What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-13 compared with 2025-08-14 · 202 added, 134 removed, 23 unchanged (94% of the section changed)

3 unchanged sentences

Our MD&A is presented in seven sections:

Portfolio and Investment Activity

SUI Treasury Management Activity

Portfolio Investment Activity

Results of Operations

3 unchanged sentences

Forward Looking Statements

Mill City Ventures III, Ltd.

was incorporated in the State of Minnesota on January 10, 2006.

In this report, we generally refer to Mill City Ventures III, Ltd.

in the first person “we.” On occasion, we refer to our company in the third person as “Mill City Ventures” or the “company.”

We are engaged in the business of providing short-term non-bank lending and specialty finance solutions to companies and individuals, generally on a secured basis.

The loans we provide typically have maturities that are nine months or shorter, highly illiquid, and ordinarily involve a pledge of collateral or, in the case of loans made to companies, personal guarantees by the principals of the borrower.

Our loans may be made for real estate acquisitions, renovation and sale, or other projects relating to real estate, title loans, inventory needs, inventory financing, solve for short-term liquidity needs, or for other similar purposes.

We intend to remain opportunistic, however, and may occasionally engage in transactions that involve our acquisition of other rights (such as stock, warrants or other equity-linked investments) or that are structured differently or uniquely.

Our business objective is to generate revenues from the interest and fees we charge, and capital appreciation from any related investments we make.

Our principal sources of income are interest and fees associated with our loans such as origination fees, closing fees or exit fees.

In connection with the short-term non-bank specialty finance loans we provide, we may receive reimbursement of legal costs associated with loan documentation.

We occasionally derive income from dividends paid on equity securities we hold from time to time, or from the sale of our equity securities.

Our statement of operations also reflect increases and decreases in the carrying value of our assets and investments (i.e., unrealized appreciation and depreciation).

Our principal expenses relate to operating expenses, the largest components of which are generally professional fees, payroll, occupancy, and insurance expenses.

Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, as well as our reports on Forms 10-Q and 8-K and other publicly available information.

SUI Group Holdings Limited was originally incorporated as Mill City Ventures III, Ltd.

in the State of Minnesota on January 10, 2006.

Historically, we operated as a publicly traded specialty finance company focused on short-term, non-bank lending solutions.

Revenue was primarily generated through interest income, transaction fees, and capital appreciation from related portfolio investments.

We recently undertook a strategic shift by launching the industry’s first SUI treasury strategy, under which the principal holding in our treasury reserve on the balance sheet is allocated to the native cryptocurrency of the SUI blockchain (commonly referred to as “SUI”).

Since the launch of our digital asset treasury strategy, we have established the largest publicly traded SUI treasury, backed by an exclusive relationship with the Sui Foundation, an independent organization dedicated to the advancement and adoption of the SUI network.

On August 26, 2025, we formally changed our name to SUI Group Holdings Limited, following an amendment to its Articles of Incorporation filed with the Officer of the Minnesota Secretary of State.

In conjunction with the name change and the rebranding, we changed our ticker symbol from “MCVT” to “SUIG”, aligning our public identity with our core blockchain initiatives.

We are executing on this opportunity by acquiring SUI tokens through open-market purchases, institutional-grade deal flow typically reserved for crypto funds, and a negotiated purchase agreement with the Sui Foundation.

This structure enables broader investor access to SUI through a regulated, publicly traded vehicle.

As the only SUI treasury with Sui Foundation support, we believe that we are uniquely positioned to capitalize on technology trends and ecosystem growth relating to SUI, while providing regulated, liquid, and institutional-grade access to blockchains designed for scalability and global adoption.

As of September 30, 2025, we held 106 million SUI tokens in our treasury, representing $344.5 million in digital assets.

This equates to approximately 1.19 SUI per-share of common stock and Pre-Funded Warrants outstanding.

Substantially almost all of these holdings continue to be staked, generating an annualized yield of approximately 2.2%.

These assets reflect our strategic commitment to the SUI blockchain infrastructure and serve as a flexible source of liquidity for future acquisitions and operational portfolio investments.

