SBET 10-K & 10-Q changes, risk factors and insider trading

You should carefully consider the risks described below before making an investment decision. The risks and uncertainties described in this section may not be the only ones we face. Additional risks and uncertainties that are not currently known to us, or that we currently deem immaterial, may also impair our business operations or financial condition. If any of the risks described below or any such additional risks actually occur, our business, financial condition, results of operations and the market price of our securities could be materially adversely affected. In particular, because we have adopted a digital asset treasury strategy centered on acquiring and holding Ether (“ETH”), and a substantial portion of our assets are concentrated in ETH and related digital intangible asset holdings, our financial results and the market price of our securities are subject to significant volatility and may be adversely impacted by events affecting the price, perception, regulation, or technological underpinnings of ETH.

Regulatory and Legal Risks Related to Digital Assets

Absent federal regulations, there is a possibility that ETH and LsETH may be classified as a “security.” Any classification of ETH and LsETH as a “security” would subject us to additional regulation and could materially impact the operation of our business.

Neither the SEC nor any other U.S. federal or state regulator has publicly stated whether they agree that ETH is a “security.” Despite the Executive Order titled “Strengthening American Leadership in Digital Financial Technology” which includes as an objective, “protecting and promoting the ability of individual citizens and private sector entities alike to access and … to maintain self-custody of digital assets,” ETH has not yet been classified with respect to U.S. federal securities laws. Therefore, while (for the reasons discussed below) we believe that ETH is not a “security” within the meaning of the U.S. federal securities laws, and registration of the Company under The Investment Company Act of 1940, as amended (the “Investment Company Act”) is therefore not required under the applicable securities laws, we acknowledge that a regulatory body or federal court may determine otherwise. Our belief, even if reasonable under the circumstances, would not preclude legal or regulatory action based on such a finding that ETH is a “security” which would require us to register as an investment company under the Investment Company Act.

We have also adapted our process for analyzing the U.S. federal securities law status of ETH and other cryptocurrencies over time, as guidance and case law have evolved. As part of our U.S. federal securities law analytical process, we take into account a number of factors, including the various definitions of “security” under U.S. federal securities laws and federal court decisions interpreting the elements of these definitions, such as the U.S. Supreme Court’s decisions in the Howey and Reves cases, as well as court rulings, reports, orders, press releases, public statements, and speeches by the SEC Commissioners and SEC Staff providing guidance on when a digital asset or a transaction to which a digital asset may relate may be a security for purposes of U.S. federal securities laws. Our position that ETH is not a “security” is premised, among other reasons, on our conclusion that ETH does not meet the elements of the Howey test. Among the reasons for our conclusion that ETH is not a security is that holders of ETH do not have a reasonable expectation of profits from our efforts in respect of their holding of ETH. Also, ETH ownership does not convey the right to receive any interest, rewards, or other returns.

We acknowledge, however, that the SEC, a federal court or another relevant entity could take a different view. The regulatory treatment of ETH is such that it has drawn significant attention from legislative and regulatory bodies. Application of securities laws to the specific facts and circumstances of digital assets is complex and subject to change. Our conclusion, even if reasonable under the circumstances, would not preclude legal or regulatory action based on a finding that ETH, or any other digital asset we might hold is a “security.” As such, we are at risk of enforcement proceedings against us, which could result in potential injunctions, cease-and-desist orders, fines, and penalties if Ether was determined to be a security by a regulatory body or a court. Such developments could subject us to fines, penalties, and other damages, and adversely affect our business, results of operations, financial condition and prospects.

If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated.

Under Sections 3(a)(1)(A) and (C) of the Investment Company Act, a company generally will be deemed to be an “investment company” if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding, or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) on an unconsolidated basis. Rule 3a-1 under the Investment Company Act generally provides that notwithstanding the Section 3(a)(1)(C) test described in clause (ii) above, an entity will not be deemed to be an “investment company” for purposes of the Investment Company Act if no more than 45% of the value of its assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) consists of, and no more than 45% of its net income after taxes (for the past four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees’ securities companies, securities issued by qualifying majority owned subsidiaries of such entity, and securities issued by qualifying companies that are controlled primarily by such entity. We do not believe that we are an “investment company” as such term is defined in either Section 3(a)(1)(A) or Section 3(a)(1)(C) of the Investment Company Act.

Recently, we have begun focusing on pursuing opportunities to expand our portfolio into digital assets. With respect to the 40% asset threshold under Section 3(a)(1)(A), following the May 2025 PIPE Offering, proceeds from the offering were used to acquire ETH, resulting in ETH comprising 98% of the Company’s total assets. Since we believe ETH is not an investment security, we do not hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting, or trading in securities within the meaning of Section 3(a)(1)(A) of the Investment Company Act.

With respect to Section 3(a)(1)(C), we believe we satisfy the elements of Rule 3a-1 and therefore are deemed not to be an investment company under, and we intend to conduct our operations such that we will not be deemed an investment company under, Section 3(a)(1)(C). We believe that we are not an investment company pursuant to Rule 3a-1 under the Investment Company Act because, on a consolidated basis with respect to wholly-owned subsidiaries but otherwise on an unconsolidated basis, no more than 45% of the value of the Company’s total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) consists of, and no more than 45% of the Company’s net income after taxes (for the last four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees’ securities companies, securities issued by qualifying majority owned subsidiaries of the Company, and securities issued by qualifying companies that are controlled primarily by the Company.

ETH and other digital assets, as well as new business models and transactions enabled by blockchain technologies, present novel interpretive questions under the Investment Company Act. There is a risk that assets or arrangements that we have concluded are not securities could be deemed to be securities by the SEC or another authority for purposes of the Investment Company Act, which would increase the percentage of securities held by us for Investment Company Act purposes. The SEC has requested information from a number of participants in the digital assets’ ecosystem, regarding the potential application of the Investment Company Act to their businesses. For example, in an action unrelated to the Company, in February 2022, the SEC issued a cease-and-desist order under the Investment Company Act to BlockFi Lending LLC, in which the SEC alleged that BlockFi was operating as an unregistered investment company because it issued securities and also held more than 40% of its total assets, excluding cash, in investment securities, including the loans of digital assets made by BlockFi to institutional borrowers.

If we were deemed to be an investment company, Rule 3a-2 under the Investment Company Act is a safe harbor that provides a one-year grace period for transient investment companies that have a bona fide intent to be engaged primarily, as soon as is reasonably possible (in any event by the termination of such one-year period), in a business other than that of investing, reinvesting, owning, holding, or trading in securities, with such intent evidenced by the company’s business activities and an appropriate resolution of its board of directors. The grace period is available not more than once every three years and runs from the earlier of (i) the date on which the issuer owns securities and/or cash having a value exceeding 50% of the issuer’s total assets on either a consolidated or unconsolidated basis or (ii) the date on which the issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.

