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

The prices of most cryptocurrencies are extremely volatile. Fluctuations in the price of various cryptocurrencies might cause uncertainty in the market and could negatively impact trading volumes of cryptocurrencies, and we may not effectively identify, prevent or mitigate cryptocurrency market risks. Volatility in the price of various cryptocurrencies may also lead to reduced or unpredictable trading volume, which could cause our operating results to fluctuate significantly over time. Any of the foregoing could adversely affect the success of our business, financial condition and results of operations.

The prices of most cryptocurrencies are based in part on market adoption and future expectations, which might or might not be realized. As a result of these and other factors, the prices of cryptocurrencies are highly speculative. The prices of cryptocurrencies have been subject to dramatic fluctuations (including as a result of prior bear market cycles), which have impacted, and will continue to impact, our trading volumes and operating results and might adversely impact our growth strategy and business. Several factors could affect a cryptocurrency’s price, including, but not limited to:

While we have observed a positive trend in the total market capitalization of cryptocurrency assets over the long-term, driven by increased adoption of cryptocurrency trading by both retail and institutional investors as well as continued growth of various non-investing use cases, historical trends are not indicative of future adoption, and it is possible that the rate of adoption of cryptocurrencies might slow or decline, which would negatively impact our business, financial condition, and results of operations.

While we currently support several cryptocurrencies for trading, market interest in particular cryptocurrencies can also be volatile and there are many cryptocurrencies in the market that we do not support. Our business could be adversely affected, and growth in our net revenue earned from cryptocurrency transactions could slow or decline, if the markets for the cryptocurrencies we support deteriorate or if demand moves to other cryptocurrencies not supported by our platform.

Volatility in the values of cryptocurrencies caused by the factors described above or other factors might impact the demand for our services and have an adverse effect on our business, financial condition and results of operations. If we are unable to effectively identify, prevent or mitigate the risks associated with this volatility, the success of our business, our financial condition and results of our operations may be adversely affected.

The future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect, our business, operating results, and financial condition could be adversely affected.

Crypto assets built on blockchain technology were only introduced in 2008 and remain in the early stages of development. In addition, different crypto assets are designed for different purposes. Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system, while Ethereum was designed to be a smart contract and decentralized application platform. Many other crypto networks, ranging from cloud computing to tokenized securities networks, have only recently been established. The further growth and development of any crypto assets and their underlying networks and other cryptographic and algorithmic protocols governing the creation, transfer, and usage of crypto assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult to evaluate, including:

Various other technical issues have also been uncovered from time to time that resulted in disabled functionalities, exposure of certain users’ personal information, theft of users’ assets, and other negative consequences, and which required resolution with the attention and efforts of their global miner, user, and development communities. If any such risks or other risks materialize, and in particular if they are not resolved, the development and growth of crypto may be significantly affected and, as a result, our business, operating results, and financial condition could be adversely affected.

In the U.S., any particular cryptocurrency’s status as a ‘security’ is subject to a high degree of uncertainty and if we have not properly characterized one or more cryptocurrencies, we might be subject to regulatory scrutiny, investigations, fines, and other penalties.

We currently facilitate customer trades for certain cryptocurrencies that we have analyzed under applicable internal policies and procedures that we believe are not securities under relevant U.S. federal and state securities laws. Determining whether any given cryptocurrency is a security is a highly complex, fact-driven analysis, which may change and evolve over time based on changes in the cryptocurrency and its related ecosystem and on evolving legal and regulatory developments. Different parties may reach different conclusions about the outcome of this analysis based on the same facts. The analysis may become clearer depending on the outcome in certain cases currently pending in varying stages of litigation. The SEC Staff has indicated that the determination of whether or not a cryptocurrency is a security depends on the characteristics and use of that particular asset. The SEC, individual commissioners and the SEC Staff have previously taken positions that certain cryptocurrencies are “securities” in the context of settled or litigated enforcement actions. Although the SEC had not historically provided advance confirmation on the status of any particular cryptocurrency as a security, speeches by senior officials at the SEC have indicated that the SEC generally does not consider certain cryptocurrencies to be securities and Staff of the SEC’s Division of Corporation Finance published statements clarifying that the Division does not view the offers and sales of certain “stablecoins” and “meme coins” to constitute securities transactions. Moreover, SEC Staff have authored informal, non-binding “no-action” letters to the promoters of a handful of digital assets to the effect that the Staff would not recommend enforcement action to the SEC on the basis that transactions in such digital assets, as described to the Staff by their respective promoters, are securities transactions, including with respect to the issuance of tokens in connection with internet and energy decentralized physical infrastructure projects and a consumer finance rewards program. However, such statements and views are not official policy statements by the SEC and reflect only the SEC Staff’s and speakers’ views, which are not binding on the SEC or any court or other agency (including, for instance, the New York Department of Financial Services, or NYDFS, which recently published a consumer alert concerning meme coins that did not opine on whether meme coins constituted securities but warned consumers of the risks of such coins), may be withdrawn at any time without notice or comment by the SEC or its senior officials, cannot be generalized to any other cryptocurrency, and might evolve (including, for instance, recently enacted legislation provides guidelines for the regulation of stablecoins in the U.S., which may differ from the views set forth in the SEC Staff statement regarding stablecoins). With respect to all cryptocurrencies other than Bitcoin and Ether, there is less certainty about whether they would be viewed as securities under the applicable federal and state securities laws. However, on November 12, 2025, SEC Chairman Paul Atkins stated during a speech that it is his view that “most crypto tokens trading today are not themselves securities,” further specifying his view that, subject to certain qualifications, he does not believe certain “digital commodities,” “network tokens,” “digital collectibles,” or “digital tools” constitute securities and that he anticipates the Commission will consider establishing a clear token taxonomy in the coming months. However, such statement is not binding on the SEC or any court or other agency. Additionally, U.S. regulators have expressed concerns about cryptocurrency platforms adding multiple new coins, some of which they may view as unregistered securities. Additionally, the current presidential administration and control of Congress in the U.S. present considerable uncertainty as to cryptocurrency regulations and how regulators will apply the securities laws to cryptocurrencies and what changes Congress may enact with respect to cryptocurrencies. Although our policies and procedures are intended to enable us to make risk-based assessments regarding the likelihood that a particular cryptocurrency could be deemed a security under applicable laws, including federal securities laws, our assessments are not definitive legal determinations as to whether a particular digital asset is a security under such laws. Accordingly, regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC, a state regulator, or a court were to assert or determine that a cryptocurrency supported by our platform is a “security” under U.S. law.