Our principal sources of income now include staking rewards from our SUI holdings, realized and unrealized gains or losses on digital assets, and rewards earned through protocol participation.

We actively monitor market conditions and developments across blockchain protocols to optimize yield and asset performance.

Legacy income streams from interest and fees on short-term loans and remain part of our portfolio, although they represent a smaller portion of our overall financial profile.

Our operating expenses now reflect a blend of our legacy finance and digital asset treasury operation, including professional fees, payroll, custody and infrastructure costs related to blockchain asset management, and insurance.

We seek to achieve enhanced operational leverage as we scale our digital asset treasury strategy and expand our operational footprint.

On September 19, 2025, our shareholders approved all proposals presented at the annual meeting, including amendments to the equity incentive plan and board composition.

These changes are expected to enhance our corporate governance and better align executive compensation with shareholder interests.

Our MD&A should be read in conjunction with (i) the accompanying unaudited condensed financial statements and the related notes included in Part I, Item 1 of this Report, (ii) the audited financial statements and related notes for the year ended December 31, 2024 included in our Annual Report and (iii) other publicly available information.

All amounts herein are unaudited.

In addition, the following discussion of our results of operations and financial condition should be read in the context of this overview.

PORTFOLIO AND INVESTMENT ACTIVITY

During the six months ended June 30, 2025, we made $4,428,530 of investment purchases and had $504,116 of redemptions and repayments, resulting in net investments at amortized cost of $17,641,707 as of June 30, 2025.

During the six months ended June 30, 2024, we made $973,438 of investment purchases and had $5,461,479 of redemptions and repayments, resulting in net investments at amortized cost of $14,460,679 as of June 30, 2024.

Our portfolio composition by major class, based on fair value at June 30, 2025, was as follows:

SUI TREASURY MANAGEMENT ACTIVITY

In late July 2025, we formally launched our SUI treasury strategy, establishing SUI, the native token of the SUI blockchain, as a core component of our digital asset treasury platform.

This initiative reflects our conviction in the long-term potential of the SUI blockchain and its role in powering the next generation of decentralized applications across finance, gaming, AI, and other sectors.

SUI is a next-generation Layer 1 blockchain designed to deliver the scalability, speed, and security required to power decentralized applications and real-world crypto use cases across finance, gaming, artificial intelligence, stablecoins, and more.

Its horizontally scalable architecture, low-latency finality, and secure, developer-friendly design, position it as a leading infrastructure platform capable of handling real-world scale.

As institutional and consumer adoption accelerates, SUI offers the potential to enable a wide range of transformative digital experiences and create long-term value opportunities for SUI Group and its shareholders.

As of September 30, 2025, we held 106 million SUI tokens, valued at $344.5 million based on a market price of $3.26 per token.

Substantially all of our SUI holdings are staked, generating an estimated 2.2% annual yield, or approximately $20,000 in daily staking rewards.

We believe this staking strategy enhances the productivity of our treasury while maintaining exposure to potential SUI price appreciation.

For the three months ended September 30, 2025, we earned $1 million in staking rewards, representing 287,599 SUI tokens generated from substantially all tokens staked.

Our treasury strategy is designed for scale, transparency, and long-term value creation, and is supported by our official relationship with the Sui Foundation.

We believe this alignment positions us uniquely as the only publicly traded company with institutional-grade exposure to the SUI blockchain.

We continue to monitor developments in the Sui ecosystem, including advancements in staking infrastructure, validator expansion, and adoption of SUI-native applications.

These developments are expected to further support the intrinsic value of our SUI holdings and reinforce our strategic positioning.

PORTFOLIO INVESTMENT ACTIVITY

While our primary focus has shifted from our legacy finance operations, the business objective of our legacy business is to generate revenues from the interest and fees we charge, and capital appreciation from any related portfolio investments we make.

During the nine months ended September 30, 2025, we made $8,247,139 of portfolio investment purchases and had $2,004,216 of redemptions and repayments, resulting in net portfolio investments at amortized cost of $19,960,216 at the end of the period.

