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Item 1A. Risk Factors

2025-11-12 compared with 2025-08-14 · 832 added, 196 removed, 394 unchanged (72% of the section changed)

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or technological underpinnings of ETH.

The following risk factors highlight the material risks associated with our ETH strategy and related

launch of central bank digital currencies (“CBDCs”) may adversely impact our business.

introduction of a government-issued digital currency could eliminate or reduce the need or demand for private-sector issued crypto currencies,

or significantly limit their utility.

National governments around the world could introduce CBDCs, which could in turn limit the size

of the market opportunity for cryptocurrencies, including ETH.

The following risk factors highlight the material risks associated with our ETH Treasury Management

strategy and related exposures.

federal regulations, there is a possibility that ETH may be classified as a “ security.

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The regulatory treatment

of ETH is such that it has drawn significant attention from legislative and regulatory bodies, in particular the SEC which has previously

stated it deemed ETH a security.

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 ETH, or any other digital asset we might hold is a “security.” As such, we are at risk of enforcement proceedings

against us, which could result in potential injunctions, cease-and-desist orders, fines, and penalties if Ether was determined to be

a security by a regulatory body or a court.

Such developments could subject us to fines, penalties, and other damages, and adversely

affect our business, results of operations, financial condition and prospects.

of ETH is such that it has drawn significant attention from legislative and regulatory bodies.

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 ETH, or any other digital asset we might hold is a “security.”

As such, we are at risk of enforcement proceedings against us, which could result in potential injunctions, cease-and-desist orders,

fines, and penalties if Ether was determined to be a security by a regulatory body or a court.

Such developments could subject us to

fines, penalties, and other damages, and adversely affect our business, results of operations, financial condition and prospects.

we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical

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With respect to Section 3(a)(1)(A), following

the PIPE Offering, the proceeds of the PIPE Offering are expected to used to acquire ETH, which will result in our ownership or holding

the PIPE Offering, the proceeds of the PIPE Offering are expected to be used to acquire ETH, which will result in our ownership or holding

of ETH in excess of 40% of our total assets.

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and could have a material adverse effect on our business, results of operations, financial condition, and prospects.

or regulatory change regarding the regulation of “ commodities ” by the Commodities Futures Trading

Commission (“CFTC”) and the potential regulation of digital assets as “ digital commodities ”

could subject us to additional regulatory burdens and oversight by the CFTC and could adversely affect the market price of ETH

and the market price of our listed securities.

CFTC has stated it believes, and judicial decisions involving CFTC enforcement actions have confirmed, that at least some digital assets

fall within the definition of a “commodity” under the U.S.

Commodities Exchange Act of 1936 (the “CEA”) and the

rules promulgated by the CFTC thereunder (“CFTC Rules”).

While the CFTC has enforcement authority to police against fraud

and manipulation in spot commodity markets (including the spot market for digital assets that are commodities), the CFTC only has regulatory

and supervisory jurisdiction with respect to “commodity interest” transactions, such as futures, options, and swaps on a

commodity (including a digital asset commodity) and certain leveraged, margined, or financed transactions in commodities involving retail

Accordingly, we are not currently regulated or supervised by the CFTC and are not subject to the legal and regulatory obligations

that are applicable to CFTC-registered entities under the CEA and CFTC Rules.

regulation of digital assets in the U.S.

is subject to change because of the enactment and adoption of new laws and regulations.

example, the proposed CLARITY Act recently passed by the U.S.

House of Representatives and other draft digital asset market structure

and regulation bills have proposed granting the CFTC additional regulatory and supervisory powers with respect to spot digital assets

as “digital commodities.” While it is not possible to predict if and in what form such proposals will be adopted, if any,

changes to or expansion of the jurisdiction of the CFTC with respect to activities in spot digital assets could result in the imposition

of additional regulatory obligations and burdens, which could include registration, disclosure, reporting, and business conduct requirements.

For example, it is possible that if the CLARITY Act were to become law as currently proposed, our ETH Treasury Management strategy could

cause us to be deemed a “commodity pool” under the CEA such that our operators and advisors may need to register with the

CFTC as commodity pool operators and comply with other CFTC regulations as well as the rules of the National Futures Association.

additional regulatory burdens and oversight could materially increase the cost of our business, could adversely affect the market price

of ETH, and in turn could adversely affect the market price of our listed securities.

may be subject to regulatory developments related to digital assets and digital asset markets, which could adversely affect our business,

financial condition, and results of operations.

digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital

assets are 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 digital assets.

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 digital assets or the ability of individuals or institutions such as us to own or transfer

digital assets.

January 23, 2025, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology”

(the “Executive Order”) aimed at supporting “the responsible growth and use of digital assets, blockchain technology,

and related technologies across all sectors of the economy.” The Executive Order also established an interagency working group

that is tasked with “proposing a Federal regulatory framework governing the issuance and operation of digital assets” in

the United States.

Pursuant to this Executive Order, the working group released a report in July 2025 outlining the administration’s

recommendations to Congress and various agencies reflecting the administration’s “pro-innovation mindset toward digital assets

and blockchain technologies.” In particular, the report recommends that Congress enact legislation regarding self-custody of digital

assets, clarifying the applicability of Bank Secrecy Act obligations with respect to digital asset service providers, granting the Commodities

Futures Trading Commission (the “CFTC”) authority to regulate spot markets in non-security digital assets, prohibiting the

adoption of a central bank digital currency (“CBDC”), and clarifying tax laws as relevant to digital assets.

the report recommends that agencies reevaluate existing guidance on digital asset activities, use existing authorities to enable the

trading of digital assets at the federal level, embrace DeFi, launch or relaunch digital asset innovation efforts, and promote U.S.

sector leadership in the responsible development of cross-border payments and financial markets technologies, among others.

have also been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset

For example, the CLARITY Act was passed by the House of Representatives in July 2025, which would, if enacted, regulate digital

asset markets and digital asset trading platforms in the United States.

In addition, also in July 2025, the Guiding and Establishing

National Innovation for U.S.

Stablecoins Act of 2025 (the “GENIUS Act”) became the first federal law specifically regulating

the issuance, custody and other stablecoin-related matters in the United States.

It is difficult to predict whether, or when, the CLARITY

Act or another bill that would regulate digital asset markets and digital asset trading platforms may become law or what any such bill

is difficult to predict whether, or when, as a result of these developments, Congress will grant additional authorities to the SEC or

other regulators, what the nature of such additional authorities might be, how additional legislation and/or regulatory oversight might

impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services

to the digital assets industry, or how any new regulations or changes to existing regulations might impact the value of digital assets

generally and ETH held by the Company specifically.

The consequences of increased federal regulation of digital assets and digital asset

activities could have a material adverse effect on our business, results of operations, financial condition, and prospects, as well as

the market price of ETH, which in turn could adversely affect the market price of our listed securities.

Common Stock may not always trade at a premium to the value of the digital assets we hold, and may trade at a discount thereto.

our common stock, par value $0.0001 per share has, and may in the future trade at a premium to the value of our holdings of Ether (“ETH”),

to the extent investors view our Common Stock as providing exposure to ETH, it is possible that the price of our Common Stock may not

always trade at such a premium, and may trade at a discount thereto.

This may occur due to the rise in other traditional investment vehicles

providing exposure to digital assets, including ETH, as well as the increase in the number of investors who may wish to purchase digital

assets, including ETH, directly, among other reasons.

For example, the Securities and Exchange Commission (the “SEC”) has

recently provided guidance that will allow broker-dealers to custody digital assets on behalf of investors.

The SEC has also rescinded

Staff Accounting Bulletin 121 which, by forcing public companies to include on their balance sheets digital assets custodied on behalf

of third parties, effectively prevented publicly traded banks from providing digital asset custodial services.

Any movement of investor

funds to such other sources, or a change in the market’s perception of digital asset treasury vehicles or in investor sentiment

generally, could result in a decrease in price of our Common Stock and may impair our ability to engage in future financings.

concentration of our ETH holdings enhances the risks inherent in our ETH Treasury Management strategy.

ETH concentration is monitored as the total number of ETH units (including native-staked and liquid-staked ETH) held by us divided by

1,000 assumed diluted shares outstanding and is used to evaluate our capital allocation strategy and digital asset leverage on a per-share

basis, significant swings in the price of ETH may lead to increased risks in our ETH Treasury Management strategy.

and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.

and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price.

