operations | 210,865,894 | 531,226 | | Net loss per share - basic and diluted | | | | Net loss from continuing operations per share - basic and diluted | $(3.25) | $(1.73) | | Net loss from discontinued operations per share – basic and diluted | - | (0.11) | | Net loss per share - basic and diluted | $(3.25) | $(1.84) | *See accompanying notes to these condensed consolidated financial statements.* 4 **SHARPLINK, INC.** **CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY** **FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025** **(UNAUDITED)** (In thousands, except share data) | Line item | Shares / Series A-1 preferred stock | Amount / Series A-1 preferred stock | Shares / Series B preferred stock | Amount / Series B preferred stock | Shares / Common stock | Amount / Common stock | Capital / Additional Paid-In | Shares / Treasury stock | Amount / Treasury stock | deficit / Accumulated | equity / Total shareholders’ | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Balance, December 31, 2024 | 601 | $1 | 1,040 | $1 | 407,295 | - | $79,920 | (8) | $(29) | $(77,809) | $2,084 | | Net loss | - | - | - | - | - | - | - | - | - | (975) | (975) | | Stock-based compensation expense | - | - | - | - | - | - | 69 | - | - | - | 69 | | Issuance of common stock for exercise of warrants | - | - | - | - | 25,000 | - | - | - | - | - | - | | Shares sold for cash | - | - | - | - | 142,960 | - | 907 | - | - | - | 907 | | Balance as of March 31, 2025 | 601 | $1 | 1,040 | $1 | 575,255 | - | $80,896 | (8) | $(29) | $(78,784) | $2,085 | | | Series A-1 preferred stock | | Series B preferred stock | | Common stock | | Additional Paid-In | Treasury stock | | Accumulated | Total shareholders’ | | | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Shares | Amount | deficit | equity | | Balance at December 31, 2025 | - | - | - | - | 198,646,255 | $20 | $3,263,114 | (1,938,458) | $(31,721) | $(812,396) | $2,419,017 | | Balance | - | - | - | - | 198,646,255 | $20 | $3,263,114 | (1,938,458) | $(31,721) | $(812,396) | $2,419,017 | | Net loss | - | - | - | - | - | - | - | - | - | (685,561) | (685,561) | | Stock-based compensation expense | - | - | - | - | - | - | 3,001 | - | - | - | 3,001 | | Shares issued for vested restricted stock | - | | - | - | 340,385 | - | - | - | - | - | - | | Settlement of accrued bonuses in shares (gross) of common stock | - | - | - | - | 490,273 | - | 5,040 | - | - | - | 5,040 | | Shares of common stock withheld for taxes for net share settlement | - | - | - | - | (351,404) | - | (2,896) | - | - | - | (2,896) | | Balance as of March 31, 2026 | - | - | - | - | 199,125,509 | $20 | $3,268,259 | (1,938,458) | $(31,721) | $(1,497,957) | $1,738,601 | | Balance | - | - | - | - | 199,125,509 | $20 | $3,268,259 | (1,938,458) | $(31,721) | $(1,497,957) | $1,738,601 | *See accompanying notes to these condensed consolidated financial statements.* 5 **SHARPLINK, INC.** ### CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS _(UNAUDITED) · (In thousands)_ | Line item | 2026 / Three Months Ended March 31, | 2025 / Three Months Ended March 31, | | --- | --- | --- | | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | Net loss | $(685,561) | $(975) | | Net loss from discontinued operations, net of tax | - | (58) | | Net loss from continuing operations | $(685,561) | $(917) | | Adjustments to reconcile net loss to net cash used in operating activities: | | | | Depreciation and amortization | 1 | 2 | | Stock-based compensation expense | 3,001 | 69 | | Impairment on crypto assets at cost | 191,670 | - | | Unrealized loss on crypto assets received at fair value, net | 506,664 | - | | Realized gain on crypto assets, net | (12,005) | - | | Rewards on native staking | (10,117) | - | | Rewards on liquid staking | (806) | - | | Rewards from protocol incentives and rebates | (981) | - | | Changes in assets and liabilities | | | | Accounts receivable | (62) | (58) | | Other receivable | - | 273 | | Due from Rsports Interactive, Inc. | - | (1) | | Prepaid expenses and other current assets | (360) | (35) | | Accounts payable and accrued expenses | (2,090) | 214 | | Net cash used in operating activities – continuing operations | (10,646) | (453) | | Net cash used in operating activities - discontinued operations | - | (61) | | Net cash used in operating activities | (10,646) | (514) | | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | Purchases of other assets | (4) | - | | Investment in Armchair Enterprises, Inc. | - | (500) | | USDC stablecoin redemptions | 1,882 | - | | Net cash provided by (used in) investing activities – continuing operations | 1,878 | (500) | | Net cash used in investing activities - discontinued operations | - | - | | Net cash provided by (used in) investing activities | 1,878 | (500) | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | Gross proceeds from sale of common stock | - | 907 | | Taxes paid related to net share settlement of equity awards | (2,896) | - | | Net cash generated by financing activities – continuing operations | (2,896) | 907 | | Net cash used in financing activities - discontinued operations | - | - | | Net cash (used in) provided by financing activities | (2,896) | 907 | | Net change in cash | (11,664) | (107) | | Cash, beginning of period including discontinued operations | 28,539 | 1,542 | | Cash, end of period including discontinued operations | 16,875 | 1,435 | | Less cash from discontinued operations | - | (60) | | Cash, end of period | 16,875 | 1,375 | | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | Cash paid for interest | - | - | | Cash paid for taxes | - | - | | NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES: | | | | Receipt of LsETH rebate receivable | $106 | - | | Deposits of crypto assets (ETH) at fair value for liquid staking activities | $197,455 | - | | Receipt of crypto assets (weETH) at cost for liquid restaking activities | $(205,844) | - | | Receipt of crypto assets (ETH) at fair value for redemption of crypto assets (LsETH at cost) | $(32,497) | - | | Redemption of crypto assets (LsETH) at impaired cost | $28,671 | - | | Stock-based bonus accrual settled with shares of common stock | $5,040 | - | *See accompanying notes to these condensed consolidated financial statements.* 6 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ### **Note 1 – Organization** ***Background and Nature of Business*** Headquartered in Miami, Florida, Sharplink, Inc. (the “Company” or “Sharplink”), a Delaware corporation, undertook a significant strategic shift in June 2025 by adopting Ether (“ETH”), the native cryptocurrency of the Ethereum blockchain, as its primary treasury asset. This strategy reflects the Company’s commitment to align the corporate treasury with the future of programmable finance, digital capital markets and decentralized infrastructure. The Company seeks to benefit from ETH accumulation, derived utilizing proceeds from multiple financings, by (i) potential ETH price appreciation and (ii) yield and other returns generated from staking and related treasury activities. We delegate our ETH to third-party validators (directly or via asset managers) and participate in both native and liquid staking and restaking programs. *See Note 3 – Crypto Asset Holdings*. The Company also operates an online affiliate marketing business that delivers unique fan activation solutions to its sportsbook and online casino gaming partners. The Company’s ETH Treasury Management strategy is now its predominant operational focus. Since the launch of its ETH Treasury Management strategy, the Company has raised capital through private investment in public equity (“PIPE”) transactions, follow-on offerings and at-the-market (“ATM”) sales. The Company has deployed the majority of the proceeds to acquire ETH (see *Note 3-Crypto Asset Holdings*). Additional details regarding these equity offerings are included in *Note 6 – Equity.* On February 2, 2026, the Company formally changed its corporate name to “Sharplink, Inc.” from “SharpLink Gaming, Inc.” in connection with a corporate rebranding initiative. ***Reverse Stock Split*** On May 5, 2025, the Company effected a one-for-twelve (1:12) reverse stock split of all the Company’s Common Stock, par value $0.0001 per share (the “Common Stock”), whereby the Company decreased the number of issued and outstanding Common Stock from 7,916,206 to 659,684. Proportional adjustments for the reverse stock split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retrospectively adjusted as of the earliest period presented in the financial statements to reflect the reverse stock split. ### **Note 2 – Summary of Significant Accounting Policies** ***(a)Basis of Presentation*** The accompanying unaudited condensed consolidated financial statements have been prepared by Sharplink, Inc. pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of Company management, the foregoing statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of March 31, 2026 and December 31, 2025, as well as its results of operations for the three months ended March 31, 2026 and 2025. The condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates. 7 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by rules and regulations of the SEC. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by GAAP for a complete financial statement presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 9, 2026. ***(b) Reclassifications*** We made certain reclassifications to prior period amounts presented on our condensed consolidated statements of operations to conform to the current period presentation. Specifically, costs of revenue from affiliate marketing have been reclassified into Operating expenses. ***(c)Principles of Consolidation*** The accompanying condensed consolidated financial statements include the accounts of Sharplink and its wholly owned subsidiaries. All intercompany accounts and transactions between consolidated subsidiaries have been eliminated in consolidation. ***(d)Use of Estimates*** The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to measurement of crypto assets at fair value; impairment of crypto assets at cost; stock-based compensation; income taxes, including the carrying value of deferred tax assets; and litigation and contingencies, including liabilities that the Company deems not probable of assertion. The Company bases its estimates on historical experience 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 equity that is not readily apparent from other sources. ***(e)Crypto Assets*** The Company’s crypto assets primarily consist of ETH, the native token of the Ethereum blockchain, liquid staking tokens (“LST”) and liquid restaking tokens (“LRT”). The Company’s LST and LRT holdings are comprised of both Liquid Collective’s LST (“LsETH”) and etherFi’s LRT (“weETH”). LsETH is a token received when ETH is staked through Liquid Collective, a third-party liquid staking protocol. weETH is a token received when ETH is staked through etherFi, a third party liquid restaking protocol. 8 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ETH is presented on the Condensed Consolidated Balance Sheet under the caption “Crypto assets at fair value” and LsETH and weETH are presented separately on the Condensed Consolidated Balance Sheet under the caption “Crypto assets at cost.” The Company has ownership of and control over its crypto assets which are held through custodial arrangements with third-party qualified custodians. These qualified custodians provide secure storage and safeguarding of the Company’s crypto assets, including ETH, LsETH and weETH. *Crypto assets at fair value (ETH)* Crypto assets acquired are initially recorded at cost, which represents the cash, cash equivalents or other financial assets paid to acquire the asset, including transaction fees. Crypto assets received in exchange for goods or services, or in connection with the issuance of shares, are recognized at their fair value on the date received, which becomes their cost basis. Crypto assets within the scope of ASC 350-60, *Intangibles—Goodwill and Other—Accounting for and Disclosure of Crypto Assets* (“ASC 350-60”), are subsequently measured at fair value in the statement of financial position with unrealized gains and losses resulting from changes in fair value recognized in net income (loss). The Company determines and records for each reporting period the fair value of its crypto assets in accordance with ASC 820, *Fair Value Measurement* (“ASC 820”)*,* based on quoted (unadjusted) prices on the Coinbase exchange, the active exchange that the Company has determined is its principal market for ETH (Level 1 inputs). Changes in the fair value are recognized in net income (loss) within “Unrealized loss on crypto assets at fair value, net,” while realized gains and losses from the de-recognition of crypto assets are included in “Realized gain on crypto assets, net” in the Company’s condensed consolidated statements of operations. The Company applies a first-in, first-out methodology to assign costs for purposes of determining crypto assets held and realized gains and losses. Purchases and sales of crypto assets are reflected as cash flows from investing activities in the condensed consolidated statements of cash flows. Deposits of ETH into liquid staking and restaking protocols, receipt of ETH from unstaking and redemption of receipt tokens, are presented as within non-cash investing activities in the condensed consolidated statements of cash flows. Receipt of ETH as staking rewards and incentives are presented as non-cash operating activities in the condensed consolidated statements of cash flows. *Crypto assets at cost (LsETH and weETH)* Crypto assets at cost are recognized at fair value on the date received, which becomes their cost basis. Crypto assets at cost, such as LsETH and weETH, do not fall in the scope of ASC 350-60 for subsequent measurement. LsETH and weETH represent a receipt token, which in general and by design, grants the holder an enforceable right to redeem ETH for which it was exchanged. Therefore, it fails the ‘other goods and services criterion’ in ASC 350-60-15-1(b) and is outside the scope of ASC 350-60. Crypto assets at cost are therefore subsequently measured at cost, net of any impairment losses incurred since acquisition, in accordance with ASC 350-30, *Intangibles—Goodwill and Other—General Intangibles Other Than Goodwill (*“ASC 350-30”*)*. The Company performs an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted (unadjusted) prices in the Company’s principal market, indicates that it is more likely than not that any of the assets are impaired. The quoted (unadjusted) prices on the Coinbase exchange, the active exchange that the Company has determined as its principal market, are used in the analysis of LsETH. Because weETH trades on multiple decentralized and centralized exchanges and no single market represents the principal market, we determine fair value using observable prices across multiple active exchanges, specifically utilizing the pricing data aggregator CoinGecko. The Company continuously monitors available data sources. In determining if an impairment has occurred, the Company considers the lowest price of one LsETH, as quoted on Coinbase, and one weETH, as determined by using observable prices across multiple active exchanges, respectively, at any time since acquiring the specific LsETH and weETH held by the Company. If the carrying value of a LsETH or weETH exceeds that lowest intraday price, an impairment loss has occurred with respect to that LsETH and weETH in the amount equal to the difference between its carrying value and such lowest price. Impairment losses are recognized in the period in which the impairment occurs and are reflected within “Impairment of crypto assets at cost” in the Company’s condensed consolidated statements of operations. The impaired crypto assets are written down to their fair value at the time of impairment and this becomes the new cost basis for those assets. The cost basis of LsETH and weETH will not be adjusted upward for any subsequent increase in fair value. 9 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) Receipt of LsETH and weETH in connection with the staking and restaking of ETH into a liquid staking protocols are presented as non-cash investing activities in the condensed consolidated statements of cash flows. Receipt of LsETH and weETH as rewards and incentives are presented as non-cash operating activities in the condensed consolidated statements of cash flows. ***(f)Revenue from Staking activities*** Beginning in June 2025, the Company began staking its ETH. To date, the Company’s staking activities comprise of (i) native staking activities, (ii) liquid staking and restaking activities, and (iii) protocol incentive generating activities tied to maintaining total value locked (“TVL”) within certain blockchain ecosystems. *Native Staking* The Company participates in native staking exclusively as a delegator through third-party validators. The Company delegates ETH to validators, either directly or through third party asset managers, who operate nodes on the Ethereum network to validate transactions and add blocks to the blockchain. In return for delegating ETH to validators, the Company is entitled to a portion of the block rewards and transaction fees earned by the validators, in the form of ETH tokens, calculated approximately based on the Company’s proportion of the total ETH staked. When the Company stakes ETH natively, the ETH does not remain in the Company’s custodial wallet, but is instead deposited into Ethereum’s staking deposit smart contract, which is required for participation in ETH staking as a delegator. Native staked ETH are not derecognized because their deposit into the smart contract does not give any other entity the right or ability to direct their use (for example, sell, lend, pledge or otherwise use those ETH). The withdrawal credentials in the smart contract are designated to the Company’s custodian, who, as described in *Note 2(e)*, holds the Company’s ETH solely for the Company’s benefit and does not obtain control of the Company’s ETH via their custodial services. Native staked ETH are therefore not derecognized. Rewards from native staking activities are recognized as revenue in accordance with ASC 606, *Revenue from Contracts with Customers* (“ASC 606”). The delegation of the Company’s ETH to validators represents an output of the Company’s ordinary activities. In this case our performance obligation is the provision of our validation rights to the validators, from which we earn variable consideration, in the form of ETH, which is non-cash consideration, measured at the fair value of ETH as of contract inception based on the quoted (unadjusted) prices on the Coinbase exchange, the active exchange that the Company has determined is its principal market. Revenue is recognized at the point in time when the Ethereum network confirms that the validation is complete. As a delegator, the Company has concluded it is not the principal to the block validation service provided to the Ethereum Network; it is the validators that control the service. Instead, the Company’s service is one of providing the use of its ETH by the validators to increase their validation opportunities. Consequently, the Company records staking revenue on a net basis, reflecting only the portion of protocol rewards to which it is entitled after validator commissions are deducted. For the three months ended March 31, 2026, fees paid to third-party asset managers of approximately $1,254 and custodians of approximately $327 are recognized separately as operating expenses. 10 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) *Liquid Staking and Liquid Restaking Activities* We also participate in liquid staking and restaking arrangements, whereby ETH is deployed into third-party protocols in exchange for LST and LRTs, such as LsETH and weETH, respectively. Staking with Liquid Collective represents the Company’s liquid staking activities, under which ETH is contributed to the Liquid Collective staking pool and LsETH is minted and received in return. Staking with etherFi represents the Company’s liquid restaking activities, under which ETH is deposited with etherFi and weETH is received in return. weETH is the wrapped, non-rebasing form of eETH, the token minted upon staking of ETH, and is designed for DeFi compatibility. Since LsETH and weETH are accounted for under ASC 350-30 (*see Note 2(e)*), increases in LsETH and weETH fair value while the Company remains staked with the liquid staking and restaking protocols, are not recognized. There is no ongoing performance obligation following the staking of ETH through the liquid staking and restaking protocol. Additionally, LsETH and weETH are non-rebasing token, meaning its quantity remains fixed over time. Staking rewards are not continuously reflected in token balances but are instead realized separately. Staking rewards are therefore recognized only when the LsETH or weETH are redeemed, measured at the fair value of ETH at contract inception, which is when the ETH were staked. Staking rewards received or receivable upon redemption of LsETH or weETH are presented in “Revenues from staking, net” in the Company’s condensed consolidated statements of operations. Upon staking ETH through the liquid staking and restaking protocols, the ETH is derecognized because the protocols obtain the ability to deploy and direct its use, and the LsETH and weETH token received concurrently are then recognized. Any gain or loss on the staking transaction is recognized in accordance with ASC 610-20, *Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets* (“ASC 610-20”) based on the difference between the carrying amount of the ETH staked and the fair value of the LsETH and weETH received; and included in “Realized gain on crypto assets, net” in the Company’s condensed consolidated statements of operations. For the three months ended March 31, 2026, the Company staked ETH and received weETH and recognized a realized gain of $8,389. When the Company initiates a redemption of LsETH or weETH, the Company derecognizes the LsETH and weETH at its carrying amount on the date the redemption request is accepted by the applicable protocol. At that time, the Company recognizes a receivable for the underlying ETH expected to be received upon completion of the protocol’s withdrawal process and additional staking rewards no longer accrue. The ETH receivable is initially measured at the fair value of the ETH expected to be received, including staking rewards, determined by the protocol’s exchange rate at the time of redemption. Any gain or loss on redemption is recognized in accordance with ASC 610-20 based on the difference between the ETH receivable and the cost basis of the LsETH or weETH at the time of redemption with such differences included in “Realized gain on crypto assets, net” in the Company’s condensed consolidated statements of operations. Rebates earned from the liquid staking activities are received in non-cash consideration in the form of LsETH and are reflected as revenue. In LsETH and weETH redemption transactions, the Company is exposed to changes in the market price of ETH between the date the redemption request is initiated and the date ETH is received. The Company evaluates whether such ETH receivables contain embedded derivatives that require bifurcation and separate accounting under applicable accounting guidance, ASC 815, *Derivatives and Hedging*. Any identified embedded derivative is measured at fair value, with changes in fair value recognized in earnings until settlement of the receivable. As of March 31, 2026, we did not have any receivables outstanding from such transactions. 11 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) For the three months ended March 31, 2026, the Company redeemed 15,182 LsETH and recognized the changes in the market price from the date of redemption to the date the ETH was received of $3,826, which is included in “Realized gain on crypto assets, net” in the Company’s condensed consolidated statements of operations. No weETH was redeemed for the three months ended March 31, 2026. *Protocol Incentives* On December 20, 2025, the Company executed a Strategic Partnership Agreement (“SPA”) with ether.fi, EigenCloud, Linea Consortium (a related party), and Consensys Software, Inc. (“Consensys”), (a related party), to bridge a minimum of $200,000 of weETH from its treasury onto Linea, a zkEVM Layer 2 network, over an initial 24-month period. The execution of the deliverables of the SPA was performed with our qualified custodian Anchorage Digital Bank N.A. as the intermediary. For the three months ended March 31, 2026, we have restaked $205,844 in weETH onto Linea. Separate from staking rewards from weETH, at redemption, as denoted above in *Liquid Staking and Liquid Restaking Activities*, we are entitled to monthly protocol incentives from ether.fi, Linea, and EigenCloud under the SPA. We have concluded that ether.fi, Linea, and EigenCloud are each customers under ASC 606, as they provide consideration in exchange for our service of providing and maintaining TVL on Linea, which is an output of our ongoing treasury operations. Protocol incentives, paid in the form of ETH and weETH, are based on month-end TVL metrics and subject to contractual caps. The quantity of incentives earned is not known or calculable by the Company until the end of the month and, until such time, is considered a variable consideration under ASC 606. Revenue from incentives are recognized over time as the Company satisfies its performance obligation of maintaining TVL, as customers simultaneously receive and consume the benefits of the service. Revenue is recognized on a monthly basis as the performance period is completed and the amount of consideration becomes determinable and no longer constrained, measured at the fair value of ETH and weETH at contract inception. We apply the variable consideration allocation exception in ASC 606-10-32-40, allocating each month’s variable consideration to the distinct monthly service period to which it relates. In accordance with ASC 606-10-32-21, such noncash consideration is measured at fair value at contract inception. Subsequent changes in the fair value of the underlying digital assets attributable solely to the form of consideration are not included in revenue and are recognized separately in earnings in accordance with applicable guidance as realized gains (losses) until the settlement date. *See Note 4 - Revenue Recognition for further disclosures* ***(g)Crypto Assets Receivable*** When redemptions of LsETH or weETH are initiated and protocol incentives are recognized, the Company is exposed to changes in the market price of crypto assets between the date the redemption request is initiated or the incentive is recognized and the date the underlying assets are received. Because settlement occurs in the form of crypto assets whose fair value fluctuates between recognition and settlement, and after evaluating the criteria in ASC 815-10-15-83, *Derivatives and Hedging,* the Company concluded that the receivable contains an embedded derivative that is not clearly and closely related to the host contract and therefore requires bifurcation. The embedded derivative is measured at fair value, with changes in fair value recognized in earnings in “Realized gain (loss) on crypto assets, net” until settlement. 12 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) The embedded derivative component is measured at fair value at each reporting date, using observable prices in the principal market in accordance with ASC 815-15 and ASC 820. Where quoted prices are directly available in active markets, the embedded derivatives are classified as Level 1 within the fair value hierarchy; if observable market prices are not available, management utilizes other relevant inputs and valuation techniques, which may result in Level 2 or Level 3 classification. Upon receipt, the Company derecognizes both the receivable and the embedded derivative, recognizing the crypto asset received at fair value. Any difference between the carrying amount and the fair value of ETH or weETH received is recognized as an unrealized gain or loss and included in “Unrealized loss on crypto assets at fair value, net” in the Company’s condensed consolidated statements of operations. For the three months ended March 31, 2026, we recognized realized losses on incentive tokens earned, due to changes in fair value, of $210 and unrealized losses upon the receipt of rebate and incentive tokens of $18. As of March 31, 2026, non-monetary receivables from liquid restaking activities were $214 and are included in accounts receivable on the condensed consolidated balance sheet. For the three months ended March 31, 2025, we did not have any liquid staking or liquid restaking activities. ***(h)USDC stablecoin*** USD stablecoin (“USDC”) is accounted for as a financial asset that can be redeemed on the basis of one USDC for one U.S. dollar on demand from the issuer. While not accounted for as cash or cash equivalents, the Company treats its USDC holdings as a liquidity resource. The Company’s USDC are held with qualified third-party custodians who provide secure storage and safeguarding of the Company’s USDC. The Company’s custodians do not obtain control over the Company’s USDC; therefore we continue to recognize USDC as our own for accounting purposes. For the three months ended March 31, 2026, we redeemed all of our USDC for U.S. dollars. ***(i)Affiliate Marketing Revenue Recognition*** The Company recognizes revenue in accordance with ASC 606. To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur; (iv) allocate the transaction price to the respective performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. For the three months ended March 31, 2026, the Company has recognized its revenue at a point in time for certain contracts and over time for other contracts. The timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in contract advanced billings on the Company’s condensed consolidated balance sheet. The Company recognized unbilled revenue when revenue is recognized prior to invoicing. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s services, and not to facilitate financing arrangements. The Company acts as an agent and records revenue net of commissions retained. 13 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ***(j)Fair Value Measurements*** The Company measures certain assets and liabilities at fair value on a recurring or nonrecurring basis. Fair value is defined as the price that is expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The three levels of the fair value hierarchy are described below: Level 1: Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Inputs other than quoted prices that are either directly or indirectly observable, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Inputs that are generally unobservable, supported by little or no market activity, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The categorization of an asset or liability within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The valuation techniques used by the Company when measuring fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company also estimates the fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and accrued compensation and employee benefits. The Company considers the carrying value of these instruments in the Condensed Consolidated Financial Statements to approximate fair value due to their short maturities. ***(k)Acquisition and Sale of 10% Equity Stake in Armchair Enterprise*** On February 24, 2025, Sharplink entered into a subscription agreement (“Subscription Agreement”) with U.K-based Armchair Enterprises Limited (“Armchair”), which owns and operates CryptoCasino.com. The acquisition of a 10% equity stake in Armchair was made for $500 in cash, along with a right of first refusal to acquire a controlling interest in Armchair. The investment was recorded at cost and was measured at cost minus impairment, adjusted for any observable price changes. The investment was sold in December 2025 for $500. ***(l)Recently Issued Accounting Pronouncements Not Yet Adopted*** In November 2024, the FASB issued ASU 2024-04, *Debt - Debt with Conversions and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments* (“ASU 2024-04”). ASU 2024-04 is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on its disclosures. 