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Item 1A. Risk Factors

2026-08-12 compared with 2026-05-14 · 37 added, 77 removed, 0 unchanged (100% of the section changed)

as set forth below, there have been no material changes in our risk factors from those disclosed in the 2025 Form 10-K for the fiscal

year ended September 30, 2025.

The risk factors set forth below, together with those previously disclosed in our 2025 Form 10-K, constitute

important cautionary statements and qualifications with respect to the forward-looking statements and other representations contained

in this Quarterly Report on Form 10-Q.

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our

business to the extent practicable under the circumstances, some level of risk and uncertainty will always be present.

Item 1A - “Risk

Factors” in the 2025 Form 10-K describes some of the risks and uncertainties associated with our business, which we strongly encourage

you to review.

These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations,

cash flows, projected results, and future prospects.

The Company has incurred significant indebtedness

under a loan agreement with Galaxy Digital LLC, secured by the Company’s SOL holdings, to fund share repurchases and other corporate

This strategy exposes the Company to substantial risks related to margin calls, failure to make interest payments, loan defaults,

and forced liquidation of its collateral.

On February 27, 2026, the

Company entered into a Master Digital Currency Loan Agreement (the “Loan Agreement”) with Galaxy Digital LLC (“Galaxy”),

under which Galaxy may extend loans of digital currency or U.S.

dollars (“Dollars”) to the Company in its sole discretion.

The Company has used Dollar loan proceeds to repurchase shares of its common stock and other corporate purposes.

These obligations are

secured exclusively by the Company’s SOL holdings, over which Galaxy holds a first priority security interest.

This strategy subjects

the Company to significant risks that could materially adversely affect its financial condition, results of operations, and stock price.

SOL’s market price

is highly volatile.

If the value of the Company’s SOL collateral falls below the margin call rate, Galaxy may require additional

collateral to restore the initial level within one business day.

If collateral value falls below an urgent margin call rate, the Company

may have as little as six hours to post additional collateral or repay outstanding principal.

There is no assurance the Company will have

sufficient SOL or other eligible assets to satisfy margin calls, acquire additional collateral, or pay down principal.

The Company may not generate

sufficient cash flow to service its debt.

Under the Loan Agreement, failure to repay borrowed amounts, make interest payments, pay fees,

or provide additional collateral constitutes an event of default.

Upon default, Galaxy may accelerate all amounts due, terminate the agreement,

and liquidate, convert, or otherwise realize upon the pledged SOL without notice.

Galaxy also has partial liquidation rights to restore

the loan-to-value ratio if the Company fails to meet margin calls.

Any liquidation could occur when SOL prices are depressed or markets

are illiquid, resulting in significant losses.

Galaxy may enter into hedging transactions, the costs and losses of which the Company would

Forced sales could also trigger adverse tax consequences.

The regulatory treatment

of digital assets remains uncertain.

If legal changes eliminate or materially impair a party’s ability to own or transfer digital

currency used as collateral, the Company may be required to settle in Dollars at prices determined under the Loan Agreement, and the agreement

would terminate.

Such changes could impair the collateral’s value or restrict the Company’s ability to hold or transact in

Because debt-funded share

repurchases do not generate revenue or cash flow to service indebtedness, leverage amplifies these risks.

The loan facility also contains

termination triggers unrelated to payment defaults—including equity declines exceeding specified thresholds or changes in key management—that

could allow acceleration of all outstanding obligations.

In an extreme scenario, declining SOL values combined with margin call failures

or a default could result in loss of all or substantially all SOL holdings, acceleration of indebtedness, and potential insolvency.

A default under the Company’s Loan Agreement

could render the Company ineligible to use Registration Statement on Form S-3 for securities offerings, which would materially impair

the Company’s ability to raise capital in the public markets.

The Company currently relies

on the availability of Form S-3 registration statements under the Securities Act of 1933 (the “Securities Act”), to conduct

primary and secondary offerings of its securities and to facilitate its share repurchase program.

Eligibility to use Form S-3 is conditioned

upon, among other things, the Company’s compliance with the timely filing requirements and other registrant eligibility conditions

set forth in General Instruction I.B of Form S-3, including that the Company has not failed to pay any dividend or sinking fund installment

on preferred stock, or defaulted on any installment on indebtedness for borrowed money, or on any material lease, since the end of the

last fiscal year.

If the Company were to default

on its obligations under the Loan Agreement -including any failure to make required interest or principal payments, satisfy margin calls,

or comply with other covenants - such default could cause the Company to fail to satisfy the registrant eligibility requirements of Form

In such event, the Company would be required to conduct any future public offerings of its securities on Form S-1, which is subject

to more extensive disclosure requirements, longer SEC review periods, and greater time and expense to prepare.

The loss of Form S-3 eligibility

would significantly impair the Company’s flexibility to access the capital markets on a timely and cost-effective basis, which could

adversely affect the Company’s ability to fund operations, pursue strategic opportunities, or respond to adverse business conditions.

Item 1A - “Risk Factors” in the 2025 Form 10-K for the fiscal year ended September 30, 2025 and the Quarterly Report on Form

10-Q for the fiscal quarter ended March 31, 2026 describes some of the risks and uncertainties associated with our business, which we

strongly encourage you to review.

These risks and uncertainties have the potential to materially affect our business, financial condition,

results of operations, cash flows, projected results, and future prospects.

We have entered into, and may in the future

enter into, derivative contracts referencing the price of SOL, and losses on these instruments could be substantial, difficult to predict,

and could adversely affect our results of operations, financial condition, and the trading price of our common stock.

As part of our digital asset treasury strategy,

we have entered into option contracts referencing the price of SOL, including European-style options that obligate us to deliver SOL,

accept delivery of SOL, or make a cash settlement payment upon exercise or expiration.

We have entered into these instruments with the

intent of generating premium income on our existing SOL holdings and otherwise managing our treasury position, and we expect to continue

to use SOL-referenced options and may in the future use other SOL-referenced derivatives, including futures, forwards, and swaps, as part

of our overall strategy of buying, holding, staking, trading, and investing in SOL and SOL-related digital assets.

We recognized net derivative

losses of $4,561,000 million and $4,292,000 million for the three and nine months ended June 30, 2026, respectively.

a party to derivative option contracts, our potential loss is not limited to the premium we pay or receive and, depending on the

structure of the instrument, may be substantial.

If the price of SOL moves significantly beyond the applicable strike price prior to

expiration, we may be required to deliver SOL at a price below its then-current market value, purchase or accept delivery of SOL at

a price above its then-current market value, or make a cash settlement payment that materially exceeds the premium we received for

writing the contract.

SOL has historically experienced significant price volatility, and this volatility increases both the

likelihood that our option contracts will be exercised against us and the potential magnitude of any resulting loss.

Our SOL-referenced derivatives are transacted

over-the-counter with a limited number of counterparties willing to trade instruments referencing SOL, which exposes us to the risk that

a counterparty fails to perform its obligations to us, particularly during periods of market stress when counterparty credit quality and

our own liquidity may be under the greatest strain.

As of June 30, 2026, a significant portion of our open derivative positions were with

Galaxy Trading Mercury LLC, a related party.

The market for SOL derivatives may also lack the depth and liquidity of markets for more

established asset classes, which could limit our ability to close out, unwind, or roll existing positions on favorable terms, or at all,

when we determine it is in our interest to do so.

Additionally, our derivative contracts require us to post collateral, including pledging

our digital assets, which reduces the liquidity of those assets and could result in margin calls requiring additional collateral during

periods of adverse price movements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors