Greenlane Holdings, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Business Transformation Overview Fiscal year 2025 represents a significant strategic transition for the Company, as it shifted its primary capital allocation focus from wholesale and distribution operations to a digital asset treasury strategy centered on BERA. Historically, operating results were driven by warehouse-based wholesale and direct-to-consumer sales. During 2025, the Company materially reduced that legacy footprint, substantially exited warehouse inventory, and transitioned the remaining commerce business to an asset-light, drop-ship model. While the Company continues to operate a scaled-down wholesale / distribution business, its financial profile is increasingly influenced by digital asset activity. During 2025, the Company completed a reverse stock split to maintain compliance with Nasdaq listing requirements. All share and per share amounts presented herein reflect the impact of the reverse stock split for all periods presented. In the fourth quarter of 2025, the Company completed a private placement with digital asset-focused investors. Transaction consideration consisted of cash, U.S. dollar-denominated stablecoins, and BERA, and the transaction established the capital base for the Company’s digital asset treasury strategy while also supporting residual legacy operations. As a result, period-over-period comparability is impacted by both the decline in legacy operating activity and the introduction of fair value accounting for digital assets. 63 Overview Greenlane Holdings, Inc. is a publicly traded digital asset treasury company with a digital asset treasury strategy focused on the acquisition, management, and strategic deployment of BERA, the native token of the Berachain blockchain network. As of December 31, 2025, a substantial majority of the Company’s balance sheet consisted of digital assets and U.S. dollar cash and dollar-pegged stablecoins, which are classified within cash and cash equivalents on the consolidate balance sheets. The Company’s financial condition, liquidity profile, and results of operations are therefore significantly influenced by digital asset market conditions, including the fair value of its BERA holdings. In addition to our digital asset treasury activities, the Company continues to operate a legacy lifestyle accessories commerce platform through vapor.com and related channels. Following the strategic transition in 2025, the legacy business was materially reduced in scale, warehouse operations were substantially exited, and the operating model shifted to an asset-light drop-ship structure. Strategic Transformation Greenlane historically operated as a distributor of lifestyle accessories and consumer products. Beginning in October 2025, management executed a strategic transformation following the closing of a $110.7 million private investment in public equity transaction led by crypto-native investors and supported by the Berachain Foundation (the “BERA Private Placement”). The BERA Private Placement provided the capital foundation for the BERA Strategy. In connection with the transaction: ● The Company received cash and stablecoin proceeds and BERA tokens. ● The Board was reconstituted to include digital asset and capital markets expertise. ● A Digital Assets Committee was formed to oversee treasury strategy and risk management. ● The Company adopted a capital allocation model centered on BERA accumulation and deployment. This transformation shifted the Company’s principal activity from a predominately operating distribution infrastructure to managing a digital asset treasury strategy. As of December 31, 2025, the Company no longer maintained warehouse inventory and had transitioned the remaining commerce business to a drop-ship operating model. The BERA Strategy The Company has implemented a Treasury Policy that sets guidelines for digital asset diversification, liquidity, and risk management, and is overseen by the Board’s Digital Asset Committee. The Company’s digital asset treasury strategy, subject to these guidelines, consists of five core components: 1. Capital Deployment The Company seeks to deploy capital raised through equity offerings and other transactions to acquire BERA through open market purchases or negotiated transactions. Capital deployment is governed by a disciplined strategy aimed at increasing long-term BERA-per-share. 2. Network Participation The Company participates in Berachain’s Proof of Liquidity (“PoL”) consensus mechanism through staking and validator infrastructure. These activities may generate staking rewards denominated in BERA, which are variable and not guaranteed. 64 3. Governance Participation Through ongoing participation in the Berachain ecosystem, the Company may earn Berachain Governance Token (“BGT”), a non-transferable governance token. BGT may provide governance influence within the ecosystem, subject to protocol rules. The Company does not control protocol governance and cannot assure that BGT will confer any anticipated influence or economic benefit. 4. Risk-Adjusted Yield Participation The Company may selectively deploy BERA or stablecoins into decentralized finance (“DeFi”) protocols within the Berachain ecosystem, subject to internal risk controls. Such activities involve smart contract risk, liquidity risk, counterparty risk, and regulatory uncertainty. 