For example, in June 2023, the SEC charged Binance and, separately, Coinbase with operating their respective cryptocurrency trading platforms as unregistered national securities exchanges, brokers, and clearing agencies, also alleging that certain cryptocurrencies supported on their respective platforms are securities. The charges also implicated Coinbase’s staking-as-a-service program and its non-custodial wallet. In November 2023, the SEC brought similar charges against Kraken, alleging that it operated as an unregistered securities exchange, brokerage and clearing agency. In February 2025, March 2025, and May 2025, each of Coinbase, Kraken, and Binance, respectively, entered into a court-approved joint stipulation with the SEC to dismiss each of the SEC’s lawsuits against such parties with prejudice. Several other digital assets market participants, including us, have also announced that the SEC informed them that the SEC was terminating its investigation or enforcement action into their firm. Also, in April 2025, the Office of the Deputy Attorney General issued a memorandum, or the April DOJ Memo, setting out new enforcement priorities for digital asset-related investigations and prosecutions by the DOJ. The April DOJ Memo directed prosecutors not to “target virtual currency exchanges, mixing and tumbling services, and offline wallets for the acts of their end users or unwitting violations of regulations”. The April DOJ Memo explained that the DOJ will instead prioritize cases against individuals who cause financial harm to digital asset investors and consumers and/or use digital assets in furtherance of other criminal conduct. The decisions by regulators not to bring enforcement actions provides, and any other action, settlement, or related investigation by regulators, might provide, additional guidance on the legal status of cryptocurrencies as securities more generally, which has affected and might significantly affect the actual or perceived regulatory status and value of cryptocurrencies we currently support or might support in the future. On January 21, 2025, the SEC announced that then-Acting Chairman Mark Uyeda “launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets.” The task force is focused on helping the SEC “draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously.” The SEC formed the Crypto Task Force to provide clarity on the application of the federal securities laws to the crypto asset market and to recommend practical policy measures that aim to foster innovation and protect investors. Since formation, the Crypto Task Force has accepted written submissions on various cryptocurrency-related topics from industry participants; hosted roundtables on topics relating to security status, trading, custody, tokenization, DeFi, and financial surveillance and privacy; and has held meetings with interested stakeholders. On July 31, 2025, SEC Chairman Paul Atkins announced the launch of “Project Crypto,” described as “a Commission-wide initiative to modernize the securities rules and regulations to enable America’s financial markets to move on-chain.” In connection with this initiative, Chairman Atkins indicated that he has asked the Crypto Task Force to work on developing proposals to implement recommendations in the July 30, 2025, President’s Working Group on Digital Asset Markets Report, as well as a potential innovation exemption. While these developments are positive, the Crypto Task Force’s work remains in the early stages, and no formal rulemaking or exemptions have been proposed or adopted to date. In addition, notwithstanding recent positive developments involving the SEC, DOJ, and other federal regulators, state regulators retain independent authority to enforce their own securities laws, which may differ from or be interpreted more expansively than federal law. As a result, a state regulator could determine that a particular digital asset, product, or service constitutes a security under state law, even if the SEC has elected not to pursue enforcement action, the SEC has provided informal guidance or assurances to the contrary, or the asset, product, or service is otherwise excluded from the definition of a security at the federal level. Moreover, private litigants may assert claims under federal or state securities laws based on similar theories, regardless of the positions taken by federal regulators.

