SILO 10-K & 10-Q changes, risk factors and insider trading
Silo Pharma, Inc. · Nasdaq · Pharmaceutical Preparations · CIK 1514183 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Relating to Investing in Digital Securities”
New heading “The launch of central bank digital currencies (“CBDCs”) may adversely impact our business.”
New heading “Absent federal regulations, there is a possibility that any digital asset we acquire may be classified as a “security.” Any classification of any digital asset we acquire as a “security” would subject us to additional regulation and could materially impact the operation of our business.”
New heading “If we were deemed to be an investment company under the 1940 Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated.”
New heading “We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations.”
New heading “Cryptocurrency assets are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.”
New heading “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.”
New heading “If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to any of our acquired digital assets, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our Solana and our financial condition and results of operations could be materially adversely affected.”
New heading “Digital assets have historically experienced, and are expected to continue to experience, high price volatility which may influence our financial results and the market price of our common stock.”
New heading “The availability of spot exchange traded products (ETPs) for Bitcoin and other digital assets may adversely affect the market price of our common stock.”
New heading “A temporary or permanent blockchain “fork” to a Digital Asset blockchain network could adversely affect our business.”
New heading “Staking introduces a risk of loss of digital assets we stake, which could adversely affect the value of our common stock.”
New heading “Staked digital assets may be inaccessible for a variable period of time, determined by a range of factors, which could result in certain liquidity risk to the Company.”
New heading “We have limited history in generating staking revenues from digital assets, which could adversely affect our business, financial condition and operating results.”
New heading “Competition from other companies staking and utilizing digital assets in their treasury plans.”
New heading “We may fail to develop and execute successful investment or trading strategies.”
New heading “We may make, or otherwise be subject to, trade errors.”
New heading “We are currently listed on The Nasdaq Capital Market. If we are unable to maintain listing of our securities on Nasdaq or any stock exchange, our stock price could be adversely affected and the liquidity of our stock and our ability to obtain financing could be impaired and it may be more difficult for our shareholders to sell their securities.”
Largest changes
“Attacks upon systems across a variety of industries, including cryptocurrency industries, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors. …”see in full comparison
“If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to any of our acquired digital assets, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our Solana and our financial condition and results of operations could be materially adversely affected.”see in full comparison
“We are currently listed on The Nasdaq Capital Market. If we are unable to maintain listing of our securities on Nasdaq or any stock exchange, our stock price could be adversely affected and the liquidity of our stock and our ability to obtain financing could be impaired and it may be more difficult for our shareholders to sell their securities.”see in full comparison
“Cryptocurrency assets are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.”see in full comparison
“Staked digital assets may be inaccessible for a variable period of time, determined by a range of factors, which could result in certain liquidity risk to the Company.”see in full comparison
“Absent federal regulations, there is a possibility that any digital asset we acquire may be classified as a “security.” Any classification of any digital asset we acquire as a “security” would subject us to additional regulation and could materially impact the operation of our business.”see in full comparison
Full comparison: every changed paragraph (97)
-1515--
We
currently have no therapies that are approved
for commercial sale and may never be able to develop marketable therapies. We entered into
license agreements with numerous companies
and universities, including the University of Maryland, Baltimore and Columbia University.
See “---LicenseItem 1-Business---License Agreements between the
Company and Vendor.” Accordingly, our business may depend on the successful
regulatory approval of potential in-licensed product
candidates. We cannot be certain that any of our product candidates will receive
regulatory approval or that our therapies will be successfully
commercialized even if we receive regulatory approval.
-1616-- In addition, therapeutic candidates containing controlled substances are subject to DEA regulations relating to manufacturing, storage, distribution and physician prescription procedures, including:
-1717--
Despite the current status of psilocybin and psilocin
as Schedule I controlled substances in the United States, there may be changes in
the status of psilocybin or psilocin under the laws
of certain U.S. cities or states. ForIn instance,Oregon, psilocybin services are legal under a
state licensing framework and in Colorado, state law authorizes regulated “natural medicine” services (including psilocybin/psilocyn)
with licensed facilities and facilitators (rolling implementation) and also provides certain personal-use allowances under state law,
but commercial sales outside the cityregulated offramework Denverremain votedillegal. toIn decriminalizeaddition, thesome possession of psilocybin in 2019 and a few
otherU.S. cities have decriminalized psilocybin since
(including Oakland, California; Santa Cruz, California; Ann Arbor,Arbor and Detroit, Michigan; Cambridge,
Massachusetts; and Somerville, Massachusetts).Massachusetts,
Seattle Moreover,and inPort Townsend, Washington, and the November 2020 election, Oregon passed Measure 109 which legalizes medical
usestate of “psilocybin products,” including magic mushrooms, to treat mental health conditions in licensed facilities with registered
therapists.Maine).
-1818-- Various federal, state, provincial and local laws govern our business in any jurisdictions in which we may operate, and to which we may export our products, including laws relating to health and safety, the conduct of our operations, and the production, storage, sale and distribution of our products. Complying with these laws requires that we comply concurrently with complex federal, state, provincial and/or local laws. These laws change frequently and may be difficult to interpret and apply. To ensure our compliance with these laws, we will need to invest significant financial and managerial resources. It is impossible for us to predict the cost of complying with such laws or the effect they may have on our future operations. A failure to comply with these laws could negatively affect our business and harm our reputation. Changes to these laws could negatively affect our competitive position and the markets in which we operate, and there is no assurance that various levels of government in the jurisdictions in which we operate will not pass legislation or regulation that adversely impacts our business.
-1919--
-2020--
-2121--
-2222-- If
we enter into arrangements with third parties
to perform market access and commercial services for any approved therapies, the revenue
or the profitability of these revenuerevenues to us could
be lower than if we were to commercialize any therapies that we develop ourselves.
Such collaborative arrangements may place the commercialization
of any approved therapies outside of our control and would make us subject
to a number of risks including that we may not be able to control
the amount or timing of resources that our collaborative partner devotes
to our therapies or that our collaborator’s willingness
or ability to complete its obligations, and our obligations under our arrangements
may be adversely affected by business combinations
or significant changes in our collaborator’s business strategy. We may not be
successful in entering into arrangements with third
parties to commercialize our therapies or may be unable to do so on terms that are
favorable to us. Acceptable third parties may fail
to devote the necessary resources and attention to commercialize our therapies effectively,
to set up sufficient number of treatment centers
in third-party therapy sites, or to recruit, train and retain adequate number of therapists
to administer our therapies.
-2323--
-2424--
-2525--
Since
its enactment, there have been numerous
judicial, administrative, executive, and legislative challenges to certain aspects of the ACA,
and we expect there will be additional
challenges and amendments to the ACA in the future. It is unclear whether the ACA will be overturned,
repealed, replaced, or further amended.
We cannot predict what affect further changes to the ACA would have on our business. This uncertainty
is heightened by President Biden’s
January 28, 2021 Executive Order on Strengthening Medicaid and the Affordable Care Act
which indicated that the Biden Administration
may significantly modify the ACA and potentially revoke any changes implemented by
the Trump Administration. It is also possible that
President Biden will further reform the ACA and other federal programs in manner that
may impact our operations. The Biden Administration
has indicated that a goal of its administration is to expand and support Medicaid
and the ACA and to make high-quality healthcare accessible
and affordable. The potential increase in patients covered by government funded
insurance may impact our pricing. Further, it is possible
that the Biden Administration may further increase the scrutiny on drug pricing.
The ACA continues to be challenged in court and it is
unclear how any future litigation and the healthcare reform measures of the Biden administration
will impact the ACA. In August
2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions
that have significant implications
for pharmaceutical manufacturers and Medicare beneficiaries, including allowing the federal government
to negotiate drug prices for certain
high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that
fail to comply with the drug price
negotiation requirements, requiring drug companies to pay rebates for all Medicare Part B and Part
D drugs, with limited exceptions, if
their drug prices increase faster than inflation, capping out-of-pocket spending for Medicare Part
D enrollees and making additional changes
to Medicare Part D to further reduce out-of-pocket prescription drug costs for beneficiaries,
among other changes. The Biden administration
released an additional executive order on October 14, 2022, requiring the U.S. Department
of Health & Human Services (“HHS”)
to submit a report within 90 days on how the Center for Medicare and Medicaid Innovation
can be further leveraged to test new models for
lowering drug costs for Medicare and Medicaid beneficiaries. The One Big Beautiful Bill Act, which was signed into law in July 2025, includes provisions that will impact the U.S. healthcare system
in various ways, including by cuts to Medicaid and introducing new participant work and eligibility requirements for Medicaid coverage,
which are expected to significantly change the administration and applicability of Medicaid coverage. In November 2025, CMS announced
a voluntary initiative called the GENEROUS Model (GENErating cost Reductions for U.S. Medicaid Model) to introduce the option of most-favored-nation
pricing to the Medicaid program, whereby a drug manufacturer may voluntarily offer supplemental rebates to participating state Medicaid
programs for a manufacturer’s covered outpatient drugs. Government agreements with pharmaceutical companies and other measures that
use most-favored-nation pricing targets for prescription drugs, including the use of international pricing reference to set drug prices
in the U.S., or that increase generic and biosimilar drug entry sooner than expected, can have a material adverse effect on our industry,
ability to set adequate pricing for new drugs to recover R&D costs, ability to attract potential investors and potential buyers in
the future. We cannot predict the likelihood,full natureimpact of the executive orders focused on reducing prescription drug prices or extentincreasing ofdomestic
drug governmentmanufacturing regulation
capacity, or other measures that may arisebe fromimplemented futureby legislationthe orcurrent administrativeadministration orrelated executiveto action,drug eitherpricing, drug supply
chain and manufacturing in the UnitedU.S. StatesThe impact of ongoing and future judicial challenges, as well as future legislative, executive, and
administrative actions and any future healthcare measures and agency rules implemented by the current administration, including the Department
of Government Efficiency, on our company and the pharmaceutical industry as a whole is unclear. The implementation of cost containment
measures or abroad.other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.