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

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 ETH or the ability of individuals or institutions such as us to own or transfer ETH.

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 ETH or the ability of individuals or institutions

such as us to own or transfer ETH.

is not possible to predict whether, or when, new laws will be enacted that change the legal framework governing digital assets or provide

additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will

take any similar actions.

It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation

or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions

to continue to provide services to the digital assets industry, or how any new laws or regulations, or changes to existing laws or regulations,

might impact the value of digital assets generally and ETH specifically.

The consequences of any new law or regulation relating to digital

assets and digital asset activities could adversely affect the market price of ETH, as well as our ability to hold or transact in ETH,

and in turn adversely affect the market price of our listed securities.

the risks of engaging in an ETH Treasury Management strategy could 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.

growth of the digital assets industry in general, and the use and acceptance of ETH in particular, may also impact the price of ETH and

is subject to a high degree of uncertainty.

The pace of worldwide growth in the adoption and use of ETH may depend, for instance, on

public familiarity with digital assets, ease of buying, accessing or gaining exposure to ETH, institutional demand for ETH as an investment

asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for ETH as a store of

value or means of payment, and the availability and popularity of alternatives to ETH.

Even if growth in ETH adoption occurs in the near

or medium-term, there is no assurance that ETH usage will continue to grow over the long-term.

ETH has no physical existence beyond the record of transactions on the Ethereum blockchain, a variety of technical factors related to

the Ethereum blockchain could also impact the price of ETH.

For example, malicious attacks, inadequate staking fees to incentivize validating

of ETH transactions, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the

Ethereum blockchain and negatively affect the price of ETH.

The liquidity of ETH may also be reduced and damage to the public perception

of ETH may occur if financial institutions were to deny or limit banking services to businesses that hold ETH, provide ETH-related services

or accept ETH as payment, which could also decrease the price of ETH.

historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to

our ETH holdings.

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 ETH.

price of ETH has historically been subject to dramatic price fluctuations and is highly volatile.

we intend to purchase additional ETH in future periods and increase our overall holdings of ETH, we expect that the proportion of our

total assets represented by our ETH holdings will increase in the future.

As a result, and in particular due to our adoption of ASU 2023-08,

volatility in our earnings may be significantly more than what we experienced in prior periods.

shift towards an ETH-focused treasury strategy requires substantial changes in our day-to-day operations and exposes us to significant

operational risks.

shift towards an ETH-focused treasury strategy, including staking, restaking, liquid staking, and other decentralized finance activities,

exposes us to significant operational risks.

ETH involves holding a certain amount of ETH in a smart contract and running a piece of software known as a “validator node.”

Validators are randomly selected to propose a new block of transactions to be added to the Ethereum blockchain.

When an Ethereum participant

attempts a transaction, that participant is required to pay a minimum “gas” fee.

A participant can opt to pay an additional

fee to ensure that its transaction is added to the blockchain more quickly.

These fees are denominated in ETH.

The validator chosen to

propose a block will (when that block is successfully confirmed by the other validator nodes) receive the gas fees for all transactions

in the block (known as “execution layer rewards”).

In addition, the Ethereum blockchain automatically issues ETH as rewards

to validators who successfully propose a block, known as “consensus layer rewards.” The Ethereum network also automatically

imposes penalties on validators that experience downtime or that propose incorrect blocks.

These penalties are known as “slashing”

and will reduce the number of ETH that are “staked” to the validator node.

we currently do not operate any validators, we may choose to operate our own validator services, or we may seek to continue to “delegate”

our ETH to third party validation service providers.

If we choose to use a third-party validation service, we will have to share our

staking rewards with that third-party validator, but that third-party validator may have more sophisticated technology which would enable

those rewards to be greater.

In either case, staking increases the risk of loss of ETH, including through slashing penalties and through

increasing vulnerabilities to hacking in the staking smart contracts.

Validators also need to maintain uptime to maximize their rewards.

Further, the ETH ecosystem rapidly evolves, with frequent upgrades and protocol changes that may require significant adjustments to our

operational setup.

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

Technical failures or operational errors could impact our ability to obtain ETH rewards or gas fees, which could result

in our failure to meet our financial projections.

ETH is also subject to lock-up periods during which it cannot be withdrawn or sold.

This lack of liquidity could limit our ability to

respond to market changes or our financial needs.

We may seek to mitigate this risk through so-called “liquid staking” arrangements,

where we deposit ETH into a smart contract and receive in exchange a “liquid staking token” which would allow us, or any

person to whom we transfer that liquid staking token, to later withdraw our ETH and associated rewards.

The smart contract would then

automatically delegate our ETH to a third-party staking service provider.

We could engage in other DeFi activities with liquid staking

While we anticipate that the price of liquid staking tokens will correlate to ETH itself, there is a possibility that prices

will diverge.

This could especially happen if the validators deployed by the liquid staking contract are subject to slashing penalties,

in which case we may be able to withdraw fewer ETH than we originally deposited.

of these operational risks could materially and adversely affect our ability to execute our ETH Treasury Management strategy and may

prevent us from realizing positive returns and could severely hurt our financial condition.

is created and transmitted through the operations of the peer-to-peer Ethereum network, a decentralized network of computers running

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or power outage.

ETH treasury strategy exposes us to various risks, including risks associated with ETH.

ETH strategy exposes us to various risks, including the following:

ETH Treasury Management strategy exposes us to various risks, including risks associated with ETH, which include the following:

is a highly volatile asset.

ETH is a highly volatile asset that has traded below $1,500 per ETH and above $4,000 per ETH on the Coinbase

exchange (our principal market for ETH) in the 12 months preceding the date of this Quarterly Report on Form 10-Q.

The trading price

of ETH decreased following the launch of our ETH treasury strategy to the end of this quarter, and such declines may occur again in the

exchange in the 12 months preceding the date of this Quarterly Report on Form 10-Q.

The trading price of ETH decreased following the

launch of our ETH Treasury Management strategy to the end of this quarter, and such declines may occur again in the future.

ETH holdings significantly impact our financial results and the market price of our listed securities.

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by holding a more diversified portfolio of treasury assets.

If there is a significant decrease in the price of ETH, we may experience a more pronounced impact on our financial

condition than if we invested our cash in a more diverse portfolio of treasury assets.

If there is a significant decrease in the price of ETH, we may experience

a more pronounced impact on our financial condition than if we invested our cash in a more diverse portfolio of treasury assets.

primarily purchase ETH using proceeds from equity financings.

Our ability to achieve the growth objectives of our ETH strategy depends

in significant part on our ability to continue raising capital to purchase ETH.

If we are unable to obtain equity, equity-linked or

debt financing on favorable terms or at all, we may not be able to successfully execute on our ETH strategy .

ETH strategy has not been tested over an extended period of time or under different market conditions.

We are continually examining

the risks and rewards of our strategy to acquire and hold ETH and to stake such ETH to generate staking rewards.

This strategy has not

been tested over an extended period of time or under different market conditions.

For example, although we believe ETH has the potential

to serve as a hedge against inflation in the long term, the short-term price of ETH declined in recent periods during which the inflation

rate increased.

If ETH prices were to decrease or our ETH strategy otherwise proves unsuccessful, our financial condition, results of

operations, and the market price of our listed securities would be materially adversely impacted.

Our ability to achieve the growth objectives of our ETH Treasury Management

strategy depends in significant part on our ability to continue raising capital to purchase ETH.

If we are unable to obtain equity, equity-linked

or debt financing on favorable terms or at all, we may not be able to successfully execute on our ETH Treasury Management strategy .

ETH Treasury Management strategy has not been tested over an extended period of time or under different market conditions.

continually examining the risks and rewards of our strategy to acquire and hold ETH and to stake such ETH to generate staking rewards.

This strategy has not been tested over an extended period of time or under different market conditions.

For example, although we believe

ETH has the potential to serve as a hedge against inflation in the long term, the short-term price of ETH declined in recent periods

during which the inflation rate increased.

If ETH prices were to decrease or our ETH Treasury Management strategy otherwise proves unsuccessful,

our financial condition, results of operations, and the market price of our listed securities would be materially adversely impacted.