If the SEC, a state regulator or a private litigant alleges that staking services we offer in the U.S. involve unregistered offers and sales of securities or unregistered securities broker-dealer activity in violation of the Securities Act, the Exchange Act or applicable state laws or regulations, and the courts agree with such plaintiff, we may be required to cease our staking activities and may be subject to monetary and other penalties.

We intend to develop products on our platform that will make available crypto staking to our customers. In several enforcement actions filed by the SEC under the prior administration, the SEC alleged that certain companies had offered staking services to retail customers for various digital assets as unregistered securities or acted as unregistered securities broker-dealers in facilitating offers or sales of third-party staking services in violation of the registration provisions of the Securities Act or the Exchange Act. For example, as described above, in 2023 the SEC charged Kraken, Coinbase and Binance with offering and selling digital asset staking-as-a-service programs to retail customers as unregistered investment contract schemes in violation of the Securities Act. In June 2024, the SEC charged Consensys Software Inc. with acting as an underwriter of unregistered securities in violation of the Securities Act and as an unregistered broker in violation of the Exchange Act by marketing the Lido and Rocket Pool third-party liquid staking-as-a-service programs to retail customers through Consensys’ “Metamask Staking” platform. As noted above, the litigation against Binance, Coinbase, and Kraken has been dismissed, and the SEC filed a stipulation to dismiss its lawsuit against Consensys with prejudice in March 2025. Although we intend to develop our staking services in a manner that we believe will not constitute an offer or sale of “securities” subject to securities laws or SEC regulations, there can be no assurance that the SEC will agree with our interpretation of the applicable federal laws or regulations, or if we will be successful if we seek relief from the courts.

In addition, there is no guarantee that state regulators will agree with our interpretation of applicable state laws or regulations. For example, several state regulators have issued cease and desist orders to, or filed lawsuits against, Coinbase with respect to its staking services, alleging that Coinbase’s staking services constitute unregistered securities offerings under applicable state laws and regulations. While certain of the state regulators have since dismissed their lawsuits against Coinbase with respect to its staking services, not all state regulators have done so.

If the SEC, a state regulator or a private litigant were to prevail on claims that our staking services offered in the U.S. violate the Securities Act, Exchange Act or applicable state laws and regulations, we may be subject to monetary penalties, liabilities, reputational harm, and may be required to cease offering these services.

Cryptocurrency laws, regulations, and accounting standards are often difficult to interpret and are rapidly evolving in ways that are difficult to predict. Changes in these laws and regulations, or our failure to comply with them, could negatively impact cryptocurrency trading on our platform.

Domestic and foreign regulators and governments are increasingly focused on the regulation of cryptocurrencies. In the U.S., cryptocurrencies are regulated by both federal and state authorities, depending on the context of their usage. For example, on October 13, 2023, California enacted the Digital Financial Assets Law, or DFAL, which, upon effectiveness on July 1, 2026, will prohibit any person or entity engaging in digital financial asset business activity or holding itself out as being engaged in digital financial asset business activity, with or on behalf of a resident of California (including businesses with a place of business in California), unless that person or entity either (i) holds a license under the DFAL, (ii) has submitted an application for such license on or before July 1, 2026 and is awaiting approval or denial of that application, or (iii) is exempt from licensure. Once licensed, the licensee must comply with requirements related to record maintenance, fee and risk disclosures, cybersecurity, customer protection, and anti-fraud and anti-money laundering. In addition, the NYDFS requires that any persons or entity engaging in virtual currency activity for third parties in or involving New York, excluding merchants and consumers, must apply for a license, commonly referred to as a BitLicense, from the NYDFS and must comply with anti-money laundering, cybersecurity, consumer protection, and financial and reporting requirements, among others, or must be chartered under the New York Banking Law and be approved by the NYDFS to engage in virtual currency business activity. We will continue to monitor developments in state-level legislation, guidance or regulations applicable to us. Cryptocurrency market disruptions and resulting governmental interventions are unpredictable, and might make cryptocurrencies, or certain cryptocurrency business activities, illegal altogether. As regulation of cryptocurrencies continues to evolve, there is a substantial risk of inconsistent regulatory guidance among federal and state agencies and among state governments which, along with potential accounting and tax issues or other requirements relating to cryptocurrencies, could impede the growth of our cryptocurrency operations. The current presidential administration and control of Congress in the U.S. also present considerable uncertainty as to future cryptocurrency regulations. Additionally, regulation in response to the climate impact of cryptocurrency mining could negatively impact cryptocurrency trading on our platform.

