What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2025-12-09 · 142 added, 131 removed, 4 unchanged (99% of the section changed)

Discussion and Analysis of Financial Condition and Results of Operations.

following discussion and analysis of the Trust’s financial condition and results of operations should be read together with,

and is qualified in its entirety by reference to, the Trust’s unaudited financial statements and related notes included

elsewhere in this Quarterly Report, which have been prepared in accordance with GAAP.

Quarterly Report on Form 10-Q (the “Quarterly Report”) includes “forward-looking statements” with respect

to the financial conditions, results of operations, plans, objectives, future performance and business of Canary Marinade Solana

ETF (the “Trust”).

In some cases, you can identify forward-looking statements by terminology such as “may,”

“will,” “should,” “expect,” “plan,” “anticipate,” “believe,”

“estimate,” “predict,” “potential,” or the negative of these terms or other comparable terminology.

All statements (other than statements of historical fact) included in this Quarterly Report that address activities, events, or

developments that will or may occur in the future, including such matters as movements in the digital asset markets, the Trust’s

operations, the plans of Canary Capital Group LLC (the “Sponsor”), and references to the Trust’s future success

and other similar matters, are forward-looking statements.

These statements are only predictions.

Actual events or results may

differ materially.

These statements are based upon certain assumptions and analyses the Sponsor has made based on its perception

of historical trends, current conditions, and expected future developments, as well as other factors appropriate in the circumstances.

which could have a material adverse effect on the Trust’s business, financial condition or results of operations and future

prospects or which could cause actual results to differ materially from the Trust’s expectations include, but are not limited

special considerations discussed in this Quarterly Report;

economic, market and business conditions;

developments regarding the use of SOL and other digital assets, including the systems

used by the Sponsor and the Trust’s custodian in their provision of services to

in laws or regulations, including those concerning taxes, made by governmental authorities

or regulatory bodies;

world economic and political developments, including, without limitation, global pandemics

and the societal and government responses thereto;

additional factors discussed in this Quarterly Report, as well as those described from

time to time in the Trust’s future reports filed with the SEC.

the forward-looking statements made in this Quarterly Report are qualified by these cautionary statements, and there can be no

assurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantially realized,

that they will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value

of the Shares.

one or more of these factors or other uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes

may vary materially from those described in forward-looking statements.

Forward-looking statements are made based on the Sponsor’s

beliefs, estimates and opinions on the date the statements are made, and neither the Trust nor the Sponsor is under a duty to

update any of the forward-looking statements to conform such statements to actual results or to reflect a change in the Sponsor’s

expectations or predictions, other than as required by applicable laws.

Investors are therefore cautioned against relying on forward-looking

Trust is an exchange-traded fund that issues Shares that are listed and trade on the Exchange.

The Trust’s investment objective

is to seek to provide exposure to the price of SOL held by the Trust, less the expenses of the Trust’s operations and other

A secondary investment objective is for the Trust to earn additional SOL through the validation of transactions in

the Solana Network’s PoS process.

In seeking to achieve its investment objectives, the Trust will hold SOL and establish

its NAV on each business day by reference to the Pricing Benchmark.

The Pricing Benchmark is calculated by the Benchmark Provider

based on a 60-minute time-weighted average price of the Underlying Index, which is an aggregation of executed trade flow of Constituent

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

following discussion and analysis of the Trust’s financial condition and results of operations should be read together with, and

is qualified in its entirety by reference to, the Trust’s unaudited financial statements and related notes included elsewhere in

this Quarterly Report, which have been prepared in accordance with GAAP.

This Quarterly

Report on Form 10-Q (the “Quarterly Report”) includes “forward-looking statements” with respect to the financial

conditions, results of operations, plans, objectives, future performance and business of Canary Marinade Solana ETF (the “Trust”).

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,”

“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”

“potential,” or the negative of these terms or other comparable terminology.

All statements (other than statements of historical

fact) included in this Quarterly Report that address activities, events, or developments that will or may occur in the future, including

such matters as movements in the digital asset markets, the Trust’s operations, the plans of Canary Capital Group LLC (the “Sponsor”),

and references to the Trust’s future success and other similar matters, are forward-looking statements.

These statements are only

Actual events or results may differ materially.

These statements are based upon certain assumptions and analyses the Sponsor

has made based on its perception of historical trends, current conditions, and expected future developments, as well as other factors

appropriate in the circumstances.

