Canary XRP ETF 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of the Trust’s financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, the Trust’s audited financial statements and related notes included elsewhere in this Annual Report, which have been prepared in accordance with GAAP. See “Cautionary Statement Regarding Forward-Looking Statements” above. Overview of the Trust The Trust is an exchange-traded fund that issues Shares that are listed and trade on the Exchange. The Trust’s investment objective is to seek to provide exposure to the price of XRP held by the Trust, less the expenses of the Trust’s operations and other liabilities. The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of XRP. In seeking to achieve its investment objective, the Trust will hold XRP and establish its NAV on each business day by reference to the Pricing Benchmark. The Pricing Benchmark is calculated by the Benchmark Provider based on a 60-minute time-weighted average price of the Underlying Index, which is an aggregation of executed trade flow of Constituent Platforms. The Benchmark Provider publishes the Pricing Benchmark. The Trust is sponsored by the Sponsor. The Shareholders of the Trust take no part in the management or control, and have no voice in, the Trust’s operations or business. Except to elect a successor Sponsor upon the resignation of the Sponsor or as otherwise required by laws of the state of Delaware, Shareholders have no voting rights under the Trust Agreement. Liquidity and Capital Resources The Trust typically does not hold a cash balance except in connection with the creation and redemption of “Baskets” ( i.e. , blocks of 10,000 Shares) or to pay expenses not assumed by the Sponsor. The Trust pays the Sponsor an annual unified fee of 0.50% of the Trust’s XRP Holdings (the “Sponsor Fee”). The Trust’s “XRP Holdings” is the quantity of the Trust’s XRP plus any cash or other assets held by the Trust represented in XRP as calculated using the Pricing Benchmark price, less its liabilities (which include estimated accrued but unpaid fees and expenses) represented in XRP as calculated using the Pricing Benchmark price. The Trust may also incur certain extraordinary, nonrecurring expenses that are not assumed by the Sponsor, including, but not limited to, brokerage and transaction costs associated with the sale or transfer of XRP, taxes and governmental charges, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust, the Trust’s assets, or the interests of Shareholders, any indemnification of the Custodians or other agents, service providers or counterparties of the Trust, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively, “Extraordinary Expenses”). To the extent on-chain transaction fees are incurred in connection with transfers or sales of XRP to pay Extraordinary Expenses, the Trust will bear such fees. To the extent it does not have cash readily available, the Sponsor shall cause the transfer or sale of XRP in such quantity as may be necessary to permit the payment of Trust expenses and liabilities not assumed by the Sponsor or for payment of redemption proceeds to Authorized Participants. The Trust will not bear any costs associated with the transfer or sale of XRP to pay the Sponsor Fee. To the extent the Trust incurs any Extraordinary Expenses, the Trust will bear the costs of any transfers or sales of XRP to pay such expenses. The Trust will seek to transfer XRP at such times and in the smallest amounts required to permit such payments as they become due. With respect to transfers or sales necessary to pay Trust expenses and liabilities that are denominated other than in XRP, the amount of XRP transferred or sold may vary from time to time depending on the actual sales price of XRP relative to the Trust’s expenses and liabilities ( e.g. , if the price of XRP falls, the amount of XRP needed to be transferred or sold to pay an expense denominated in U.S. dollars will increase). To the extent the Trust must buy or sell XRP, the Trust may do so through a third-party digital asset broker or dealer. When the Trust buys or sells XRP, the Sponsor seeks quotes from its XRP trading counterparties. Such transactions are typically conducted over the counter rather than over a trading platform or similar order matching service. The Sponsor will select third party brokers or dealers that it believes have implemented adequate AML, KYC and other legal compliance policies and procedures. Results of Operations for the Period Ended December 31, 2025 The Trust commenced operations and its net asset value increased from $0 at the start of business on November 12, 2025, to $319,157,354 on December 31, 2025. The change in the Trust’s net assets resulted from an increase in outstanding Shares, which grew from 0 at the start of business on November 12, 2025, to 16,490,000 at December 31, 2025, as a result of 16,550,000 Shares (1,655 Baskets) being created and 60,000 Shares (6 Baskets) being redeemed during the period, and a decrease in the value of XRP, which depreciated -20.86% from $2.30 at November 12, 2025 (the initial share purchase date) to $1.82 at December 31, 2025. 19 The net asset value per Share decreased -21.69% from $25.00 as of November 12, 2025, (the initial share purchase date) to $19.58 as of December 31, 2025. The net asset value per Share of $25.00 as of November 12, 2025, was the highest during the period, compared with a low of $19.16 as of December 18, 2025. The decrease in net assets from operations for the period ended December 31, 2025 was $(70,111,041), resulting from a decrease in unrealized gain on the Trust’s XRP investment of $(69,540,982), realized losses on the disposition of XRP of $(352,804), and Sponsor Fees incurred of $217,255. Off-Balance Sheet Arrangements As of December 31, 2025, the Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate off balance sheet financing arrangements and has no loan guarantee arrangements or off-balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services which are in the best interests of the Trust. While the Trust’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on the Trust’s financial position. Critical Accounting Policies Principal Market and Fair Value Determination The Trust’s periodic financial statements are prepared in accordance with the FASB ASC Topic 820 and utilize an exchange-traded price from the Trust’s principal market for XRP on the Trust’s financial statement measurement date. The Sponsor determined in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP. The Trust engaged a third-party vendor to obtain a price from a principal market for XRP, which was determined and designated by such third-party vendor daily based on its consideration of several exchange characteristics, including oversight, and the volume and frequency of trades. Under GAAP, such a price is deemed a Level 1 input in accordance with ASC Topic 820 because it is a quoted price in active markets for identical assets or liabilities. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, the Trust is not required to provide the information required by this item.