Accordingly, the grace period may not be available at the time that we seek to rely on Rule 3a-2; however, Rule 3a-2 is a safe harbor and we may rely on any exemption or exclusion from investment company status available to us under the Investment Company Act at any given time. Furthermore, reliance on Rule 3a-2, Section 3(a)(1)(C), or Rule 3a-1 could require us to take action to dispose of securities, limit our ability to make certain investments or enter into joint ventures, or otherwise limit or change our service offerings and operations. If we were to be deemed an investment company in the future, restrictions imposed by the Investment Company Act — including limitations on our ability to issue different classes of stock and equity compensation to directors, officers and employees and restrictions on management, operations, and transactions with affiliated persons — likely would make it impractical for us to continue our business as contemplated, and could have a material adverse effect on our business, results of operations, financial condition, and prospects.

We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.

Mutual funds, ETFs and their directors and management are subject to extensive regulation as “investment companies” and “investment advisers” under U.S. federal and state law; this regulation is intended for the benefit and protection of investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of or changes to our ETH Treasury Management strategy, the manner in which our ETH is custodied, our ability to engage in transactions with affiliated parties and our operating and investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies and investment advisers. Our board of directors has broad discretion over the investment, leverage and cash management policies it authorizes, whether in respect of our ETH holdings or other digital asset activities we may pursue, and has the power to change our current policies, including our strategy of acquiring and holding ETH and other digital assets.

Legislative or regulatory change regarding the regulation of “commodities” by the Commodities Futures Trading Commission (“CFTC”) and the potential regulation of digital assets as “digital commodities” could subject us to additional regulatory burdens and oversight by the CFTC and could adversely affect the market price of ETH and the market price of our listed securities.

The CFTC has stated it believes, and judicial decisions involving CFTC enforcement actions have confirmed, that at least some digital assets fall within the definition of a “commodity” under the U.S. Commodities Exchange Act of 1936 (the “CEA”) and the rules promulgated by the CFTC thereunder (“CFTC Rules”). While the CFTC has enforcement authority to police against fraud and manipulation in spot commodity markets (including the spot market for digital assets that are commodities), the CFTC only has regulatory and supervisory jurisdiction with respect to “commodity interest” transactions, such as futures, options, and swaps on a commodity (including a digital asset commodity) and certain leveraged, margined, or financed transactions in commodities involving retail customers. Accordingly, we are not currently regulated or supervised by the CFTC and are not subject to the legal and regulatory obligations that are applicable to CFTC-registered entities under the CEA and CFTC Rules.

The regulation of digital assets in the U.S. is subject to change because of the enactment and adoption of new laws and regulations. For example, the proposed CLARITY Act recently passed by the U.S. House of Representatives and other draft digital asset market structure and regulation bills have proposed granting the CFTC additional regulatory and supervisory powers with respect to spot digital assets as “digital commodities.” While it is not possible to predict if and in what form such proposals will be adopted, if any, changes to or expansion of the jurisdiction of the CFTC with respect to activities in spot digital assets could result in the imposition of additional regulatory obligations and burdens, which could include registration, disclosure, reporting, and business conduct requirements. For example, it is possible that if the CLARITY Act were to become law as currently proposed, our ETH Treasury Management strategy could cause us to be deemed a “commodity pool” under the CEA such that our operators and advisors may need to register with the CFTC as commodity pool operators and comply with other CFTC regulations as well as the rules of the National Futures Association. Such additional regulatory burdens and oversight could materially increase the cost of our business, could adversely affect the market price of ETH, and in turn could adversely affect the market price of our listed securities.

The launch of central bank digital currencies (“CBDCs”) may adversely impact our business.

The introduction of a government-issued digital currency could eliminate or reduce the need or demand for private-sector issued crypto currencies, or significantly limit their utility. National governments around the world could introduce CBDCs, which could in turn limit the size of the market opportunity for cryptocurrencies, including ETH.

Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns.

The Financial Crimes Enforcement Network, a division of the U.S. Treasury Department (“FinCEN”) regulates providers of certain services with respect to “convertible virtual currency,” including ETH. Businesses engaged in the transfer of convertible virtual currencies are subject to registration and licensure requirements at the U.S. federal level and also under U.S. state laws. While FinCEN has issued guidance that cryptocurrency mining, without engagement in other activities, does not require registration and licensure with FinCEN, FinCEN has not made similar pronouncements with respect to the operation of Ethereum validators. In addition, our engaging in decentralized finance activities could expose us to further risk in this regard.

If regulatory changes or interpretations require us to register as a money services business with FinCEN under the U.S. Bank Secrecy Act, or as a money transmitter under state laws, we may be subject to extensive regulatory requirements—including those that would mandate us to implement anti-money laundering programs meeting certain requirements, make certain reports to FinCEN or state regulators, and maintain certain records, resulting in significant compliance costs and operational burdens.

We may incur extraordinary expenses to meet these requirements or, alternatively, may determine that continued operations are not viable. Further, we may not be capable of complying with certain federal or state regulatory obligations applicable to “money services businesses” and “money transmitters,” such as monitoring transactions and blocking transactions, because of the nature of the Ethereum blockchain. If we are deemed to be subject to and not in compliance with such additional regulatory and registration requirements, we may act to dissolve and liquidate. If we decide to cease certain operations in response to new regulatory obligations, such actions could occur at a time that is unfavorable to investors.

Our digital asset treasury strategy exposes us to various risks, including risks associated with ETH.

Our ETH treasury management strategy exposes us to various risks, including risks associated with ETH, which include the following:

We have engaged in decentralized finance transactions and deploy ETH using liquid staking protocols, which present additional risk as opposed to simply holding our digital assets.

We have deployed ETH using one or more decentralized finance protocols. All trading and investment activity involves risk, which is heightened in the case of decentralized finance due to the irrevocable nature of blockchain transactions and the possibility of errors in smart contracts. Decentralized finance protocols also attract hackers and persons looking to exploit flaws in or the ability to misuse smart contracts. We also may incur losses in connection with our decentralized finance activity due to human error or our inability to predict future price movements. Any losses we sustain in connection with decentralized finance activities could cause an adverse impact on our financial condition, results of operations, and the market price of our Common Stock.

Decentralized finance protocols also pose heightened regulatory concerns even beyond those that face digital asset networks and digital assets generally. The U.S. financial system is extensively regulated at both the federal and state level with a particular focus on intermediaries such as banks, broker-dealers, futures commission merchants, investment funds, investment advisers, financial asset exchanges, trading platforms, clearinghouses and custodians. U.S. laws and regulations impose specific obligations on financial services intermediaries both for the protection of their customers and for the protection of the U.S. financial system as a whole. These include, among others, capital requirements, activities restrictions, reporting and disclosure requirements and obligations to monitor the activities of their customers and to ensure that the intermediaries’ activities and the activities of their customers are conducted in accordance with applicable laws and regulations. Non-U.S. laws and regulatory requirements may impose similar obligations. By seeking to eliminate or substantially limit the role of traditional financial services intermediaries in lending, brokering, advisory, trading, clearing, custody and other financial services activities, DeFi protocols pose numerous challenges to the longstanding oversight framework developed under U.S. law and used by U.S. and other regulators. Legislative bodies and regulators may be required to adapt their regulatory models to accommodate decentralized financial activities, or take novel steps to supervise, limit or even prohibit decentralized financial activities. It is not possible to predict how or when these challenges will be resolved or what the impact on specific decentralized finance protocols will be, and it is likely that the decentralized finance industry will face a prolonged period of regulatory uncertainty. It is possible that some decentralized finance protocols will be subjected to costly and burdensome compliance regimes or even prohibited outright.

