What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-02-10 compared with 2025-11-12 · 103 added, 54 removed, 252 unchanged (38% of the section changed)

1 unchanged sentence

General Overview

As used in this current report and unless otherwise indicated, the terms “we”, “us” and “our” mean Upexi, Inc.

As used in this current report and unless otherwise indicated, the terms “we”, “us”, “our”, and the “Company” mean Upexi, Inc.

Upexi, Inc., a Delaware corporation, originally formed as a Nevada corporation in September of 2018.

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Under our new approach, our treasury policy focuses primarily on Solana (“SOL”).

The approach involves applying a public-market treasury model to an asset that is considered earlier in its lifecycle than, with respect to both development and usage, as well as institutional adoption, Bitcoin.

The approach involves applying a public-market treasury model to an asset that is considered earlier in its lifecycle, with respect to both development and usage, as well as institutional adoption, than Bitcoin.

Management will focus its resources on this digital asset strategy and a significant portion of the balance sheet will be allocated to holding Solana in the Company’s digital asset treasury.

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While certain entities such as Solana Labs, Inc.

(“Solana Labs”) and the Solana Foundation have influence over the Solana network’s development and governance (which was particularly true during the network’s early years), no single entity owns or operates the Solana network, the infrastructure of which is collectively maintained by a decentralized user base.

and the Solana Foundation have influence over the Solana network’s development and governance (which was particularly true during the network’s early years), no single entity owns or operates the Solana network, the infrastructure of which is collectively maintained by a decentralized user base.

The Solana network allows the creation and exchange of tokens, including SOL, which are recorded on the Solana network.

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Blocks are built on top of prior ones by subsequent leaders, continuing the process.

Prior to transacting on Solana, a user generally must first install on his computer or mobile device a software program that will allow the user to generate a private and public key pair such as a wallet.

Prior to transacting on Solana, a user generally must first install on their computer or mobile device a software program that will allow the user to generate a private and public key pair such as a wallet.

The wallet also enables the user to connect to the Solana network, interact with decentralized applications, and transfer or swap tokens with other users or applications.

Each user has his own key pair that is stored in such software, like a wallet.

Each user has their own key pair that is stored in such software, like a wallet.

To receive SOL in a peer-to-peer transaction, the SOL recipient must provide its public key to the party initiating the transfer.

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Malfunctions that cause validators to go offline and, in turn, inhibit them from performing their duties can result in financial penalties.

Any malicious activity, such as making incorrect attestations or otherwise violating protocol rules results may result in lower rewards or the lost opportunity to gain rewards.

Any malicious activity, such as making incorrect attestations or otherwise violating protocol rules may result in lower rewards or the lost opportunity to gain rewards.

The penalty varies depending on the type of offense and correlation to potential offenses by other validators.

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When a validator confirms a transaction, the validator and any associated stakers receive a fee.

During the course of ordering transactions and validating blocks, validators may be able to prioritize certain transactions in return for increased transaction fees, an incentive system known as “Maximal Extractable Value” or “MEV.” For example, in blockchain networks that facilitate DeFi protocols in particular, such as the Solana network, users may attempt to gain an advantage over other users by offering greater transaction fees.

During the course of ordering transactions and validating blocks, validators may be able to prioritize certain transactions in return for increased transaction fees, an incentive system known as “Maximal Extractable Value” or “MEV.” For example, in blockchain networks that facilitate decentralized finance “DeFi” protocols in particular, such as the Solana network, users may attempt to gain an advantage over other users by offering greater transaction fees.

Validators less commonly capture MEV in the Solana network because, unlike the Ethereum network, it does not publicly expose transactions before they are accepted by a validator.

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We also maintain a custodial relationship with Coinbase, Inc.

and are in the process of distributing our treasury to different custodians and onboarding other qualified custodians to ensure that we mitigate our Solana treasury risk through the use of several qualified custodians.

(“Coinbase”) and are in the process of distributing our treasury to different custodians and onboarding other qualified custodians to ensure that we mitigate our Solana treasury risk through the use of several qualified custodians.

