What changed in this filing

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Item 1A. Risk Factors

2025-11-14 compared with 2025-08-14 · 877 added, 21 removed, 53 unchanged (94% of the section changed)

1 unchanged sentence

31, 2024, filed with the SEC on March 21, 2025, except as set forth below.

We have incurred

significant operating and net losses and anticipate that we will continue to incur significant losses for the foreseeable future.

Company has incurred net losses of $7.1 million and $5.1 million for the six months ended June 30, 2025 and 2024, respectively.

six months ended June 30, 2025 and 2024, the Company used $7.9 million and $0.4 million in operating activities, respectively.

have incurred significant operating and net losses and anticipate that we will continue to incur significant losses for the foreseeable

Company has incurred net losses of $16.0 million and $8.9 million for the nine months ended September 30, 2025 and 2024, respectively.

For the nine months ended September 30, 2025 and 2024, the Company used $11.8 million and $5.2 million in operating activities, respectively.

ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve

35 unchanged sentences

May 5, 2025, Greenlane Holdings, Inc.

received a notification letter from the Listing Qualifications Department of The Nasdaq Stock

Market LLC (“Nasdaq”), stating that based on its review of the Company’s public filings with the Securities and

Exchange Commission (the “SEC”), its staff has determined to delist the Company’s securities pursuant to its

discretionary authority under Listing Rule 5101.

Only July 29 , 2025, after a

hearing with the Nasdaq Hearings Board, the Company was notified that the “Company had demonstrated compliance with Listing

Rule 5550(a)(2) (the “Bid Price Rule”) and satisfied the conditions of the Hearings Panel’s decision dated May 30,

Although the Company has regained compliance with the referenced concern, based on the facts underlying the public interest

concern raised by Staff and the Company’s history of repeated bid price compliance issues, the Panel imposed a one-year

Discretionary Panel Monitor pursuant to its discretion under Listing Rule 5815(d)(4)(A).

On July 29, 2025, Greenlane Holdings,

received a notification letter from the Listing qualifications Department of the Nasdaq Stock Market LLC, that the Company has demonstrated

compliance with Listing Rule 5550(a)(2) (the “Bid Price Rule”) and satisfied the conditions of the Hearings Panel’s

(“Panel”) decision dated May 30, 2025 (the “Decision”).

Nasdaq will continue to monitor

Greenlane Holdings, Inc.’s continued compliance with the Bid Price Rule and other Nasdaq Rules.

received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market

LLC (“Nasdaq”), stating that based on its review of the Company’s public filings with the Securities and Exchange Commission

(the “SEC”), its staff has determined to delist the Company’s securities pursuant to its discretionary authority under

Listing Rule 5101.

Only July 29 , 2025, after a hearing with the Nasdaq Hearings Board, the Company was notified that the “Company

had demonstrated compliance with Listing Rule 5550(a)(2) (the “Bid Price Rule”) and satisfied the conditions of the Hearings

Panel’s decision dated May 30, 2025.

Although the Company has regained compliance with the referenced concern, based on the facts

underlying the public interest concern raised by Staff and the Company’s history of repeated bid price compliance issues, the Panel

imposed a one-year Discretionary Panel Monitor pursuant to its discretion under Listing Rule 5815(d)(4)(A).

tariffs and the evolving trade policy dispute between the United States and China may adversely affect our business.

12 unchanged sentences

sectors thereof and, thus, to adversely impact our businesses and results of operations.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Our financial results and the market price

of our Common Stock may be affected by the prices of BERA.

As part of our capital allocation strategy for

assets that are not required to provide working capital for our ongoing operations, we have invested and will continue to invest in BERA.

As of the date of this prospectus, we hold over 54,000,000 BERA.

The price of BERA has historically been subject to dramatic price fluctuations

and is highly volatile.

In addition, because our Treasury Policy is currently primarily concentrated in BERA, adverse developments specific

to BERA, including protocol-level failures, governance decisions, validator network instability, or ecosystem contraction, could disproportionately

impact our financial condition.

Any decrease in the fair value of BERA below our

carrying value for such assets could require us to incur a loss due to the decrease in fair market value, and such charge could be material

to our financial results for the applicable reporting period, which may create significant volatility in our reported earnings.

in reported earnings or increased volatility of such earnings could have a material adverse effect on the market price of our Common Stock.

In addition, the application of generally accepted accounting principles in the United States, with respect to BERA, may change in the

future and could have a material adverse effect on our financial results and the market price of our Common Stock.

In addition, if investors view the value of our

Common Stock as dependent upon or linked to the value or change in the value of our BERA holdings, the price of BERA may significantly

influence the market price of our Common Stock.

Our Common Stock may trade at a substantial

premium or discount to the value of the BERA tokens we hold, and our stock price may be more volatile than the price of BERA.

The market price of our Common Stock reflects many factors that do

not affect the spot price of BERA and may therefore diverge materially — positively or negatively — from the per-share value

of our BERA token holdings (net of cash, other assets and liabilities).

These factors include, among others:

our corporate-level expenses;

the timing, size and pricing of equity or debt financings (including at-the-market offerings, equity line financings or convertible

securities), equity awards and other sources of dilution;

expectations about our future purchases or sales of BERA tokens or our onchain

activities, including staking, validator or other DeFi initiatives;

our liquidity and public float;

differences in trading hours and market

microstructure between our Common Stock and spot markets for BERA tokens;

changes in index inclusion, analyst coverage or investor sentiment

toward us as an operating company;

our corporate governance, financial reporting, and any actual or perceived operational, custody, technology

or regulatory risks specific to us;

and broader equity-market conditions independent of digital asset markets.

As a result, our Common

Stock may trade at a premium or discount to the value of our BERA token holdings for extended periods, and may be more volatile than the

price of BERA tokens.

Accordingly, investors could lose all or a substantial part of their investment even if the market price of BERA

does not decline, and may not benefit commensurately from increases in the market price of BERA tokens.

Our historical financial statements do not

reflect the potential variability in earnings that we may experience in the future relating to our BERA token 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 BERA tokens.

The price of BERA tokens is subject to dramatic

price fluctuations and is highly volatile.

For example, from February 6, 2025 (the date BERA tokens first became available on digital

asset trading platforms) through October 26, 2025, the price of BERA tokens, as reported by CoinGecko.com, ranged from a high of $8.75

to a low of $1.58.

We are required to measure our BERA token holdings at fair value in our statement of financial position, and to recognize

gains and losses from changes in the fair value of our BERA tokens in net income each reporting period, which may create significant volatility

in our reported earnings and decrease the carrying value of our digital assets, which in turn could have a material adverse effect on

the market price of our common stock.

