What changed in this filing

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Item 1A. Risk Factors

2026-08-13 compared with 2026-05-15 · 32 added, 17 removed, 38 unchanged (56% of the section changed)

3 unchanged sentences

There may be no realized economic value of the Company’s HPL tokens.

The HyperLend protocol is a liquidity, borrowing, and lending platform built on the Hyperliquid Layer 1 blockchain.

The HyperLend protocol is a liquidity, borrowing, and lending platform built on the Hyperliquid L1 blockchain.

In March 2026, the Company received 10,000,000 of HyperLend’s governance tokens called “HPL”.

1 unchanged sentence

The maximum total supply of HPL is 1 billion, of which it is reported that 25.0% was distributed to participants through HyperLend’s token genesis event in January 2026, 30.1% was reserved for ecosystem growth and incentives, 22.5% has been allocated to core contributors (with a multi-year unlock schedule), strategic investors will receive 17.4% (through a multi-year unlock schedule), and 5% has been dedicated to liquidity provision.

HPL has limited trading history, with a limited number of trading venues providing liquidity as of March 31, 2026.

HPL has limited trading history, with a limited number of trading venues providing liquidity as of June 30, 2026.

There can be no assurance that the Company will be able to monetize these tokens for any material economic value.

The Company’s liquid staking activities, including its holdings of HiHYPE, kHYPE, kmHYPE, and sKNTQ (each a digital intangible asset), expose the Company to additional risks and earnings volatility.

Hyperion Institutional HYPE (“HiHYPE”), Kinetiq Staked HYPE (“kHYPE”) and Kinetiq Market HYPE (“kmHYPE”) are HYPE liquid staking tokens (each, a “HYPE LST”);

Staked KNTQ (“sKNTQ”) is a KNTQ LST;

and, Staked HPL (“sHPL”) is a HPL LST (together with each HYPE LST and KNTQ LST, “LSTs”).

As of March 31, 2026, all HYPE LSTs owned by the Company are designed by Kinetiq, the Company’s KNTQ LSTs are designed by Kinetiq, and the Company’s HPL LSTs are designed by HyperLend.

The Company’s liquid staking activities, including its holdings of HiHYPE, kHYPE, kmHYPE, sKNTQ, and sHPL (each a digital intangible asset), expose the Company to additional risks and earnings volatility.

HiHYPE, kHYPE and kmHYPE are HYPE LSTs;

sKNTQ is a KNTQ LST;

and sHPL is a HPL LST.

As of June 30, 2026, all HYPE LSTs owned by the Company are designed by Kinetiq, the Company’s KNTQ LSTs are designed by Kinetiq, and the Company’s HPL LSTs are designed by HyperLend.

The Company’s LSTs enable the Company to access HyperEVM DeFi.

23 unchanged sentences

The Company’s deposits into the Rysk Institutional Volatility Income Vault and smart contract enabled options activity expose the Company to additional risks and earnings volatility.

In the three months ended March 31, 2026, the Company launched in partnership with the Rysk protocol an Institutional Volatility Income Vault (“IVIV”), through which the Company owns Hyperion Rysk Vault Shares specific to the Company’s activity (such shares bearing the name “WHYPE-USDH-USDH-P-H-HL”) which were received in exchange for the Company’s deposits of USDH into the smart contract enabled vault.

The purpose of this vault is to execute HYPE options (puts and calls) via smart-contracts on-chain, and the Company began executing on-chain put sales on the price of HYPE in the three months ended March 31, 2026, collateralized by the Company’s Hyperion Rysk Vault Shares.

On March 3, 2026, the Company launched in partnership with the Rysk protocol an IVIV, to execute HYPE options (puts and calls) via smart-contracts on-chain.

The Company began executing on-chain put sales on the price of HYPE in the three months ended March 31, 2026, pursuant to which the Company executed on-chain options in the price of HYPE during the six months ended June 30, 2026.

In order to collateralize these HYPE options, the Company first creates a standalone collateralization liquidity pool of the Company’s assets.

Until May 2026, the Company’s liquidity pool was denominated in USDH;

following Native Markets’ announcement on May 14, 2026 that it would cease supporting the USDH stablecoin, beginning in June 2026, the Company’s liquidity pool is denominated in USDC.

When the Company’s USDC is deposited into the IVIV, it receives in exchange Hyperion Rysk Vault Shares, which evidence ownership of the Company’s deposited USDC plus any income from the IVIV on-chain HYPE options execution in a matter akin to liquid staking tokens.

The Company relinquishes control over its underlying USDC when deposited into its liquidity pool.

Any increase in the amount of underlying USDC within the IVIV is not recognized as income until the Hyperion Rysk Vault Shares are redeemed for USDC.