Storage of Our Digital Assets in our SOL Treasury

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The custodian accounts are all opened by the Company, this segregates our assets into an individual custodian account owned by the Company and access is monitored and controlled by the Company.

Our Asset Management Company is given access to the Custodian accounts with established controls to ensure transactions require consensus of a minimum of two individuals when assets are being transferred between wallets and additional controls if an asset of the Treasury is moved out of the Custodians control.

The assets go through the Custodians Trust Company, which maintains its own insurance and is regulated by their respective state where the trust is incorporated in.

Our asset management company is given access to the custodian accounts with established controls to ensure transactions require consensus of a minimum of two individuals when assets are being transferred between wallets and additional controls if an asset of the treasury is moved out of the custodian’s control.

The assets go through the custodian’s trust company, which maintains its own insurance and is regulated by their respective state where the trust is incorporated in.

Our primary custodian is currently BitGo Trust Company, Inc.

a South Dakota corporation (“BitGo”) and is regulated by the state of South Dakota.

a South Dakota corporation, and is regulated by the state of South Dakota.

On May 1, 2025, we entered into a Custodial Services Agreement with BitGo (the “BitGo Agreement”) to hold our digital currency.

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The Company pays BitGo a monthly digital asset storage fee based upon the market value of the assets in storage, plus $500.

The BitGo Agreement is terminable by either the Company or BitGo on thirty days’ notice as a result of a breach of the Agreement and may be suspended by BitGo if the Company violates the intended use of the account or due to a change in the applicable law, litigation or bankruptcy.

The BitGo Agreement is terminable by either the Company or BitGo on thirty days’ notice as a result of a breach of the BitGo Agreement and may be suspended by BitGo if the Company violates the intended use of the account or due to a change in the applicable law, litigation or bankruptcy.

Our secondary custodian is Coinbase Inc., a subsidiary of Coinbase Global, Inc., a Delaware corporation, which is primarily used for the acquisition of digital assets.

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The Company pays Coinbase its regularly scheduled fees based on the dollar trading volume over a thirty-day period.

The Coinbase Agreement is terminable by either the Company or Coinbase on ten days’ notice as a result of a breach of the Agreement and may be suspended by Coinbase if the Company violates the intended use of the account or due to a change in the applicable law, governmental proceeding, litigation or bankruptcy.

The Coinbase Agreement is terminable by either the Company or Coinbase on ten days’ notice as a result of a breach of the Coinbase Agreement and may be suspended by Coinbase if the Company violates the intended use of the account or due to a change in the applicable law, governmental proceeding, litigation or bankruptcy.

Coinbase may also close the Company’s account if it has been inactive for more than one year.

BitGo maintains a $250,000,000 policy against loss, theft and misuse.

Currently we have approximately $253,000,000 of treasury value at Bitgo, based on the SOL price of $202.51 per token.

Coinbase has an insurance policy for any cash held in the account of $250,000.

We currently have less than $250,000 of cash held at Coinbase and less than $6,000,000 in SOL value, based on the SOL price of $202.51 per token.

At the current price of SOL as of the date of this report, these policies are not adequate to fully cover the full loss of our SOL.

Currently, as of December 31, 2025, we have approximately $199,000,000 of treasury value at BitGo, based on the SOL price of $124.48 per liquid token and $107.04 per locked token.

At the current price of SOL as of the date of this report, these policies were adequate to fully cover the full loss of our SOL.

Solana, as with all digital assets, can be highly volatile.

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SOL – the Token of the Solana Blockchain

Solana (SOL) is the native token of the Solana blockchain.

According to Solana Compass – a popular website covering the Solana ecosystem that also runs a Solana validator – Solana was created with an initial supply of 500m SOL, though much of the initial supply was locked or earmarked for various use cases such as for the community, investors, foundation, team, etc.

SOL is the native token of the Solana blockchain.