Conversely, any sale of BERA tokens at prices above our carrying value for such assets creates a

gain for financial reporting purposes even if we would otherwise incur an economic or tax loss with respect to such transaction, which

also may result in significant volatility in our reported earnings.

Because we intend to purchase additional BERA

tokens in future periods and increase our overall holdings of BERA tokens, we expect that the proportion of our total assets represented

by our BERA token holdings will increase in the future.

As a result, volatility in our earnings may be significantly more than what we

experienced in prior periods.

For many reasons, including those described below,

our operating results, revenues, and expenses may vary significantly in the future from quarter to quarter.

These fluctuations could have

an adverse effect on the market price of our Common Stock.

The trading prices of many digital assets,

including BERA, have experienced extreme volatility in recent periods and may continue to do so.

Extreme volatility in the future, including

further declines in the trading prices of BERA, could have a material adverse effect on the value of the Common Stock.

The trading prices of many digital assets, including

BERA, have experienced extreme volatility in recent periods and may continue to do so, including as a result of shifts in market sentiment,

speculative trading, macroeconomic trends, technology-related disruptions, and regulatory announcements.

Digital asset trading markets,

including the BERA network, are relatively new, largely unregulated, and, at times, subject to limited liquidity.

As a result, trading

activity on or reported by these digital asset trading platforms, including BERA, is generally significantly less regulated than trading

in regulated U.S.

securities and commodities markets and may reflect behavior that would be prohibited in regulated U.S.

trading venues.

Furthermore, many digital asset trading platforms lack certain safeguards put in place by more traditional exchanges to enhance the stability

of trading on the platform.

The digital asset markets may also be experiencing a bubble or may experience a bubble in the future, which

may undermine confidence and affect liquidity of the digital asset markets.

A rapid decrease in the price of BERA —whether as a

result of negative perception, a lack of stability in the digital asset trading platforms, market manipulation of cryptocurrency trading

platforms by customers, a cyber-security incident, regulatory action, or other factors—could materially reduce the value of any

BERA we hold, force us to recognize impairment charges, trigger defaults or covenant breaches in any future financing arrangements, and

could have a material adverse effect on the value of our Common Stock that may result in the loss of all or substantially all of its value.

Risks Related to Our Digital Asset Trading

Strategy and Cryptocurrencies

We have recently adopted a digital asset treasury

strategy with a focus on BERA, and we may be unable to successfully implement this new strategy.

We have recently adopted our Treasury Policy primarily

dedicated to BERA, including potential investments in BERA, including through staking, validator activities and engaging in other DeFi

There is no assurance that we will be able to successfully implement our Treasury Policy or operate BERA-related activities

at the scale or profitability currently anticipated.

BERA operates with a proof-of-liquidity consensus mechanism, which differs significantly

from other consensus mechanisms, and will require specialized employee skillsets and novel treasury management practices tailored to the

Berachain network.

Further, there is ongoing scrutiny and limited formal guidance from regulatory agencies, including Nasdaq and the SEC,

with respect to the treatment of public company digital asset strategies.

Our inability to implement the Treasury Policy for whatever

reason, could have a material adverse effect on our business and financial condition.

Our shift towards a BERA -focused strategy

requires substantial changes in our day-to-day operations and exposes us to significant operational risks.

Our shift towards a BERA- focused strategy exposes

us to significant operational risks.

In connection with the implementation of our Treasury Policy, we intend to operate a validator to

help secure the Berachain network, and we expect to allocate a portion of our BERA holdings to other onchain activities, including staking

and certain DeFi strategies.

If we serve as a validator, we may suffer slashing or forfeiture of rewards due to downtime, misconfiguration,

or malicious software, materially reducing the number of BERA held in our treasury.

In addition, the Berachain protocol is rapidly evolving,

with frequent upgrades and protocol changes that may require significant adjustments to our operational setup and allocation strategy.

The upgrades and protocol changes may require that we incur unanticipated costs and could cause temporary service disruptions.

also need to employ third-party service providers in our operations, which may introduce risks outside of our control, including significant

cybersecurity risks.

In connection with our proposed activities, we intend to operate a validator to secure the Berachain network.

we choose to serve as a validator, we may suffer slashing or forfeiture of rewards due to downtime, misconfiguration, or malicious software,

materially reducing the number of BERA held in our treasury.

Any of these operational risks could materially and adversely affect our

ability to execute our Treasury Policy, prevent us from realizing positive returns and severely hurt our financial condition.

A disruption of the internet may affect the

operation of blockchain networks, which may adversely affect the digital asset industry and an investment in us.

Blockchain protocols rely on the internet.

A significant

disruption of internet connectivity could disrupt blockchain networks’ functionality until such disruption is resolved.

in the internet could adversely affect an investment in us.

In particular, some variants of blockchain protocols have experienced denial-of-service

attacks, which have led to temporary delays in block creation and digital asset transfers.

Digital assets are also susceptible to border

gateway protocol hijacking (“BGP hijacking”).

Such an attack can be a very effective way for an attacker to intercept traffic

en route to a legitimate destination.

BGP hijacking impacts the way different nodes are connected to one another to isolate portions of

them from the remainder of the network, which could lead to a risk of the network allowing double-spending and other security issues.

Any internet failures or internet connectivity-related

attacks that impact the ability to transfer or secure digital assets could have a material adverse effect on the price of digital assets

generally, and BERA’s value specifically, and the value of an investment in us.

Blockchain technologies are based on theoretical

conjectures as to the impossibility of solving certain cryptographical puzzles quickly.

These premises may be incorrect or may become

incorrect due to technological advances.

Blockchain technologies are premised on theoretical

conjectures as to the impossibility, in practice, of solving certain mathematical problems quickly.

Those conjectures remain unproven,

however, and mathematical or technological advances could conceivably prove them to be incorrect.

Blockchain technology companies may

also be negatively affected by cryptography or other technological or mathematical advances, such as the development of quantum computers

with significantly more power than computers presently available, that undermine or vitiate the cryptographic consensus mechanism underpinning

Berachain and other blockchain protocols.

If either of these events were to happen, markets that rely on blockchain technologies could

quickly collapse, and an investment in our Common Stock may be adversely affected.

Technical shortcomings or defects in the BERA

network, including changes to its validator structure, governance model, or core software, could diminish the utility and value of BERA

and harm our business.

The BERA network is a public, open-source and

decentralized blockchain protocol that is not under our or any single party’s control.

Its ongoing viability depends on the continued

consensus and cooperation of independent developers, validators, tokenholders, and other ecosystem participants.

The existing Berachain

protocol may be subject to significant alterations, including by way of community governance votes, and any such changes may have a material

adverse effect on BERA and the viability of the Berachain protocol.