5. Capital Allocation Discipline The Company may pursue strategic initiatives aligned with its digital asset treasury model, including validator partnerships, infrastructure investments, and capital markets transactions intended to enhance net asset value per share. There can be no assurance that such initiatives will generate positive returns. BERA and the Berachain Ecosystem Berachain is a decentralized, open-source, EVM-compatible layer-1 blockchain engineered for high throughput, low latency, and full compatibility with Ethereum tooling, smart contracts, and infrastructure. Berachain utilizes a novel proof of liquidity consensus mechanism (“PoL”) that integrates network security with active liquidity provisioning. BERA is the native digital asset of the Berachain network and is used for transaction fees, staking, validator participation, and ecosystem incentives. BERA is not legal tender, is not backed by any government or central bank, and may be subject to significant price volatility, regulatory uncertainty, and technological risk. The Berachain ecosystem includes decentralized exchanges, lending protocols, liquidity pools, validator infrastructure providers, and governance mechanisms. The Company does not control the Berachain protocol, validator selection outcomes, or governance decisions. Protocol parameters, incentive structures, and token mechanics may change over time. The Company’s strategy assumes continued ecosystem development and network adoption. There can be no assurance that the Berachain ecosystem will achieve sustained adoption or that the PoL mechanism will perform as intended. Treasury Holdings and Liquidity The Company’s liquidity is primarily derived from cash and cash equivalents on hand and is supplemented by digital asset holdings, which are subject to market volatility and liquidity constraints. As of December 31, 2025, the Company’s treasury holdings consisted of BERA, cash, and U.S. dollar-denominated stablecoins. Stablecoins that are readily convertible into U.S. dollars are classified as cash equivalents. Stablecoins deployed into DeFi protocols are not classified as cash equivalents. In connection with the October 2025 PIPE transaction, the Company agreed to certain contractual transfer restrictions on a portion of its BERA holdings. As of December 31, 2025, while these contractual provisions were in place, no operational lockup mechanism had been implemented, and the Company retained the ability to utilize such BERA, including for staking activities. An operational lockup mechanism was implemented in mid-February 2026, with restrictions scheduled to expire on April 23, 2026. Management concluded that, as of December 31, 2025, these contractual provisions did not impact the fair value measurement or classification of the Company’s BERA holdings. Legacy Distribution Business The Company’s legacy business consists of lifestyle accessories and consumer products historically distributed through wholesale and direct-to-consumer channels. 65 Revenue from the legacy segment declined significantly during fiscal 2025 and is expected to represent a decreasing proportion of overall Company activity. The legacy business is currently managed to preserve liquidity and fulfill contractual obligations. The Company does not currently prioritize expansion of this segment. As of December 31, 2025, the Company no longer maintained warehouse inventory and had transitioned the remaining business to a drop-ship operating model supported by its existing e-commerce platform, vapor.com. Regulatory Considerations The regulatory framework for digital assets remains evolving and uncertain. For a discussion of the risks related to digital assets and the Company’s operations, see “Risk Factors” in Section 1.A of this Form 10-K. The Company’s legacy business continues to be subject to federal, state, and local regulation governing consumer products, vaporization devices, and related accessories. Reverse Stock Splits On June 26, 2025, we filed a Certificate of Amendment to the A&R Charter with the Secretary of State for the State of Delaware (“SSSD”), which effected a one-for-seven hundred and fifty (1-for-750) reverse stock split (the “2025 Reverse Stock Split”) of our issued and outstanding shares of Common Stock at 5:01 PM Eastern Time on June 26, 2025. As a result of the 2025 Reverse Stock Split, every seven hundred and fifty shares of common stock issued and outstanding were converted into one share of common stock. In lieu of fractional shares we rounded up to the next whole share, and accordingly, no fractional shares were issued in connection with the 2025 Reverse Stock Split. The 2025 Reverse Stock Split did not change the par value of the Common Stock or the authorized number of shares of Common Stock. All outstanding options, restricted stock awards, warrants and other securities entitling their holders to purchase or otherwise receive shares of our Common Stock have been adjusted as a result of the 2025 Reverse Stock Split, as required by the terms of each security. The number of shares available to be awarded under our Amended and Restated 