According to Solana Compass – a popular website covering the Solana ecosystem that also runs a Solana validator – Solana was created with an initial supply of 500 million SOL, though much of the initial supply was locked or earmarked for various use cases such as for the community, investors, foundation, team, etc.

New Solana tokens are brought into existence primarily through inflationary rewards distributed to validators (and delegators).

Solana currently has a total supply of 606.5m SOL, a circulating supply of 538.2m, and no maximum supply.

Solana currently has a total supply of 606.5 million SOL, a circulating supply of 538.2 million, and no maximum supply.

The Solana staking yield is made up of three primary components:

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Inflationary rewards started out at 8.0%, currently sit at 4.3%, and will fall 15% every epoch-year until it reaches a long-term floor of 1.5%.

There are currently 27.2m locked SOL, representing 6.7% of the total SOL supply with various vesting schedules.

There are currently 27.2 million locked SOL, representing 6.7% of the total SOL supply with various vesting schedules.

Historically, 50% of all transaction fees were burned (with the other 50% going to the validator), but now all transaction fees go to the validator after the passage and adoption of Solana Improvement Document 96 (SIMD-96).

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As one of the first “second-generation” high performance blockchains, Solana uniquely enjoys both the best-in-class technology described above, as well as strong network effects that have attracted a large, growing, and vibrant ecosystem of users, developers, and decentralized applications.

Indeed, while Solana is focused on bringing global finance onchain (commonly referred to as “onchain Nasdaq” or “Internet Capital Markets”), Solana’s performance and technical capabilities enable a plethora of use cases from decentralized finance (“DeFi”) to decentralized physical infrastructure networks (“DePIN”), AI agents, social media, gaming, stablecoins, real-world assets (“RWA”s), and more.

Indeed, while Solana is focused on bringing global finance onchain (commonly referred to as “onchain Nasdaq” or “Internet Capital Markets”), Solana’s performance and technical capabilities enable a plethora of use cases from DeFi to decentralized physical infrastructure networks (DePIN), AI agents, social media, gaming, stablecoins, real-world assets (RWA’s), and more.

Moreover, according to Electric Capital’s 2024 Developer Report, Solana is the #1 ecosystem for new developers, growing 83% in 2024, with this metric often considered a leading indicator of blockchain growth.

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For any asset prices not available on Coinbase, the Asset Manager shall determine the value of such assets in a commercially reasonable manner and in good faith by reference to reputable industry sources.

As compensation for services rendered by the Asset Manager, the Company issued warrants (the “GSR Warrants”) to the Asset Manager ( to purchase 2,192,982 shares of Common Stock at various prices per share of common stock as follows:

As compensation for services rendered by the Asset Manager, the Company issued warrants to the Asset Manager to purchase 2,192,982 shares of common stock at various prices per share of common stock as follows:

(i) 877,193 shares of common stock at an exercise price of $2.28 per share of common stock;

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The Asset Management Agreement may be terminated for Cause (i) by the Company upon at least thirty (30) days prior written notice to the Asset Manager and (ii) by the Asset Manager upon at least sixty (60) days prior written notice to the Company.

On October 27, 2025, the Asset Manager provided the Company notice that it believed the Company had defaulted under the Asset Management Agreement between the Company and the Asset Manager dated April 23, 2025.

The Company disputes the Asset Manager’s allegations and disputes that it has defaulted under the Asset Management Agreement.

As such, on November 26, 2025, the Company filed an Arbitration Demand, instituting an arbitration proceeding against the Asset Manager with respect to the Asset Management Agreement (“Arbitration”).

On December 30, 2025, the Asset Manager filed Counterclaims in the Arbitration asserting certain damages.

The Company intends to vigorously defend against these Counterclaims.

Critical Accounting Estimates

During the three months ended September 30, 2025, there were no material changes to our critical accounting policies as disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended June 30, 2025 .

There have been no material changes to our critical accounting policies as disclosed in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended June 30, 2025 .

Results of Operations

The following summary of the Company’s operations should be read in conjunction with its unaudited condensed consolidated financial statements for the three months ended September 30, 2025 and 2024, which are included herein.