The cryptocurrency accounting rules and regulations that we must comply with are complex and subject to interpretation by the FASB, the SEC, and various bodies formed to promulgate and interpret accounting principles. A change in these rules and regulations or interpretations could have a significant effect on our reported financial results and financial position, and could even affect the reporting of transactions completed before the announcement or effectiveness of a change. Further, there are a limited number of precedents for the financial accounting treatment of cryptocurrency assets (including related issues of valuation and revenue recognition), and while the staff of the SEC’s Division of Trading and Markets provided certain limited FAQ guidance on May 15, 2025 with respect to net capital considerations, no formal guidance has been provided by the FASB or the SEC. Accordingly, there remains significant uncertainty as to the appropriate accounting for cryptocurrency asset transactions, cryptocurrency assets, and related revenues. Uncertainties in or changes in regulatory or financial accounting standards could result in the need to change our accounting methods and/or restate our financial statements, and could impair our ability to provide timely and accurate financial information, which could adversely affect our financial statements, and result in a loss of investor confidence.

In addition, future regulatory actions or policies, including, for instance, the assertion of jurisdiction by domestic and foreign regulators and governments over cryptocurrency and cryptocurrency markets could limit or restrict cryptocurrency usage, custody, or trading, or the ability to convert cryptocurrencies to fiat currencies. The current presidential administration and control of Congress in the U.S. also present considerable uncertainty as to such regulatory actions or policies. Any future regulatory actions or policies could reduce the demand for cryptocurrency trading and adversely affect our business, financial condition and results of operations.

Furthermore, the Infrastructure Investment and Jobs Act significantly changes the tax reporting requirements applicable to brokers and holders of cryptocurrency and digital assets. On August 25, 2023, the Treasury Department and Internal Revenue Service released proposed regulations on the sale and exchange of digital assets by brokers. On June 28, 2024, final regulations were released that require information reporting by digital asset brokers on certain digital asset sales or exchanges that occur on or after January 1, 2025, and basis tracking for digital assets that are treated as “covered securities” if acquired on or after January 1, 2026. The implementation of these requirements, and any further legislative changes or related guidance from the Internal Revenue Service and the Treasury Department, might significantly impact our tax reporting and withholding processes and result in increased compliance costs. Failure to comply with these new information reporting and withholding requirements might subject us to significant tax liabilities and penalties. Similarly, the OECD has published final guidance on a new “crypto-asset reporting framework” and amendments to the existing rules for reporting crypto assets under the global “common reporting standard” that might apply to our international operations. These new rules might give rise to potential liabilities or disclosure requirements, and implementation of these requirements might significantly impact our operations and result in increased costs.

Efforts to expand our business internationally subject us to additional laws, regulations, or other government or regulatory scrutiny. Various foreign jurisdictions have adopted, and may continue to adopt laws, regulations or directives that affect crypto-asset industry participants, the crypto-asset markets, and their users, particularly trading platforms and service providers that fall within such jurisdictions’ regulatory scope. For example, the Markets in Crypto-Assets regulation, or MiCA, went into effect on December 30, 2024 in Europe, and in the U.K. the Financial Conduct Authority announced new proposals for certain aspects of the prudential requirements for crypto firms. Monitoring and maintaining our compliance with the laws and regulations to which we are subject is complex and requires us to expend significant resources. In addition, any failure to comply with any applicable laws and regulations could result in regulatory fines, suspensions of personnel or other sanctions, including revocation of our registration or that of our subsidiaries, which could, among other things, require changes to our business practices and scope of operations or harm our reputation, which, in turn could have a material adverse effect on our results of operations, financial condition or business. In addition, new laws or regulations, or new interpretations of existing laws or regulations, could have a material adverse impact on our ability to operate as currently intended, or require us to obtain additional or newly created registrations or licenses in the future and cause us to incur significant expense in order to ensure compliance. Additionally, under recommendations from the Financial Crimes Enforcement Network, or FinCEN, and the Financial Action Task Force, the U.S. and several international jurisdictions have imposed the Funds Travel Rule and the Funds Transfer Rule (commonly referred to collectively as the Travel Rule) on financial service providers in the cryptoeconomy. We may incur high costs to implement and comply with the Travel Rule, and could also face penalties for technical violations or lose customers if it negatively impacts customer experience.

A temporary or permanent blockchain “fork” could adversely affect our business.

Most blockchain protocols, including Bitcoin and Ethereum, are open source. Any user can download the software, modify it and then propose that users and miners of Bitcoin, Ethereum or other blockchain protocols adopt the modification. When a modification is introduced and a substantial majority of miners consent to the modification, the change is implemented and the Bitcoin, Ethereum or other blockchain protocol networks, as applicable, remain uninterrupted, although such modifications might cause certain cryptocurrencies to fail our Crypto Listing Frameworks. However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork” (i.e., “split”) of impacted blockchain protocol network and respective blockchain with one prong running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of the Bitcoin, Ethereum or other blockchain protocol network, as applicable, running simultaneously, but with each split network’s cryptocurrency lacking interchangeability.