ETH staking activities could result in “ slashing risks ” and loss of staked ETH.

ETH staking exposes

us to slashing risks, defined as a punitive mechanism built into the Ethereum network, designed to penalize validators and their delegators

ETH staking exposes us

to slashing risks, defined as a punitive mechanism built into the Ethereum network, designed to penalize validators and their delegators

for misbehavior or failing to follow network rules, which could result in the loss of our staked ETH.

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ASU 2023-08 could also have adverse tax consequences.

In addition, on September 30, 2025, the Treasury and the IRS issued interim guidance (the “Interim Guidance”)

which, in relevant part, clarifies that a corporation may disregard unrealized gains and losses on its digital asset holdings when computing

AFSI for purposes of determining whether it is subject to the 15% CAMT under the Inflation Reduction Act.

The Treasury and IRS intend

to issue revised proposed regulations similar to this Interim Guidance.

These impacts could in turn have a material

adverse effect on our financial results and the market price of our listed securities.

Additionally, our LsETH holdings as of June 30,

2025 are accounted for as digital intangible assets within the scope of ASC 350-30 at cost-less-impairment.

Significant declines in the

price of LsETH may result in material impairment within our financial results.

Additionally, our LsETH holdings as of September 30,

2025 are accounted for at cost-less-impairment.

Significant declines in the price of LsETH may result in material impairment within our

financial results.

is a highly volatile asset, and fluctuations in the price of ETH are likely to influence our financial results and the market price of

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cryptography used by the ETH blockchain becoming insecure or ineffective

“fork” in the Ethereum protocol could adversely affect the value of the Company’s shares.

Ethereum network operates using open-source protocols, meaning that any user can become a node by downloading the Ethereum Client and

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These proposed modifications to the Ethereum network’s source code, if adopted, can lead to forks.

in the Ethereum protocol may lead to disruptions, security risks or declines in ETH value.

A “fork” occurs when a change to

the Ethereum network’s source code creates two incompatible versions of the blockchain, resulting in separate networks.

be planned (e.g., upgrades to the Ethereum protocol like the Merge or Dencun) or unplanned (e.g., due to software bugs or validator disagreement).

Planned forks are designed to improve performance or introduce new features, but they may introduce bugs, security vulnerabilities, or

unexpected economic consequences.

Unplanned forks can arise from client software inconsistencies or protocol failures, causing network

instability or fragmentation.

In either case, forks may result in operational outages, user confusion, replay attacks and reduced validator

participation, all of which could undermine confidence in the Ethereum network and adversely affect the price of ETH.

Our ETH holdings,

staking activities and related treasury strategy could be materially negatively impacted in the event of such a fork.

concentration of our ETH holdings enhances the risks inherent in our ETH treasury strategy.

ETH concentration is monitored as the total number of ETH units (including native-staked and liquid-staked ETH) held by us divided by

1,000 assumed diluted shares outstanding and is used to evaluate our capital allocation strategy and digital asset leverage on a

per-share basis, significant swings in the price of ETH may lead to increased risks in our ETH strategy.

and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.

and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price.

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

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 ETH or the ability of individuals or institutions such as us to own or transfer ETH.

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 ETH or the ability of individuals or institutions

such as us to own or transfer ETH.

is not possible to predict whether, or when, new laws will be enacted that change the legal framework governing digital assets or provide

additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will

take any similar actions.

It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation

or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions

to continue to provide services to the digital assets industry, or how any new laws or regulations, or changes to existing laws or regulations,

might impact the value of digital assets generally and ETH specifically.

The consequences of any new law or regulation relating to digital

assets and digital asset activities could adversely affect the market price of ETH, as well as our ability to hold or transact in ETH,

and in turn adversely affect the market price of our listed securities.

the risks of engaging in an ETH strategy are relatively novel and have 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.

growth of the digital assets industry in general, and the use and acceptance of ETH in particular, may also impact the price of ETH and

is subject to a high degree of uncertainty.

The pace of worldwide growth in the adoption and use of ETH may depend, for instance, on

public familiarity with digital assets, ease of buying, accessing or gaining exposure to ETH, institutional demand for ETH as an investment

asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for ETH as a store of

value or means of payment, and the availability and popularity of alternatives to ETH.

Even if growth in ETH adoption occurs in the near

or medium-term, there is no assurance that ETH usage will continue to grow over the long-term.

ETH has no physical existence beyond the record of transactions on the Ethereum blockchain, a variety of technical factors related to

the Ethereum blockchain could also impact the price of ETH.

For example, malicious attacks, inadequate staking fees to incentivize validating

of ETH transactions, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the

Ethereum blockchain and negatively affect the price of ETH.

The liquidity of ETH may also be reduced and damage to the public perception

of ETH may occur if financial institutions were to deny or limit banking services to businesses that hold ETH, provide ETH-related services

or accept ETH as payment, which could also decrease the price of ETH.

historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to

our ETH holdings.

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 ETH.

price of ETH has historically been subject to dramatic price fluctuations and is highly volatile.

in part to the volatility of ETH, we incurred $87.7 million of cumulative impairment on our LsETH holdings (a receipt token from ETH

liquid staking) through June 30, 2025, which losses were reflected in the financial statements for the respective period in which the

losses were incurred.

we intend to purchase additional ETH in future periods and increase our overall holdings of ETH, we expect that the proportion of our

total assets represented by our ETH holdings will increase in the future.

As a result, and in particular due to our adoption of ASU 2023-08,

volatility in our earnings may be significantly more than what we experienced in prior periods.

“fork” in the Ethereum protocol could adversely affect the value of the Company’s shares.

in the Ethereum protocol may lead to disruptions, security risks or declines in ETH value and therefore the value of the Company’s common stock.

A “fork” occurs when a change to the Ethereum network’s source code creates two incompatible versions of the

blockchain, resulting in separate networks.

Forks may be planned (e.g., upgrades to the Ethereum protocol like the Merge or Dencun) or

unplanned (e.g., due to software bugs or validator disagreement).

Planned forks are designed to improve performance or introduce new

features, but they may introduce bugs, security vulnerabilities, or unexpected economic consequences.

Unplanned forks can arise from

client software inconsistencies or protocol failures, causing network instability or fragmentation.

In either case, forks may result

in operational outages, user confusion, replay attacks and reduced validator participation, all of which could undermine confidence in

the Ethereum network and adversely affect the price of ETH.

Our ETH holdings, staking activities and related treasury strategy could

be materially negatively impacted in the event of such a fork.

ETH 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 ETH market has 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.

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

a number of ETH trading venues temporarily halted deposits and withdrawals in 2022, although the Coinbase exchange (our principal market

for ETH) has, to date, not done so.

As a result, our ETH holdings may not be able to serve as a source of liquidity for us to the same

extent as cash and cash equivalents.

Further, ETH we hold with our custodians do 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.

Additionally, we may be unable to enter into term loans or other capital raising transactions

collateralized by our unencumbered ETH or otherwise generate funds using our ETH holdings, including in particular during times of market

instability or when the price of ETH has declined significantly.

If we are unable to sell our ETH, enter into additional capital raising

transactions, including capital raising transactions using ETH as collateral, or otherwise generate funds using our ETH holdings, or

if we are forced to sell our ETH at a significant loss, in order to meet our working capital requirements, our business and financial

condition could be negatively impacted.

plan to purchase additional digital assets using primarily proceeds from equity and debt financings, but we may be unable to obtain such

financings on favorable terms.

ability to achieve the objectives of our digital asset acquisition strategy depends in significant part on our ability to obtain equity

and debt financing.

The terms of debt or equity securities that we issue may require us to make periodic payments to the holders of those

If we are unable to obtain equity or debt financing on favorable terms or at all, we may not be able to successfully execute

on our digital asset acquisition strategy.

ability to obtain equity or debt financing may in turn depend on, among other factors, the value of our digital asset holdings, investor

sentiment and the public perception of ETH and other digital assets, our strategy and our value proposition.

Accordingly, a significant

decline in the market value of our digital asset holdings, our inability to monetize our ETH through staking, decentralized finance or

other yield-generating activities, or a negative shift in these other factors may create liquidity and credit risks, as such a decline

or such shifts may adversely impact our ability to secure sufficient equity or debt financing.

constitutes the vast bulk of assets on our balance sheet.