Rysk designed the Hyperion Rysk Vault Shares and manages the underlying smart contracts.

When USDH is deposited into the IVIV in exchange for Hyperion Rysk Vault Shares, the Company relinquishes control over the underlying USDH.

The Company’s Hyperion Rysk Vault Shares evidence ownership of the Company’s deposited USDH plus any income from the IVIV on-chain HYPE options execution.

Rysk has commissioned Dedaub for multiple comprehensive smart contract security audits covering different protocol versions and components over multiple years;

in addition, Rysk uses Opyn Gamma–derived smart contracts, which themselves are widely audited.

Nevertheless, there is no guaranty against a bug or other vulnerability leading to a loss of the Company’s Hyperion Rysk Vault Shares or USDH.

In addition, the Company is also exposed to risk of losing USDH to system failure or hacking.

As a result, the Hyperion Rysk Vault Shares do not confer an enforceable right to the underlying deposited USDH and IVIV assets, but only a claim.

Nevertheless, there is no guaranty against a bug or other vulnerability leading to a loss of the Company’s Hyperion Rysk Vault Shares or USDC.

In addition, the Company is also exposed to risk of losing USDC through system failure or hacking.

As a result, the Hyperion Rysk Vault Shares do not confer an enforceable right to the underlying deposited USDC and IVIV assets, but only a claim.

Further, the Hyperion Rysk Vault Shares are periodically locked into smart contracts to collateralize on-chain HYPE options activity.

Therefore, the Company’s ability to redeem Hyperion Rysk Vault Shares back to underlying USDH is subject to smart contract risk and resolution of HYPE options activity on-chain.

The Hyperion Rysk Vault Shares are initially recognized at the fair value of the USDH exchanged and, due to their indefinite useful life, are not amortized but instead are subject to impairment testing on the price of USDH.

Therefore, the Company’s ability to redeem Hyperion Rysk Vault Shares back to underlying USDC is subject to smart contract risk and resolution of HYPE options activity on-chain.

The Hyperion Rysk Vault Shares are initially recognized at the fair value of the USDC exchanged and, due to their indefinite useful life, are not amortized but instead are subject to impairment testing.

Any HYPE options income earned within the IVIV is not recognized until the Hyperion Rysk Vault Shares are redeemed.

The variances in valuation methods between the Hyperion Rysk Vault Shares and USDH, including the delay of recognizing income from executive HYPE options strategies, may create material volatility in the financial statements depending on conversion and redemption activity between the Hyperion Rysk Vault Shares and USDH each period.

The variances in valuation methods between the Hyperion Rysk Vault Shares and the underlying pool of USDC, including the delay of recognizing income from executed HYPE options strategies, may create material volatility in the financial statements depending on conversion and redemption activity between the Hyperion Rysk Vault Shares and USDC each period.

We may engage in distinct digital asset financing strategies in which we will leverage our digital asset holdings to acquire additional amounts of the same leveraged digital assets, and may do so on a compounded basis, which will increase our exposure to smart-contract, operational and counterparty risks.

We may also lend amounts of digital assets (including stablecoins) to third parties through the use of third party on-chain lending platforms.

We may engage in digital asset leverage strategies to acquire additional amounts of HYPE or lend a portion of digital assets (including stablecoins).

As part of this strategy, we may borrow digital assets by pledging our own HYPE holdings as collateral (including on a compounded basis), deploy these borrowed assets to acquire additional amounts of HYPE, and subsequently re-pledge the newly acquired HYPE to further engage in these leveraged transactions.

We may also lend digital assets through a third-party loan facilitator, to a borrower under loan, security and third-party custodian agreements on-chain and off-chain.

Since some of these transactions will be effectuated on-chain, the strategy may expose us to significant smart-contract vulnerabilities and operational risks.

The smart contracts that are used for purposes of these transactions may contain undiscovered bugs, logical errors or economic vulnerabilities that could be exploited by malicious actors or that could cause the contracts to perform in unintended ways, resulting in partial or total loss of our collateral and borrowed assets.

In addition, the strategy may subject us to counterparty risk through the platforms we utilize to facilitate leveraging strategies including, among others, insolvency of the platform, coding errors and cyberattacks.

We may also be subject to the insolvency of the borrower and the value of the collateral they pledge may not be sufficient to wholly satisfy the outstanding debt obligations of the borrower.

Finally, where we are a borrower (and conversely where we act as a lender), lenders customarily require that collateral ratios be maintained within narrowly defined thresholds and may exercise broad contractual discretion to impose additional margin requirements or to liquidate collateral without notice when those thresholds are breached.

We may also incur losses if the interest that accrues on our borrowings significantly exceeds the revenue generated by the borrowed HYPE.

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