Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
The duly authorized officers
of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would
perform if the Trust had any officers, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have
concluded that the disclosure controls and procedures of the Trust were effective as of the end of the period covered by this report to
provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it
is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive
officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate to allow timely decisions
regarding required disclosure.
There are inherent limitations to the effectiveness
of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the
controls and procedures.
Exemption from Management’s Report on
Internal Control over Financial Reporting
This Form 10-K does
not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established
by rules of the SEC for newly public companies.
Item 9B. Other Information
No officers or directors of
the Sponsor have adopted , modified , or terminated trading plans under either a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement (as
such terms are defined in Item 408 of Regulation S-K of the Securities Act) during the quarter ended December 31, 2024.
Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections
Not applicable.
64
PART III
Item 10. Directors, Executive Officers,
and Corporate Governance
The Trust does not have any
directors, officers, or employees. The following persons, in their respective capacities as directors or executive officers of the Sponsor,
a Delaware limited liability company, perform certain functions with respect to the Trust that, if the Trust had directors or executive
officers, would typically be performed by them.
Russell Barlow is CEO of the
Sponsor, Duncan Moir is President of the Sponsor, Edel Bashir is Chief Operating Officer of the Sponsor and Andres Valencia is the Executive
Vice President of Investment Management for the Sponsor.
Mr. Russell Barlow ,
51, has been the Chief Executive Officer of the Sponsor since March 2025, contributing more than 25 years of expertise in regulated asset
management. Previously, Russell was the Global Head of Multi Asset and Alternative Investment Solutions and Global Head of Alternative
Investment Solutions at abrdn plc, a global investment company (“abrdn”). Over the course of his career, he has designed,
launched and managed a wide range of investment products. Additionally, Russell has held a position as a Non-Executive Director at Archax,
the UK’s first FCA-regulated digital asset exchange.
Mr. Duncan Moir ,
39, has been the President of the Sponsor since March 2025, with deep expertise in crypto and blockchain strategy. Previously, Duncan
was a Senior Investment Manager at abrdn. He is an independent board member of Hedera Hashgraph LLC and an advisor to Web3 companies.
A University of Strathclyde graduate with a BA (Hons) in Economics, he is also a CFA and CAIA charterholder.
Ms. Edel Bashir ,
45, has been the Chief Operating Officer of the Sponsor since March 2025, with over 20 years of experience in asset management. Previously,
Edel was the COO of Multi Asset and Alternative Investment Solutions, COO of Alternatives and a Senior Investment Manager at abrdn. Her
expertise includes operation strategy, portfolio management, and hedge fund research. A graduate of University College Cork, Ireland with
a BSc in Finance, she has held senior roles across Bermuda, Dublin and Boston.
Mr. Andres Valencia ,
37, is the Executive Vice President of Investment Management at the Sponsor and a member of the Executive Committee. Before Andres joined
the Sponsor in June 2021, he was a VP of Operations at JPMorgan as part of the Beta Strategies Group and helped launch and build the company’s
ETF business. Andres has over ten years of experience managing ETFs. Andres started his career in Asset Servicing at Bank of New York
Mellon covering commodity and currency ETFs.
The Trust does not have a
code of ethics as it does not have any directors, officers, or employees.
The Sponsor has a code of
ethics (the “Code of Ethics”) that applies to its executive officers, including its Principal Executive Officer and Principal
Financial Officer, who perform certain functions with respect to the Trust that, if the Trust had executive officers would typically be
performed by them. The Sponsor’s Policies are in place and require that the Sponsor eliminate, mitigate, or otherwise disclose conflicts
of interest. Additionally, the Sponsor has adopted policies and procedures requiring that certain applicable personnel pre-clear personal
trading activity in which ether is the referenced asset. The Sponsor has also implemented an Information Barrier Policy restricting certain
applicable personnel from obtaining sensitive information. The Sponsor believes that these controls are reasonably designed to mitigate
the risk of conflicts of interest and other impermissible activity. The Code of Ethics is available on request, free of charge, by writing
the Sponsor at etf@21shares.com or calling the Sponsor at (646) 370-6016.
Insider Trading Policy
The Trust does not have an
insider trading policy as it does not have any directors, officers, or employees.
The Sponsor has adopted an
insider trading policy applicable to the Sponsor’s directors, officers and employees, which is included as an exhibit to this annual
report on Form 10-K.
Item 11. Executive Compensation
The Trust does not have directors
or executive officers. The only ordinary expense paid by the Trust is the Sponsor’s fee.
Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners
There are no persons known by the Trust to own directly or indirectly
beneficially more than 5% of the outstanding Shares of the Trust as of March 26, 2025.
Security Ownership of Management
The Trust does not have directors
or executive officers.
65
Change in Control
Neither the Sponsor nor the
Trustee knows of any arrangements which may subsequently result in a change in control of the Trust.
Securities Authorized for Issuance under Equity
Compensation Plans
The Trust has no securities
authorized for issuance under equity compensation plans.
Item 13. Certain Relationships and Related
Transactions
See Item 11.
Item 14. Principal Accounting Fees and
Services
Fees for services performed
by Cohen & Company, Ltd., as paid by the Sponsor from the Sponsor fee, for the period ended December 31, 2024 were:
2024
Audit fees
$ 96,500
Audit-related fees
$ -
Tax fees
$ -
All other fees
$ -
Total
$ 96,500
In the table above, in accordance
with the SEC’s definitions and rules, Audit Fees are fees paid to Cohen & Company, Ltd. for professional services for the audit
of the Trust’s financial statements included in the Form 10-K and review of financial statements included in the Forms 10-Q, and
for services that are normally provided by the accountants in connection with regulatory filings or engagements. Audit Related Fees are
fees for assurance and related services that are reasonably related to the performance of the audit or review of the Trust’s financial
statements.