2019 Equity Incentive Plan have also been appropriately adjusted. See “Note 10 — Stockholders’ Equity” for more information. On March 25, 2026, the Company’s stockholders approved an amendment to the Company’s amended and restated certificate of incorporation to effect a reverse stock split of the Company’s issued and outstanding common stock at a ratio within a range of 1-for-5 to 1-for-15, with the final ratio and timing to be determined at the discretion of the Company’s Board of Directors (the “2026 Reverse Stock Split”). The Company expects to effect the reverse stock split shortly following this issuance of this Annual Report. All share and per share amounts in the Company’s consolidated financial statements, notes thereto and this Annual Report have been retroactively adjusted for all periods presented to give effect to the 2025 Reverse Stock Split, including reclassifying an amount equal to the reduction in par value of Common Stock to additional paid-in capital. As of the issuance date of these financial statements, the 2026 Reverse Stock Split has not been effected. Accordingly, the Company’s financial statements, including share and per share amounts, and the figures appearing in this Annual Report have not been adjusted to reflect the 2026 Reverse Stock Split. Critical Accounting Estimates We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience, outside advice from parties believed to be experts in such matters, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. See “Note 2—Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for a description the significant accounting policies and methods used in the preparation of our consolidated financial statements. 66 In December 2023, the FASB issued ASU 2023-08 (ASC 350-60) requiring in-scope crypto assets to be measured at fair value with changes in net income and presented separately, with enhanced disclosures under ASC 820. The standard is effective for fiscal years beginning after December 15, 2024, including interim periods. We adopted the standard effective January 1, 2025. Beginning in the fourth quarter of 2025, we provide ASC 820 hierarchy, valuation, and sensitivity disclosures, together with custody and pricing-control updates. Fair value measurement of digital assets Beginning in Q4 2025, crypto assets within the scope of ASU 2023-08 are measured at fair value with changes recognized in earnings. The Company primarily uses quoted prices in active markets for identical assets when available (Level 1 inputs). When such prices are not available, the Company utilizes observable market data from secondary sources, including pricing aggregators and broker quotes (Level 2 inputs). Management applies judgment in determining the principal market and evaluates the reliability of pricing sources, including volume, accessibility, and consistency across exchanges. In periods of market dislocation or limited liquidity, alternative valuation approaches may be applied. Differences in these assumptions could materially impact reported fair values and results of operations. The Company also maintains supporting schedules of significant crypto assets and performs daily to monthly reconciliations between wallet activity and the general ledger. Stablecoins held in Company-controlled wallets that are readily convertible to U.S. dollars are classified as cash equivalents based on management’s assessment of their high liquidity, short term nature, and minimal risk of changes in value. This classification reflects the Company’s conclusion that such holdings are economically equivalent to cash and are used in treasury management activities. The Company evaluates counterparty risk, redemption mechanisms, and market liquidity in determining this classification. Stablecoins deployed into decentralized finance (DeFi) protocols are not classified as cash equivalents and are presented separately based on their use and risk profile. As of December 31, 2025, the Company held approximately $22.6 million in U.S. dollar-denominated stablecoins, classified as cash equivalents, representing a significant component of the Company’s near-term liquidity and treasury management framework. Digital asset fair value adjustments are non-cash and may significantly impact reported net income independent of operating performance of the wholesale and distribution segment. Inventories Inventories, consisting of finished products, are primarily accounted for using the weighted-average method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to customers or liquidations. Assumptions about the future disposition of inventory are inherently uncertain and changes in our estimates and assumptions may cause us to realize material write-downs in the future. Management evaluated whether the reduction of the legacy commerce business and the exit of warehouse operations qualified for discontinued operations presentation under ASC 205-20 and concluded that discontinued operations treatment was not appropriate because the Company continues to operate vapor.com and related commerce activities. During 2025, the Company fully impaired its remaining inventory to reflect reduced demand and warehouse exit. Stock-Based Compensation The Company accounts for stock-based compensation