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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
file number
(Exact name of registrant as specified in its charter)
|
State or other jurisdiction of incorporation or organization |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 4 2026, shares of the registrant’s common stock, par value $ per share, were issued and outstanding.
TABLE OF CONTENTS
| 2 |
Item 1. Financial Statements:
SKYAI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets: | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable – product trade | ||||||||
| Accounts receivable – digital currency, net | ||||||||
| Prepaid expenses – related party | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Inventories, net | ||||||||
| Total Current Assets | ||||||||
| Digital commodities, at fair value | ||||||||
| Fixed assets, net | ||||||||
| Right of use assets | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities: | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other | ||||||||
| Margin loan | ||||||||
| Warrant liability | ||||||||
| Current portion of right of use liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Right of use liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, $ par value; shares authorized; shares issued and outstanding (2025: ) | ||||||||
| Common stock, $ par value; shares authorized; issued, outstanding at June 30, 2026 and issued and outstanding at December 31, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock, at cost, and shares, respectively at June 30, 2026 and December 31, 2025 | ( |
) | ||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-1 |
SKYAI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30
(UNAUDITED)
|
THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Cost of goods – inventory reserve | ||||||||||||||||
| Total cost of goods sold | ||||||||||||||||
| Gross Margin (Loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Staking Revenue, net | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Consulting fees – related party | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Unrealized loss on digital commodities | ||||||||||||||||
| Realized loss on digital commodities | ||||||||||||||||
| Digital commodity transaction expenses | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss from Operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income (expense), net | ( |
) | ||||||||||||||
| Fair market value adjustment on warrants | ||||||||||||||||
| Other expense | ( |
) | ( |
) | ||||||||||||
| Other Income, net | ||||||||||||||||
| Income (Loss) Before Provision for Taxes | ( |
) | ( |
) | ||||||||||||
| Tax Provision | ||||||||||||||||
| Income (Loss) from Continuing Operations | ( |
) | ( |
) | ||||||||||||
| Discontinued Operations: | ||||||||||||||||
| Loss from discontinued operations | ( |
) | ( |
) | ||||||||||||
| Income tax benefit | ||||||||||||||||
| Loss from Discontinued Operations | ( |
) | ( |
) | ||||||||||||
| Net Income (Loss) | $ | ( |
) | $ | $ | ( |
) | |||||||||
| Income (loss) per share from Continuing Operations, basic and diluted | $ | ) | $ | $ | ) | $ | ||||||||||
| Loss per share from Discontinued Operations, basic and diluted | ) | ) | ||||||||||||||
| Net income (loss) per share, basic and diluted | $ | ) | $ | $ | ) | $ | ||||||||||
| Weighted average shares used to compute net income (loss) per share, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-2 |
SKYAI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30
(UNAUDITED)
|
THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net Income (loss) | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Other comprehensive income: | ||||||||||||||||
| Foreign currency translation adjustments | ||||||||||||||||
| Comprehensive Income (loss) | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
SKYAI, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
(Unaudited)
| Preferred Stock | Common Stock |
Additional Paid-in |
Accumulated Other Comprehensive |
Accumulated |
Total Stockholders’ |
|||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||
| Balance – December 31, 2024 | $ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||
| Net income for the three months ended March 31, 2025 | - | - | ||||||||||||||||||||||||||||||
| Share-based compensation charges | - | - | ||||||||||||||||||||||||||||||
| Equity Offering - January 2025 – see Note 8 | - | |||||||||||||||||||||||||||||||
| Warrant Exercise – Series B Cashless – see Note 8 | - | ( |
) | |||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ||||||||||||||||||||||||||||||
| Balance – March 31, 2025 | $ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||
| Net income for the three months ended June 30, 2025 | - | - | ||||||||||||||||||||||||||||||
| Share-based compensation charges | - | - | ||||||||||||||||||||||||||||||