We have also deployed ETH using other ETH-related staking protocols. These staking protocols, which include liquid staking protocols, are even newer than many decentralized finance protocols and are a novel and evolving technology. The staff of the SEC’s Division of Corporation Finance has provided a statement that the SEC does not generally believe liquid staking services are securities offerings. However, these statements are not binding rule or regulations, and any deviations from the fact patterns described in the staff statement could result in the liquid staking protocols we use being deemed securities offerings. If it is determined that the liquid staking protocols we use, or the receipt tokens we receive, are securities offerings, the providers of liquid staking protocols may be required to pay fines or be subject to other third-party claims, and the ETH we have deposited with them may be available to their creditors to fulfill those claims. See “Our shift towards an ETH-focused treasury strategy requires substantial changes in our day-to-day operations and exposes us to significant operational risks” and “We face risks relating to the custody of our ETH, including the loss or destruction of private keys required to access our ETH and cyberattacks or other data loss relating to our ETH.” There is also ongoing uncertainty as to the regulatory treatment of liquid staking other ETH-related staking services from other regulators and agencies.

Both decentralized finance protocols and liquid staking protocols typically rely on the use of smart contracts. Smart contracts are computer programs that run on a digital asset network or related protocol that execute automatically when certain conditions are met. Because smart contract functions typically cannot be stopped or reversed, vulnerabilities in or unforeseen consequences of their programming can have damaging effects for the underlying digital asset network or protocol and the value of digital assets that use or interact with such smart contracts. For example, in June 2016, a vulnerability in the smart contracts underlying a protocol that was deployed on the Ethereum network, The DAO, a distributed autonomous organization for venture capital funding, allowed an attack by a hacker to syphon approximately $60 million worth of ETH from The DAO into a separate account. In the aftermath of the theft, certain developers of and core contributors to the Ethereum network pursued a “hard fork” of the Ethereum network in order to erase any record of the theft. Despite these efforts, the price of ETH dropped approximately 35% in the aftermath of the attack and subsequent hard fork. In addition, in July 2017, a vulnerability in a smart contract for a multi-signature wallet software developed by Parity led to a $30 million theft of ETH, and in November 2017, a new vulnerability in Parity’s wallet software led to roughly $160 million worth of ETH being indefinitely frozen in an account.

Other smart contracts, such as bridges between separate digital asset networks have also been manipulated, exploited or used in ways that were not intended or envisioned by their creators. Initial problems and continued problems with the development, design and deployment of smart contracts may have an adverse effect on the value of protocols, including liquid staking and decentralized finance protocols, built on smart contract platforms or other digital assets that rely on smart contract technology, including any liquid staking tokens such as LsETH. If any of the smart contracts with which we interact, whether decentralized finance, liquid staking, or otherwise, suffer from such manipulation or exploit, or otherwise do not function as intended or as we anticipate, our ETH and any LsETH or similar tokens we hold may be exposed.

The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of ETH and adversely affect our business.

As a result of our ETH treasury management strategy, our assets are concentrated in our ETH and other ETH-related digital assets holdings. Accordingly, the emergence or growth of digital assets other than ETH may have a material adverse effect on our financial condition. There are numerous alternative digital assets and many entities, including consortiums and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets. Additionally, the Ethereum network has completed multiple major upgrades since then and may undertake additional upgrades in the future. If the mechanisms for validating transactions in other alternative digital assets are perceived as superior to the Ethereum network, those digital assets could gain market share relative to ETH.

Additionally, central banks in some countries have started to introduce digital forms of legal tender. For example, China’s CBDC project was made available to consumers in January 2022, and governments including the United Kingdom, the European Union, and Israel have been discussing the potential creation of new CBDCs. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, ETH and other digital assets as a medium of exchange or store of value. As a result, the emergence or growth of these or other digital assets could cause the market price of ETH to decrease, which could have a material adverse effect on our business, prospects, financial condition, and operating results.

Operational, Financial Reporting and Capital Stock Risks

ETH is a highly volatile asset and fluctuations in the price of ETH are likely to influence our financial results and the market price of our listed securities.

ETH is a highly volatile asset, and fluctuations in the price of ETH are likely to influence our financial results and the market price of our listed securities. Our financial results and the market price of our listed securities would be adversely affected, and our business and financial condition would be negatively impacted, if the price of ETH decreased substantially (as it has in the past), including as a result of:

The Ethereum network operates using open-source protocols, meaning that any user can become a node by downloading the Ethereum Client and participating in the Ethereum network, and no permission of a central authority or body is needed to do so. In addition, anyone can propose a modification to the Ethereum network’s source code and then propose that the Ethereum network community support the modification. These proposed modifications to the Ethereum network’s source code, if adopted, can lead to forks. See risk factor “A “fork” in the Ethereum protocol could adversely affect the value of the Company’s shares”.

We may be subject to regulatory developments related to digital assets and digital asset markets, which could adversely affect our business, financial condition, and results of operations.

As digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital assets are unclear in certain respects, it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of digital assets. The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of digital assets or the ability of individuals or institutions such as us to own or transfer digital assets.

On January 23, 2025, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology” (the “Executive Order”) aimed at supporting “the responsible growth and use of digital assets, blockchain technology and related technologies across all sectors of the economy.” The Executive Order also established an interagency working group that is tasked with “proposing a Federal regulatory framework governing the issuance and operation of digital assets” in the United States. Pursuant to this Executive Order, the working group released a report in July 2025 outlining the administration’s recommendations to Congress and various agencies reflecting the administration’s “pro-innovation mindset toward digital assets and blockchain technologies.” In particular, the report recommends that Congress enact legislation regarding self-custody of digital assets, clarifying the applicability of Bank Secrecy Act obligations with respect to digital asset service providers, granting the Commodities Futures Trading Commission (the “CFTC”) authority to regulate spot markets in non-security digital assets, prohibiting the adoption of a central bank digital currency (“CBDC”), and clarifying tax laws as relevant to digital assets. In addition, the report recommends that agencies reevaluate existing guidance on digital asset activities, use existing authorities to enable the trading of digital assets at the federal level, embrace DeFi, launch or relaunch digital asset innovation efforts, and promote U.S. private sector leadership in the responsible development of cross-border payments and financial markets technologies, among others.

There have also been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset markets. The Digital Asset Market Clarity Act of 2025 (the “CLARITY Act”) was passed by the U.S. House of Representatives on July 17, 2025, and, as of the date of this report, remains pending before the Senate. In addition, also in July 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (the “GENIUS Act”) became the first federal law specifically regulating the issuance, custody and other stablecoin-related matters in the United States. If enacted, the CLARITY Act would establish a federal framework for the regulation of certain digital asset markets and digital asset trading platforms in the United States.

It is difficult to predict whether, or when, as a result of these developments, Congress will grant additional authorities to the SEC or other regulators, what the nature of such additional authorities might be, how additional legislation and/or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services to the digital assets industry, or how any new regulations or changes to existing regulations might impact the value of digital assets generally and ETH held by the Company specifically. The consequences of increased federal regulation of digital assets and digital asset activities could have a material adverse effect on our business, results of operations, financial condition, and prospects, as well as the market price of ETH, which in turn could adversely affect the market price of our listed securities.