under ASC 718. Expense is recognized over vesting periods and may fluctuate based on equity issuance timing and fair value assumptions. Income Taxes and TRA Liability We are a corporation subject to U.S. federal and state income taxes. Certain of our subsidiaries are subject to tax in their respective jurisdictions, and their results are included in our consolidated financial statements. As of December 31, 2022, we held all outstanding Common Units of the Operating Company and became its sole member. Beginning in 2023, 100% of the Operating Company’s U.S. taxable income and losses are included in our U.S. federal and state income tax returns. Deferred income tax assets and liabilities are recognized for the expected future tax consequences of differences between the financial statement carrying amounts and the tax bases of assets and liabilities. These amounts are measured using enacted tax rates expected to apply in the periods in which such differences are anticipated to reverse. A valuation allowance is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing realizability, we consider all available evidence, including the reversal of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent operating results. 67 We evaluate tax positions taken, or expected to be taken, in income tax returns to determine whether they meet the more-likely-than-not recognition threshold. For positions that meet this threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized. Interest and penalties related to unrecognized tax benefits are recorded within income tax expense. As of the reporting date, we have no material uncertain tax positions requiring recognition in the consolidated financial statements. In addition to income taxes, we may be required to make payments under the Tax Receivable Agreement (TRA). Under the Operating Agreement, Greenlane Holdings, LLC may make pro rata tax distributions to its members to fund their tax liabilities arising from allocated taxable income. Such distributions may, in certain cases, exceed the related tax liabilities. Legal Contingencies In the ordinary course of business, we are involved in legal proceedings involving a variety of matters. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We evaluate the associated developments on a regular basis and accrue a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine there is a reasonable possibility that we may incur a loss and the loss or range of loss can be estimated, we disclose the possible loss in the accompanying notes to the consolidated financial statements to the extent material. We review the developments in our contingencies that could affect the amount of the provisions that have been previously recorded, and the matters and related reasonably possible losses disclosed. We make adjustments to our provisions and changes to our disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability of loss and the estimated amount of loss. The outcome of these matters is inherently uncertain. Therefore, if one or more legal proceedings were resolved against us for amounts in excess of management’s expectations, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected. See “Note 7—Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information regarding these contingencies. Recent Accounting Pronouncements See “Note 2—Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K. Executive Overview Fiscal year 2025 represented a year of strategic transformation for the Company. Historically operating as a lifestyle accessories distributor, the Company shifted its primary focus in October 2025 to a digital asset treasury strategy focused on BERA, the native token of the Berachain blockchain network. As of December 31, 2025: ● A substantial majority of total assets consisted of digital assets and cash equivalents. ● The implementation of the BERA Strategy resulted in a significant investment in digital assets. ● The legacy distribution business had materially declined in scale. The Company no longer maintained warehouse inventory and had transitioned the remaining business to an asset-light, e-commerce drop-ship operating model. ● Significant inventory write-downs and restructuring charges were recorded. ● Results of operations were materially impacted by unrealized fair value adjustments related to digital assets. Accordingly, year-over-year comparisons reflect both operating changes and structural transformation. 68 Results of Operations The following table presents operating results for the years ended December 31, 2025 and 2024: For the Year Ended December 31, (in thousands) % of Net sales Change 2025 2024 2025 2024 $ % Net revenue $ 4,355 $ 13,275 100 % 100 % (8,920 ) (67 )% Cost of revenue 16,820 6,993 386 % 53 % 9,827 141 % Gross (loss) profit (12,465 ) 6,282 (286 )% 47 % (18,747 ) (298 )% Operating expenses: Salaries, benefits and payroll taxes 9,947 7,380 228 % 56 % 2,567 35 % Stock based compensation – strategic advisory warrants 18,553 — 426 % — % 18,553 100 % General and administrative 10,646 9,764 244 % 74 % 882 91 % Restructuring expenses 1,492 — 34 % — % 1,492 100 % Impairment of property and equipment 650 153 15 % 1 % 497 325 % Depreciation and amortization 493 800 11 % 6 % (307 ) (38 )% Total