Both Bitcoin and Ethereum protocols have been subject to “forks” that resulted in the creation of new networks, including, among others, Bitcoin Cash, BSV, Bitcoin Diamond, Bitcoin Gold, Ethereum Classic, and Ethereum Proof-of-Work. Some of these forks have caused fragmentation among platforms as to the correct naming convention for forked cryptocurrencies. Due to the lack of a central registry or rulemaking body in the cryptocurrency market, no single entity has the ability to dictate the nomenclature of forked cryptocurrencies, causing disagreements and a lack of uniformity among platforms on the nomenclature of forked cryptocurrencies, and which results in further confusion to customers as to the nature of cryptocurrencies they hold on platforms. In addition, several of these forks were contentious and as a result, participants in certain communities might harbor ill will towards other communities. As a result, certain community members might take actions that adversely impact the use, adoption and price of Bitcoin, Ethereum or any of their forked alternatives.

Furthermore, forks can lead to disruptions of networks and our information technology systems, cybersecurity attacks, replay attacks, or security weaknesses, any of which can further lead to temporary or even permanent loss of customer cryptocurrencies. For instance, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast on the other network to achieve “double-spending,” plagued platforms that traded Ethereum through at least October 2016, resulting in significant losses to some cryptocurrency platforms. Another possible result of a fork is an inherent decrease in the level of security due to the splitting of some mining power across networks, making it easier for a malicious actor to gain the majority of the mining power of that network. Such disruption and loss could cause our company to be exposed to liability, even in circumstances where we have no intention of supporting a cryptocurrency compromised by a fork.

Moreover, we might decide not to or not be able to support a cryptocurrency resulting from the fork of a network which might cause our customers to lose confidence in us or reduce their engagement on our platform. In assessing whether we will support a cryptocurrency resulting from the fork of a network, among our top priorities is to safeguard our customer’s assets, and we spend extensive time designing, building, testing, reviewing and auditing our systems to check whether the cryptocurrencies we support remain safe and secure. To the extent that we decide not to support, or to cease support of, certain forked cryptocurrencies, it could negatively impact customer sentiment and our business, operating results, and financial condition, especially to the extent that our competitors continue to support such forked cryptocurrencies on their platforms.

We currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our ability to support our customers.

We rely on third parties in connection with many aspects of our business, including payment processors, financial institutions, and payment gateways to process transactions; cloud computing services and data centers that provide facilities, infrastructure, smart contract development, website functionality and access, components, and services, including databases and data center facilities and cloud computing; as well as third parties that provide outsourced customer service, compliance support and product development functions, which are critical to our operations. Because we rely on third parties to provide these services and to facilitate certain of our business activities, we face increased operational risks. We do not directly manage the operation of any of these third parties, including their data center facilities that we use. These third parties may be subject to financial, legal, regulatory, and labor issues, cybersecurity incidents, data theft or loss, break-ins, computer viruses or vulnerabilities in their code, denial-of-service attacks, sabotage, acts of vandalism, loss, disruption, or instability of third-party financial institution relationships, privacy breaches, service terminations, disruptions, interruptions, and other misconduct. They are also vulnerable to damage or interruption from human error, power loss, telecommunications failures, fires, floods, earthquakes, hurricanes, tornadoes, pandemics and similar events. In addition, these third parties may breach their agreements with us, disagree with our interpretation of contract terms or applicable laws and regulations, refuse to continue or renew these agreements on commercially reasonable terms or at all, fail or refuse to process transactions or provide other services adequately, take actions that degrade the functionality of our services, impose additional costs or requirements on us or our customers, or give preferential treatment to competitors. There can be no assurance that third parties that provide services to us or to our customers on our behalf will continue to do so on acceptable terms, or at all. If any third parties do not adequately or appropriately provide their services or perform their responsibilities to us or our customers on our behalf, such as if third-party service providers close their data center facilities without adequate notice, are unable to restore operations and data, fail to perform as expected, or experience other unanticipated problems, we may be unable to procure alternatives in a timely and efficient manner and on acceptable terms, or at all, and we may be subject to business disruptions, losses or costs to remediate any of the deficiencies, customer dissatisfaction, reputational damage, legal or regulatory proceedings, or other adverse consequences which could adversely affect our business, operating results, and financial condition.

We face significant competition in developing and selling our solutions. Our primary competitors are larger trading platforms such as Galaxy Digital (NASDAQ: GLXY) and Coinbase (NASDAQ: COIN).