If we are unable to secure equity or debt financing in a timely manner, on

favorable terms, or at all, we may be required to sell ETH to satisfy our financial obligations, and we may be required to make such

sales at prices below our cost basis or that are otherwise unfavorable.

Any such sale of ETH may have a material adverse effect on our

operating results and financial condition and could impair our ability to secure additional equity or debt financing in the future.

inability to secure additional equity or debt financing in a timely manner, on favorable terms or at all, or to sell our ETH in amounts

and at prices sufficient to satisfy our financial obligations, including any debt service and cash dividend obligations, could cause

us to default under such obligations.

Any default on our future indebtedness or any newly issued preferred stock could have a material

adverse effect on our financial condition.

Such actions could cause significant variation in our operating results in any quarter.

There are also volatility risks related

to stablecoins, which are designed to have a relatively stable price relative to an underlying physical asset, most commonly a fiat currency,

dollars, or an exchange-traded commodity.

The stability of a stablecoin results from the underlying assets backing the stablecoin

that are held by the stablecoin’s issuer in reserve accounts, among other factors such as the ability of a holder to redeem the

stablecoin from its issuer at par.

The issuers of certain stablecoins currently retain broad discretion to determine the composition and

amounts of assets held in the issuers’ accounts backing those stablecoins, and to substitute assets other than the fiat currency

that is initially deposited.

The composition of backing assets varies considerably across popular stablecoins, with some stablecoins backed

entirely by off-chain assets including cash or short-term, highly liquid assets, and others backed by assets significantly less liquid

than cash or cash equivalents.

For example, Circle, which issues USDC, reports that it holds cash and short-term cash equivalents to back

its USDC stablecoins.

We regularly transact in and hold stablecoins;

as of September 30, 2025, USDC is the only stablecoin that we held.

A lack of applicable law and regulation has afforded discretion to certain stablecoin issuers to determine the composition and amounts

of assets backing those stablecoins.

There is a risk that an issuer may be unable to liquidate enough backing assets if it were to face

mass redemptions ofits stablecoin, which could cause the price of the stablecoin to deviate from the price of the underlying fiat currency

or other asset with which the stablecoin is designed to align in price.

In extreme cases, such as a request to immediately redeem all

or substantially all of a particular stablecoin in circulation, even stablecoins backed by reserves comprised primarily of cash and cash

equivalents may be subject to instability or an inability of the stablecoin issuer to meet all redemption requests, as the market for

short-dated U.S.

government obligations might not be sufficiently price stable.

Market participants have increasingly shown concern about

the actual underlying liquidity and reserves for dollar stablecoins such as USDC.

For example, according to reports, Circle had more than

$3 billion of its USDC reserve funds on deposit at SVB which became temporarily inaccessible when SVB was placed into FDIC receivership

in March 2023.

Although these funds were ultimately made available, concerns related to Circle’s access to these funds caused USDC

to temporarily fall below its$1.00 peg, and the total market capitalization of USDC decreased following this temporary depegging.

stablecoin issuer were to fail to honor its redemption obligations, this could undermine public confidence in stablecoins and in digital

assets more broadly, which could have a widespread impact on the crypto economy, causing the prices of other stablecoins and digital assets

to become more volatile.

Volatility in stablecoins, operational

issues with stablecoins (for example, technical issues that prevent settlement), concerns about the sufficiency of any reserves that support

stablecoins, or regulatory concerns about stablecoin issuers or intermediaries ,such as crypto asset spot markets, that support stablecoins,

could have a significant impact on the global crypto market and may adversely affect our business.

Because stablecoins purport to be backed

by underlying reserve assets, a fundamental issue in the event of the bankruptcy or insolvency of the issuer of a given stablecoin is

which party possesses beneficial ownership of the underlying reserve assets:

the holder of the stablecoin, or the issuer.

If a particular

stablecoin were structured in a manner that entitles its holder only to a contractual right to payment from the issuer (even if such

payments are to be derived from the underlying assets), then the assets underlying the stablecoins may be considered to be the property

of the issuer’s bankruptcy estate, such that all of the issuer’s creditors would be entitled to their pro rata share of such

assets, with the stablecoin holder being treated as an unsecured creditor of the issuer.

In such an event, if the issuer were to have

insufficient funds or assets to satisfy the claims of its creditors, then the holder of a stablecoin would likely receive only a partial

recovery, and not the full purported value of its stablecoin holdings.

Conversely, if a particular stablecoin were structured in a manner

that entitles its holder to absolute beneficial ownership of the underlying reserve assets, whereby the issuer holds bare legal title

to the underlying assets but has no beneficial interest or property rights in such assets, then the holders would likely have a stronger

claim on the underlying assets in the event of a bankruptcy or insolvency of the issuer.

However, due to the novelty of stablecoins,

courts have not yet considered the treatment of underlying reserve assets in the context of a bankruptcy or insolvency of a stablecoin

issuer, and there can be no certainty as to a court’s determination in such circumstances.

technology may expose us to sanctioned or blocked persons or may result in unintentional or inadvertent violations of economic sanctions

and anti-money laundering laws and regulations.

are subject to the rules enforced by the Office of Foreign Assets Control of the U.S.

Department of the Treasury (“ OFAC ”),

including prohibitions on conducting direct or indirect business with persons named on, or owned by persons named on, OFAC’s various

sanctions lists, including the Specially Designated Nationals and Blocked Persons list (“SDN List”).

We are also prohibited

from direct or indirect dealings with persons located, organized, or resident in jurisdictions subject to comprehensive U.S.

sanctions (as of today, Cuba, Iran, North Korea, the so-called Donetsk People’s Republic, the so-called Luhansk People’s

Republic, and the Crimea region of Ukraine), and may be prohibited from dealing with persons in other jurisdictions subject to targeted

sanctions such as Venezuela, Russia, and Belarus.

sanctions compliance obligations apply to all U.S.

persons and cover transactions in digital assets.

sanctions authorities and law

enforcement have, in recent years, directed significant attention to sanctions compliance among the digital assets industry.

OFAC has issued updated advisories regarding the use of virtual currencies, added a number of digital asset exchanges and service providers

to the SDN List, and engaged in several enforcement actions, including a series of enforcement actions that have either shut down or

significantly curtailed the operations of several smaller digital asset exchanges associated with Russian and/or North Korean nationals.

of the pseudonymous nature of blockchain transactions and decentralized applications, we may inadvertently and without knowledge, directly

or indirectly engage in transactions with or for the benefit of prohibited persons under U.S.

sanctions regulations, especially when

engaging in DeFi activities where it may be impossible for us to determine the identity of our counterparties.

OFAC may impose civil

penalties for sanctions violations on a “strict liability” basis, meaning we may be held responsible for transacting with

prohibited parties even if we have no knowledge that a particular counterparty is a prohibited person under U.S.

sanctions regulations.

In addition, we may be subject to non-U.S.

economic sanctions laws and regulations to the extent we conduct activity within the jurisdiction

of other sanctions regimes, including those of the European Union and United Kingdom.

and other governmental authorities have significant discretion in the interpretation and enforcement of U.S.

economic sanctions laws

and regulations.

Moreover, economic sanctions laws and regulations continue to evolve, often with little or no notice, which could raise

operational or compliance challenges.

If it is determined that we have transacted with prohibited persons under U.S.

sanctions regulations,

even inadvertently, this could result in substantial reputational harm, fines or penalties, and costs associated with governmental inquiries

and investigations.

Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for

which we may be held responsible, and any or all of the foregoing could have a material adverse effect on our business, prospects, operations

or financial condition.

addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities

or fund criminal or terrorist activities.

This misuse, or the perception of such misuse, could lead to greater regulatory oversight of

ETH and ETH platforms, and there is the possibility that law enforcement agencies could close or blacklist ETH platforms or other ETH-related

infrastructure with little or no notice and prevent users from accessing or retrieving ETH held via such platforms or infrastructure.

have recently implemented policies and procedures reasonably designed to promote compliance with applicable anti-money laundering laws

and regulations and take care to only acquire our ETH through entities subject to anti-money laundering regulation and related compliance

rules in the United States, if we are found to have purchased any of our ETH from bad actors that have used ETH to launder money or otherwise

engage in illicit financial activity, we may be subject to regulatory proceedings and further transactions or dealings in ETH may be

restricted or prohibited.

launch of central bank digital currencies (“CBDCs”) may adversely impact our business.

introduction of a government-issued digital currency could eliminate or reduce the need or demand for private-sector issued crypto currencies,

or significantly limit their utility.