| Warrant Exercise – Series B Cashless – see Note 8 | - | ( |
) | |||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ||||||||||||||||||||||||||||||
| Balance – June 30, 2025 | $ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||
SKYAI, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
(Unaudited)
| Preferred Stock | Common Stock | Treasury Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||||||||
| Balance – December 31, 2025 | $ | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2026 | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Share-based compensation charges | - | - | - | |||||||||||||||||||||||||||||||||||||
| Share repurchase for treasury stock | - | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Exercise of prefunded | - | - | ||||||||||||||||||||||||||||||||||||||
| Exercise of warrants - related party | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance – March 31, 2026 | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||
| Net loss for the three months ended June 30, 2026 | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Share-based compensation charges | - | - | - | |||||||||||||||||||||||||||||||||||||
| Share repurchase for treasury stock | - | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Exercise of prefunded warrants | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Balance – June 30, 2026 | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
SKYAI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30
(UNAUDITED)
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( |
) | $ | ||||
| Less: Loss from discontinued operations | ( |
) | ||||||
| Income (loss) from continuing operations | ( |
) | ||||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Accretion of debt discount | ||||||||
| Inventory reserve adjustment | ||||||||
| Fair market value adjustment for warrants | ( |
) | ( |
) | ||||
| Non-cash operating lease right of use assets | ||||||||
| Amortization of related party prepaid | ||||||||
| Digital commodities received as staking revenues, net | ( |
) | ||||||
| Validator operating fees | ||||||||
| Realized loss on digital commodities | ||||||||
| Unrealized loss on digital commodities | ||||||||
| Changes in operating assets: | ||||||||
| Accounts receivable - trade | ( |
) | ||||||
| Prepaid expenses and other | ( |
) | ( |
) | ||||
| Operating lease right of use liabilities | ( |
) | ||||||
| Inventory | ||||||||
| Other assets | ( |
) | ( |
) | ||||
| Accounts payable and accrued liabilities | ( |
) | ||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of and deposits paid for fixed assets | ( |
) | ||||||
| Sale of digital commodities | ||||||||
| Net cash provided by investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds (repayment) from offerings and warrant exercises | ( |
) | ||||||
| Share repurchase program | ( |
) | ||||||
| Repayment of debt financing | ( |
) | ||||||
| Repayment of margin loan | ( |
) | ||||||
| Net cash provided by (used in) financing activities | ( |
) | ||||||
| NET INCREASE IN CASH - CONTINUING OPERATIONS | ||||||||
| CASH FLOWS FROM DISCONTINUED OPERATIONS | ||||||||
| Net cash used in operating activities - discontinued operations | ( |
) | ||||||
| Net cash used in investing activities - discontinued operations | ( |
) | ||||||
| NET DECREASE IN CASH - DISCONTINUED OPERATIONS | ( |
) | ||||||
| CASH — BEGINNING OF PERIOD | ||||||||
| CASH — END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Right of use assets obtained in exchange for lease liabilities | $ | $ | ||||||
| OID interest | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
SKYAI, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
Note 1. Description of Business
Nature of Business
SkyAI, Inc. (“SkyAI” or the “Company”) was founded
as a medical device company. On April 13, 2022, the Company’s Initial Public Offering was deemed effective with trading commencing
on April 14, 2022. The Company received net proceeds of $
On October 6, 2025, the Company entered into definitive agreements, including a bill of sale, assignment and assumption agreement providing for the transfer by the Company of certain assets, and a contract for the transfer of business share providing for the assignment by the Company of all of the Company’s right, title and interest in and to the issued and outstanding shares of Safegard Medical Kft, the Hungarian subsidiary, which is reflected in the accompanying financial statements as a discontinued operation. As of October 6, 2025, with the ownership transfer of Safegard Medical Kft complete, the Company discontinued all design and manufacturing endeavors to focus instead solely on marketing and distribution.
On August 24, 2025, the Company adopted a digital commodity treasury strategy focused on accumulating Solana (“SOL”), the native digital commodity of the Solana blockchain.
On May 26, 2026, the Company filed a Certificate of Amendment to its articles of incorporation to change the name of the Company to SkyAI, Inc. and effectuate the name change with the Nevada Secretary of State. On May 28, 2026, the Company’s common stock ceased trading under the ticker symbol “STSS” and began trading under the new ticker symbol “SKYA,” and its warrants ceased trading under the ticker symbol “STSSW” and began trading under the new ticker symbol “SKYAW.”
On May 27, 2026, the Company announced a strategic transformation of its business, reflecting a shift from its legacy operations to the development of a technology-driven financial platform and the establishment of an international operational headquarters in Hong Kong.
The accompanying condensed consolidated financial statements include the accounts of SkyAI, Inc. and its wholly owned subsidiaries, SOL Equity Limited, and Axis Global Tech Limited (f/k/a Sol Equity HK Limited), collectively referred to as the “Company.” All intercompany transactions and balances have been eliminated.
Note 2. Summary of Significant Accounting Policies
The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and are expressed in U.S. dollars.
Significant accounting policies are described in the Company’s Form 10-K for the year ended December 31, 2025.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and are expressed in U.S. dollars.
These unaudited Condensed Consolidated Financial Statements do not include all disclosures that are normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and should be read in conjunction with the audited Condensed Consolidated Financial Statements and the related notes included in the 2025 Annual Report. The condensed consolidated financial information as of December 31, 2025 included herein has been derived from the audited Condensed Consolidated Financial Statements in the 2025 Annual Report.
| F-6 |
In the opinion of management, these Condensed Consolidated Financial Statements contain all adjustments (consisting of normal recurring adjustments, including eliminations of material intercompany accounts and transactions) considered necessary for a fair statement of the results presented herein. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026.
Discontinued Operations
The Company accounts for discontinued operations in accordance with ASC 205-20. A discontinued operation is a component of the Company that has been disposed of or classified as held for sale and represents a strategic shift that has (or will have) a major effect on the Company’s operations and financial results. Discontinued operations are reported separately net of taxes for all periods presented from continuing operations in the condensed consolidated statements of income for all periods presented. Assets and liabilities of discontinued operations are presented separately for all periods presented in the condensed consolidated balance sheets. The Company provides additional disclosures in the notes, including major classes of assets and liabilities, results of operations, and cash flows related to discontinued operations. Unless otherwise indicated, the information in the notes to the condensed consolidated financial statements refers only to the Company’s continuing operations.
The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the condensed consolidated statements of operations. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Pre-funded and related party warrants exercisable for nominal consideration of $ per share are included in weighted average shares outstanding from their date of issuance. Basic EPS during the six months ended June 30, 2026 included in outstanding pre-funded warrants and in outstanding related party warrants. The three months ended June 30, 2026 included in outstanding pre-funded warrants and in outstanding related party warrants. pre-funded warrants or related party warrants were outstanding during the three and six months ended June 30, 2025.
Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of June 30, 2026 and 2025, there were , respectively, of stock options and warrants that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented.
Foreign Currency Translation/Transactions
The Company has determined that the functional currency for its Hungarian subsidiary (included in discontinued operations) is the local currency. For financial reporting purposes, assets and liabilities denominated in foreign currencies were translated at current exchange rates and profit and loss accounts are translated at weighted average exchange rates. Resulting translation gains and losses are included as a separate component of stockholders’ equity as accumulated other comprehensive income or loss.
For the Company’s Hong Kong subsidiary Axis Global Tech Limited, the functional currency has been determined to be the U.S. dollar. Gains or losses resulting from transactions in other than the functional currency are recorded as foreign exchange gains and losses in the condensed consolidated statements of operations.
Cash and Cash Equivalents
The
Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date
of purchase to be cash equivalents. Cash and cash equivalents are maintained with various financial institutions. At June 30, 2026 and
December 31, 2025, the Company had cash of $
| F-7 |
Trade Receivable and Allowance for Credit Losses
Trade
receivables from contracts with customers are recorded at invoiced amounts and do not bear interest. Because product revenue is currently
concentrated in a limited number of customers, the Company measures expected credit losses under ASC 326 on an individual basis rather
than a collective basis. Based on its assessment, including the repayment plan described in Note 18, the Company expects to collect the
trade receivable balance in full, and
Concentration of Credit Risk
The Company’s cash, USDC, certain digital commodities held, accounts receivable, and deposits are potentially subject to concentration of credit risk.
