Bitwise Dogecoin ETF 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of the Trust’s financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, the Trust’s unaudit ed financial statements and related notes included elsewhere in this Quarterly Report, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The following discussion may contain forward-looking statements based on assumptions the Trust believes to be reasonable. The Trust’s actual results could differ materially from those discussed in these forward-looking statements. See “Statement Regarding Forward-Looking Statements” above. You should not place undue reliance on any forward-looking statements. Except as expressly required by the Federal securities laws, the Trust and the Sponsor undertake no obligation to publicly update or revise any forward-looking statements or the risks, uncertainties or other factors described in this Quarterly Report, as a result of new information, future events or changed circumstances or for any other reason after the date of this Quarterly Report. Trust Overview The Trust’s registration statement on Form S-1 relating to its continuous public offering of Shares was declared effective by the U.S. Securities and Exchange Commission on November 25, 2025 and the Shares of the Trust began trading on the Exchange on November 26, 2025. Prior to the commencement of operations on November 25, 2025, on November 3, 2025, BAM purchased 8 Shares at a per-share price of $25.00 for $200.00 in a transaction exempt from registration under Section 4(a)(2) of the 1933 Act (the “Seed Shares”). On November 25, 2025, BAM redeemed the entirety of its 8 Seed Shares for $200 and Bitwise Investment Manager, LLC (“BIM”), an affiliate of the Sponsor, purchased the initial 100,000 Shares of the Trust (the “Seed Baskets”) for $2,500,000, at a per-Share price of $25.00. BIM acted as a statutory underwriter in connection with the initial purchase of the Seed Baskets. The Trust is an exchange-traded product that issues common shares of beneficial interest (“Shares”) that are listed on NYSE Arca, Inc. (the “Exchange”) under the ticker symbol “BWOW.” The Trust’s investment objective is to seek to provide exposure to the value of Dogecoin held by the Trust, less the expenses of the Trust’s operations and other liabilities. In seeking to achieve its investment objective, the Trust will hold Dogecoin and establish its net asset value (“NAV”) by reference to the CF Dogecoin-Dollar US Settlement Price (“DOGEUSD_NY”). The Trust is sponsored and managed by Bitwise Investment Advisers, LLC (the “Sponsor”). The net assets of the Trust and its Shares are valued on a daily basis with reference to the Pricing Benchmark, a standardized reference rate published by CF Benchmarks Ltd. (the “Benchmark Provider”) that is designed to reflect the performance of Dogecoin in U.S. dollars. The Pricing Benchmark is calculated by the Benchmark Provider based on an aggregation of executed trade flow of major Dogecoin trading platforms (“Constituent Platforms”). The Pricing Benchmark is calculated as of 4:00 p.m. Eastern Standard Time (“EST”). Coinbase Custody Trust Company, LLC (“Coinbase Custody” or the “Dogecoin Custodian”) serves as the custodian for the Trust’s Dogecoin holdings and is responsible for the secure safekeeping of the Trust’s Dogecoin pursuant to a custody agreement (the “Dogecoin Custody Agreement”). Coinbase Custody was appointed by the Sponsor and is tasked with establishing and maintaining segregated accounts to hold the Trust’s Dogecoin (the “Trust Dogecoin Accounts”). The Dogecoin Custodian is chartered as a New York State limited liability trust company that provides custody services for digital assets. The Dogecoin Custodian is not insured by the Federal Deposit Insurance Corporation (the “FDIC”) but carries insurance provided by private insurance carriers. Dogecoin is a digital asset. Like all digital assets, buying, holding and selling Dogecoin is very different from buying, holding and selling more conventional investments like stocks and bonds. Stocks represent ownership in a company, entitling shareholders to a portion of the company’s profits. Bonds are debt instruments issued by corporations or governments, where the bondholder is a creditor to the issuer that is generally entitled to a stream of income payments. Ownership of stocks and bonds is typically recorded through a centralized system managed by brokers, custodians or clearinghouses. Ownership of Dogecoin does not entitle its holders to any portion of a company’s profits or any stream of income payments. Dogecoin is a decentralized digital asset and ownership of it is reflected on a decentralized ledger. The Trust provides investors with the opportunity to access the market for Dogecoin through a traditional brokerage account without the potential barriers to entry or risks involved with acquiring and holding Dogecoin directly. The Trust will not use derivatives that could subject the Trust to additional counterparty and credit risks. The Sponsor believes that the