National governments around the world could introduce CBDCs, which could in turn limit the size

of the market opportunity for cryptocurrencies, including ETH.

in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance

costs or operational shutdowns.

Financial Crimes Enforcement Network, a division of the U.S.

Treasury Department (“FinCEN”) regulates providers of certain

services with respect to “convertible virtual currency,” including ETH.

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.

FinCEN has issued guidance that cryptocurrency mining, without engagement in other activities, does not require registration and licensure

with FinCEN, FinCEN has not made similar pronouncements with respect to the operation of Ethereum validators.

In addition, our engaging

in decentralized finance activities could expose us to further risk in this regard.

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—including those that would mandate

us to implement anti-money laundering programs meeting certain requirements, make certain reports to FinCEN or state regulators, and

maintain certain records—resulting in significant compliance costs and operational burdens.

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

Further, we may not be capable of complying with certain federal or state regulatory obligations applicable to “money services

businesses” and “money transmitters,” such as monitoring transactions and blocking transactions, because of the nature

of the Ethereum blockchain.

If we are deemed to be subject to and determine not to comply with such additional regulatory and registration

requirements, we may act to dissolve and liquidate.

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.

Note – pretty small risk here.

If this is a normal CYA then

fine but if this causes any concern we should discuss.

may engage in decentralized finance transactions and deploy ETH using liquid staking protocols, which present additional risk as opposed

to simply holding our digital assets.

intend to invest and deploy ETH using one or more decentralized finance protocols.

All trading and investment activity involves risk,

which is heightened in the case of decentralized finance due to the irrevocable nature of blockchain transactions and the possibility

of errors in smart contracts.

Decentralized finance protocols also attract hackers and persons looking to exploit flaws in or the ability

to misuse smart contracts.

We also may incur losses in connection with our decentralized finance activity due to human error or our inability

to predict future price movements.

Any losses we sustain in connection with decentralized finance activities could cause an adverse impact

on our financial condition, results of operations, and the market price of our Common Stock.

Decentralized

finance protocols also pose heightened regulatory concerns even beyond those that face digital asset networks and digital assets generally.

financial system is extensively regulated at both the federal and state level with a particular focus on intermediaries such

as banks, broker-dealers, futures commission merchants, investment funds, investment advisers, financial asset exchanges, trading platforms,

clearinghouses and custodians.

laws and regulations impose specific obligations on financial services intermediaries both for the

protection of their customers and for the protection of the U.S.

financial system as a whole.

These include, among others, capital requirements,

activities restrictions, reporting and disclosure requirements and obligations to monitor the activities of their customers and to ensure

that the intermediaries’ activities and the activities of their customers are conducted in accordance with applicable laws and

laws and regulatory requirements may impose similar obligations.

By seeking to eliminate or substantially limit

the role of traditional financial services intermediaries in lending, brokering, advisory, trading, clearing, custody and other financial

services activities, DeFi protocols pose numerous challenges to the longstanding oversight framework developed under U.S.

and other regulators.

Legislative bodies and regulators may be required to adapt their regulatory models to accommodate decentralized

financial activities, or take novel steps to supervise, limit or even prohibit decentralized financial activities.

It is not possible

to predict how or when these challenges will be resolved or what the impact on specific decentralized finance protocols will be, and

it is likely that the decentralized finance industry will face a prolonged period of regulatory uncertainty.

It is possible that some

decentralized finance protocols will be subjected to costly and burdensome compliance regimes or even prohibited outright.

have also deployed ETH using liquid staking protocols.

Liquid staking protocols are even newer than many decentralized finance protocols

and are a novel and evolving technology.

Although the staff of the SEC’s Division of Corporation Finance has provided a statement

that the staff does not generally believe liquid staking services are securities offerings, and that it does not believe receipt tokens

obtained through such liquid staking services are generally securities, there is no guarantee that courts agree.

It is also possible

that the liquid staking protocols we use do not fit the specific scope of the staff statement.

If it is determined that the liquid staking

protocols we use, or the receipt tokens we receive, are securities offerings, the providers of liquid staking protocols may be required

to pay fines or be subject to other third-party claims, and the ETH we have deposited with them may be available to their creditors to

fulfill those claims.

See “ Our shift towards an ETH-focused treasury strategy requires substantial changes in our day-to-day

operations and exposes us to significant operational risks ” and “ We face risks relating to the custody of our

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

loss relating to our digital assets and insolvency of our custodians.

” There is also ongoing uncertainty as to the regulatory

treatment of liquid staking services from other regulators and agencies.

decentralized finance protocols and liquid staking protocols typically rely on the use of smart contracts.

Smart contracts are computer

programs that run on a digital asset network or related protocol that execute automatically when certain conditions are met.

smart contract functions typically cannot be stopped or reversed, vulnerabilities in or unforeseen consequences of their programming

can have damaging effects for the underlying digital asset network or protocol and the value of digital assets that use or interact with

such smart contracts.

For example, in June 2016, a vulnerability in the smart contracts underlying a protocol that was deployed on the

Ethereum network, The DAO, a distributed autonomous organization for venture capital funding, allowed an attack by a hacker to syphon

approximately $60 million worth of ETH from The DAO into a separate account.

In the aftermath of the theft, certain developers of and

core contributors to the Ethereum network pursued a “hard fork” of the Ethereum network in order to erase any record of the

Despite these efforts, the price of ETH dropped approximately 35% in the aftermath of the attack and subsequent hard fork.

addition, in July 2017, a vulnerability in a smart contract for a multi-signature wallet software developed by Parity led to a $30 million

theft of ETH, and in November 2017, a new vulnerability in Parity’s wallet software led to roughly $160 million worth of ETH being

indefinitely frozen in an account.

smart contracts, such as bridges between separate digital asset networks have also been manipulated, exploited or used in ways that were

not intended or envisioned by their creators.

Initial problems and continued problems with the development, design and deployment of

smart contracts may have an adverse effect on the value of protocols, including liquid staking and decentralized finance protocols, built

on smart contract platforms or other digital assets that rely on smart contract technology, including any liquid staking tokens such

If any of the smart contracts with which we interact, whether decentralized finance, liquid staking, or otherwise, suffer from

such manipulation or exploit, or otherwise do not function as intended or as we anticipate, our ETH and any LsETH or similar tokens we

hold may be exposed.

in the governance of a digital asset network or protocol may not receive sufficient support from users and validators, which may negatively

affect that digital asset network ’ s or protocol ’ s ability to grow and respond to challenges.

governance of some digital asset networks and protocols, such as the Ethereum Network, is generally by voluntary consensus and open competition.

For such networks and protocols, there may be a lack of consensus or clarity on that network’s or protocol’s governance,

which may stymie such network’s or protocol’s utility, adaptability and ability to grow and face challenges.

The foregoing

notwithstanding, the underlying software for some digital asset networks and protocols, such as the Ethereum Network, is informally or

formally managed or developed by a group of core developers that propose amendments to the relevant network’s or protocol’s

Core developers’ roles may evolve over time, generally based on self-determined participation.

If a significant majority

of users and validators were to adopt amendments to a decentralized network based on the proposals of such core developers, such network

would be subject to new source code that may adversely affect the value of the relevant digital asset.

As a result of the foregoing,

it may be difficult to find solutions or marshal sufficient effort to overcome any future problems, especially long-term problems, on

digital asset networks.

the digital asset award or transaction fees for recording transactions on the Ethereum Network are not sufficiently high to incentivize

validators, or if certain jurisdictions continue to limit or otherwise regulate validating activities, validators may cease expanding

validating power or demand high transaction fees, which could negatively impact the value of Ether and the value of our Common Stock.

2021, the Ethereum Network implemented the EIP-1559 upgrade.