Cash
is primarily placed with financial institutions which are of high credit quality. The Company does have corporate deposit balances with
financial institutions which exceed the Federal Deposit Insurance Corporation insurance limit of $
The Company holds USDC periodically as a liquidity resource facilitating transactions such as purchases, dispositions and payments. USDC is a payment stablecoin redeemable on a one-to-one basis for U.S. dollars and issued by Circle Internet Financial, LLC. (“Circle”). Circle’s underlying reserves were held in cash, short-duration U.S. Treasuries, and overnight U.S. Treasury repurchase agreements within segregated accounts for the benefit of USDC holders. USDC is a current financial asset in the Condensed Consolidated Financial Statements.
The Company holds SOL, a digital commodity, as part of its treasury strategy. SOL is reported as a digital commodity in the Condensed Consolidated Financial Statements. Our concentration in a single digital commodity exposes the Company to unique liquidity risks that may prevent the conversion of SOL into fiat currency or other assets when desired, particularly during periods of market stress.
Classification of Digital Commodities & Payment Stablecoin
Management assessed SOL, USDC, & USDT under ASU 2023-08. For new asset classes that are out of ASU 2023-08’s scope, the Company considered the assets underlying characteristics within the GENIUS Act, ASC 825, and ASC 350 for assignment as a cash equivalent, financial or intangible asset respectively. The Company also evaluated if each new asset type should be presented as long-term or current under ASC 210.
SOL meets the criteria of ASU 2023-08 and is considered an in-scope digital commodity. This is because it meets the definition of an intangible asset per the FASB codification, does not provide enforceable rights or claims to underlying goods, services, or other assets. Furthermore, SOL resides on a distributed ledger, is secured through cryptography, is fungible, and is not created or issued by the Company or its related parties.
Both USDC and USDT (“payment stablecoins”) provide the holder with enforceable rights to or claims on underlying goods, services or other assets. Therefore, they are not considered an in-scope crypto asset under ASU 2023-08, but instead the same factor meets the criteria as a financial asset under ASC 825.
While both Circle (USDC) and Tether (USDT) have applied as payment stablecoins to be cash equivalent under the Genius Act since it came into effect, neither has achieved that designation. Therefore, management does not consider either to be cash equivalent but based on guidance under ASC 210, does classify payment stablecoins as current assets expected to be converted to cash within one year from the balance sheet date. The Company reports payment stablecoins as a current financial asset on the balance sheet adjusted to fair market value.
| F-8 |
Digital Commodities
Pursuant to ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets: Accounting for and Disclosure of Crypto Assets, codified into ASC subtopic 350-60, in-scope crypto assets are required to be measured at fair value in the condensed consolidated balance sheet, with gains and losses from changes in the fair value of such digital commodities recognized in the condensed consolidated statement of operations each reporting period. Under ASU 2023-08 in-scope crypto assets are considered to be indefinite-lived intangible assets. The in-scope crypto assets are initially measured at cost based on existing GAAP guidance per ASC 350-30. ASU 2023-08 also requires certain interim and annual disclosures for digital commodities within the scope of the standard. Sales and purchases of digital commodities are reflected as cash flows from investing activities in the condensed consolidated statements of cash flows.
The Company adopted this guidance effective August 25, 2025, the date of the Company’s first holding in digital commodities. SOL is measured using Level 1 inputs under ASC 820, based on quoted prices from the principal market unless otherwise restricted. ASC 820 defines “principal market” as the market with the greatest volume and level of activity for the asset or liability. The determination of the principal market (and, as a result, the market participants in the principal market) is made from the perspective of the reporting entity. The digital commodities held by the Company are traded on a number of active markets globally. The Company determines Coinbase as its principal market. The Company recognizes staking revenue by utilizing daily prices obtained from Coinbase at the end of the treasury operations day at 5pm ET (“Spot Price”).