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

The following summary of the Company’s operations should be read in conjunction with its unaudited condensed consolidated financial statements for the three and six months ended December 31, 2025 and 2024, which are included herein.

Three Months Ended

$ (1,096,965 )

4 unchanged sentences

General and administrative expenses

Unrealized (gain) on digital assets

Unrealized losses on digital assets

Realized losses on digital asset revenue conversion to USD

Other operating expenses

Other expenses

Net income (loss)

$ (178,924,930 )

$ (1,301,310 )

$ (177,623,620 )

Revenue declined by approximately $1.1 million, or 27.4%, as compared with the same period last year.

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The Company earns staking revenue by delegating its digital assets to third-party validators on proof-of-stake blockchain networks.

The digital asset revenue is expected to increase as the number of SOL tokens the Company has staked, the overall increase in the price of SOL and the Company’s continued expansion of it digital asset strategy.

The digital asset revenue is expected to increase as the number of SOL tokens the Company has staked increases, the overall increase in the price of SOL and the Company’s continued expansion of its digital asset strategy.

Cost of revenue increased by approximately $0.3 million, or 30%, as compared with the same period last year.

The gross margin was approximately 53.9% and 74.3% for the three months ended December 31, 2025 and 2024, respectively, a decrease of approximately 20%, as compared with the same period last year, mainly due to inventory valuation adjustments.

Sales and marketing expenses decreased by approximately $34,000, or 3.6%, as compared with the same period last year.

Management expects the sales and marketing expenses to significantly decline, quarter over quarter for the year remainder of the year as less marketing expenses are spent on the remaining products and several of the fixed sales and marketing expenses have been eliminated.

Distribution costs decreased by approximately $0.3 million, or 27.6%, as compared with the same period last year.

The decrease in distribution costs was primarily related to the overall decline in revenue and is expected to continue to decline for the remainder of the year.

General and administrative expenses increased approximately $4.0 million, or 257%, as compared with the same period last year.

The increase is mainly a result of expenses in connection with the change in the business strategy to hold digital assets as parts of its treasury.

The increase was primarily due to the $1.5 million increase in public company expenses, $0.4 million increase in professional fees and the $1.5 million increase in compensation to employees.

Unrealized losses on digital assets increased by approximately $164.5 million as the Company began its investments in digital assets toward the end of fiscal year 2025.

The changes mainly result from the price changes on SOL over the recorded cost of SOL during the three months ended December 31, 2025.

There were no digital assets in the Company’s treasury in the same period one year ago.

Realized losses on digital asset revenue converted into USD increased by approximately $0.3 million as the Company began its investments in digital assets toward the end of fiscal year 2025 and there was no staking revenue converted into USD in the prior period.

The losses were a result of the price changes on SOL from the period the digital assets were recorded as staking revenue and the price the staking revenue was converted into USD during the three months ended December 31, 2025.

The digital assets sales are recorded on a first in first out basis.

Other operating expenses increased by approximately $9.6 million, or 3,527%, as compared with the same period last year.

The increase was primarily due to increased stock compensation of approximately $8.3 million.

The increase was primarily related to the $4.4 million increase related to the warrants for the asset management agreement, the $1.4 million impairment of assets from manufacturing shutdown and approximately $3.8 million increase in the amortization of stock-based compensation related to restricted stock units.

Other expenses increased by approximately $3.3 million, or 1,461%, as compared with the same period last year.

The increase was primarily due to increased debt used in the purchase of SOL for the digital asset treasury and partially offset by gains from cash management.

Six Months Ended

$ (2,297,352 )

Digital asset revenue

Cost of revenue

Sales and marketing expenses

Distribution costs

General and administrative expenses

Unrealized losses on digital assets

Realized losses on digital assets

Other operating expenses

Other expenses

$ (112,176,808 )

$ (2,926,887 )

$ (109,249,921 )

Revenue declined by approximately $2.3 million, or 27.5%, as compared with the same period last year.