During the nine months ended September 30, 2024, we made $5,106,503 of portfolio investment purchases and had $6,614,573 of redemptions and repayments, resulting in net portfolio investments at amortized cost of $17,208,066 at the end of that period.

Our portfolio composition by major class, based on fair value at September 30, 2025, was as follows:

Investments at

2 unchanged sentences

Commercial Business Loans

FACTORS AFFECTING THE COMPARABILITY OF OUR RESULTS OF OPERATIONS AND MATERIAL TRENDS

Strategic Shift

Our historical financial condition and results of operations for the periods presented may not be comparable, either from period to period or going forward, due to the recent strategic shift from our legacy finance business toward blockchain-native treasury management.

As a result, the periods presented in our historical financial statements may not be comparable to one another and our future results of operations and financial results may differ.

Our treasury management business is expected to be heavily dependent on the price of SUI tokens, which has historically experienced significant volatility.

As of September 30, 2025, we held 106 million SUI tokens, valued at $344.5 million based on a market price of $3.26 per token.

SUI is valued at fair value at the end of each reporting period, with changes in fair value recognized in net income.

As a result, fluctuations in the price of SUI may significantly impact our results of operations .

RESULTS OF OPERATIONS

Our operating results for the three and six months ended June 30, 2025 and June 30, 2024 were as follows:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Investment Income:

Our operating results for the three and nine months ended September 30, 2025 and September 30, 2024 were as follows:

For the Three Months Ended

September 30,

Favorable (Unfavorable)

Percentage Change

Portfolio investment income

SUI staking revenue

Total Revenues

Operating Expenses:

Net Investment Gain

Investment Income

We generate revenue primarily in the form of interest income derived from the short-term non-banking loans we provide, together with fees we charge in connection with those loans, such as commitment, origination, structuring, diligence, or consulting fees.

Any such fees will be recognized as earned.

In some cases, the interest payable to us on the short-term loans we provide may accrue or be paid in the form of additional debt.

The principal amount of the debt instruments, together with any accrued but unpaid interest thereon, will generally become due at the maturity date of those debt instruments.

On occasion, we may also generate revenue from dividends and capital gains on equity investments we make, if any, or on warrants or other equity interests that we may acquire.

For the three and six months ended June 30, 2025, our total investment income was $948,034 and $1,726,061, respectively.

For the three and six months ended June 30, 2024 our total investment income was $888,629 and $1,721,296, respectively.

Our loan portfolio generates interest income, with an average rate on the loans of 20%.

Professional fees

For the three and six months ended June 30, 2025, we had $98,764 and $241,420 professional fees expense, respectively.

For the three and six months ended June 30, 2024, we had $174,098 and $312,469 professional fees expense, respectively.

The decrease is due to the decrease in loan activity during the current year.

Payroll and Directors Fees

For the three and six months ended June 30, 2025, we had $160,230 and $323,499 of payroll expense, respectively, and we had $30,000 and $60,000 of directors fees, respectively.

For the three and six months ended June 30, 2024, we had $145,859 and $296,925 of payroll expense, respectively, and we had $30,000 and $60,000 of directors fees, respectively.

Interest Expense

For the three and six months ended June 30, 2025, we had $0 and $0 of interest expense, respectively.

For the three and six months ended June 30, 2024, we had $0 and $320 of interest expense, respectively.

The decrease is due to the termination of the line of credit agreement in January 2024.

Net Realized Gain (Loss) from Investments

For the three and six months ended June 30, 2025, we had $500,017 and $504,116, respectively, of sales of investments resulting in $31 of realized losses and $205 of realized gains, respectively.

For the three and six months ended June 30, 2024, we had $5,152,682 and $5,461,479, respectively, of sales of investments resulting in $346,745 and $371,240 of realized gains, respectively.

Net Change in Unrealized Appreciation (Depreciation) on Investments

For the three and six months ended June 30, 2025, our investments had $314,515 and $476,781 of unrealized appreciation, respectively.

For the three and six months ended June 30, 2024, our investments had $289,641 and $237,890 of unrealized depreciation, respectively.