Sensitivity to market risk
The
Company is exposed to SOL market risk related to our digital commodity holdings, which are impacted by the market value of the respective
digital commodity held. The Company performed a sensitivity analysis assuming a hypothetical 10% change in the fair value of these digital
commodities to demonstrate the potential impact on our financial results. A hypothetical 10% increase or decrease in market prices would
have positively or negatively impacted our Income (loss) before income taxes by approximately $
Acquisition of digital commodities
Per ASC 350-60-45-2, gains and losses from the remeasurement of digital commodities shall be included in net income and presented separately from changes in the carrying value of other intangible assets. Pursuant to this guidance, changes in fair value are reflected in the line items ‘Realized gain (loss) on digital commodities’ and ‘Unrealized gain (loss) on digital commodities’ in the operations section of the condensed consolidated statements of operations. Changes in fair value are measured as the difference between the cost basis and the prevailing market price of the digital commodity at the date of measurement, multiplied by the quantity held of the digital commodity.
These prices are independently analyzed, including comparisons to other exchanges and potential cut-off times.
The Company is authorized to enter into derivative positions; no positions were open during the periods presented. For any open derivative positions, the Custodians provide a period-end spot price for the open positions based on valuation models applied based on various inputs.
Remeasurement on a recurring basis
Subsequent to the acquisitions of SOL, remeasurement of change in fair value is done by taking the spot price as defined above on the last day of the period. Tokens are bifurcated between liquid and locked tokens. In the case of liquid tokens, the aggregate fair value is computed by taking the number of liquid and locked tokens and multiplying by the period-end spot price. As locked tokens become unlocked over time, they will be added to the count of liquid tokens and accordingly, make up less of that discount percentage over time when computing aggregate fair value on locked tokens. In the case of locked tokens, the aggregate fair value is computed by taking the number of locked tokens, discounted by the appropriate percentage, which as of December 31, 2025 was 10% and as of June 30, 2026 was 8.5%. Management considers this a Level 2 input and monitors this discount percentage adjusting when appropriate
| F-9 |
The
Company performed a sensitivity analysis assuming a hypothetical 1% change in the discount to fair value of these digital commodities
to demonstrate the potential impact on our financial results. A hypothetical 1% increase or decrease in the discount would have positively
or negatively impacted our Income (loss) before income taxes by approximately $
Staking revenue
The Company earns staking rewards by delegating our digital commodities to third-party validators on proof-of-stake blockchain networks. These tokens remain under the Company’s control and are not derecognized, as the delegation does not constitute a transfer of control under ASC 610-20 or ASC 350-60.
While there is no explicit guidance under U.S. GAAP for staking activities, the Company applies the principles of ASC 606, Revenue from Contracts with Customers, by analogy. Management evaluates whether a contract exists, identifies the performance obligations, and determines whether the Company acts as a principal or agent in the transaction. The transaction price is measured at the fair value of the digital commodities received at the time control is obtained Changes in protocol rules or accounting interpretations may materially impact how staking revenue is recognized and measured. SOL tokens held by the Company, whether liquid or locked, are eligible for staking. The Company evaluation has determined that it is the delegator and the Custodians, via agreements with validators, are the validators. Therefore, the Company recognizes the staking rewards on a net basis unless it is the validator.
The Company recognizes the staking rewards as the rewards are earned. Rewards are recognized as revenue as is earned at the end of each epoch (just under two day periods for SOL); rewards earned but not yet received at period end are recorded in Accounts receivable – digital commodities, net. This revenue is reported in the Statements of consolidated statement of operations under the line item “Staking Revenue.”
The Company had staked substantially all of its SOL treasury staked during the period ended June 30, 2026. The Company maintains control over the delegated SOL tokens throughout the staking period. Although the tokens undergo a bonding process with validators, the Company retains the ability to initiate unbonding at any time for liquid SOL. The validators cannot sell, pledge, or otherwise dispose of the tokens. As such, the Company continues to recognize the delegated SOL tokens as part of its digital commodity holdings.