If Berachain experiences a successful cyber-attack, a material software

bug, a “hard fork” that fragments the network, or a prolonged outage, market confidence in BERA could be severely undermined.

Similarly, decisions by influential validators to adopt protocol changes, modify transaction-fee structures, or alter other existing practices

or network governance could adversely affect BERA’s economics and, therefore, the value of our holdings.

Further, because the governance

of decentralized networks, such as Berachain, is by voluntary consensus, a single party could gain majority control of the network, and

enact changes or amendments to the network that are otherwise undesirable to other participants.

Were this to happen, it could harm the

value of BERA and therefore the value of the Common Stock.

If validators exit the BERA network, it could

increase the likelihood of a malicious actor obtaining control.

Validators exiting the network could make BERA

more vulnerable to a malicious actor obtaining control of a large percentage of staked BERA, which might enable them to manipulate the

BERA network by censoring or manipulating specific transactions, or undermining the economic incentives underlying the Berachain ecosystem.

If the BERA network suffers such an attack, the price of BERA could be negatively affected, and a loss of confidence in the BERA network

could result.

Any reduction in confidence in the transaction confirmation process or staking power of the BERA network may adversely affect

an investment in the Common Stock.

Berachain may not be able to compete with other

blockchain networks.

If Berachain is not able to compete successfully, the value of BERA would be significantly affected.

Berachain faces intense competition from a large

number of established layer-1 blockchains, including Ethereum, Solana, and Binance Smart Chain, layer-2 scaling solutions, and emerging

protocols, many of which currently maintain significantly larger active user bases, higher total value locked (“TVL”), more

extensive developer communities, broader third-party tooling and wallet support, deeper liquidity across centralized and decentralized

exchanges, and more robust cross-chain interoperability frameworks.

These competing networks may offer lower transaction fees, faster

finality, superior virtual machine performance, more advanced smart-contract languages, or more effective incentive programs that attract

users, liquidity providers, dApp developers, and other participants away from Berachain.

If Berachain fails to generate sufficient user

interest relative to these alternatives, the network could experience reduced protocol adoption and diminished liquidity.

Such outcomes

may lead to lower user and transaction volumes, reduced fee revenue, impaired ability to fund ongoing development, and a downward spiral

in token valuation, ultimately jeopardizing the long-term viability of the Berachain ecosystem.

The economic design underlying PoL may be flawed,

may fail to gain adoption, or may be exploited.

Any such events could undermine the growth and development of the Berachain network.

Berachain’s network security, incentive

alignment, and ecosystem growth depend entirely on the proper functioning of its novel PoL consensus mechanism, including the recently

introduced PoLv2 framework.

Under this design, validators stake BERA to secure the network and earn BGT emissions through block production,

then stake or delegate BGT to dApps to direct future reward allocation;

dApps distribute BGT to users for providing liquidity or engaging

in protocol activity;

and users may burn BGT for BERA.

As a new consensus mechanism, users may be reluctant or unable to understand the

technical underpinnings and benefits of PoL, and may favor a more traditional consensus mechanism, such as proof of stake or proof of

If validators delegate BGT to low-performing or malicious dApps, dApps distribute rewards inefficiently or in ways that favor short-term

speculation over sustained usage, or liquidity suffers due to lack of actual or perceived alignment between different ecosystem parties,

the intended incentive loop may break.

Such failures could result in misaligned emissions, and if rewards are capture by a limited set

of participants, or if there is insufficient liquidity in core DeFi primitives or declining BERA staking participation, the network effect

intended by the PoL consensus mechanism may fail to be achieved.

From time to time, the Berachain community may also make additional changes

to the PoL mechanism, such as via the PoLv2 update, which introduces increased complexity through dynamic emission schedules, delegation

weighting mechanisms, and customizable reward modules, any of which may contain latent design flaws, unintended economic consequences,

or vulnerabilities not identified during testing or early deployment.

Future iterations of PoL may introduce additional changes that disrupt

existing incentives, and even a well-designed system remains susceptible to coordinated exploitation, front-running of reward signals,

or sybil attacks.

A breakdown in PoL functionality or adoption could lead to declining network activity, erosion of economic security,

loss of developer and user confidence, and a decline of the Berachain ecosystem, any of which could have significant adverse consequences

We and other users may suffer losses due to

staking or validator slashing, which could make Berachain less attractive.

Berachain’s native staking protocol is relatively

new and requires users to place BERA in a smart contract that is not under anyone’s control.

Users who serve as validators also

risk losing some or all of their BERA if they intentionally or unintentionally perform their duties poorly, for example, by double-signing

a transaction or experiencing downtime, in a process known as slashing.

Any cybersecurity attacks, security issues, hacks, penalties,

slashing events, or other problems could damage validators’ willingness to participate in validation and stakers’ willingness

to participate in staking, and this could further discourage existing and future validators and stakers from serving as such, thereby

adversely impacting Berachain’s adoption and the price of BERA.

Any disruption of validation on Berachain could interfere with network

operations and cause Berachain to be less attractive to users and application developers than competing blockchain networks, which could

cause the price of BERA to decrease.

Further, the limited liquidity during the unbonding period of the staking process could cause Berachain

to be less attractive to users and application developers than competing blockchain networks, which could cause the price of BERA to decrease.

Any decrease in the price of BERA could have a material adverse effect on our business and financial condition.

We face risks relating to the potential compromise

of Berachain’s and other blockchains’ network security by emerging technologies, including artificial intelligence and quantum

computing, which may materially and adversely impact our operations and financial condition.

The security and integrity of Berachain and other

blockchains’ network are fundamentally dependent on the robustness of its cryptographic algorithms.

BERA and other cryptocurrencies’

protocol relies heavily on public key cryptography and hashing algorithms to secure transactions, safeguard private keys, and prevent

double-spending.

Advances in emerging technologies, particularly artificial intelligence (“AI”) and quantum computing may

pose significant risks to Berachain and other blockchains’ network’s security and operational stability.

Quantum computing, in particular, presents a long-term

threat to the cryptographic assumptions underpinning BERA and other digital assets.

Should quantum computing achieve sufficient maturity,

it could undermine the effectiveness of the cryptographic algorithms used to secure the blockchain.

A sufficiently powerful quantum computer

could potentially reverse-engineer private keys from public addresses or compromise the blockchain’s consensus mechanism, leading

to the theft of digital assets, double-spending, and other forms of fraud.

Although current quantum computing capabilities are not yet

at this level, advancements in quantum technologies could materialize more rapidly than anticipated, creating significant systemic risks

for the Berachain protocol and the BERA token.

AI may also pose indirect security risks.

cyberattacks, including advanced phishing schemes, autonomous malware, and intelligent blockchain analysis tools, could increase the sophistication

and success rate of attacks targeting Berachain and other blockchains’ users, exchanges, custodians, and node operators.

of AI to exploit vulnerabilities in software, hardware, or network protocols could threaten the stability and reliability of Berachain

and other blockchains’ ecosystems.