design of the Trust will enable certain 14 investors to more effectively and efficiently implement strategic and tactical asset allocation strategies that use Dogecoin by investing in the Shares rather than purchasing, holding and trading Dogecoin directly. Results of Operations For the three months ended March 31, 2026* For the three months ended March 31, 2026 (unaudited) Net investment loss $ (684 ) Net realized and unrealized gain (loss) $ (140,868 ) Net increase (decrease) in net assets resulting from operations $ (141,552 ) Net Assets 1 $ 604,292 1. Net assets in the above table are calculated in accordance with U.S. GAAP based on the principal market price for Dogecoin that the Trust considered its principal market, as of 4:00 p.m., New York time, on the valuation date. During the three months ended March 31, 2026, the Trust's net assets decreased from $1,152,815 on December 31, 2025 to $604,292 on March 31, 2026. The decrease in the Trust's net assets resulted primarily from dispositions of approximately (5,280) Dogecoin to pay the Sponsor Fee, and approximately (3,285,152) Dogecoin for the redemption of Shares, with a value of $(407,544) from the Trust. For the period, there were no additions of Dogecoin for the creation of Shares. Net realized and change in unrealized loss on investment in Dogecoin for the three months ended March 31, 2026 was $(140,868), which included a realized loss of $(231) on the transfer of Dogecoin to pay the Sponsor Fee, a realized loss of $(93,255) on the sale of Dogecoin to meet redemptions, and a change in unrealized depreciation on investment in Dogecoin of $(47,382). Net realized and change in unrealized loss on investment in Dogecoin for the period resulted primarily from Dogecoin price depreciation from $0.116546 on December 31, 2025 to $0.092042 on March 31, 2026. Net decrease in net assets resulting from operations for the three months ended March 31, 2026 was $(141,552), which consisted of the net realized and unrealized loss on investment in Dogecoin, less the Sponsor Fee of $(684). * No comparative period information yet available as the Trust commenced operations on November 25, 2025. Net Assets As of March 31, 2026, the Trust held a net closing balance of 6,567,469.6487 Dogecoin with a total market value of $604,482 based on the DOGEUSD_NY price of $0.092042, used to determine the Trust's NAV. The total market value of the Trust's Dogecoin held was $604,470 based on the price of Dogecoin (Lukka Prime Rate) in the principal market (Coinbase) of $0.092040, used to determine the Trust's Principal Market NAV. 15 Liquidity and Capital Resources The Trust pays the unitary Sponsor Fee of 0.34% per annum of the Trust’s Dogecoin holdings. The Sponsor contractually waived the Sponsor Fee on the first $500 million of Trust assets through December 25, 2025, and has been accruing at an annual rate of 0.34% of the Trust’s net assets since then. As a result, the only ordinary expense of the Trust is expected to be the Sponsor Fee. In exchange for the Sponsor Fee, the Sponsor has agreed to assume and pay the normal operating expenses of the Trust, which include the Trustee’s monthly fee and out-of-pocket expenses, the fees of the Trust’s regular service providers (Cash Custodian, Dogecoin Custodian, Prime Execution Agent, Marketing Agent, Transfer Agent and Administrator), exchange listing fees, tax reporting fees, SEC registration fees, printing and mailing costs, audit fees and up to $500,000 per annum in ordinary legal fees and expenses. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Trust in excess of $500,000 per annum. The Sponsor will also pay the costs of the Trust’s organization. The Trust may incur certain extraordinary, non-recurring expenses that are not assumed by the Sponsor, including, but not limited to, taxes and governmental charges, any applicable brokerage commissions, financing fees, Dogecoin network fees and similar transaction fees, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the Shareholders (including, for example, in connection with any fork of the Dogecoin Blockchain, any Incidental Rights (as defined below) and any IR Asset (as defined below)), any indemnification of the Cash Custodian, Dogecoin Custodian, Prime Execution Agent, Transfer Agent, Administrator or other agents, service providers or counterparties of the Trust, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters. The Trust does not hold a cash balance except in connection with the creation and redemption of Baskets (blocks of 10,000 Shares) or to pay expenses not assumed by the Sponsor. To pay for expenses not assumed by the Sponsor that are denominated in U.S. dollars, the Sponsor, on behalf of the Trust, may sell the Trust’s Dogecoin as necessary to pay such expenses. The cash proceeds of the sale will be sent to the Sponsor, which will use such proceeds to pay the expenses. Any remaining cash will be distributed back to the Cash Custodian. The Sponsor expects that the Trust will have an immaterial amount of cash flow from its operations and that