The availability of spot ETPs for ETH and other digital assets may adversely affect the market price of our listed securities.

Although ETH and other digital assets have experienced a surge of investor attention since ETH was invented in 2015, until recently, investors in the United States had limited means to gain direct exposure to ETH through traditional investment channels, and instead generally were only able to hold ETH through “hosted” wallets provided by digital asset service providers or through “unhosted” wallets that expose the investor to risks associated with loss or hacking of their private keys. Given the relative novelty of digital assets, general lack of familiarity with the processes needed to hold ETH directly, as well as the potential reluctance of financial planners and advisers to recommend direct ETH holdings to their retail customers because of the manner in which such holdings are custodied, some investors have sought exposure to ETH through investment vehicles that hold ETH and issue shares representing fractional undivided interests in their underlying ETH holdings. These vehicles, which were previously offered only to “accredited investors” on a private placement basis, have in the past traded at substantial premiums to net asset value, possibly due to the relative scarcity of traditional investment vehicles providing investment exposure to ETH.

Although we are an operating company, and we believe we offer a different value proposition than an ETH investment vehicle, such as a spot ETH ETP, investors may nevertheless view our Common Stock as an alternative to an investment in an ETP and choose to purchase shares of a spot ETP instead of our Common Stock. They may do so for a variety of reasons, including if they believe that ETPs offer a “pure play” exposure to ETH that is generally not subject to federal income tax at the entity level as we are, or the other risk factors applicable to an operating business, such as ours.

As a result of the foregoing factors, availability of spot ETPs for ETH and other digital assets could have a material adverse effect on the market price of our listed securities.

Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our ETH and LsETH holdings.

Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of ETH and LsETH.

The price of ETH has historically been highly volatile and subject to dramatic price fluctuations. Because we intend to purchase additional ETH in future periods and increase our overall holdings of ETH, we expect that the proportion of our total assets represented by our ETH holdings will increase in the future. As a result, and in particular due to our adoption of ASU 2023-08 and use of the fair value method for accounting for digital ETH assets, volatility in our earnings may be significantly more than what we experienced in prior periods.

The LsETH token is relatively new and the market for LsETH may be subject to manipulation, limited transparency, inconsistent pricing sources and episodic illiquidity. The price information available in the market may not reflect executable prices or sufficient market depth and there can be no assurance that we would be able to sell our LsETH at the quoted market price, or at all. Because changes in the fair value of digital assets may impact earnings, limitations in market liquidity or pricing reliability for LsETH could increase volatility in our reported results. In addition, the market infrastructure supporting LsETH remains nascent, and future developments in protocol mechanics, exchange support or regulatory oversight may materially impact pricing, liquidity and valuation methodologies. Accordingly, the market value amounts reported for LsETH may not reflect the amount that could ultimately be realized upon redemption or sale, and actual realizable values could materially differ.

Our shift towards an ETH-focused treasury strategy requires substantial changes in our day-to-day operations and exposes us to significant operational risks.

Our shift towards an ETH-focused treasury strategy, including staking, restaking, liquid staking and other decentralized finance activities, exposes us to significant operational risks.

Staking ETH involves holding a certain amount of ETH in a smart contract and running a piece of software known as a validator. Validators are randomly selected to propose a new block of transactions to be added to the Ethereum blockchain. When an Ethereum participant attempts a transaction, that participant is required to pay a minimum “gas” fee. A participant can opt to pay an additional fee to ensure that its transaction is added to the blockchain more quickly. These fees are denominated in ETH. The validator chosen to propose a block will (when that block is successfully confirmed by the other validator nodes) receive the gas fees for all transactions in the block (known as “execution layer rewards”). In addition, the Ethereum blockchain automatically issues ETH as rewards to validators who successfully propose a block, known as “consensus layer rewards.” The Ethereum network also automatically imposes penalties on validators that experience downtime or that propose incorrect blocks. These penalties are known as “slashing” and will reduce the number of ETH that are “staked” to the validator node.

Although we currently do not operate any validators, we may choose to operate our own validator services, or we may seek to continue to “delegate” our ETH to third party validation service providers. When we choose to use a third-party validation service, we share our staking rewards with that third-party validator, but that third-party validator may have more sophisticated technology which would enable those rewards to be greater. In either case of operating our own validators or utilizing third-party validators, staking increases the risk of loss of ETH, including through slashing penalties and through increasing vulnerabilities to hacking in the staking smart contracts. Validators also need to maintain uptime to maximize their rewards. Further, the ETH ecosystem rapidly evolves, with frequent upgrades and protocol changes that may require significant adjustments to our operational setup. The upgrades and protocol changes may require that we incur unanticipated costs, and it could cause temporary service disruptions. Technical failures or operational errors could impact our ability to obtain ETH rewards or gas fees, which could result in our failure to meet our financial projections.

Staked ETH is also subject to lock-up periods during which it cannot be withdrawn or sold. This lack of liquidity could limit our ability to respond to market changes or our financial needs. We could engage in other DeFi activities with liquid staking tokens. While we anticipate that the price of other ETH-related digital assets, such as liquid staking tokens, will correlate to ETH itself, there is a possibility that prices will diverge. This could especially happen if the validators deployed with a smart contract are subject to slashing penalties, in which case we may be able to withdraw fewer ETH than we originally deposited.

Any of these operational risks could materially and adversely affect our ability to execute our ETH treasury management strategy and may prevent us from realizing positive returns and could severely hurt our financial condition.

Cautionary Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s current expectations, assumptions, and beliefs regarding future events and involve risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements are not guarantees of future performance.

Forward-looking statements in this Annual Report include, but are not limited to, statements regarding our business strategy; digital asset treasury activities; capital allocation and liquidity management; potential mergers, acquisitions, or other strategic transactions; regulatory developments affecting digital assets; market trends; competition; future financial position and results of operations; and plans, objectives, and expectations of management. Words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” “predicts” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements include such words.

Actual results may differ materially from those contemplated by forward-looking statements due to a variety of risks and uncertainties, including those described under Part I, Item 1A, “Risk Factors,” in this Annual Report on Form 10-K, as well as risks described in our other filings with the SEC. The discussion of risks herein is not an indication that any such risks have occurred at the time of this filing. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Unless otherwise indicated or the context requires otherwise, all numbers presented in this Item 7 are in thousands.

Industry and Market Data

This Annual Report on Form 10-K includes market and industry data obtained from third-party sources, industry publications, and publicly available information that we believe to be reliable, as well as estimates derived from our own internal analyses and assumptions. In particular, certain market estimates reflect our assumptions regarding digital asset markets, including the Ethereum ecosystem and broader blockchain-based financial infrastructure.

While we believe such information is reasonable, market and industry data involve risks and uncertainties and are subject to change based on a variety of factors, including regulatory developments, market conditions, technological changes, and other factors discussed under “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A, “Risk Factors,” in this Annual Report on Form 10-K. We have not independently verified and do not undertake to update any such market or industry data.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition, results of operations, liquidity, and capital resources should be read together with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion also should be read in conjunction with the information contained in Part I, Item 1, “Business,” and Part I, Item 1A, “Risk Factors.”