Factors which could have a material

adverse effect on the Trust’s business, financial condition or results of operations and future prospects or which could cause actual

results to differ materially from the Trust’s expectations include, but are not limited to:

● the special considerations discussed in this Quarterly

● general economic, market and business conditions;

● technology developments

regarding the use of SOL and other digital assets, including the systems used by the Sponsor and the Trust’s custodians in their

provision of services to the Trust;

● changes in laws or regulations,

including those concerning taxes, made by governmental authorities or regulatory bodies;

● other world economic and

political developments, including, without limitation, global pandemics and the societal and government responses thereto;

● any additional factors

discussed in this Quarterly Report, as well as those described from time to time in the Trust’s future reports filed with the SEC.

All the forward-looking statements

made in this Quarterly Report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments

the Sponsor anticipates will be realized or, even if substantially realized, that they will result in the expected consequences to, or

have the expected effects on, the Trust’s operations or the value of the Shares.

or more of these factors or other uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary

materially from those described in forward-looking statements.

Forward-looking statements are made based on the Sponsor’s beliefs,

estimates and opinions on the date the statements are made, and neither the Trust nor the Sponsor is under a duty to update any of the

forward-looking statements to conform such statements to actual results or to reflect a change in the Sponsor’s expectations or

predictions, other than as required by applicable laws.

Investors are therefore cautioned against relying on forward-looking statements.

Overview of the Trust

is an exchange-traded fund that issues Shares that are listed and trade on the Exchange.

The Trust’s investment objective is to

seek to provide exposure to the price of SOL held by the Trust, less the expenses of the Trust’s operations and other liabilities.

A secondary investment objective is for the Trust to earn additional SOL through the validation of transactions in the SOL network’s

(the “Solana Network”) proof-of-stake (“PoS”) process.

In seeking to achieve its investment objectives, the Trust

holds SOL and establishes its NAV on each business day by reference to the Pricing Benchmark.

The Pricing Benchmark is calculated by the

Benchmark Provider based on a 60-minute time-weighted average price of the Underlying Index, which is an aggregation of executed trade

flow of Constituent Platforms.

The Benchmark Provider publishes the Pricing Benchmark.

The Trust is sponsored by the Sponsor.

Shareholders of the Trust take no part in the management or control, and have no voice in, the Trust’s operations or business.

Except to elect a successor Sponsor upon the resignation of the Sponsor or as otherwise required by laws of the state of Delaware,

Shareholders will have no voting rights under the Trust Agreement.

Liquidity and

Capital Resources

commencement of investment operations, the Trust will typically not hold a cash balance except in connection with the creation

and redemption of “Baskets” (i.e., blocks of 10,000 Shares) or to pay expenses not assumed by the Sponsor.

pays the Sponsor an annual unified fee based on a percentage of the Trust’s SOL Holdings (the “Sponsor Fee”).

The Trust’s “SOL Holdings” is the quantity of the Trust’s SOL plus any cash

or other assets held by the Trust represented in SOL as calculated using the Pricing Benchmark price, less its liabilities (which

include estimated accrued but unpaid fees and expenses) represented in SOL as calculated using the Pricing Benchmark price.

Trust may also incur certain extraordinary, nonrecurring expenses that are not assumed by the Sponsor, including, but not limited

to, brokerage and transaction costs associated with the sale or transfer of SOL, taxes and governmental charges, expenses and

costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect

the Trust, the Trust’s assets, or the interests of Shareholders, any indemnification of the Custodian or other agents, service

providers or counterparties of the Trust, and extraordinary legal fees and expenses, including any legal fees and expenses incurred

in connection with litigation, regulatory enforcement or investigation matters (collectively, “Extraordinary Expenses”).

To the extent on-chain transaction fees are incurred in connection with transfers or sales of SOL to pay Extraordinary Expenses,

the Trust will bear such fees.

the extent it does not have cash readily available, the Sponsor shall cause the transfer or sale of SOL in such quantity as may

be necessary to permit the payment of Trust expenses and liabilities not assumed by the Sponsor or for payment of redemption proceeds

to Authorized Participants.

The Trust will not bear any costs associated with the transfer or sale of SOL to pay the Sponsor Fee.