At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control
prescription drug pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and
marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk
purchasing. A number of states are considering or have recently enacted state drug price transparency and reporting laws that could substantially
increase our compliance burdens and expose us to greater liability under such state laws. We expect that additional
state and federal health care
healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will
pay for healthcare products and services, which could result in reduced demand for our products or product candidates or additional pricing
pressures. We cannot predict the likelihood,
nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the
United States or abroad. We expect that additional state and federal health care reform measures will be adopted in the future, any of
which could limit the amounts that federal and state governments will pay for health care products and services.
-2626-- In addition, new laws and additional health reform measures may result in additional reductions in Medicare and other healthcare funding, which may adversely affect customer demand and affordability for our future therapeutic candidates and, accordingly, the results of our financial operations.
-2727--
-2828--
-2929-- Of note, in response to the global COVID-19 pandemic, the FDA adopted a risk-based system for the conduct of inspections of manufacturing facilities and began conducting voluntary remote interactive evaluations of certain drug manufacturing facilities and clinical research sites where an in-person inspection would not be prioritized, deemed mission-critical, or where direct inspection is otherwise limited by travel restrictions, but where the FDA determines that remote evaluation would still be appropriate. Regulatory authorities inside and outside the United States may adopt similar restrictions or other policy measures in response to any future pandemic. If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
-3030-- Furthermore, third-party payors are increasingly challenging prices charged for therapeutic substances and services, and many third-party payors may refuse to provide coverage and reimbursement for particular drugs when an equivalent generic drug or a less expensive therapy is available. It is possible that a third-party payor may consider our future therapeutic candidates as substitutable and only offer to reimburse patients for the less expensive therapy. These payors may deny or revoke the reimbursement status of a given drug product or establish prices for new or existing marketed therapies at levels that are too low to enable us to realize an appropriate return on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our future therapeutic candidates, and may not be able to obtain a satisfactory financial return on therapeutic candidates that we may develop.
-3131--
-3232--
-3333-- The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our licensed or owned patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products, or limit the duration of the patent protection of our products. Given the amount of time required for the development, testing and regulatory review of new life science product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property rights portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
-3434-- Periodic maintenance fees and annuities on any issued patent or pending application may be due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent or pending application. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, our competitors might be able to enter our markets, which could have a material adverse effect on our business.
-3535-- Disputes over intellectual property that we have licensed may prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, and we may be unable to successfully develop and commercialize our product candidate.
-3636--
Risks Relating to Investing in Digital 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 Solana.
Absent federal regulations, there is a possibility that any digital asset we acquire may be classified as a “security.” Any classification of any digital asset we acquire as a “security” would subject us to additional regulation and could materially impact the operation of our business.
We intend to only acquire digital assets that we believe would not be considered a “security” by the SEC and other U.S. federal or state regulator publicly stated may not agree our assessment. Despite the Trump Administration’s 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,” leading digital assets that we may acquire, may not be classified with respect to U.S. federal securities laws. Therefore, while (for the reasons discussed below) we intend to only invest in leading digital assets, that we conclude are 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 “1940 Act”) is therefore not required under the applicable securities laws, we acknowledge that a regulatory body or federal court may determine otherwise. Our conclusion, even if reasonable under the circumstances, would not preclude legal or regulatory action based on such a finding that any leading digital asset we acquire is a “security” which would require us to register as an investment company under the 1940 Act.
-3737-- We intend to adapt our process for analyzing the U.S. federal securities law status of any cryptocurrencies we acquire over time, as guidance and case law have evolved. As part of our U.S. federal securities law analytical process, we intend to 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.
Application of securities laws to the specific facts and circumstances of digital assets is complex and subject to change. 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 any digital asset we acquires is 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 1940 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 1940 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 1940 Act, and cash items) on an unconsolidated basis. Rule 3a-1 under the 1940 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 1940 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 1940 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 1940 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 1940 Act.
Since our formation, we have been a biopharmaceutical industry with a focus is on developing novel therapeutics that address underserved conditions including PTSD, stress-induced anxiety disorders, fibromyalgia, and central nervous system (CNS) diseases. Recently, we have begun focusing on pursuing opportunities to expand our portfolio into digital assets. We only intend to acquire digital assets that we conclude are investment securities, and as such do not intend to 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 1940 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 1940 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 1940 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 1940 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.
-3838-- Digital assets, as well as new business models and transactions enabled by blockchain technologies, present novel interpretive questions under the 1940 Act. There is a risk that assets or arrangements that we conclude are not securities prior to acquisition could be deemed to be securities by the SEC or another authority for purposes of the 1940 Act, which would increase the percentage of securities held by us for 1940 Act purposes. The SEC has requested information from a number of participants in the digital assets ecosystem, regarding the potential application of the 1940 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 1940 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 1940 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 1940 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 actions 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 1940 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 may be subject to regulatory developments related to crypto assets and crypto 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 is 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 any digital assets we may hold in the future. 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 any digital assets we acquire in the future or the ability of individuals or institutions to own or transfer digital assets.
If any digital asset we acquire is determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of such digital security and in turn adversely affect the market price of our common stock. Moreover, the risks of us engaging in a cryptocurrency treasury strategy have created, and could continue to create complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.
Cryptocurrency assets are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
Historically, the crypto markets have been characterized by: significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets; relative anonymity; a developing regulatory landscape; potential susceptibility to market abuse and manipulation; compliance and internal control failures at exchanges; and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell any digital assets we hold at favorable prices or at all. Further, any digital assets which we hold with our custodians will not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. If we are unable to sell any digital assets we hold, enter into additional capital raising transactions using any digital assets we hold as collateral, or otherwise generate funds using any digital assets we hold, or if we are forced to sell any digital assets we hold at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
-3939--
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, exchange-traded funds 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 Treasury Reserve Policy or our cryptocurrency strategy, our use of leverage, the manner in which our cryptocurrency assets are 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. Consequently, our board of directors has broad discretion over the investment, leverage and cash management policies it authorizes, in respect of any activities we may pursue, and has the power to change our current policies, including our strategy of acquiring and holding digital assets.
If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to any of our acquired digital assets, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our Solana and our financial condition and results of operations could be materially adversely affected.
We expect that any digital asset we own will be held in custody accounts at U.S.-based institutional-grade digital asset custodians. Security breaches and cyberattacks are of particular concern with respect to digital assets. Cryptocurrencies and the entities that provide services to participants in such ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. For example, in October 2021 it was reported that hackers exploited a flaw in the account recovery process and stole from the accounts of at least 6,000 customers of the Coinbase exchange, although the flaw was subsequently fixed and Coinbase reimbursed affected customers. Similarly, in November 2022, hackers exploited weaknesses in the security architecture of the FTX Trading digital asset exchange and reportedly stole over $400 million in digital assets from customers. A successful security breach or cyberattack could result in:
Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader cryptocurrency ecosystem, which could negatively impact us.
Attacks upon systems across a variety of industries, including cryptocurrency industries, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service providers or partners. We may experience breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities. In particular, we expect that unauthorized parties will attempt to gain access to our systems and facilities, as well as those of our partners and third-party service providers, through various means, such as hacking, social engineering, phishing and fraud. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. In addition, certain types of attacks could harm us even if our systems are left undisturbed. For example, certain threats are designed to remain dormant or undetectable, sometimes for extended periods of time, or until launched against a target and we may not be able to implement adequate preventative measures. Further, there has been an increase in such activities due to the increase in work-from-home arrangements. The risk of cyberattacks could also be increased by cyberwarfare in connection with the ongoing Russia-Ukraine and Israel-Hamas conflicts, or other future conflicts, including potential proliferation of malware into systems unrelated to such conflicts. Any future breach of our operations or those of others in the cryptocurrency industry, including third-party services on which we rely, could materially and adversely affect our financial condition and results of operations.
-4040--
Digital assets have historically experienced, and are expected to continue to experience, high price volatility which may influence our financial results and the market price of our common stock.
Digital assets like Bitcoin (BTC), and Ethereum (ETH) have historically experienced, and are expected to continue to experience, high price volatility. Such price fluctuations are likely to influence our financial results and the market price of our common stock. Our financial results and the market price of our common stock would be adversely affected, and our business and financial condition would be negatively impacted, if the price of digital assets we hold decrease substantially, including as a result of:
-4141--
A decline in the market value of digital assets or in the demand for trading digital assets could lead to a corresponding decline in the value of our digital assets, the number of transactions on the relevant blockchain network and, as such, the opportunities to earn block rewards and transaction fees, and could adversely affect our business, operating results and financial condition. Any decline in the volume of Digital Asset transactions, the price of digital assets, or market liquidity for digital assets generally may adversely affect our operating results. As part of our digital asset treasury strategy, we will have significant investments in BTC, ETH, Solana and other digital assets. Our operating results will be impacted by the revenues and profits we generate from the purchase, sale, and trading of digital asset, and financial contracts linked to thereto.
The price and trading volume of any digital asset is subject to significant uncertainty and volatility, and may significantly decline in the future, without recovery. Future fluctuations in trading prices of the digital assets that we hold may increase the price volatility or affect the value of digital assets we acquire or hold, which could materially and adversely affect our business operations, financial performance, and prospects. There is no assurance that any Digital Asset will maintain its value or that there will be meaningful levels of trading activities to support markets in any Digital Asset.