This Management’s Discussion and Analysis reflects management’s perspective on the key factors that have affected, and are expected to affect, our operating results, financial condition and cash flows. As discussed in Part I, Item 1, “Business,” the Company has undergone a strategic shift, with an increased focus on digital asset treasury activities while continuing to operate a legacy affiliate marketing business. As a result, period-to-period comparisons may be affected by changes in business mix, capital allocation priorities and prevailing market conditions.

This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results could differ materially from those expressed or implied by such forward-looking statements.

Unless the context indicates otherwise, references in this Annual Report on Form 10-K to “Sharplink Gaming,” “Sharplink,” “Sharplink US,” the “Company,” “we,” “our,” and “us” refer to Sharplink Gaming, Inc., a Delaware corporation, and its wholly owned subsidiaries. References to “Sharplink Israel” refer to Sharplink Gaming, Ltd., an Israeli limited liability company with which Sharplink US completed a domestication merger in February 2024.

Sharplink, Inc. is a publicly traded company that, in June 2025, undertook a significant strategic shift by adopting Ether (“ETH”), the native token of the Ethereum blockchain, as its primary treasury asset. Through this strategy, Sharplink seeks to align its capital allocation and treasury management with the growth of blockchain-based financial infrastructure, programmable finance, and decentralized protocols on Ethereum. As part of this transition, the Company became one of the largest publicly traded companies to pursue an ETH-centered digital asset treasury strategy.

Sharplink operates through two reportable segments: ETH Treasury Management and Affiliate Marketing.

The Company’s ETH Treasury Management focuses on the accumulation and active management of ETH as a long-term treasury asset. Sharplink seeks to benefit from potential ETH price appreciation and from protocol-level rewards earned by participating in Ethereum’s proof-of-stake consensus mechanism through staking activities. These activities include both native staking and liquid staking arrangements, executed within a governance, custody, and risk management framework designed to meet public company standards. The Company is not registered as an investment company under the Investment Company Act of 1940.

In addition, Sharplink continues to operate a legacy Affiliate Marketing segment that provides performance-based customer acquisition services to sportsbook and online casino gaming operators in regulated jurisdictions. Through its international affiliate network, PAS.net, and a portfolio of U.S. state-specific digital properties, the Company drives user traffic and player acquisition for licensed gaming operators. While this business remains operational, management’s strategic focus has shifted toward digital asset treasury activities.

Sharplink’s business model emphasizes balance sheet deployment, disciplined capital allocation and internal treasury management rather than traditional operating leverage. Management believes this approach positions the Company to participate in the evolving digital asset ecosystem while maintaining public company governance, transparency, and regulatory compliance.

Capital Markets Funds Raising

$4.5 Million Offering

On May 20, 2025, we entered into a securities purchase agreement (the “May 20, 2025 Purchase Agreement”) pursuant to which we agreed to sell and issue, in a reasonable best efforts registered offering (the “May 20, 2025 Offering”), an aggregate of 34,000 shares (the “May 20, 2025 Shares”) of our Common Stock, par value $0.0001 per share (the “Common Stock”) and pre-funded warrants (the “May 20 Pre-Funded Warrants”) to purchase up to 1,496,612 shares of Common Stock (the “May 20, 2025 Pre-Funded Warrant Shares”). The May 20, 2025 Shares were offered at an offering price of $2.94 per May 20, 2025 Share. The gross proceeds from the May 20, 2025 Offering, before deducting the placement agent fees and offering expenses, were approximately $4,500. A.G.P./Alliance Global Partners (“A.G.P.”) acted as the sole placement agent for the May 20, 2025 Offering.

$425 Million Offering

On May 26, 2025, we entered into a securities purchase agreement for a private placement in public entity (the “May 2025 PIPE Offering”), raising gross proceeds of $425,000 funded in a combination of fiat and Ether. On June 2, 2025, we announced the closing of the May 2025 PIPE Offering was May 30, 2025, and launched our treasury reserve strategy to hold the native cryptocurrency of the Ethereum blockchain, commonly referred to as “Ether” or “ETH,” as our primary treasury reserve asset. Consensys Software Inc. acted as the lead investor in the May 2025 PIPE Offering, along with prominent crypto venture capital firms and infrastructure providers, with an intent to assist us in earning distinction as one of the largest ETH-focused treasury strategies in the public markets. A.G.P. acted as the sole placement agent in connection with the May 2025 PIPE Offering.

At-The-Market (“ATM”) Offerings

On May 1, 2024, we entered into an ATM Sales Agreement (the “2024 ATM Sales Agreement”) with A.G.P. pursuant to which we may offer and sell, from time to time, through A.G.P., as sales agent and/or principal, shares of our Common Stock having an aggregate offering price of up to $1,700, subject to certain limitations on the amount of Common Stock that may be offered and sold by us set forth in the ATM Sales Agreement (the “2024 ATM Offering”).

On May 30, 2025, we entered into a second ATM Sales Agreement (the “May 2025 ATM Sales Agreement”) with A.G.P. relating to the sale of shares of our Common Stock from time to time, having an aggregate offering price of up to $1.0 billion (the “May 2025 ATM Offering”). On July 17, 2025, we entered into an Amendment to the May 2025 ATM Sales Agreement (the “Amendment”) to (i) increase the number of shares that may be sold in the May 2025 ATM Offering to $6.0 billion; and (ii) to permit the forward sale of shares to be sold in the May 2025 ATM Offering pursuant to Master Forward Confirmation Letter Agreements.

As of December 31, 2025, we had raised total gross proceeds of $2,147,072 from sales of shares under our ATM Sales Agreements, before factoring related fees and expenses.

August 6, 2025 Registered Direct Offering

On August 6, 2025, Sharplink entered into a securities purchase agreement (the “August 2025 Purchase Agreement”) with certain institutional investors to sell in a registered direct offering (the “August 2025 Offering”) an aggregate of 10,256,411 shares of the Company’s Common Stock (the “August 2025 Shares”). The price per share was $19.50, and the gross proceeds from the August 2025 Offering, before deducting the placement agent fees, financial advisor fees, and offering expenses, were approximately $200,000. The Company used the net proceeds received from the August 2025 Offering to acquire ETH and for general working capital purposes. The August 2025 Shares were offered and sold pursuant to a prospectus, dated May 30, 2025, and a prospectus supplement, dated August 6, 2025, in connection with a takedown from the Company’s effective shelf registration statement on Form S-3ASR (File No. 333-287708). The August 2025 Purchase Agreement contained customary representations and warranties that the parties made to, and solely for the benefit of, each other in the context of all of the terms and conditions of that agreement and in the context of the specific relationship between the parties. The August 2025 Purchase Agreement also contained customary conditions to closing, termination rights of the parties, certain indemnification obligations of the Company and ongoing covenants for the Company.