EIP-1559 changed the methodology used to calculate transaction fees paid

to Ether validators (then called “miners”) in such a manner that reduced the total net issuance of Ether fees paid to miners.

If the digital asset awards for validating blocks or the transaction fees for recording transactions on the Ethereum Network are not

sufficiently high to incentivize validators, validators may cease validating blocks and confirmations of transactions on the Ethereum

Network could be slowed.

For example, the realization of one or more of the following risks could materially adversely affect the value

of our Common Stock:

the profit margins of digital asset validating operations are not sufficiently high, digital asset validators are more likely to

immediately sell digital assets earned by validating, resulting in an increase in liquid supply of that digital asset, which would

generally tend to reduce that digital asset’s market price.

reduction in digital assets staked by validators on the Ethereum Network could increase the likelihood of a malicious actor or botnet

obtaining control.

See “-If a malicious actor or botnet obtains control of more than 33% of the validating power on the Ethereum

Network, or otherwise obtains control over the Ethereum Network through its influence over core developers or otherwise, such actor

or botnet could manipulate the Ethereum Network to adversely affect the value of our Common Stock.”

have historically accepted relatively low transaction confirmation fees on most digital asset networks.

If validators demand higher

transaction fees for recording transactions on the Ethereum Network or a software upgrade automatically charges fees for all transactions

on the Ethereum Network, the cost of using ETH may increase and the demand for ETH may correspondingly decrease.

Alternatively, validators

could collude in an anti-competitive manner to reject low transaction fees on the Ethereum Network and force users to pay higher

fees, thus reducing the attractiveness of the Ethereum Network.

Higher transaction confirmation fees resulting through collusion

or otherwise may adversely affect the attractiveness of the Ethereum Network, the value of ETH and the value of our Common Stock.

the extent that any validators cease to record transactions that do not include the payment of a transaction fee in validated blocks

or do not record a transaction because the transaction fee is too low, such transactions will not be recorded on the Ethereum blockchain

until a block is validated by a validator who does not require the payment of transaction fees or is willing to accept a lower fee.

Any widespread delays in the recording of transactions could result in a loss of confidence in the Ethereum Network.

the course of ordering transactions and validating blocks, validators may be able to prioritize certain transactions in return for

increased transaction fees, an incentive system known as “Maximal Extractable Value” or MEV.

For example, in blockchain

networks that facilitate DeFi protocols in particular, such as the Ethereum Network, users may attempt to gain an advantage over

other users by increasing offered transaction fees.

Certain software solutions have been developed which facilitate validators in

capturing MEV produced by these increased fees.

The MEV incentive system may lead to an increase in transaction fees on the Ethereum

Network, which may diminish its use.

Users or other stakeholders on the Ethereum Network could also view the existence of MEV as

unfair manipulation of decentralized digital asset networks, and refrain from using DeFi protocols or the Ethereum Network generally.

In addition, it’s possible regulators or legislators could enact rules which restrict the use of MEV, which could diminish

the popularity of the Ethereum Network among users and validators.

Any of these or other outcomes related to MEV may adversely affect

the value of Ether and the value of our Common Stock.

Custodians ’ digital asset insurance may not be sufficient to make us whole in the event of any loss of ETH.

of the date of this filing, the insurance that covers losses of our ETH holdings may cover none or only a small fraction of the value

of the entirety of our ETH holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services

we have or that such coverage will cover losses with respect to our ETH.

The insurance policies maintained by our custodians are shared

among all of such custodian’s customers and are not specific to us and may not be available or sufficient to protect us as a result.

Moreover, our use of custodians exposes us to the risk that the ETH our custodians hold on our behalf could be subject to insolvency

proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights

with respect to such ETH.

Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we

maintain related to our ETH.

The legal framework governing digital asset ownership and rights in custodial or insolvency contexts remains

uncertain and continues to evolve, which could result in unexpected losses, protracted recovery processes or adverse treatment in insolvency

asset networks face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successful.

digital asset networks face significant scaling challenges due to the fact that public, permissionless blockchains generally face a tradeoff

between security and scalability.

One means through which digital asset networks that utilize public, permissionless blockchains achieve

security is decentralization, meaning that no intermediary is responsible for securing and maintaining these systems.

For example, a

greater degree of decentralization of a public, permissionless blockchain generally means a given digital asset network is less susceptible

to manipulation or capture.

In practice, this typically means that every single node on a given digital asset network is responsible

for securing the system by processing every transaction and maintaining a copy of the entire state of the network.

As a result, a digital

asset network that utilizes a public, permissionless blockchain may be limited in the number of transactions it can process by the computing

capabilities of each single fully participating node.

As of August 31, 2025, the Ethereum Network handled approximately 18 transactions

In an effort to increase the volume of transactions that can be processed on a given digital asset network, many digital

assets are being upgraded with various features to increase the speed and throughput of digital asset transactions.

developers are actively researching and testing scalability solutions for public blockchains that do not necessarily result in lower

levels of security or decentralization, such as off-chain payment channels and Layer 2 networks.

Off-chain payment channels would allow

parties to transact without requiring the full processing power of a blockchain.

Layer 2 networks can increase the scalability of a blockchain

by allowing users to transact on a second blockchain deployed on top of a “Layer 1” network.

However, such off-chain channels

and Layer 2 networks only periodically use the Ethereum Network, reducing the demand for ETH as gas fees.

corresponding increases in throughput lag behind growth in the use of digital asset networks, average transaction fees and settlement

times may increase considerably.

For example, the Ethereum Network has been, at times, at capacity, which has led to transaction fees

as high as $200.27 per transaction, on May 1, 2022.

Transaction fees in 2025 have ranged from a high of $12.11 on January 19 to below

$1.00 throughout much of September 2025.

Increased transaction fees and decreased settlement speeds could preclude certain uses for Ether

(e.g., micropayments), and could reduce demand for, and the price of, ETH, which could adversely impact the value of our Common Stock.

However, reduced gas fees could signal lower demand for ETH.

is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement or throughput of Ethereum

Network transactions will be effective, or how long these mechanisms will take to become effective, which could adversely impact the

value of our Common Stock.

Cybersecurity

incidents and other issues related to our information systems, technology and data may affect us materially and adversely

Cybersecurity

incidents and cyberattacks have been occurring globally at a more frequent and severe level and will likely continue to increase in

frequency in the future.

The digital asset industry are a particular target for cybersecurity incidents, which may occur through

intentional or unintentional acts by individuals or groups having authorized or unauthorized access to our systems or our

clients’ or counterparties’ information, which may include confidential information.

These individuals or groups include

employees, vendors and customers, as well as hackers.

The information and technology systems used by us and our service providers,

and other third parties, are vulnerable to damage or interruption from, among other things:

hacking, ransomware, malware and other

computer viruses;

denial of service attacks;

network failures;

computer and telecommunication failures;

phishing attacks;

infiltration by unauthorized persons;

security breaches;

usage errors by their respective professionals;

power outages;

and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes.

It is difficult or impossible to defend

against every risk being posed by changing technologies, as well as criminals’ intent to commit cybercrime, and these efforts

may not be successful in anticipating, preventing, detecting or stopping attacks, or reacting in a timely manner.

The increasing

sophistication and resources of cybercriminals and other non-state threat actors and increased actions by nation-state actors make

it difficult to keep up with new threats and could result in a breach of security.

Such threats may see their frequency increased,

and effectiveness enhanced, by the use of artificial intelligence.

Further, cybersecurity risks may be heightened as a result of

ongoing global conflicts such as the Russia-Ukraine conflict or the ongoing Israel-Hamas conflict.

Additionally, we cannot guarantee

that our insurance coverage would be sufficient to cover any such losses.

the extent the operation of our systems relies on our third-party service providers, through either a connection to, or an integration

with, third parties’ systems, the risk of cybersecurity attacks and loss, corruption, or unauthorized access to or publication

of our information or the confidential information and personal data of customers and employees may increase.

Third-party risks may include

insufficient security measures, data location uncertainty, and the possibility of data storage in inappropriate jurisdictions where laws,

security measures or other controls may be inadequate or in which there are uncertainties regarding governmental intervention and use

of such data, and our ability to monitor our third-party service providers’ data security practices are limited.