14 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) In November 2024, the FASB issued ASU 2024-03, *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses* (“ASU 2024-03”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date* (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for the Company for annual reporting periods beginning in fiscal 2027 and for interim reporting periods beginning in fiscal 2028 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its disclosures. ### **Note 3 – Crypto Asset Holdings** ***Crypto Assets at fair value*** The following table sets forth the units held, cost basis and fair value of crypto assets held at fair value, as shown on the condensed consolidated balance sheet as of March 31, 2026: Schedule of Crypto Assets At Fair Value  | in thousands, except number of ETH | Units | Cost Basis | Fair Value | | --- | --- | --- | --- | | ETH | 589,305 | $2,361,942 | $1,239,140 | The following table sets forth the units held, cost basis and fair value of crypto assets held at fair value, as shown on the condensed consolidated balance sheet as of December 31, 2025: | in thousands, except number of ETH | Units | Cost Basis | Fair Value | | --- | --- | --- | --- | | ETH | 640,026 | $2,515,856 | $1,899,683 | Fair value represents the quoted (unadjusted) prices on the Coinbase exchange as of midnight UTC on the measurement date. The following table represents a reconciliation of crypto assets held at fair value: Schedule of Reconciliation of Crypto Assets  _For the Three Months Ended March 31, 2026_ | | | | --- | --- | | Fair Value, Year Ended December 31, 2025 | $1,899,683 | | Deposits of ETH into liquid staking activities | (197,455) | | Receipt of ETH upon redemption in liquid staking activities | 32,497 | | Receipt and accrual of ETH rewards from native staking activities | 10,117 | | Protocol incentive rewards received in ETH from liquid restaking activities | 138 | | Receipt and accrual of ETH rewards from liquid staking activities | 806 | | Unrealized loss on crypto assets held | (506,646) | | Fair Value, March 31, 2026 | $1,239,140 | 15 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) For the three months ended March 31, 2025, the Company did not have any liquid or native staking activities. ***Crypto Assets at cost*** The following table sets forth the units held, the cost basis less prior year impairment, the current year impairment amount, and carrying amount of crypto assets held at cost, for LsETH and weETH as shown on the condensed consolidated balance sheet as of March 31, 2026: Schedule of Crypto Assets Crypto Assets at Cost  | in thousands, except number of Ls ETH and we ETH | Units | Cost | Impairment | Net | | --- | --- | --- | --- | --- | | LsETH | 189,327 | $472,498 | $(114,944) | $357,554 | | weETH | 66,102 | 206,024 | (76,726) | 129,298 | | Total | 255,429 | $678,522 | $(191,670) | $486,852 | The following table sets forth the units held, cost basis less year end impairment, as shown on the condensed consolidated balance sheet as of December 31, 2025: | in thousands, except number of Ls ETH | Units | Cost | Impairment | Net | | --- | --- | --- | --- | --- | | LsETH | 204,409 | $641,120 | $(140,208) | $500,912 | The following table represents a reconciliation of crypto assets held at cost, for LsETH and weETH, and activity for the three months ended March 31, 2026:  Schedule of Reconciliation of Crypto Assets | | | | --- | --- | | Balance, December 31, 2025 | $500,912 | | Beginning balance | $500,912 | | Receipt of weETH upon deposits of ETH into liquid restaking activities | 205,844 | | Redemptions of LsETH from liquid staking activities at cost less impairment | (28,671) | | Receipt of LsETH for rebate rewards | 257 | | Receipt of weETH for protocol incentive rewards | 180 | | Impairment loss | (191,670) | | Balance, March 31, 2026 | $486,852 | | Ending balance | $486,852 | For the three months ended March 31, 2026 and March 31, 2025, the Company recorded an impairment loss $191,670 and $0, respectively, related to its holdings of LsETH and weETH in accordance with ASC 350-30 see *Note 2(e) Crypto Assets.* The impairment is presented on “Impairment of crypto assets at cost” in the condensed consolidated statements of operations. 16 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) For the three months ended March 31, 2026, the Company redeemed 15,182 LsETH for 16,740 ETH and recognized a net gain of $3,826 which is included in “Realized gain on crypto assets at fair value, net” in the Company’s condensed consolidated statements of operations. The Company also recognized $9,387 of cumulative realized gains and $(999) of cumulative losses from liquid restaking activities of ETH to weETH, which is included in “Realized gain from crypto assets, net”, in the Company’s condensed consolidated statements of operations. For the three months ended March 31, 2025, the Company did not have any native or liquid staking activities. ### **Note 4 – Revenue Recognition** The Company is currently engaged in ETH Treasury Management activities and Affiliate Marketing services. ***ETH Treasury Management*** The following table provides additional breakdown of the Company’s revenue from staking activities: Schedule of Revenue Recognition _March 31, 2026_ | | | | --- | --- | | Revenue from contracts with customers | | | Native staking rewards | $10,117 | | Native staking fees | (403) | | Protocol incentives earned in ETH and weETH | 753 | | Rewards from native staking and liquid restaking, net | $10,467 | | Revenue from contracts with non-customers | | | Liquid staking rewards | 806 | | Rebates earned in LsETH | 228 | | Rewards from liquid staking | 1,034 | | Total revenue from staking, net | $11,501 | The Company participates in the following revenue generating transactions: staking and restaking activities on the Ethereum blockchain; earned rewards for securing and validating transactions; earned protocol incentives for providing and maintaining TVL on Linea. For the three months ended March 31, 2026, the Company earned total staking rewards of $11,501, of which $806 relates to liquid staking rewards received upon redemption of 15,182 LsETH, rebates earned of $228, $753 in protocol incentives, and $10,117 of rewards received from native staking, net of cash paid for staking fees $(403). Management has evaluated the nature of rewards received from liquid and restaking activities in accordance with the guidance in ASC 610-20 and 606-10-50-4 *Revenue from Contracts with Customers*. Management applies the noncash consideration guidance in ASC 606-10-32-21 and measures the revenue at the fair value of ETH at contract inception. While included within the same line item, management has disclosed separately the amount of revenue attributable to liquid staking and liquid restaking versus native staking, and evaluated the associated risks and timing of reward recognition. 17 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) The following is a summary of crypto assets staked (in units) as of March 31, 2026 and December 31, 2025: Schedule of Crypto Assets | Line item | March 31, 2026 | December 31, 2025 | | --- | --- | --- | | Unstaked ETH | 378 | 55,582 | | Native staked ETH | 588,927 | 584,443 | | Total LsETH | 189,327 | 204,409 | | Total weETH | 66,102 | - | | Total crypto assets | 844,734 | 844,434 | The following is a summary of total rewards earned from staking activities (in units) for the three months ended March 31, 2026: Schedule of Rewards Earned _March 31, 2026_ | | | | --- | --- | | Native staked ETH | 4,201 | | Redeemed liquid staked ETH | 283 | | Total staking rewards | 4,484 | The following is a summary of accounts receivable from rebates and incentive rewards earned but not yet received as of March 31, 2026 and December 31, 2025: Schedule of Accounts Receivable from Rebates and Incentive rewards | Line item | March 31, 2026 | December 31, 2025 | | --- | --- | --- | | Rebates receivable in LsETH | $70 | $106 | | Protocol incentive receivables in ETH | 92 | - | | Protocol incentive receivables in weETH | 122 | - | | Accounts receivable from rebate and protocol incentive rewards | $284 | $106 | For the three months ended March 31, 2025, the Company did not have any native, liquid staking or restaking activities. ***Affiliate Marketing*** The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. For the three months ended March 31, 2026 and 2025, the Company has recognized its revenue at a point in time. 18 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) The timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in contract advanced billings on the Company’s condensed consolidated balance sheet. The Company recognizes unbilled revenue when revenue is recognized prior to invoicing. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s services, and not to facilitate financing arrangements. The Company did not have any major customers for the period ended March 31, 2026 or December 31, 2025. ### **Note 5 – Additional Balance Sheet Information** ***Accounts payable and accrued expenses*** On December 15, 2025, the Company effected the separation of its former Co-Chief Executive Officer and entered into a severance agreement providing for cash payments to be made in installments beginning January 7, 2026 through December 15, 2026 and the acceleration of unvested RSUs (*See Note 8* - *Stock Compensation*). As of March 31, 2026 and December 31, 2025, the Company recorded an accrued severance liability of $981 and $2,125, respectively, which was included in accounts payable and accrued expenses on the condensed consolidated balance sheets. As of December 31, 2025, also included in accounts payable and accrued expenses were cash bonuses of $3,183 and $5,040 of equity bonuses to be settled in Common Stock. The cash bonuses were paid on February 5, 2026. For the three months ended March 31, 2026, the Company net share settled the accrued bonuses by issuing an aggregate of 490,273 shares of Common Stock to the employees and withholding a total of 351,404 shares of Common Stock for tax withholding purposes. For the three months ended March 31, 2026, the Company paid the relevant taxing authorities $2,896 related to issuances of shares of vested restricted stock (s*ee Note 8 - Stock Compensation*). ### **Note 6 – Equity** ***Preferred Stock*** The Company has 15,000,000 shares of undesignated preferred stock authorized, par value of $0.0001. There is no undesignated preferred stock issued or outstanding as of March 31, 2026 and December 31, 2025. 19 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ***Exchange of Series A-1 Preferred Stock and Series B Preferred Stock for Common Stock and Prefunded Warrants*** On April 2, 2025, Sharplink entered into an exchange agreement (“Exchange Agreement”) with Alpha Capital Anstalt (“Alpha”), whereby, pursuant to the terms and conditions set forth in the Exchange Agreement and in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), 600 shares of the Company’s Series A-1 Preferred Stock and 1,040 shares of the Company’s Series B Preferred Stock (collectively, the “Existing Securities”) held by Alpha were exchanged for38,683 shares of Sharplink’s Common Stock and 44,650 prefunded warrants to purchase shares of Sharplink’s Common Stock (“Alpha Prefunded Warrants”) at an exercise price of $0.012. With the exchange of Alpha’s Existing Securities for Common Stock and Alpha Prefunded Warrants, Sharplink no longer has any Series A-1 Preferred Stock or Series B Preferred Stock issued and outstanding. ***At-The-Market (“ATM”) Offerings*** On May 2, 2024, Company entered into an ATM Sales Agreement (the “May 2024 ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) pursuant to which the Company may offer and sell, from time to time, through A.G.P., as sales agent and/or principal, shares of the Company’s Common Stock, having an aggregate offering price of up to $1,700, subject to certain limitations on the amount of Common Stock that may be offered and sold by the Company set forth in the May 2024 ATM Sales Agreement. On February 4, 2025, the Company, under the terms of the ATM Sales Agreement, filed a prospectus supplement that amended the number of shares of Common Stock having an aggregate offering price of up to $1,800. On May 30, 2025, the Company entered into a second ATM Sales Agreement (the “May 2025 ATM Sales Agreement”) with A.G.P. relating to the sale of shares of the Company’s Common Stock from time to time, having an aggregate offering price of up to $1,000,000 (the “ATM Offering”). On July 17, 2025, the Company entered into an amendment to the May 2025 ATM Sales Agreement (the “Amendment”) with A.G.P to increase the number of shares that may be sold from time to time in connection with the ATM facility from $1,000,000 to $6,000,000; and to permit the forward sale of shares to be sold in the ATM Offering to master forward confirmation letter agreements. On July 17, 2025, the Company filed a supplement to the prospectus supplement with the SEC to address the Amendment and the forward sales agreements. On July 17, 2025, the Company entered into a forward sales agreement to permit the forward sale of shares of the Company’s Common Stock to A.G.P. The forward sales agreement was outstanding for one week and was settled with the purchase of 6,800,000 shares for $201,100. The Company accounted for the forward sales agreement as an equity instrument as the agreement required for physical settlement in shares of the Company’s Common Stock and did not require or permit net cash settlement. Accordingly, the contract was recorded in equity, and no gains or losses were recognized in earnings during the period. Upon settlement of the forward sales agreement, the proceeds were recorded as an increase to Common Stock and additional paid in capital as part of the ATM Offering. On August 19, 2025, the Company entered into an Amended and Restated Sales Agreement (“Amended and Restated Sales Agreement”) (which amended and restated the May 2025 ATM Sales Agreement) to add additional sales agents to the ATM Offering and to make certain conforming changes. 20 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) As of March 31, 2026, the Company has raised total gross proceeds of $2,147,073 from sales of shares under the Amended and Restated May 2025 ATM Sales Agreement. The proceeds were used to further the Company’s ETH Treasury Management strategy as well as provide for working capital. ***Equity Offerings*** $4.5 Million Offering On May 20, 2025, the Company entered into a securities purchase agreement (the “May 20, 2025 Purchase Agreement”) for an offering of 34,000 shares of Common Stock and pre-funded warrants to purchase up to 1,496,612 shares of Common Stock. The shares were offered at an offering price of $2.94 per share. The gross proceeds from the May 20, 2025 Purchase Agreement, before deducting the placement agent fees and offering expenses, were approximately $4,500. *See Note 7 – Warrants.* The issuance of shares and pre-funded warrants were recorded at the offering price within equity in accordance with ASC 505, *Equity*. Any amounts in excess of the par value of the shares were recorded in additional paid-in capital. $425 Million Offering On May 26, 2025, the Company entered into a securities purchase agreement for a private placement in public equity (“PIPE”), offering (the “May 2025 PIPE Offering”) an aggregate of (i) 58,699,760 shares of Common Stock of the Company at an offering price of $6.15 per share, and (ii) pre-funded warrants to purchase up to an aggregate of 10,400,553 shares of Common Stock at an offering price of $6.1499 per pre-funded warrant. Each of the pre-funded warrants is exercisable for one share of Common Stock at the exercise price of $0.0001 per pre-funded warrant share, are immediately exercisable, and may be exercised at any time until all of the pre-funded warrants issued in the May 2025 PIPE Offering are exercised in full. The gross proceeds from the May 2025 PIPE Offering, before deducting the placement agents fees and offering expenses, were approximately $425,000 funded in a combination of cash and Ether. On June 2, 2025, Sharplink launched its treasury reserve strategy with the commencement of its purchasing of ETH, serving as the Company’s primary treasury reserve asset. Consensys acted as the lead investor in the May 2025 PIPE Offering, along with prominent crypto venture capital firms and infrastructure providers, with an intent to assist the Company in earning distinction as one of the largest ETH-focused treasury strategies in the public markets. The Company also implemented native and liquid staking activities in the second quarter of 2025 to earn staking rewards from the Company’s digital assets held. *See Note 3 – Digital Asset Holdings, Note 7 – Warrants and Note 12 - Related Parties.* $200 Million Offering On August 6, 2025, the Company entered into a securities purchase agreement (the “August 2025 Purchase Agreement”) with certain institutional investors to sell in a registered direct offering (the “August 2025 Offering”) an aggregate of 10,256,411 shares of the Company’s Common Stock. The price per share was $19.50, and the gross proceeds from the August Offering, before deducting the placement agent fees, financial advisor fees, and offering expenses, were approximately $200,000. In addition, on August 6, 2025, the Company entered into a placement agency agreement (the “August 2025 Placement Agency Agreement”) with A.G.P., as lead placement agent and SG Americas Securities, LLC, as co-placement agent (“SocGen,” and together with AGP, the “Placement Agents”), pursuant to which the Company engaged the Placement Agents as the exclusive placement agents in connection with the August Offering. Cantor Fitzgerald & Co. (“Cantor”) acted as financial advisor to the Company pursuant to an engagement letter with the Company. Pursuant to the August 2025 Placement Agency Agreement, the Company paid the Placement Agents a cash fee equal to their pro rata allocation of 5.0% of the aggregate gross proceeds raised from the sale of the shares sold in the August Offering. The August 2025 Offering closed on August 8, 2025. 21 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) $400 Million Offering On August 10, 2025, the Company entered into a securities purchase agreement (the “Second August 2025 Purchase Agreement”) with certain institutional investors to sell in a registered direct offering (the “Second August Offering”) an aggregate of 18,382,353 shares of the Company’s Common Stock. The price per share was $21.76, and the gross proceeds from the Second August Offering, before deducting the placement agent fees, financial advisor fees, and offering expenses, were approximately $400,000. In addition, on August 10, 2025, the Company entered into a placement agency agreement (the “Second August 2025 Placement Agency Agreement”) with A.G.P. as the sole placement agent, in connection with the Second August Offering. Pursuant to the Second August Placement Agency Agreement, the Company paid A.G.P. a cash fee equal to 2.5% of the aggregate gross proceeds raised from the sale of the shares sold in the Second August Offering. The Second August 2025 Offering closed on August 12, 2025. $76.5 Million Offering On October 15, 2025, the Company entered into a securities purchase agreement (the “October 2025 Purchase Agreement”) with an institutional investor to sell in a registered direct offering (the “October 2025 Offering”) an aggregate of 4,500,000 shares of the Company’s Common Stock (the “October 2025 Shares”). The price per October 2025 Shares was $17.00, and the gross proceeds from the October 2025 Offering, before deducting the placement agent fees and offering expenses, were approximately $76,500. The Company used the net proceeds received from the October 2025 Offering to acquire ETH as well as for general working capital purposes. Under the October 2025 Purchase Agreement, the Company also granted the investor 90-day premium purchase contracts, which expired on January 15, 2026, to purchase up to an additional 4,500,000 shares of Common Stock at an exercise price of $17.50 (the “Premium Purchase Contract” and the shares of Common Stock issuable upon exercise of the Premium Purchase Contracts, the “Premium Purchase Shares”). The Premium Purchase Contract was classified as an equity instrument, valued at $8,586 and recorded in additional paid in capital. The remaining $67,914 of the $76,500 proceeds were allocated to Common Stock and also recorded in additional paid in capital, see *Note 7 - Warrants*. The premium purchase contracts were not executed prior to the January 15, 2026 expiration date. ***Share Repurchase Program*** On August 21, 2025, the Board approved a share repurchase program (the “2025 Repurchase Program”) providing for the repurchase of up to $1,500,000 of the Company’s outstanding shares of Common Stock. Under the 2025 Repurchase Program, the Company is authorized to repurchase shares of Common Stock through open market purchases, privately negotiated transactions, or otherwise in accordance with applicable federal securities laws. The 2025 Repurchase Program does not obligate the Company to repurchase shares of Common Stock, and the specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance metrics, market conditions, securities law limitations and other factors. In connection with the 2025 Repurchase Program, on August 21, 2025, the Company entered into an open market share repurchase agreement (the “Repurchase Agreement”) with a broker whereby the broker has agreed to act as a non-exclusive agent on behalf of the Company to repurchase shares of Common Stock in the open market. The Repurchase Agreement will continue in effect until terminated by either the Company or the broker, with or without cause, upon written notice to the other party. We will pay the broker a commission at a rate of $0.01 for each share of Common Stock repurchased pursuant to the Repurchase Agreement. 22 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) During the year ended December 31, 2025, the Company repurchased 1,938,450 shares of its Common Stock for $31,692. All repurchased shares are recorded as treasury stock. For the three months ended March 31, 2026, the Company did not repurchase any shares of its Common Stock. ***Common Stock*** On July 24, 2025, the Company held a special meeting of the stockholders and received approval for two proposals: (i) the adoption of the Company’s Amended and Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of Common Stock of the Company from 100,000,000 to 500,000,000; and (ii) the adoption of the Company’s Amended and Restated 2023 Equity Incentive Plan to increase the number of shares of Common Stock reserved for issuance thereunder by 8,000,000 to 8,034,166 shares. On September 25, 2025, the Company held a special meeting of stockholders and received approval for an amendment to the Company’s Certificate of Incorporation to increase the number of authorized and outstanding Common Stock from 500,000,000 to 2,500,000,000. The amendment was effective on September 25, 2025. The increase in authorized shares provides additional flexibility to support the Inducement Award Plan (as defined below), among other initiatives. ***Tokenization of Stock*** On September 24, 2025, the Company entered into a digital transfer agent agreement with Superstate Services LLC with the intent to tokenize the Company’s Common Stock on the Ethereum blockchain. As of the date of this filing, the Company has not tokenized any of its common stock. ### **Note 7 – Warrants** Following is a summary of the Company’s warrant activity for the three months ended March 31, 2026 and 2025: Schedule of Warrant Activity  | Line item | Number of Common Stock Underlying the Warrants | Weighted Average Exercise Price Per Share | Weighted Average Remaining Life (Years) | | --- | --- | --- | --- | | Outstanding as of December 31, 2025 | 22,616,449 | $5.48 | 3.54 | | Exercised | - | - | - | | Issued | - | - | - | | Expired | (4,500,000) | 17.50 | - | | Outstanding as of March 31, 2026 | 18,116,449 | $2.49 | 4.16 | The Company issued a Premium Purchase Contract (“PPC”) to an institutional investor for the right to purchase up to 4,500,000 shares of Common Stock in conjunction with the October 2025 Offering. The PPC was economically equivalent to a warrant and had an exercise price of $17.50 per share of Common Stock. The PPC expired on January 15, 2026 and was not exercised. 23 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) As of March 31, 2026, our total issued and outstanding warrants include 11,897,165 prefunded warrants of which 6,434,213 are held by the Company’s Chairman of the Board and 5,462,952 are held by Consensys, a related party. The prefunded warrants have an exercise price of $0.0001 and expire in May 2030 and were issued as part of the Equity Offerings discussed in *Note 6 – Equity*. Further, Consensys also holds 3,455,019 warrants to purchase the Company’s Common Stock with exercise prices ranging from $6.1500 - $7.995 and expire in May 2030 that were issued in connection with a Strategic Advisory Agreement entered into May 2025. *See Note 15 - Subsequent Events* for the exercise of pre-funded warrants in April 2026. The pre-funded warrants met the criteria for classification within stockholders’ equity as permanent equity, with no subsequent remeasurement required. | Line item | Number of Common Stock Underlying the Warrants | Weighted Average Exercise Price Per Share | Weighted Average Remaining Life (Years) | | --- | --- | --- | --- | | Outstanding as of December 31, 2024 | 50,569 | $1.07 | 7.71 | | Exercised | (25,000) | - | - | | Issued | - | - | - | | Expired | - | - | - | | Outstanding as of March 31, 2025 | 25,569 | $2.12 | 8.74 | ### **Note 8 – Stock Compensation** ***Inducement Award Plan*** On August 19, 2025, the board of directors (the “Board”) of the Company adopted the Sharplink, Inc. Inducement Award Plan (the “Inducement Award Plan”). The Board reserved 3,000,000 shares of the Company’s Common Stock for issuance under the Inducement Award Plan, including restricted stock units (time-based and performance-based), subject to adjustment as provided in the plan document. The terms of the Inducement Award Plan are substantially similar to the terms of the Company’s Amended and Restated 2023 Equity Incentive Plan, with the exception that incentive stock options may not be issued under the Inducement Award Plan, and equity awards under the Inducement Award Plan (including nonqualified stock options, restricted stock, restricted stock units, and other stock-based awards) may be issued only to an employee who is commencing employment with the Company or any subsidiary or who is being rehired following a bona fide interruption of employment by the Company or any subsidiary, in either case if he or she is granted such award in connection with his or her commencement of employment and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. In August 2025, the Company granted 443,385 restricted stock units to the newly appointed Co-CEO with 147,795 performance based awards and295,590 service based awards, under the Inducement Award Plan (see Restricted Stock Units - Performance Based below). 24 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ***Stock Options*** Option awards are generally granted with an exercise price equal to the market price of the Company’s Common Stock at the date of grant; those options generally vest based on three years of continuous service and have ten-year contractual terms. Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the plans. The Company has the following equity plans: Sharplink Ltd. 2021 Equity Incentive Plan and Sharplink, Inc. 2023 Equity Incentive Plan The Company did not grant any stock options for the three months ended March 31, 2026 and 2025, respectively. The Company recognized stock compensation expense for stock options of $1 and $36 for the three months ended March 31, 2026 and 2025. The summary of activity under the plans as of March 31, 2026, and change for the three months ended March 31, 2026, is as follows: Schedule of Stock Option Activity  | Line item | Shares of / Common Stock | Weighted / average / exercise / price | Weighted / average / remaining / contractual / term | Aggregate / intrinsic / value | | --- | --- | --- | --- | --- | | Outstanding as of December 31, 2025 | $8,906 | $91.56 | $2.5 | - | | Granted | - | - | | | | Exercised | - | - | | | | Forfeited | - | - | | | | Expired | (5,760) | - | | | | Outstanding as of March 31, 2026 | 3,146 | 122.88 | 6.4 | - | | Exercisable as of March 31, 2026 | $3,146 | $122.88 | $6.4 | - | The summary of activity under the plans as of March 31, 2025, and change for the three months ended March 31, 2025, is as follows: | Line item | Shares of / Common Stock | Weighted / average / exercise / price | Weighted / average / remaining / contractual / term | Aggregate / intrinsic / value | | --- | --- | --- | --- | --- | | Outstanding as of December 31, 2024 | 9,022 | $91.08 | 7.6 | - | | Granted | - | - | | | | Exercised | - | - | | | | Forfeited | - | - | | | | Expired | - | - | | | | Outstanding as of March 31, 2025 | 9,022 | $91.06 | 7.4 | - | | Exercisable as of March 31, 2025 | 6,924 | $96.28 | 7.4 | - | 25 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ***Restricted Stock Units- Service Based*** The Company’s Compensation Committee recommended to the Board and the Board approved the granting of certain restricted stock units (“RSUs”) to employees and the Board that vest over the passage of time. The Company recognized stock compensation expense for service based RSU awards of $2,934 and $33 for the three months ended March 31, 2026 and 2025, respectively. The following is a summary of service based RSU activity for the three months ended March 31, 2026: Schedule of Restricted Stock Units  | Line item | Number of / RSU Shares | Weighted / Average Grant / Date Fair Value | | --- | --- | --- | | Outstanding as of December 31, 2025 | 1,594,205 | $14.26 | | Granted | 632,932 | 10.36 | | Cancelled | (78,120) | 19.27 | | Vested | (830,658) | 15.33 | | Outstanding and unvested as of March 31, 2026 | 1,318,359 | $17.78 | The total unrecognized compensation cost related to unvested service based RSUs as of March 31, 2026 was $18,410. For the three months ended March 31, 2026, the grant date fair value of the vested and issued restricted stock was $12,731. The following is a summary of RSU activity for the three months ended March 31, 2025: | Line item | Number of / RSU Shares | Weighted / Average Grant / Date Fair Value | | --- | --- | --- | | Outstanding as of December 31, 2024 | 12,501 | $7.74 | | Granted | - | - | | Cancelled | - | - | | Vested | - | - | | Outstanding and unvested as of March 31, 2025 | 12,501 | $7.74 | 26 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ***Restricted Stock Units- Performance Based*** The Company’s Compensation Committee recommended to the Board of Directors and the Board approved the design of performance based restricted stock units (“Performance RSU”) for certain executive officers. The awards are intended to vest based on the achievement of specified financial and operational performance metrics over a three-year performance period, subject to continued service through the end of the performance period. The Company recognizes the stock-based compensation expense in connection with the Performance RSUs when they are granted or at the service inception date if the service inception date precedes the grant date. As of March 31, 2026, a grant date had not yet been established for 89,029 Performance RSUs because certain performance conditions and award parameters remained subject to the final determination by the Compensation Committee. The Company remeasures the fair value of the award at each reporting date, as the service date preceded the grant date. In the period in which the grant date occurs, cumulative compensation cost will be adjusted to reflect the cumulative effect of measuring compensation cost based on the fair value at the grant date rather than the fair value previously used at the service inception date or subsequent reporting dates. For the three months ended March 31, 2026, the Company recognized $66 in stock compensation expense. Unamortized stock compensation expense of $618 will be recognized through 2028 for 89,029 unvested options. ***Net Share Settlement of Restricted Stock Units*** Upon vesting of certain restricted stock units, the Company withholds a portion of the shares otherwise issuable to satisfy the employees’ statutory tax withholding obligation. As a result, the number of shares ultimately issued is less than the number of restricted stock units vested. During the period ended March 31, 2026, RSUs representing 830,658 shares vested on a gross basis, of which 351,404 shares were withheld to satisfy tax withholding obligations, resulting in 479,254 net shares issued to employees, executives and our former CEO. The shares withheld are treated as a repurchase of Common Stock and recorded as a reduction of $(2,896). ### **Note 9 – Income Taxes** On a quarterly basis, we estimate our annual effective tax rate and record a quarterly income tax provision based on the anticipated rate. As the year progresses, we refine our estimate based on the facts and circumstances, including discrete events, by each tax jurisdiction. The effective tax rate for the three months ended March 31, 2026 was 0.17% primarily due to the full valuation allowance for the Company’s deferred tax assets as of March 31, 2026, as well as the current tax expense of $(1,183) for the period ended March 31, 2026. The Company has NOLs available to offset a portion of the current year taxable income, subject to certain limitations. At each reporting period, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. On March 31, 2026, management has determined that there is not sufficient positive evidence to conclude that it is more likely than not that the Company’s net deferred tax asset will be fully realized. ### **Note 10 - Commitments and Contingencies** From time to time, the Company may enter into certain types of contracts that require it to indemnify parties against third-party claims. The conditions of these obligations vary. In addition, legal claims may be made against the Company in the ordinary course of business, which could result in legal proceedings. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, which could have a material adverse effect on the Company’s results of operations for that period or future periods. 27 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) The Company has entered into certain capital markets arrangements in connection with its Amended and Restated May 2025 ATM Sales Agreement (see *Note 7-Equity*) that include broker compensation provisions contingent upon future sales activity. Certain of these arrangements provide for a minimum broker fee over a specified period, which would be payable only in the event that aggregate fees generated under the ATM Offering do not meet the specified minimum threshold over a one-year period ending August 2026. The Company’s obligation, if any, under such provisions is contingent upon future ATM sales activity, which is discretionary and subject to prevailing market conditions, including volatility in the Company’s stock price and digital asset markets. As of March 31, 2026 and December 31, 2025, management concluded that it is not probable that the Company will incur a minimum broker fee shortfall. Accordingly, no liability has been accrued related to these arrangements. ***Risks and Uncertainties*** The Company holds ETH and ETH-related crypto assets with regulated custodians that safeguard the Company’s private keys. ETH and ETH-related crypto assets are controllable only by the possessor of both the unique public key and private key(s). The custodial services contracts do not restrict the Company’s ability to reallocate ETH and ETH-related crypto assets among custodians. The Company’s ability to access, transfer, or withdraw its crypto assets is therefore not contractually restricted, and the Company is able to convert or reallocate crypto assets as needed to meet operating requirements or settle obligations. A portion of the Company’s ETH is deployed in liquid staking protocols. Staked ETH and LsETH remain accessible to the Company, subject to the applicable unbonding or withdrawal periods of the underlying protocol. The Ethereum network permits withdrawals of staked ETH, and the Company has the ability to request and receive withdrawals in the normal course of business. The Company also assesses whether staking-related lock-ups or protocol-level withdrawal queues create any restrictions that would affect liquidity or the timing of settlement of obligations. The Company’s crypto assets are subject to fair value volatility. Changes in market prices directly affect the carrying value of crypto assets measured at fair value and may result in unrealized gains or losses. For crypto assets measured at cost less impairment, declines in observable market prices may result in impairment charges. The Company recognized a net fair value unrealized loss of ($506,664) and an impairment loss on its LsETH and weETH of $191,670 for the three months ended March 31, 2026, reflecting the decline in ETH prices during the period. Further, for the three months ended March 31, 2026, we recognized realizes losses and unrealized losses related to rebates and incentives received in the form of digital assets of $210 and $18, respectively. The Company’s custodial arrangements with Anchorage Digital Bank N.A. and Coinbase Inc. include operational controls designed to mitigate risks of loss, including multi-user approval quorums and internal controls requiring face-to-face authorization for non-recurring transactions. These quorums are unalterable by the users and provide safeguards for both the misappropriation of assets as well as mitigating the risk of a misstatement. While these controls reduce operational risk, the Company continues to evaluate counterparty, concentration, and operational risks associated with custodial relationships and considers these factors in assessing credit risk, fair value measurement inputs, and impairment indicators. The Company also deploys ETH using decentralized finance and liquid-style protocols. All trading and investment activity involves risk, which is heightened in the case of decentralized finance due to the irrevocable nature of blockchain transactions and the possibility of errors in smart contracts. These risks may affect the recoverability, valuation, or liquidity of crypto assets. Smart-contract vulnerabilities, protocol failures, or validator-level issues could result in partial or total loss of staked or deployed assets. The Company evaluates these risks when determining fair value hierarchy levels, impairment indicators, and whether any restrictions on use or withdrawal require separate disclosure. 28 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) The Ethereum protocol enforces ownership and withdrawal rights for staked assets. The safeguarding of staked digital assets is enforced at the base protocol level and is protected by security mechanisms that are trusted globally across the Ethereum network. These protocol-level assurances support the Company’s conclusion that staked ETH remains accessible and under the Company’s control for financial-statement purposes. The Company performs monthly and quarterly reconciliations of all wallet activity and staking revenue. The Company verifies the existence of a staking pipeline utilizing open-source smart contracts in the expected manner and in-line with on-chain protocols. These procedures support the Company’s assessment of existence, rights and obligations, and completeness of digital-asset balances and related revenue. ***Loan Agreement*** On November 26, 2025, the Company entered into a Master Lender Agreement (“Master Lender Agreement”) with FalconX Charlie Inc. (“FalconX”), whereas the Company may borrow U.S. dollars or specified digital assets under individually negotiated term sheets. Borrowings under the Master Lender Agreement are secured by collateral in the form of U.S. dollars, digital assets or eligible securities and are subject to initial collateral ratio and ongoing margin maintenance requirements. There is no defined minimum or maximum loan amount and FalconX has no obligation to approve a lending request. A monthly Loan Fee is calculated by the Lender and agreed on between FalconX and the Company. The Master Lender Agreement also contains normal representations and warranties and includes provisions on hard forks and a termination event tied to specific valuation thresholds. The Master Lender Agreement remains in effect until terminated by either party, provided any outstanding borrowings are repaid in full. There were no borrowings under the Master Lender Agreement for the three months ended March 31, 2026. ### **Note 11 – Net Loss Per Share** Basic net loss per share is calculated by dividing net loss available to Common Stockholders by the weighted-average number of Common Stock outstanding during the period excluding the effects of any potentially dilutive securities. As of March 31, 2026, the Company has issued and outstanding prefunded warrants that are exercisable at a nominal price and exercisable at any time by the holder (see *Note 7 - Warrants*). As such, the prefunded warrants have been determined to be equivalent to Common Stock and included in basic weighted-average Common Stock outstanding. As of March 31, 2025, there were no issued and outstanding prefunded warrants. Diluted net loss per share is computed similarly to basic loss per share, except that the denominator is increased to include the number of additional Common Stock that would have been outstanding if potential shares of Common Stock had been issued if such additional Common Stock were dilutive. As the Company had net loss from operations for the three months ended March 31, 2026 and a net loss from both continuing and discontinued operations for the three months ended March 31, 2025, the following presents anti-dilutive securities excluded from basic and diluted net loss per share calculated on the statement of operations as their inclusion would have been anti-dilutive. 29 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens)  Schedule of Computation of Diluted Shares Outstanding | Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | | --- | --- | --- | | Anti-Dilutive: | | | | Warrants | 6,219,284 | 25,568 | | Stock options | 3,146 | 6,924 | | Series A-1 preferred stock | - | 601 | | Series B preferred stock | - | 1,040 | | Unvested restricted stock Units | 1,318,359 | 12,501 | | Total Anti-dilutive | 7,540,789 | 46,634 | ### **Note 12 – Related Parties** ***Warrants Issued and Outstanding*** S*ee Note 7 - Warrant*s for warrants issued and outstanding held by the Company’s Chairman of the Board, who is also the CEO of Consensys, and warrants issued and outstanding held by Consensys, both considered to be related parties. ***Linea Consortium*** The Company is a founding member of the Linea Consortium, along with Consensys, a leading governance body supporting the development of Ethereum’s most aligned Layer 2 blockchain network. ### **Note 13 – Operating Segments** The Company’s Chief Executive Officer serves as the Chief Operating Decision Maker (“CODM”) and evaluates the financial performance of the business and makes resource allocation decisions on the basis of its two different revenue sources. The ETH Treasury Management segment captures ETH-based yield generated by participating in Ethereum network’s staking protocol which is currently comprised of rewards received from native and liquid staking. The Affiliate Marketing segment is focused on performance-based customer acquisition services for leading sportsbooks and online casino gaming operators throughout the world. The CODM assesses financial performance by segment for revenue, operating profit (loss) and key operating expenses, as well as significant segments assets, as detailed below. As a result, the Company operates two reportable segments under ASC 280, *Segment Reporting*, ETH Treasury Management and Affiliate Marketing. ***ETH Treasury Management*** In June 2025, the Company launched an ETH-centered treasury strategy and established ETH Treasury Management as a dedicated operating segment, delivering recurring, yield-based revenue and returns. The staking revenues are derived from the rewards the Company earns by actively participating in the Ethereum network’s proof-of-stake consensus mechanism. The Company delegates ETH holdings to validators that process and verify transactions on the blockchain. In return, the Company receives protocol-level rewards in ETH, typically proportional to the amount staked and the network’s overall activity and performance. Our ETH Treasury Management segment includes both native and liquid staking and restaking activities. In addition to the staking and restaking activities, the ETH Treasury Management segment receives monthly protocol incentives from Ether.fi, Linea, and Eigen Cloud under the SPA in exchange for providing and maintaining TVL on Linea. Total ETH Treasury Management net loss from continuing operations before income taxes was $(684,331) for the three months ended March 31, 2026. 30 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ***Affiliate Marketing*** The Company’s Affiliate Marketing operations include performance marketing services, lead generation and data analytics. The Company focuses on delivering quality traffic and player acquisitions, retention and conversions to global casino gaming partners worldwide in exchange for a commission (cost per acquisition or portion of net gaming revenues) paid to the Company by the partners for the new players referred to them. Total Affiliate Marketing net loss from continuing operations before income taxes was $(47) for the three months ended March 31, 2026 and $(914) for the period ended March 31, 2025. The following table presents significant segment assets regularly provided to and reviewed by the CODM for each operating segment as of the period ended March 31, 2026: Schedule of Companies Reportable Segments  | Line item | ETH Treasury Management | Affiliate Marketing | Total Consolidated | | --- | --- | --- | --- | | Cash | $16,334 | $541 | $16,875 | | Crypto assets at fair value | 1,239,140 | - | 1,239,140 | | Crypto assets at cost | 486,852 | - | 486,852 | | Other assets | 985 | 186 | 1,171 | | Total consolidated assets | $1,743,311 | $727 | $1,744,038 | The following table presents significant segment revenues and expenses regularly provided to and reviewed by the CODM for each operating segment for the three months ended March 31, 2026: | Line item | ETH Treasury Management | Affiliate Marketing | Total Consolidated | | --- | --- | --- | --- | | Revenue from staking, net | $11,501 | - | $11,501 | | Revenue from affiliate marketing | - | 557 | 557 | | Total revenue | 11,501 | 557 | 12,058 | | Gains and (losses) from operations | | | | | Realized gain on crypto assets, net | 12,005 | - | 12,005 | | Unrealized loss on crypto assets at fair value, net | (506,664) | - | (506,664) | | Total losses from operations | (494,659) | - | (494,659) | | Less: | | | | | Cost of revenues | - | 432 | 432 | | Salaries and benefits | 2,429 | 141 | 2,570 | | Stock-based compensation | 3,001 | - | 3,001 | | Bank fees | 327 | - | 327 | | Asset manager fees | 1,254 | - | 1,254 | | Accounting and Legal expenses | 1,251 | - | 1,251 | | Impairment of crypto assets at cost | 191,670 | - | 191,670 | | Other segment expenses (1) | 1,241 | 31 | 1,272 | | Segment net loss from continuing operations before income taxes | $(684,331) | $(47) | $(684,378) | (1) - other segment items included in Segment net loss include: consulting and compliance fees, general and administrative, insurance, other income and expenses. 31 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) The following table presents significant segment assets regularly provided to and reviewed by the CODM for each operating segment for the year ended December 31, 2025: | Line item | ETH Treasury Management | Affiliate Marketing | Total Consolidated | | --- | --- | --- | --- | | Cash | $28,021 | $518 | $28,539 | | USDC stablecoin | 1,882 | - | 1,882 | | Crypto assets at fair value | 1,899,683 | - | 1,899,683 | | Crypto assets at cost | 500,912 | - | 500,912 | | Other assets | 650 | 100 | 750 | | Total consolidated assets | $2,431,148 | $618 | $2,431,766 | The following table presents significant segment expenses regularly provided to and reviewed by the CODM for each operating segment for the three months ended March 31, 2025: | Line item | ETH Treasury Management | Affiliate Marketing | Total Consolidated | | --- | --- | --- | --- | | Revenue from affiliate marketing | - | $742 | $742 | | Total revenue | - | 742 | 742 | | Gains and (losses) from operations | - | - | - | | Realized gain on crypto assets, net | - | - | - | | Total losses from operations | - | - | - | | Less: | | | | | Cost of revenues | - | 610 | 610 | | Salaries and benefits | - | 303 | 303 | | Contractors and consulting expense | - | 71 | 71 | | Marketing expenses | - | 20 | 20 | | Other segment expenses (1) | - | 652 | 652 | | Segment net loss from continuing operations before income taxes | - | $(914) | $(914) | (1) - other segment items included in Segment net loss include: stock-based compensation, professional fees, general and administrative, insurance, other income and expenses. 32 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ***Revenue by Geographic Location*** Summarized revenues by country in which the Company operated for the three months ended March 31, 2026 and 2025 are shown below. All ETH Treasury Management revenue occurred within the United States. Schedule of Revenues by Country  **For the three months ended March 31, 2026:** | | | | --- | --- | | United States | $11,559 | | Rest of the World | 499 | | Revenue | $12,058 | **For the three months ended March 31, 2025:** | | | | --- | --- | | United States | $231 | | Rest of the World | 511 | | Revenue | $742 | The Company does not have material assets in foreign jurisdictions. ### **Note 14 – Discontinued Operations** In accordance with ASC 205-20, *Presentation of Financial Statements: Discontinued Operations* (“ASC 205-20”), a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major impact on an entity’s operations and financial results when the components of an entity meet the criteria in paragraph 205-20-45-10. In the period in which the component meets the held-for-sale or discontinued operations criteria, the major assets, other assets, current liabilities and non-current liabilities shall be reported as a component of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the income (loss) of continuing operations. 33 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) ***Sale of MTS*** The Company negotiated a Share and Asset Purchase Agreement which was closed on December 31, 2022. The majority of the assets of the primary reporting unit within MTS were sold. Accordingly, the assets and liabilities of the MTS business were separately reported as assets and liabilities from discontinued operations as of December 31, 2025. For the three months ended March 31, 2025, the results of operations and cash flows of MTS are separately reported as discontinued operations. As of March 31, 2026, the Company did not have significant assets and liabilities related to discontinued operations or significant results of operations or cash flows for the three months ended March 31, 2026. Therefore, the disclosures on discontinued operations is only relevant as of and for the three months ended March 31, 2025. **Summary Reconciliation of Discontinued Operations**  Schedule of Reconciliation of Discontinued Operations _March 31, 2025_ | Revenues | - | | --- | --- | | Cost of Revenues | (9) | | Gross Profit | 9 | | Operating Expenses | | | Selling, general, and administrative expenses | 69 | | Operating Loss | (60) | | Other income | 3 | | Total other income | 3 | | Loss before income taxes | (57) | | Income tax expense | 1 | | Loss from discontinued operations, net | $(58) | 34 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) The following table presents a reconciliation of the carrying amounts of major classes of assets and liabilities of the Company classified as discontinued operations as of December 31, 2025:  Schedule of Major Classes of Assets and Liabilities _December 31, 2025_ | | | | --- | --- | | Carrying amounts of major classes of assets included as part of discontinued operations: | | | Current assets | | | Cash | $37 | | Prepaid expenses and other current assets | 145 | | Total current assets | $182 | _December 31, 2025_ | | | | --- | --- | | Carrying amounts of major classes of liability included as part of discontinued operations: | | | Current Liabilities | | | Accounts payable and accrued expenses | $1 | | Total current liabilities | $1 | ### **Note 15 – Subsequent Events** *Pre-Funded Warrant Exercises* On April 14, 2026, the Company issued 5,462,952 shares of its Common Stock upon the exercise of 5,462,952 pre-funded common stock warrants with an exercise price of $0.0001, which were held by Consensys. On April 15, 2026, the Company issued 6,354,213 shares of its Common Stock upon exercise of 6,354,213 pre-funded common stock warrants with an exercise price of $0.0001, which were held by our chairman of our Board. *Termination of Asset Manager Agreements* On April 3, 2026, the Company entered into a mutual termination agreement with its two external asset managers, ParaFi Capital LP and Galaxy Digital Capital Management LP (the “Termination Agreements”). Pursuant to the Termination Agreements, each asset management agreement that was previously entered into on May 30, 2025 (the “Asset Management Agreements”) will be terminated effective May 31, 2026. 35 **SHARPLINK, INC.** **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** **THREE MONTHS ENDED MARCH 31, 2026 AND 2025** (dollar amounts in thousands, except share, per share data, and crypto asset tokens) Neither the Company nor the asset managers have any remaining or future obligations or commitments to the other party under the Asset Management Agreements other than those amounts pursuant to the Termination Agreements. Further, the Company is not required to pay any termination fees or penalties in connection with the mutual termination of the Asset Management Agreements. *Chief Accounting Officer* On May 6, 2026, the Board appointed Dana Perez, 48, the former Senior Vice President of Accounting as the Chief Accounting Officer, effective March 1, 2026. Ms. Perez has served as the Company’s Senior Vice President of Accounting since September 15, 2025. The foregoing description is qualified in its entirety by reference to the full text of the employment letter, which will be filed in the Company’s Form 10-Q for the quarter ended June 30, 2026. Ms. Perez is a Florida-licensed Certified Public Accountant with over 25 years of experience in SEC compliance and reporting, audit management, technical accounting, and financial statement preparation. Since 2020, she has served as the principal of Eschenburg Perez CPA, LLC, a financial consulting firm providing fractional CFO and controller services to public and private companies. Concurrently, she has served as Chief Financial Officer of Jupiter Neurosciences, Inc. (June 2021 to December 2022), MGO Global, Inc. (January 2024 to February 2025), and as Interim Chief Financial Officer of Capstone Companies, Inc. (January 2023 to present). From 2013 to 2021, Ms. Perez served as Chief Financial Officer of Adopt-A-Family of the Palm Beaches, Inc. Earlier in her career, she served as Manager, National Office of Risk Management, and Audit Manager at RSM US LLP. Ms. Perez holds a Master of Science in Accountancy and a Bachelor of Science in Accountancy from the University of North Carolina at Wilmington and is a member of the American Institute of Certified Public Accountants. There are no family relationships between Ms. Perez and any director or other executive officer, nor are there any transactions to which the Company was or is a participant and in which Ms. Perez has a material interest subject to disclosure under Item 404(a) of Regulation S-K. There are no arrangements or understandings between Ms. Perez and any other persons pursuant to which she was selected as an officer. 36 ## Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 2.** **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION** ***Cautionary Note Regarding Forward-Looking Statements*** *The discussions in this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions with respect to the future and management’s current expectations, involve certain risks and uncertainties and are not guarantees. These forward-looking statements include, but are not limited to, statements concerning our strategy, competition, future operations, future financial position, future revenues, projected costs, profitability, expected cost reductions, capital adequacy, expectations regarding demand and acceptance for our technologies, growth opportunities and trends in the markets in which we operate, prospects and plans and objectives of management. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” “predicts” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Future results may differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, as amended, and that are otherwise described or updated from time to time in our other filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2025. The discussion of such risks is not an indication that any such risks have occurred at the time of this filing. We do not assume any obligation to update any forward-looking statements.* ***Industry and Market Data*** *We are responsible for all information contained in this Quarterly Report on Form 10-Q. In some cases, we have relied on market and industry data from third-party sources we believe to be reliable. These market estimates combine independent industry publications with our own assumptions about the Ethereum industry and broader market. Although we are not aware of any material inaccuracies in this data, it involves risks, uncertainties, and is subject to change based on various factors and these factors may be outside of the control of the Company. These factors include those discussed under “Cautionary Note Regarding Forward-Looking Statements,” Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q.* *This section discusses the key factors that have shaped the financial condition, results of operations, liquidity and capital resources of Sharplink, Inc. and its wholly owned subsidiaries (collectively, “Sharplink,” the “Company,” “we,” “our,” or “us”). You should read this discussion together with our condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission on March 9, 2026.* *As noted under “Cautionary Note Regarding Forward-Looking Statements,” this discussion includes forward-looking statements that involve risks, uncertainties, and assumptions. Actual results could differ materially from those expressed or implied by these statements.* *Unless the context indicates otherwise, references in this Quarterly Report on Form 10-Q to” “Sharplink,” “Sharplink US,” “our Company,” “we,” “our,” and “us” refer to Sharplink, Inc., a Delaware corporation, and its wholly owned subsidiaries.* 37 **Business Overview** Headquartered in Miami, Florida, Sharplink, a Delaware corporation, undertook a significant strategic shift in June 2025 by becoming one of the world’s largest publicly traded companies to adopt Ether (“ETH”), the native token of the Ethereum blockchain, as its primary treasury asset. This strategy reflects the Company’s commitment to align our corporate treasury with the future of programmable finance, digital capital markets and decentralized infrastructure. The Company also operates an online affiliate marketing company that delivers unique fan activation solutions to its sportsbook and online casino gaming partners. In tandem with this transformation, Sharplink has streamlined its operations around two distinct reportable segments: **1) ETH Treasury Management.** We seek to benefit from our ETH accumulation strategy through (i) potential ETH price appreciation and (ii) yield and other returns generated from staking and related treasury activities. Through our qualified custodians, we participate in native staking by delegating ETH to third-party validators in Ethereum’s proof-of-stake (“PoS”) network, earning protocol-level rewards. We also participate in liquid staking and restaking arrangements, whereby ETH is deployed into third-party protocols in exchange for liquid staking tokens (“LSTs”) and liquid restaking tokens (“LRTs”), such as LsETH and weETH. In addition, we generate incentive-based revenue from third-party arrangements tied to maintaining total value locked (“TVL”) within certain blockchain ecosystems. Our staking infrastructure and custody arrangements are designed to meet the governance, security and control standards expected of a public company. **2) Affiliate Marketing.** Our Affiliate Marketing segment is focused on performance-based customer acquisition services for leading sportsbooks and online casino gaming operators worldwide. Through our iGaming affiliate marketing network, known as PAS.net, Sharplink focuses on driving qualified traffic and player acquisitions, retention and conversions to U.S. regulated and global iGaming operator partners worldwide. In addition, we own and operate a portfolio of direct-to-player, state-specific, affiliate marketing websites designed to attract, acquire and drive local sports betting and online casino gaming traffic to its valued partners which are licensed to operate in each respective state. **ETH Treasury Management Strategy** **WE ARE NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940, AND STOCKHOLDERS DO NOT HAVE THE PROTECTIONS ASSOCIATED WITH OWNERSHIP OF SHARES IN A REGISTERED INVESTMENT COMPANY NOR THE PROTECTIONS AFFORDED BY THE COMMODITIES EXCHANGE ACT.