There can be no assurance that Berachain’s

and other blockchains’ current cryptographic safeguards will be sufficient to protect against future technological advances.

research and development efforts are ongoing to develop quantum-resistant cryptographic protocols, Berachain’s and other blockchains’

networks may face challenges in adopting such technologies at scale, particularly given their decentralized governance structure.

successful attack or perceived vulnerability arising from AI or quantum computing could materially and adversely affect the price, liquidity,

and adoption of BERA and other digital assets and could negatively impact our business, financial condition and results of operations.

BERA is created and transmitted through the

operations of the Berachain network, a decentralized network of computers running software following the Berachain protocol.

If the Berachain

network is disrupted or encounters any unanticipated difficulties, the value of BERA could be negatively impacted.

If the Berachain network is disrupted or encounters

any unanticipated difficulties, then the processing of transactions on the Berachain network may be disrupted, which in turn may prevent

us from depositing or withdrawing BERA from our accounts or otherwise effecting BERA transactions.

Such disruptions could include, for

the price volatility of BERA;

the insolvency, business failure, interruption, default, failure to perform, security breach, or

other problems of network participants, custodians or others;

the closing of trading platforms on which BERA is transacted due to fraud,

failures, security breaches or otherwise;

or network outages or congestion, power outages, or other problems or disruptions affecting

the Berachain network.

We face risks relating to the custody of our

BERA or other digital assets, including the loss or destruction of private keys required to access our BERA or other digital assets and

cyberattacks or other data loss relating to our BERA or other digital assets.

We expect to self-custody our BERA using, in part,

the Fireblocks Vault service.

If we lose access to our private keys, we may not be able to recover all or any portion of our BERA, or

any value thereof.

BERA 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 BERA is held.

While the 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 BERA 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, we will not be able to access the BERA held in the related digital wallet and such BERA

will be irretrievably lost.

While Fireblocks Vault service may be able to initiate a recovery if certain keys remain available, there

can be no guarantee that not all keys will be lost or that a catastrophic error won’t occur that would prevent recovery.

we cannot provide assurance that our digital wallets will not be compromised as a result of a cyberattack.

Blockchain ledgers and blockchain

technologies have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities.

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.

Certain employees or vendors

may also be vulnerable to physical or psychological coercion, commonly referred to as “wrench attacks,” as well as scams and

social engineering tactics intended to obtain access to passwords or private cryptographic keys, in order to then effectuate the unauthorized

transfer or theft of digital assets.

A successful security breach or cyberattack could result in:

● a partial or total loss of our BERA;

● significant harm to our reputation and

● improper disclosure of data and violations

of applicable data privacy and other laws;

● 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 users and confidence in the broader BERA ecosystem or

in the use of the BERA network, which could negatively impact us.

Attacks upon systems across a variety of industries,

including industries related to BERA, 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.

In particular, we expect that unauthorized parties will attempt to gain access to our systems and facilities, as well as those of our

partners and third-party service providers, through various means, such as hacking, social engineering, phishing and fraud.

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, in October 2021 it was reported

that hackers exploited a flaw in the account recovery process and stole from the accounts of at least 6,000 customers of the Coinbase

exchange, although the flaw was subsequently fixed and Coinbase reimbursed affected customers.

Similarly, in November 2022, hackers exploited

weaknesses in the security architecture of the FTX Trading digital asset exchange and reportedly stole over $400 million in digital assets

from customers.

More recently, Bybit was hacked by the Lazarus Group, a North Korean state-sponsored organization, resulting in the loss

of $1.5 billion of customer assets.

Further, there has been an increase in such activities due to the increase in work-from-home arrangements.

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 Berachain ecosystem, including third-party services on which we rely, could materially and adversely

affect our financial condition and results of operations.

We intend to deploy our BERA into DeFi applications,

which are subject to a variety of risks and vulnerabilities.

As part of our treasury management strategy, we

also intend to engage in staking, validating, and other permitted activities that involve the use of “smart contracts”, DeFi

DeFi protocols, wallets, and bridges have been frequent targets of sophisticated cyberattacks, including flash-loan attacks,

cross-chain bridge exploits, and private key compromises.

Losses from such incidents are often immediate, irreversible, and may not be

covered by insurance or contractual recourse.

The use of smart contracts or dApps 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 dApp, potentially leading to a loss of our BERA.

Vulnerabilities or

flaws in a smart contract could allow attackers to drain assets, prevent us from accessing our holdings, or manipulate protocol operations.

Once deployed, smart contracts are difficult to amend, and in many cases cannot be modified at all without widespread validator or governance

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 smart contract or dAPP.

Smart contracts and dApps may contain bugs, security vulnerabilities or poorly designed permission

structures that could result in the irreversible loss of BERA or other digital assets.

Certain DeFi protocols are also governed by decentralized

communities through on-chain voting mechanisms, which may be subject to capture by a small number of participants.

Protocol governance

decisions could adversely affect our ability to use or recover assets.

Additionally, protocols may change rules, fees, or parameters without

advance notice.

Moreover, the legal and regulatory treatment of DeFi remains highly uncertain.

Regulators could impose restrictions or

obligations on participants or on protocols themselves, which could adversely affect our ability to use, access or withdraw such platforms

or the value of assets held in them.

If we lose key personnel, including our Chief

Investment Officer and Strategic Advisors, or if we fail to recruit additional highly skilled personnel, our ability to operate and manage

our digital asset treasury strategy will be impaired.

Our ability to operate and manage our digital

asset treasury strategy depends upon our ability to attract and retain highly qualified personnel, including our Chief Investment Officer

and members of our executive team, and other key personnel, including the Strategic Advisors.

The loss of the services of any of our executive

officers, key employees, and the Strategic Advisors, and our inability to find suitable replacements, could result in significant disruption

in our operations and management of our digital assets.

Despite our efforts to retain valuable members

of our management, employees and consultants, such key personnel may terminate their employment with us on short notice.

Although we have

agreements with our key employees and consultants, these agreements provide for at-will employment, which means that any of our employees

or consultants could leave our employment at any time, with or without notice.

We do not maintain “key man” insurance policies

on any of our employees or consultants.

If we are unable to raise additional capital

on acceptable terms, our ability to implement and sustain our Treasury Policy may be compromised.

Our strategy contemplates the discretionary purchase

of BERA and related yield-generating instruments.

The capital required to acquire, stake, and actively manage BERA may exceed our existing

cash resources and cash flows from operations.

Market conditions, our share price performance, the volatility of digital assets, and regulatory

uncertainties could impair our ability to access debt or equity capital on terms acceptable to us, or at all.