Although we generally

have agreements relating to cybersecurity and data privacy in place with our third-party service providers, they are limited in nature

and we cannot guarantee that such agreements will prevent the accidental or unauthorized access to or disclosure, loss, destruction,

disablement or encryption of, use or misuse of or modification of data (including personal data) or enable us to obtain adequate or any

reimbursement from our third-party service providers in the event we should suffer any such incidents.

Due to applicable laws and regulations

or contractual obligations, we may be held responsible for any information security failure or cybersecurity attack attributed to our

vendors as they relate to the information we share with them.

A vulnerability in or related to a third-party service provider’s

software or systems, a failure of our third-party service providers’ safeguards, policies or procedures, or a breach of a third-party

service provider’s software or systems could result in the compromise of the confidentiality, integrity or availability of our

systems or the data housed in our third-party solutions.

security of the information and technology systems used by us and our service providers may continue to be subjected to cybersecurity

threats that could result in material failures or disruptions in our business.

If these systems are compromised, become inoperable for

extended periods of time or cease to function properly, we or a service provider may have to make a significant investment to fix or

replace them.

The failure of these systems or of disaster recovery plans for any reason could cause significant interruptions in operations

and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating

to stockholders (and the beneficial owners of stockholders).

Such a failure could harm our reputation, subject us to legal claims and

otherwise materially and adversely affect our investment and trading strategies and our value.

a malicious actor or botnet obtains control of more than 33% of the validating power on the Ethereum Network, or otherwise obtains control

over the Ethereum Network through its influence over core developers or otherwise, such actor or botnet could manipulate the Ethereum

Network to adversely affect the value of our Common Stock.

networked systems are vulnerable to various types of attacks.

As with any computer network, the Ethereum Network could be attacked.

example, following the “Merge” to transition the Ethereum Network from a proof-of-work consensus mechanism to a proof-of-stake

consensus mechanism and the switch to proof-of-stake validation, the Ethereum Network is currently vulnerable to several types of attacks,

attack ” where, if a malicious actor, validator, botnet (a volunteer or hacked collection of computers controlled by networked

software coordinating the actions of the computers) or group of validators acting in concert were to gain control of more than 33%

of the total staked Ether on the Ethereum Network, a malicious actor could temporarily impede or delay block confirmation or even

cause a temporary fork in the blockchain.

This is designed to be a temporary risk, as the Ethereum Network’s inactivity leak

would be expected to eventually penalize the attacker enough for the chain to finalize again (i.e., the honest majority would be

expected to reclaim 2/3rd stake as the attacker’s stake is penalized).

Moreover, it is not believed that a 33% attack would

allow a malicious actor to engage in double-spending or fraudulent block propagation.

Even without 33% control, a malicious actor

or botnet could create a flood of transactions in order to slow down the Ethereum Network.

attack ” where, if a malicious actor, validator, botnet (a volunteer or hacked collection of computers controlled by networked

software coordinating the actions of the computers) or group of validators acting in concert were to gain control of more than 50%

of the total staked Ether on the Ethereum Network, a malicious actor would be able to manipulate transactions on the blockchain,

including censoring transactions, double-spending and fraudulent block propagation, potentially for an extended period or even permanently.

In theory, the minority non-attackers might reach social consensus to reject blocks proposed by the malicious majority attacker,

reducing the attacker’s ability to engage in malicious activity, but there can be no assurance this would happen or that non-attackers

would be able to coordinate effectively.

To the extent that such malicious actor or botnet did not yield its control of the validating

power on the Ethereum Network or the Ethereum community did not reject the fraudulent blocks as malicious, reversing any changes

made to the blockchain may not be possible.

attack ” where, if a malicious actor, validator, botnet (a volunteer or hacked collection of computers controlled by networked

software coordinating the actions of the computers) or group of validators acting in concert were to gain control of more than 66%

of the total staked Ether on the Ethereum Network, a malicious actor could permanently and irreversibly manipulate the blockchain,

including censorship, double-spending and fraudulent block propagation.

Although the malicious actor or botnet may not be able to

generate new tokens or transactions using such control, it could “double-spend” its own tokens (i.e., spend the same

tokens in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained

control (over 50%).

The attacker could finalize their preferred chain without any consideration for the votes of other stakers and

could also revert finalized blocks.

an example from another network, in August 2020, the Ethereum Classic Network, a proof-of-work network, was the target of two double-spend

attacks by an unknown actor or actors that gained more than 50% of the processing power of the Ethereum Classic Network.

resulted in reorganizations of the Ethereum Classic Blockchain that allowed the attacker or attackers to reverse previously recorded

transactions in excess of over $5.0 million and $1.0 million.

addition, in May 2019, the Bitcoin Cash network, a proof-of-work network, experienced a >50% attack when two large mining pools reversed

a series of transactions in order to stop an unknown miner from taking advantage of a flaw in a recent Bitcoin Cash protocol upgrade.

Although this particular attack was arguably benevolent, the fact that such coordinated activity was able to occur may negatively impact

perceptions of the Bitcoin Cash network.

Although the two attacks described above took place on proof-of-work-based networks, it is possible

that a similar attack may occur on the Ethereum Network, which could negatively impact the value of Ether and the value of our Common

there are no known reports of malicious control of the Ethereum Network, if groups of coordinating or connected Ether holders that together

have more than 33% of outstanding Ether were to stake that Ether and run validators, they could exert authority over the validation of

Ether transactions.

This risk is heightened if a substantial amount of the validating power on the network falls within the jurisdiction

of a single governmental authority and is significantly heightened if over 66% falls within such a jurisdiction.

If network participants,

including the core developers and the administrators of validating pools, do not act to ensure greater decentralization of Ethereum Network

validators, the feasibility of a malicious actor obtaining control of the validating power on the Ethereum Network will increase, which

may adversely affect the value of our Common Stock.

malicious actor may also obtain control over the Ethereum Network through its influence over core developers by gaining direct control

over a core developer or an otherwise influential programmer.

The less that the Ethereum ecosystem grows, the greater the possibility

that a malicious actor may be able to maliciously influence the Ethereum Network in this manner.

Moreover, it is possible that a group

of Ether holders that together control more than a substantial amount of outstanding Ether are in fact part of the initial or current

core developer group, or are otherwise influential members of the Ethereum community.

To the extent that the initial or current core

developer groups also control higher than a threshold of outstanding Ether necessary for an attack, as some believe, the risk of this

particular group of users causing the Ethereum Network to adopt updates to the core protocol that this particular group wants to be implemented

will be even greater, and should this materialize, it may adversely affect the value of our Common Stock.

asset networks are developed by a diverse set of contributors and the perception that certain high-profile contributors will no longer

contribute to the network could have an adverse effect on the market price of the related digital asset.

asset networks and related protocols are often developed by a diverse set of contributors, but are also often developed by identifiable

and high-profile contributors.

The perception that certain high-profile contributors may no longer contribute to the applicable digital

asset network or protocol may have an adverse effect on the market price of any related digital assets.

For example, in June 2017, an

unfounded rumor circulated that Ethereum protocol developer Vitalik Buterin had died.

Following the rumor, the price of Ether decreased

approximately 20% before recovering after Buterin himself dispelled the rumor.

Some have speculated that the rumor led to the decrease

in the price of Ether.

In the event a high-profile contributor to the Ethereum Network, such as Vitalik Buterin, is perceived as no longer

contributing to the Ethereum Network due to death, retirement, withdrawal, incapacity, or otherwise, whether or not such perception is

valid, it could negatively affect the price of Ether, which could adversely impact the value of our Common Stock.

availability of spot ETPs for ETH and other digital assets may adversely affect the market price of our listed securities.

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impact on the price of ETH and adversely affect our business.

a result of our ETH strategy, our assets are concentrated in our ETH holdings.

Accordingly, the emergence or growth of digital assets

other than ETH may have a material adverse effect on our financial condition.

There are numerous alternative digital assets and many

entities, including consortiums and financial institutions, are researching and investing resources into private or permissioned blockchain

platforms or digital assets.

Additionally, the Ethereum network has completed multiple major upgrades since then and may undertake additional

upgrades in the future.

If the mechanisms for validating transactions in other alternative digital assets are perceived as superior to

the Ethereum network, those digital assets could gain market share relative to ETH.

a result of our ETH Treasury Management strategy, our assets are concentrated in our ETH holdings.