** Our decision to accumulate ETH as a core treasury asset is grounded in a forward-looking view of the evolving global financial ecosystem. We believe Ethereum’s unparalleled programmability, security and active developer ecosystem position it as a foundational layer for decentralized finance and Web3 applications. With Ethereum’s proof-of-stake consensus mechanism and the growth of highly scalable Layer 2 networks, ETH has evolved into a yield-bearing, productive crypto asset with increasing institutional adoption and intrinsic network value. We view ETH as a digital asset trust commodity, offering the potential for long-term appreciation and yield generation as more stablecoins and tokenized real-world assets leverage the Ethereum ecosystem. A key strategy of our ETH Treasury Management strategy is to raise capital to be used to increase our ETH holdings and generate yield opportunities in a manner which is accretive to shareholders. This can come in the form of equity, equity-linked debt, debt of any kind or any other contract or arrangement intended to fund the purchase of ETH, whether or not such financing is formally classified as debt or equity or other forms of offerings or arrangements (“Financings”), designed to maximize stockholder exposure to ETH within a prudent risk management framework. We also maintain the flexibility to buy back stock when it is accretive to stockholders. We have not set a specific target for the maximum amount of ETH we seek to hold. 38 We diligently track and routinely report key performance indicators (“KPIs”) designed to offer investors transparency and insight into the execution and effectiveness of our ETH Treasury Management strategies. Among these metrics, our ETH concentration (“ETH Concentration”), and growing it over time, has emerged as a central performance benchmark metric by which we gauge our progress. ETH Concentration or ETH per Share, which is calculated by dividing our total ETH holdings by every 1,000 Assumed Diluted Shares outstanding, reflects both the scale of our ETH accumulation efforts and the capital efficiency of our treasury operations. By prioritizing this metric, we underscore our commitment to driving long-term shareholder value, rather than short-term fluctuations in asset prices or market capitalization. Assumed Diluted Shares Outstanding (as defined below) represents the sum of (i) our actual shares of common stock, par value $0.0001 per share (the “Common Stock”) issued and outstanding as of the end of each reporting period, plus (ii) the additional shares that would be issued upon the assumed exercise or settlement of all outstanding warrants, pre-funded warrants, stock option awards, and restricted stock units (“Assumed Diluted Shares Outstanding”). Assumed Diluted Shares Outstanding is not calculated using the treasury stock method. It does not account for equity award vesting conditions, stock option exercise prices, or contractual restrictions limiting the convertibility of debt instruments. Additionally, it excludes any assumed share repurchases that would ordinarily be considered under the treasury stock method. We currently generate yield on our ETH holdings through native staking and liquid staking and restaking arrangements, which include participation in protocols that issue liquid staking tokens (“LSTs”) such as LsETH and liquid restaking tokens (“LRTs”) such as weETH. In native staking, our ETH is deposited into the Ethereum smart contract while withdrawal credentials remain controlled by our custodian, and the underlying ETH is not derecognized. Rewards earned from native staking are recognized as revenue as earned. In liquid staking and restaking arrangements, we deposit ETH into third-party protocols and receive LsETH or weETH, respectively, which are redeemable receipt tokens representing a claim on the underlying staked ETH and related rewards. Upon staking ETH through the liquid staking and restaking protocols, the ETH is derecognized and the LsETH and weETH token received concurrently are then recognized. Any gain or loss on the staking transaction is recognized based on the difference between the carrying amount of the ETH staked and the fair value of the LsETH and weETH received; and included in “Realized gain on crypto assets, net” in the Company’s condensed consolidated statements of operations. The LsETH or weETH received is recognized as an indefinite-lived intangible asset accounted for at cost less impairment. These receipt tokens may increase in value over time due to protocol-based reward mechanisms reflected in changes in exchange rates relative to ETH; however, such increases do not represent revenue and are not recognized in our financial statements until realized through redemption or sale. Revenue is also recognized for incentives earned from third-party arrangements, which are accounted for separately under applicable revenue recognition guidance. Importantly, our ETH Treasury Management strategy is complemented by our active participation in the Ethereum ecosystem. We are a founding member of the Linea Consortium, along with Consensys, see Note 12 - Related Parties, a leading governance body supporting the development of Ethereum’s most aligned Layer 2 blockchain network. Our participation in the consortium enables us to help steer capital allocation toward high-impact infrastructure, public goods and innovation pipelines that are intended to strengthen the long-term utility and defensibility of the Ethereum network, reinforcing the intrinsic value of our own ETH treasury assets. 39 ***Continuing Operations –*** **ETH Treasury Management** In June 2025, we formally launched our ETH-centered treasury strategy and established staking as a dedicated operating segment, reflecting its role in generating yield-based returns on our digital asset holdings. Our ETH Treasury Management segment includes both native staking and liquid staking and restaking activities. Through native staking, we delegate ETH to third-party validators that participate in the Ethereum network’s proof-of-stake consensus mechanism. In return, we earn protocol-level rewards in ETH, which are recognized as revenue as earned and are generally based on the amount of ETH staked and overall network activity. We also participate in liquid staking and restaking arrangements, whereby we deposit ETH into third-party protocols and receive liquid staking tokens (“LSTs”), such as LsETH, and liquid restaking tokens (“LRTs”), such as weETH. These tokens represent a redeemable claim on the underlying staked ETH and are accounted for as indefinite-lived intangible assets measured at cost less impairment. In addition to staking and restaking rewards, we earn incentive-based revenue from third-party arrangements related to maintaining TVL within certain blockchain ecosystems. These incentives are typically paid in digital assets and are recognized as revenue in accordance with applicable revenue recognition guidance. Changes in the value of LSTs and LRTs arising from protocol-based reward mechanisms are reflected in exchange rate movements relative to ETH and do not constitute revenue until realized through redemption or sale. Since initiating our ETH Treasury Management operations in June of 2025, we have accumulated approximately 872,984 in total ETH holdings, comprised of 590,823 in native ETH and 209,789 and 72,372 ETH on an as if redeemed basis from LsETH and weETH, respectively, as of May 4, 2026. The ETH holdings were derived through purchases of ETH, receipts of ETH from investors and ETH rewards. For the three months ended March 31, 2026, revenues generated from native staking rewards totaled $10,467. These native staking rewards represent the ETH-based rewards accumulated through the delegation of ETH to staking validators, which we expect to scale materially in future quarters in correlation with growth in our treasury balance and broader ETH market performance. The foregoing revenue does not include staking rewards generated from our LsETH or weETH holdings. These receipt tokens increase in value over time due to protocol-based reward mechanisms reflected in changes in exchange rates relative to ETH; however, such increases do not represent revenue and are not recognized in our financial statements until realized through redemption or sale. See Liquid Staking and Wrapped Ether Protocol disclosure below. We view our ETH Treasury Management operations as a core strategic pillar and its broader alignment with the Ethereum ecosystem. Our current and future strategy includes pursuing yield and performance through staking and other treasury activities designed to generate yield and other returns, while contributing directly to Ethereum’s decentralization, scalability, and security. Moreover, we believe staking is foundational to a new generation of blockchain-native capital structures that enable corporations to earn yield without relying on traditional debt instruments, equities, or centralized intermediaries. Our staking and treasury efforts are focused on maximizing risk-adjusted yield, managing operational and market risks, and ensuring our operations meet institutional standards for transparency, efficiency and governance. On December 20, 2025, the Company executed the definitive agreement providing for allocation of at least $200 million in ETH for deployment on Linea over the following six months in a risk-managed manner over a multi-year commitment period. The Company expects to leverage Linea’s institutional-grade infrastructure to optimize onchain yield to capture differentiated ETH denominated returns. This differentiated yield is expected to combine native ETH yield, restaking rewards from securing EigenCloud Autonomous Verifiable Services (AVSs), and direct Linea and ether.fi protocol incentives, all within a compliant Layer 2 infrastructure. Consensys will not receive any fees or commission on the Company’s deployment of ETH on Linea. As of March 17, 2026, the Company had completed deployment of $200 million of ETH assets to Linea, converting 71,726 ETH into 66,102 units of weETH in connection with the deployment. 40 ***Liquid Staking Protocol*** As part of our ETH Treasury Management strategy, we participate in liquid staking through the Liquid Collective protocol, a decentralized, enterprise-focused liquid staking network that enables participants to stake ETH through a set of approved node operators while maintaining liquidity via a transferable receipt token. In a liquid staking arrangement, we transfer ETH to the protocol and receive LsETH, a fungible ERC-20 receipt token, that represents a proportional interest in the protocol’s pool of staked ETH. LsETH is accounted for as an indefinite-lived intangible asset under ASC 350-30, and recorded at cost, less any impairment losses. The Liquid Collective protocol establishes a daily Protocol Conversion Rate (“PCR”), which reflects the amount of ETH into which a unit of LsETH is redeemable. The PCR is calculated by dividing the total ETH held by the protocol, including accumulated staking rewards (net of penalties or slashing fees), by the total number of LsETH tokens in circulation. The PCR is updated daily through the protocol’s on-chain infrastructure and is publicly accessible. The PCR is not a market trading price. The process of redeeming LsETH for ETH is subject to the validator exit queue, bonding periods and other mechanics that may affect the timing and execution of redemption. As a result, we may not be able to redeem our holdings immediately. As of March 31, 2026, we held 189,327 LsETH tokens. The following table presents a roll-forward of our LsETH holdings, including relevant details related to LsETH purchases, redemptions and impairment losses within the periods presented. | in thousands, except number of Ls ETH and price of Ls ETH | Source of capital used to purchase Ls ETH | Ls ETH original cost basis | Ls ETH impairment losses | Ls ETH carrying value | Number of Ls ETH held | Approx. average purchase price per Ls ETH | Weighted Average Ls ETH Conversion Rate at Acquisition | Ls ETH Conversion Rate at End of Period | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Balance at December 31, 2025 | | $624,659 | $(140,208) | $500,912 | $204,409 | $3,056 | | | | LsETH acquisitions | (a) | 257 | | 257 | 100 | 2,566 | 1.101622031 | 1.1058168385 | | LsETH redemptions | | (46,414) | | (28,671) | (15,182) | n/a | | | | LsETH impairment losses | | | (114,944) | (114,944) | - | n/a | | | | Balance as of March 31, 2026 | | $578,502 | $(255,152) | $357,554 | $189,327 | $3,056 | | | **(a)** Earned through rebates offered by protocol provider. 41 The following table shows the number of LsETH held at the end this period, as well as market value calculations of our LsETH holdings based on the lowest, highest, and ending market prices of one LsETH on the Coinbase exchange (our principal market): | Period End Date | Number of Ls ETH Held at End of Quarter | Lowest Market Price of Ls ETH Held During the Quarter (b) | Market Value of Ls ETH held using Lowest Market Price (c) | Highest Market Price of Ls ETH Held During the Quarter (d) | Market Value of Ls ETH held using Highest Market Price (e) | Market Price of Ls ETH Held at End of Quarter (f) | Market Value of Ls ETH Held at End of Quarter (g) | | --- | --- | --- | --- | --- | --- | --- | --- | | March 31, 2026 | $189,327 | $1,888 | $357,542 | $3,630 | $687,241 | $2,236 | $423,301 | - **(b)** The “Lowest Market Price of LsETH During the Quarter” represents the lowest market price for one LsETH reported on the Coinbase exchange during the respective quarter, without regard to when we purchased any of our LsETH. - **(c)** The “Market Value of LsETH Held Using Lowest Market Price” represents a mathematical calculation consisting of the lowest market price for one LsETH reported on the Coinbase exchange during the respective quarter multiplied by the number of LsETH held by us at the end of the applicable period. - **(d)** The “Highest Market Price of LsETH During the Quarter” represents the highest market price for one LsETH reported on the Coinbase exchange during the respective quarter, without regard to when we purchased any of our LsETH. - **(e)** The “Market Value of LsETH Held Using Highest Market Price” represents a mathematical calculation consisting of the highest market price for one LsETH reported on the Coinbase exchange during the respective quarter multiplied by the number of LsETH held by us at the end of the applicable period. - **(f)** The “Market Price of LsETH at End of Quarter” represents the market price of one LsETH on the Coinbase exchange at midnight UTC on the last day of the respective quarter. - **(g)** The “Market Value of LsETH Held at End of Quarter” represents a mathematical calculation consisting of the market price of one LsETH on the Coinbase exchange at midnight UTC on the last day of the respective quarter multiplied by the number of LsETH held by us at the end of the applicable period. The amounts reported as “Market Value” in the table above represent only a mathematical calculation consisting of the number of LsETH tokens held by us at the end of the applicable period multiplied by the market price of LsETH as reported on the Coinbase Exchange. The LsETH token is relatively new and the market for LsETH may be subject to manipulation, limited transparency, inconsistent pricing sources, and episodic illiquidity. The price information referenced may not reflect actionable market depth or executable prices, and there is no assurance that we would be able to sell our LsETH holdings at the Market Value amounts indicated above, at the quoted market price, or at all. The market infrastructure supporting LsETH remains nascent, and future developments in protocol mechanics, exchange support, or regulatory oversight may materially impact pricing, liquidity, and valuation methodologies. Accordingly, the Market Value amounts reported above may not accurately reflect the fair market value of LsETH, and the actual realizable value of our holdings could differ materially from the calculated figures. ***Liquid Restaking Protocol*** As noted previously, on December 20, 2025, the Company executed the definitive agreement providing for allocation of at least $200 million in ETH for deployment on Linea over the following six months in a risk-managed manner over a multi-year commitment period. The Company expects to leverage Linea’s institutional-grade infrastructure to optimize onchain yield to capture differentiated ETH denominated returns. This differentiated yield is expected to combine native ETH yield, restaking rewards from securing EigenCloud Autonomous Verifiable Services (AVSs), and direct Linea and Ether.fi protocol incentives, all within a compliant Layer 2 infrastructure. Consensys will not receive any fees or commission on the Company’s deployment of ETH on Linea. Our digital assets, including ETH and weETH, are held in our name by Anchorage Digital Bank N.A., our qualified custodian, on both Ethereum and Linea. Upon depositing ETH into the ether.fi protocol and minting weETH, we derecognize the ETH transferred and recognize weETH as a new unit of account at its fair value on the mint date. Derecognition reflects the difference between the fair value of weETH received and the carrying amount of the ETH transferred is recognized as a realized gain (loss) on the condensed consolidated statement of operations. Since weETH provides the holder with an enforceable, pro-rata claim on ETH and accumulated rewards held by the ether.fi protocol, weETH fails the scope criterion in ASC 350-60-15-1(b), which requires that a crypto asset not provide the holder with enforceable rights to or claims on underlying goods, services, or other assets. Accordingly, weETH is outside the scope of ASC 350-60 and is accounted for as an indefinite-lived intangible asset under ASC 350-30. 42 The liquid restaking protocol uses a floating conversion rate, or PCR, between the receipt token and staked tokens, reflecting the value of accrued network rewards, penalties, and fees associated with the staked ETH. The conversion rate between weETH and ETH increases over time as staking rewards accrue to the protocol; no new or additional tokens are received. In addition to the core weETH accretion, we are entitled to monthly incentive payments funded by ether.fi, Linea, and EigenCloud under a SPA, with Consensys acting as program administrator. We have concluded that ether.fi, Linea, and Eigen are each customers under ASC 606, as they provide consideration in exchange for our service of providing and maintaining TVL on Linea, which is an output of our ongoing treasury operations. Consensys is a conduit and is not considered a customer. We consider each incentive stream as variable (based on month-end TVL metrics and subject to contractual caps) and is paid in a noncash form. We estimate variable consideration using the expected value method and the noncash consideration is measured at fair value at contract inception in accordance with ASC 606-10-32-21; subsequent changes in the fair value of the underlying tokens attributable solely to the form of consideration do not adjust the transaction price. We apply the variable consideration allocation exception in ASC 606-10-32-40, allocating each month’s variable consideration to the distinct monthly service period to which it relates. At each month-end, we recognize a receivable for the incentives earned for that period, measured at the fair value of the tokens to be received. Because settlement occurs in digital assets whose fair value fluctuates between the date the receivable is recognized and the settlement date, we have concluded that the receivable contains an embedded derivative. The embedded derivative is subsequently measured at fair value through earnings until settlement. Upon receipt of the tokens, we reclassify the receivable and embedded derivative to the applicable crypto asset account. As of March 31, 2026, we held 66,102 weETH tokens. The following table presents a roll-forward of our weETH holdings, including relevant details related to weETH purchases and impairment losses within the periods presented. | in thousands, except number of we ETH and price of we ETH / Balance at December 31, 2025 | we ETH original cost basis / - | we ETH impairment losses / - | we ETH carrying value / - | Number of we ETH held / - | Approx. average purchase price per we ETH / - | | --- | --- | --- | --- | --- | --- | | weETH acquisitions | 206,024 | | 206,024 | 66,102 | 3,117 | | weETH impairment losses | | (76,726) | (76,726) | - | n/a | | Balance as of March 31, 2026 | $206,024 | $(76,726) | $129,298 | $66,102 | $3,117 | **(a)** Earned through rebates offered by protocol provider. The following table shows the number of weETH held at the end of this period, as well as market value calculations of our weETH holdings based on the lowest, highest, and ending market prices of one weETH using observable prices across multiple active exchange, utilizing the pricing data aggregator CoinGecko: | Period End Date | Number of we ETH Held at End of Quarter | Lowest Market Price of we ETH Held During the Quarter (b) | Market Value of we ETH held using Lowest Market Price (c) | Highest Market Price of we ETH Held During the Quarter (d) | Market Value of we ETH held using Highest Market Price (e) | Market Price of we ETH Held at End of Quarter (f) | Market Value of we ETH Held at End of Quarter (g) | | --- | --- | --- | --- | --- | --- | --- | --- | | March 31, 2026 | $66,102 | $1,915 | $126,580 | $3,678 | $243,125 | $2,295 | $151,705 | - **(b)** The “Lowest Market Price of weETH During the Quarter” represents the lowest market price for one weETH reported for the respective quarter, without regard to when we purchased any of our weETH. 43 - **(c)** The “Market Value of weETH Held Using Lowest Market Price” represents a mathematical calculation consisting of the lowest market price for one weETH reported during the respective quarter multiplied by the number of weETH held by us at the end of the applicable period. - **(d)** The “Highest Market Price of weETH During the Quarter” represents the highest market price for one weETH reported during the respective quarter, without regard to when we purchased any of our weETH. - **(e)** The “Market Value of weETH Held Using Highest Market Price” represents a mathematical calculation consisting of the highest market price for one weETH reported during the respective quarter multiplied by the number of weETH held by us at the end of the applicable period. - **(f)** The “Market Price of weETH at End of Quarter” represents the market price of one weETH at midnight UTC on the last day of the respective quarter. - **(g)** The “Market Value of weETH Held at End of Quarter” represents a mathematical calculation consisting of the market price of one weETH at midnight UTC on the last day of the respective quarter multiplied by the number of weETH held by us at the end of the applicable period. **Regulatory Developments — SEC/CFTC Joint Interpretation on Digital Assets (March 17, 2026)** On March 17, 2026, the SEC and the Commodity Futures Trading Commission (“CFTC”) issued a joint interpretation addressing the application of federal securities and commodities laws to certain digital assets and related transactions. The interpretation is intended to provide market participants with greater clarity regarding the regulatory treatment of digital assets and to support ongoing Congressional efforts to establish a comprehensive digital asset market structure framework. The joint interpretation introduces a functional taxonomy distinguishing among digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. It further explains how a digital asset that itself is not a security may nonetheless be sold as part of an “investment contract,” and how such an asset may cease to be subject to an investment contract over time as the underlying facts and circumstances evolve. The SEC and CFTC also clarified the application of federal securities laws to airdrops, protocol mining, protocol staking, and the wrapping of non-security digital assets. The agencies stated that the CFTC will administer the Commodity Exchange Act in a manner consistent with the SEC’s interpretation. Management is evaluating the potential implications of this interpretation on the Company’s digital asset activities, including the classification, measurement, and disclosure of digital assets held in treasury and any activities involving protocol staking or other network participation. Based on the Company’s current operations and information available as of the date of this filing, the Company does not expect the interpretation to have a material impact on its condensed consolidated financial statements. The Company will continue to monitor regulatory developments and update its disclosures as appropriate. **Affiliate Marketing** In December 2021, we acquired certain assets of FourCubed, including FourCubed’s online casino gaming-focused affiliate marketing network, known as PAS.net (“PAS”). For more than 18 years, PAS has focused on delivering quality traffic and player acquisitions, retention and conversions to regulated and global casino gaming operator partners worldwide. In fact, PAS won industry recognition as the European online gambling industry’s Top Affiliate Manager, Top Affiliate Website and Top Affiliate Program for four consecutive years by both igamingbusiness.com and igamingaffiliate.com. The strategic acquisition of FourCubed brought us talent with proven experience in affiliate marketing services and recurring net gaming revenue (“NGR”) contracts with many of the world’s leading online casino gambling companies, including Party Poker, bwin, UNIBET, GGPoker, 888 poker, betfair, World Poker Tour and others. As part of our strategy to expand our affiliate marketing services to the emerging American sports betting market, in November 2022, we began a systematic roll-out of our U.S.-focused performance-based marketing business with the launch of 15 state-specific, content-rich affiliate marketing websites. Our user-friendly, state-specific domains are designed to attract, acquire and drive local sports betting and casino traffic directly to our sportsbook and casino partners, which are licensed to operate in each respective state. As of April 2026, we are licensed to operate in 18 jurisdictions and own and operate sites serving 17 U.S. states (Arizona, Colorado, Iowa, Illinois, Indiana, Kansas, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Wyoming). We largely utilize search engine optimization and programmatic advertising campaigns to drive traffic to our direct-to-player (“D2P”) sites. 44 ***Capital Markets Funds Raised -*** At-The-Market (“ATM”) Offerings On May 1, 2024, we entered into an ATM Sales Agreement (the “2024 ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P”) pursuant to which we may offer and sell, from time to time, through A.G.P., as sales agent and/or principal, shares of our Common Stock having an aggregate offering price of up to $1.7 million, subject to certain limitations on the amount of Common Stock that may be offered and sold by us set forth in the 2024 ATM Sales Agreement (the “2024 ATM Offering”). On May 30, 2025, we entered into a second ATM Sales Agreement (the “May 2025 ATM Sales Agreement”) with A.G.P. relating to the sale of shares of our Common Stock from time to time, having an aggregate offering price of up to $1.0 billion (the “May 2025 ATM Offering”). On July 17, 2025, we entered into an Amendment to the May 2025 ATM Sales Agreement (the “Amendment”) to (i) increase the number of shares that may be sold in the May 2025 ATM Offering to $6.0 billion; and (ii) to permit the forward sale of shares to be sold in the May 2025 ATM Offering pursuant to Master Forward Confirmation Letter Agreements. Addition of Sales Agents to ATM Offering On August 19, 2025, the Company entered into an Amended and Restated Sales Agreement (the “Amended and Restated ATM Sales Agreement”) (which amended and restated the May 2025 ATM Sales Agreement) by and among the Company, A.G.P., Canaccord Genuity LLC (“Canaccord Genuity”), Societe Generale, B. Riley Securities, Inc. (“B. Riley”), and Citizens JMP Securities, LLC (“Citizens”) to add Canaccord Genuity, Societe Generale, B. Riley, and Citizens as additional sales agents and to make certain conforming changes. We elected not to conduct any sales under our ATM programs for the three months ended March 31, 2026. See *Note 6 - Equity* for results from recently closed capital market offerings. ***Meetings of Stockholders -*** April 2026 Annual Meeting of Stockholders On April 10, 2026, Sharplink convened its 2026 Annual Meeting of Stockholders (the “Annual Meeting”) virtually via live webcast. Only stockholders of record at the close of business on March 6, 2026, the record date for the Annual Meeting, were entitled to vote at the Annual Meeting. As of the record date, 197,161,623 shares of the Company’s common stock were outstanding and entitled to vote at the Annual Meeting. Based on the certified final voting results received from the Inspector of Election, present at the meeting or by proxy were holders of 109,754,580 shares of the Company’s common stock, which represented approximately 56% of the voting power of all shares of common stock as of the record date and constituted a quorum for the transaction of business at the Annual Meeting. The stockholders of the Company voted and approved on the following three proposals at the Annual Meeting: 1) To elect Joseph Lubin, Joseph Chalom, Leslie Bernhard, Obie McKenzie, and Robert Gutkowski to serve as directors until the next annual meeting of stockholders or until their successors have been duly elected and qualified; 2) To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026; and 3) To approve, on an advisory basis, the compensation of the Company’s named executive officers. 45 ***Other Matters -*** Termination of Asset Management Agreements On April 3, 2026, Sharplink entered into a mutual termination agreement (the “Galaxy Termination Agreement”) with Galaxy Digital Capital Management LP (“Galaxy”) in connection with the mutual termination of that certain asset management agreement by and between the Company and Galaxy, dated May 30, 2025, for certain discretionary investment management services with respect to the Company’s purchase of Ethereum (the “Galaxy Asset Management Agreement”). Pursuant to the Galaxy Termination Agreement, the Galaxy Asset Management Agreement will be terminated effective May 31, 2026. On April 3, 2026, the Company also entered into a mutual termination agreement (the “ParaFi Termination Agreement” and together with the Galaxy Termination Agreement, the “Termination Agreements”), with ParaFi Capital LP (“ParaFi”) in connection with the mutual termination of that certain asset management agreement between ParaFi and the Company, dated May 30, 2025, for certain discretionary investment management services with respect to the Company’s purchase of Ethereum (the “ParaFi Asset Management Agreement, and, together with the Galaxy Asset Management Agreement, the “Asset Management Agreements”). Pursuant to the ParaFi Termination Agreement, the Galaxy/ParaFi Asset Management Agreement will be terminated effective May 31, 2026. Neither the Company nor Galaxy or ParaFi shall have any remaining or future obligations or commitments to the other party under the Asset Management Agreements other than those amounts pursuant to the Termination Agreements. Further, the Company is not required to pay Galaxy or ParaFi any termination fees or penalties in connection with the mutual termination of the Asset Management Agreements. The decision to enter into the Termination Agreements reflects the Company’s continued evolution, including the addition of internal asset management personnel, and was not the result of any disagreement with either Galaxy or ParaFi. Adoption of Inducement Award Plan On August 19, 2025, the Board of Directors of the Company (the “Board”) adopted the Sharplink Gaming, Inc. Inducement Award Plan (the “Inducement Award Plan”). The Inducement Award Plan was adopted without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4) and will be administered by the Compensation Committee of the Board or the independent members of the Board. The Board reserved 3,000,000 shares of the Company’s common stock for issuance under the Inducement Award Plan, subject to adjustment as provided in the plan document. The terms of the Inducement Award Plan are substantially similar to the terms of the Company’s Amended and Restated 2023 Equity Incentive Plan, with the exception that incentive stock options may not be issued under the Inducement Award Plan and equity awards under the Inducement Award Plan (including nonqualified stock options, restricted stock, restricted stock units, and other stock-based awards) may be issued only to an employee who is commencing employment with the Company or any subsidiary or who is being rehired following a bona fide interruption of employment by the Company or any subsidiary, in either case if he or she is granted such award in connection with his or her commencement of employment and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The Board also adopted a form of Restricted Stock Unit Agreement Notice of Restricted Stock Unit Grant (Time-Based Grant) (the “Inducement Time-Based RSU Grant Package”) and a form of Restricted Stock Unit Agreement Notice of Restricted Stock Unit Grant (Performance-Based Grant) (the “Inducement Performance-Based RSU Grant Package”) for use under the Inducement Award Plan. 46 2025 Share Repurchase Plan On August 21, 2025, the Board approved a share repurchase program (the “2025 Repurchase Program”) providing for the repurchase of up to $1.5 billion of the Company’s outstanding shares of common stock. Under the 2025 Repurchase Program, the Company is authorized to repurchase shares of common stock through open market purchases, privately-negotiated transactions, accelerated share repurchases, or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The 2025 Repurchase Program does not obligate the Company to repurchase shares of common stock and the specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance metrics, market conditions, securities law limitations and other factors. In connection with the 2025 Repurchase Program, on August 21, 2025, the Company entered into an Open Market Share Repurchase Agreement (the “Repurchase Agreement”) with The Benchmark Company, LLC (the “Broker”) whereby the Broker has agreed to act as a non-exclusive agent on behalf of the Company to repurchase shares of the Company’s common stock in the open market pursuant to Rule 10b-18 of the Exchange Act. The Repurchase Agreement will continue in effect until terminated by either the Company or the Broker, with or without cause, upon written notice to the other party. The Company will pay Broker