The availability of spot exchange traded products (ETPs) for Bitcoin and other digital assets may adversely affect the market price of our common stock.
Although BTC and other digital assets have experienced a surge of investor attention since Bitcoin was invented in 2008, until recently investors in the United States had limited means to gain direct exposure to BTC through traditional investment channels, and instead generally were only able to hold BTC 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 digital assets directly, as well as the potential reluctance of financial planners and advisers to recommend direct Digital Asset holdings to their retail customers because of the manner in which such holdings are custodied, some investors have sought exposure to BTC and other digital assets through investment vehicles that hold BTC and other digital assets and issue shares representing fractional undivided interests in their underlying Digital Asset 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, or NAV, possibly due to the relative scarcity of traditional investment vehicles providing investment exposure to digital assets.
On January 10, 2024, the SEC approved the listing and trading of spot Bitcoin ETPs, the shares of which can be sold in public offerings and are traded on U.S. national securities exchanges. The approved ETPs commenced trading directly to the public on January 11, 2024, with a trading volume of approximately $4.6 billion on the first trading day. Additionally, on May 23, 2024, the SEC approved rule changes permitting the listing and trading of spot ETPs that invest in ether, the main crypto asset supporting the Ethereum blockchain. The approved spot ETPs commenced trading directly to the public on July 23, 2024. To the extent investors view our common stock as providing exposure to digital assets, it is possible that the value of our common stock may also have included a premium over the value of our digital assets due to the prior scarcity of traditional investment vehicles providing investment exposure to digital assets or may be subject to declined due to investors now having a greater range of options to gain exposure to digital assets and investors choosing to gain such exposure through spot ETPs rather than our common stock. The possible listing and subsequent trading of spot ETPs for other digital assets offers investors another alternative to gain exposure to digital assets, which could result in a decline in the trading price of digital assets as well as a decline in the value of our common stock relative to the value of our digital assets.
-4242-- Although we are developmental-stage biopharmaceutical company, and we believe we offer a different value proposition than a passive digital asset investment vehicle such as a spot Bitcoin ETP or 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 BTC 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 digital assets 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. Additionally, unlike spot ETPs, we (i) do not seek for our shares to track the value of the underlying digital assets we hold before payment of expenses and liabilities, (ii) do not benefit from various exemptions and relief under the Securities Exchange Act of 1934, as amended, or the Exchange Act, including Regulation M, and other securities laws, which enable spot ETPs to continuously align the value of their shares to the price of the underlying digital assets they hold through share creation and redemption, and (iii) are not required to provide daily transparency as to our digital asset holdings or our daily net asset value (NAV). Furthermore, recommendations by broker-dealers to buy, hold, or sell complex products and non-traditional ETPs, or an investment strategy involving such products, may be subject to additional or heightened scrutiny that would not be applicable to broker-dealers making recommendations with respect to our common stock. Based on how we are viewed in the market relative to ETPs, and other vehicles that offer economic exposure to digital assets, such as Bitcoin futures ETFs and leveraged BTC futures ETFs, any premium or discount in our common stock relative to the value of our digital asset holdings may increase or decrease in different market conditions.
Management's Discussion & Analysis (MD&A)
New heading “Loss from Operations”
New heading “Crypto Assets, at Fair Value”
New heading “Crypto Assets, at Cost”
New heading “Staking Activities”
Removed heading “Operating Loss from Continuing Operations”
Removed heading “Loss from Discontinued Operations”
Removed heading “Research and Development”
Largest changes
For the year ended December 31,see in full comparison20242025 and2023,2024, other income, net amounted to$312,814$52,964 and$224,509,$312,814, respectively,anaincreasedecrease of$88,305,$259,850, or39.3%.83.1%. Theincreasedecrease in other income, net was primarily due toa decrease in penalty expense of $166,034 which was incurred during the 2023 period due to the early termination of a certificate of deposit and a decrease in net unrealized loss on equity investment of $3,118, offset by an increase in foreign currency transaction loss of $14,242,a decrease in interest and dividend income of$65,365,$139,253, an increase in unrealized loss on crypto assets of $64,608, increase inrealizedimpairment loss on crypto assets ofshort-term debt investments of $1,025,$39,916, and an increase in interest expense of$215.$32,218, offset by a decrease in foreign currency transaction loss of $14,242 and an increase in other income of $5,143.
“Crypto assets, at cost are recognized at fair value on the date received, which becomes their cost basis. Crypto assets at cost, such as LsETH and mSOL, do not fall in the scope of ASC 350-60 for subsequent measurement. LsETH and mSOL represent receipt tokens, which in general and by design, grants the holder an enforceable right to redeem ETH or SOL for which it was exchanged. Therefore, it fails the ‘other goods and services criterion’ in ASC 350-60-15-1(b) and is outside the scope of ASC 350-60. …”see in full comparison
“The Company also participates in liquid staking through a liquid staking protocol. One key difference and intended benefit of liquid staking versus native staking is that it allows the Company to earn staking rewards, like native staking, but provides liquidity and the ability to enter into other transactions through the use of receipt token. Instead of directly locking ETH or SOL into the respective staking deposit contract, the Company deposits ETH or SOL through its custodian into the liquid staking protocol’s smart contract. …”see in full comparison
“The Company participates in native staking exclusively as a delegator through third-party validators. The Company delegates SOL to validators, either directly or through third party asset managers, who operate nodes on the Solana network to validate transactions and add blocks to the blockchain. In return for delegating SOL to validators, the Company is entitled to a portion of the protocol-level rewards, comprising both consensus- and execution layer components received by the validators, in the form of SOL tokens, calculated based on the Company’s proportion of the total SOL staked. …”see in full comparison
“The Company performs an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted (unadjusted) prices in the Company’s principal market, indicate that it is more likely than not that any of the assets are impaired. The quoted (unadjusted) prices on the coinmarketcap.com or the Coinbase exchange, the active exchange that the Company has determined as its principal market, are used in the analysis. …”see in full comparison
Full comparison: every changed paragraph (56)
-5252-- In
addition, as more fully described below, we
have entered into a license agreement with the University of Maryland, Baltimore, and developing
a Ketamine polymer implant. In addition,
we into a sponsored research agreement with Columbia University for the study of ketamine in combination
with other drugs for treatment
of Alzheimer’s and depression disorders and we have also entered into an exclusive license agreement
with Columbia under which we
have rights to certain patents and inventions relating to the treatment of Alzheimer’s disease and
stress-induced affective disorders
using Ketamine in combination with certain other compounds.
Our
lead product candidate, SPC-15, is
designed as a novel serotonin 4 (5-HT4) receptor agonist that utilizes biomarkers for treatment of
stress-induced psychiatric
disorders such as PTSD and anxiety disorders. This innovative treatment is administered via an intranasal
formulation, potentially
qualifying for the FDA's streamlined 505(b)(2) regulatory pathway, which could expedite its approval process.
We are actively
collaborating with Columbia University, holding exclusive global rights to develop and commercialize SPC-15, pursuant
to and thethat certain exclusive license agreement entered into with Columbia on July 1, 2024. See “Item 1 Business --License----License Agreements between
between the Company and Vendor—Exclusive License Agreement with Columbia University.”
On
November 15, 2023, we entered intoan an
exclusive license agreement with Medspray Pharma BV for its proprietary patented soft mist nasal spray
technology, as the delivery
mechanism for SPC-15, which agreement has an effective date of October 31, 2023. Preclinical and formulation
studies were completed
in the first half of 2024 and on June 4, 2024 the Company submitted a pre-Investigational New Drug (pre-IND) briefing
package and
meeting request to the U.S. Food and Drug Administration (FDA) for SPC-15, Silo’s intranasal prophylactic treatment
for for
post-traumatic stress disorder (PTSD) and stress-induced anxiety disorder. In September 2024, we had a pre-IND meeting with the FDA
to align on the 505(b)(2) regulatory pathway for approval of SPC-15 and review our proposed plan to support opening an
IND.
Currently,
we are conducting GLP-compliant pharmacokinetic
and pharmacodynamic studies and in early March 2025 we completed first dosing in an IND-enabling
GLP-compliant toxicology and toxicokinetics,
and we are aiming for an IND submission in 2025.2026. The preclinical data suggests additional
applications for eating disorders and anorexia,
as well as enhanced efficacy when combined with an NMDA receptor antagonist for major
depressive disorder and other severe stress-related
conditions.
-5353--
In
March 2023, we filed a provisional patent application
with the USPTO to use SP-26 for treatment of chronic pain, including fibromyalgia. fibromyalgia
We intend to develop SP-26 following the Section 505(b)(2)
regulatory pathway of the FDA rules. Section 505(b)(2) of the FDCA was enacted
to enable sponsors to seek NDA approval for novel repurposed
drugs without the need for such sponsors to undertake time consuming and
expensive pre-clinical safety studies and Phase 1 safety studies.
Proceeding under this regulatory pathway, we will be able to rely upon
publicly available data with respect to our active ingredient in
our NDA submission to the FDA for marketing approval.
SPC-14
targets glutamate receptor NDMAR and serotonin
5-HT4 to address cognitive and neuropsychiatric symptoms in Alzheimer’s disease.
Given the global Alzheimer’s therapeutics
market is projected to exceed $30.8 billion by 2033, SPC-14 presents a promising opportunity.