Failure to obtain necessary

financing could force us to curtail or abandon our digital asset strategy, which could materially harm our growth prospects and the value

of our securities.

Our BERA 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 digital asset markets have 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.

of market instability, we may not be able to sell our BERA at favorable prices or at all.

Further, BERA we stake or otherwise deposit

into Apps and DeFi protocols does 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.

any BERA staked or otherwise deployed in DeFi protocols could be subject to partial or total loss if any third-party developer or recipient

of the staked or deployed BERA is subject to a cyberattack of any sort or is otherwise unable to repay the assets we’ve deployed.

In addition, Berachain’s native staking protocol currently requires a 7-day unbonding period for withdrawing staked BERA tokens.

During this period, staked BERA will not earn rewards and will not be liquid.

The unbonding period may be subject to change with or without

notice to us.

Moreover, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered

BERA or otherwise generate funds using our BERA holdings, including in particular during times of market instability or when the price

of BERA has declined significantly.

Furthermore, a certain portion of our BERA are under a contractual lockup from the Berachain Foundation

(the “Foundation”), and we may continue to acquire locked BERA at a discount to market prices of unlocked BERA in order to

generate value for stockholders.

These locked BERA are significantly less liquid than cash and our unlocked BERA holdings.

If we are unable

to sell our locked or unlocked BERA, enter into additional capital raising transactions using locked or unlocked BERA as collateral, or

otherwise generate funds using our locked or unlocked BERA holdings, or if we are forced to sell our locked or unlocked BERA at a significant

loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.

We may be subject to regulatory developments

related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations.

As BERA and other digital assets are relatively

novel and the application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain

respects, 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 BERA, 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 BERA or the ability of individuals or institutions such as us to own or transfer BERA.

Moreover, the implementation of our Treasury Policy

has created, and could continue to 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.

Future regulatory developments regarding the treatment

of digital assets, staking rewards, or digital asset treasury strategies for U.S.

federal, state, or international tax purposes could

materially affect the liquidity or value of BERA, or the way we account for, recognize, and report our BERA holdings and related income.

There is a possibility that BERA tokens may

be classified as a “security” under U.S.

federal securities laws.

If BERA tokens are classified as a “security,”

that would subject us to additional regulation and could materially impact the operations of our treasury strategy and our business.

Neither the SEC nor any other U.S.

state regulator has publicly stated whether they agree that BERA tokens are a “security,” and BERA tokens have not yet been

classified with respect to the U.S.

federal securities laws.

Although we believe that BERA tokens are not a “security” within

the meaning of the U.S.

federal securities laws, we acknowledge the uncertainty that a regulatory body or federal court may determine

otherwise in the future.

If BERA is deemed a securite, we may face legal or regulatory action, even if our beliefs were reasonable under

the circumstances.

As part of our ongoing review of applicable securities

laws, we take into account a number of factors, including the various definitions of “security” under such laws, including

but not limited to federal court decisions interpreting the elements of these definitions, such as the U.S.

Supreme Court’s decisions

in the Howey and Reves cases.

We also consider court rulings, reports, orders, press releases, public statements, and speeches by the

SEC Commissioners and SEC Staff 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.

We acknowledge, however, that the SEC, a federal court or another relevant entity

could take a different view.

The application of securities laws to the specific facts and circumstances of digital assets is complex and

subject to change.

Our conclusion, even if reasonable under the circumstances, would not preclude legal or regulatory action based on

a finding that BERA tokens, or any other digital asset we might hold, are a “security.” Therefore, we are at risk of enforcement

proceedings against us, which could result in potential injunctions, cease-and-desist orders, fines, penalties or other damages if BERA

tokens were determined to be a security by a regulatory body or a court.

Further, if BERA tokens are viewed as a security,

it may become more difficult to purchase and sell BERA tokens, as they could only be traded through SEC-registered broker-dealers or exchanges.

This would make it more difficult for us to continue our BERA treasury strategy, or to monetize BERA tokens that we hold in the event

we need to do so for working capital purposes.

Such developments could adversely affect the fair value of BERA, our business, results

of operations, financial condition, treasury operations and prospects.

Regulatory change reclassifying BERA as a security

could lead to our falling within the definition of “investment company” under the Investment Company Act of 1940, as amended

(the “1940 Act”), and could adversely affect the market price of BERA and the market price of our Common Stock.

Under Sections 3(a)(1)(A) and (C) of the 1940

Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (1) 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 (2) it is engaged, 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.

securities and cash items) on an unconsolidated basis.

We do not believe that we are an “investment company,” as such term

is defined in the 1940 Act, and are not registered as an “investment company” under the 1940 Act as of the date of this Quarterly

Report on Formo 10-Q.

While the SEC has not stated a view as to whether

BERA is or is not a “security” for purposes of the federal securities laws, a determination by the SEC or a court of competent

jurisdiction that BERA is a security could lead to our meeting the definition of “investment company” under the 1940 Act,

if the portion of our assets that consists of investments in BERA exceeds the 40% limit prescribed in the 1940 Act, which would subject

us to significant additional regulatory requirements that could have a material adverse effect on our business and operations and may

also require us to change the manner in which we conduct our business.

We monitor our assets and income in order to conduct

our business activities in a manner such that we do not fall within the definition of “investment company” under the 1940

Act or would qualify under one of the exemptions or exclusions provided by the 1940 Act and corresponding SEC rules.

If BERA is determined

to be a security for purposes of the federal securities laws, we would take steps to reduce our holdings of BERA as a percentage of our

total assets.

These steps may include, among others, selling BERA that we might otherwise hold for the long term and deploying our cash

in assets that are not considered to be investment securities under the 1940 Act, in which case we may be forced to sell our BERA at unattractive

We may also seek to acquire additional assets that are not considered to be investment securities under the 1940 Act, and we may

need to incur debt, issue additional equity or enter into other financing arrangements that are not otherwise attractive to our business.

Any of these actions could have a material adverse effect on our results of operations and financial condition.

Moreover, we can make

no assurance that we would successfully be able to take the necessary steps to avoid meeting the definition of “investment company”

under the 1940 Act and becoming subject to its requirements.

If BERA is determined to constitute a security for purposes of the federal

securities laws, and if we are not able to come within an available exemption or exclusion under the 1940 Act, then we would have to register

as an investment company and require us to change the manner in which we conduct our business.

In addition, such a determination could

adversely affect the market price of BERA and in turn adversely affect the market price of our Common Stock.

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

Mutual funds, exchange-traded funds and their

directors and management are subject to extensive regulation as “investment companies” and “investment advisers”

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 Treasury Reserve Policy or our BEAR strategy, our use of leverage, the manner in which our BERA 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.