On August 6, 2025, the Company entered into a placement agency agreement (the “August 2025 Placement Agency Agreement”) with A.G.P., as lead placement agent and SG Americas Securities, LLC, as co-placement agent (“Societe Generale,” and together with A.G.P.., the “Placement Agents”), pursuant to which the Company engaged the Placement Agents as the exclusive placement agents in connection with the August 2025 Offering. Cantor Fitzgerald & Co., (“Cantor”) acted as financial advisor to the Company pursuant to an engagement letter with the Company. Pursuant to the August 2025 Placement Agency Agreement, the Company paid the August 2025 Placement Agents a cash fee equal to 5.0% of the aggregate gross proceeds raised from the sale of the shares sold in the August 2025 Offering less the fees to be paid to Cantor as financial advisor. Notwithstanding the foregoing, the cash fee paid to A.G.P. did not exceed 2.0% of the aggregate gross proceeds raised from the sale of the securities sold in the offering. The balance of the cash fee not payable to the August 2025 Placement Agents or Cantor was credited back to the Company. The August 2025 Placement Agency Agreement also contains representations, warranties, indemnification and other provisions customary for transactions of this nature. The August 2025 Offering closed on August 8, 2025.

August 10, 2025 Registered Direct Offering

On August 10, 2025, we entered into a securities purchase agreement (the “Second 2025 August Purchase Agreement”) with certain institutional investors to sell in a registered direct offering (the “Second 2025 August Offering”) an aggregate of 18,382,353 shares of the Company’s Common Stock (the “Second 2025 August Shares”). The price per Second 2025August Share was $21.76, and the gross proceeds from the Second August 2025 Offering, before deducting the placement agent fees, financial advisor fees, and offering expenses, were approximately $400,000. The Company used the net proceeds received from the Second 2025 August Offering to acquire ETH as well and for general working capital purposes. The Second August 2025 Shares were offered and sold pursuant to a prospectus, dated May 30, 2025, and a prospectus supplement, dated August 10, 2025, in connection with a takedown from the Company’s effective shelf registration statement on Form S-3ASR (File No. 333-287708). The Second August 2025 Purchase Agreement contained customary representations and warranties that the parties made to, and solely for the benefit of, each other in the context of all of the terms and conditions of that agreement and in the context of the specific relationship between the parties. The Second August 2025 Purchase Agreement also contained customary conditions to closing, termination rights of the parties, certain indemnification obligations of the Company and ongoing covenants for the Company.

On August 10, 2025, the Company entered into a placement agent agreement (the “Second August 2025 Placement Agent Agreement”) with AGP as sole placement agent, pursuant to which the Company engaged A.G.P. as the exclusive placement agent in connection with the Second August 2025 Offering. Cantor acted as financial advisor to the Company pursuant to an engagement letter with the Company. Pursuant to the Second 2025 August Placement Agent Agreement, the Company paid A.G.P. a cash fee equal to 2.5% of the aggregate gross proceeds raised from the sale of the shares sold in the Second August 2025 Offering less the fees to be paid to Cantor as financial advisor. The Second August 2025 Placement Agent Agreement also contains representations, warranties, indemnification and other provisions customary for transactions of this nature. The Second August 2025 Offering closed on August 12, 2025.

October 15, 2025 Registered Direct Offering

On October 15, 2025, we entered into a securities purchase agreement (the “October 2025 Purchase Agreement”) with an institutional investor to sell in a registered direct offering (the “October 2025 Offering”) an aggregate of 4,500,000 shares of the Company’s Common Stock (the “October 2025 Shares”). The price per October 2025 Share was $17.00, and the gross proceeds from the October 2025 Offering, before deducting the placement agent fees and offering expenses, were approximately $76,500. The Company intends to use the net proceeds received from the October 2025 Offering to acquire ETH as well as for general working capital purposes. Under the October 2025 Purchase Agreement, the Company also granted the investor 90-day premium purchase contracts, which expired on January 15, 2026, to purchase up to an additional 4,500,000 shares of Common Stock at an exercise price of $17.50 (the “Premium Purchase Contract” and the shares of Common Stock issuable upon exercise of the Premium Purchase Contracts, the “Premium Purchase Shares”). The premium purchase contracts were not executed prior to the January 15, 2026 expirations date. The October 2025 Shares, Premium Purchase Contracts, and Premium Purchase Shares (collectively, the “October 2025 Securities”) were offered and sold pursuant to a prospectus, dated May 30, 2025, and a prospectus supplement, dated October 15, 2025, in connection with a takedown from the Company’s effective shelf registration statement on Form S-3ASR (File No. 333-287708). The October 2025 Purchase Agreement contains customary representations and warranties that the parties made to, and solely for the benefit of, each other in the context of all of the terms and conditions of that agreement and in the context of the specific relationship between the parties. The October 2025 Purchase Agreement also contains customary conditions to closing, termination rights of the parties, certain indemnification obligations of the Company and ongoing covenants for the Company.

On October 15, 2025, the Company entered into a placement agent agreement (the “October 2025 Placement Agent Agreement”) with A.G.P. as sole placement agent (the “October 2025 Placement Agent”), pursuant to which the Company engaged the October 2025 Placement Agent as the exclusive placement agent in connection with the October 2025 Offering. Pursuant to the October 2025 Placement Agent Agreement, the Company paid the October 2025 Placement Agent a cash fee equal to 2.0% of the aggregate gross proceeds raised from the sale of the Securities sold in the October 2025 Offering. The October 2025 Placement Agent Agreement also contains representations, warranties, indemnification and other provisions customary for transactions of this nature. The Offering closed on October 17, 2025.

Meetings of Stockholders

July 2025 Special Meeting of Stockholders

On July 24, 2025, the Company convened a special meeting of stockholders (the “July 2025 Special Meeting”) virtually via live webcast. Only stockholders of record at the close of business on June 18, 2025, the record date for the July 2025 Special Meeting, were entitled to vote at the Special Meeting. As of the record date, 62,125,336 shares of the Company’s Common Stock were outstanding and entitled to vote at the July 2025 Special Meeting. Based on the estimated preliminary voting results present at the meeting or by proxy were holders of 35,076,578 shares of the Company’s Common Stock, which represented approximately 56% of the voting power of all shares of Common Stock as of the record date and constituted a quorum for the transaction of business at the July 2025 Special Meeting. During the July 2025 Special Meeting, our stockholders approved two proposals: (i) to adopt an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of Common Stock of the Company from 100,000,000 to 500,000,000; and (ii) to adopt the Company’s Amended and Restated 2023 Equity Incentive Plan to increase the number of shares of Common Stock reserved for issuance thereunder by 8,000,000 shares to 8,034,166 shares.

September 2025 Special Meeting of Stockholders

On September 24, 2025, the Company convened a special meeting (the “September 2025 Special Meeting”) virtually via live webcast. Only stockholders of record at the close of business on August 22, 2025, the record date for the September 2025 Special Meeting, were entitled to vote at the September 2025 Special Meeting. As of the record date, 181,740,293 shares of the Company’s Common Stock were outstanding and entitled to vote at the September 2025 Special Meeting. Based on the estimated preliminary voting results present at the meeting or by proxy were holders of 81,092,892 shares of the Company’s Common Stock, which represented approximately 44.67% of the voting power of all shares of Common Stock as of the record date and constituted a quorum for the transaction of business at the September 2025 Special Meeting. Our stockholders voted on and approved one proposal: to adopt an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to increase the number of shares of Common Stock of the Company from 500,000,000 to 2,500,000,000.