Approval of Independent Registered Public Accounting
Firm Services and Fees
The Sponsor approved all of
the services provided by Cohen & Company, Ltd. described above. The Sponsor pre-approved all audit services of the independent registered
public accounting firm, including all engagement fees and terms.
66
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1) Financial Statements
See Index to Financial Statements
on page F-1.
(a)(2) Financial Statement Schedules
No financial statement schedules
are filed herewith because (i) such schedules are not required or (ii) the information required has been presented in the aforementioned
financial statements.
(a)(3) Exhibits
The following documents are
filed herewith or incorporated herein and made a part of this Annual Report:
No.
Exhibit
Description
3.1
Trust Agreement (2)
3.2
Amended and Restated Trust Agreement (2)
3.3
Certificate of Trust (2)
3.4
Amended Certificate of Trust (2)
4.1
Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (1)
10.1
Form of Sponsor Agreement (5)
10.2
Form of Authorized Participant Agreement (2)
10.3
Form of Prime Broker Agreement (2)
10.4
Form of Custodial Services Agreement (2) (included as Exhibit A to Form of Prime Broker Agreement)
10.5
Form of Fund Administration and Accounting Agreement (2)
10.6
Form of Transfer Agency and Services Agreement (2)
10.7
Form of Index Licensing Agreement (2)
10.8
Form of Marketing Agent Agreement (2)
10.9
Form of Cash Custody Agreement (2)
10.10
Form of Subscription Agreement (2)
10.11
Initial Seed Capital Subscription Agreement (2)
10.12
BitGo Custodial Services Agreement (3)
10.13
Anchorage Custodial Services Agreement (3)
19.1
Insider Trading Policies and Procedures (1)
23.1
Consent
of Independent Registered Public Accounting Firm (4)
31.1
Certification by Principal Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
31.2
Certification by Principal Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
32.1
Certification by Principal Executive Officer Pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
32.2
Certification by Principal Financial Officer Pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
97.1
Executive Officer Incentive-Based Compensation Clawback Policy (1)
101.INS
Inline XBRL Instance Document.*
101.SCH
Inline XBRL Taxonomy Extension Schema Document.*
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
Document.*
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
Document.*
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
Document.*
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
Document.*
104
Cover Page Interactive Data File (Embedded as
Inline XBRL document and contained in Exhibit 101).*
(1)
Filed herewith.
(2)
Incorporated by reference to Pre-Effective Amendment No.3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-274364) filed by the Registrant on May 31, 2024.
(3)
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed by the Registrant on September 12, 2024.
(4)
Incorporated by reference to Pre-Effective Amendment No. 5 to the Registrant's Registration Statement on Form S-1 (File No. 333-274364)
filed by the Registrant on July 8, 2024.
(5)
Incorporated by reference to Pre-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form S-1 (File No. 333-274364) filed by the Registrant on July 17, 2024.
Item 16. Form 10-K Summary
None.
67
GLOSSARY OF DEFINED TERMS
“Advisers Act”: The Investment Advisers Act of 1940, as
amended.
“Article 8”: Article 8 of the New York Uniform Commercial
Code.
“1940 Act”: Investment Company Act of 1940, as amended.
“Additional
Trust Expenses”: Certain extraordinary, non-recurring expenses that are not Sponsor-paid Expenses (as defined below), which the
Sponsor does not assume, including, but not limited to, 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 or the interests of Shareholders,
any indemnification of the ether Custodians, Administrator or other
agents, service providers or counterparties of the Trust, the fees and expenses related to the listing, and extraordinary legal fees and
expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters.
“Administrator”: The Bank of New York Mellon.
“Authorized Participant”: One that purchases or redeems
Baskets from or to the Trust.
“Basket” or “Creation Basket”: A block of 10,000
Shares used by the Trust to issue or redeem Shares.
“Blockchain” or “Ethereum blockchain”: The
public transaction ledger of the Ethereum network on which validators or validator pools stake ether allowing them to be selected to add
records of recent transactions (called “blocks”) to the chain of transactions in exchange for an award of ether from the Ethereum
network and the payment of transaction fees, if any, from users whose transactions are recorded in the block being added.
“Business Day”: Any day other than a day when the Exchange
is closed for regular trading.
“CBDCs”: Central bank digital currencies.
“Cash Custodian”: The Bank of New York Mellon
“CEA”: Commodity Exchange Act of 1936, as amended.
“CFTC”: Commodity Futures Trading Commission, an independent
agency with the mandate to regulate commodity futures and options in the United States.
“Code”: Internal Revenue Code of 1986, as amended.
“Coinbase Global”: Coinbase Global, Inc., the parent of
Coinbase, Inc.
“Cold Vault Balance”: The Trust’s “cold storage”
or similarly secure technology.
“Connected Trading Venue”: Trading venues (including third-party
venues and the Prime Broker’s own execution venue) where the Prime Broker executes orders to buy and sell ether on behalf of clients.
“Constituent Exchange”: A trading venue that is eligible
as in any of the CME CF Cryptocurrency Pricing Products if it offers a market that facilitates the spot trading of the relevant base digital
asset against the corresponding quote asset, including markets where the quote asset is made fungible with the accepted digital assets
and makes trade data and order data available through an application programming interface with sufficient reliability, detail and timeliness.
“DeFi”: Decentralized finance.
“DFPI”: California Department of Financial Protection and
Innovation.
“DTC”: The Depository Trust Company. DTC will act as the
securities depository for the Shares.