For example, although a significant

change to our Treasury Reserve Policy would require the approval of our Board, no stockholder or regulatory approval would be necessary.

Consequently, our Board has broad discretion over the investment, leverage and cash management policies it authorizes, whether in respect

of our BERA holdings or other activities we may pursue, and has the power to change our current policies, including our strategy of acquiring

and holding BERA, See “ Use of Proceeds .”

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 regulatory regime for digital assets in the

and elsewhere is uncertain.

We may be unable to effectively react to proposed legislation and regulation of digital assets, which

could adversely affect our business.

FinCEN regulates providers of certain services

with respect to “convertible virtual currency,” including BERA tokens.

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.

risk that if we decide to provide validator services to third parties, FinCEN or other regulators could view such services as the provision

of money transmission activities subject to regulations.

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, resulting in significant compliance costs and operational burdens.

In such a case,

we may incur extraordinary expenses to meet these requirements or, alternatively, may determine that continued operations are not viable.

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.

Multiple states have implemented or proposed regulatory

frameworks for digital asset businesses.

Compliance with such state-specific regulations may increase costs or impact our business operations.

Further, if we or our service providers are unable to comply with evolving federal or state regulations, we may be forced to dissolve

or liquidate certain operations, which could materially impact our investors.

Litigation, regulatory enforcement actions,

or legal proceedings against key participants in the Berachain ecosystem could materially harm network activity, token demand, and the

value of an investment in the Company.

Key participants in the Berachain ecosystem including

the Foundation, core contributors, validators, dApp developers, liquidity providers, and token holders may become subject to litigation,

regulatory investigations, or enforcement actions in the United States or other jurisdictions.

Such legal proceedings could arise from

various allegations, including that BERA or BGT constitutes an unregistered security, that PoL incentive mechanisms are illegal, or that

ecosystem activities breach anti-money laundering, know-your-customer, sanctions, or consumer protection or other regulations.

such participant is named in a lawsuit, subpoenaed in a regulatory inquiry, or subjected to an enforcement action, whether by U.S.

federal or foreign authorities, it may be required to expend significant resources on legal defense, modify or cease operations, restrict

user access, or face monetary penalties, disgorgement, or injunctive relief.

Adverse outcomes could damage the reputation of the affected

participant and, by association, the broader Berachain network, leading to reduced validator participation, declining user confidence,

lower transaction volume, and reduced demand for BERA, any of which could materially and adversely affect the price of BERA and the value

of our Common Stock.

Berachain provides base layer infrastructure

that can be used for multiple types of applications, including applications that may be unregulated or face significant regulatory risks.

Berachain operates as a general-purpose layer-1

blockchain that provides base-layer infrastructure capable of supporting a wide range of dApps, including but not limited to DeFi protocols,

liquid staking platforms, decentralized exchanges, lending markets, derivatives platforms, and other smart-contract-based services.

of these applications may operate in regulatory gray areas or involve activities that are subject to evolving, unclear, or restrictive

regulatory frameworks in the United States, European Union, United Kingdom, and other jurisdictions.

For instance, regulatory treatment of liquid staking

derivatives remains uncertain and varies by jurisdiction.

In the United States, the SEC has taken enforcement actions against certain

staking-as-a-service providers, asserting that staked assets or derivative tokens may constitute unregistered securities under the Howey

While the SEC has recently released a statement stating that, in the views of its Division of Trading and Markets, it will not consider

certain qualifying staking services to constitute an offering of securities, this statement is not a rule, regulation, guidance, or statement

of the SEC and does not alter applicable law.

Given the evolving regulatory framework in the United States, there can be no guarantees

that the SEC will not pursue additional enforcement actions against such services in the future.

Similarly, regulators in other jurisdictions

have expressed concerns that liquid staking tokens could be classified as securities, collective investment schemes, or derivatives requiring

Beyond liquid staking, other DeFi applications

on Berachain—such as leveraged yield farming, perpetual futures, synthetic assets, or algorithmic stablecoins—may trigger

regulatory oversight under securities, commodities, stablecoin, money transmission, anti-money laundering (AML), or know-your-customer

If any application is deemed to violate applicable regulations, authorities may impose fines, require registration, mandate

operational changes, restrict user access (including geo-blocking), or pursue enforcement actions against the protocol’s developers,

governance participants, or associated entities.

Such regulatory actions could materially reduce

user participation in the affected application, leading to a decline in transaction volume, TVL, and BGT reward delegation to that protocol.

Since network fees and BERA demand are directly tied to on-chain activity, a significant reduction in usage of one or more major applications

could decrease overall demand for BERA.

This, in turn, may result in lower BERA staking participation, reduced network security under

PoL, diminished validator revenue, and downward pressure on the market price of BERA, which would adversely affect the value of the Common

Additional sales, distributions, or issuances

of BERA could cause the price of BERA to decline significantly

BERA was created with an initial supply of 500

million BERA, of which 16.8% was allocated to initial core contributors, 34.3% was allocated to investors, and 48.9% was allocated to

community programs, including an airdrop (15.8%), future community initiatives to incentivize applications, developers, and users (13.1%),

and ecosystem development (20%) to support growth initiatives and the operations of the Foundation.

Unlock schedules applicable to these

allocations will periodically release additional BERA into circulation, which may create sustained or concentrated selling pressure and

adversely affect the market price of BERA.

Further, approximately 10% new BERA is generated annually through the protocol’s built-in

inflation mechanism via BGT emissions, the rate of which may be adjusted from time to time by community governance.

Although BERA used

to pay transaction fees is currently burned and removed from circulating supply, there can be no assurance that this burn mechanism will

offset inflationary issuances or vesting releases.

Sales, distributions, or secondary market transfers of a substantial number of BERA

by core contributors, investors, the Foundation, airdrop recipients, or any other holders—whether pursuant to scheduled unlocks,

governance-approved initiatives, or otherwise—or the market perception that such transfers are occurring or imminent, could cause

the price of BERA to decline significantly, resulting in a partial or complete loss of your investment.

Our BERA holdings may amplify market volatility.

The Company holds approximately 54 million BERA,

representing more than 10% of the total initial BERA supply of 500 million tokens.

This significant concentration means that any future

sale, transfer, staking, delegation, or other disposition of BERA by the Company, whether to fund operations, provide liquidity, or for

any other purpose, could substantially increase the circulating supply and exert downward pressure on the market price of BERA, regardless

of the underlying performance or adoption of the Berachain network.

Additionally, our large holdings may create actual or perceived conflicts

of interest in governance decisions, validator delegation strategies, or protocol upgrade proposals, particularly if such actions could

directly or indirectly benefit the Company’s token position at the expense of other BERA holders.

