SUI Group Holdings Ltd. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. In addition, unless expressly stated otherwise, the comparisons presented in this MD&A refer to the same period in the prior year. Our MD&A is presented in seven sections: · Overview · SUI Treasury Management Activity · Portfolio Investment Activity · Results of Operations · Financial Condition · Critical Accounting Estimates · Off-Balance Sheet Arrangements · Forward Looking Statements OVERVIEW 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. - 19 - Table of Contents 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: Portfolio Investments at Fair Value Percentage of Fair Value Short-term Non-banking Loans $ 8,915,603 43.1 % Commercial Business Loans 10,268,565 49.6 Common Stock 1,513,994 7.3 Total $ 20,698,162 100.0 % 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. - 20 - Table of Contents Price of SUI 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 nine months ended September 30, 2025 and September 30, 2024 were as follows: For the Three Months Ended September 30, Favorable (Unfavorable) Percentage Change 2025 2024 Revenues Portfolio investment income $ — $ 711,022 $ (711,022 ) (100 )% SUI staking revenue 1,013,945 — 1,013,945 n/a Total Revenues 1,013,945 711,022 302,923 43 % Operating Expenses: Professional fees 516,645 190,369 (326,276 ) (171 )% Stock-based compensation 2,261,737 — (2,261,737 ) n/a Asset and strategic management fees 437,736 — (437,736 ) n/a Compensation expense 337,592 178,072 (159,520 ) (90 )% Insurance 303,997 24,694 (279,303 ) (1131 )% Unrealized loss on digital assets 60,763,592 — (60,763,592 ) n/a Net realized and unrealized gain on portfolio investments — (298,108 ) (298,108 ) 100 % Other general and administrative 55,121 26,712 (28,409 ) (106 )% Total Operating Expenses 64,676,420 121,739 (64,554,681 ) (53027 )% Operating Income (Loss) $ (63,662,475 ) $ 589,283 $ (64,251,758 ) (10,903 %) 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. - 21 - Table of Contents 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 2025 2024 Revenues Portfolio investment income $ 1,726,061 $ 2,432,318 $ (706,257 ) (29 )% SUI staking revenue 1,013,945 — 1,013,945 n/a Total Revenues 2,740,006 2,432,318 307,688 13 % Operating Expenses: Professional fees 758,065 502,838 (255,227 ) (51 )% Stock-based compensation 2,261,737 — (2,261,737 ) n/a Asset and strategic management fees 437,736 — (437,736 ) n/a Compensation expense 721,091 534,997 (186,094 ) (35 )% Insurance 328,250 76,186 (252,064 ) (331 )% Unrealized loss on digital assets 60,763,592 — (60,763,592 ) n/a Net realized and unrealized gain on portfolio investments (476,986 ) (431,458 ) 45,528 (11 )% Other general and administrative 101,915 64,972 (36,943 ) (57 )% Total Operating Expenses 64,895,400 747,535 (64,147,865 ) (8581 )% Operating Income (Loss) $ (62,155,394 ) $ 1,684,783 $ (63,840,177 ) (3,789 %) - 22 - Table of Contents 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. - 23 - Table of Contents 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. 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. 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. 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, 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 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 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. - 24 - Table of Contents 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 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.