“DTC Participant”: An entity that has an account with DTC.
“DSTA”: Delaware Statutory Trust Act.
68
“Ether”: A digital asset based on the decentralized, open-source
protocol of the peer-to-peer Ethereum computer network.
“Ether Counterparty”: Designated third party, who is not
an Authorized Participant but who may be an affiliate of an Authorized Participant, or the Prime Broker or Lender, as applicable, with
whom the Sponsor has entered into an agreement on behalf of the Trust, that will, acting as a counterparty, deliver, receive or convert
to U.S. dollars the ether related to the Authorized Participant’s creation or redemption order.
“Ether Custodians”: Coinbase Custody Trust Company, LLC,
Anchorage Digital Bank N.A, BitGo New York Trust Company, LLC.
“Ethereum”: The open-source, decentralized, peer-to-peer
Ethereum network, and the system as a whole that is involved in maintaining the ledger of ether ownership and facilitating the transfer
of ether among parties
“Ethereum blockchain”: The blockchain ledger for Ethereum.
“Exchange”: Cboe BZX Exchange, Inc.
“Exchange Act”: The Securities Exchange Act of 1934, as
amended.
“FinCEN”: The Financial Crimes Enforcement Network.
“FINRA”: Financial Industry Regulatory Authority, formerly
the National Association of Securities Dealers.
“GAAP”: Accounting principles generally accepted in the
United States of America.
“Indirect Participants”: Banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly.
“Incidental Rights”: Rights to acquire, or otherwise establish
dominion and control over, any virtual currency or other asset or right, which rights are incident to the Trust’s ownership of ether
and arise without any action of the Trust, or of the Sponsor on behalf of the Trust.
“Index”: CME CF Ether-Dollar Reference Rate — New
York Variant
“Index Provider”: CF Benchmarks Ltd.
“IRS”: U.S. Internal Revenue Service.
“IR Virtual Currency”: Virtual currency tokens, or other
assets or rights, acquired by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental
Right.
“KYT”: Know-Your-Transaction.
“Lender”: Coinbase Credit, Inc.
“Marketing Agent”: Foreside Global Services, LLC.
“Mutually Capped Liabilities”: In respect of the Coinbase
Custodian’s obligations to indemnify the Trust and its affiliates against third-party claims and losses to the extent arising out
of or relating to, among others, the Coinbase Custodian’s gross negligence, violation of its confidentiality, data protection and/or
information security obligations, or violation of any law, rule or regulation with respect to the provision of its services, the Coinbase
Custodian’s liability shall not exceed the greater of (A) $5 million and (B) the aggregate fees paid by the Trust to the Coinbase
Custodian in the 12 months prior to the event giving rise to the Coinbase Custodian’s liability.
“NAV”: Net asset value of the Trust.
“NAV per Share”: Net asset value of the Trust per Share.
“NFA”: National Futures Association.
69
“OFAC”: Office of Foreign Assets Control of the U.S. Treasury
Department.
“PB Mutually Capped Liabilities”: In respect of the Prime
Broker’s obligations to indemnify the Trust and its affiliates against third-party claims and losses to the extent arising out of
or relating to, among others, the Prime Broker’s gross negligence, violation of its confidentiality, data protection and/or information
security obligations, violation of any law, rule or regulation with respect to the provision of its services, or the full amount of the
Trust’s assets lost due to the insolvency of or security event at a Connected Trading Venue, the Prime Broker’s liability
shall not exceed the greater of (A) $5 million and (B) the aggregate fees paid by the Trust to the Prime Broker in the 12 months prior
to the event giving rise to the Prime Broker’s liability.
“Prime Broker”: Coinbase, Inc.
“Principal Market NAV”: Net asset value of the Trust determined
on a GAAP basis.
“Principal Market NAV per Share”: Net asset value of the
Trust per Share determined on a GAAP basis.
“Redemption Order Date”: The date a redemption order is
received in satisfactory form by the Marketing Agent.
“Register”: The record of all Shareholders and holders
of the Shares in certificated form kept by the Administrator.
“Relevant Coinbase Entities”: Coinbase Global and Coinbase
Inc.
“SEC”: The U.S. Securities and Exchange Commission.
“Securities Act”: The Securities Act of 1933.
“Seed Capital Investor”: 21Shares US LLC, a Delaware limited
liability company.
“Seed Creation Baskets”: Shares of the Trust purchased
by the Seed Capital Investor.
“Shares”: Common shares representing fractional undivided
beneficial interests in the Trust.
“Shareholders”: Holders of Shares.
“Staking Activities”: employing any portion of the Trust’s
assets in actions where any portion of the Trust’s ether becomes subject to the Ethereum proof-of-stake validation or is used to
earn additional ether or generate income or other earnings.
“Sponsor”: 21Shares US LLC, a Delaware limited liability
company.
“Sponsor-paid Expenses”: The fees and other expenses incurred
by the Trust in the ordinary course of its affairs, which the Sponsor assumes and pays, excluding taxes, but including (i) the Marketing
Fee, (ii) fees to the Administrator, if any, (iii) fees to the Ether Custodians, (iv) fees to the Transfer Agent, (v) fees to the Trustee,
(vi) the fees and expenses related to any future listing, trading or quotation of the Shares on any listing exchange or quotation system
(including legal, marketing and audit fees and expenses), (vii) ordinary course legal fees and expenses but not litigation-related expenses,
(viii) audit fees, (ix) regulatory fees, including if applicable any fees relating to the registration of the Shares under the Securities
Act or the Exchange Act, (x) printing and mailing costs; (xi) costs of maintaining the Sponsor’s website and (xii) applicable license
fees, provided that any expense that qualifies as an Additional Trust Expense will be deemed to be an Additional Trust Expense and not
a Sponsor-paid Expense.