a commission at a rate of $0.01 for each share of common stock repurchased pursuant to the Repurchase Agreement. For the three months ended March 31, 2026, the Company did not repurchase any shares of its Common Stock. Reverse Stock Split On May 5, 2025, we effected a one-for-twelve (1:12) reverse stock split of all the Company’s common stock, whereby the Company decreased the number of issued and outstanding shares of common stock from 7,916,206 to 659,684. Proportional adjustments for the reverse stock split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retrospectively adjusted as of the earliest period presented in the financial statements to reflect the reverse stock split. **Results of Operations *(in thousands, except for percentages)*** The following table provides certain selected financial information for the periods presented: | Line item | For the Three Months Ended / March 31, 2026 | For the Three Months Ended / March 31, 2025 | Change | % Change | | --- | --- | --- | --- | --- | | Revenue from staking | $11,501 | - | $11,501 | $100.0 | | Revenue from affiliate marketing | 557 | 742 | (185) | (24.9) | | Total revenue | 12,058 | 742 | 11,316 | 1,525.1 | | Gains and (losses) from operations | | | | | | Realized gain on crypto assets, net | 12,005 | - | 12,005 | 100.0 | | Unrealized loss on crypto assets at fair value, net | (506,664) | - | (506,664) | 100.0 | | Total losses from operations | (494,659) | - | (494,659) | | | Operating expenses | | | | | | Cost of revenues from affiliate marketing | 432 | 610 | (178) | (29.2) | | Selling, general, and administrative expenses | 9,876 | 1,058 | 8,818 | 833.5 | | Impairment of crypto assets at cost | 191,670 | - | 191,670 | 100.0 | | Total operating expenses | 201,978 | 1,668 | 200,310 | 12,009.0 | | Operating loss | (684,579) | (926) | (683,653) | 73,829 | | Total other income, net | 201 | 12 | 189 | 1,575.0 | | Net loss before income taxes | (684,378) | (914) | (683,464) | 74,777 | | Income tax expense | (1,183) | (3) | (1,180) | 39,333 | | Net loss from continuing operations | (685,561) | (917) | (684,644) | 74,661 | | Net loss from discontinued operations, net of tax | - | (58) | 58 | (100.0) | | Net loss | $(685,561) | $(975) | $(684,586) | 70,214 | 47 ***For the Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025*** Revenue For the three months ended March 31, 2026, total revenue increased 1,525.1% to $12,058 compared to $742 reported for the same three-month period in the prior year. The notable increase was due to revenues from staking generated by our ETH Treasury Management segment, launched in June 2025, which was $11,501, or 95.4% of our total revenues for the quarter ended March 31, 2026. The revenues from staking have immaterial costs and therefore nearly 100% gross margin. The increase in revenues was offset by a -24.9% decline in revenues generated in our Affiliate Marketing Segment, which generated $557 in revenues compared to $742 for the three months ended March 31, 2026 and 2025, respectively. The decrease in affiliate marketing revenues was primarily due to softening market conditions in the global iGaming industry, changes in customer pricing structures and the loss of customers due primarily to evolving regulatory environments in certain foreign markets in which our affiliate marketing business operates. Total Losses from Operations We recognized a gain on crypto assets at fair value of $12,005 and recorded an unrealized loss on crypto assets at fair value, net of $(506,664) resulting from the sum of fair value accounting adjustments of ($506,464), due to the volatility in the price of ETH, and $(18) of unrealized losses on rebate and incentive rewards earned for the three months ended March 31, 2026 as compared to zero for the same three month period in the prior year. Total Operating Expenses For the three months ended March 31, 2026, cost of revenues - affiliate marketing decreased $(178) to $432 from $610 compared to the same three-month period in the prior year. This decrease is reflective of the decrease in revenues from Affiliate Marketing Segment. For the three months ended March 31, 2026, total selling, general and administrative expenses increased 833.5% to $9,876 from $1,058 reported for the same three-month period in the prior year. The increase was primarily attributable to the following: $1,254 in asset manager fees, $2,570 in compensation costs, $1,251 in accounting, legal and compliance fees, $327 in custodial and banking fees. These expenses were incurred to establish and support our ETH Treasury Management strategy. For the three months ended March 31, 2026, we also recognized an impairment loss on LsETH and weETH crypto assets of $191,670. These crypto assets do not meet the scope criteria of ASC 350-60. Accordingly, these crypto assets continue to be accounted for as indefinite-lived intangible assets under ASC 350-30 and are measured at historical cost less cumulative impairment, rather than at fair value. We did not incur any such impairment losses for the same three month period in the prior year. 48 Operating Loss Net loss from operations increased 73,829% to $(684,579) for the three months ended March 31, 2026, compared to a net loss from operations of $(926) reported for the same three-month period in 2025. This is attributable to the impairment on crypto assets of LsETH and weETH of $191,670 and an unrealized loss on our crypto assets at fair value, net which totaled $(506,664), offset by a $12,005 net realized gains on our crypto assets, for the three months ended March 31, 2026. Net Income (Loss) from Discontinued Operations, Net of Tax For the three months ended March 31, 2026, net income from discontinued operations, net of tax was zero compared to $(58), for the three months ended March 31, 2025. The prior period discontinued operations were associated with the wind down of certain MTS business amounts, which are immaterial in the current period. Net Loss As a result of the aforementioned reasons, net loss for the three months ended March 31, 2026 totaled $(685,561), climbing 70,214% when compared to net loss of $(975) reported for the three months ended March 31, 2025. **Cash Flows *(in thousands, except for percentages)*** *Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025* As of March 31, 2026, cash on hand was $16,875, a 1,127% increase when compared to cash on hand of $1,375 as of March 31, 2025. The increase was due to net proceeds raised from the PIPE, ATM and registered direct offerings completed from May through year end 2025, which increased cash on hand at the end of 2025, compared to cash on hand at the end of March 31, 2025. For the three months ended March 31, 2026, net cash used in operating activities from continuing operations totaled $(10,646) compared to net cash used in operating activities from continuing operations of $(453) in the prior year. Net cash used in operating activities from discontinued operations was zero, compared to net cash used in operating activities of $(61) from discontinued operations for the same three-month period in 2025. Overall, net cash used in operating activities was $(10,646) and $(514) for the three months ended March 31, 2026 and 2025, respectively. The change in the operating cash flows was largely attributable to cash used in payments of accounts payable and accrued expenses and prepaid expenses in the first quarter of 2026 as compared to the prior period. For the three months ended March 31, 2026, net cash provided by our investing activities from operations totaled $1,878, an increase of 476% when compared to cash used in investing activities from operations of $(500) for the same three-month period in 2025. The increase in net cash used in investing activities for the three months ended March 31, 2026 versus 2025 was due to our ETH Treasury Management strategy and the related redemptions of USDC stablecoins in the first quarter of 2026. 49 For the three months ended March 31, 2026, net cash used for financing activities from operations was $(2,896), a -419% increase when compared to net cash provided by financing activities from operations of $907 for the same three-month period in 2025. Cash used in financing activities during the first quarter of 2026 related to cash payments of taxes for net share settlement of stock issued for previously accrued severance and bonus awards. Cash generated by financing activities during the first quarter of 2025 related to gross cash proceeds from the sale of our Common Stock. **Liquidity and Capital Resources *(in thousands)*** As of March 31, 2026, we had working capital of $12,589. For the three months ended March 31, 2026, we had net loss from continuing operations of $(685,561) compared to a net loss from continuing operations of $(917) reported for the same three-month period in 2025. The net loss from continuing operations was primarily driven by the net unrealized loss on our crypto assets of $(506,664) and impairment of crypto assets at cost of $(191,670) due to price decreases in ETH during the first quarter of 2026. ***Principal Sources of Liquidity*** Our principal sources of liquidity are our cash and cash equivalents balances and proceeds from equity financing transactions, including pursuant to our at-the-market offering facility under the Amended and Restated ATM Sales Agreement with A.G.P. Under our internal Treasury Reserve Policy, we use the vast majority of our cash, including cash generated from capital raising transactions, to acquire ETH, some of which are classified as indefinite-lived intangible assets. As of March 31, 2026 and December 31, 2025, we held approximately $1,239,140 and $1,899,683 ETH in crypto assets at fair value, respectively, all of which are unencumbered. As of March 31, 2026 and December 31, 2025, we held approximately $486,852 and $500,912 LsETH and weETH in crypto assets at cost, respectively. As of May 4, 2026, we held approximately 872,984 in total ETH holdings, comprised of 590,823 in native ETH, 209,789 in ETH as if redeemed from LsETH and 72,372 in ETH as if redeemed from weETH, all of which are unencumbered. As discussed further below, although our crypto assets are classified as non-current assets due to our long-term treasury strategy, they represent a significant and readily accessible source of liquidity. Based on current Ethereum network conditions, we estimate that a material portion of our staked ETH could be withdrawn and converted to cash within approximately 30 days, and our entire staking portfolio within approximately 90 days. We believe this provides meaningful additional liquidity support beyond our cash and cash equivalents. ***Short-Term and Long-Term Liquidity*** *Short-Term Liquidity* — Our short-term liquidity needs include working capital requirements, anticipated capital expenditures, and contractual obligations due within the next 12 months. We expect that our cash and cash equivalents as of March 31, 2026, together with cash and cash equivalents generated by our operations, coupled with the use of a portion of proceeds earned from staking activities and redeemed for cash, and equity financings will be sufficient to satisfy these needs over the twelve months. Although we do not anticipate needing to use our ETH to meet our short-term liquidity needs, to the extent necessary, we may seek to use proceeds from the sale of our ETH, and other tokens earned and received as rewards and incentives, to meet such needs. See “*Availability of ETH for Liquidity*” below and “Item 1A. Risk Factors” for additional information. *Long-Term Liquidity* — Beyond the next 12 months, our long-term cash needs are primarily for obligations related to working capital needs. We expect our cash and cash equivalents as of March 31, 2026, together with cash and cash equivalents, coupled with the use of a portion of proceeds earned from staking activities and redeemed for cash, and equity financings will be sufficient to satisfy these needs over the twelve months. See “*Availability of ETH for Liquidity*” below and “Item 1A. Risk Factors” for additional information. 50 *Availability of ETH for Liquidity* — We do not believe we will need to sell or engage in other transactions with respect to any of our ETH within the next 12 months to meet our liquidity needs, although we may from time to time sell or engage in other transactions with respect to our ETH, and other tokens earned and received as rewards and incentives, as part of treasury management operations, as noted above. The ETH market historically has been characterized by significant volatility in its price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of instability in the ETH market, we may not be able to sell our ETH at reasonable prices or at all. As a result, our ETH are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. In addition, upon sale of our ETH, we may incur additional taxes related to any realized gains or we may incur capital losses as to which the tax deduction may be limited. See “Item1A. Risk Factors” for additional information. **Off-Balance Sheet Arrangements** On March 31, 2026, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. We have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities. **Inflation** Our opinion is that inflation did not have a material effect on our operations for the three months ended March 31, 2026. **Climate Change** Our opinion is that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations. **New Accounting Pronouncements** In November 2024, the FASB issued ASU 2024-04, Debt-Debt with Conversions and Other Option. ASU 2024-04 is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on its disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its condensed consolidated financial statements and disclosures. 51 **ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item. **ITEM 4. CONTROLS AND PROCEDURES** **Evaluation of Disclosure and Control Procedures** The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, have concluded that our disclosure controls and procedures are effective and are designed to ensure that the information we are required to disclose is recorded, processed, summarized and reported within the necessary time periods. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit pursuant to the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. **Changes in Internal Control over Financial Reporting** There were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. 52 **PART II. OTHER INFORMATION** **ITEM 1. LEGAL PROCEEDINGS** From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of our business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse effect on us. Regardless of final outcomes, however, any such proceedings or claims may nonetheless impose a significant burden on management and employees and may come with costly defense costs or unfavorable preliminary interim rulings. **ITEM 1A. RISK FACTORS** You should carefully consider the risks described below before making an investment decision. The risks and uncertainties described in this section may not be the only ones we face. Additional risks and uncertainties that are not currently known to us, or that we currently deem immaterial, may also impair our business operations or financial condition. If any of the risks described below or any such additional risks actually occur, our business, financial condition, results of operations and the market price of our securities could be materially adversely affected. In particular, because we have adopted a treasury strategy centered on acquiring and holding ETH, and a substantial portion of our assets are concentrated in ETH and related digital intangible asset holdings, our financial results and the market price of our securities are subject to significant volatility and may be adversely impacted by events affecting the price, perception, regulation, or technological underpinnings of ETH. The following risk factors highlight the material risks associated with our ETH Treasury Management strategy and related exposures. ***Although the SEC and CFTC have issued joint interpretive guidance identifying ETH as a “digital commodity” rather than a “digital security,” that guidance is non-binding and could be modified or rejected by a court, and any determination that ETH is a “security” would subject us to additional regulation and could materially impact the operation of our business.*** On March 17, 2026, the U.S. Securities and Exchange Commission (“SEC”), joined by the U.S. Commodity Futures Trading Commission (“CFTC”), issued a joint interpretation (the “Joint Interpretation”) clarifying the application of the federal securities laws to crypto assets and establishing a taxonomy of five categories: “digital commodities,” “digital collectibles,” “digital tools,” “stablecoins,” and “digital securities.” The Joint Interpretation expressly identifies ETH as an example of a digital commodity, and the SEC and CFTC have each stated that they will administer their respective statutes consistent with the Joint Interpretation. The Joint Interpretation is consistent with our long-held view, described below, that ETH is not a “security” within the meaning of the U.S. federal securities laws and that registration of the Company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), is therefore not required under the applicable securities laws. The Joint Interpretation is interpretive guidance rather than a rulemaking and does not itself have the force of law. It could be modified, withdrawn, or superseded by future SEC or CFTC leadership, narrowed or invalidated through judicial challenge, or rendered obsolete by subsequent legislation or rulemaking. Federal and state courts are not bound by the Joint Interpretation, and the ultimate legal question of whether any particular digital asset, or any particular transaction involving a digital asset, is a “security” remains subject to judicial determination under tests articulated by the U.S. Supreme Court, including in the Howey and Reves cases. In addition, the Joint Interpretation acknowledges that a crypto asset that is not itself a security may nonetheless become subject to an “investment contract” depending on the manner in which it is offered or sold, so classification of ETH as a digital commodity does not foreclose the possibility that particular transactions involving ETH could be characterized as securities transactions. 53 We have adapted, and expect to continue to adapt, our process for analyzing the U.S. federal securities law status of ETH and other cryptocurrencies over time, as guidance, interpretive releases, and case law have evolved. As part of our U.S. federal securities law analytical process, we take into account a number of factors, including the various definitions of “security” under U.S. federal securities laws and federal court decisions interpreting the elements of these definitions, such as the U.S. Supreme Court’s decisions in the Howey and Reves cases, as well as court rulings, reports, orders, press releases, public statements, and speeches by the SEC Commissioners and SEC Staff — including, most recently, the Joint Interpretation — providing guidance on when a digital asset, or a transaction to which a digital asset may relate, may be a security for purposes of U.S. federal securities laws. Our position that ETH is not a “security” is premised, among other reasons, on our conclusion that ETH does not meet the elements of the Howey test. Among the reasons for our conclusion that ETH is not a security is that holders of ETH do not have a reasonable expectation of profits from our efforts in respect of their holding of ETH. Also, ETH ownership does not convey the right to receive any interest, rewards, or other returns. Notwithstanding the Joint Interpretation and our own conclusion, we acknowledge that a federal or state court, state securities regulator, future SEC or CFTC leadership, or private plaintiff could take a different view as to the status of ETH or any particular transaction involving ETH. State “blue sky” regulators are not formally bound by the Joint Interpretation, and private litigants are not bound by the views of any federal regulator. Application of securities laws to the specific facts and circumstances of digital assets is complex and subject to change. As such, we remain at risk of private litigation, state enforcement proceedings, and — in the event the Joint Interpretation is modified, withdrawn, or judicially rejected — federal enforcement proceedings, any of which could result in potential injunctions, cease-and-desist orders, fines, penalties, damages, or a requirement that we register as an investment company under the Investment Company Act, and any of which could adversely affect our business, results of operations, financial condition and prospects. ***If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated.*** Under Sections 3(a)(1)(A) and (C) of the Investment Company Act, a company generally will be deemed to be an “investment company” if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding, or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) on an unconsolidated basis. Rule 3a-1 under the Investment Company Act generally provides that notwithstanding the Section 3(a)(1)(C) test described in clause (ii) above, an entity will not be deemed to be an “investment company” for purposes of the Investment Company Act if no more than 45% of the value of its assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) consists of, and no more than 45% of its net income after taxes (for the past four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees’ securities companies, securities issued by qualifying majority owned subsidiaries of such entity, and securities issued by qualifying companies that are controlled primarily by such entity. We do not believe that we are an “investment company” as such term is defined in either Section 3(a)(1)(A) or Section 3(a)(1)(C) of the Investment Company Act. Recently, we have begun focusing on pursuing opportunities to expand our portfolio into digital assets. With respect to Section 3(a)(1)(A), following the PIPE Offering, the proceeds of the PIPE Offering are expected to be used to acquire ETH, which will result in our ownership or holding of ETH in excess of 40% of our total assets. Since we believe ETH is not an investment security, we do not hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting, or trading in securities within the meaning of Section 3(a)(1)(A) of the Investment Company Act. 54 With respect to Section 3(a)(1)(C), we believe we satisfy the elements of Rule 3a-1 and therefore are deemed not to be an investment company under, and we intend to conduct our operations such that we will not be deemed an investment company under, Section 3(a)(1)(C). We believe that we are not an investment company pursuant to Rule 3a-1 under the Investment Company Act because, on a consolidated basis with respect to wholly-owned subsidiaries but otherwise on an unconsolidated basis, no more than 45% of the value of the Company’s total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) consists of, and no more than 45% of the Company’s net income after taxes (for the last four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees’ securities companies, securities issued by qualifying majority owned subsidiaries of the Company, and securities issued by qualifying companies that are controlled primarily by the Company. ETH and other digital assets, as well as new business models and transactions enabled by blockchain technologies, present novel interpretive questions under the Investment Company Act. There is a risk that assets or arrangements that we have concluded are not securities could be deemed to be securities by the SEC or another authority for purposes of the Investment Company Act, which would increase the percentage of securities held by us for Investment Company Act purposes. The SEC has requested information from a number of participants in the digital assets’ ecosystem, regarding the potential application of the Investment Company Act to their businesses. For example, in an action unrelated to the Company, in February 2022, the SEC issued a cease-and-desist order under the Investment Company Act to BlockFi Lending LLC, in which the SEC alleged that BlockFi was operating as an unregistered investment company because it issued securities and also held more than 40% of its total assets, excluding cash, in investment securities, including the loans of digital assets made by BlockFi to institutional borrowers. If we were deemed to be an investment company, Rule 3a-2 under the Investment Company Act is a safe harbor that provides a one-year grace period for transient investment companies that have a bona fide intent to be engaged primarily, as soon as is reasonably possible (in any event by the termination of such one-year period), in a business other than that of investing, reinvesting, owning, holding, or trading in securities, with such intent evidenced by the company’s business activities and an appropriate resolution of its board of directors. The grace period is available not more than once every three years and runs from the earlier of (i) the date on which the issuer owns securities and/or cash having a value exceeding 50% of the issuer’s total assets on either a consolidated or unconsolidated basis or (ii) the date on which the issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Accordingly, the grace period may not be available at the time that we seek to rely on Rule 3a-2; however, Rule 3a-2 is a safe harbor and we may rely on any exemption or exclusion from investment company status available to us under the Investment Company Act at any given time. Furthermore, reliance on Rule 3a-2, Section 3(a)(1) (C), or Rule 3a-1 could require us to take actions to dispose of securities, limit our ability to make certain investments or enter into joint ventures, or otherwise limit or change our service offerings and operations. If we were to be deemed an investment company in the future, restrictions imposed by the Investment Company Act — including limitations on our ability to issue different classes of stock and equity compensation to directors, officers and employees and restrictions on management, operations, and transactions with affiliated persons — likely would make it impractical for us to continue our business as contemplated, and could have a material adverse effect on our business, results of operations, financial condition, and prospects. 55 ***Regulatory developments regarding the classification of digital assets as “commodities” or “digital commodities” by the Commodities Futures Trading Commission (“CFTC”), including recent joint SEC-CFTC interpretive guidance and pending legislation, could subject us to additional regulatory burdens and oversight by the CFTC and could adversely affect the market price of ETH and the market price of our listed securities.*** The CFTC has stated it believes, and judicial decisions involving CFTC enforcement actions have confirmed, that at least some digital assets fall within the definition of a “commodity” under the U.S. Commodities Exchange Act of 1936 (the “CEA”) and the rules promulgated by the CFTC thereunder (“CFTC Rules”). On March 17, 2026, the U.S. Securities and Exchange Commission (“SEC”), joined by the CFTC, issued a joint interpretation (the “Joint Interpretation”) clarifying the application of the federal securities laws to crypto assets and establishing a token taxonomy distinguishing “digital commodities,” “digital collectibles,” “digital tools,” “stablecoins,” and “digital securities.” The Joint Interpretation expressly identifies ETH as an example of a digital commodity, and the CFTC has stated that it will administer the CEA consistent with the Joint Interpretation. While the CFTC has enforcement authority to police against fraud and manipulation in spot commodity markets (including the spot market for digital assets that are commodities), the CFTC continues to have regulatory and supervisory jurisdiction only with respect to “commodity interest” transactions, such as futures, options, and swaps on a commodity (including a digital asset commodity) and certain leveraged, margined, or financed transactions in commodities involving retail customers. The Joint Interpretation did not expand the CFTC’s statutory jurisdiction over spot digital asset activities. Accordingly, we are not currently regulated or supervised by the CFTC and are not subject to the legal and regulatory obligations that are applicable to CFTC-registered entities under the CEA and CFTC Rules. The Joint Interpretation is interpretive guidance rather than a rulemaking, and it does not itself have the force of law. It could be modified, withdrawn, or superseded by future SEC or CFTC leadership, narrowed or invalidated through judicial challenge, or rendered obsolete by subsequent legislation or rulemaking. No assurance can be given that ETH will continue to be treated as a digital commodity under this or any future guidance, or that the current allocation of jurisdiction between the SEC and CFTC with respect to ETH and other digital assets will remain unchanged. A change in ETH’s regulatory classification, or in the coordinated posture between the SEC and the CFTC, could materially increase our compliance burden, restrict our ability to hold or transact in ETH, and adversely affect the market price of ETH and the market price of our listed securities. The regulation of digital assets in the U.S. also remains subject to change through the enactment and adoption of new laws and regulations, and the Joint Interpretation is expressly intended to complement, rather than substitute for, Congressional market structure legislation. The proposed CLARITY Act passed by the U.S. House of Representatives, and other draft digital asset market structure and regulation bills, have proposed granting the CFTC additional regulatory and supervisory powers with respect to spot digital assets as “digital commodities.” While it is not possible to predict if and in what form such proposals will be adopted, if any, changes to or expansion of the jurisdiction of the CFTC with respect to activities in spot digital assets could result in the imposition of additional regulatory obligations and burdens, which could include registration, disclosure, reporting, and business conduct requirements. For example, it is possible that if the CLARITY Act were to become law as currently proposed, our ETH Treasury Management strategy could cause us to be deemed a “commodity pool” under the CEA such that our operators and advisors may need to register with the CFTC as commodity pool operators and comply with other CFTC regulations as well as the rules of the National Futures Association. Such additional regulatory burdens and oversight could materially increase the cost of our business, could adversely affect the market price of ETH, and in turn could adversely affect the market price of our listed securities. **We may be subject to regulatory developments related to digital assets and digital asset markets, which could adversely affect our business, financial condition, and results of operations.** As digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital assets is still evolving, it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of digital assets. The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of digital assets or the ability of individuals or institutions such as us to own or transfer digital assets. 