SPC-14 was developed under a sponsored research
agreement with Columbia University See “Item 1 Business--Investigator-SponsoredInvestigator-Sponsored Study Agreements
between the Company and Vendors---Sponsored
Research Agreement with Columbia University for the Study of Ketamine in Combination with
Other Drugs for Treatment of Alzheimer’s
and Depression Disorders,” and we have exclusive global rights to develop and commercialize
SPC-14, pursuant to and that certain
exclusive license agreement entered into with Columbia on July 1, 2024. See “Item 1 Business--License----License Agreements
between the Company
and Vendor—Exclusive License Agreement with Columbia University.”. On October 13, 2022, we extended the
term of the sponsored
research agreement with Columbia to conduct further research studies into the mechanism of action of SPC-14 in
the treatment of Alzheimer’s
disease. In addition, we have been granted an option to license certain assets currently under development,
including SPC-14 for the treatment
of Alzheimer’s disease.
-5454-- On July 8, 2025, we entered into July 2025 Termination and Option Agreement with UMB which terminates the UMB License Agreement, previously in effect between us and UMB, and provides us with an exclusive, non-transferable evaluation license, as well as an exclusive option to negotiate a new exclusive commercial license, with respect to certain intellectual property related to central nervous system-homing peptides (the “Invention” and related “Patent Rights”) that were previously licensed under the UMB License Agreement.
Pursuant to the July 2025 Termination and Option Agreement, we were granted Option, exercisable during the term of the July 2025 Termination and Option Agreement, to negotiate and obtain an exclusive, sublicensable, royalty-bearing license to the Invention and Patent Rights for the therapeutic treatment of neuroinflammatory disease worldwide. The Option may be exercised by (i) providing written notice and submitting an acceptable commercialization plan to UMB, and (ii) paying a $1,000 option fee, which is creditable against certain future expenses if a commercial license is executed. The July 2025 Termination and Option Agreement was effective as of July 8, 2025, and will expire on March 31, 2026, unless earlier terminated or superseded by a new definitive license agreement upon exercise of the Option.
On January 26, 2023, the Company’s Board
of Directors authorized
a stock repurchase plan to repurchase up to $1 million of the Company’s issued and outstanding common
stock, from time to time,
with such plan to be in place until December 31, 2023. On January 9, 2024, the Board of Directors of the Company
approved an extension
of the previously announced stock repurchase program authorizing the purchase of up to $1 million of the Company’s
common stock
until March 31, 2024 and on April 4, 2024, the Stock Repurchase Plan was extended to April 30, 2024.30. During the year ended December
31, 31,
2023, the Company purchased 252,855 shares of common stock for a cost of $471,121, which is reflected in treasury stock on the accompanying
consolidated balance sheet. During the year ended December 31, 2024, the Company purchased 102,855 shares of common stock for a cost
of of
$173,113. In aggregate, during the years ended December 31, 2024 and 2023, the Company repurchased a total of 355,710 shares of its
common common
stock for a total cost of $644,234 pursuant to its Stock Repurchase Program. During the year ended December 31, 2024, all 355,710
shares shares
treasury shares with a cost of $644,234 were cancelled. As of December 31, 2025 and 2024, there were no treasury shares outstanding.
On February 20, 2026, the Company’s Board of Directors approved a stock repurchase program authorizing the purchase of up to $1 million of the Company’s issued and outstanding common stock, from time to time, with such plan to be in place until December 31, 2026. As of the date of this report, no shares have been repurchased under this plan.
-5555--
During
the years ended December 31, 20242025 and 2023,
2024, cost of revenues amounted to $5,838$44,295 and $5,838, respectively,respectively. andCost of revenues consisted
of license fees related to the UMB License and Sublicense
Agreement, which are being amortized into cost of revenuesrevenues. overEffective July
8, 2025, the estimated 15-yearuseful termslives of theirthe respectiveunamortized agreementslicense with Akido
and UMB.sublicense fees were changed to reflect the termination of the Master
License Agreement and the expiration of the subsequent Option Agreement on March 31, 2026, resulting in accelerated amortization expense
during the year ended December 31, 2025.
-5656--
Other selling, general and administrative expenses include advertising and promotion, insurance expenses, patent related expenses, public company expenses, custodian fees, bank service charges, travel, and other office expenses.
Operating Loss from Continuing Operations
For
the years ended December 31, 20242025 and 2023,
loss2024, fromselling, continuing operations amounted to $4,705,694general and $3,855,592administrative expenses were $258,709 and $298,284, respectively, an increasea
decrease of $850,102,$39,575, or 22.1%.13.3%. The increase
decrease was primarily attributed to a resultdecrease in proxy meeting fees of the$18,377, changesa decrease in operatingtransfer
agent expensesfees discussedof above.$13,395, and a decrease in other selling, general and administrative fees of $7,803.
Loss from Operations
For the years ended December 31, 2025 and 2024, loss from operations amounted to $4,280,662 and $4,705,694 respectively, a decrease of $425,032 or 9.0%. The decrease was primarily a result of the changes in operating expenses discussed above.
For
the year ended December 31, 20242025 and 2023,
2024, other income, net amounted to $312,814$52,964 and $224,509,$312,814, respectively, ana increasedecrease of $88,305, $259,850,
or 39.3%.83.1%. The increasedecrease in other income, net
was primarily due to a decrease in penalty expense of $166,034 which was incurred during the 2023 period due to the early termination
of a certificate of deposit and a decrease in net unrealized loss on equity investment of $3,118, offset by an increase in foreign currency
transaction loss of $14,242, a decrease in interest and dividend income of $65,365,$139,253, an increase
in unrealized loss on crypto assets of $64,608, increase in realizedimpairment loss on crypto assets of short-term debt investments
of $1,025,$39,916, and an increase in interest
expense of $215.$32,218, offset by a decrease in foreign currency transaction loss of $14,242 and an increase in other income of $5,143.
-5757--
Loss from Discontinued Operations
For the year ended December 31, 2024 and 2023,
loss from discontinued operations amounted to $0 and $69,600, respectively, a decrease of $69,600. As of December 31, 2023, we recognized
an allowance for loss on the NFID. LLC note receivable and accrued interest receivable in an amount equal to the estimated probable losses,
and accordingly, we recorded bad debt expense of $69,600.
For
the year ended December 31, 2024,2025, net loss amounted to $4,227,698, or $0.50 per common share (basic and diluted), as compared to net
loss amounted to $4,392,880 or $1.19 per common share (basic and diluted), as compared to net loss amounted to $3,700,683 or $1.20 per common
share (basic and diluted) for the year ended December 31, 2023,2024, ana increasedecrease of $692,197, $165,182,
or 18.7%.3.8%. The change was primarily a result of
the changes discussed above.
Liquidity is the ability of an enterprise to
generate generate
adequate amounts of cash to meet its needs for cash requirements. We had working capital of $6,737,542, short-term
investments of $2,110,065, crypto assets, at fair value of $221,817, crypto assets, at cost of $98,584, and $4,748,700 in cash and
cash equivalents as of December 31, 2025. We had a working capital of $5,455,483, $3,174,724 in short-term investments, and
and $3,905,799 in cash and cash equivalents as of December 31, 2024, and working capital of $6,905,568, short-term investments of $4,140,880
and $3,524,308 in cash and cash equivalents as of December 31, 2023, respectively.2024.
The decrease
increase in working capital of $1,450,085
$1,282,059 was primarily attributable to aan decreaseincrease in current assets of $569,678$276,425 primarily due to a decrease in short-term investments of approximatelyan
$966,000, offset by an increase in cash and cash equivalents of approximately $381,000$842,901, andan increase in crypto assets, at fair value of $221,817, an increase
in crypto assets, at cost of $98,584, an increase in prepaid expenses and other current
assets of $15,000,$177,602, and ana increasedecrease in currentaccounts
payable liabilitiesand accrued expenses of $1,005,814, offset by a decrease in short-term investments of approximately $880,000.$1,064,659.
-5858--
Net
Cash Provided by (Used in) by Investing Activities
Net
cash provided by (used in) investing activities
for the years ended December 31, 20242025 and 20232024 were $973,777$644,021 and $(4,147,107),$973,777, respectively, a positive change decrease
of $5,120,884,$329,756, or 123.5%.33.9%.
Net
cash provided by (used in) financing activities
for the years ended December 31, 20242025 and 20232024 were $3,241,628$4,860,219 and $(471,121),$3,241,628, respectively,
an a positive changeincrease of $3,712,749,$1,618,591, or 788%.49.9%.
-5959--
On September 29, 2025, pursuant to the October 2025 Offering, we received net proceeds of $2,146,000, net of placement agent fees and offering costs of $303,450 and legal and other fees of $50,550.
Crypto Assets
The Company’s crypto assets primarily include Bitcoin (BTC), Ethereum (ETH) and Solana (SOL), and liquid staked tokens consisting of Liquid Staked ETH (LsETH) and Marinade Solana (mSOL), tokens received when ETH and SOL was staked through a third-party protocol. The Company has ownership of and control over its crypto assets which are held through custodial arrangements with qualified third-party custodians. These custodians provide secure storage and safeguarding of the Company’s crypto assets.
The Company distinguishes between crypto assets which fall within the scope of ASC 350-60, Accounting for and Disclosure of Crypto Assets, and those which do not. The Company refers to crypto assets which fall within the scope of ASC 350-60 (BTC, ETH, USDC, SOL, XRP and RSC) as “crypto assets, at fair value.” Crypto assets which do not fall within the scope of ASC 350-60 (LsETH and mSOL) are referred to as “crypto assets, at cost.”