“Sponsor Indemnified Party”: The Sponsor and each of its
shareholders, members, directors, officers, employees, affiliates and subsidiaries.
“Trade Credits”: Ether or cash that are borrowed by the
Trust as trade credits.
“Transfer Agent”: The Bank of New York Mellon.
“Trust”: 21Shares Core Ethereum ETF.
“Trust Agreement”: Amended and Restated Trust Agreement
of 21Shares Core Ethereum ETF.
“Trustee”: Delaware Trust Company, a Delaware trust company.
“U.S Treasury Department”: U.S. Department of the Treasury.
“You”: The owner or holder of Shares.
70
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
21Shares Core Ethereum ETF (Registrant)
By:
21Shares US LLC, its Sponsor
Signature
Title (Capacity)
Date
/s/ Russell Barlow
Chief Executive Officer
March 26, 2025
Russell Barlow
(Principal Executive Officer)
/s/ Duncan Moir
President
(Principal Financial Officer and
March 26, 2025
Duncan Moir
Principal Accounting Officer)
Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in
the capacities* and on the dates indicated.
Signature
Title (Capacity)
Date
/s/ Russell Barlow
Chief Executive Officer
March 26, 2025
Russell Barlow
(Principal Executive Officer)
/s/ Duncan Moir
President
(Principal Financial Officer and
March 26, 2025
Duncan Moir
Principal Accounting Officer)
71
21shares
CORE EtherEUM ETF
index
to financial statements
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 925 ) F-2
Statement of Assets and Liabilities F-3
Schedule of Investments F-4
Statement of Operations F-5
Statement of Changes in Net Assets F-6
Notes to Financial Statements F-7
F- 1
Report
of Independent Registered Public Accounting Firm
To the Sponsor and Shareholders of
21Shares Core Ethereum ETF
Opinion on the Financial Statements
We have audited the accompanying statement of
assets and liabilities, including the schedule of investment, of 21Shares Core Ethereum ETF (the “Trust”) as of December 31,
2024, and the related statements of operations and changes in net assets for the period from May 1, 2024 (date of initial seeding) through
December 31, 2024, including the related notes (collectively referred to as the “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2024, and the results
of its operations and changes in its net assets for the period from May 1, 2024 (date of initial seeding) through December 31, 2024, in
conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audit.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and
are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement whether due to error or fraud. The Trust is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of
internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit includes performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our procedures included confirmation of digital assets owned as of December 31, 2024, by correspondence with the custodians. Our audit
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Trust’s auditor since
2024.
/s/ COHEN & COMPANY, LTD.
COHEN & COMPANY, LTD.
Towson, Maryland
March 26, 2025
F- 2
21SHARES CORE ETHEREUM ETF
STATEMENT OF ASSETS AND LIABILITIES
December 31,
2024*
Assets
Investment in ether, at fair value (cost $ 15,551,512 )
$ 16,869,879
Total assets
16,869,879
Liabilities
Total liabilities
$ –
Commitments and contingent liabilities (Note 9)
Net assets
$ 16,869,879
Net assets consist of:
Paid-in-capital
$ 12,483,772
Accumulated earnings (loss)
4,386,107
$ 16,869,879
Shares issued and outstanding, no -par value, unlimited amount authorized
1,010,000
Net asset value per share
$ 16.70
* No comparative statement has been provided as this is the first
fiscal year of the Trust’s operations.
The accompanying notes are an integral part of the financial statements.
F- 3
21SHARES CORE ETHEREUM ETF
SCHEDULE OF INVESTMENT
December 31, 2024 *
Quantity of
ether
Cost
Fair Value
% of Net
Assets
Investment in ether
5,050.0000
$ 15,551,512
$ 16,869,879
100.00 %
Total investments
5,050.0000
$ 15,551,512
$ 16,869,879
100.00 %
Liabilities in excess of other assets
-
-
Net assets
$ 16,869,879
100.00 %
* No comparative schedule has been provided as this is the first fiscal year of the Trust’s operations.
The accompanying notes are an integral part of the financial statements.
F- 4
21SHARES CORE ETHEREUM ETF
STATEMENT OF OPERATIONS
For the Period
from May 1,
2024 (date of
initial seeding)
through
December 31,
2024 *
Expenses
Sponsor fee
$ 14,657
Total expenses
14,657
Less waiver and reimbursement
( 14,657 )
Net expenses
–
Net investment loss
–
Realized and change in unrealized
gain (loss)
Net realized gain on investment in ether sold for redemptions
3,067,740
Net change in unrealized appreciation on investment in ether
1,318,367
Net realized and change in unrealized gain (loss)
4,386,107
Net increase in net assets resulting from operations
$ 4,386,107
* No prior year comparative statement
has been provided as this is the first fiscal year of the Trust’s operations.
The accompanying notes are an integral part of the financial
statements.
F- 5
21SHARES CORE ETHEREUM ETF
STATEMENT OF CHANGES IN NET ASSETS
For the Period
from May 1,
2024 (date of
initial seeding)
through
December 31,
2024 *
Net assets, beginning of period
$ –
Contributions for Shares issued
27,592,779
Distributions for Shares redeemed
( 15,109,007 )
Net investment loss
–
Net realized gain on investment in ether sold for redemptions
3,067,740
Net change in unrealized appreciation on investment in ether
1,318,367
Net assets, end of period
$ 16,869,879
Shares issued and redeemed
Shares issued
1,810,002
Shares redeemed
( 800,002 )
Net increase in Shares issued and outstanding
1,010,000
* No prior year comparative statement
has been provided as this is the first fiscal year of the Trust’s operations.
The accompanying notes are an integral part of the financial
statements.
F- 6
21Shares
Core Ethereum ETF
Notes
to Financial Statements
1.
Organization
The 21Shares Core Ethereum
ETF (the “Trust”) is a Delaware statutory trust, formed on September 5, 2023, pursuant to the Delaware Statutory Trust Act
(“DSTA”). The Trust operates pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”). CSC
Delaware Trust Company, a Delaware trust company, is the trustee of the Trust (the “Trustee”). The Trust is managed and controlled
by 21Shares US LLC (the “Sponsor”). The Sponsor is a limited liability company formed in the state of Delaware on June 16,
2021, and is a wholly owned subsidiary of Jura Pentium Inc., whose ultimate parent company is 21co Holdings Limited (formerly known as
Amun Holdings Limited). Coinbase Custody Trust Company, LLC (“Coinbase”), BitGo New York Trust Company, LLC (“BitGo”),
and Anchorage Digital Bank N.A (“Anchorage”, and, together with Coinbase and BitGo, as the context may require, the “Custodian”,
“Custodians” and each a “Custodian”), are the Custodians for the Trust and hold all of the Trust’s ether
on the Trust’s behalf. The transfer agent (the “Transfer Agent”), the administrator for the Trust (the “Administrator”),
and the cash custodian (the “Cash Custodian”), is Bank of New York Mellon.
The Trust is an exchange-traded
fund that issues units of beneficial interest (the “Shares”) representing fractional undivided beneficial interests in its
net assets that trade on the Cboe BZX Exchange, Inc. (the “Exchange”). The Shares were listed for trading on the Exchange
on July 23, 2024, under the ticker symbol “CETH”.
The Trust’s investment
objective is to seek to track the performance of ether, as measured by the performance of the CME CF Ether-Dollar Reference Rate —
New York Variant (the “Index”), adjusted for the Trust’s expenses and other liabilities. CF Benchmarks Ltd. is the administrator
for the Index (the “Index Provider”). The Index is designed to reflect the performance of ether in U.S. dollars. In seeking
to achieve its investment objective, the Trust holds ether at its Custodians and values its Shares daily based on the Index.
The Trust is an “emerging
growth company” as that term is used in the Securities Act of 1933, as amended (the “Securities Act”), and, as such,
the Trust may elect to comply with certain reduced public company reporting requirements.
The Sponsor served as the
“Seed Capital Investor” to the Trust. On May 1, 2024, the Sponsor, in its capacity as Seed Capital Investor, subject to certain
conditions, purchased 2 Shares at a per-Share price of $ 50.00 (the “Initial Seed Shares”). Total proceeds to the Trust from
the sale of these Initial Seed Shares were $ 100 . Delivery of the Seed Shares were made on May 1, 2024.
On June 18, 2024 (the “Seed
Capital Purchase Date”), the Sponsor, in its capacity as Seed Capital Investor, purchased the Seed Creation Baskets comprising 20,000
Shares (the “Seed Creation Baskets”). In its capacity as the Seed Capital Investor, the Sponsor has acted as a statutory underwriter
in connection with this purchase. The total proceeds to the Trust from the sale of the Seed Creation Baskets were $ 340,739 . On June 18,
2024, the Trust purchased ether with the proceeds of the Seed Creation Baskets by transacting with an Ether Counterparty to acquire ether
on behalf of the Trust in exchange for cash provided by the Sponsor in its capacity as Seed Capital Investor. All ether acquired in connection
with the Seed Creation Baskets is held by the one or more of the Custodians.
2.
Significant Accounting Policies
Basis of Accounting
The financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP” or “GAAP”).
The Trust qualifies as an
investment company solely for accounting purposes and not for any other purpose and follows the accounting and reporting guidance under
the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial
Services - Investment Companies, but is not registered, and is not required to be registered, as an investment company under the Investment
Company Act of 1940, as amended. The Trust uses fair value as its method of accounting for ether in accordance with its classification
as an investment company for accounting purposes.
The preparation of the financial
statements in conformity with US GAAP requires the Trust 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 period.
Actual results may differ materially from such estimates as additional information becomes available or actual amounts may become determinable.
Should actual results differ from those previously recognized, the recorded estimates will be revised accordingly with the impact reflected
in the operating results of the Trust in the reporting period in which they become known.
F- 7
Cash
Cash includes non-interest
bearing, non-restricted cash maintained with one financial institution that does not exceed U.S. federally insured limits.
Investment Valuation
US GAAP defines fair value
as the price the Trust would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants
at the measurement date. The Trust’s policy is to value investments held at fair value.
The Trust identifies and determines
the ether principal market (or in the absence of a principal market, the most advantageous market) for GAAP purposes consistent with the
application of the fair value measurement framework in FASB ASC 820 – Fair Value Measurement. A principal market is the market with
the greatest volume and activity level for the asset or liability. The determination of the principal market will be based on the market
with the greatest volume and level of activity that can be accessed. The Trust obtains relevant volume and level of activity information
and based on initial analysis will select an exchange market as the Trust’s principal market. The net asset value (“NAV”)
and NAV per Share will be calculated using the fair value of ether based on the price provided by this exchange market, as of 4:00 p.m.
ET on the measurement date for GAAP purposes. The Trust will update its principal market analysis periodically and as needed to the extent
that events have occurred, or activities have changed in a manner that could change the Trust’s determination of the principal market.