Accordingly, the emergence or growth

of digital assets other than ETH may have a material adverse effect on our financial condition.

There are numerous alternative digital

assets and many entities, including consortiums and financial institutions, are researching and investing resources into private or permissioned

blockchain platforms or digital assets.

Additionally, the Ethereum network has completed multiple major upgrades since then and may undertake

additional upgrades in the future.

If the mechanisms for validating transactions in other alternative digital assets are perceived as

superior to the Ethereum network, those digital assets could gain market share relative to ETH.

alternative digital assets that compete with ETH in certain ways include “stablecoins,” which are designed to maintain a

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which could have a material adverse effect on our business, prospects, financial condition, and operating results.

ETH 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 ETH market has 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.

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

a number of ETH trading venues temporarily halted deposits and withdrawals in 2022, although the Coinbase exchange (our principal market

for ETH) has, to date, not done so.

As a result, our ETH holdings may not be able to serve as a source of liquidity for us to the same

extent as cash and cash equivalents.

Further, ETH we hold with our custodians do 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.

Additionally, we may be unable to enter into term loans or other capital raising transactions

collateralized by our unencumbered ETH or otherwise generate funds using our ETH holdings, including in particular during times of market

instability or when the price of ETH has declined significantly.

If we are unable to sell our ETH, enter into additional capital raising

transactions, including capital raising transactions using ETH as collateral, or otherwise generate funds using our ETH holdings, or

if we are forced to sell our ETH at a significant loss, in order to meet our working capital requirements, our business and financial

condition could be negatively impacted.

we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our ETH,

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subject to security breaches, cyberattacks, or other malicious activities.

As of the date of this filing,

the insurance that covers losses of our Ether holdings may cover none or only a small fraction of the value of the entirety of our Ether

holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such

coverage will cover losses with respect to our Ether.

Moreover, our use of custodians exposes us to the risk that the Ether our custodians

hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian,

inhibiting our ability to exercise ownership rights with respect to such Ether.

Any loss associated with such insolvency proceedings is

unlikely to be covered by any insurance coverage we maintain related to our Ether.

The legal framework governing digital asset ownership

and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could result in unexpected losses, protracted

recovery processes or adverse treatment in insolvency proceedings.

As part of our treasury management

strategy, we may engage in staking, restaking, or other permitted activities that involve the use of “smart contracts” or

decentralized applications.

The use of smart contracts or decentralized applications 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 decentralized application, potentially leading to a loss of our Ether.

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 contract or decentralized application.

Smart contracts and decentralized applications may contain bugs,

security vulnerabilities or poorly designed permission structures that could result in the irreversible loss of Ether or other digital

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.

of the date of this filing, the insurance that covers losses of our Ether holdings may cover none or only a small fraction of the value

of the entirety of our Ether holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial

services we have or that such coverage will cover losses with respect to our Ether.

Moreover, our use of custodians exposes us to the

risk that the Ether our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general

unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Ether.

Any loss associated

with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Ether.

The legal framework

governing digital asset ownership and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could

result in unexpected losses, protracted recovery processes or adverse treatment in insolvency proceedings.

part of our treasury management strategy, we may engage in staking, restaking, or other permitted activities that involve the use of

“smart contracts” or decentralized applications.

The use of smart contracts or decentralized applications 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 decentralized application, potentially leading to a loss

of our Ether.

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 contract or decentralized application.

Smart contracts and

decentralized applications may contain bugs, security vulnerabilities or poorly designed permission structures that could result in the

irreversible loss of Ether or other digital assets.

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.

are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds,

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This means, among other things, that the execution

of or changes to our ETH treasury strategy, the manner in which our ETH 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.

of or changes to our ETH Treasury Management strategy, the manner in which our ETH 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.

Our board of directors has broad discretion over the investment,

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period the trading of ETH or other digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational

ETH strategy exposes us to risk of non-performance by providers and counterparties.

ETH strategy exposes us to the risk of non-performance by providers and counterparties, whether contractual or otherwise.

Risk of non-performance

includes inability or refusal of a provider or counterparty to perform because of a deterioration in the counterparty’s financial

condition and liquidity or for any other reason.

For example, our execution partners, custodians, or other counterparties might fail

to perform in accordance with the terms of our agreements with them, which could result in a loss of ETH, a loss of the opportunity to

generate funds, or other losses.

ETH Treasury Management strategy exposes us to risk of non-performance by providers and counterparties.

ETH Treasury Management strategy exposes us to the risk of non-performance by providers and counterparties, whether contractual or otherwise.

Risk of non-performance includes inability or refusal of a provider or counterparty to perform because of a deterioration in the counterparty’s

financial condition and liquidity or for any other reason.

For example, our execution partners, custodians, or other counterparties might

fail to perform in accordance with the terms of our agreements with them, which could result in a loss of ETH, a loss of the opportunity

to generate funds, or other losses.

primary provider risk with respect to our ETH is custodian performance obligations under the various custody arrangements we have entered

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financial condition and operating results.

In addition, in the event of a termination of one or more of our custody agreements,

the Company would be required to contract with an alternative custodian at terms and conditions that may not be as favorable as our current

custody agreements.

In addition, in the event of a termination of one or more of our custody agreements, the Company

would be required to contract with an alternative custodian at terms and conditions that may not be as favorable as our current custody

series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies

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Any significant non-performance by providers and counterparties, including in particular the custodians with which

we custody substantially all of our ETH, could have a material adverse effect on our business, prospects, financial condition and

operating results.

If we are unable to recruit or retain skilled

personnel, or if we lose the services of our Chairman of the Board of Directors and Co-Chief Executive Officers, our business, operating

results, and financial condition could be materially adversely affected.

Our future success depends on our

continuing ability to attract and retain highly skilled personnel.

we custody substantially all of our ETH, could have a material adverse effect on our business, prospects, financial condition and operating

we are unable to recruit or retain skilled personnel, or if we lose the services of our Chairman of the Board of Directors and Co-Chief

Executive Officers, our business, operating results, and financial condition could be materially adversely affected.

future success depends on our continuing ability to attract and retain highly skilled personnel.

Competition for employees is intense.

We may not be

able to retain our current key employees or attract, train, and retain other highly skilled personnel in the future.

We may not be able to retain our current key employees or attract, train, and retain other highly skilled personnel in the future.

for qualified employees in the technology industry has historically been high.

Our future success also depends in large part on the

continued service of Joseph Lubin, our Chairman of the Board of Directors, Rob Phythian and Joseph Chalom as Co-Chief Executive Officers

of the Company, and Robert DeLucia, Chief Financial Officer of the Company.

Our future success also depends in large part on the continued

service of Joseph Lubin, our Chairman of the Board of Directors, Rob Phythian and Joseph Chalom as Co-Chief Executive Officers of the

Company, and Robert DeLucia, Chief Financial Officer of the Company.

If we lose the services of Messrs.

Lubin, Phythian,

Chalom or DeLucia, or if we are unable to attract, train and retain the highly skilled personnel we need, our business, operating

results and financial condition could be materially adversely affected.

Lubin, Phythian, Chalom or DeLucia,

or if we are unable to attract, train and retain the highly skilled personnel we need, our business, operating results and financial

condition could be materially adversely affected.

SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

August 21, 2025, the Board authorized a share repurchase program under which the Company may repurchase up to $1.5 billion of its

outstanding Common Stock.

As of September 30, 2025, the Company has repurchased 1,938,540 of its outstanding Common Stock for

following table sets forth repurchases of our Common Stock during the three months ended September 30, 2025:

of shares purchased (1)

Average price paid per share

of shares purchased as part of the publicly announced program

Approximate dollar value of shares that may yet to be purchased under program

September 1, 2025 – September 30, 2025

1,468,307,512

$ 1,468,307,512

August 21, 2025, the Board authorized a share repurchase program under which the Company may purchase up to $1.5 billion of its outstanding

Common Stock.

The share repurchase program does not have an expiration date and may be adjusted or terminated by the Company at any

There were 1,938,450 shares of Common Stock repurchased as part of the publicly announced share repurchase program during the

three months ended September 30, 2025.

UPON SENIOR SECURITIES

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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