its cash balance will be insignificant at the end of each reporting period. The Trust’s only sources of cash are proceeds from the sale of Baskets and Dogecoin. The Trust will not borrow to meet liquidity needs. The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs. Off-Balance Sheet Arrangements and Contractual Obligations As of March 31, 2026, the Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate off-balance sheet financing arrangements and has no loan guarantee arrangements or off-balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services which are in the best interests of the Trust. While the Trust’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on the Trust’s financial position. Sponsor Fee payments made to the Sponsor are calculated at an annual rate of 0.34% of the Trust's Dogecoin holdings. As such, the Sponsor cannot anticipate the payment amounts that will be required under these arrangements for future periods since the Trust's holdings of Dogecoin will vary in the normal course of business operations. Critical Accounting Policies Investment Valuation - Principal Market Net Asset Value ("NAV") To determine which market is the Trust's principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust's net asset value in accordance with U.S. GAAP ("Principal Market NAV" and "Principal Market NAV per Share"), the Trust follows ASC Topic 820-10, Fair Value Measurement, which outlines the application of fair value accounting. ASC 820-10 determines fair value to be the price that would be received for Dogecoin in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Trust to assume that Dogecoin is sold in its 16 principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. The Trust only receives Dogecoin in connection with a creation order from the Authorized Participant (or a Liquidity Provider) and does not itself transact on any Digital Asset Markets. Therefore, the Trust looks to market-based volume and level of activity for Digital Asset Markets. The Authorized Participant(s), or a Liquidity Provider, may transact in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets ("Trading Platform Markets”), each as defined in the FASB ASC Master Glossary (collectively, "Digital Asset Markets"). In determining which of the eligible Digital Asset Markets is the Trust's principal market, the Trust reviews these criteria in the following order: First, the Trust reviews a list of Digital Asset Markets that are U.S. accessible, have historically provided publicly available data, and are exchanges that Bitwise normally transacts on. Specifically, the Trust utilizes a third-party valuation vendor, Lukka, Inc., to identify publicly available, well established and reputable crypto asset exchanges selected in their sole discretion. Second, Lukka, Inc. sorts these Digital Asset Markets from high to low by market-based volume and level of activity of Dogecoin traded on each Digital Asset Market. For the period ended March 31, 2026, this sort was performed for Digital Asset Markets for the period mid-February through mid-March 2026. Third, Lukka, Inc. then reviews pricing fluctuations and the degree of variances in price on each Digital Asset Market during the 60 minutes prior to 4:00 pm. EST for Dogecoin to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market. Fourth, Lukka, Inc. then selects a Digital Asset Market as its principal market based on the highest market-based volume level of activity and price stability in comparison to the other Digital Asset Markets on the list. As of March 31, 2026, Lukka, Inc. included Binance, Bitfinex, Bitflyer, Bitstamp, Bullish, Bybit, Coinbase, Crypto.com, Gate.io, Gemini, HitBTC, Huobi, itBit, Kraken, KuCoin, LMAX, MEXC Global, OKX and Poloniex as its primary Exchange Markets in consideration. At March 31, 2026, the principal market and the principal market price for Dogecoin, which is composed of the majority of the Trust’s assets as of March 31, 2026, was Coinbase with a price of $0.09204. The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market's price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust's determination of its principal market. The cost basis of the Dogecoin received by the Trust in connection with a creation order is recorded by the Trust at the fair value of Dogecoin at 4:00 p.m., New York time, on the creation date for financial reporting purposes. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors. Investment Company Considerations The Trust is an investment company for U.S. GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial Services - Investment Companies. The Trust uses fair value as its method of accounting for Dogecoin in accordance with its classification as an investment company for accounting purposes. The Trust is not a registered investment 17 company under the Investment Company Act of 1940. U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material. Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, the Trust is not required to provide the information required by this item.