The market may also react negatively

to the mere possibility of future dispositions by the Company, leading to increased price volatility, reduced investor confidence, and

a material decline in the value of BERA, which could adversely affect the Company’s financial condition and the value of an investment

in the Company.

Digital asset trading platforms on which BERA

trades are relatively new and largely unregulated or may not be complying with existing regulations.

Digital asset markets, including spot markets

for BERA, are growing rapidly.

The digital asset trading platforms through which BERA and other digital assets trade are new and largely

unregulated or may not be complying with existing regulations.

These markets are local, national and international and include a broadening

range of digital assets and participants.

Significant trading may occur on systems and platforms with minimum predictability.

may impose daily, weekly, monthly or customer-specific transaction or withdrawal limits or suspend withdrawals entirely, rendering the

exchange of BERA for fiat currency difficult or impossible.

Digital asset trading platforms may not be subject

to, or may not comply with, regulation in a manner similar to other regulated trading platforms, such as national securities exchanges

or designated contract markets.

Many digital asset trading platforms are unlicensed, are unregulated, operate without extensive supervision

by governmental authorities, and do not provide the public with significant information regarding their ownership structure, management

team, corporate practices, cybersecurity, and regulatory compliance.

In particular, those located outside the United States may be subject

to significantly less stringent regulatory and compliance requirements in their local jurisdictions.

Digital asset trading platforms may

be out of compliance with existing regulations.

As a result, trading activity on or reported by

these digital asset trading platforms may reflect behavior that would be prohibited in regulated U.S.

trading venues.

Furthermore, many

digital asset trading platforms lack certain oversight and safeguards put in place by more traditional exchanges to enhance the stability

of trading on the platform and prevent market manipulation.

As a result, the prices of digital assets such as BERA on digital asset trading

platforms may be subject to larger and/or more frequent sudden declines than assets traded on more traditional exchanges.

Tools to detect

and deter fraudulent or manipulative trading activities (such as market manipulation, front-running of trades, and wash-trading) may not

be available to or employed by digital asset trading platforms or may not exist at all.

Consequently, the marketplace may lose confidence

in, or may experience problems relating to, these venues.

No digital asset trading platform on which BERA

trades is immune from these risks.

The closure or temporary shutdown of digital asset trading platforms due to fraud, business failure,

hackers or malware, or government-mandated regulation may reduce confidence in Berachain and can slow down the mass adoption of Berachain

as a base layer protocol.

Further, digital asset trading platform failures or the failure of any other major component of the overall

Berachain ecosystem can have an adverse effect on the price of BERA, and could therefore have a negative impact on our financial condition

and the value of our Common Stock.

Negative perception, a lack of stability in the

digital asset trading platforms, manipulation of BERA on trading platforms by customers and/or the closure or temporary shutdown of such

trading platforms due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in digital

assets generally or BERA specifically, and result in greater volatility in the market price of digital assets, including BERA, and negatively

impact the price of our Common Stock.

Digital assets represent a new and rapidly

evolving industry, and the value of our Common Stock may depend, in large part, on the acceptance of Berachain and applications built

on the Berachain protocol.

The first digital asset, bitcoin, was launched

The Berachain protocol launched its mainnet in February 2025.

In general, digital asset networks, including Berachain and other

cryptographic and algorithmic protocols governing the issuance of digital assets, represent a new and rapidly evolving industry that is

subject to a variety of factors that are difficult to evaluate.

For example, the realization of one or more of the following risks could

materially adversely affect the value of our Common Stock:

● Berachain and Berachain-based applications

today have limited use.

As a result, the price of BERA may be influenced to a significant extent by speculators, thus contributing to

price volatility.

● Users, protocol and application developers

and validators may otherwise switch to or adopt certain digital assets at the expense of their engagement with other digital asset networks,

which may negatively impact those networks, including Berachain.

● Digital asset networks, including networks

and networks utilizing Berachain, are in the early stages of development.

Given the recentness of the development of digital asset networks,

digital assets may not function as intended and parties may be unwilling to use digital assets, which would dampen the growth, if any,

of digital asset networks.

Because BERA is a digital asset, the value of the Common Stock is subject to a number of factors relating to

the fundamental investment characteristics of digital assets, including the fact that digital assets are bearer instruments and loss,

theft, compromise, or destruction of the associated private keys could result in permanent loss of the asset.

● Digital asset networks are dependent upon

the internet.

A disruption of the internet or a digital asset network, such as Berachain, would affect the ability to transfer digital

assets, including BERA, and, consequently, a disruption may impact BERA’s value.

● Although unlikely, the acceptance of software

patches or upgrades by a significant, but not overwhelming, percentage of the users and validators in a digital asset network, such as

Berachain, could result in a “fork” in such network’s blockchain, including Berachain, resulting in the operation of

multiple separate networks.

● Governance of the Berachain protocol is

by voluntary consensus.

As a result, there may be a lack of consensus or clarity on the governance of the Berachain protocol, which may

stymie Berachain’s utility and ability to grow and face challenges.

In particular, it may be difficult to find solutions or marshal

sufficient effort to overcome any future problems on Berachain, especially long-term problems.

● In the past, flaws in the source code

for digital assets have been exposed and exploited, including flaws that disabled some functionality for users, exposed users’ personal

information and/or resulted in the theft of users’ digital assets.

The cryptography underlying Berachain or other blockchain networks

could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic

geometry and quantum computing, could result in such cryptography becoming ineffective.

In any of these circumstances, a malicious actor

may be able to compromise the security of Berachain or take our BERA, which would adversely affect the value of the Common Stock.

functionality of Berachain may be negatively affected such that it is no longer attractive to users, thereby dampening demand for BERA.

Even if another digital asset other than BERA were affected by similar circumstances, any reduction in confidence in the source code or

cryptography underlying digital assets generally could negatively affect the demand for digital assets and therefore adversely affect

the value of the Common Stock.

Moreover, because digital assets, including BERA,

have been in existence for a relatively short period of time and are continuing to develop, there may be additional risks in the future

that are impossible to predict as of the date of this Quarterly Report on Form 10-Q.

Berachain is a relatively new technological

innovation with a limited operating history.

Berachain has a limited history of existence and

The Berachain protocol launched in early 2025, with BERA first becoming tradable on major global cryptocurrency exchanges

in February 2025.

As a result, there is only a brief performance record regarding the technical stability, security, scalability, and

economic behavior of the Berachain protocol under real-world conditions.

The network has not yet been tested through prolonged periods

of high transaction volume, sustained validator participation, adverse market conditions, or significant stress on the PoL incentive system,

including PoLv2 mechanics such as dynamic emissions, delegation weighting, and reward module execution.