Changes in Net Assets from Operations

For the three and six months ended June 30, 2025, we recorded a net increase in net assets from operations of $677,035 and $1,128,781, respectively.

Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2025, our per-share net increase in net assets from operations was $0.11 and $0.18, respectively.

For the three and six months ended June 30, 2024, we recorded a net increase in net assets from operations of $412,936 and $795,039, respectively.

Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2024, our per-share net increase in net assets from operations was $0.06 and $0.12, respectively.

Cash Flows for the Six Months Ended June 30, 2025 and 2024

The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and repayments of portfolio investments, among other factors.

For the six months ended June 30, 2025, net cash used in operating activities was $3,898,665.

Cash flows used in operating activities for the six months ended June 30, 2025 were primarily related to purchasing of investments totaling $4,428,530.

Cash flows used in our financing activities for the six months ended June 30, 2025 were due to the repurchase and retirement of 322,482 of our common shares for $630,436.

For the six months ended June 30, 2024, net cash provided in operating activities was $5,048,587.

Cash flows provided in operating activities for the six months ended June 30, 2024 were primarily related to the funding of our short-term loans and purchases of investments aggregating $973,438, offset mostly by redemptions and repayments of short-term loans and investments totaling $5,461,479.

FINANCIAL CONDITION

As of June 30, 2025, we had cash of $1,497,009, a decrease of $4,529,101 from December 31, 2024.

The primary use of our existing funds and any funds raised in the future is expected to be for our investments in portfolio companies or for other general corporate purposes, including paying for operating expenses or debt service to the extent we borrow or issue senior securities.

Pending investment in portfolio companies, our investments may consist of cash, cash equivalents, U.S.

government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to collectively as “temporary investments.”

Private Placement of Securities and SUI Strategy

On July 31, 2025, we closed on a private placement offer and sale of 75,881,625 shares of our common stock at an offering price of $5.42 per share, and pre-funded warrants to purchase up to 7,144,205 shares of our common stock at an offering price of $5.4199 per share, exercisable at a per-share price of $0.0001.

On July 27, 2025, and in connection with the private placement, we entered into a Placement Agency Agreement with A.G.P., pursuant to which A.G.P.

agreed to serve as our exclusive placement agent in connection with the private placement.

Pursuant to the Placement Agency Agreement, we paid A.G.P.

a cash placement agent fee of $18,000,000.

We also issued to A.G.P.

warrants (the “Placement Agent Warrants”) to purchase up to 3,113,469 shares of our common stock (equal to 3.75% of the securities sold in the private placement).

The Placement Agent Warrants will become exercisable six months following the issuance date and will be exercisable for a period of five years following the issuance date, at an exercise price of $5.962 per share.

In addition, we agreed to reimburse A.G.P.

for accountable expenses in an amount of $200,000 for its legal fees in connection with the private placement, as well as non-accountable expenses incurred by A.G.P.

for up to $25,000 in connection with the private placement.

At the closing of the private placement, we also issued five-year warrants to purchase our common stock as follows:

warrants (the “Lead Investor Warrants”) to Karatage Opportunities (“Karatage”), to purchase 3,113,469 shares of common stock at various exercise prices as follows:

(i) 1,245,387 common shares at an exercise price of $5.42 per share;

(ii) 1,245,387 common shares at an exercise price of $5.962 per share;

(iii) 415,129 common shares at an exercise price of $6.504 per share;

and (iv) 207,565 common shares at an exercise price of $7.046 per share;

warrants (the “Foundation Investor Warrants”) to the Sui Foundation (the “Foundation Investor”), to purchase 3,113,469 shares of common stock at various exercise prices as follows:

(i) 1,245,388 common shares at an exercise price of $5.42 per share;

(ii) 1,245,387 common shares at an exercise price of $5.962 per share;

(iii) 415,129 common shares at an exercise price of $6.504 per share;

and (iv) 207,565 common shares at an exercise price of $7.046 per share;

warrants (the “Management Warrants”) to certain members of the management of the Company to purchase 1,245,388 shares of common stock at various exercise prices as follows:

(i) 622,694 common shares at an exercise price of $5.42 per share;

(ii) 415,130 common shares at an exercise price of $6.504 per share;

and (iii) 207,564 common shares at an exercise price of $7.046 per share;

warrants (the “Advisor Warrants”) to certain advisors of the Company to purchase 207,565 shares of common stock at an exercise price of $5.962 per share.

All of the above-described warrants, other than that Advisor Warrants, will vest over a 24-month period starting six months from the issue date (as defined therein) in four equal installments (being 25% every six months), and in the case of the Management Warrants, subject to the relevant holder still being employed by the Company at each respective vesting date.

In the event that a member of the management team is terminated by the Company other than for cause or resigns for good reason (as defined in the individual’s employment agreement), the vesting of all of such individual’s Management Warrants will immediately accelerate and be fully vested as of the date of such termination.

The Advisor Warrants are fully exercisable beginning as of January 31, 2026.

On July 27, 2025, and in connection with the private placement, we entered into a Registration Rights Agreement with the investors and A.G.P.

pursuant to which we agreed to file a registration statement, within 10 days of the closing (i.e., on or before August 10, 2025), providing for the resale by the investors of the common shares and shares of common stock issuable upon exercise of the pre-funded warrants, and the shares of common stock issuable upon exercise of the Lead Investor Warrant, Foundation Investor Warrant, Management Warrants and the Placement Agent Warrants, and to have such registration statement declared effective within 30 days of its filing date (or 60 days, if the SEC conducts a full review), and to maintain the effectiveness of such registration statement until all securities registered pursuant thereto (i) shall have been sold, either thereunder or pursuant to Rule 144, or (ii) starting from the third anniversary of the registration rights agreement, may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 under the Securities Act, and without the requirement for our Company to be in compliance with the current public information requirement Rule 144.

Common Stock Purchase Agreement

On August 1, 2025, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with A.G.P./Alliance Global Partners (the “Investor”), pursuant to which we have the right, but not the obligation, to direct the Investor to purchase the lesser of (i) $500,000,000 or (ii) a number of shares not to exceed 19.99% of our shares of common stock outstanding on August 1, 2025, unless our shareholders shall have approved the issuance of common stock in excess of such percentage, upon satisfaction of certain terms and conditions contained in the Purchase Agreement, including but not limited to an effective resale registration statement filed with the SEC.

In this regard, we also entered into a Registration Rights Agreement with the Investor on August 1, 2025, pursuant to which we agreed to file a resale registration statement registering the resale of shares of common stock that may be purchased by the Investor pursuant to the Purchase Agreement.

Any purchases and sales under the Purchase Agreement will be at a per-share purchase price equal 95% of the volume-weighted average price for the applicable period, as calculated pursuant to the Purchase Agreement.

Any proceeds from sales of common stock under the Purchase Agreement will be used in the manner set forth in the prospectus included in the related registration statement (and any post-effective amendment thereto), and any prospectus supplement thereto, filed pursuant to the registration rights agreement.

Stock-based compensation

Asset and strategic management fees

Compensation expense

Unrealized loss on digital assets

(60,763,592 )

Net realized and unrealized gain on portfolio investments

Other general and administrative

Total Operating Expenses

(64,554,681 )

Operating Income (Loss)

$ (63,662,475 )

$ (64,251,758 )

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

SUI Staking Revenue

For the three months ended September 30, 2025, we generated approximately $1 million in staking rewards from our SUI token holdings.

This income reflects the accrual of 287,599 SUI tokens earned.

The staking yield remains consistent with our estimated annualized return of 2.2%, and rewards were accrued daily in accordance with our treasury management strategy.

Staking rewards are recognized as income when earned and are valued based on the market price of SUI at the time earned.

These rewards enhance the productivity of our digital asset treasury while maintaining exposure to the underlying token.

We continue to monitor validator performance, protocol-level developments, and infrastructure improvements to optimize staking efficiency and security.

Portfolio Investment Income

For the three months ended September 30, 2025, our total portfolio investment income was $0, compared to $711,022 for the three months ended September 30, 2024.

The variance is attributable to the Company’s change in accounting presentation following its cessation of investment company accounting under ASC 946.

Accordingly, portfolio investment income for the three months ended September 30, 2025, is classified within other income and totaled $1,621,044.

The overall change reflects a higher average portfolio loan rate of 20.5%, in addition to an increase in origination fees on current loan portfolio extensions.

Professional Fees

For the three months ended September 30, 2025, we had a $516,645 professional fees expense.

For the three months ended September 30, 2024, we had a $190,369 professional fees expense.

The increase was due to the increased professional costs related to our new strategy.

Stock-based compensation

For the three months ended September 30, 2025, stock-based compensation amounted to $2,261,737, an increase of $2,261,737 from the three months ended September 30, 2024.

The increase was attributable to compensatory expenses incurred in connection with the issuance of warrants pursuant to the $450 million private placement (the “Private Placement”) to our advisor, lead investor, management and director, as discussed in “Note 8 – Stock-Based Compensation” of our condensed financial statements.

Asset and Strategic Management Fees

For the three months ended September 30, 2025, we incurred $437,736 in asset and strategic management fees under our strategic and asset management arrangements.

These fees were calculated based on a tiered schedule applied to our average daily Assets Under Management (“AUM”), which includes SUI, cash, and cash equivalents, but excludes assets from our short-term lending business.

Fees are calculated monthly in arrears and pro-rated for partial periods due to asset contributions or withdrawals.

These arrangements support our digital asset treasury strategy, including discretionary investment management, staking operations, protocol-specific guidance, and infrastructure alignment.

We expect advisory fees to scale with AUM and remain aligned with our long-term strategy to deliver institutional-grade exposure to the SUI blockchain.

Insurance Expense

For the three months ended September 30, 2025, we had $303,997 of insurance expense.

For the three months ended September 30, 2024, we had $24,694 of insurance expense.

The increase was due to additional D&O policies required due to our change in strategy.

Unrealized Loss on Digital Assets

For the three months ended September 30, 2025, we recognized an unrealized loss of $62,740,063 on our digital asset holdings, excluding the amortization of remaining deferred income.

This loss was partially offset by $1,976,471 of amortized deferred income related to the discount received on the purchase of SUI tokens as discussed in “Note 3 – Digital Assets” of our condensed financial statements.

As result, the net unrealized loss on digital assets for the period was $60,763,592.

Net realized and unrealized gain on portfolio investment

For the three months ended September 30, 2025, our net realized and unrealized gain on portfolio investment was $0, compared to $298,108 for the three months ended September 30, 2024.

The variance is attributable to the Company’s change in accounting presentation following its cessation of investment company accounting under ASC 946.

Accordingly, net realized and unrealized gain on portfolio investment for the three months ended September 30, 2025, is classified within other income and totaled $524,692.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

For the Nine Months Ended

September 30,

Favorable (Unfavorable)

Percentage Change

Portfolio investment income

SUI staking revenue

Total Revenues

Operating Expenses:

Professional fees

Stock-based compensation

Asset and strategic management fees

Compensation expense

Unrealized loss on digital assets

(60,763,592 )

Net realized and unrealized gain on portfolio investments

Other general and administrative

Total Operating Expenses

(64,147,865 )

Operating Income (Loss)

$ (62,155,394 )

$ (63,840,177 )

SUI Staking Revenue

For the nine months ended September 30, 2025, we generated approximately $1 million in staking rewards from our SUI token holdings.

This income reflects the accrual of 287,599 SUI tokens earned on 49,251,995 SUI tokens staked, representing approximately 47% of our total SUI holdings during the period.

The staking yield remains consistent with our estimated annualized return of 2.2%, and rewards were accrued daily in accordance with our treasury management strategy.

Staking rewards are recognized as income when earned and are valued based on the market price of SUI at the time earned.

These rewards enhance the productivity of our digital asset treasury while maintaining exposure to the underlying token.

We continue to monitor validator performance, protocol-level developments, and infrastructure improvements to optimize staking efficiency and security.

Portfolio Investment Income

For the nine months ended September 30, 2025, our total portfolio investment income was $1,726,061, compared to $2,432,318 for the nine months ended September 30, 2024.

The decrease primarily reflects the Company’s change in accounting presentation following its cessation of investment company accounting under ASC 946 during the three months ended September 30, 2025.

As a result of this change, portfolio investment income recognized during the first two quarters of 2025 continues to be presented within revenue, while portfolio investment income recognized in the current quarter is presented within other income and totaled $1,621,044.

The overall fluctuation of $914,787 reflects a higher average portfolio loan rate of 20.5%, in addition to an increase in origination fees on current loan portfolio extensions.

Professional Fees

For the nine months ended September 30, 2025, we had $758,065 professional fees expense.

For the nine months ended September 30, 2024, we had $502,838 professional fees expense.

The increase was due to the increased professional costs related to our new strategy.

Stock-based compensation

For the nine months ended September 30, 2025, stock-based compensation amounted to $2,261,737, an increase of $2,261,737 from the three months ended September 30, 2024.

The increase was attributable to compensatory expenses incurred in connection with the issuance of warrants in the Private Placement to our advisor, lead investor, management and director, as discussed in “Note 9 – Stock- Based Compensation” of our condensed financial statements.

Asset and Strategic Management Fees

For the nine months ended September 30, 2025, we incurred $437,736 in asset and strategic management fees under our strategic and asset management arrangements.

These fees were calculated based on a tiered schedule applied to our average daily AUM, which includes SUI, cash, and cash equivalents, but excludes assets from our short-term lending business.

Fees are calculated monthly in arrears and pro-rated for partial periods due to asset contributions or withdrawals.

These arrangements support our digital asset treasury strategy, including discretionary investment management, staking operations, protocol-specific guidance, and infrastructure alignment.

We expect advisory fees to scale with AUM and remain aligned with our long-term strategy to deliver institutional-grade exposure to the SUI blockchain.

Insurance Expense

For the nine months ended September 30, 2025, we had a $328,250 insurance expense.

For the nine months ended September 30, 2024, we had a $76,186 insurance expense.

The increase was due to additional D&O policies required due to our change in strategy.

Unrealized Loss on Digital Assets

For the nine months ended September 30, 2025, we recognized an unrealized loss of $62,740,063 on our digital asset holdings, excluding the amortization of remaining deferred income.

As result, the net unrealized loss on digital assets for the period was $60,763,592.

This amount excludes the amortization of the remaining deferred income balance of $22,729,412.

Net realized and unrealized gain on portfolio investment

For the nine months ended September 30, 2025, our net realized and unrealized gain on portfolio investment was $476,986, compared to $431,458 for the nine months ended September 30, 2024.

As a result of this change, net realized and unrealized gain on portfolio investment recognized during the first two quarters of 2025 continues to be presented within operating expenses, while net realized and unrealized gain on portfolio investment recognized in the current quarter is presented within other income and totaled $524,692.

Cash Flows for the Nine Months Ended September 30, 2025 and 2024

The level of cash flows used in or provided by operating activities is affected primarily by our portfolio investment income earned on our short-term loans and the staking rewards earned in our SUI strategy, offset by operating expenses.

For the nine months ended September 30, 2025, net cash used in operating activities was $1,782,339.

This use of cash was primarily due to increased professional and compensation expenses.

For the nine months ended September 30, 2024, net cash provided in operating activities was $1,248,783.

Cash flows provided in operating activities for the nine months ended September 30, 2024 were primarily related to the interest earned on our short-term loans.

The level of cash flows used in or provided by investing activities is affected primarily by our purchase of SUI tokens.

For the nine months ended September 30, 2025, net cash used in investing activities was $250,229,041, The use of cash was primarily attributable to purchases related to the SUI strategy.

For the nine months ended September 30, 2024, net cash provided in investing activities was $1,508,070.

Cash flows provided in investing activities for the nine months ended September 30, 2024 were primarily related to the funding of our short-term loans and purchases of portfolio investments aggregating $5,106,503, offset mostly by redemptions and repayments of short-term loans and portfolio investments totaling $6,614,573.

The level of cash flows used in or provided by financing activities is affected primarily by the issuance of new common stock and warrants and the repurchase of common stock.

For the nine months ended September 30, 2025, net cash provided in financing activities was $288,685,681.

Cash flows provided in financing activities for the nine months ended September 30, 2025 were related to the proceeds received from the Private Placement, which was supplemented by the proceeds received from the exercise of stock options and warrants, offset by issuance costs of our private offering and the repurchase of common stock.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2025, we had cash and cash equivalents of $42,700,411, an increase of $36,674,301 from December 31, 2024.

The primary use of our existing funds and any funds raised in the future is expected to be for our SUI strategy and for other general corporate purposes, including paying for operating expenses or debt service to the extent we borrow or issue senior securities.

Pending portfolio investments in portfolio companies, our portfolio investments may consist of cash, cash equivalents, U.S.

government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to collectively as “temporary portfolio investments.” Management believes our existing liquidity sources, together with the cash generated from operations, will be sufficient to meet our liquidity needs in the short and long term.

CRITICAL ACCOUNTING ESTIMATES

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, or U.S.

GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Our financial statements are prepared in conformity with the generally accepted accounting principles in the United States of America, or GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods.

In preparing the financial statements, management will make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.

In preparing the financial statements, management also will utilize available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality.

In preparing the financial statements, management utilizes available information—including historical performance, industry benchmarks, and current economic conditions—to inform its estimates and judgments, with appropriate consideration of materiality.

Actual results may differ materially from these estimates.

Actual results will almost certainly differ from these estimates.

In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.

As our expected operating results occur, we will describe additional critical accounting policies in the notes to our financial statements.

Our most critical accounting policies relate to the valuation of our portfolio investments, and revenue recognition.

For more information, refer to our Annual Report on Form 10-K for the year ended December 31, 2024.

As our operations have evolved to include blockchain-native treasury management, our critical accounting policies now encompass both legacy finance and digital asset activities.

The most significant estimates currently relate to:

Legacy portfolio valuation:

We continue to hold certain short-term, secured loans and equity-linked portfolio investments from our prior specialty finance operations.

These assets are measured at fair value, consistent with our historical policy, and are evaluated quarterly for impairment.

Valuation inputs include expected cash flows, collateral assessments, and market comparables, with oversight from management and the Audit Committee.

We will continue to evaluate and disclose additional critical accounting policies as our operations expand and as new standards or interpretations emerge.

For further detail, refer to our Annual Report.

OFF-BALANCE-SHEET ARRANGEMENTS

During the six months ended June 30, 2025, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.

FORWARD-LOOKING STATEMENTS

Some of the statements made in this section of our report are forward-looking statements based on our management’s current expectations for our company.

These expectations involve assumptions and are subject to substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.

Forward-looking statements relate to future events or our future financial performance, and can ordinarily be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words.

Important assumptions include our ability to identify and consummate new investments, achieve certain margins and levels of profitability, the availability of any needed additional capital, and the ability to maintain compliance with regulations applicable to us.

Some of the forward-looking statements contained in this report relate to, and are based our current assumptions regarding, the following:

our future operating results;

the success of our investments;

our relationships with third parties;

the dependence of our success on the general economy and its impact on the industries in which we invest;

the ability of our portfolio companies to achieve their objectives;

our expected financings and investments;

our regulatory structure and tax treatment;

the adequacy of our cash resources and working capital;

the timing of cash flows, if any, we receive from our investments.

The foregoing list is not exhaustive.

For a more complete summary of the risks and uncertainties facing our company and its business and relating to our forward-looking statements, please refer to our Annual Report on Form 10-K filed on April 17, 2023 (related to our year ended December 31, 2024) and in particular the section thereof entitled “Risk Factors.” Because of the significant uncertainties inherent in forward-looking statements pertaining to our company, the inclusion of those statements should not be regarded as a representation or warranty by us or any other person that our objectives, plans, expectations or projections that are contained in this filing will be achieved in any specified time frame, if ever.

We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this filing.

The forward-looking statements made in this report relate only to events as of the date on which the statements are made, and are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934.

During the nine months ended September 30, 2025, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

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