Various inputs are used in
determining the fair value of assets and liabilities. Inputs may be based on independent market data (“observable inputs”)
or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting
of three broad levels for financial reporting purposes. The level of a value determined for an asset or liability within the fair value
hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels
of the fair value hierarchy are as follows:
Level 1: Unadjusted quoted prices in
active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices
included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar
assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered
to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally
from or corroborated by observable market data by correlation or other means; and
Level 3: Unobservable inputs, including
the Trust’s assumptions used in determining the fair value of investments, where there is little or no market activity for the asset
or liability at the measurement date.
Amount at
Fair Value Measurement Using
Fair Value
Level 1
Level 2
Level 3
December 31, 2024
Assets
Investment in ether
$ 16,869,879
$ 16,869,879
$ –
$ –
* No comparative schedule has been
provided as this is the first fiscal year of the Trust’s operations.
The cost basis of the investment
in ether recorded by the Trust for financial reporting purposes is the fair value of ether at the time of purchase. The cost basis recorded
by the Trust may differ from proceeds collected by the authorized participant from the sale of the corresponding Shares to investors.
Investment Transactions
The Trust considers investment
transactions to be the receipt of ether for Share creations and the delivery of ether for Share redemptions or for payment of expenses
in ether. The Trust records its investments transactions on a trade date basis and changes in fair value are reflected as net change in
unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method.
Realized gains and losses are recognized in connection with transactions including redemption of shares and settling obligations for the
Sponsor’s Fee in ether.
Calculation of Net Asset Value “NAV”
and NAV per Share
On each day other than when
the Exchange is closed for regular trading (a “Business Day”), as soon as practicable after 4:00 p.m. (Eastern Time), the
net asset value of the Trust is obtained by subtracting all accrued fees, expenses and other liabilities of the Trust from the fair value
of the ether and other assets held by the Trust. The Trustee computes the NAV per Share by dividing the NAV of the Trust by the number
of Shares outstanding on the date the computation is made.
F- 8
Federal Income Taxes
The Sponsor and the Trustee
will treat the Trust as a “grantor trust” for U.S. federal income tax purposes. Although not free from doubt due to the lack
of directly governing authority, if the Trust operates as expected, the Trust should be classified as a “grantor trust” for
U.S. federal income tax purposes and the Trust itself should not be subject to U.S. federal income tax. Each beneficial owner of Shares
will be treated as directly owning its pro rata Share of the Trust’s assets and a pro rata portion of the Trust’s income,
gain, losses and deductions passed through to each beneficial owner of Shares. If the Trust sells ether (for example, to pay fees or expenses),
such a sale is a taxable event to Shareholders. Upon a Shareholder’s sale of its Shares, the Shareholder will be treated as having
sold the pro rata share of the ether held in the Trust at the time of the sale and may recognize gain or loss on such sale. The Sponsor
has reviewed the tax positions as of December 31, 2024, and has determined that no provision for income tax is required in the Trust’s
financial statements.
Recently Issued Accounting Pronouncements
The Trust adopted FASB Accounting Standards Update
2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The Trust operates
in one segment. The segment derives its revenues from Trust investments made in accordance with the defined investment strategy of the
Trust, as prescribed in the Trust’s prospectus. The Chief Operating Decision Maker (“CODM”) is the Sponsor. The CODM monitors
the operating results of the Trust. The financial information the CODM leverages to assess the segment’s performance and to make decisions
for the Trust’s single segment, is consistent with that presented within the Trust’s financial statements.
In December 2023, the FASB issued Accounting Standards Update (“ASU”)
2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU
2023-08”). ASU 2023-08 is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto
assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information
provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale
restrictions, and changes during the reporting period. ASU 2023-08 is effective for annual and interim reporting periods beginning after
December 15, 2024. Early adoption is permitted for both interim and annual financial statements that have not yet been issued. The Trust
adopted this new guidance with no material impact on its financial statements and disclosures as the Trust uses fair value as its method
of accounting for ether in accordance with its classification as an investment company for accounting purposes.
3.
Fair Value of Ether
The following represents the
changes in quantity of ether and the respective fair value on December 31, 2024 *:
Quantity
of ether
Fair Value
Beginning balance as of May 1, 2024
–
$ –
Ether purchased
9,050.0000
27,592,779
Ether sold
( 4,000.0000 )
( 15,109,007 )
Net realized gain on investment in ether sold to pay Sponsor fee
–
–
Net realized gain on investment in ether sold for redemptions
–
3,067,740
Change in unrealized appreciation on investment in ether
–
1,318,367
Ending balance as of December 31, 2024 *
5,050.0000
$ 16,869,879
* No prior year comparative period
presented as this is the first fiscal year of the Trust’s operations.
4.
Trust Expenses
The Trust pays the unitary
Sponsor Fee of 0.21 % of the Trust’s ether holdings. The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services
performed under the Trust Agreement. The Sponsor agreed to waive the entire Sponsor Fee for (i) a six-month period which commenced on
July 23, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or (ii) the first $ 500 million of Trust assets,
whichever came first. The six-month waiver period ended on January 23, 2025, at which time the Sponsor began collecting the Sponsor Fee.
Except for during periods in which the Sponsor Fee is being waived, the Sponsor Fee accrues daily and is payable in ether weekly in arrears.
The Administrator calculates the Sponsor Fee on a daily basis by applying a 0.21 % annualized rate to the Trust’s total ether holdings,
and the amount of ether payable in respect of each daily accrual is determined by reference to the Index.