Management’s focus is on the digital asset strategy and resources are allocated accordingly.

We do not expect significant increases to these revenue sources in future periods.

Digital asset revenue increased by approximately $11.2 million as compared with the same period last year as the Company began its investments in digital assets toward the end of fiscal year 2025.

The Company earns staking revenue by delegating its digital assets to third-party validators on proof-of-stake blockchain networks.

Cost of revenue decreased by approximately $0.2 million, or 6.5%, as compared with the same period last year.

The gross margin was approximately 69.7% and 67.3% for the three months ended September 30, 2025 and 2024, respectfully, an increase of approximately 2.4%, as compared with the same period last year.

Sales and marketing expenses increased marginally by $26,000, or 3%, as compared with the same period last year.

Management expects the sales and marketing expense to remain consistent, quarter over quarter for the year.

The gross margin was approximately 62.1% and 70.6% for the six months ended December 31, 2025 and 2024, respectively, a decrease of approximately 8%, as compared with the same period last year, mainly due to inventory valuation adjustments.

Sales and marketing expenses decreased marginally by approximately $8,000, or 0.4%, compared with the same period last year.

Management expects the sales and marketing expenses to significantly decline, quarter over quarter for the remainder of the year as less marketing expenses are spent on the remaining products and several of the fixed sales and marketing expenses have been eliminated.

Distribution costs decreased by approximately $0.9 million, or 33.7%, as compared with the same period last year.

The decrease in distribution costs was primarily related to the overall decline in revenue.

The decrease in distribution costs was primarily related to the overall decline in revenue and is expected to continue to decline for the remainder of the year.

General and administrative expenses increased approximately $11.9 million, or 407%, as compared with the same period last year.

The increase is mainly a result of expenses in connection with the change in the business to hold digital assets as parts of its treasury.

This included an increase of approximately $2.9 million in compensation expense, an increase of approximately $2.4 million in public company expenses, an increase of approximately $0.5 million in travel expenses and an increase of approximately $1.6 million in management and other fees related to the digital asset treasury.

Unrealized gain on digital assets increased by approximately $78.0 million as the Company began its investments in digital assets toward the end of fiscal year 2025.

The gains mainly result from the price changes on SOL over the recorded cost of SOL during the three months ended September 30, 2025.

The increase is mainly a result of expenses in connection with the change in the business strategy to hold digital assets as parts of its treasury.

The increase was primarily due to the $3.8 million increase in public company expenses, $0.8 million increase in professional fees, $1.7 million in digital asset treasury fees, $0.6 million in travel related expenses and $4.5 million increase in compensation to employees.

Unrealized losses on digital assets increased by approximately $86.5 million as the Company began its investments in digital assets toward the end of fiscal year 2025.

The changes mainly result from the price changes on SOL over the recorded cost of SOL during the six months ended December 31, 2025.

The digital assets sales are recorded on a first in first out basis.

Other operating expenses increased by approximately $15.1 million, or 2,247%, as compared with the same period last year.

The increase was primarily due to increased stock compensation.

The increase was primarily due to increased stock-based compensation of approximately $9.2 million related to restricted stock units, $4.7 million increased stock-based compensation related to the warrants for the asset management agreement, and $1.4 million impairment of assets from manufacturing shutdown.

Other expenses increased by approximately $5.4 million, or 1,051%, as compared with the same period last year.

The increase was primarily due to increased debt used in the purchase of SOL for the digital asset treasury and was offset by approximately $300,000 for interest revenue or short term gains from cash management.

The increase was primarily due to increased debt used in the purchase of SOL for the digital asset treasury and partially offset by gains from cash management.

Liquidity and Capital Resources

Working Capital

September 30,

Current assets

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Working capital

$ 155,712,133

Three Months Ended

September 30,

Six Months Ended

Cash flows used in operating activities

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Net change in cash during the period

On September 30, 2025, the Company had cash of $2,237,223, a decrease of $737,927 from June 30, 2025.