Through our investment in DNA X, LLC, we are a provider of crypto trading services to the public. Our services are available over the internet at www.dnax.us. We serve individual cryptocurrency traders around the world. Our products allow users to efficiently buy and sell cryptocurrencies with cash or cash equivalents, or to exchange one cryptocurrency for another cryptocurrency. Our platform allows users to execute strategies between pairs of cryptocurrencies that allow them to swap between the currencies as the prices diverge or converge. This allows users to automate strategies without the need to continuously monitor the market. We are developing products to increase the number of cryptocurrencies that are available for trading on our platform and products that are expected to bring in additional customers and drive additional revenue from commissions and fees.

We are currently operating on a limited basis to monitor the platform and address any bugs or performance issues. We plan to add additional features and products to the platform throughout 2026 as we execute our growth strategy. We will continue to monitor the platform to ensure that it can handle the anticipated increase in trading volume during 2026. We may use social media and traditional media to market our platform to potential customers. We may expand our marketing efforts as new products become available to customers.

Prior to our purchase of the DNA X platform, we operated a cell phone and hotspot manufacturing and software development company under the name Sonim Technologies Inc. We completed the disposition of substantially all assets of our phone and hotspot business in January 2026.

The accompanying financial statements present operations from the phone and hotspot business as a discontinued operation for all periods presented and the assets and liabilities of the phone and hotspot business are presented as assets and liabilities held for sale for all periods presented. See Note 4 for account level detail of the discontinued operations.

Acquisition of Membership Units in the DNA X, LLC Trading Platform

On December 15, 2025, we acquired 100% of the membership units in DNA X, LLC and its cryptocurrency trading platform that operates under the name DNA X. The platform allows individuals to open an account and to buy or sell cryptocurrencies, or to trade pairs of cryptocurrencies. This business became operational in November 2025 and trading volume has increased steadily since then. Following the sale of our legacy phone and hotspot business, we are now completely focused on operating the DNA X trading platform.

Sale of Phone and Hotspot Assets to Pace Car Acquisition LLC

On January 23, 2026 the Company completed the sale of substantially all assets related to our phone and hotspot business to Pace Car Acquisition LLC, or Buyer, for aggregate cash consideration of $15.0 million, less customary working capital adjustments. The Buyer assumed most of our then outstanding liabilities, and a portion of the proceeds from the transaction was used to repay our debt with Streeterville Capital in full. Most of the employees and contractors providing services related to our phone and hotspot business transferred to the Buyer at the close of the transaction.

Upon the close of the sale, we changed our name from Sonim Technologies Inc to DNA X, Inc. to reflect the shift in our focus to the operation of our DNA X cryptocurrency trading platform.

ChEF Purchase Agreement

On September 29, 2025, the Company entered into a ChEF purchase agreement (the “ChEF Agreement”) and registration rights agreement (the “Registration Rights Agreement”), each with Chardan Capital Markets LLC or Chardan, related to a ChEF, Chardan’s committed equity facility.

Pursuant to the ChEF Agreement, the Company has the right from time to time at our option to sell and issue to Chardan up to the lesser of (i) $500,000 in aggregate gross purchase price of newly issued shares of our common stock, and (ii) the Exchange Cap (as defined in the ChEF Agreement), subject to certain conditions and limitations set forth in the ChEF Agreement and applicable Nasdaq listing rules. We are under no obligation to sell any securities to Chardan under the ChEF Agreement.

The net proceeds from any sales under the ChEF Purchase Agreement will depend on the frequency we use, and the price of shares of our common stock that we sell to Chardan. The registration statement in connection with the facility became effective on October 29, 2025.

On July 2, 2025, the Company consummated a best-efforts public offering (the “Offering”) of 411,111 shares of its common stock, as adjusted for the Reverse Stock Splits, at a public offering price of $13.50 per share, as adjusted for the Reverse Stock Splits. In connection with the Offering, we entered into a securities purchase agreement with certain investor signatories thereto for the purchase of shares of common stock described above.

Roth or the Placement Agent, served as the exclusive placement agent in connection with the Offering. We paid the Placement Agent a cash fee of 7.0% of the aggregate gross proceeds raised at the closing of the Offering, and reimbursement of certain expenses and legal fees in the amount of $100. We also issued to designees of the Placement Agent warrants to purchase up to an aggregate of 11,604 shares of Common Stock, as adjusted for the Reverse Stock Splits or the Placement Agent Warrants. The Placement Agent Warrants have an exercise price of $13.50 per share, as adjusted for the Reverse Stock Splits, are not exercisable until January 2, 2026, and expire on July 2, 2030. The exercise prices of the Placement Agent Warrants are subject to appropriate adjustment in the event of stock dividends, stock splits, stock combinations, reorganizations or similar events affecting our common stock. Subject to limited exceptions, a holder of Placement Agent Warrants will not have the right to exercise any portion of its Warrants if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of common stock in excess of 4.99% (or, upon election by a holder prior to the issuance of any Warrants, 9.99%) of the shares of common stock then outstanding. At the holder’s option, upon notice to us, the holder may increase or decrease this beneficial ownership limitation not to exceed 9.99% of the shares of Common Stock then outstanding. The Purchase Agreement contains customary representations, warranties, and covenants by us. It also provides for customary indemnification for losses or damages arising out of or in connection with the Offering, including for liabilities under the Securities Act, other obligations of the parties and termination provisions.