Other Matters

Addition of Sales Agents to ATM Offering

On August 19, 2025, the Company entered into an Amended and Restated Sales Agreement (the “Amended and Restated ATM Sales Agreement”) (which amended and restated the May 2025 ATM Sales Agreement) by and among the Company, A.G.P., Canaccord Genuity LLC (“Canaccord Genuity”), Societe Generale, B. Riley Securities, Inc. (“B. Riley”), and Citizens JMP Securities, LLC (“Citizens”) to add Canaccord Genuity, Societe Generale, B. Riley, and Citizens as additional sales agents and to make certain conforming changes.

Adoption of Inducement Award Plan

On August 19, 2025, the Board adopted the Sharplink, Inc. Inducement Award Plan (the “Inducement Award Plan”). The Inducement Award Plan was adopted without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4) and will be administered by the Compensation Committee of the Board or the independent members of the Board. The Board reserved 3,000,000 shares of the Company’s Common Stock for issuance under the Inducement Award Plan, subject to adjustment as provided in the plan document. The terms of the Inducement Award Plan are substantially similar to the terms of the Company’s Amended and Restated 2023 Equity Incentive Plan, with the exception that incentive stock options may not be issued under the Inducement Award Plan and equity awards under the Inducement Award Plan (including nonqualified stock options, restricted stock, restricted stock units, and other stock-based awards) may be issued only an employee who is commencing employment with the Company or any subsidiary or who is being rehired following a bona fide interruption of employment by the Company or any subsidiary, in either case if he or she is granted such award in connection with his or her commencement of employment and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The Board also adopted a form of Restricted Stock Unit Agreement Notice of Restricted Stock Unit Grant (Time-Based Grant) (the “Inducement Time-Based RSU Grant Package”) and a form of Restricted Stock Unit Agreement Notice of Restricted Stock Unit Grant (Performance-Based Grant) (the “Inducement Performance-Based RSU Grant Package”) for use under the Inducement Award Plan.

2025 Share Repurchase Plan

On August 21, 2025, the Board approved a share repurchase program (the “2025 Repurchase Program”) providing for the repurchase of up to $1.5 billion of the Company’s outstanding shares of Common Stock. Under the 2025 Repurchase Program, the Company is authorized to repurchase shares of Common Stock through open market purchases, privately-negotiated transactions, accelerated share repurchases, or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The 2025 Repurchase Program does not obligate the Company to repurchase shares of Common Stock and the specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance metrics, market conditions, securities law limitations and other factors. In connection with the 2025 Repurchase Program, on August 21, 2025, the Company entered into an Open Market Share Repurchase Agreement (the “Repurchase Agreement”) with The Benchmark Company, LLC (the “Broker”) whereby the Broker has agreed to act as a non-exclusive agent on behalf of the Company to repurchase shares of the Company’s Common Stock in the open market pursuant to Rule 10b-18 of the Exchange Act. The Repurchase Agreement will continue in effect until terminated by either the Company or the Broker, with or without cause, upon written notice to the other party. The Company will pay Broker a commission at a rate of $0.01 for each share of common stock repurchased pursuant to the Repurchase Agreement. As of December 31, 2025, the Company has repurchased 1,938,450 shares of its Common Stock pursuant to the 2025 Repurchase Program at an average price of $16.33 per share.

Appointment of Superstate as Digital Transfer Agent

On September 25, 2025, we announced that financial technology firm, Superstate, was appointed by the Company as its Digital Transfer Agent in connection with our plans to tokenize our SEC-registered Common Stock directly on the Ethereum blockchain. By enabling its equity to be tokenized natively onchain, Sharplink aims to demonstrate how public companies can use blockchain infrastructure to create shareholder value, improve market efficiency and drive forward the next generation of capital markets. Sharplink intends to partner with Superstate to tokenize its equity on Ethereum through its Opening Bell platform, expanding Superstate’s multichain capital markets infrastructure. Sharplink and Superstate also intend to closely collaborate on advancing how tokenized public equities can ultimately trade on Automated Market Makers (“AMMs”) and other DeFi protocols in a fully compliant manner. We believe this initiative aligns with the SEC’s broader Project Crypto innovation agenda aimed at modernizing U.S. securities regulation to better enable digital assets, blockchain and onchain markets.

Sharplink has concurrently realigned its corporate structure to support this strategic transition by organizing its activities into two distinct reportable segments. This segmentation is intended to enhance transparency into the Company’s operating performance and provide investors with clearer insight into the underlying drivers of revenue, expenses and capital allocation priorities across the business. As the ETH treasury and related revenue platform scale, management also expects this structure to support disciplined capital deployment and greater operating leverage across the Company’s corporate infrastructure.

1) ETH Treasury Management

The Company seeks to benefit from its ETH-focused treasury strategy through two primary drivers: (i) yield and other returns generated from staking and related on-chain treasury activities and (ii) through potential appreciation in the market value of ETH. Through qualified custodians, the Company participates in native staking by delegating ETH to third-party validators operating on Ethereum’s proof-of-stake (“PoS”) network, earning protocol-level rewards in accordance with prevailing network conditions.

The Company also utilizes liquid staking and restaking arrangements, whereby ETH is deployed into third-party protocols in exchange for liquid staking tokens (“LSTs”) and liquid restaking tokens (“LRTs”), including instruments such as LsETH and weETH. These arrangements allow the Company to maintain exposure to underlying staked ETH while accessing additional on-chain liquidity and yield opportunities. In certain cases, the Company earns incentive-based revenue from third-party programs designed to promote ecosystem participation, including rewards tied to maintaining total value locked (“TVL”) within specific blockchain environments.

On December 18, 2025, the Company entered into a Strategic Partnership Agreement (the “SPA”) with ether.fi, EigenCloud, Linea Consortium (“Linea”), a related party, and Consensys Software, Inc. (“Consensys”), a related party, pursuant to which the Company agreed to bridge and maintain weETH from its treasury on Linea, a zero-knowledge Ethereum Virtual Machine (“zkEVM”) Layer 2 network, over an initial 24-month period through Anchorage Digital Bank N.A., its qualified custodian. Consensys will not receive any fees or commission on the Company’s deployment of ETH on Linea. In addition to the staking and restaking rewards reflected in the weETH conversion rate, the Company is entitled under the SPA to monthly protocol incentives funded by ether.fi, Linea and EigenCloud based on month-end TVL metrics, subject to contractual caps and payable in the form of ETH and weETH. The Company accounts for the protocol incentives as revenue under ASC 606 because ether.fi, Linea and EigenCloud provide consideration in exchange for the Company’s service of providing and maintaining TVL on Linea. Revenue is recognized over each monthly service period as the Company satisfies its performance obligation and the amount of consideration becomes determinable and is no longer constrained; subsequent changes in the fair value of the digital assets attributable solely to the form of consideration are recognized separately in earnings.

The Company’s staking infrastructure, custody relationships and operational controls are structured to meet the governance, security and oversight standards expected of a public company. These arrangements are intended to support safe participation in Ethereum’s PoS network and related protocols while maintaining compliance with applicable regulatory, risk-management and financial-reporting requirements.