F- 9
The Sponsor has agreed to
pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor Fee. Operating expenses
assumed by the Sponsor include; (i) the Marketing Fee, (ii) fees to the Administrator, if any, (iii) fees to the ether Custodians, (iv)
fees to the Transfer Agent, (v) fees to the Trustee, (vi) the fees and expenses related to any future listing, trading or quotation of
the Shares on any listing exchange or quotation system (including legal, marketing and audit fees and expenses), (vii) ordinary course
legal fees and expenses but not litigation-related expenses, (viii) audit fees, (ix) regulatory fees, including, if applicable, any fees
relating to the registration of the Shares under the Securities Act or Exchange Act, (x) printing and mailing costs; (xi) costs of maintaining
the Sponsor’s website and (xii) applicable license fees (each, a “Sponsor-paid Expense,” and together, the “Sponsor-paid
Expenses”), provided that any expense that qualifies as an Additional Trust Expense (as defined below) will be deemed to be an Additional
Trust Expense and not a Sponsor-paid Expense.
The Sponsor will not, however,
assume certain extraordinary, non-recurring expenses that are not Sponsor-paid Expenses, including, but not limited to, 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 or the interests of Shareholders, any indemnification of the ether Custodians, Administrator or other agents, service
providers or counter-parties of the Trust, the fees and expenses related to the listing, and extraordinary legal fees and expenses, including
any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively, “Additional
Trust Expenses”). Of the Sponsor-paid Expenses, ordinary course legal fees and expenses shall be subject to a cap of $ 100,000 per
annum. In the Sponsor’s sole discretion, all or any portion of a Sponsor-paid Expense may be re-designated as an Additional Trust
Expense.
To the extent that the Sponsor
does not voluntarily assume expenses, they will be the responsibility of the Trust. The Sponsor also pays the costs of the Trust’s
organization and offering. The Trust is not obligated to repay any such costs related to the Trust’s organization and offering paid
by the Sponsor.
5.
Creation and Redemption of Shares
The Trust creates and redeems
Shares on a continuous basis but only in Creation Baskets consisting of 10,000 Shares or multiples thereof on the NAV of the date of the
creation or redemption. Only Authorized Participants, which are registered broker-dealers who have entered into written agreements with
the Sponsor and the Administrator, can place orders. The Trust engages in ether transactions for converting cash into ether (in association
with purchase orders) and ether into cash (in association with redemption orders). The Trust conducts its ether purchase and sale transactions
by, in its sole discretion, choosing to trade directly with third parties (each, an “ether Trading Counterparty”), who are
not registered broker-dealers pursuant to written agreements between such ether Trading Counterparties and the Trust, or choosing to trade
through the Prime Broker acting in an agency capacity with third parties such as through its Coinbase Prime service pursuant to the Prime
Broker Agreement. An ether Trading Counterparty may be an affiliate of an Authorized Participant.
The Authorized Participants
deliver only cash to create Shares and receive only cash when redeeming Shares. Further, Authorized Participants will not directly or
indirectly purchase, hold, deliver, or receive ether as part of the creation or redemption process or otherwise direct the Trust or a
third-party with respect to purchasing, holding, delivering, or receiving ether as part of the creation or redemption process.
The Trust creates Shares by
receiving ether from a third-party that is not the Authorized Participant and the Trust—not the Authorized Participant—is
responsible for selecting the third-party to deliver the ether. Further, the third-party will not be acting as an agent of the Authorized
Participant with respect to the delivery of the ether to the Trust or acting at the direction of the Authorized Participant with respect
to the delivery of the ether to the Trust. The Trust redeems shares by delivering ether to a third-party that is not the Authorized Participant
and the Trust—not the Authorized Participant—is responsible for selecting the third-party to receive the ether. Further, the
third-party will not be acting as an agent of the Authorized Participant with respect to the receipt of the ether from the Trust or acting
at the direction of the Authorized Participant with respect to the receipt of the ether from the Trust. The third-party is unaffiliated
with the Trust and the Sponsor.
For the Period
from May 1,
2024 (date
of initial seeding)
through
December 31,
2024 *
Activity in Capital Transactions Issued and Redeemed:
Shares issued (1)
1,810,002
Shares redeemed (1)
( 800,002 )
Net Change in Capital Transactions Issued and Redeemed
1,010,000
* No prior year comparative period
presented as this is the first fiscal year of the Trust’s operations.
(1) Included 2 initial seed shares issued and redeemed in cash.
F- 10
For the Period
from May 1,
2024 (date
of initial
seeding)
through
December 31,
2024 *
Activity in Capital Transactions Issued and Redeemed:
Shares issued
$ 27,592,779
Shares redeemed
( 15,109,007 )
Net Change in Capital Transactions Issued and Redeemed
$ 12,483,772
* No prior year comparative period
presented as this is the first fiscal year of the Trust’s operations.
Ether purchased payable represents
the quantity of ether purchased for the creation of Shares where the ether has not yet settled. Generally, ether is transferred within
two Business Days of the trade date.
December 31,
2024*
Ether purchased payable
$ -
* No prior year comparative period
presented as this is the first fiscal year of the Trust’s operations.
Ether
sold receivable represents the quantity of ether sold for the redemption of Shares where the ether has not yet been settled. Generally,
ether is transferred within two Business Days of the trade date.
December 31,
2024*
Ether sold receivable
$ -
* No prior year comparative period
presented as this is the first fiscal year of the Trust’s operations.
6.
Related Parties
The Sponsor is a related party
to the Trust. The Trust’s operations are supported by its Sponsor, who is in turn supported by its parent company and affiliated
companies and external service providers.
As of December 31, 2024, the
Sponsor owned 20,000 Shares of the Trust.
The Sponsor arranged for the
creation of the Trust and is responsible for the ongoing registration of the Shares for their public offering in the United States and
the listing of Shares on the Exchange.