operating expenses 41,781 18,097 959 % 136 % 23,684 134 % Loss from operations (54,246 ) (11,815 ) (1,246 )% (89 )% (42,431 ) 359 % Other income(expense), net: Interest expense (394 ) (5,941 ) (9 )% (45 )% 5,547 (93 )% Change in fair value of contingent consideration — 1,000 0 % 8 % (1,000 ) (100 )% Change in fair value of digital assets (31,147 ) — (715 )% — % (31,147 ) (100 )% Loss on extinguishment of debt — (876 ) — % (7 )% 876 (100 )% Other expense, net 213 (25 ) 5 % (0 )% 238 (954 )% Total other income (expense), net (31,327 ) (5,842 ) (719 )% (44 )% (25,485 ) 436 % Loss before income taxes (85,573 ) (17,657 ) (1,965 )% (133 )% (67,916 ) 385 % Provision for income taxes 7 — — % — % 7 100 % Net loss (85,580 ) (17,657 ) (1,965 )% (133 )% (67,923 ) 385 % Net loss attributable to non-controlling interest — (17 ) — % (0.1 )% (17 ) (100 )% Net loss attributable to Greenlane Holdings, Inc. $ (85,580 ) $ (17,640 ) (1,965 )% (133 )% (67,940 ) 385 % Consolidated Results of Operations Digital Asset Activity Beginning in October 2025, the Company transitioned to a digital asset treasury following a $110.7 million private investment in public equity transaction , which included BERA, the principal token of the Berachain ecosystem, stablecoins and cash (the “BERA Private Placement”). During the remainder of 2025, the Company deployed a portion of its cash balances to acquire BERA in the open market. During the fourth quarter of 2025, digital asset markets experienced broad-based declines, adversely affecting all major cryptocurrencies. The Company’s holdings in BERA, a less established digital asset, were particularly volatile and experienced larger relative declines compared with more widely traded cryptocurrencies such as Bitcoin and Ethereum. Accordingly, for fiscal year 2025, the Company recorded: ● $31.1 million in unrealized losses on digital assets; and ● $0.2 million in staking rewards. Legacy Distribution Operations The reorganization of the sales team and the challenges in recruiting personnel in 2025 negatively affected sales in the first half of the year. During the second half of 2025, the Company transitioned from an inventory-based warehouse model to an asset-light, drop ship model supported by its existing e-commerce platform. As a result, f or fiscal year 2025: ● Net revenue decreased $8.9 million or (67%) compared to 2024 ● Gross margin was impacted by $6.3 million in inventory impairment write-downs ● Operating expenses were reduced through headcount and infrastructure reduction Net Revenue For the year ended December 31, 2025, total net sales were approximately $4.4 million, compared to approximately $13.3 million for the year ended December 31, 2024, representing a decrease of $8.9 million, or 67%. The decrease was attributable primarily to the reorganization of the sales team and challenges in higher-performing personnel, which adversely affected sales in the first half of 2025. In the second half of the year, revenue was further impacted by the substantial reduction of legacy warehouse-based operations and the Company’s transition to a drop-ship fulfilment model. 69 Cost of Revenue and Gross Profit (Loss) Profit For the year ended December 31, 2025, cost of sales increased by $9.8 million, or 141%, as compared to the year ended December 31, 2024. The increase was primarily attributable to a $6.3 million inventory reserve recorded following a comprehensive review of inventory aging and realizability in connection with the Company’s transition to an asset-light, e-commerce operating model. In addition, costs associated with the wind-down of legacy warehouse-based operations also contributed to the increase. Gross loss decreased significantly, to approximately $(12.5 million) for the year ended December 31, 2025 compared to approximately $6.3 million for the year ended December 31, 2024, driven by the increase in cost of sales described above, together with the 67% reduction in net revenue. Salaries, Benefits and Payroll Taxes Salaries, benefits and payroll taxes expenses increased by approximately $2.6 million, or 35%, to $9.9 million for the year ended December 31, 2025, compared to $7.4 million for the same period in 2024. The increase was primarily driven by an increase of approximately $4.8 million in stock-based compensation expense related to employee and director equity awards, partially offset by a $2.3 million decrease associated with workforce reductions as part of the Company’s restructuring initiatives. Stock based compensation – strategic advisory warrants Stock-based compensation – strategic advisory warrants was approximately $18.6 million for the year ended December 31, 2025, compared to $0 for the year ended December 31, 2024, representing an increase of approximately $18.6 million. The increase is attributable to warrants issued in connection with with the October 2025 PIPE. These awards were accounted for under ASC 718 and were recognized at grant date based on the fair value of the warrants. As a result, the expense is non-cash in nature and is presented separately within operating expenses. General and Administrative Expenses General and administrative expenses increased to approximately $10.6 million for the year ended December 31, 2025, from approximately $9.8 million for the year ended December 31, 2024, an increase of approximately $0.9 million, or 9%. This increase was primarily driven by higher professional and outside services, facility-related costs, outbound freight, marketing, and general insurance expenses. These advisory warrants were accounted for as equity-based compensation under ASC 718 and ASC 505-50. A substantial portion of the awards was recognized immediately at grant due to the absence of a substantive service period, while a smaller portion is being recognized over the related service period. Excluding the impact of advisory warrant-related stock-based compensation, the increase in general and administrative expenses was driven by higher professional and outside services, facility expenses, outbound freight, marketing, and general insurance costs. Restructuring Expenses Restructuring and transformation costs were $1.5 million for the year ended December 31, 2025, driven primarily by personnel actions associated with the Company’s cost reduction initiatives and its strategic transition to a crypto treasury model, together with a $1.0 million termination payment to the Company’s former Chief Executive Officer. Impairment of property and equipment Impairment of property and equipment increased $0.5 million, for the year ended December 31, 2025, compared to the same period in 2024. The increase was primarily attributable to the write-off of certain fixed assets in connection with the Company’s change in operating strategy and the termination of warehouse operations. Depreciation and Amortization Expense Depreciation and amortization expense decreased $0.3 million, or 38%, for the year ended December 31, 2025, compared to the same period in 2024. Depreciation decreased due to the impairment of fixed assets noted above. Other Income (Expense), Net Interest expense Interest expense decreased approximately $5.5 million for the year ended December 31, 2025, compared to the same period in 2024. The decrease is attributable to the reduction in the Company’s overall debt, which was fully repaid in February 2025. Change in fair value of contingent consideration The change in fair value of contingent consideration decreased $1.0 million for the year ended December 31, 2025 compared to the prior year. The prior year included a one-time reduction in estimated earnout liabilities associated with the Davinci and Eyce product lines. Change in fair value of digital assets Digital assets consisted primarily of BERA held in the Company’s digital treasury. These assets are remeasured to fair value at the end of each reporting period, with changes recognized in earnings. For the year ended December 31, 2025, the Company recognized a fair value loss of approximately $31.1 million driven by market fluctuations in BERA. As of December 31, 2025, the fair value of digital assets on the consolidated balance sheet was $36.6 million. The Company may also deploy portions of its BERA holdings in staking or other permitted treasury activities from time to time. Loss on debt extinguishment For the year ended December 31, 2024, the Company reported a non-recurring loss on debt extinguishment of approximately $0.9 million attributable to the October 29, 2024 debt restructuring. For further information, see Note 6, “Debt” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. Liquidity and Capital Resources As of December 31, 2025, the Company had approximately $32.5 million of cash and cash equivalents, $36.6 million in digital asset holdings (BERA), and working capital of approximately $28.9 million, compared to $0.9 million of cash and cash equivalents and working capital of approximately $1.6 million as of December 31, 2024. 70 The increase in working capital reflects proceeds from the October 2025 private placement and the Company’s transition away from legacy warehouse operations. The Company’s primary sources of liquidity are cash and cash equivalents, as well as proceeds from equity issuances. While digital assets represent a significant portion of total assets, the Company primarily relies on cash and cash equivalents to meet near-term operating needs. Digital assets are subject to price volatility and market liquidity constraints, which may impact the Company’s ability to convert such assets into cash at expected values or within desired timeframes. The Company has no outstanding debt as of December 31, 2025. The Company may opportunistically access capital markets, including through its at-the-market (“ATM”) program, but is not dependent on additional financing to meet its near-term obligations. The Company’s contractual obligations are primarily limited to short-term vendor arrangements and are not material individually or in the aggregate. The Company’s liquidity may be impacted by fluctuations in digital asset prices, timing of capital deployment, and other risks described in “Risk Factors.” On January 7, 2026, the Company entered into a Sales Agreement (the “Sales Agreement”) with Yorkville Securities, LLC (“Yorkville”) pursuant to which the Company may, from time to time, offer and sell shares of its Class A common stock through or to Yorkville, acting as sales agent or principal (the “ATM Offering”). On January 7, 2026, the Company filed a