As such, there is only limited

historical data to assess the resilience of core Berachain protocol components—such as BERA staking dynamics, BGT governance efficiency,

or dApp reward distribution—during network congestion, token price volatility, or coordinated economic attacks.

Although past performance

is not necessarily indicative of future results, a longer operational track record might provide greater insight into the protocol’s

ability to maintain PoL consensus stability, sustain liquidity in key markets, or adapt to evolving user and validator behavior.

of such history increases uncertainty regarding the long-term viability of the Berachain network and the value of an investment in the

If we or our counterparties suffer losses as a

result of DeFi protocol failures, hacks, or exploits, we may be unable to recover some or all of our assets.

Such an event could materially

and adversely affect our business, financial condition, and the market price of our Common Stock.

As of the date of this Quarterly Report on Form

10-Q we have not engaged a significant portion of our assets with DeFi protocols yet.

We face other risks related to our BERA treasury

reserve business model.

Our BERA treasury reserve business model exposes

us to various risks, including the following:

BERA and other digital assets are subject to significant legal, commercial, regulatory, and technical uncertainty, and our BERA strategy subjects us to enhanced regulatory oversight;

regulatory changes could impact our ability to interact with DeFi protocols, stake our digital assets, act as a validator or receive rewards;

potential litigation risks exist related to smart contract vulnerabilities, or our business activities;

uncertainty around BERA’s regulatory status may impact our ability to maintain our listing;

changes in political administration may not guarantee a favorable regulatory environment for BERA;

future SEC actions or court decisions could retroactively classify BERA as a security, potentially leading to penalties or forced unwinding of transactions;

increased regulatory focus on Layer-1 blockchains beyond Bitcoin and Ethereum could result in new compliance requirements;

our use of call and put options on BERA exposes us to derivative-specific risks, including potential leverage effects, counterparty default risk, valuation and liquidity challenges, and the possibility that option strategies may not effectively hedge downside risk or may limit upside participation;

concentration of influence by the Foundation or core contributors could impact protocol governance in ways that are adverse to us.

market instability or liquidity freezes could prevent us from liquidating BERA or using it as collateral when needed.

Risks Related to Our Use of Derivatives

We may from time to time utilize call options

and put options on BERA as part of our treasury reserve strategy.

These derivatives are intended to (i) hedge downside exposure to BERA

price volatility and (ii) accelerate our accumulation of BERA in a capital-efficient manner.

While these option strategies may enhance

our risk-adjusted returns, they expose us to additional risks, including the following:

Most BERA options are traded over-the-counter or on non-qualified crypto venues.

If a counterparty fails to perform on its obligations, we may be unable to realize gains, recover premiums, or receive delivery of BERA, potentially resulting in a total loss of value associated with the position.

Options can introduce effective leverage, amplifying gains but also magnifying losses.

We may be required to post collateral or margin, which could reduce liquidity available for our operations.

Option contracts may also be illiquid, particularly during periods of market stress, making it difficult to exit or adjust positions.

While put options may provide downside protection and call options may accelerate accumulation, there is no guarantee these strategies will be effective.

Options may expire worthless, may not move in correlation with BERA spot prices, or may limit upside gains.

Option valuations are sensitive to assumptions about implied volatility, time to maturity, and counterparty pricing.

These variables may fluctuate significantly, resulting in mark-to-market losses or earnings volatility.

The regulatory treatment of BERA derivatives remains uncertain.

Future guidance could limit our ability to continue using derivatives or require us to account for them in a manner that increases earnings volatility.

Any of these risks could materially and adversely

affect the value of our BERA treasury, our financial condition, and the market price of our Common Stock.

liquidity, and concentration risk

Prices of digital assets, including BERA and stablecoins, can be volatile and may experience rapid declines, thin

liquidity, trading halts, forks, or network outages.

If active markets deteriorate or become unavailable, we may be unable to liquidate

positions or may be required to use less observable inputs to measure fair value, which would increase earnings volatility and valuation

Beginning with periods after October 2025, in-scope crypto assets are measured at fair value with changes recognized in earnings,

which may significantly increase quarterly volatility.

security, and operational risk

Self-custody and third-party custody arrangements expose us to loss from cyberattacks, key compromise, operational

error, or vendor failure.

Our controls include dual-authorization wallet policies and Board-level oversight through a Digital Assets Committee.

Crypto assets are not legal tender, are not backed by any government, and are not insured by the Federal Deposit Insurance Corporation

or the Securities Investor Protection Corporation.

Custody arrangements, whether self-custody or with a third-party custodian, are not

bank deposits.

Losses may occur due to cyberattack, key compromise, protocol failure, operational error, or custodian insolvency.

insolvency of a third-party custodian, we could be treated as a general unsecured creditor and may not recover all assets.

regulatory, and sanctions risk

Digital-asset activities are subject to uncertain and evolving United States and foreign legal requirements, including

securities, commodities, money transmission, and sanctions laws.

The Securities and Exchange Commission has emphasized clear disclosure

of crypto exposures, counterparties, liquidity impacts, and regulatory developments.

Failure to comply with sanctions screening, including

screening of counterparties and addresses, may result in penalties under strict-liability regimes.

New rules, enforcement actions, or

interpretations could restrict activities, require changes to controls, or increase compliance costs.

reporting and valuation risk

New fair-value accounting requires daily pricing controls, principal-market assessments, fair-value hierarchy classification,

and expanded disclosures.

Weaknesses in new processes could lead to control deficiencies or a material weakness.

We will measure in-scope

crypto assets at fair value with changes recognized in earnings beginning in the fourth quarter of 2025.

Market price swings could cause

material variability in reported results in periods when we hold crypto assets.

Counterparty,

stablecoin, and protocol risk

Stablecoins may lose their pegs, face redemption stress, or be subject to issuer or reserve-asset risk.

protocols and bridges can fail or be exploited, causing loss of value or inaccessibility of assets.

Dependencies on exchanges, market-makers,

analytics vendors, or custodians introduce additional counterparty risk that may not be diversifiable.

Our ability to hedge these risks

is limited and may be costly or unavailable during market stress.

controls, and key-person risk

The digital-asset strategy relies on specialized expertise and new governance, including dual-authorization wallet

policies and Board-level oversight.

If key personnel are unavailable or if controls are not designed and operated effectively, we could

experience losses, reporting errors, or control deficiencies and may incur increased audit and compliance costs.

Related-party

and conflicts risk

The Chief Investment Officer has industry relationships in the digital-asset ecosystem, including with Berachain-affiliated

Transactions or arrangements with related parties could create actual or perceived conflicts of interest.

We may determine that

certain transactions require disclosure under accounting standards or the federal securities laws, and any failure to identify, approve,

and disclose such transactions could result in regulatory scrutiny or reputational harm.

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