To the extent the Trust incurs any Extraordinary Expenses, the Trust will bear the costs of any transfers or sales of SOL to pay

such expenses.

The Trust will seek to transfer SOL at such times and in the smallest amounts required to permit such payments

as they become due.

With respect to transfers or sales necessary to pay Trust expenses and liabilities that are denominated other

than in SOL, the amount of SOL transferred or sold may vary from time to time depending on the actual sales price of SOL relative

to the Trust’s expenses and liabilities (e.g., if the price of SOL falls, the amount of SOL needed to be transferred or

sold to pay an expense denominated in U.S.

The Shareholders

of the Trust take no part in the management or control, and have no voice in, the Trust’s operations or business.

Except to elect

a successor Sponsor upon the resignation of the Sponsor or as otherwise required by laws of the state of Delaware, Shareholders have no

voting rights under the Trust Agreement.

and Capital Resources

The Trust typically

does not hold a cash balance except in connection with the creation and redemption of “Baskets” (i.e., blocks of 10,000

Shares) or to pay expenses not assumed by the Sponsor.

The Trust pays the Sponsor an annual unified fee of 0.50% of the

Trust’s SOL Holdings (the “Sponsor Fee”).

The Trust’s “SOL Holdings” is the quantity of the

Trust’s SOL plus any cash or other assets held by the Trust represented in SOL as calculated using the Pricing Benchmark

price, less its liabilities (which include estimated accrued but unpaid fees and expenses) represented in SOL as calculated using

the Pricing Benchmark price.

may also incur certain extraordinary, nonrecurring expenses that are not assumed by the Sponsor, including, but not limited to, brokerage

and transaction costs associated with the sale or transfer of SOL, taxes and governmental charges, expenses and costs of any extraordinary

services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust, the Trust’s assets,

or the interests of Shareholders, any indemnification of the Custodians or other agents, service providers or counterparties of the Trust,

and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement

or investigation matters (collectively, “Extraordinary Expenses”).

To the extent on-chain transaction fees are incurred in

connection with transfers or sales of SOL to pay Extraordinary Expenses, the Trust will bear such fees.

To the extent

it does not have cash readily available, the Sponsor shall cause the transfer or sale of SOL in such quantity as may be necessary to permit

the payment of Trust expenses and liabilities not assumed by the Sponsor or for payment of redemption proceeds to Authorized Participants.

The Trust does not bear any costs associated with the transfer or sale of SOL to pay the Sponsor Fee.

To the extent the Trust incurs any

Extraordinary Expenses, the Trust will bear the costs of any transfers or sales of SOL to pay such expenses.

The Trust seeks to transfer

SOL at such times and in the smallest amounts required to permit such payments as they become due.

With respect to transfers or sales

necessary to pay Trust expenses and liabilities that are denominated other than in SOL, the amount of SOL transferred or sold may vary

from time to time depending on the actual sales price of SOL relative to the Trust’s expenses and liabilities (e.g., if the price

of SOL falls, the amount of SOL needed to be transferred or sold to pay an expense denominated in U.S.

dollars will increase).

To the extent the Trust must buy or sell SOL, the Trust may

do so through a third-party digital asset broker or dealer.

When the Trust buys or sells SOL, the Sponsor seeks quotes from its

SOL trading counterparties.

Such transactions are typically conducted over the counter rather than over a trading platform or

similar order matching service.

The Sponsor will select third party brokers or dealers that it believes have implemented adequate

anti-money laundering, know-your-customer and other legal compliance policies and procedures.

Results of Operations

October 17, 2024 (i.e., the date of formation) through September 30, 2025, the Trust was in an organizational period and had not

commenced investment operations.

On November 17, 2025, the Trust received $250,000 of SOL in connection with the issuance of the

Sheet Arrangements

of September 30, 2025, the Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate

off-balance sheet financing arrangements and has no loan guarantee arrangements or off-balance sheet arrangements of any kind

other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain

risks service providers undertake in performing services which are in the best interests of the Trust.

While the Trust’s

exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to

have a material impact on the Trust’s financial position.

Critical Accounting

Principal Market

and Fair Value Determination

Trust’s periodic financial statements are prepared in accordance with the Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”)

and utilize an exchange-traded price from the Trust’s principal market for SOL on the Trust’s financial statement

measurement date.