prospectus supplement in connection with the ATM Offering for up to $5,355,687 of shares of Common Stock. As of the date of this Annual Report, the Company has not made any sales under the ATM Offering. Going Concern Management has evaluated the Company’s ability to continue as a going concern in accordance with ASC 205-40. Based on the Company’s current cash position, cash equivalents, digital asset holdings, and expected operating cash flows, management believes that there is no substantial doubt about the Company’s ability to continue as a going concern for at least the next twelve months from the date of issuance of these financial statements. Outlook and plan Based on cash and cash equivalents on hand, including proceeds from the October 2025 private placement, management believes the Company has sufficient liquidity to fund its working capital requirements and operating obligations for at least the next twelve months. The Company’s focus is executing its digital asset treasury strategy, maintaining liquidity, and aligning operating costs with its reduced legacy footprint. The Company may seek additional capital opportunistically depending on market conditions and strategic priorities. As of December 31, 2025, the Company did not have any off-balance sheet arrangements that are reasonably likely to have a material effect on its financial condition, results of operations, or liquidity. Cash Flows The following summary of cash flows for the periods indicated has been derived from our consolidated financial statements included in Part II, Item 8 of this Form 10-K: Year Ended December 31, (in thousands) 2025 2024 Net cash used in operating activities $ (16,260 ) $ (6,750 ) Net cash used in investing activities (8,260 ) (244 ) Net cash provided by financing activities 56,134 7,427 Net cash used in operating activities was approximately $16.3 million for the year ended December 31, 2025, compared to approximately $6.8 million for the year ended December 31, 2024, representing an increase in cash usage of approximately $9.5 million, or 141%. The increase was primarily driven by changes in working capital, including the wind-down of legacy operations, as well as the timing of payments to vendors and service providers. These cash outflows were partially offset by non-cash items, including stock-based compensation and changes in the fair value of digital assets, which do not impact operating cash flows. Net cash used in investing activities was approximately $8.3 million for the year ended December 31, 2025, compared to approximately $0.2 million for the year ended December 31, 2024, representing an increase in cash usage of approximately $8.0 million, or approximately 3,285%. The increase was primarily attributable to cash-funded purchases of digital assets as part of the Company’s treasury strategy, as well as purchases of property and equipment. Digital assets acquired in connection with the October 2025 private placement were non-cash in nature and are disclosed as supplemental non-cash investing and financing activity. Net cash provided by financing activities was approximately $56.1 million for the year ended December 31, 2025, compared to approximately $7.4 million for the year ended December 31, 2024, representing an increase of approximately $48.7 million, or 656%. The increase was primarily driven by proceeds from the October 2025 private placement and other equity-related transactions. A portion of the consideration received in connection with the private placement consisted of digital assets, which are non-cash in nature and are disclosed separately as supplemental non-cash investing and financing activity. Digital Asset Holdings and Indicative Net Asset Value As part of its digital asset treasury strategy, the Company monitors the aggregate fair value of its digital asset holdings. As of December 31, 2025, the Company held digital assets with an approximate fair value of $36.6 million. In addition, the Company held cash and cash equivalents, including stablecoins, of approximately $22.6 million, and had total liabilities of approximately $7.2 million. Based on these amounts, the Company’s indicative net asset value was approximately $63.0 million, or approximately $13.04 per share, based on 4,829,563 shares of Class A common stock outstanding as of December 31, 2025. This metric is presented for informational purposes only and does not represent a measure of financial performance under U.S. GAAP. It is derived from amounts that are based on different measurement attributes, including fair value and historical cost, and therefore may not be comparable to similarly titled measures presented by other companies. The fair value of digital assets is subject to significant market volatility, and such values may differ materially from subsequent periods. Accordingly, this measure should not be considered a substitute for, or superior to, financial information prepared in accordance with U.S. GAAP. Management monitors the value of its digital asset holdings relative to market capitalization as an internal metric; however, such measures are not presented as formal financial metrics and are subject to significant variability. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required. 71