Crypto Assets, at Fair Value
Crypto assets that fall within the scope of ASC 350-60, such as BTC, ETH, SOL, native staked SOL, RSC and XRP, which are actively traded on public exchanges, are initially recorded at cost, which represents the cash, cash equivalents, or other financial assets paid to acquire the asset, including transaction fees.
-6060-- Crypto assets are subsequently measured in accordance with ASC 350-60, at fair value in the statement of operations with unrealized gains and losses resulting from changes in fair value recognized in net income or loss. The Company determines and records at each reporting period the fair value of its crypto assets in accordance with ASC 820, Fair Value Measurement, based on quoted (unadjusted) prices on the coinmarketcap.com or Coinbase exchange, the active exchange that the Company has determined is its principal market (Level 1 inputs). Changes in the fair value are recognized in net income (loss) within “Unrealized gain (loss) on crypto assets”, while realized gains and losses from the derecognition of crypto assets are included in “Realized gain (loss) on crypto assets, net” in the Company’s consolidated statements of operations. The Company applies a weighted average cost methodology to assign costs for purposes of determining crypto assets held and realized gains and losses.
Purchases and sales of crypto assets are reflected as cash flows from investing activities in the consolidated statements of cash flows. Contributions of crypto assets received in connection with deposits of ETH and SOL into a liquid staking protocol are presented as non-cash investing and financing activities.
Crypto Assets, at Cost
Crypto assets, at cost are recognized at fair value on the date received, which becomes their cost basis. Crypto assets at cost, such as LsETH and mSOL, do not fall in the scope of ASC 350-60 for subsequent measurement. LsETH and mSOL represent receipt tokens, which in general and by design, grants the holder an enforceable right to redeem ETH or SOL for which it was exchanged. Therefore, it fails the ‘other goods and services criterion’ in ASC 350-60-15-1(b) and is outside the scope of ASC 350-60. Crypto assets, at cost are therefore subsequently measured at cost, net of any impairment losses incurred since acquisition, in accordance with ASC 350-30, Intangibles—Goodwill and Other—General Intangibles Other Than Goodwill.
The Company performs an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted (unadjusted) prices in the Company’s principal market, indicate that it is more likely than not that any of the assets are impaired. The quoted (unadjusted) prices on the coinmarketcap.com or the Coinbase exchange, the active exchange that the Company has determined as its principal market, are used in the analysis. If the carrying value of LsETH and mSOL exceeds that end of period quoted price, an impairment loss has occurred in the amount equal to the difference between its carrying value and such period end closing price. Impairment losses are recognized in the period in which the impairment occurs and are reflected within “Impairment loss on crypto assets, at cost” in the Company’s consolidated statements of operations. The impaired crypto assets are written down to their fair value at the time of impairment and this becomes the new cost basis for those assets. The cost basis of LsETH or mSOL will not be adjusted upward for any subsequent increase in fair value.
Staking Activities
The Company participates in both native and liquid staking of its digital assets to generate yield. The Company’s role is that of a Delegator (a staker who does not run a validation node).
Native Staking
The Company participates in native staking exclusively as a delegator through third-party validators. The Company delegates SOL to validators, either directly or through third party asset managers, who operate nodes on the Solana network to validate transactions and add blocks to the blockchain. In return for delegating SOL to validators, the Company is entitled to a portion of the protocol-level rewards, comprising both consensus- and execution layer components received by the validators, in the form of SOL tokens, calculated based on the Company’s proportion of the total SOL staked. When the Company stakes SOL natively, the SOL does not remain in the Company’s custodial wallet, but is instead deposited into Solana’s staking deposit smart contract, which is required for participation in SOL staking as a delegator. Native staked SOL are not derecognized because their deposit into the smart contract does not give any other entity the right or ability to direct their use (for example, sell, lend, pledge or otherwise use those SOL) and the staked SOL may be withdrawn at any time by the delegator through the use of private withdrawal keys, subject only to protocol-defined withdrawal and exit queue mechanics. The withdrawal credentials in the smart contract are designated to the Company’s custodian who holds the Company’s SOL solely for the Company’s benefit and does not obtain control of the Company’s SOL via their custodial services. Native staked SOL are therefore not derecognized.
-6161-- Rewards from native staking activities fall outside the scope of ASC 606, Revenue from Contracts as these activities do not represent an output of the Company’s ordinary activities. Therefore, we reflect any such rewards received as other income on the accompanying consolidated statements.. In this case the Company’s performance obligation is the provision of our validation rights to the validators, from which we earn variable consideration, in the form of SOL, which is non-cash consideration, measured at the fair value of SOL as of contract inception based on the quoted (unadjusted) prices on coinmarketcap.com or the Coinbase exchange, the active exchange that the Company has determined is its principal market. Revenue is recognized at the point in time when the Solana network confirms that the validation is complete. As a delegator, the Company has concluded it is not the principal to the block validation service provided to the Solana Network; it is the validators that control the service. Instead, the Company’s service is one of providing the use of its SOL by the validators to increase their validation opportunities. Consequently, the Company records staking revenue on a net basis, reflecting only the portion of protocol rewards to which it is entitled after validator commissions are paid to the custodians. During the year ended December 31, 2025, staking income from native staking activities amounted to $207, which has been reflected as other income.
Liquid Staking
The Company also participates in liquid staking through a liquid staking protocol. One key difference and intended benefit of liquid staking versus native staking is that it allows the Company to earn staking rewards, like native staking, but provides liquidity and the ability to enter into other transactions through the use of receipt token. Instead of directly locking ETH or SOL into the respective staking deposit contract, the Company deposits ETH or SOL through its custodian into the liquid staking protocol’s smart contract. The liquid staking protocol then controls the ETH or SOL for deposit into the respective staking deposit contract and further delegation to its chosen validators. In exchange for staking its ETH or SOL, the Company receives LsETH or mSOL, freely transferable liquid staking receipt tokens, which enables participation in decentralized finance (DeFi) and other crypto markets while the underlying ETH or SOL remains staked on Ethereum or SOL. Upon staking ETH or SOL through the liquid staking protocol, the ETH or SOL is derecognized because the liquid staking protocol obtains the ability to deploy and direct its use, and the LsETH token or mSOL token received concurrently is then recognized. Any gain or loss on the derecognition of ETH or SOL and the recognition of the LsETH or mSOL is recognized in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”) based on the difference between the carrying amount of the ETH or SOL staked and the fair value of the LsETH received or mSOL; and shall be included in “Realized gain or loss on crypto assets” in the Company’s consolidated statements of operations.
Staking rewards in the form of ETH or SOL are only received upon redemption of LsETH or mSOL. During the year ended December 31, 2025, no liquid staking rewards were received.
Since LsETH and mSOL are accounted for under ASC 350-30, any increases in LsETH and mSOL fair value while the Company remains staked with the liquid staking protocols, are not recognized. There is no ongoing performance obligation following the staking of ETH or SOL through the liquid staking protocol. Additionally, LsETH and mSOL are non-rebasing tokens, meaning its quantity remains fixed over time. Staking rewards are not continuously reflected in token balances but are instead realized separately. Staking rewards are therefore recognized only when the LsETH or mSOL is redeemed, measured at the fair value of ETH or SOL at contract inception, which is when the ETH or SOL were staked. Staking rewards on LsETH or mSOL shall be included in “Staking income on crypto assets” in the Company’s consolidated statements of operations. Gain or loss resulting from the difference between the carrying amount of the LsETH or mSOL redeemed and the fair value of ETH or SOL received at redemption (i.e., excluding staking rewards), shall be included in “Realized gain or loss on crypto assets” in the Company’s consolidated statements of operations.
-6262--
Research and Development
In accordance with ASC 730-10, “Research
and Development-Overall,” research and development costs are expensed when incurred.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We do not expect the adoption of this new guidance to have a material impact on our consolidated financial statements.
Management
does not believe that any other recently
issued, but not yet effective accounting pronouncements, if adopted, would have a material effect
on the Company’s consolidated
financial statements. In certain research and development projects, we estimate the percentage of completion of the research and development projects to recognize
research and development expense.
What changed in the latest 10-Q
Risk Factors
Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 27, 2026 (“Annual Report”). There have been no material changes in our risk factors from those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual Report, which could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.
Full comparison: every changed paragraph (1)
Risk factors that affect our business and financial
results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31,
2025 as filed with the SEC on March 27, 2026 (“Annual Report”). Except as set forth below, thereThere have been no material changes
in our risk factors from
those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual
Report, which could
materially affect our business, financial condition or future results. The risks described in our Annual Report are
not the only risks
we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also
may materially
adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial
financial condition, and/or results of operations could be negatively affected.