The Sponsor will determine in its sole discretion the valuation sources and policies used to prepare the Trust’s

financial statements in accordance with GAAP.

The Trust intends to engage a third-party vendor to obtain a price from a principal

market for SOL, which will be determined and designated by such third-party vendor daily based on its consideration of several

exchange characteristics, including oversight, and the volume and frequency of trades.

Under GAAP, such a price is expected to

be deemed a Level 1 input in accordance with the ASC Topic 820 because it is expected to be a quoted price in active markets for

identical assets or liabilities.

Investment Company

Considerations

Trust follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial Services – Investment

The Trust uses fair value as its method of accounting for SOL.

The Trust qualifies as an investment company solely

for accounting purposes and not for any other purpose.

The Trust is not registered, and is not required to be registered, as an

investment company under the Investment Company Act of 1940, as amended.

GAAP requires management to make estimates and assumptions

that affect the reported amounts in the financial statements and accompanying notes.

Actual results could differ from those estimates

and these differences could be material.

extent the Trust must buy or sell SOL, the Trust may do so through a third-party digital asset broker or dealer.

When the Trust buys or

sells SOL, the Sponsor seeks quotes from its SOL trading counterparties.

Such transactions are typically conducted over the counter rather

than over a trading platform or similar order matching service.

The Sponsor selects third party brokers or dealers that it believes have

implemented adequate AML, KYC and other legal compliance policies and procedures.

Results of Operations for the Three Months

Ended March 31, 2026 *

net asset value decreased from $1,926,808 at December 31, 2025, to $1,145,618 at March 31, 2026.

The change in the Trust’s net assets

resulted from a decrease in outstanding Shares, which fell from 80,000 at December 31, 2025, to 70,000 at March 31, 2026, as a result

of 10,000 Shares being created and 20,000 Shares being redeemed during the quarter, and a decrease in the value of SOL, which depreciated

-33.12% from $124.26 at December 31, 2025, to $83.11 at March 31, 2026.

The net asset

value per Share decreased -32.05% from $24.09 at December 31, 2025, to $16.37 at March 31, 2026.

The net asset

value per Share of $28.62 at January 14, 2026 was the highest during the quarter, compared with a low of $15.07 at February 12, 2026.

in net assets from operations for the quarter ended March 31, 2026, was $(551,958), resulting from a decrease in unrealized gain on the

Trust’s SOL investment of $(539,756), realized losses on the disposition of SOL of $(34,177), and staking income of $21,975.

* No comparative periods have been presented as the initial share purchase date of the Trust was November 17, 2025.

Off-Balance Sheet Arrangements

31, 2026, the Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate off balance sheet financing

arrangements and has no loan guarantee arrangements or off-balance sheet arrangements of any kind other than agreements entered into in

the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing

services which are in the best interests of the Trust.

While the Trust’s exposure under such indemnification provisions cannot be

estimated, these general business indemnifications are not expected to have a material impact on the Trust’s financial position.

Critical Accounting Policies

Principal Market and Fair Value Determination

periodic financial statements are prepared in accordance with the FASB ASC Topic 820 and utilize an exchange-traded price from the Trust’s

principal market for SOL on the Trust’s financial statement measurement date.

The Sponsor determined in its sole discretion the

valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

The Trust engaged a third-party

vendor to obtain a price from a principal market for SOL, which was determined and designated by such third-party vendor daily based on

its consideration of several exchange characteristics, including oversight, and the volume and frequency of trades.

Under GAAP, such a

price is deemed a Level 1 input in accordance with ASC Topic 820 because it is a quoted price in active markets for identical assets or

Investment Company Considerations

The Trust follows

accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial Services – Investment Companies.

uses fair value as its method of accounting for SOL.

The Trust qualifies as an investment company solely for accounting purposes and not

for any other purpose.

The Trust is not registered, and is not required to be registered, as an investment company under the Investment

Company Act of 1940, as amended.

GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial

statements and accompanying notes.

Actual results could differ from those estimates and these differences could be material.

Quantitative and Qualitative Disclosures About Market Risk .

Not applicable to

“Smaller Reporting Companies,” as defined in Rule 12b-2 of the Exchange Act.

Not applicable to “Smaller Reporting Companies,”

as defined in Rule 12b-2 of the Exchange Act.

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 2. Management’s Discussion and Analysis