The shares of common stock and the Placement Agent Warrants described above and the underlying shares of common stock were offered pursuant to a Registration Statement on Form S-1, as amended (File No. 333-288221), which was declared effective by the SEC on June 30, 2025.

The net proceeds of the Offering are approximately $4,800, after deducting the Placement Agent fees and expenses and other estimated offering expenses payable by us. We used the net proceeds of the Offering for overall business strategy, for working capital purposes and for general corporate purposes.

Registered Public Offering

On May 12, 2025, we closed on a capital investment of 61,111 shares of common stock, as adjusted for the Reverse Stock Splits, and 30,555 warrants, as adjusted for the Reverse Stock Splits, with two investors for an aggregate purchase price of $1,375. In connection with the closing, we incurred approximately $169 in issuance costs, which was offset against the proceeds.

Each warrant has an exercise price of $24.9552 per share, as adjusted for the Reverse Stock Splits, is immediately exercisable, will expire in five years from the date of issuance, and is subject to customary adjustments for certain transactions affecting our capitalization. The warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the investor subsequent to the exercise exceeds the specified beneficial ownership limitation provided therein (which is currently 9.99% and 4.99% and may be adjusted upon advance notice). On August 7, 2025, we and the investors entered into an amendment to reduce the exercise price of the warrants to $13.50 per share, as adjusted for the Reverse Stock Splits.

In connection with the close of the capital investment on May 12, 2025, we issued 1,375 warrants, as adjusted for the Reverse Stock Splits, to Roth on July 2, 2025. Each warrant has an exercise price of $24.912 per share, as adjusted for the Reverse Stock Splits, is immediately exercisable, will expire in five years from the date of issuance, and is subject to customary adjustments for certain transactions affecting our capitalization. The warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the investor subsequent to the exercise exceeds the specified beneficial ownership limitation provided therein (which is currently 4.99% and may be adjusted upon advance notice).

On August 22, 2025, we received a letter from the Staff of Nasdaq notifying us that we did not comply with the Stockholders’ Equity Rule. On February 20, 2026 the company received a letter from the Staff notifying us that we have regained compliance with the Stockholders’ Equity Rule following the completion of the Asset Sale on January 23, 2026.

The key financial metrics for the DNA X trading platform is trading volume which is the dollar value of assets that were traded and was $6,721 from December 15, 2025 to December 31, 2025, and resulted in $27 in commissions revenue, which is usually a fixed rate of 0.4% of the volume. Daily trading volume has been steadily increasing since the trading platform became operational in November 2025. In January 2026 the commissions revenue was $53. We believe that the decrease in cryptocurrencies values since October 2025 has had a negative effect on trading volume. We will continue to monitor the revenue and will consider employing marketing activities to help grow trading volume.

Acquisition of assets of DNA X LLC. On May 26, 2026, the Put Option referred to in our consolidated condensed financial statements, which allowed DNA Holdings to reacquire DNA X LLC, was terminated. This gave the Company full control over DNA X LLC and requires the Company to consolidate DNA X LLC with the Company’s financial statements commencing on May 26, 2026. We expect to continue to execute our strategy of adding enhancements to DNA X and re-launching DNA X in the fourth quarter of 2026.

Since the closing of the asset sale, we have focused on growing and developing our cryptocurrency trading platform, We closed the DNA X cryptocurrency trading platform to the public in March 2026 to allow us to develop and test enhancements. We have used third-party consultants for the software development and have licensed additional software to add additional services. In January 2026 and February 2026 the DNA X platform averaged $47 per month in commission revenue. Cost of revenue is primarily licensing fees on the software and is currently fixed at 50% of commission revenue. Once we re-launch the platform, we expect commissions to return to levels achieved in early 2026.

On May 26, 2026, we issued a convertible note to DNA Holdings and received cash proceeds of $1,800. On July 8, 2026 we sold convertible preferred stock in the Company to DNA Holdings for $2,500 in cash proceeds and the cancellation of the entire balance of $3,053 due under the convertible note. On August 7, 2026 we sold convertible preferred stock in the Company to DNA Holdings for $2,500 in cash proceeds. See Note 13 to our consolidated condensed financial statements included in Part I, Item 1 of this Quarterly Report. The cash proceeds from the two transactions will be used for general corporate purposes, to continue to enhance the DNA X platform, and to promote the platform once it is relaunched.