Management's Discussion & Analysis (MD&A)
New heading “Reverse Stock Split and Concurrent Proportionate Reduction in Authorized Common Stock”
New heading “July 2026 Private Placement”
New heading “Net Cash Provided by (Used in) Financing Activities”
Removed heading “Net Cash (Used in) Provided by Investing Activities”
Removed heading “Crypto Assets, at Fair Value”
Removed heading “Crypto Assets, at Cost”
Removed heading “Staking Activities”
Largest changes
“Crypto assets, at cost are recognized at fair value on the date received, which becomes their cost basis. Crypto assets, at cost, such as LsETH and mSOL, do not fall in the scope of ASC 350-60 for subsequent measurement. LsETH and mSOL represent receipt tokens, which in general and by design, grant the holder an enforceable right to redeem ETH or SOL for which it was exchanged. Therefore, it fails the ‘other goods and services criterion’ in ASC 350-60-15-1(b) and is outside the scope of ASC 350-60. …”see in full comparison
“Reverse Stock Split and Concurrent Proportionate Reduction in Authorized Common Stock”see in full comparison
“We also participate in liquid staking through a liquid staking protocol. One key difference and intended benefit of liquid staking versus native staking is that it allows us to earn staking rewards, like native staking, but provides liquidity and the ability to enter into other transactions through the use of receipt token. Instead of directly locking ETH or SOL into the respective staking deposit contract, we deposit ETH or SOL through our custodian into the liquid staking protocol’s smart contract. …”see in full comparison
“We participate in native staking exclusively as a delegator through third-party validators. We delegate SOL to validators, either directly or through third party asset managers, who operate nodes on the Solana network to validate transactions and add blocks to the blockchain. In return for delegating SOL to validators, we are entitled to a portion of the protocol-level rewards, comprising both consensus- and execution-layer components received by the validators, in the form of SOL tokens, calculated based on our proportion of the total SOL staked. …”see in full comparison
“We perform an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted (unadjusted) prices in our principal market, indicate that it is more likely than not that any of the assets are impaired. The quoted (unadjusted) prices on the coinmarketcap.com or the Coinbase exchange, the active exchange that we have determined as our principal market, are used in the analysis. …”see in full comparison
Full comparison: every changed paragraph (71)
We are a diversified developmental-stage biopharmaceutical
andcompany with a cryptocurrency company.treasury strategy. Our therapeutic focus is on developing novel therapeutics that address underserved conditions
including PTSD,
stress-induced anxiety disorders, fibromyalgia, and central nervous system (CNS) diseases. We are focused on developing
novel therapies
that include conventional drugs and psychedelic formulations. Our lead program, SPC-15, is an intranasal drug targeting
PTSD and stress-induced
anxiety disorders. SP-26 is a time-release ketamine-based loaded implant for fibromyalgia and chronic pain relief.
Silo’s two preclinical
programs are SPC-14, an intranasal compound for the treatment of Alzheimer’s disease, and SPU-16, a
CNS-homing peptide targeting
the central nervous system with initial research indication in multiple sclerosis (MS).
In addition, aswe more fully described below, we
have entered into a license agreement with the University of Maryland, Baltimore, andare developing a Ketamine polymer
implant. InWe addition,
wealso entered into a sponsored research agreement Columbia University (“Columbia”) for the study of ketamine in
combination with other drugs for treatment of
Alzheimer’s and depression disorders and we have also entered into an exclusive license
agreement with Columbia under which we have
rights to certain patents and inventions relating to the treatment of Alzheimer’s disease
and stress-induced affective disorders
using Ketamine in combination with certain other compounds.
Our lead product candidate, SPC-15, is designed
as a novel serotonin 4 (5-HT4) receptor agonist that utilizes biomarkers for treatment of stress-induced psychiatric disorders such as
PTSD and anxiety disorders. This innovative treatment is administered via an intranasal formulation, potentially qualifying for the FDA’s
streamlined 505(b)(2) regulatory pathway, which could expedite its approval process. We are actively collaborating with ColumbiaColumbia, University,and
holdinghold exclusive global rights to develop and commercialize SPC-15, pursuant to and that certain exclusive license agreement entered into
into with Columbia on July 1, 2024. See “----License Agreements between the Company and Vendor—Exclusive License Agreement
with Columbia University.”
In March 2023, we filed a provisional patent
application application
with the U.S. Patent & Trademark Office (“USPTO”) to use SP-26 for treatment of chronic pain, including fibromyalgia fibromyalgia.
We intend to develop SP-26 following the Section 505(b)(2)
regulatory pathway of the FDA rules. Section 505(b)(2) of the FDCA was enacted
to enable sponsors to seek NDA approval for novel repurposed
drugs without the need for such sponsors to undertake time consuming and
expensive pre-clinical safety studies and Phase 1 safety studies.
Proceeding under this regulatory pathway, we will be able to rely upon
publicly available data with respect to our active ingredient in
our NDA submission to the FDA for marketing approval.
SPC-14 targets glutamate receptor NDMARNMDAR and serotonin
5-HT4 to address cognitive and neuropsychiatric symptoms in Alzheimer’s disease. Given the global Alzheimer’s therapeutics
market is projected to exceed $30.8 billion by 2033, SPC-14 presents a promising opportunity. SPC-14 was developed under a sponsored
research research
agreement with Columbia University See “Investigator-Sponsored Study Agreements between the Company and Vendors---Sponsored Research
Agreement with Columbia University for the Study of Ketamine in Combination with Other Drugs for Treatment of Alzheimer’s and Depression
Disorders,” and we have exclusive global rights to develop and commercialize SPC-14, pursuant to and that certain exclusive
license license
agreement entered into with Columbia on July 1, 2024. See “----License Agreements between the Company and Vendor—Exclusive
License Agreement with Columbia University”. On October 13, 2022, we extended the term of the sponsored research agreement
with with
Columbia to conduct further research studies into the mechanism of action of SPC-14 in the treatment of Alzheimer’s disease.
In In
addition, we have been granted an option to license certain assets currently under development, including SPC-14 for the treatment
of of
Alzheimer’s disease.
SPU-16 is a promising candidate targeting centralCNS
nervous system (CNS) disorders, with an initial indication for multiple sclerosis. On February 12, 2021, we entered into athe Master License
Agreement (the “UMB License Agreement”) with
the University of Maryland, Baltimore (“UMB”) pursuant to which UMB
granted us an exclusive, worldwide, sublicensable, royalty-bearing
license to certain intellectual property (i) to make, have made, use,
sell, offer to sell, and import certain licensed products and (ii)
to use the invention titled “Central nervous system-homing peptides
in vivo and their use for the investigation and treatment of
multiple sclerosis and other neuroinflammatory pathology,” or SPU-16.
See “License Agreements between the Company and Vendors--Vendor License Agreement with the University of Maryland, Baltimore for
CNS Homing Peptide” for additional details.
On April 11, 2023 certain intellectual property
under the UMBMaster License Agreement described above were issued a patent from the U.S. Patent & Trademark Office (USPTO) for “Peptide-Targeted
Liposomal Delivery
For Treatment, Diagnosis, and Imaging of Diseases and Disorders” (US 11,766,403, B2).
On July 8, 2025, we entered into the July 2025
Termination Termination
and Option Agreement with UMB which terminates the UMB License Agreement, previously in effect between us and UMB, and provides
us with
an exclusive, non-transferable evaluation license, as well as an exclusive option to negotiate a new exclusive commercial license,
with with
respect to certain intellectual property related to central nervous system-homing peptides (the “Invention” and related
“Patent
Rights”) that were previously licensed under the UMB License Agreement. The July 2025 Termination and Option Agreement
was effective as of July 8, 2025, and expired on March 31, 2026.
Pursuant to the July 2025 Termination and Option
Agreement, we were granted Option, exercisable during the term of the July 2025 Termination and Option Agreement, to negotiate and obtain
an exclusive, sublicensable, royalty-bearing license to the Invention and Patent Rights for the therapeutic treatment of neuroinflammatory
disease worldwide. The Option may be exercised by (i) providing written notice and submitting an acceptable commercialization plan to
UMB, and (ii) paying a $1,000 option fee, which is creditable against certain future expenses if a commercial license is executed. The
July 2025 Termination and Option Agreement was effective as of July 8, 2025, and will expire on March 31, 2026, unless earlier terminated
or superseded by a new definitive license agreement upon exercise of the Option.
Our strategy changed to include cryptocurrency
treasury strategy in August 2025 to focus on the acquisition of leading digital assets. Management focused a portion of its resources
inon this cryptocurrency strategy. OurAs of June 30, 2026, our crypto assets primarily include Bitcoin (BTC), Ethereum (ETH) and Solana
(SOL), and liquid staked
tokens consisting of Liquid Staked ETH (LsETH) and Marinade Solana (mSOL), tokens received when ETH and SOL was staked through a third-party
protocol.. We have ownership of and control over our crypto assets which are held through custodial arrangements with qualified third-party
custodians. These custodians provide secure storage and safeguarding of our crypto assets. WePreviously, participatewe participated in both native
and liquid staking
of our digital assets to generate yield. Our role iswas that of a Delegator (a staker who does not run a validation
node). As of June 30, 2026, we held no staked crypto assets.
We have staked $68,673 and $98,584 of crypto assets,
at cost as of March 31, 2026 and December 31, 2025, respectively. Our ability to sell or transfer staked digital assets is subject to
restrictions related to unbonding periods, which are based on network traffic on the respective blockchains. As of MarchJune 31, 2026, all
staked crypto assets could be unbonded within 2 to 3 days. As of March 31, 2026, our staked assets have near immediate terms. In exchange
for staking the crypto assets on blockchain networks, we are entitled to a fractional share of the fixed digital asset award a third-party
validator node receives for successfully validating or adding a block to the blockchain. As of March 31,30, 2026 and December 31, 2025, we
held $173,462$205,414 and $221,817 of crypto assets comprised of BTC, ETH, USDC, SOL, RSC and XRP, at fair value, respectively. We reflect these
assets assets
held at fair value on the unaudited consolidated balance sheets within the “crypto assets” line item. In determining
the fair
value of the crypto assets in accordance with ASC 820, we utilize coinmarketcap.com or Coinbase as the principal market.