$ (1,358,385 )

On December 31, 2025, the Company had cash of $1,616,765, a decrease of $1,358,385 from June 30, 2025.

The primary changes resulted from financing obtained to implement and grow the Company’s digital asset strategy that was deployed to acquire digital assets.

Net cash flows used in operating activities was $9,780,221 for the three months ended September 30, 2025, as compared to net cash flows used in operating activities of $1,974,592 for the three months ended September 30, 2024.

The digital asset revenue of approximately $6.1 million and the unrealized gain of approximately $78 million are non-cash.

The primary cash change from prior periods were attributable to general and administrative expenses, which were $9,257,208 and $1,367,690, respectively, for the three months ended September 30, 2025 and 2024, respectfully.

Net cash flows used in operating activities was $12,461,887 for the six months ended December 31, 2025, as compared to net cash flows used in operating activities of $3,358,636 for the six months ended December 31, 2024.

The digital asset revenue was approximately $6.5 million non-cash as approximately $11.2 million was recognized as revenue, with approximately $4.7 million converted to USD.

The unrealized losses of approximately $86.5 million, approximately $14.1 million in stock-based compensation, approximately $1.7 million in deferred financing cost amortization and approximately $1.4 million in impairment of manufacturing assets were all non-cash expenses offsetting the operational losses.

Various costs were incurred in connection with beginning, implementing and growing the Company’s digital asset strategy and are expected to continue.

Net cash flows used in investing activities was approximately $30.3 million for the three months ended September 30, 2025, as compared to net cash flows provided by investing activities of approximately $5.8 million for the three months ended September 30, 2024.

The primary use of funds was the acquisitions SOL for the digital assets treasury during the three months ended September 30, 2025.

In the three months ended September 30, 2024, the primary driver was the cash collected in connection with the sale of a building and the collection of the purchase price for E-core.

Net cash flows provided by financing activities was approximately $39.4 million for the three months ended September 30, 2025, as compared to net cash flows used in financing activities of approximately $2.7 million for the three months ended September 30, 2024.

The primary driver of the change was the financing obtained from a capital raise for purposes of executing the Company’s digital asset strategy in the three months ended September 30, 2025.

This capital raise was offset by the expenses incurred for the capital raise and the expenses incurred for the convertible note obtained in a swap transaction for SOL.

In the three months ended September 30, 2024, the primary driver of cash used in financing activities was the payment on a note in connection with the sale of a building.

Net cash flows used in investing activities was approximately $36.8 million for the six months ended December 31, 2025, as compared to net cash flows provided by investing activities of approximately $5.8 million for the six months ended December 31, 2024.

The primary use of funds was on the acquisitions of SOL for the digital assets treasury during the six months ended December 31, 2025.

In the six months ended December 31, 2024, the primary driver was the cash collected in connection with the sale of a building and the collection of the purchase price for E-core.

Net cash flows provided by financing activities was approximately $47.9 million for the six months ended December 31, 2025, as compared to net cash flows used in financing activities of approximately $2.7 million for the six months ended December 31, 2024.

The primary driver of the change was the financing obtained from a capital raise occurring in each of July 2025 and November 2025 for purposes of executing the Company’s digital asset strategy in the six months ended December 31, 2025.

This capital raise was offset by the expenses incurred for the capital raise and the expenses incurred for the convertible note obtained in a swap transaction for SOL Other notable drivers include the exercise of warrants that provided cash of $100,000 and cash used for common stock repurchases of approximately $800,000.

In the six months ended December 31, 2024, the primary driver of cash used in financing activities was the payment on a note in connection with the sale of a building.

We estimate that we will have sufficient working capital to fund our operations over the twelve months following the date of the issuance of these condensed consolidated financial statements and meet all of our debt obligations.

Additionally, we have a shelf registration statement on file with the SEC that was declared effective January 8, 2026.

Specific information on the terms of and the securities being offered will be provided at the time of the applicable offering.

Proceeds from any future offerings are expected to be used for corporate purposes or other purposes to be disclosed at the time of offering.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis