KULR Technology Group, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the results of operations and financial condition of KULR Technology Group, Inc. (“KULR”) and its wholly-owned subsidiary, KULR Technology Corporation (“KTC”) (collectively referred to as “KULR” or the “Company”) as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this Quarterly Report. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”, “we”, “our” and similar terms refer to the Company. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Quarterly Report, and other factors that we may not know. There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K which was filed with the SEC on March 31, 2026, unless disclosed elsewhere in this Quarterly Report. Overview KULR designs and builds advanced battery systems for autonomous platforms, digital infrastructure, e-mobility and Space – sold as a product or delivered as service subscription. The Company addresses two primary constraints in electrification: thermal management and safety. As energy and power density increase across aerospace, autonomous machines, digital infrastructure and industrial applications, managing heat generation, current density, and propagation risk becomes essential to system reliability and survivability. KULR is establishing a fully integrated battery energy storage system design and production infrastructure in Houston, Texas. KULR brings battery pack design, prototyping, testing, certification, and manufacturing; as well as battery management system software and electronics design capabilities together under one roof. This full-stack approach enables faster development cycles and rapid transition from prototype to cost-effective volume production. The facility is designed to build high-power and high-energy battery packs that require advanced thermal, mechanical, and safety engineering. With domestic supply chain alignment and scalable production capacity, KULR is positioning itself as a leading manufacturer of advanced battery packs for mission-critical and high-performance applications in the United States. KULR VIBE is a vibration-reduction technology designed to improve performance and reliability in high-speed and rotor-driven systems. Derived from vibration management solutions used in defense helicopters for over 20 years, it addresses excess vibration that reduces efficiency, increases mechanical wear, and shortens vehicle lifespan. KULR VIBE enables motors, rotating assemblies, and sensitive electronics to operate more smoothly and efficiently across a range of applications, including helicopters, drones, performance vehicles, wind turbines, and other electric and autonomous systems. Recent Developments Caban Asset Acquisition On December 24, 2025 (the “Acquisition Date”), we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Caban Systems, Inc. (“Caban”), a Miami-based renewable energy services and technology company, pursuant to which we acquired certain equipment and software used for the development, manufacture, and supply of Underwriters Laboratories (“UL”)-certified battery packs in exchange for a purchase price of $2,515,987 (the “Acquisition”). We paid cash of $1,921,127 on the Acquisition Date, with the remainder of $594,860 (“Holdback Amount”) to be paid in cash during 2026 based on timing of completion of delivery and installation of the equipment at our facility. If we suffer any damages related to the Acquisition for which we are indemnified and that are not cured by Caban, the Holdback Amount may be setoff against payments for such damages that would otherwise be paid by Caban. As of March 31, 2026, the remaining balance of the Holdback Amount was $348,601. In connection with the Purchase Agreement, we entered into a Transition Services Agreement (the “TSA”) with Caban, whereby both parties agreed to work together for approximately ninety days after the equipment is installed at our facility, to ensure a smooth transition of the manufacturing of the Battery Packs from Caban to KULR. In consideration for the transition services, we will pay Caban service fees not to exceed $500,000 in the aggregate unless otherwise agreed in writing. During the three months ended March 31, 2026, we incurred expenses in connection with the TSA of approximately $100,000. 29 Table of Contents Credit Agreement In July 2025, we secured a $20 million credit facility (which has no fixed termination date) with Coinbase, our digital assets custodian (the “Custodian”). Pursuant to the terms of the agreement, either party may terminate a loan on a termination date established by notice given to the other party prior to the close of business on any day that is a calendar day. On July 8, 2025, we borrowed $8 million (“Initial Drawdown”) which was repaid on October 15, 2025. On March 27, 2026, we borrowed $5 million (the “Second Drawdown”) against the facility. The Second Drawdown bears a 7% loan fee, and we segregated 125 Bitcoin (“BTC”) as collateral against this loan. The Second Drawdown is subject to the terms and conditions of the Master Loan Agreement. As of March 31, 2026, the full $5 million of principal was outstanding and we incurred interest in the amount of $4,795 pursuant to the Second Drawdown. On May 13, 2026, we borrowed an additional $15 million (the “Third Drawdown”) against the $20 million credit facility with Coinbase. The Third Drawdown bears a 7% loan fee rate per annum, paid monthly, with no scheduled maturity date. We segregated 300 BTC as collateral against this loan. The Third Drawdown is subject to the terms and conditions of the Master Loan Agreement. Bitcoin Strategy As of March 31, 2026, we had two machine lease agreements (“Machine Lease Agreements”) with digital asset mining services providers related to the operation of digital asset mining machines. On July 30, 2025, we entered into a one-year mining services agreement and on October 1, 2025, we entered into a two-year mining services agreement with a digital asset mining services company. During the three months ended March 31, 2026, the Company did not purchase BTC and 8.80 BTC were earned from mining operations at an average value of $75,263 per BTC. See the section “Our Bitcoin Acquisition Strategy” below for further information regarding our Bitcoin purchases, including the source of capital used to purchase Bitcoin. Departure and Appointment of Directors On April 28, 2026, the holder of a majority of the outstanding voting stock of the Company, acting by written consent in lieu of a stockholder meeting, removed Dr. Joanna Massey, Donna Grier, Aron Schwartz, and Shawn Canter from the Company’s Board of Directors and appointed Mr. Ben Frank, a Director of Workforce AI Solution Engineering at Microsoft Corporation, and Dr. Mike Kimel, a specialist in pricing and profit optimization, as directors, effective immediately. Each newly appointed director will serve until the Company’s next annual meeting of stockholders or until his successor has been duly elected and qualified. As a result of these actions, the Company’s Board of Directors was reduced to three members, a majority of whom are independent. These changes were undertaken as part of the Company’s ongoing efforts to reduce selling, general and administrative expenses and improve operating efficiency in 2026. Facility Lease On May 12, 2026, we executed a 3-year lease agreement for a new facility located in Houston, Texas. The facility is approximately 24,700 rentable square feet and monthly rent is $30 thousand, which consists of base rent plus common area maintenance costs. We will pay a security deposit of $70 thousand and secure a letter of credit in the amount of $0.3 million within sixty days of the effective date of the agreement. At the Market Offering As of December 22, 2025, the Company decided to pause its ATM transactions through June 30, 2026. During the three months ended March 31, 2026, the Company did not issue any shares of common stock pursuant to the ATM Agreement. 30 Table of Contents Reverse Stock Split On June 23, 2025, the Company effected a reverse stock split wherein each 8 shares of common stock outstanding immediately prior to the effective date was combined and converted into one share of common stock. All share and per share amounts have been adjusted to reflect the Reverse Stock Split. Results of Operations Three Months Ended March 31, 2026, Compared With Three Months Ended March 31, 2025 Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ Variances ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ ​ ​ ​ % ​ Product sales ​ $ 2,133,238 ​ $ 1,160,559 ​ $ 972,679 ​ 84 % Contract services ​ 682,645 ​ 1,038,293 ​ (355,648) ​ (34) % Grant revenue ​ ​ 1,368,236 ​ ​ — ​ ​ 1,368,236 ​ N/A ​ Mining of digital assets ​ ​ 662,311 ​ ​ 249,754 ​ ​ 412,557 ​ 165 % Total Revenue ​ $ 4,846,430 ​ $ 2,448,606 ​ $ 2,397,824 ​ 98 % ​ For the three months ended March 31, 2026 and 2025, we generated $4.8 million and $2.4 million, respectively, of revenues from 26 customers in each period. We had 19 product sales customers in the first quarter of 2026, compared with 16 in the first quarter of 2025. Product sales during these periods include sales of our component product, fiber thermal interface solutions (“FTI”), battery production, internal short circuit battery cells and devices, patented thermal runaway shield technology (“TRS”), phase change material (“PCM”) heatsinks, and KULR SafeCases. The increase in product revenue is primarily due to large sales of FTI and KULR One products to three new customers with whom we did not have contracts during the three months ended March 31, 2025. We had 12 contract services customers in each of the first quarters of 2026 and 2025. Although the number of customers was unchanged, the decrease in revenue was primarily driven by two large long term contracts that were completed during the three months ended March 31, 2025. Contract services revenue includes unique engineering design and testing projects customized for specific customers. Grant revenue during the three months ended March 31, 2026 was $1.4 million related to the reimbursement of R&D expenses. Grant revenue consists of an award from the Texas Space Commission to perform research and development of cold-temperature lithium-ion battery solutions for the next generation of Lunar and Martian missions which is part of our ongoing major or central activities. The contract award was executed on September 23, 2025. Revenue is earned on the award once specific grant conditions have been met, which is generally when the costs relevant to the condition have been incurred by the Company. There was no grant revenue recognized for the three months ended March 31, 2025. Revenue from mining of digital assets during the three months ended March 31, 2026 was $0.7 million. The Company continued its mining operations pursuant to existing Machine Lease Agreements entered into during 2025. For the three months ended March 31, 2026, the Company earned 8.80 BTC from mining operations. For the three months ended March 31, 2025, the Company earned 2.97 BTC from mining operations pursuant to the initial Machine Lease Agreement entered into on March 7, 2025. Our customers and prospective customers are large organizations with multiple levels of management, controls/procedures, and contract evaluation/authorization. Furthermore, our solutions are new and do not necessarily fit into pre-existing patterns of purchase commitments. Accordingly, the business activity cycle between expression of initial customer interest to shipping, acceptance and billing can be lengthy, unpredictable, and lumpy, which can influence the timing, consistency and reporting of sales growth. 31 Table of Contents Cost of Revenue, Gross Profit and Gross Profit Margin Cost of revenue consists of the cost of our products as well as labor expenses directly related to product sales or contract services, and lease and non-lease costs incurred pursuant to Machine Lease Agreements in connection with mining digital assets. The following tables present the gross profit and gross profit margin by revenue type for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ ​ ​ ​ ​ March 31, 2026 ​ Gross Profit ​ ​ ​ ​ Revenue ​ ​ ​ COGS ​ ​ ​ $ ​ ​ ​ % Gross Margins ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product sales ​ $ 2,133,238 ​ $ 1,673,015 ​ $ 460,223 ​ 22 % Contract services ​ 682,645 ​ 714,220 ​ (31,575) ​ (5) % Grant revenue ​ 1,368,236 ​ — ​ 1,368,236 ​ 100 % Mining of digital assets ​ 662,311 ​ 1,041,903 ​ (379,592) ​ (57) % Total ​ $ 4,846,430 ​ $ 3,429,138 ​ $ 1,417,292 ​ 29 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ ​ ​ ​ ​ March 31, 2025 ​ Gross Profit ​ ​ ​ ​ Revenue ​ ​ ​ COGS ​ ​ ​ $ ​ ​ ​ % Gross Margins ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product sales $ 1,160,559 $ 738,304 ​ $ 422,255 ​ 36 % Contract services ​ 1,038,293 ​ 1,163,957 ​ (125,664) ​ (12) % Mining of digital assets ​ 249,754 ​ 340,000 ​ (90,246) ​ (36) % Total ​ $ 2,448,606 ​ $ 2,242,261 ​ $ 206,345 ​ 8 % ​ Revenue mix plays an important part in our reported average margins for any period. Because we are introducing new revenue streams at an early stage in our development cycle, the margins earned can vary significantly between periods, customers, products and services due to the learning process, customer negotiating strengths, and product mix. Gross profit margin on product sales decreased compared to the prior year period, driven primarily by reduced margins recognized on various product lines during the period as a result of product mix. Gross profit margin on contract services improved slightly in the first quarter of 2026, driven primarily by the completion of two projects that had been impacted by excess labor hours and created negative margins in the first quarter of 2025. Mining of digital asset margins decreased during the period. The decrease was primarily driven by the decline in BTC prices, which were down significantly in March 2026 relative to March 2025, reducing the value of BTC mined relative to the fixed costs associated with machine lease obligations. Grant revenue, which represents a reimbursement of costs, reflected a full gross margin contribution. The related costs include $1.4 million primarily classified within research and development expenses. Research and Development Research and development (“R&D”) includes expenses incurred in connection with the R&D of our CFV thermal management solution, high-areal-capacity battery electrodes, and 3D engineering for a rechargeable battery. R&D expenses are charged to operations as incurred. The following table presents the dollar and percentage variances in R&D expenses for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ ​ ​ ​ ​ March 31, ​ Variances ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ ​ ​ ​ % Operating Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ $ 1,770,500 ​ $ 2,449,900 ​ $ (679,400) ​ (28) % Total research and development ​ $ 1,770,500 ​ $ 2,449,900 ​ $ (679,400) ​ (28) % ​ We expect that our R&D expenses will increase as we expand our future operations. 32 Table of Contents The decrease in research and development expenses was primarily attributable to progress made on several key initiatives in the prior year, including third-party engineering and development services, testing equipment purchases, and investments to support manufacturing expansion, which resulted in lower activity levels and associated costs during the current period. Selling, General and Administrative Selling, general and administrative expenses consisted primarily of stock-based compensation, marketing and advertising, salaries, payroll taxes and other benefits, Board member compensation, accounting and tax, consulting fees, travel and entertainment, rent expense, office expenses, and legal and professional fees. The following table presents the dollar and percentage variances in selling, general and administrative expenses for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ ​ ​ ​ ​ March 31, ​ Variances ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ ​ ​ ​ % Operating Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general, and administrative ​ $ 6,531,969 ​ $ 7,200,250 ​ $ (668,281) ​ (9) % Total selling, general, and administrative ​ $ 6,531,969 ​ $ 7,200,250 ​ $ (668,281) ​ (9) % ​ The decrease in selling, general and administrative expenses was primarily attributable to the conclusion of strategic investment and corporate development activities that drove costs higher during 2025, including a minority investment in an external company that did not recur during the three months ended March 31, 2026. Accounting, legal, consulting, and other professional fees decreased as these activities wound down. Marketing, travel, insurance, and personnel-related expenses similarly reflect lower activity levels in the current period compared to the elevated investment and expansion efforts undertaken throughout 2025. Credit Losses During the three months ended March 31, 2026, the Company recorded a credit loss of $500,000 on Auto-Vibe assets. There was no comparable charge in the prior year period. Other Income (Expense) The following table presents the dollar and percentage variances in other income (expense) for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ ​ ​ ​ ​ March 31, ​ Variances ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ ​ ​ ​ % Other Expense (Income) ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in fair value of digital assets $ (20,767,713) $ (9,748,600) ​ $ (11,019,113) ​ 113 % Interest income ​ 38,487 ​ 168,424 ​ (129,937) ​ (77) % Interest expense ​ (5,441) ​ (10,397) ​ 4,956 ​ (48) % Change in fair value of accrued issuable equity ​ — ​ 260,598 ​ (260,598) ​ (100) % Amortization of debt discount ​ — ​ (82,878) ​ 82,878 ​ (100) % Gain on debt extinguishment, net ​ — ​ 50,000 ​ (50,000) ​ (100) % Total Other Expense, net ​ $ (20,734,667) ​ $ (9,362,853) ​ $ (11,371,814) ​ 121 % ​ The change is primarily attributable to the $11.0 million increase in unrealized loss on BTC holdings reflecting the change in market price of BTC, from $82,559 on March 31, 2025, to $68,228 on March 31, 2026, $0.3 million due to the change in fair value of accrued issuable equity, $0.1 million due to the decrease in interest income, $0.1 million due to the gain on debt extinguishment, partially offset by amortization of debt discount of $0.1 million. 33 Table of Contents Our Bitcoin Acquisition Strategy In December 2024, we adopted Bitcoin as our primary treasury reserve asset on an ongoing basis, subject to market conditions and our anticipated cash needs. Our strategy includes acquiring and holding Bitcoin using cash that exceeds our working capital requirements, and from time to time, subject to market conditions, issuing equity or debt securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase Bitcoin. We view our Bitcoin holdings as long-term holdings however, for the foreseeable future, the Company does not expect to allocate surplus cash to Bitcoin as it prioritizes scaling its operating business, including KULR ONE and related products and services. We have not set any specific target for the amount of Bitcoin we seek to hold, and we will continue to monitor market conditions in determining whether to engage in additional Bitcoin purchases. This overall strategy also contemplates that we could periodically leverage or sell Bitcoin for general corporate purposes or in connection with strategies that generate tax benefits in accordance with applicable law, enter into additional capital raising transactions, including those that could be collateralized by our Bitcoin holdings, and consider pursuing strategies to create income streams or otherwise generate funds using our Bitcoin holdings. To date, KULR has not sold any Bitcoin from its treasury holdings. As of March 31, 2026, we had contractual commitments with digital asset mining services providers related to the operation of digital asset mining machines. On July 30, 2025, we entered into a one-year mining services agreement with a digital asset mining services company, with total committed payments of $2.6 million, of which $0.7 million remained as commitments as of March 31, 2026. In addition, on October 1, 2025, we entered into a two-year mining services agreement with a digital asset mining services company, that included certain non-lease operating expense commitments and the remaining commitments as of March 31, 2026 for future operating expenses associated with this lease totaled $2.5 million. For the three months ended March 31, 2026, the Company earned 8.80 BTC from mining operations. As of March 31, 2026, we held 1,083.14 BTC with a fair value of $73.9 million. The following table presents BTC activity during the three months ended March 31, 2026 and 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Average ​ ​ Digital Assets(1) ​ Bitcoin Held ​ Per Bitcoin Fair value as of December 31, 2025 ​ $ 93,995,256 1,074.21 ​ $ 87,502 Digital assets purchased ​ — — ​ ​ — Digital assets mined ​ 662,311 8.80 ​ 75,263 Digital assets received as lease incentive ​ ​ 10,328 ​ 0.13 ​ ​ 80,140 Change in fair value of digital assets ​ (20,767,713) ​ ​ ​ Fair value as of March 31, 2026 ​ $ 73,900,182 1,083.14 ​ $ 68,228 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Average ​ ​ Digital Assets(1) ​ Bitcoin Held ​ Per Bitcoin Fair value as of December 31, 2024 ​ ​ ​ $ 20,281,175 ​ ​ ​ 217.18 ​ ​ ​ $ 93,384 Digital assets purchased ​ 44,499,352 449.45 ​ ​ 99,008 Digital assets mined ​ 249,754 2.97 ​ 84,092 Digital assets received as lease incentive ​ — — ​ — Change in fair value of digital assets ​ (9,748,600) ​ ​ ​ Fair value as of March 31, 2025 ​ $ 55,281,681 669.60 ​ $ 82,560 (1) The source of capital used to purchase Bitcoin was primarily proceeds from ATM offerings. ​ Liquidity and Capital Resources As of May 13, 2026, March 31, 2026 and December 31, 2025, we had cash balances of $19.0 million, $7.7 million and $13.3 million, respectively. As of March 31, 2026 and December 31, 2025, working capital was $6.9 million and $19.2 million, respectively. As of March 31, 2026 and December 31, 2025, we also had BTC holdings of $73.9 million and $94.0 million, respectively. On May 13, 2026, we borrowed an additional $15 million against the $20 million credit facility with Coinbase. 34 Table of Contents For the three months ended March 31, 2026 and 2025, net cash used in operating activities was $8.7 million and $9.6 million, respectively. Our net cash used in operations for the three months ended March 31, 2026 was primarily attributable to our net loss of $28.1 million, adjusted for non-cash expenses in the aggregate amount of $22.4 million, as well as $3.0 million of net cash used to fund changes in the levels of operating assets and liabilities. Our net cash used in operations for the three months ended March 31, 2025 was primarily attributable to our net loss of $18.8 million, adjusted for non-cash expenses in the aggregate amount of $11.9 million plus $2.7 million of net cash used to fund changes in the levels of operating assets and liabilities. For the three months ended March 31, 2026 and 2025, net cash used in investing activities was $1.5 million and $44.7 million, respectively. Net cash used in investing activities during the three months ended March 31, 2026, was related to deposits paid for purchases of property and equipment of $1.1 million, plus purchases of property and equipment of $0.2 million and payment of holdback amount related to the Caban asset acquisition of $0.2 million. Net cash used in investing activities during the three months ended March 31, 2025, was related to investments in digital assets of $44.5 million, purchases of property and equipment of $0.1 million and deposits paid for purchases of property and equipment of $0.1 million. For the three months ended March 31, 2026 and 2025, net cash provided by financing activities was $4.6 million and $49.0 million, respectively. Financing activities during the three months ended March 31, 2026 were primarily due to proceeds from the loan payable totaling $5.0 million, which represents a drawdown of our collateralized credit facility with Coinbase, partially offset by payment of employee tax withholding from shares withheld of $0.4 million. Net cash provided by financing activities during the three months ended March 31, 2025, was primarily due to net proceeds from ATM equity financing totaling $49.9 million, partially offset by notes payable repayments of $0.6 million and payments for deferred financing costs of $0.2 million. Future cash requirements for our March 31, 2026 current liabilities include approximately $4.6 million for accounts payable and accrued expenses, $5.0 million to repay our loan payable and $2.6 million for future payments under operating and finance leases. Future cash requirements for our March 31, 2026 long-term liabilities include $1.9 million for future payments under operating and finance leases. Our primary source of liquidity has historically been cash generated from equity and debt offerings. Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern, we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet future financial obligations as they become due within one year after the date that the financial statements are issued. We have a history of recurring net losses and recurring use of cash in operations. As of December 22, 2025, the Company decided to pause its ATM transactions through June 30, 2026. As of March 31, 2026, we believe that our cash on hand, BTC holdings, cash flows from operations and working capital balances and $15.0 million of available collateralized borrowing through Coinbase as of March 31, 2026, will be sufficient to meet our obligations as they become due over the next twelve months from the date these condensed consolidated financial statements were to be issued. The Company’s ATM transactions remain paused as of the date of this filing. The Company continues to evaluate market conditions to determine when to resume ATM transactions. Off-Balance Sheet Arrangements There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. Critical Accounting Estimates We prepare our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our condensed consolidated financial statements that require estimation but are not deemed critical, as defined above. There have been no material changes to our critical accounting estimates from those described in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 31, 2026. 35 Table of Contents ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company, as defined by Rule 229.10(f)(1) and are not required to provide the information required by this Item. ​