Reverse Stock Split and Concurrent Proportionate Reduction in Authorized Common Stock
On June 1, 2026, we filed a Certificate of Change with the Secretary of State of the State of Nevada to effectuate a 1-for-15 reverse stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding and authorized shares of common stock, par value $0.0001 per share (“Common Stock”). The Reverse Stock Split became effective at 4:01 p.m., Eastern Time, on Tuesday, June 2, 2026, and the Company’s Common Stock began trading on a split-adjusted basis when The Nasdaq Stock Market (“Nasdaq”) opened on June 3, 2026. When the Reverse Stock Split became effective, every 15 shares of Common Stock issued and outstanding were automatically reclassified and combined into one share of Common Stock, without any change in the par value per share, and a proportionate reduction was made to the Company’s authorized shares of Common Stock such that the Company now has 6,666,667 shares of authorized Common Stock.
July 2026 Private Placement
On July 9, 2026, we entered into those securities purchase agreements with institutional and accredited investors (the “July 2026 Purchase Agreements”) with certain institutional investors for the issuance and sale in a private placement (the “Private Placement”) of (i) 124,000 shares of Common Stock at a purchase price of $6.452 per Share; (ii) Pre-Funded Warrants at a purchase price of $6.4519 per Pre-Funded Warrant to purchase up to an aggregate of 495,965 shares of Common Stock (the “Pre-Funded Warrant Shares”); (iii) Series A-3 Warrants to purchase up to 619,965 shares of the Common Stock (the “Series A-3 Warrant Shares”), and (iv) Series A-4 Warrants to purchase up to 619,965 shares of Common Stock (the “Series A-4 Warrant Shares”).
Each Series A-3 Warrant and Series A-4 Warrant has an exercise price of $6.21 per share and are immediately exercisable upon issuance. The Series A-3 Warrants will expire five (5) years after the effective date of the July 2026 Resale Registration Statement. The Series A-4 Warrants will expire eighteen (18) months after the effective date of the July 2026 Resale Registration Statement. A holder may not exercise any portion of the Series A-3 Warrants and/or Series A-4 Warrants to the extent the holder would own more than 4.99% or 9.99% of the outstanding Common Stock immediately after exercise. A holder may increase or decrease this percentage with respect to either the Series A-3 Warrants or the Series A-4 Warrants to a percentage not in excess of 9.99%, except that any such increase shall require at least 61 days’ prior notice to the Company.
The Pre-Funded Warrants are immediately exercisable and may be exercised at a nominal exercise price of $0.0001 per share of Common Stock at any time until all of the Pre-Funded Warrants are exercised in full. A holder may not exercise any portion of the Pre-Funded Warrants to the extent the holder would own more than 9.99% of the outstanding Common Stock immediately after exercise. A holder may increase or decrease this percentage with respect to Pre-Funded Warrants to a percentage not in excess of 9.99%, except that any such increase shall require at least 61 days’ prior notice to us.
On March 30, 2026, we entered into an asset purchase
agreement (the “Many Ads Agreement”) with Many Ads Inc. (“Many Ads”), pursuant to which we acquired certain software
of the web-based application currently marketed as “qwikagents.com” and the related domain names. In consideration, we issued
to Many Ads 2,100,000 shares of our common stock, valued at $714,000 or $0.34 per share, based on the quoted closing stock price on March
30, 2026. The acquired assets did not meet the definition of a business under ASC 805, were obtained for a particular research and development
project with no alternative future uses, and the entire $714,000 consideration was recorded as research and development expense for the
three months ended March 31, 2026.
On April 15, 2026, we formed Qwikagentsai Inc.
(“Qwikagentsai”), a Nevada corporation, as a wholly-owned subsidiary. We acquired 1,000,000 shares of Qwikagentsai’s
common stock, par value $0.0001 per share, for aggregate consideration of $100. Qwikagentsai was formed to diversify the Company’s
business into AI technology including the development and commercialization of web-based AI agent platforms.
On February 20, 2026, our Board of Directors
approved approved
a stock repurchase program authorizing the purchase of up to $1 million of our issued and outstanding common stock, from time
to time,
with such plan to be in place until December 31, 2026. As of MarchJune 31,30, 2026, no shares have been repurchased under this plan.
Comparison of Our Results of Operations for
the Three and Six Months Ended MarchJune 31,30, 2026 and 2025
The following table summarizes the results of
operations for the three and six months ended MarchJune 31,30, 2026 and 2025 and were based primarily on the comparative unaudited consolidated
financial financial
statements, footnotes and related information for the periods identified and should be read in conjunction with the unaudited
consolidated consolidated
financial statements and the notes to those statements that are included elsewhere in this report.
During the three and six months ended MarchJune 31, 30,
2026 and
2025, we generated minimal or no revenues from operations. For the three months ended MarchJune 31,30, 2026 and 2025, revenues amounted
to $0 and $18,025, respectively. For the six months ended June 30, 2026 and 2025, revenues amounted to $18,026
and $18,026,$36,051, respectively.
Such revenues are related to the Aikido License and Sublicense Agreement and arewas being recognized over the estimated
15-year term of
the UMB license agreement. Effective April 1, 2026, due to the expiration of the Option Agreement and related UMB Master License as discussed
elsewhere, we ceased the recognition of license and sublicense fee revenues related to the License Agreement and reclassified all remaining
deferred revenues to a liability named “contingently returnable sublicense fee” on the accompanying consolidated balance
sheet since the sublicense is no longer available to Aikido or any of their assignees, if any.
During the three months ended MarchJune 31,30, 2026 and
2025, cost of revenues amounted to $0 and $1,459, respectively, a decrease of $1,459, or 100.0%. During the six months ended June 30,
2026 and 2025, cost of revenues amounted to $20,688 and $1,460,$2,919, respectively, an increase of $19,228,$17,769, or 1,317.0%.608.7%. Cost of revenues consisted
of of
license fees related to the UMBMaster License and Sublicense Agreement, which are being amortized into cost of revenues. Effective July 8, 2025, the
the estimated useful lives of the unamortized license and sublicense fees were changed to reflect the termination of the Master License Agreement
Agreement and the expiration of the subsequent Option Agreement on March 31, 2026, resulting in accelerated amortization expense during
the three six
months ended MarchJune 31,30, 2026.
For the three and six months ended MarchJune 31,30, 2026
and and
2025, total operating expenses consisted of the following:
For the three months ended MarchJune 31,30,
2026 and 2025, compensation expense was $242,633$222,684 and $178,469,$195,305, respectively, an increase of $64,164,$27,379, or 36.0%.14.0%. This increase primarily
resulted from an increase in stock-based compensation of $56,619,$21,729 health insurance of $8,963 offset by a decrease inand payroll expense and
related benefits of $1,418.$5,650.
For the threesix months ended MarchJune 31,30,
2026 and 2025, professionalcompensation feesexpense werewas $255,293$465,317 and $273,824,$373,774, respectively, a decrease of $18,531, or 6.8%. The decrease was primarily
attributable to a decrease in investor relations of $77,334, and a decrease in other consulting fees of $2,212, offset by an increase
in stock-based consulting fees of $26,712,$91,543, or 24.5%. This increase primarily
resulted from an increase in accountingstock-based compensation of $78,348, and auditingpayroll feesexpense and related benefits of $19,113, and an increase in legal fees of $15,190.$13,195.
For the three months ended June 30, 2026 and 2025, professional fees were $311,846 and $299,592, respectively, an increase of $12,254, or 4.1%. The increase was primarily attributable to an increase in stock-based consulting fees of $62,500, an increase in legal fees of $23,881, and an increase in other consulting fees of $1,070, offset by a decrease in investor relations of $72,396 and a decrease in accounting and auditing fees of $2,801.
For the six months ended June 30, 2026 and 2025, professional fees were $567,139 and $573,416, respectively, a decrease of $6,277, or 1.1%. The decrease was primarily attributable to a decrease in investor relations of $149,730, and a decrease in other consulting fees of $1,142, offset by an increase in stock-based consulting fees of $89,212, an increase in legal fees of $39,071, and an increase in accounting and auditing fees of $16,312.
For the three months ended MarchJune 31,30,
2026 and 2025, we incurred research and development expense of $1,013,265$298,418 and $593,962,$717,247, respectively, ana increasedecrease of $419,303,$418,829, or 70.6%.58.4%.
The decrease was a result of a decrease in research and development costs in connection with our key Investigator-sponsored Study Agreements
and other research projects with third party vendors and universities.
For the six months ended June 30, 2026 and 2025, we incurred research and development expense of $1,311,683 and $1,311,209, respectively, an increase of $474, or 0.0%.
This increase was attributable to an
increase in acquired software applications of $714,000 and an increase in research related consulting fees of $78,057, offset by a decrease
in research and development expense associated with our various studies of $372,754. On March 30, 2026, we entered into
an asset purchase
agreement (the “Many Ads Agreement”) with Many Ads Inc. (“Many Ads”). Pursuant to the Many
Ads Agreement, Many
Ads agreed to sell, and we agreed to purchase, certain software of the web-based application currently marketed as
“qwikagents.com”
and the domain names qwikagents.com, qwikagents.ai, and qwikagents.co (the “Many Ads Purchased Assets”).
In consideration
for the Many Ads Purchased Assets, we issued to Many Ads 2,100,000140,000 shares of itsour common stock, which were valued at $714,000
or $0.34
$5.10 per share, based on the quoted closing stock price on March 30, 2026. Due to the nature of the Many Ads Purchased Assets and
their lack
of an established alternative future use, the fair value of the common stock issued was recorded as research and development
expense of
$714,000 during the threesix months ended MarchJune 31,30, 2026.
For the three months ended MarchJune 31,30,
2026 and 2025, other selling, general and administrative expenses were $80,807$96,001 and $64,432,$52,973, respectively, an increase of $16,375,$43,028, or
81.2%. 25.4%.