56 On January 23, 2025, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology” (the “Executive Order”) aimed at supporting “the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy.” The Executive Order also established an interagency working group that is tasked with “proposing a Federal regulatory framework governing the issuance and operation of digital assets” in the United States. Pursuant to this Executive Order, the working group released a report in July 2025 outlining the administration’s recommendations to Congress and various agencies reflecting the administration’s “pro-innovation mindset toward digital assets and blockchain technologies.” In particular, the report recommends that Congress enact legislation regarding self-custody of digital assets, clarifying the applicability of Bank Secrecy Act obligations with respect to digital asset service providers, granting the Commodities Futures Trading Commission (the “CFTC”) authority to regulate spot markets in non-security digital assets, prohibiting the adoption of a central bank digital currency (“CBDC”), and clarifying tax laws as relevant to digital assets. In addition, the report recommends that agencies reevaluate existing guidance on digital asset activities, use existing authorities to enable the trading of digital assets at the federal level, embrace DeFi, launch or relaunch digital asset innovation efforts, and promote U.S. private sector leadership in the responsible development of cross-border payments and financial markets technologies, among others. Consistent with the Executive Order and the July 2025 working group report, on March 17, 2026, the U.S. Securities and Exchange Commission (“SEC”), joined by the CFTC, issued a joint interpretation (the “Joint Interpretation”) clarifying the application of the federal securities laws to crypto assets. The Joint Interpretation establishes a taxonomy of five categories — “digital commodities,” “digital collectibles,” “digital tools,” “stablecoins,” and “digital securities” — and expressly identifies ETH as an example of a digital commodity. The SEC and CFTC have each stated that they will administer their respective statutes consistent with the Joint Interpretation. While we believe the Joint Interpretation provides meaningful additional clarity regarding the regulatory status of ETH, it is interpretive guidance rather than a rulemaking, does not itself have the force of law, and is not binding on federal or state courts, state securities regulators, or private litigants. The Joint Interpretation could be modified, withdrawn, or superseded by future SEC or CFTC leadership, narrowed or invalidated through judicial challenge, or rendered obsolete by subsequent legislation or rulemaking, and it also acknowledges that a crypto asset that is not itself a security may nonetheless become subject to an “investment contract” depending on the manner in which it is offered or sold. There have also been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset markets. For example, the CLARITY Act was passed by the House of Representatives in July 2025, which would, if enacted, regulate digital asset markets and digital asset trading platforms in the United States and provide statutory backing for the allocation of jurisdiction between the SEC and CFTC reflected in the Joint Interpretation. In addition, also in July 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (the “GENIUS Act”) became the first federal law specifically regulating the issuance, custody and other stablecoin-related matters in the United States. It is difficult to predict whether, or when, the CLARITY Act or another bill that would regulate digital asset markets and digital asset trading platforms may become law or what any such bill may entail. It is difficult to predict whether, or when, as a result of these developments, Congress will grant additional authorities to the SEC, the CFTC, or other regulators, what the nature of such additional authorities might be, how additional legislation and/or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services to the digital assets industry, or how any new regulations, changes to existing regulations, or changes to or withdrawal of existing interpretive guidance might impact the value of digital assets generally and ETH held by the Company specifically. The consequences of these potential developments, including any narrowing, modification, or withdrawal of the Joint Interpretation, could have a material adverse effect on our business, results of operations, financial condition, and prospects, as well as the market price of ETH, which in turn could adversely affect the market price of our listed securities. 57 ***Our Common Stock may not always trade at a premium to the value of the digital assets we hold, and may trade at a discount thereto.*** Although our common stock, par value $0.0001 per share has, and may in the future trade at a premium to the value of our holdings of Ether (“ETH”), to the extent investors view our Common Stock as providing exposure to ETH, it is possible that the price of our Common Stock may not always trade at such a premium, and may trade at a discount thereto. This may occur due to the rise in other traditional investment vehicles providing exposure to digital assets, including ETH, as well as the increase in the number of investors who may wish to purchase digital assets, including ETH, directly, among other reasons. For example, the Securities and Exchange Commission (the “SEC”) has recently provided guidance that will allow broker-dealers to custody digital assets on behalf of investors. The SEC has also rescinded Staff Accounting Bulletin 121 which, by forcing public companies to include on their balance sheets digital assets custodied on behalf of third parties, effectively prevented publicly traded banks from providing digital asset custodial services. Any movement of investor funds to such other sources, or a change in the market’s perception of digital asset treasury vehicles or in investor sentiment generally, could result in a decrease in price of our Common Stock and may impair our ability to engage in future financings. ***The concentration of our ETH holdings enhances the risks inherent in our ETH Treasury Management strategy.*** While ETH concentration is monitored as the total number of ETH units (including native-staked and liquid-staked ETH) held by us divided by 1,000 assumed diluted shares outstanding and is used to evaluate our capital allocation strategy and digital asset leverage on a per-share basis, significant swings in the price of ETH may lead to increased risks in our ETH Treasury Management strategy. ***ETH and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.*** ETH and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of ETH or the ability of individuals or institutions such as us to own or transfer ETH. The U.S. federal government, states, regulatory agencies and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of ETH or the ability of individuals or institutions such as us to own or transfer ETH. It is not possible to predict whether, or when, new laws will be enacted that change the legal framework governing digital assets or provide additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services to the digital assets industry, or how any new laws or regulations, or changes to existing laws or regulations, might impact the value of digital assets generally and ETH specifically. The consequences of any new law or regulation relating to digital assets and digital asset activities could adversely affect the market price of ETH, as well as our ability to hold or transact in ETH, and in turn adversely affect the market price of our listed securities. Moreover, the risks of engaging in an ETH Treasury Management strategy could create complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future. The growth of the digital assets industry in general, and the use and acceptance of ETH in particular, may also impact the price of ETH and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of ETH may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to ETH, institutional demand for ETH as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for ETH as a store of value or means of payment, and the availability and popularity of alternatives to ETH. Even if growth in ETH adoption occurs in the near or medium-term, there is no assurance that ETH usage will continue to grow over the long-term. 58 Because ETH has no physical existence beyond the record of transactions on the Ethereum blockchain, a variety of technical factors related to the Ethereum blockchain could also impact the price of ETH. For example, malicious attacks, inadequate staking fees to incentivize validating of ETH transactions, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the Ethereum blockchain and negatively affect the price of ETH. The liquidity of ETH may also be reduced and damage to the public perception of ETH may occur if financial institutions were to deny or limit banking services to businesses that hold ETH, provide ETH-related services or accept ETH as payment, which could also decrease the price of ETH. ***Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our ETH holdings.*** Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of ETH. ***The price of ETH has historically been subject to dramatic price fluctuations and is highly volatile.*** Because we intend to purchase additional ETH in future periods and increase our overall holdings of ETH, we expect that the proportion of our total assets represented by our ETH holdings will increase in the future. As a result, and in particular due to our adoption of ASU 2023-08, volatility in our earnings may be significantly more than what we experienced in prior periods. ***Our shift towards an ETH-focused treasury strategy requires substantial changes in our day-to-day operations and exposes us to significant operational risks.*** Our shift towards an ETH-focused treasury strategy, including staking, restaking, liquid staking, and other decentralized finance activities, exposes us to significant operational risks. Staking ETH involves holding a certain amount of ETH in a smart contract and running a piece of software known as a “validator node.” Validators are randomly selected to propose a new block of transactions to be added to the Ethereum blockchain. When an Ethereum participant attempts a transaction, that participant is required to pay a minimum “gas” fee. A participant can opt to pay an additional fee to ensure that its transaction is added to the blockchain more quickly. These fees are denominated in ETH. The validator chosen to propose a block will (when that block is successfully confirmed by the other validator nodes) receive the gas fees for all transactions in the block (known as “execution layer rewards”). In addition, the Ethereum blockchain automatically issues ETH as rewards to validators who successfully propose a block, known as “consensus layer rewards.” The Ethereum network also automatically imposes penalties on validators that experience downtime or that propose incorrect blocks. These penalties are known as “slashing” and will reduce the number of ETH that are “staked” to the validator node. Although we currently do not operate any validators, we may choose to operate our own validator services, or we may seek to continue to “delegate” our ETH to third party validation service providers. If we choose to use a third-party validation service, we will have to share our staking rewards with that third-party validator, but that third-party validator may have more sophisticated technology which would enable those rewards to be greater. In either case, staking increases the risk of loss of ETH, including through slashing penalties and through increasing vulnerabilities to hacking in the staking smart contracts. Validators also need to maintain uptime to maximize their rewards. Further, the ETH ecosystem rapidly evolves, with frequent upgrades and protocol changes that may require significant adjustments to our operational setup. The upgrades and protocol changes may require that we incur unanticipated costs, and it could cause temporary service disruptions. Technical failures or operational errors could impact our ability to obtain ETH rewards or gas fees, which could result in our failure to meet our financial projections. 59 Staked ETH is also subject to lock-up periods during which it cannot be withdrawn or sold. This lack of liquidity could limit our ability to respond to market changes or our financial needs. We may seek to mitigate this risk through so-called “liquid staking” arrangements, where we deposit ETH into a smart contract and receive in exchange a “liquid staking token” which would allow us, or any person to whom we transfer that liquid staking token, to later withdraw our ETH and associated rewards. The smart contract would then automatically delegate our ETH to a third-party staking service provider. We could engage in other DeFi activities with liquid staking tokens. While we anticipate that the price of liquid staking tokens will correlate to ETH itself, there is a possibility that prices will diverge. This could especially happen if the validators deployed by the liquid staking contract are subject to slashing penalties, in which case we may be able to withdraw fewer ETH than we originally deposited. Any of these operational risks could materially and adversely affect our ability to execute our ETH Treasury Management strategy and may prevent us from realizing positive returns and could severely hurt our financial condition. ***ETH is created and transmitted through the operations of the peer-to-peer Ethereum network, a decentralized network of computers running software following the Ethereum protocol. If the Ethereum network is disrupted or encounters any unanticipated difficulties, the value of Ethereum could be negatively impacted.*** If the Ethereum network is disrupted or encounters any unanticipated difficulties, then the processing of transactions on the Ethereum network may be disrupted, which in turn may prevent us from depositing or withdrawing ETH from our accounts with our custodian or otherwise effecting ETH transactions. Such disruptions could include, for example: the price volatility of ETH; the insolvency, business failure, interruption, default, failure to perform, security breach, or other problems of participants, custodians, or others; the closing of ETH trading platforms due to fraud, failures, security breaches, or otherwise; or network outages or congestion, power outages, or other problems or disruptions affecting the Ethereum network. In addition, although we do not currently intend to mine ETH, digital asset validating operations can consume significant amounts of electricity, which may have a negative environmental impact and give rise to public opinion against allowing, or government regulations restricting, the use of electricity for validating operations. Additionally, validators may be forced to cease operations during an electricity shortage or power outage. Our ETH Treasury Management strategy exposes us to various risks, including risks associated with ETH, which include the following: *ETH is a highly volatile asset.* ETH is a highly volatile asset that has traded below $1,500 per ETH and above $4,000 per ETH on the Coinbase exchange in the 12 months preceding the date of this Quarterly Report on Form 10-Q. The trading price of ETH decreased following the launch of our ETH Treasury Management strategy to the end of this quarter, and such declines may occur again in the future. *Our ETH holdings significantly impact our financial results and the market price of our listed securities.* Our ETH holdings could significantly affect our financial results and if we continue to increase our overall holdings of ETH in the future, they will have an even greater impact on our financial results and the market price of our listed securities. *Our assets are concentrated in ETH.* The vast majority of our assets are concentrated in our ETH holdings or receipt tokens (i.e., LsETH) from liquid staking of ETH. The concentration of our assets in ETH limits our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of treasury assets. If there is a significant decrease in the price of ETH, we may experience a more pronounced impact on our financial condition than if we invested our cash in a more diverse portfolio of treasury assets. 60 *We primarily purchase ETH using proceeds from equity financings.* Our ability to achieve the growth objectives of our ETH Treasury Management strategy depends in significant part on our ability to continue raising capital to purchase ETH. If we are unable to obtain equity, equity-linked or debt financing on favorable terms or at all, we may not be able to successfully execute on our ETH Treasury Management strategy. *Our ETH Treasury Management strategy has not been tested over an extended period of time or under different market conditions.* We are continually examining the risks and rewards of our strategy to acquire and hold ETH and to stake such ETH to generate staking rewards. This strategy has not been tested over an extended period of time or under different market conditions. For example, although we believe ETH has the potential to serve as a hedge against inflation in the long term, the short-term price of ETH declined in recent periods during which the inflation rate increased. If ETH prices were to decrease or our ETH Treasury Management strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our listed securities would be materially adversely impacted. *Our ETH staking activities could result in “slashing risks” and loss of staked ETH.* ETH staking exposes us to slashing risks, defined as a punitive mechanism built into the Ethereum network, designed to penalize validators and their delegators for misbehavior or failing to follow network rules, which could result in the loss of our staked ETH. *We are subject to provider and counterparty risks, including risks relating to our custodians.* Although we have implemented various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the ETH and LsETH we own in custody accounts at U.S.-based, institutional-grade custodians and negotiating contractual arrangements intended to establish that our property interest in custodially-held ETH and LsETH is not subject to claims of our custodians’ creditors, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts. If our custodially-held ETH were nevertheless considered to be the property of our custodians’ estates in the event that any such custodians were to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership rights with respect to such ETH, or delaying or hindering our access to our ETH holdings or LsETH holdings, and this may ultimately result in the loss of the value related to some or all of such ETH and LsETH, which could have a material adverse effect on our financial condition as well as the market price of our listed securities. *The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of ETH.* A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry have highlighted the counterparty risks applicable to owning and transacting in digital assets. Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our ETH or LsETH, nor have such events adversely impacted our access to our ETH or LsETH, they have, in the short-term, likely negatively impacted the adoption rate and use of ETH. Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of ETH, limit the availability to us of financing collateralized by ETH, or create or expose additional counterparty risks. *Changes in the accounting treatment of our ETH holdings or LsETH holdings could have significant accounting impacts, including increasing the volatility of our results.* We have adopted ASU 2023-08 as of January 1, 2025, which requires us to measure our ETH holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our ETH in net income each reporting period beginning January 1, 2025. ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our ETH holdings. Due in particular to the volatility in the price of ETH, we expect the measurement at fair value to have a material impact on our financial results in future periods, increase the volatility of our financial results, and affect the carrying value of our ETH on our balance sheet. ASU 2023-08 could also have adverse tax consequences. In addition, on September 30, 2025, the Treasury and the IRS issued interim guidance (the “Interim Guidance”) which, in relevant part, clarifies that a corporation may disregard unrealized gains and losses on its digital asset holdings when computing AFSI for purposes of determining whether it is subject to the 15% CAMT under the Inflation Reduction Act. The Treasury and IRS intend to issue revised proposed regulations similar to this Interim Guidance. These impacts could in turn have a material adverse effect on our financial results and the market price of our listed securities. Additionally, our LsETH holdings as of December 31, 2025 are accounted for at cost-less-impairment. Significant declines in the price of LsETH may result in material impairment within our financial results. 61 ***ETH is a highly volatile asset, and fluctuations in the price of ETH are likely to influence our financial results and the market price of our listed securities.*** ETH is a highly volatile asset, and fluctuations in the price of ETH are likely to influence our financial results and the market price of our listed securities. Our financial results and the market price of our listed securities would be adversely affected, and our business and financial condition would be negatively impacted, if the price of ETH decreased substantially (as it has in the past), including as a result of: - decreased user and investor confidence in ETH, including due to the various factors described herein; - investment and trading activities, such as (i) trading activities of highly active retail and institutional users, speculators, miners and investors; (ii) actual or expected significant dispositions of ETH by large holders, including the expected liquidation of digital assets associated with entities that have filed for bankruptcy protection and the transfer and sale of ETH associated with significant hacks, seizures, or forfeitures; and (iii) actual or perceived manipulation of the spot or derivative markets for ETH or spot ETH exchange-traded products (“ETPs”); - negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, ETH or the broader digital assets industry, for example, (i) public perception that ETH can be used as a vehicle to circumvent sanctions, including sanctions imposed on Russia or certain regions related to the ongoing conflict between Russia and Ukraine, or to fund criminal or terrorist activities, such as the purported use of digital assets by Hamas to fund its terrorist attack against Israel in October 2023; (ii) expected or pending civil, criminal, regulatory enforcement or other high profile actions against major participants in the ETH ecosystem; (iii) additional filings for bankruptcy protection or bankruptcy proceedings of major digital asset industry participants, such as the bankruptcy proceeding of FTX Trading and its affiliates; (iv) the actual or perceived environmental impact of ETH and related activities, including environmental concerns raised by private individuals, governmental and non-governmental organizations, and other actors related to the energy resources consumed in ETH related processes, and (v) changes in government regulations ; - changes in consumer preferences and the perceived value or prospects of ETH; - competition from other digital assets that exhibit better speed, security, scalability, or energy efficiency, that feature other more favored characteristics, that are backed by governments, including the U.S. government, or reserves of fiat currencies, or that represent ownership or security interests in physical assets; - a decrease in the price of other digital assets, including stablecoins, or the crash or unavailability of stablecoins that are used as a medium of exchange for ETH purchase and sale transactions to the extent the decrease in the price of such other digital assets or the unavailability of such stablecoins may cause a decrease in the price of ETH or adversely affect investor confidence in digital assets generally; - developments relating to the ETH protocol that may impact (i) its security, speed, scalability, usability, or value, (b) failures to upgrade the protocol to adapt to security, technological, legal or other challenges, and (iii) changes to the ETH protocol that introduce software bugs, security risks or other elements that adversely affect ETH; - disruptions, failures, unavailability, or interruptions in service of trading venues for ETH; - the filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of digital asset custodians, trading venues, lending platforms, investment funds, or other digital asset industry participants; - regulatory, legislative, enforcement and judicial actions that adversely affect the price, ownership, transferability, trading volumes, legality or public perception of ETH, or that adversely affect the operations of or otherwise prevent digital asset custodians, trading venues, lending platforms or other digital assets industry participants from operating in a manner that allows them to continue to deliver services to the digital assets industry; - reductions in staking rewards of ETH, or increases in the costs associated with ETH staking, including increases in electricity costs and hardware and software used in staking, or new or enhanced regulation or taxation of ETH staking, which could further increase the costs associated with ETH staking, any of which may cause a decline in support for the Ethereum protocol; - transaction congestion and fees associated with processing transactions of ETH or lengthened periods to exit ETH staking or other delays to unstaking or withdrawing ETH from staking protocols; 62 - ETH staking exposes us to slashing risks, defined as a punitive mechanism built into the Ethereum network, designed to penalize validators and their delegators for misbehavior or failing to follow network rules, which could result in the loss of our staked ETH; - macroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions, and fiat currency devaluations; - changes in national and international economic and political conditions, including, without limitation, federal government policies, trade tariffs and trade disputes, the adverse impacts attributable to the current conflict between Russia and Ukraine and the economic sanctions adopted in response to the conflict, and the broadening of the Israel-Hamas conflict to other countries in the Middle East; and - developments in mathematics or technology, including in digital computing, algebraic geometry and quantum computing, that could result in the cryptography used by the ETH blockchain becoming insecure or ineffective The Ethereum network operates using open-source protocols, meaning that any user can become a node by downloading the Ethereum Client and participating in the Ethereum network, and no permission of a central authority or body is needed to do so. In addition, anyone can propose a modification to the Ethereum network’s source code and then propose that the Ethereum network community support the modification. These proposed modifications to the Ethereum network’s source code, if adopted, can lead to forks. ***A “fork” in the Ethereum protocol could adversely affect the value of the Company’s shares.*** Forks in the Ethereum protocol may lead to disruptions, security risks or declines in ETH value and therefore the value of the Company’s common stock. A “fork” occurs when a change to the Ethereum network’s source code creates two incompatible versions of the blockchain, resulting in separate networks. Forks may be planned (e.g., upgrades to the Ethereum protocol like the Merge or Dencun) or unplanned (e.g., due to software bugs or validator disagreement). Planned forks are designed to improve performance or introduce new features, but they may introduce bugs, security vulnerabilities, or unexpected economic consequences. Unplanned forks can arise from client software inconsistencies or protocol failures, causing network instability or fragmentation. In either case, forks may result in operational outages, user confusion, replay attacks and reduced validator participation, all of which could undermine confidence in the Ethereum network and adversely affect the price of ETH. Our ETH holdings, staking activities and related treasury strategy could be materially negatively impacted in the event of such a fork. ***Our ETH holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.*** Historically, the ETH market has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our ETH at favorable prices or at all. For example, a number of ETH trading venues temporarily halted deposits and withdrawals in 2022, although the Coinbase exchange (our principal market for ETH) has, to date, not done so. As a result, our ETH holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, ETH we hold with our custodians do not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered ETH or otherwise generate funds using our ETH holdings, including in particular during times of market instability or when the price of ETH has declined significantly. If we are unable to sell our ETH, enter into additional capital raising transactions, including capital raising transactions using ETH as collateral, or otherwise generate funds using our ETH holdings, or if we are forced to sell our ETH at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted. 63 ***We plan to purchase additional digital assets using primarily proceeds from equity and debt financings, but we may be unable to obtain such financings on favorable terms.*** Our ability to achieve the objectives of our digital asset acquisition strategy depends in significant part on our ability to obtain equity and debt financing. The terms of debt or equity securities that we issue may require us to make periodic payments to the holders of those securities. If we are unable to obtain equity or debt financing on favorable terms or at all, we may not be able to successfully execute on our digital asset acquisition strategy. Our ability to obtain equity or debt financing may in turn depend on, among other factors, the value of our digital asset holdings, investor sentiment and the public perception of ETH and other digital assets, our strategy and our value proposition. Accordingly, a significant decline in the market value of our digital asset holdings, our inability to monetize our ETH through staking, decentralized finance or other yield-generating activities, or a negative shift in these other factors may create liquidity and credit risks, as such a decline or such shifts may adversely impact our ability to secure sufficient equity or debt financing. ETH constitutes the vast bulk of assets on our balance sheet. If we are unable to secure equity or debt financing in a timely manner, on favorable terms, or at all, we may be required to sell ETH to satisfy our financial obligations, and we may be required to make such sales at prices below our cost basis or that are otherwise unfavorable. Any such sale of ETH may have a material adverse effect on our operating results and financial condition and could impair our ability to secure additional equity or debt financing in the future. Our inability to secure additional equity or debt financing in a timely manner, on favorable terms or at all, or to sell our ETH in amounts and at prices sufficient to satisfy our financial obligations, including any debt service and cash dividend obligations, could cause us to default under such obligations. Any default on our future indebtedness or any newly issued preferred stock could have a material adverse effect on our financial condition. Such actions could cause significant variation in our operating results in any quarter. There are also volatility risks related to stablecoins, which are designed to have a relatively stable price relative to an underlying physical asset, most commonly a fiat currency, such as U.S. dollars, or an exchange-traded commodity. The stability of a stablecoin results from the underlying assets backing the stablecoin that are held by the stablecoin’s issuer in reserve accounts, among other factors such as the ability of a holder to redeem the stablecoin from its issuer at par. The issuers of certain stablecoins currently retain broad discretion to determine the composition and amounts of assets held in the issuers’ accounts backing those stablecoins, and to substitute assets other than the fiat currency that is initially deposited. The composition of backing assets varies considerably across popular stablecoins, with some stablecoins backed entirely by off-chain assets including cash or short-term, highly liquid assets, and others backed by assets significantly less liquid than cash or cash equivalents. For example, Circle, which issues USDC, reports that it holds cash and short-term cash equivalents to back its USDC stablecoins. We regularly transact in and hold stablecoins; as of December 31, 2025, USDC is the only stablecoin that we held. A lack of applicable law and regulation has afforded discretion to certain stablecoin issuers to determine the composition and amounts of assets backing those stablecoins. There is a risk that an issuer may be unable to liquidate enough backing assets if it were to face mass redemptions of its stablecoin, which could cause the price of the stablecoin to deviate from the price of the underlying fiat currency or other asset with which the stablecoin is designed to align in price. In extreme cases, such as a request to immediately redeem all or substantially all of a particular stablecoin in circulation, even stablecoins backed by reserves comprised primarily of cash and cash equivalents may be subject to instability or an inability of the stablecoin issuer to meet all redemption requests, as the market for short-dated U.S. government obligations might not be sufficiently price stable. Market participants have increasingly shown concern about the actual underlying liquidity and reserves for dollar stablecoins such as USDC. For example, according to reports, Circle had more than $3 billion of its USDC reserve funds on deposit at SVB which became temporarily inaccessible when SVB was placed into FDIC receivership in March 2023. Although these funds were ultimately made available, concerns related to Circle’s access to these funds caused USDC to temporarily fall below its $1.00 peg, and the total market capitalization of USDC decreased following this temporary depegging. If a stablecoin issuer were to fail to honor its redemption obligations, this could undermine public confidence in stablecoins and in digital assets more broadly, which could have a widespread impact on the crypto economy, causing the prices of other stablecoins and digital assets to become more volatile. 64 Volatility in stablecoins, operational issues with stablecoins (for example, technical issues that prevent settlement), concerns about the sufficiency of any reserves that support stablecoins, or regulatory concerns about stablecoin issuers or intermediaries , such as crypto asset spot markets, that support stablecoins, could have a significant impact on the global crypto market and may adversely affect our business. Because stablecoins purport to be backed by underlying reserve assets, a fundamental issue in the event of the bankruptcy or insolvency of the issuer of a given stablecoin is which party possesses beneficial ownership of the underlying reserve assets: the holder of the stablecoin, or the issuer. If a particular stablecoin were structured in a manner that entitles its holder only to a contractual right to payment from the issuer (even if such payments are to be derived from the underlying assets), then the assets underlying the stablecoins may be considered to be the property of the issuer’s bankruptcy estate, such that all of the issuer’s creditors would be entitled to their pro rata share of such assets, with the stablecoin holder being treated as an unsecured creditor of the issuer. In such an event, if the issuer were to have insufficient funds or assets to satisfy the claims of its creditors, then the holder of a stablecoin would likely receive only a partial recovery, and not the full purported value of its stablecoin holdings. Conversely, if a particular stablecoin were structured in a manner that entitles its holder to absolute beneficial ownership of the underlying reserve assets, whereby the issuer holds bare legal title to the underlying assets but has no beneficial interest or property rights in such assets, then the holders would likely have a stronger claim on the underlying assets in the event of a bankruptcy or insolvency of the issuer. However, due to the novelty of stablecoins, courts have not yet considered the treatment of underlying reserve assets in the context of a bankruptcy or insolvency of a stablecoin issuer, and there can be no certainty as to a court’s determination in such circumstances. ***Blockchain technology may expose us to sanctioned or blocked persons or may result in unintentional or inadvertent violations of economic sanctions and anti-money laundering laws and regulations.*** We are subject to the rules enforced by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“**OFAC**”), including prohibitions on conducting direct or indirect business with persons named on, or owned by persons named on, OFAC’s various sanctions lists, including the Specially Designated Nationals and Blocked Persons list (“**SDN List**”). We are also prohibited from direct or indirect dealings with persons located, organized, or resident in jurisdictions subject to comprehensive U.S. economic sanctions (as of today, Cuba, Iran, North Korea, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, and the Crimea region of Ukraine), and may be prohibited from dealing with persons in other jurisdictions subject to targeted U.S. sanctions such as Venezuela, Russia, and Belarus. U.S. sanctions compliance obligations apply to all U.S. persons and cover transactions in digital assets. U.S. sanctions authorities and law enforcement have, in recent years, directed significant attention to sanctions compliance among the digital assets industry. For example, OFAC has issued updated advisories regarding the use of virtual currencies, added a number of digital asset exchanges and service providers to the SDN List, and engaged in several enforcement actions, including a series of enforcement actions that have either shut down or significantly curtailed the operations of several smaller digital asset exchanges associated with Russian and/or North Korean nationals. Because of the pseudonymous nature of blockchain transactions and decentralized applications, we may inadvertently and without knowledge, directly or indirectly engage in transactions with or for the benefit of prohibited persons under U.S. sanctions regulations, especially when engaging in DeFi activities where it may be impossible for us to determine the identity of our counterparties. OFAC may impose civil penalties for sanctions violations on a “strict liability” basis, meaning we may be held responsible for transacting with prohibited parties even if we have no knowledge that a particular counterparty is a prohibited person under U.S. sanctions regulations. In addition, we may be subject to non-U.S. economic sanctions laws and regulations to the extent we conduct activity within the jurisdiction of other sanctions regimes, including those of the European Union and United Kingdom. 65 OFAC and other governmental authorities have significant discretion in the interpretation and enforcement of U.S. economic sanctions laws and regulations. Moreover, economic sanctions laws and regulations continue to evolve, often with little or no notice, which could raise operational or compliance challenges. If it is determined that we have transacted with prohibited persons under U.S. sanctions regulations, even inadvertently, this could result in substantial reputational harm, fines or penalties, and costs associated with governmental inquiries and investigations. Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any or all of the foregoing could have a material adverse effect on our business, prospects, operations or financial condition. In addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities or fund criminal or terrorist activities. This misuse, or the perception of such misuse, could lead to greater regulatory oversight of ETH and ETH platforms, and there is the possibility that law enforcement agencies could close or blacklist ETH platforms or other ETH-related infrastructure with little or no notice and prevent users from accessing or retrieving ETH held via such platforms or infrastructure. We have recently implemented policies and procedures reasonably designed to promote compliance with applicable anti-money laundering laws and regulations and take care to only acquire our ETH through entities subject to anti-money laundering regulation and related compliance rules in the United States, if we are found to have purchased any of our ETH from bad actors that have used ETH to launder money or otherwise engage in illicit financial activity, we may be subject to regulatory proceedings and further transactions or dealings in ETH may be restricted or prohibited. ***The launch of central bank digital currencies (“CBDCs”) may adversely impact our business.*** The introduction of a government-issued digital currency could eliminate or reduce the need or demand for private-sector issued crypto currencies, or significantly limit their utility. National governments around the world could introduce CBDCs, which could in turn limit the size of the market opportunity for cryptocurrencies, including ETH. ***Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns.*** The Financial Crimes Enforcement Network, a division of the U.S. Treasury Department (“FinCEN”) regulates providers of certain services with respect to “convertible virtual currency,” including ETH. Businesses engaged in the transfer of convertible virtual currencies are subject to registration and licensure requirements at the U.S. federal level and also under U.S. state laws. While FinCEN has issued guidance that cryptocurrency mining, without engagement in other activities, does not require registration and licensure with FinCEN, FinCEN has not made similar pronouncements with respect to the operation of Ethereum validators. In addition, our engaging in decentralized finance activities could expose us to further risk in this regard. If regulatory changes or interpretations require us to register as a money services business with FinCEN under the U.S. Bank Secrecy Act, or as a money transmitter under state laws, we may be subject to extensive regulatory requirements—including those that would mandate us to implement anti-money laundering programs meeting certain requirements, make certain reports to FinCEN or state regulators, and maintain certain records—resulting in significant compliance costs and operational burdens. 66 We may incur extraordinary expenses to meet these requirements or, alternatively, may determine that continued operations are not viable. Further, we may not be capable of complying with certain federal or state regulatory obligations applicable to “money services businesses” and “money transmitters,” such as monitoring transactions and blocking transactions, because of the nature of the Ethereum blockchain. If we are deemed to be subject to and determine not to comply with such additional regulatory and registration requirements, we may act to dissolve and liquidate. If we decide to cease certain operations in response to new regulatory obligations, such actions could occur at a time that is unfavorable to investors. ***We may engage in decentralized finance transactions and deploy ETH using liquid staking and liquid restaking protocols, which present additional risk as opposed to simply holding our digital assets.*** We intend to invest and deploy ETH using one or more decentralized finance protocols. All trading and investment activity involves risk, which is heightened in the case of decentralized finance due to the irrevocable nature of blockchain transactions and the possibility of errors in smart contracts. Decentralized finance protocols also attract hackers and persons looking to exploit flaws in or the ability to misuse smart contracts. We also may incur losses in connection with our decentralized finance activity due to human error or our inability to predict future price movements. Any losses we sustain in connection with decentralized finance activities could cause an adverse impact on our financial condition, results of operations, and the market price of our Common Stock. Decentralized finance protocols also pose heightened regulatory concerns even beyond those that face digital asset networks and digital assets generally. The U.S. financial system is extensively regulated at both the federal and state level with a particular focus on intermediaries such as banks, broker-dealers, futures commission merchants, investment funds, investment advisers, financial asset exchanges, trading platforms, clearinghouses and custodians. U.S. laws and regulations impose specific obligations on financial services intermediaries both for the protection of their customers and for the protection of the U.S. financial system as a whole. These include, among others, capital requirements, activities restrictions, reporting and disclosure requirements and obligations to monitor the activities of their customers and to ensure that the intermediaries’ activities and the activities of their customers are conducted in accordance with applicable laws and regulations. Non-U.S. laws and regulatory requirements may impose similar obligations. By seeking to eliminate or substantially limit the role of traditional financial services intermediaries in lending, brokering, advisory, trading, clearing, custody and other financial services activities, DeFi protocols pose numerous challenges to the longstanding oversight framework developed under U.S. law and used by U.S. and other regulators. Legislative bodies and regulators may be required to adapt their regulatory models to accommodate decentralized financial activities, or take novel steps to supervise, limit or even prohibit decentralized financial activities. It is not possible to predict how or when these challenges will be resolved or what the impact on specific decentralized finance protocols will be, and it is likely that the decentralized finance industry will face a prolonged period of regulatory uncertainty. It is possible that some decentralized finance protocols will be subjected to costly and burdensome compliance regimes or even prohibited outright. We have also deployed ETH using liquid staking and liquid restaking protocols, including by staking ETH through Liquid Collective in exchange for LsETH and through ether.fi in exchange for weETH, the wrapped, non-rebasing form of eETH. Liquid staking protocols are even newer than many decentralized finance protocols and are a novel and evolving technology, and liquid restaking protocols — which layer additional restaking and validation arrangements on top of liquid staking and use the underlying ETH (or its receipt tokens) to provide cryptoeconomic security to other protocols and services — are even more novel and have an even more limited operating history. Although the staff of the SEC’s Division of Corporation Finance has provided a statement that the staff does not generally believe liquid staking services are securities offerings, and that it does not believe receipt tokens obtained through such liquid staking services are generally securities, there is no guarantee that courts agree. That staff statement is, by its terms, addressed to liquid staking and does not directly address liquid restaking arrangements or the receipt tokens obtained from liquid restaking protocols, such as weETH; the regulatory treatment of liquid restaking arrangements under the federal securities laws therefore remains uncertain. It is also possible that the liquid staking or liquid restaking protocols we use, or specific features of those protocols, do not fit within the scope of the staff statement. If it is determined that the liquid staking or liquid restaking protocols we use, or the receipt tokens we receive (including LsETH and weETH), are securities offerings, the providers of those protocols may be required to pay fines or be subject to other third-party claims, and the ETH we have deposited with them may be available to their creditors to fulfill those claims. See “*Our shift towards an ETH-focused treasury strategy requires substantial changes in our day-to-day operations and exposes us to significant operational risks*” and “*We face risks relating to the custody of our digital assets, including the loss or destruction of private keys required to access our digital assets and cyberattacks or other data loss relating to our digital assets and insolvency of our custodians.*” There is also ongoing uncertainty as to the regulatory treatment of liquid staking and liquid restaking services from other regulators and agencies. 67 Liquid restaking activities also involve risks beyond those associated with native staking or liquid staking. In a liquid restaking arrangement, the underlying ETH (or its receipt token) is used to provide cryptoeconomic security not only to the Ethereum proof-of-stake protocol but also to additional services, such as the EigenCloud Autonomous Verifiable Services (“AVSs”) that we secure through ether.fi. This exposes our underlying ETH to potential slashing, forfeiture or other penalties arising from issues outside of the Ethereum staking protocol itself, including operational failures, validator or operator misconduct, or technical problems with the AVSs being secured. The AVSs and other services secured through restaking are themselves new, with limited operating history, and there can be no assurance that they will function as designed. We have deployed a portion of our ETH treasury into weETH issued by ether.fi, and any losses sustained in connection with that deployment — whether from slashing, smart contract exploits, protocol failure or otherwise — could have a material adverse effect on our financial condition, results of operations and the market price of our Common Stock. In addition, we have bridged weETH from the Ethereum mainnet to Linea, a zkEVM Layer 2 network, using ether.fi’s weETH OFT bridge powered by LayerZero v2. Cross-chain bridges have historically been a frequent target of exploits in decentralized finance, and any failure, vulnerability or exploit affecting the bridge, the messaging layer or the destination network — or any disruption to or change in the Linea sequencer, prover, governance or future upgrades — could result in delays in accessing, or partial or total loss of, the weETH we have bridged. Both decentralized finance protocols and liquid staking and liquid restaking protocols typically rely on the use of smart contracts. Smart contracts are computer programs that run on a digital asset network or related protocol that execute automatically when certain conditions are met. Because smart contract functions typically cannot be stopped or reversed, vulnerabilities in or unforeseen consequences of their programming can have damaging effects for the underlying digital asset network or protocol and the value of digital assets that use or interact with such smart contracts. For example, in June 2016, a vulnerability in the smart contracts underlying a protocol that was deployed on the Ethereum network, The DAO, a distributed autonomous organization for venture capital funding, allowed an attack by a hacker to syphon approximately $60 million worth of ETH from The DAO into a separate account. In the aftermath of the theft, certain developers of and core contributors to the Ethereum network pursued a “hard fork” of the Ethereum network in order to erase any record of the theft. Despite these efforts, the price of ETH dropped approximately 35% in the aftermath of the attack and subsequent hard fork. In addition, in July 2017, a vulnerability in a smart contract for a multi-signature wallet software developed by Parity led to a $30 million theft of ETH, and in November 2017, a new vulnerability in Parity’s wallet software led to roughly $160 million worth of ETH being indefinitely frozen in an account. Other smart contracts, such as bridges between separate digital asset networks, have also been manipulated, exploited or used in ways that were not intended or envisioned by their creators. Initial and continued problems with the development, design and deployment of smart contracts may have an adverse effect on the value of protocols, including liquid staking, liquid restaking and decentralized finance protocols, built on smart contract platforms or other digital assets that rely on smart contract technology, including any liquid staking or liquid restaking tokens such as LsETH and weETH. Liquid restaking tokens such as weETH are exposed not only to risks at the liquid staking protocol layer but also to risks at the additional restaking and AVS layers and, where bridged to other networks, to risks of the cross-chain bridge and the destination network. If any of the smart contracts with which we interact — whether decentralized finance, liquid staking, liquid restaking, cross-chain bridging or otherwise — suffer from such manipulation or exploit, or otherwise do not function as intended or as we anticipate, our ETH and any LsETH, weETH or similar tokens we hold may be exposed. 68 ***If the digital asset award or transaction fees for recording transactions on the Ethereum Network are not sufficiently high to incentivize validators, or if certain jurisdictions continue to limit or otherwise regulate validating activities, validators may cease expanding validating power or demand high transaction fees, which could negatively impact the value of Ether and the value of our Common Stock.*** In 2021, the Ethereum Network implemented the EIP-1559 upgrade. EIP-1559 changed the methodology used to calculate transaction fees paid to Ether validators (then called “miners”) in such a manner that reduced the total net issuance of Ether fees paid to miners. If the digital asset awards for validating blocks or the transaction fees for recording transactions on the Ethereum Network are not sufficiently high to incentivize validators, validators may cease validating blocks and confirmations of transactions on the Ethereum Network could be slowed. For example, the realization of one or more of the following risks could materially adversely affect the value of our Common Stock: - If the profit margins of digital asset validating operations are not sufficiently high, digital asset validators are more likely to immediately sell digital assets earned by validating, resulting in an increase in liquid supply of that digital asset, which would generally tend to reduce that digital asset’s market price. - A reduction in digital assets staked by validators on the Ethereum Network could increase the likelihood of a malicious actor or botnet obtaining control. See “*-If a malicious actor or botnet obtains control of more than 33% of the validating power on the Ethereum Network, or otherwise obtains control over the Ethereum Network through its influence over core developers or otherwise, such actor or botnet could manipulate the Ethereum Network to adversely affect the value of our Common Stock*.” - Validators have historically accepted relatively low transaction confirmation fees on most digital asset networks. If validators demand higher transaction fees for recording transactions on the Ethereum Network or a software upgrade automatically charges fees for all transactions on the Ethereum Network, the cost of using ETH may increase and the demand for ETH may correspondingly decrease. Alternatively, validators could collude in an anti-competitive manner to reject low transaction fees on the Ethereum Network and force users to pay higher fees, thus reducing the attractiveness of the Ethereum Network. Higher transaction confirmation fees resulting through collusion or otherwise may adversely affect the attractiveness of the Ethereum Network, the value of ETH and the value of our Common Stock. - To the extent that any validators cease to record transactions that do not include the payment of a transaction fee in validated blocks or do not record a transaction because the transaction fee is too low, such transactions will not be recorded on the Ethereum blockchain until a block is validated by a validator who does not require the payment of transaction fees or is willing to accept a lower fee. Any widespread delays in the recording of transactions could result in a loss of confidence in the Ethereum Network. - During the course of ordering transactions and validating blocks, validators may be able to prioritize certain transactions in return for increased transaction fees, an incentive system known as “Maximal Extractable Value” or MEV. For example, in blockchain networks that facilitate DeFi protocols in particular, such as the Ethereum Network, users may attempt to gain an advantage over other users by increasing offered transaction fees. Certain software solutions have been developed which facilitate validators in capturing MEV produced by these increased fees. The MEV incentive system may lead to an increase in transaction fees on the Ethereum Network, which may diminish its use. Users or other stakeholders on the Ethereum Network could also view the existence of MEV as unfair manipulation of decentralized digital asset networks, and refrain from using DeFi protocols or the Ethereum Network generally. In addition, it’s possible regulators or legislators could enact rules which restrict the use of MEV, which could diminish the popularity of the Ethereum Network among users and validators. Any of these or other outcomes related to MEV may adversely affect the value of Ether and the value of our Common Stock. ***Our Custodians’ digital asset insurance may not be sufficient to make us whole in the event of any loss of ETH.*** As of the date of this filing, the insurance that covers losses of our ETH holdings may cover none or only a small fraction of the value of the entirety of our ETH holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our ETH. The insurance policies maintained by our custodians are shared among all of such custodian’s customers and are not specific to us and may not be available or sufficient to protect us as a result. Moreover, our use of custodians exposes us to the risk that the ETH our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such ETH. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our ETH. The legal framework governing digital asset ownership and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could result in unexpected losses, protracted recovery processes or adverse treatment in insolvency proceedings. 69 ***Digital asset networks face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successful.*** Many digital asset networks face significant scaling challenges due to the fact that public, permissionless blockchains generally face a tradeoff between security and scalability. One means through which digital asset networks that utilize public, permissionless blockchains achieve security is decentralization, meaning that no intermediary is responsible for securing and maintaining these systems. For example, a greater degree of decentralization of a public, permissionless blockchain generally means a given digital asset network is less susceptible to manipulation or capture. In practice, this typically means that every single node on a given digital asset network is responsible for securing the system by processing every transaction and maintaining a copy of the entire state of the network. As a result, a digital asset network that utilizes a public, permissionless blockchain may be limited in the number of transactions it can process by the computing capabilities of each single fully participating node. As of March 31, 2025, the Ethereum Network handled approximately 18 transactions per second. In an effort to increase the volume of transactions that can be processed on a given digital asset network, many digital assets are being upgraded with various features to increase the speed and throughput of digital asset transactions. Many developers are actively researching and testing scalability solutions for public blockchains that do not necessarily result in lower levels of security or decentralization, such as off-chain payment channels and Layer 2 networks. Off-chain payment channels would allow parties to transact without requiring the full processing power of a blockchain. Layer 2 networks can increase the scalability of a blockchain by allowing users to transact on a second blockchain deployed on top of a “Layer 1” network. However, such off-chain channels and Layer 2 networks only periodically use the Ethereum Network, reducing the demand for ETH as gas fees. As corresponding increases in throughput lag behind growth in the use of digital asset networks, average transaction fees and settlement times may increase considerably. For example, the Ethereum Network has been, at times, at capacity, which has led to transaction fees as high as $200.27 per transaction, on May 1, 2022. Transaction fees in 2024 have ranged from a high of $12.11 on January 19 to below $1.00 throughout much of the year. Increased transaction fees and decreased settlement speeds could preclude certain uses for Ether (e.g., micropayments), and could reduce demand for, and the price of, ETH, which could adversely impact the value of our Common Stock. However, reduced gas fees could signal lower demand for ETH. There is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement or throughput of Ethereum Network transactions will be effective, or how long these mechanisms will take to become effective, which could adversely impact the value of our Common Stock. ***The AI industry is subject to developing and evolving regulatory frameworks globally, which are expected to become increasingly complex as AI continues to evolve, and our efforts to, or our failure or inability to comply with, these regulations or regulatory action against us could adversely affect our results of operations, financial condition or business.*** The rapid pace of innovation in the field of AI has led to developing and evolving regulatory frameworks globally, which are expected to become increasingly complex. U.S. and regulators and lawmakers have started proposing and adopting, or are currently considering, regulations and guidance specifically on the use of AI. In the U.S., there is ongoing tension between the states and the federal government over how best to regulate the use of AI. Colorado passed a Consumer Protections for Artificial Intelligence bill introducing state-level oversight of “high-risk” AI systems. It is possible that new laws and regulations will be adopted in the U.S. and in non-U.S. jurisdictions, or that existing laws and regulations may be interpreted, in ways that would affect our operations. We may be unable to anticipate or respond to these changes, and may need to expend additional resources to adjust our offerings where legal frameworks diverge. Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations. 