2) Affiliate Marketing

Key Growth Strategies

Sharplink’s growth strategy is focused on disciplined capital allocation, compounding ETH Concentration, increasing the productivity of its ETH treasury and leveraging its scale while preserving strategic flexibility as the Ethereum ecosystem and digital asset treasury segment evolve. The Company seeks to support long-term shareholder value through the following key initiatives:

Emerging Growth Areas for the Ethereum Ecosystem

We track four areas of growth for the Ethereum ecosystem that we believe may support long-term demand for ETH: stablecoins, tokenization of RWAs, institutional decentralized finance and agentic finance. During the second quarter, stablecoin settlement volume expanded; established market infrastructure providers continued moving tokenized securities toward production; institutional participation in on-chain strategies grew; and agent-initiated payment activity increased. Management views these four areas as complementary sources of potential network activity rather than independent or guaranteed drivers of demand.

Agentic finance refers to activity in which software agents transact, pay for data and services, and coordinate with other agents using programmable wallets, stablecoins, identity tools and verifiable settlement. Management believes Ethereum and its Layer 2 networks are positioned to provide elements of this infrastructure. During the first half of 2026, third parties reported continued growth in agent-initiated stablecoin micropayment activity on Ethereum Layer 2 networks. According to Crypto Briefing, Coinbase’s x402 went from near zero in mid-2025 to more than 100 million cumulative transactions by the first quarter of 2026. By late April 2026, Coinbase reported approximately 69,000 active agents, 165 million transactions and approximately $50 million in cumulative volume. Separately, the Ethereum network reached record levels of daily active addresses and transactions during the first half of 2026, including 3.6 million daily transfers across approximately 600,000 daily active wallets. Much of the reported x402 activity occurred on Base, an Ethereum Layer 2 network rather than Ethereum mainnet, and some third-party analysts have indicated that early volume may include testing or speculative activity. Accordingly, management views agentic finance as an emerging, not yet mature, contributor to on-chain activity. Currently the Company is not actively participating in agentic finance either within its operations or as part of our ETH Treasury Management Strategy.

We view ETH Treasury Management as a core operating business. Our strategy combines a foundational staking layer with selective treasury activities intended to generate incremental, risk-adjusted ETH-denominated rewards and other returns above the staking baseline. As our treasury grows, scale is expected to improve our ability to access institutional capital, negotiate deployment opportunities and leverage our corporate infrastructure across a larger asset and revenue base. Our staking and treasury activities are designed to support Ethereum’s decentralization, scalability and security while meeting institutional standards for custody, transparency, risk management and governance.

Our capital allocation framework is designed to increase shareholder exposure to ETH within a prudent risk-management framework. We evaluate capital issuance, ETH accumulation, treasury deployment and share repurchases dynamically based on market conditions and the expected long-term effect on ETH Concentration and shareholder value. Capital may be raised through equity, equity-linked debt, debt or other contracts or arrangements intended to fund the purchase of ETH, whether or not classified as a liability, debt or equity (collectively, “Financings”). We may seek to access capital when terms are attractive, acquire ETH at prices management considers attractive, and repurchase shares when management believes they trade below its assessment of underlying value, subject in each case to available capital, applicable law and other considerations. We have not set a specific target for the maximum amount of ETH we seek to hold.

We view disciplined capital allocation and treasury productivity as complementary sources of potential compounding. Capital allocation can expand the ETH base, while native staking, liquid staking, restaking and selected on-chain treasury activities can generate additional ETH-denominated rewards or other returns on that base. We evaluate such activities on a risk-adjusted basis, with emphasis on liquidity, qualified custody, operational controls and institutional governance.

The accounting models applicable to ETH, LsETH and weETH may cause period-to-period results to include unrealized fair-value changes or impairment charges that do not represent realized cash gains or losses and do not, by themselves, change the number of digital asset units held. Accordingly, management evaluates reported results together with the quantity and composition of digital assets held, ETH-denominated rewards and protocol incentives earned, and related cash flows.

During the quarter and shortly thereafter, several independent organizations focused on protocol research, institutional adoption and privacy and compliance infrastructure were launched or advanced, as described under “Ecosystem Stewardship.” At the same time, we observed continued development across four areas that management believes may support long-term demand for ETH: stablecoin settlement, tokenization of real-world assets (“RWAs”), institutional decentralized finance and agentic finance. We view these developments as part of a broader, increasingly specialized institutional ecosystem around Ethereum.

ETH Productivity

Our ETH Treasury Management segment includes native staking, liquid staking, restaking activities and protocol incentives.

(a) Value of initial staked ETH into ether.fi and earned incentives.

Carrying Value versus Market Value

As described in our condensed consolidated financial statements, our LsETH and weETH are outside the scope of ASC 350-60, Intangibles—Goodwill and Other—Accounting for and Disclosure of Crypto Assets, and are accounted for as indefinite-lived intangible assets under ASC 350-30, Intangibles—Goodwill and Other—General Intangibles Other Than Goodwill, recorded at cost, less any impairment recognized since acquisition.

Under this cost-less-impairment model, we recognize an impairment loss whenever the observable market price of an LsETH or weETH token falls below its carrying value at any time since we acquired that token, and the reduced amount becomes the token’s new cost basis. Once an asset has been impaired, its carrying value is not adjusted for any subsequent recovery or appreciation in market price. As a result, the carrying amounts of these assets on our condensed consolidated balance sheet may be less than their current market value, and our financial statements do not reflect any unrealized appreciation on these holdings. Appreciation, if any, would only be recognized in earnings upon a derecognition event, such as the redemption of the receipt token for ETH, a sale, or an exchange measured as the difference between the consideration received and the asset’s carrying amount, in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.

The following table compares the carrying value of our crypto assets accounted for at historical cost less impairment to the calculated market value of those assets as of June 30, 2026. The market-value amounts are determined using the mathematical calculations described in the LsETH and weETH tables above (see footnotes (f) and (g)) — the number of tokens held at period end multiplied by the applicable end-of-period market price. These amounts do not represent fair value for purposes of financial-statement recognition and do not represent amounts we would realize upon sale or redemption. These calculations are presented solely as supplemental information. They are not a substitute for the amounts presented in our financial statements that are stated in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Galaxy Sharplink Onchain Yield Fund

On May 11, 2026, Sharplink announced a non-binding memorandum of understanding with Galaxy Digital to establish the Galaxy Sharplink Onchain Yield Fund. On August 7, 2026, the Company and Galaxy Digital executed definitive agreements establishing the Galaxy Sharplink Onchain Yield Fund, LP, a $125.0 million institutional investment vehicle designed to deploy ETH into professionally managed onchain yield strategies. The Fund launched with $125.0 million in committed capital, including a $100.0 million commitment from the Company’s staked ETH treasury and a $25.0 million commitment from Galaxy. Galaxy serves as the Fund’s investment manager and is responsible for opportunity sourcing, risk management and capital deployment. The Fund is designed to maintain exposure to ETH and underlying staking rewards while deploying capital into targeted onchain yield strategies. The Company also intends to leverage the Fund’s institutional investment process and risk management framework as a framework for evaluating additional external treasury strategies. The launch of the Fund represents an important milestone in the Company’s broader ETH treasury management strategy by expanding beyond passive ownership of ETH into institutional-grade onchain capital deployment designed to generate additional risk-managed returns. See Note 14 – Subsequent Events.

Ecosystem Stewardship