F- 11
7. Quarterly Statement of Operations (unaudited)
For the Period from May 1, 2024 (date of initial seeding) through
December 31, 2024*
Three Months Ended (unaudited)
For the Period
from May 1,
2024 (date of
initial seeding)
through
June 30,
2024
Sept-30,
2024
Dec-31,
2024
For the Period
from May 1,
2024 (date of
initial seeding)
through
December 31,
2024
Expenses
Sponsor Fee
$
-
$
3,777
$
10,880
$
14,657
Waiver and Reimbursement
-
( 3,777
)
( 10,880
)
( 14,657
)
Net expenses
-
-
-
-
Net investment loss
-
-
-
-
Realized and change in unrealized gain (loss)
Net realized gain on investment in ether sold for redemptions
-
-
3,067,740
3,067,740
Net change in unrealized appreciation on investment in ether
1,561
( 3,223,608
)
4,540,414
1,318,367
-
Net realized and change in unrealized gain (loss)
1,561
( 3,223,608
)
7,608,154
4,386,107
Net increase (decrease) in net assets resulting from operations
$
1,561
$
( 3,223,608
)
$
7,608,154
$
4,386,107
* No prior year comparative table has been provided as this is
the first fiscal year of the Trust’s operations.
8. Financial Highlights
Per Share Performance (for a Share
outstanding throughout the period presented)
For the period
May 1, 2024
(date of initial
seeding)
through
December 31,
2024*
Net asset value per Share, beginning of period
$ 17.04 1
Net investment loss 2
-
Net realized and change in unrealized gain (loss) on investment in ether 3
( 0.34 )
Net increase (decrease) in net assets resulting from operations
( 0.34 )
Net asset value per Share, end of period
$ 16.70
Total return, at net asset value 4,6
( 2.00 )%
Ratio to average net assets 5,7
Net investment income (loss)
-
%
Gross expenses
0.21 %
Net expenses
-
%
* No prior year comparative financial
statements have been provided as this is the first fiscal year of the Trust’s operations.
1 The amount represents the NAV per Share on June 18, 2024, the
Seed Capital Purchase Date.
2 Calculated using average Shares outstanding.
3 The amount shown for a share outstanding throughout the period may
not agree with the change in the aggregate gains and losses for the period because of the timing of sales and repurchases of the Trust’s
shares in relation to fluctuating market values for the Trust.
4 Total return is calculated based
on the change in value during the period and is not annualized. An individual shareholder’s total return and ratio may vary from
the above total returns and ratios based on the timing of contributions to and withdrawals from the Trust.
5 Annualized.
6 Not annualized.
7 Calculated based on average net
assets starting on the Seed Capital Purchase Date.
F- 12
9.
Commitments and Contingent Liabilities
In the normal course of business, the Trust may
enter into contracts that contain a variety of general indemnification clauses. The Trust’s maximum exposure under these arrangements
is unknown as this would involve future claims that may be made against the Trust which have not yet occurred and cannot be predicted
with any certainty. However, the Sponsor believes the risk of loss under these arrangements to be remote.
10.
Concentration Risk
Unlike other funds that may invest in diversified
assets, the Trust’s investment strategy is concentrated in a single asset within a single asset class. This concentration maximizes
the degree of the Trust’s exposure to a variety of market risks associated with ether and digital assets. By concentrating its investment
strategy solely in ether, any losses suffered as a result of a decrease in the value of ether can be expected to reduce the value of an
interest in the Trust and will not be offset by other gains if the Trust were to invest in underlying assets that were diversified.
11.
Indemnification
The Sponsor will not be liable
to the Trust, the Trustee or any Shareholder for any action taken or for refraining from taking any action in good faith, or for errors
in judgment or for depreciation or loss incurred by reason of the sale of any ether or other assets of the Trust. However, the preceding
liability exclusion will not protect the Sponsor against any liability resulting from its own gross negligence, bad faith, or willful
misconduct.
The Sponsor and each of its
shareholders, members, directors, officers, employees, affiliates, and subsidiaries will be indemnified by the Trust and held harmless
against any losses, liabilities or expenses incurred in the performance of its duties under the Trust Agreement without gross negligence,
bad faith, or willful misconduct. The Sponsor may rely in good faith on any paper, order, notice, list, affidavit, receipt, evaluation,
opinion, endorsement, assignment, draft, or any other document of any kind prima facie properly executed and submitted to it by the Trustee,
the Trustee’s counsel or by any other person for any matters arising under the Trust Agreement. The Sponsor shall in no event be
deemed to have assumed or incurred any liability, duty, or obligation to any Shareholder or to the Trustee other than as expressly provided
for in the Trust Agreement. Such indemnity includes payment from the Trust of the costs and expenses incurred in defending against any
indemnified claim or liability under the Trust Agreement.
The Trustee will not be liable
or accountable to the Trust or any other person or under any agreement to which the Trust or any series of the Trust is a party, except
for the Trustee’s breach of its obligations pursuant to the Trust Agreement or its own willful misconduct, bad faith or gross negligence.
The Trustee and each of the Trustee’s officers, affiliates, directors, employees, and agents will be indemnified by the Trust from
and against any losses, claims, taxes, damages, reasonable expenses, and liabilities incurred with respect to the creation, operation
or termination of the Trust, the execution, delivery or performance of the Trust Agreement or the transactions contemplated thereby; provided
that the indemnified party acted without willful misconduct, bad faith or gross negligence.
12.
Subsequent Events
The Trust has evaluated subsequent
events and transactions for potential recognition or disclosure through the date the financial statements were issued and has determined
that there are no material events that would require disclosure in the financial statements.
F-13