70 ***Cybersecurity incidents and other issues related to our information systems, technology and data may affect us materially and adversely*** Cybersecurity incidents and cyberattacks have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future. The digital asset industry are a particular target for cybersecurity incidents, which may occur through intentional or unintentional acts by individuals or groups having authorized or unauthorized access to our systems or our clients’ or counterparties’ information, which may include confidential information. These individuals or groups include employees, vendors and customers, as well as hackers. The information and technology systems used by us and our service providers, and other third parties, are vulnerable to damage or interruption from, among other things: hacking, ransomware, malware and other computer viruses; denial of service attacks; network failures; computer and telecommunication failures; phishing attacks; infiltration by unauthorized persons; security breaches; usage errors by their respective professionals; power outages; terrorism; and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes. It is difficult or impossible to defend against every risk being posed by changing technologies, as well as criminals’ intent to commit cybercrime, and these efforts may not be successful in anticipating, preventing, detecting or stopping attacks, or reacting in a timely manner. The increasing sophistication and resources of cybercriminals and other non-state threat actors and increased actions by nation-state actors make it difficult to keep up with new threats and could result in a breach of security. Such threats may see their frequency increased, and effectiveness enhanced, by the use of artificial intelligence. Further, cybersecurity risks may be heightened as a result of ongoing global conflicts such as the Russia-Ukraine conflict or the ongoing Israel-Hamas conflict. Additionally, we cannot guarantee that our insurance coverage would be sufficient to cover any such losses. To the extent the operation of our systems relies on our third-party service providers, through either a connection to, or an integration with, third parties’ systems, the risk of cybersecurity attacks and loss, corruption, or unauthorized access to or publication of our information or the confidential information and personal data of customers and employees may increase. Third-party risks may include insufficient security measures, data location uncertainty, and the possibility of data storage in inappropriate jurisdictions where laws, security measures or other controls may be inadequate or in which there are uncertainties regarding governmental intervention and use of such data, and our ability to monitor our third-party service providers’ data security practices are limited. Although we generally have agreements relating to cybersecurity and data privacy in place with our third-party service providers, they are limited in nature and we cannot guarantee that such agreements will prevent the accidental or unauthorized access to or disclosure, loss, destruction, disablement or encryption of, use or misuse of or modification of data (including personal data) or enable us to obtain adequate or any reimbursement from our third-party service providers in the event we should suffer any such incidents. Due to applicable laws and regulations or contractual obligations, we may be held responsible for any information security failure or cybersecurity attack attributed to our vendors as they relate to the information we share with them. A vulnerability in or related to a third-party service provider’s software or systems, a failure of our third-party service providers’ safeguards, policies or procedures, or a breach of a third-party service provider’s software or systems could result in the compromise of the confidentiality, integrity or availability of our systems or the data housed in our third-party solutions. The security of the information and technology systems used by us and our service providers may continue to be subjected to cybersecurity threats that could result in material failures or disruptions in our business. If these systems are compromised, become inoperable for extended periods of time or cease to function properly, we or a service provider may have to make a significant investment to fix or replace them. The failure of these systems or of disaster recovery plans for any reason could cause significant interruptions in operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to stockholders (and the beneficial owners of stockholders). Such a failure could harm our reputation, subject us to legal claims and otherwise materially and adversely affect our investment and trading strategies and our value. 71 ***If a malicious actor or botnet obtains control of more than 33% of the validating power on the Ethereum Network, or otherwise obtains control over the Ethereum Network through its influence over core developers or otherwise, such actor or botnet could manipulate the Ethereum Network to adversely affect the value of our Common Stock.*** All networked systems are vulnerable to various types of attacks. As with any computer network, the Ethereum Network could be attacked. For example, following the “Merge” to transition the Ethereum Network from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism and the switch to proof-of-stake validation, the Ethereum Network is currently vulnerable to several types of attacks, including: - “>33% attack” where, if a malicious actor, validator, botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) or group of validators acting in concert were to gain control of more than 33% of the total staked Ether on the Ethereum Network, a malicious actor could temporarily impede or delay block confirmation or even cause a temporary fork in the blockchain. This is designed to be a temporary risk, as the Ethereum Network’s inactivity leak would be expected to eventually penalize the attacker enough for the chain to finalize again (i.e., the honest majority would be expected to reclaim 2/3rd stake as the attacker’s stake is penalized). Moreover, it is not believed that a 33% attack would allow a malicious actor to engage in double-spending or fraudulent block propagation. Even without 33% control, a malicious actor or botnet could create a flood of transactions in order to slow down the Ethereum Network. - “>50% attack” where, if a malicious actor, validator, botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) or group of validators acting in concert were to gain control of more than 50% of the total staked Ether on the Ethereum Network, a malicious actor would be able to manipulate transactions on the blockchain, including censoring transactions, double-spending and fraudulent block propagation, potentially for an extended period or even permanently. In theory, the minority non-attackers might reach social consensus to reject blocks proposed by the malicious majority attacker, reducing the attacker’s ability to engage in malicious activity, but there can be no assurance this would happen or that non-attackers would be able to coordinate effectively. To the extent that such malicious actor or botnet did not yield its control of the validating power on the Ethereum Network or the Ethereum community did not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible. - “>66% attack” where, if a malicious actor, validator, botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) or group of validators acting in concert were to gain control of more than 66% of the total staked Ether on the Ethereum Network, a malicious actor could permanently and irreversibly manipulate the blockchain, including censorship, double-spending and fraudulent block propagation. Although the malicious actor or botnet may not be able to generate new tokens or transactions using such control, it could “double-spend” its own tokens (i.e., spend the same tokens in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control (over 50%). The attacker could finalize their preferred chain without any consideration for the votes of other stakers and could also revert finalized blocks. In an example from another network, in August 2020, the Ethereum Classic Network, a proof-of-work network, was the target of two double-spend attacks by an unknown actor or actors that gained more than 50% of the processing power of the Ethereum Classic Network. The attacks resulted in reorganizations of the Ethereum Classic Blockchain that allowed the attacker or attackers to reverse previously recorded transactions in excess of over $5.0 million and $1.0 million. In addition, in May 2019, the Bitcoin Cash network, a proof-of-work network, experienced a >50% attack when two large mining pools reversed a series of transactions in order to stop an unknown miner from taking advantage of a flaw in a recent Bitcoin Cash protocol upgrade. Although this particular attack was arguably benevolent, the fact that such coordinated activity was able to occur may negatively impact perceptions of the Bitcoin Cash network. Although the two attacks described above took place on proof-of-work-based networks, it is possible that a similar attack may occur on the Ethereum Network, which could negatively impact the value of Ether and the value of our Common Stock. Although there are no known reports of malicious control of the Ethereum Network, if groups of coordinating or connected Ether holders that together have more than 33% of outstanding Ether were to stake that Ether and run validators, they could exert authority over the validation of Ether transactions. This risk is heightened if a substantial amount of the validating power on the network falls within the jurisdiction of a single governmental authority and is significantly heightened if over 66% falls within such a jurisdiction. If network participants, including the core developers and the administrators of validating pools, do not act to ensure greater decentralization of Ethereum Network validators, the feasibility of a malicious actor obtaining control of the validating power on the Ethereum Network will increase, which may adversely affect the value of our Common Stock. 72 A malicious actor may also obtain control over the Ethereum Network through its influence over core developers by gaining direct control over a core developer or an otherwise influential programmer. The less that the Ethereum ecosystem grows, the greater the possibility that a malicious actor may be able to maliciously influence the Ethereum Network in this manner. Moreover, it is possible that a group of Ether holders that together control more than a substantial amount of outstanding Ether are in fact part of the initial or current core developer group, or are otherwise influential members of the Ethereum community. To the extent that the initial or current core developer groups also control higher than a threshold of outstanding Ether necessary for an attack, as some believe, the risk of this particular group of users causing the Ethereum Network to adopt updates to the core protocol that this particular group wants to be implemented will be even greater, and should this materialize, it may adversely affect the value of our Common Stock. ***Digital asset networks are developed by a diverse set of contributors and the perception that certain high-profile contributors will no longer contribute to the network could have an adverse effect on the market price of the related digital asset.*** Digital asset networks and related protocols are often developed by a diverse set of contributors, but are also often developed by identifiable and high-profile contributors. The perception that certain high-profile contributors may no longer contribute to the applicable digital asset network or protocol may have an adverse effect on the market price of any related digital assets. For example, in June 2017, an unfounded rumor circulated that Ethereum protocol developer Vitalik Buterin had died. Following the rumor, the price of Ether decreased approximately 20% before recovering after Buterin himself dispelled the rumor. Some have speculated that the rumor led to the decrease in the price of Ether. In the event a high-profile contributor to the Ethereum Network, such as Vitalik Buterin, is perceived as no longer contributing to the Ethereum Network due to death, retirement, withdrawal, incapacity, or otherwise, whether or not such perception is valid, it could negatively affect the price of Ether, which could adversely impact the value of our Common Stock. ***The availability of spot ETPs for ETH and other digital assets may adversely affect the market price of our listed securities.*** Although ETH and other digital assets have experienced a surge of investor attention since ETH was invented in 2015, until recently investors in the United States had limited means to gain direct exposure to ETH through traditional investment channels, and instead generally were only able to hold ETH through “hosted” wallets provided by digital asset service providers or through “unhosted” wallets that expose the investor to risks associated with loss or hacking of their private keys. Given the relative novelty of digital assets, general lack of familiarity with the processes needed to hold ETH directly, as well as the potential reluctance of financial planners and advisers to recommend direct ETH holdings to their retail customers because of the manner in which such holdings are custodied, some investors have sought exposure to ETH through investment vehicles that hold ETH and issue shares representing fractional undivided interests in their underlying ETH holdings. These vehicles, which were previously offered only to “accredited investors” on a private placement basis, have in the past traded at substantial premiums to net asset value, possibly due to the relative scarcity of traditional investment vehicles providing investment exposure to ETH. Although we are an operating company, and we believe we offer a different value proposition than a ETH investment vehicle such as a spot ETH ETP, investors may nevertheless view our common stock as an alternative to an investment in an ETP, and choose to purchase shares of a spot ETP instead of our common stock. They may do so for a variety of reasons, including if they believe that ETPs offer a “pure play” exposure to ETH that is generally not subject to federal income tax at the entity level as we are, or the other risk factors applicable to an operating business, such as ours. 73 As a result of the foregoing factors, availability of spot ETPs for ETH and other digital assets could have a material adverse effect on the market price of our listed securities. ***The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of ETH and adversely affect our business.*** As a result of our ETH Treasury Management strategy, our assets are concentrated in our ETH holdings. Accordingly, the emergence or growth of digital assets other than ETH may have a material adverse effect on our financial condition. There are numerous alternative digital assets and many entities, including consortiums and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets. Additionally, the Ethereum network has completed multiple major upgrades since then and may undertake additional upgrades in the future. If the mechanisms for validating transactions in other alternative digital assets are perceived as superior to the Ethereum network, those digital assets could gain market share relative to ETH. Other alternative digital assets that compete with ETH in certain ways include “stablecoins,” which are designed to maintain a constant price because of, for instance, their issuers’ promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown rapidly as an alternative to ETH and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms. Additionally, central banks in some countries have started to introduce digital forms of legal tender. For example, China’s CBDC project was made available to consumers in January 2022, and governments including the United States, the United Kingdom, the European Union, and Israel have been discussing the potential creation of new CBDCs. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, ETH and other digital assets as a medium of exchange or store of value. As a result, the emergence or growth of these or other digital assets could cause the market price of ETH to decrease, which could have a material adverse effect on our business, prospects, financial condition, and operating results. ***If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our ETH, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our ETH and our financial condition and results of operations could be materially adversely affected.*** Substantially all of the ETH and LsETH we own is held in custody accounts at institutional-grade digital asset custodians. Security breaches and cyberattacks are of particular concern with respect to our ETH. ETH and other blockchain-based cryptocurrencies and the entities that provide services to participants in the ETH ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. A successful security breach or cyberattack could result in: - a partial or total loss of our ETH in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who hold our ETH; - harm to our reputation and brand; - improper disclosure of data and violations of applicable data privacy and other laws; or - significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure. Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader blockchain ecosystem or in the use of the Ethereum network to conduct financial transactions, which could negatively impact us. 74 Attacks upon systems across a variety of industries, including industries related to ETH, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service providers or partners. We may experience breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. In addition, certain types of attacks could harm us even if our systems are left undisturbed. For example, certain threats are designed to remain dormant or undetectable, sometimes for extended periods of time, or until launched against a target and we may not be able to implement adequate preventative measures. The risk of cyberattacks could also be increased by cyberwarfare in connection with the ongoing Russia-Ukraine and Israel-Hamas conflicts, or other future conflicts, including potential proliferation of malware into systems unrelated to such conflicts. Any future breach of our operations or those of others in the ETH industry, including third-party services on which we rely, could materially and adversely affect our business. ***We face risks relating to the custody of our ETH, including the loss or destruction of private keys required to access our ETH and cyberattacks or other data loss relating to our ETH.*** We hold our ETH with regulated custodians that have duties to safeguard our private keys. Our custodial services contracts do not restrict our ability to reallocate our ETH among our custodians, and our ETH holdings may be concentrated with a single custodian from time to time. In light of the significant amount of ETH we hold, we will seek to engage additional custodians to achieve a greater degree of diversification in the custody of our ETH as the extent of potential risk of loss is dependent, in part, on the degree of diversification. If there is a decrease in the availability of digital asset custodians that we believe can safely custody our ETH, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our ETH, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected. ETH is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the ETH is held. While the ETH blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the ETH held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the ETH held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack. ETH, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. As of the date of this filing, the insurance that covers losses of our Ether holdings may cover none or only a small fraction of the value of the entirety of our Ether holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our Ether. Moreover, our use of custodians exposes us to the risk that the Ether our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Ether. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Ether. The legal framework governing digital asset ownership and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could result in unexpected losses, protracted recovery processes or adverse treatment in insolvency proceedings. 75 As part of our treasury management strategy, we may engage in staking, restaking, or other permitted activities that involve the use of “smart contracts” or decentralized applications. The use of smart contracts or decentralized applications entails certain risks including risks stemming from the existence of an “admin key” or coding flaws that could be exploited, potentially allowing a bad actor to issue or otherwise compromise the smart contract or decentralized application, potentially leading to a loss of our Ether. Like all software code, smart contracts are exposed to risk that the code contains a bug or other security vulnerability, which can lead to loss of assets that are held on or transacted through the contract or decentralized application. Smart contracts and decentralized applications may contain bugs, security vulnerabilities or poorly designed permission structures that could result in the irreversible loss of Ether or other digital assets. Exploits, including those stemming from admin key misuse, admin key compromise, or protocol flaws, have occurred in the past and may occur in the future. ***We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.*** Mutual funds, ETFs and their directors and management are subject to extensive regulation as “investment companies” and “investment advisers” under U.S. federal and state law; this regulation is intended for the benefit and protection of investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of or changes to our ETH Treasury Management strategy, the manner in which our ETH is custodied, our ability to engage in transactions with affiliated parties and our operating and investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies and investment advisers. Our board of directors has broad discretion over the investment, leverage and cash management policies it authorizes, whether in respect of our ETH holdings or other activities we may pursue, and has the power to change our current policies, including our strategy of acquiring and holding ETH. ***Due to the unregulated nature and lack of transparency surrounding the operations of many ETH trading venues, ETH trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in ETH trading venues and adversely affect the value of our ETH.*** ETH trading venues are relatively new and, in many cases, unregulated. Furthermore, there are many ETH trading venues which do not provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance. As a result, the marketplace may lose confidence in ETH trading venues, including prominent exchanges that handle a significant volume of ETH trading and/or are subject to regulatory oversight, in the event one or more ETH trading venues cease or pause for a prolonged period the trading of ETH or other digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational problems. ***Our ETH Treasury Management strategy exposes us to risk of non-performance by providers and counterparties.*** Our ETH Treasury Management strategy exposes us to the risk of non-performance by providers and counterparties, whether contractual or otherwise. Risk of non-performance includes inability or refusal of a provider or counterparty to perform because of a deterioration in the counterparty’s financial condition and liquidity or for any other reason. For example, our execution partners, custodians, or other counterparties might fail to perform in accordance with the terms of our agreements with them, which could result in a loss of ETH, a loss of the opportunity to generate funds, or other losses. Our primary provider risk with respect to our ETH is custodian performance obligations under the various custody arrangements we have entered into. In particular, Sharplink is reliant on our custodial relationships and agreements with Anchorage Digital Bank N.A. and its affiliates, as well as Coinbase Inc. and its affiliates. Any failures of our custodians to perform could have an impact on our business, prospects, financial condition and operating results. In addition, in the event of a termination of one or more of our custody agreements, the Company would be required to contract with an alternative custodian at terms and conditions that may not be as favorable as our current custody agreements. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry have highlighted the perceived and actual counterparty and provider risk applicable to digital asset ownership and trading. Although these bankruptcies, closures and liquidations have not resulted in any loss or misappropriation of our ETH, nor have such events adversely impacted our access to our ETH, legal precedent created in these bankruptcy and other proceedings may increase the risk of future rulings adverse to our interests in the event one or more of our custodians becomes a debtor in a bankruptcy case or is the subject of other liquidation, insolvency or similar proceedings. While all of our custodians are subject to regulatory regimes intended to protect customers in the event of a custodial bankruptcy, receivership or similar insolvency proceeding, no assurance can be provided that our custodially-held ETH and LsETH will not become part of the custodian’s insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings. Additionally, if we pursue any strategies to create income streams or otherwise generate funds using our ETH holdings, we would become subject to additional counterparty risks. Any significant non-performance by providers and counterparties, including in particular the custodians with which we custody substantially all of our ETH, could have a material adverse effect on our business, prospects, financial condition and operating results. 76 **ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS** On August 21, 2025, the Board authorized a share repurchase program under which the Company may repurchase up to $1.5 billion of its outstanding Common Stock. The Company did not repurchase any shares for the three months ended March 31, 2026. **ITEM 3. DEFAULTS UPON SENIOR SECURITIES** None. **ITEM 4. MINE SAFETY DISCLOSURES** Not applicable. **ITEM 5. OTHER INFORMATION** None of the Company’s directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, as such terms are defined under Item 408(a) of Regulation S-K, during the Company’s fiscal quarter ended March 31, 2026. **Sharplink, Inc. Disclosure Channels to Disseminate Information** Sharplink’s investors and others should note that we announce material information to the public about our Company and its ETH updates, ETH Dashboard and other matters through a variety of means, including the Company’s website, press releases, SEC filings and social media, in order to achieve broad, non-exclusionary distribution of information to the public. We encourage our investors and others to review the information we make public in the locations below as such information could be deemed to be material information. Please note that this list may be updated from time to time. For more information on Sharplink, Inc. and its ETH updates, ETH Dashboard, and other matters, please visit: https://www.sharplink.com/. For more information for the Company’s investors, including press releases, SEC filings, corporate presentations, events, please visit: https://www.sharplink.com/investors. Investors and other interested parties can subscribe to our press releases and SEC filings at the aforementioned address. For additional information, please follow Sharplink social media accounts at: X account (formerly Twitter): @Sharplink or https://x.com/sharplink LinkedIn: https://www.linkedin.com/company/sharplink-sbet Investors and other interested parties can also subscribe to our social media accounts at the aforementioned addresses. **Chief Accounting Officer** On May 6, 2026, the Board appointed Dana Perez, 48, the former Senior Vice President of Accounting as the Chief Accounting Officer, effective March 1, 2026. Ms. Perez has served as the Company’s Senior Vice President of Accounting since September 15, 2025. In connection with the appointment, Ms. Perez entered into an employment letter with the Company providing for: (i) an annual base salary of $350,000; (ii) a short-term incentive opportunity equal to 30% of her base salary and a maximum opportunity of 80%; and (iii) a 2026 long-term incentive opportunity of $150,000. If the Company terminates her employment without cause, she will receive continued base salary for nine months, subject to her execution of a release of claims in favor of the Company. Upon a change in control, all unvested time-based equity awards will vest in full, and all unvested performance-based equity awards will vest based on actual achievement of the applicable performance goals measured through the date immediately prior to the change in control (or as close to that date as administratively practicable). Ms. Perez will also be eligible to participate in the standard benefit plans generally available to similarly situated employees and has reaffirmed her obligations under her existing Confidentiality and Proprietary Rights Agreement. The foregoing description is qualified in its entirety by reference to the full text of the employment letter, which will be filed in the Company’s Form 10-Q for the quarter ended June 30, 2026. Ms. Perez is a Florida-licensed Certified Public Accountant with over 25 years of experience in SEC compliance and reporting, audit management, technical accounting, and financial statement preparation. Since 2020, she has served as the principal of Eschenburg Perez CPA, LLC, a financial consulting firm providing fractional CFO and controller services to public and private companies. Concurrently, she has served as Chief Financial Officer of Jupiter Neurosciences, Inc. (June 2021 to December 2022), MGO Global, Inc. (January 2024 to February 2025), and as Interim Chief Financial Officer of Capstone Companies, Inc. (January 2023 to present). From 2013 to 2021, Ms. Perez served as Chief Financial Officer of Adopt-A-Family of the Palm Beaches, Inc. Earlier in her career, she served as Manager, National Office of Risk Management, and Audit Manager at RSM US LLP. Ms. Perez holds a Master of Science in Accountancy and a Bachelor of Science in Accountancy from the University of North Carolina at Wilmington and is a member of the American Institute of Certified Public Accountants. There are no family relationships between Ms. Perez and any director or other executive officer, nor are there any transactions to which the Company was or is a participant and in which Ms. Perez has a material interest subject to disclosure under Item 404(a) of Regulation S-K. There are no arrangements or understandings between Ms. Perez and any other persons pursuant to which she was selected as an officer. 77 **ITEM 6. EXHIBITS** | Exhibit No. | Description | | --- | --- | | 3.1 | Certificate of Incorporation of SharpLink Gaming, Inc. (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-4 filed with the SEC on June 15, 2023) | | 3.2 | Amended and Restated Certificate of Incorporation of SharpLink Gaming, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K12B filed with the SEC on February 13, 2024) | | 3.3 | Certificate of Designation of the Series A-1 Preferred Stock of SharpLink Gaming, Inc., par value $0.0001 per share (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K12B filed with the SEC on February 13, 2024) | | 3.4 | Certificate of Designation of the Series B Preferred Stock of SharpLink Gaming, Inc., par value $0.0001 per share (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K12B filed with the SEC on February 13, 2024) | | 3.5 | Certificate of Amendment to Amended and Restated Certificate of Incorporation of SharpLink Gaming, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on May 2, 2025) | | 3.6 | Second Certificate of Amendment to the Amended and Restated Certificate of Incorporation of SharpLink Gaming, Inc., effective as of July 24, 2025 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on July 25, 2025) | | 3.7 | Third Certificate of Amendment to the Amended and Restated Certificate of Incorporation of SharpLink Gaming, Inc., effective as of September 25, 2025 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on September 25, 2025) | | 3.8 | Fourth Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Sharplink, Inc., effective as of February 3, 2026 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on February 3, 2026). | | 3.9 | Second Amended and Restated Bylaws of Sharplink, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on February 3, 2026) | | 10.1 | Termination Agreement, dated April 3, 2026, between Sharplink, Inc. and Galaxy Digital Capital Management LP | | 10.2 | Termination Agreement, dated April 3, 2026, between Sharplink, Inc. and ParaFi Capital LP | | 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer | | 31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer | | 32.1** | Section 1350 Certification of principal executive officer | | 32.2** | Section 1350 Certification of principal financial officer | | 101.INS | Inline XBRL INSTANCE DOCUMENT | | 101.SCH | Inline XBRL TAXONOMY EXTENSION SCHEMA | | 101.CAL | Inline XBRL TAXONOMY EXTENSION CALCULATION LINKBASE | | 101.DEF | Inline XBRL TAXONOMY EXTENSION DEFINITION LINKBASE | | 101.LAB* | Inline XBRL TAXONOMY EXTENSION LABEL LINKBASE | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ** Furnished herewith. * Filed herewith. 78 **SIGNATURES** Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. **Sharplink, Inc.** Dated: May 8, 2026 By: */s/ Joseph Chalom* Joseph Chalom Chief Executive Officer Dated: May 8, 2026 By: */s/ Robert DeLucia* Robert DeLucia Chief Financial Officer 79