Total Net Revenues

There was no revenue from continuing operations during the three and six months ended June 30, 2025 and 2026 because we acquired DNA X LLC in the fourth quarter of 2025 and because revenue from the DNA X platform was not consolidated into the Company prior to the Company gaining accounting control of DNA X LLC on May 26, 2026. Revenue from DNA X LLC from December 15, 2025, when we acquired the business, until May 26, 2026, when the Company gained control of the business, was $120. Net income of $48 from DNA X LLC for the six months ending June 30, 2026 was recorded by the Company as income from investment in DNA X LLC. After May 26, 2026 we began consolidating the financials from DNA X LLC into the Company. There was no revenue from DNA X LLC from May 26, 2026 through June 30, 2026. We will consolidate future activity from DNA X LLC into the Company’s financial statements.

Cost of Revenues

Cost of revenues was $0 during the three and six months ended June 30, 2025 and 2026 because we acquired DNA X LLC in the fourth quarter of 2025 and because revenue from the DNA X platform was not consolidated prior to the Company gaining accounting control of DNA X LLC on May 26, 2026. Cost of revenues for the DNA X trading platform was approximately 50% of the revenue for the period that the DNA X website was operating before it was taken offline in March 2026. We expect the cost of revenues as a percentage of revenue to decrease as revenue increases in the future.

Research and Development

There were no R&D expenses for the DNA X business during the three and six months ended June 30, 2026 because software development costs were capitalized as intangible software assets From May 26, 2026 to June 30, 2026, $94 of software development costs were capitalized. These costs were primarily for direct labor by contractors to produce enhancements to the DNA X trading platform. Once the DNA X platform is relaunched, we will amortize the intangible software assets costs over the estimated useful life of the software.

General and administrative expenses for the three months ended June 30, 2026, decreased by $0.2 million compared to 2025 primarily because of lower legal expense in 2026.

Interest expense

Interest expense decreased by $0.2 million for both the three months and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025 because the outstanding balance of the Streerterville note in 2025 was $3.3 million and the outstanding balance of the DNA Holding note in 2026 was $1.2 million until May 26, 2026. The Streeterville note was repaid in full on January 23, 2026 and the larger $3.1 million note with DNA Holdings was only active from May 26, 2026 through June 30, 2026.

Gain (Loss) on remeasurement of derivative liability

A derivative liability was recorded with the issuance of the note to DNA Holdings on December 15, 2025. The derivative liability represents the value of the conversion feature of the note. This derivative liability was remeasured at March 31, 2026, and at May 26, 2026 which was when the note was cancelled. A new derivative liability was recorded with the issuance of a new DNA Holdings Note on May 26, 2026, and was remeasured on June 30, 2026. Upon remeasurement, the derivative liability was adjusted to fair value, and the offset was recorded as a gain or loss on remeasurement. On May 26, 2026, the derivative liability from the December 15, 2025 DNA Holdings Note was derecognized when the note was cancelled. The derivative liability from the May 26, 2026 DNA Holdings Note was derecognized on July 8, 2026 when the note was cancelled and exchanged for shares of preferred stock. See Note 13 to our consolidated condensed financial statements included in Part I, Item 1 of this Quarterly Report.

Gain on extinguishment of debt

On May 26, 2026, the note dated December 15, 2025 that was held by DNA Holdings was cancelled in connection with DNA Holdings’ purchase of a new note with a principal amount of $3,053. The outstanding balances for the cancelled note for principal, loan discount, accrued interest, and derivative liability for the conversion feature were all derecognized and the resulting gain of $191 was recorded as a gain on extinguishment of debt.

During the six months ended June 30, 2026, the Company received $3.4 million in net cash from the sale of our legacy assets, and we received $1.8 million in proceeds from a new note that we issued to DNA Holdings on May 26, 2026. On July 8, 2026, we received $2.5 million in cash from the issuance of preferred stock to DNA Holdings. On August 7, 2026 we received an additional $2.5 million in cash from the issuance of preferred stock to DNA Holdings. See Note 13 to our consolidated condensed financial statements included in Part I, Item 1 of this Quarterly Report. The May 2026 convertible note that we issued to DNA Holdings was cancelled and exchanged for shares of preferred stock on July 8, 2026, leaving the Company with no indebtedness for borrowed money. Management believes that the $5 million received will be sufficient to pay our existing obligations for at least twelve months following the filing date of this Quarterly Report.

For the six months ended June 30, 2026, cash used in operating activities was $5.5 million, primarily attributable to the non-cash portion of the gain on the sale of the assets of $15.3 million, partially offset by $5.1 million in net income and by cash used from a change in net operating assets and liabilities of $4.8 million, that includes a decrease in inventory of $5.5 million.

For the six months ended June 30, 2025, there were no investing activities.

Cash flows from financing activities

For the six months ended June 30, 2026, the Company received $1.8 million in cash from issuing a new convertible note to DNA Holdings.

For the six months ended June 30, 2025, the Company received $9.0 million in cash, net of issuance costs, from sales of common stock, as well as $2.8 million in net proceeds from the issuance of the Note and repaid $0.6 million borrowed under the Receivables Financing Agreement.