The increase was primarily attributed to an increase in computer and internet expenses of $12,199, an increase in proxy meeting
expenses of $10,500, and a net increase in other general and administrative expenses of $26,895, offset by a decrease
in filing fees of $10,520.$20,329.
For the six months ended June 30, 2026 and 2025, other selling, general and administrative expenses were $176,808 and $117,405, respectively, an increase of $59,403, or 50.6%. The increase was primarily attributed to an increase in computer and internet expenses of $17,980, an increase in license expenses of $12,500, and a net increase in other general and administrative expenses of $28,923.
For the three months ended MarchJune 31,30, 2026 and
2025, loss from operations amounted to $1,594,660$928,949 and $1,094,121,$1,248,551, respectively, a decrease of $319,602, or 25.6%. For the six months
ended June 30, 2026 and 2025, loss from operations amounted to $2,523,609 and $2,342,672, respectively, an increase of $500,539, $180,937,
or 45.7%.7.7%. The increasechanges was
were primarily a result of the changes in operating expenses discussed above.
For the three months ended June 30, 2026 and 2025, other income, net amounted to $96,120 and $44,258, respectively, an increase of $51,862, or 117.2%. The increase in other income, net is primarily due to an increase in gain on debt settlement of $91,645, an increase in unrealized gain on short-term tokenized investment funds of $4,961 and an increase in staking income on crypto assets of $1,147, offset by an increase in unrealized loss on crypto assets, at fair value of $35,795, a decrease in interest and dividend income, net of $5,762, an increase in realized loss on crypto assets of $2,073, an increase in interest expense of $1,217, an increase in foreign currency transaction loss of $912, and a decrease in net realized gain on short-term debt investments of $132.
For the threesix months ended MarchJune 31,30, 2026 and 2025,
2025, other income (expense),income, net amounted to $(52,457)$43,663 and $62,684,$106,942, respectively, a negative changedecrease of $115,141,$63,279, or 183.7%.59.2%. The negative
changedecrease in other incomeincome, (expense) net
was primarily due to an increase in unrealized loss on crypto assetsassets, at fair value of $53,348,$89,143, an increase in impairment
loss on crypto
assets, assetsat cost of $29,911, a decrease in interest and dividend incomeincome, net of $23,110,$28,872, an increase in foreign currency transaction loss
of $3,586, a decrease in net realized gain on short-term debt
investments of $2,922, an increase in foreign currency transaction loss of $2,674, an increase in unrealized loss on short-term tokenized
investment funds of $2,060, and$3,054, an increase in interest expense of $1,307,$2,524, and an
increase in realized loss on crypto assets of $2,073, offset by an increase in gain on debt settlement of $91,645, an increase in unrealized
gain on short-term tokenized investment funds of $2,901 and an increase in staking income on crypto assets of
$191. $1,338.
For the three months ended MarchJune 31,30, 2026, net
loss amounted to $1,647,117 $832,829
or $0.12$0.76 per common share (basic and diluted), as compared to net loss of $1,031,437$1,204,293 or $0.23$2.88 per common share
(basic and diluted) for
the three months ended MarchJune 31,30, 2025, a decrease of $371,464, or 30.8%. For the six months ended June 30, 2026, net loss amounted to $2,479,946
or $2.46 per common share (basic and diluted), as compared to net loss of $2,235,730 or $6.22 per common share (basic and diluted) for
the six months ended June 30, 2025, an increase of $615,680,$244,216, or 59.7%.10.9%.
The changechanges waswere primarily a result of the changes
discussed above.
Liquidity is the ability of an enterprise to
generate generate
adequate amounts of cash to meet its needs for cash requirements. We had working capital of $6,098,849,$4,647,793, $2,129,659$1,950,147 in short-term
investments, investments,
and $3,902,514$3,277,095 in cash and cash equivalents as of MarchJune 31,30, 2026, and working capital of $6,737,542, $2,110,065 in short-term
investments investments
and $4,748,700 in cash and cash equivalents as of December 31, 2025, respectively.
The decrease in working capital of $638,693$2,089,749
was was
primarily attributable to a decrease in current assets of $584,031$1,674,199 primarily due to a decrease in cash and cash equivalents of
$1,471,605, $846,186,
a decrease in cryptoshort-term assets,investments, at fair value of $48,355,$159,918, a decrease in crypto assets, at cost of $29,911,$98,584, a decrease
in crypto assets, at fair value of $16,403, offset by an increase in prepaid
expenses and other current assets of $320,827$72,311, and an increase
in short-term investments, at fair value of $19,594, and an increase in
current liabilities of $54,662$415,550 attributable to the reclassification of deferred revenue – long-term to a current liability
named “contingently returnable sublicense fee”, offset by a decrease in accounts payable and accrued expenses.expenses of $215,900.
Net cash used in operating activities for the
threesix months ended MarchJune 31,30, 2026 and 2025 were $822,623$1,604,484 and $1,640,300,$2,925,568, respectively, a decrease of $817,677,$1,321,084, or 49.8%.45.2%.
Net Cash (Used in) Provided by Investing
Activities
Net cash (used in) provided by investing activities
for the three months ended March 31, 2026 and 2025 were $(23,563) and $871,381, respectively, a negative change of $894,944 or 102.7%.
Net Cash Provided by FinancingInvesting Activities
We did not have any netNet cash provided by financing
investing activities for
the threesix months ended MarchJune 31,30, 2026 and 2025.2025 were $159,876 and $1,259,483, respectively, a decrease of $1,099,607 or 87.3%.
Net Cash Provided by (Used in) Financing Activities
Net cash provided by (used in) financing activities for the six months ended June 30, 2026 and 2025 were $(26,997) and $2,093,958, respectively, a negative change of $2,120,955 or 101.3%.
As reflected in the accompanying unaudited consolidated
financial statements, we generated a net loss of $1,647,117$2,479,946 and used cash in operations of $822,623$1,604,484 during the threesix months ended MarchJune
31,30, 2026. Additionally, we have an accumulated deficit of $21,139,506$21,972,335 on MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, we had working capital of
of$4,647,793, $6,098,849, $2,129,659$1,950,147 in short-term investments, and $3,902,514$3,277,095 in cash and cash equivalents.
On July 9, 2026, pursuant to the July 2026 Offering, we received net proceeds of $3,527,392, net of placement agent fees and offering costs of $415,001, legal fees of $50,000 and escrow fees of $7,600.
Our consolidated financial statements are prepared in accordance with GAAP. These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements. We believe that the estimates, judgments and assumptions are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. For a discussion of our critical accounting estimates, please read Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 27, 2026. There have been no material changes to the critical accounting estimates previously disclosed in such report.
Crypto Assets
Our crypto assets primarily include Bitcoin (BTC),
Ethereum (ETH) and Solana (SOL), and liquid staked tokens consisting of Liquid Staked ETH (LsETH) and Marinade Solana (mSOL), tokens received
when ETH and SOL was staked through a third-party protocol. We have ownership of and control over our crypto assets which are held through
custodial arrangements with qualified third-party custodians. These custodians provide secure storage and safeguarding of our crypto assets.
We distinguish between crypto assets which fall
within the scope of ASC 350-60, Accounting for and Disclosure of Crypto Assets, and those which do not. We refer to crypto assets which
fall within the scope of ASC 350-60 (BTC, ETH, USDC, SOL, XRP and RSC) as “crypto assets, at fair value.” Crypto assets which
do not fall within the scope of ASC 350-60 (LsETH and mSOL) are referred to as “crypto assets, at cost.”
Crypto Assets, at Fair Value
Crypto assets that fall within the scope of ASC
350-60, such as BTC, ETH, SOL, native staked SOL, RSC and XRP, which are actively traded on public exchanges, are initially recorded at
cost, which represents the cash, cash equivalents, or other financial assets paid to acquire the asset, including transaction fees.
Crypto assets are subsequently measured in accordance
with ASC 350-60, at fair value in the statements of operations with unrealized gains and losses resulting from changes in fair value recognized
in net income or loss. We determine and record at each reporting period the fair value of our crypto assets in accordance with ASC 820,
Fair Value Measurement, based on quoted (unadjusted) prices on the coinmarketcap.com or Coinbase exchange, the active exchange that we
have determined is our principal market (Level 1 inputs). Changes in the fair value are recognized in net income (loss) within “Unrealized
gain (loss) on crypto assets”, while realized gains and losses from the derecognition of crypto assets are included in “Realized
gain (loss) on crypto assets, net” in our unaudited consolidated statements of operations and comprehensive loss. We apply a weighted
average cost methodology to assign costs for purposes of determining crypto assets held and realized gains and losses.
Purchases and sales of crypto assets are reflected
as cash flows from investing activities in the unaudited consolidated statements of cash flows. Contributions of crypto assets received
in connection with deposits of ETH and SOL into a liquid staking protocol are presented as non-cash investing and financing activites.
Crypto Assets, at Cost
Crypto assets, at cost are recognized at fair
value on the date received, which becomes their cost basis. Crypto assets, at cost, such as LsETH and mSOL, do not fall in the scope of
ASC 350-60 for subsequent measurement. LsETH and mSOL represent receipt tokens, which in general and by design, grant the holder an enforceable
right to redeem ETH or SOL for which it was exchanged. Therefore, it fails the ‘other goods and services criterion’ in ASC 350-60-15-1(b)
and is outside the scope of ASC 350-60. Crypto assets, at cost are therefore subsequently measured at cost, net of any impairment losses
incurred since acquisition, in accordance with ASC 350-30, Intangibles—Goodwill and Other—General Intangibles Other Than Goodwill.
SILO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding SILO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 16,800 | $104.3K | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 21,448 | $7.7K | — | Sold out |