Realized disposition of the digital commodities
When digital commodities are disposed, realized gains or (losses) are recorded for the difference between FMV price at disposition and its cost. For sales of digital commodities, this would be the net transaction price. All sales of Solana are made from wallets and with tokens that were specifically identified, including their cost basis, prior to disposition, In the case of transfers of custody to third parties this is the spot price of the asset on the day of the transfer.
Software Development Costs
The Company accounts for costs incurred in developing software for internal use in accordance with ASC 350-40. Costs incurred during the preliminary project stage are expensed as incurred. Capitalization begins when the preliminary project stage is complete, management with the relevant authority has authorized and committed to funding the project, and it is probable that the project will be completed and the software will be used to perform the function intended. Costs of training, data conversion, and maintenance are expensed as incurred.
The
Company’s software development activities were in the preliminary project stage at June 30, 2026. Accordingly,
| F-10 |
Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigations, fines and penalties and other sources are recognized when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal fees related to contingencies are expensed as incurred. Gain contingencies are not recognized until the gain is realizable or realized.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) and in January 2025 issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The new guidance requires disaggregated information about the entity’s type of expenses into certain categories. As clarified by ASU 2025-01, the guidance is effective for public business entities for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company expects to adopt the annual disclosure requirements in its Annual Report on Form 10-K for the year ending December 31, 2027, and the interim disclosure requirements beginning with its Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2028. The Company is evaluating the impacts of the new guidance on its disclosures within the condensed consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The new guidance removes the references to software development project stages in Subtopic 350-40 and instead requires capitalization to begin when management with the relevant authority has authorized and committed to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, and may be applied on a prospective, modified prospective, or retrospective basis. Early adoption is permitted as of the beginning of an annual reporting period. The Company expects to adopt the new guidance beginning with its Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2028. The Company continues to monitor the effect of the new guidance on its software development activities.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the scope, form and content, and disclosure requirements of interim reporting, and adds a disclosure principle requiring disclosure of events occurring after the most recent annual reporting period that have a material impact on the entity. For public business entities, the guidance is effective for interim reporting periods in fiscal years beginning after December 15, 2027, with early adoption permitted. The Company expects to adopt the new guidance beginning with its Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2028. The Company is evaluating the impacts of the new guidance on its interim disclosures.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which makes technical corrections and clarifications across a range of Topics. Among other matters, the amendments clarify the calculation of diluted earnings per share when an entity has a loss from continuing operations and the methods permitted to account for treasury stock retirements. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The amendments relating to diluted earnings per share are applied retrospectively. The Company expects to adopt the new guidance beginning with its Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2027. The Company is evaluating the impacts of the new guidance on its condensed consolidated financial statements and disclosures.
Reclassification of Prior Period Presentation
Certain prior period amounts have been reclassified to conform to the current period presentation.
| F-11 |
Note 3. Prepaid Expenses and Current Assets
Prepaid expenses and other current assets consisted of the following at June 30, 2026 and December 31, 2025:
June 30, 2026 |
December 31, 2025 |
|||||||
| Insurance | $ | $ | ||||||
| Other | ||||||||
| Total | $ | $ | ||||||
Note 4. Inventories
Inventories,
net of reserves of $
June 30, 2026 |
December 31, 2025 |
|||||||
| Finished goods | $ | $ | ||||||
Note 5. Fixed Assets
Fixed assets, net, as of June 30, 2026 and December 31, 2025, are summarized as follows:
June 30, 2026 |
December 31, 2025 |
|||||||
| Computer systems, website and other | $ | $ | ||||||
| Less: accumulated depreciation | ( |
) | ( |
) | ||||
| Fixed assets, net | $ | $ | ||||||
Depreciation
expense for the six months ended June 30, 2026 and 2025 was $
Note 6. - Investments in Digital Commodities
The following table summarizes digital commodities held for investment:
| June 30, 2026 | ||||||||||||
| Units | Cost Basis | Fair Value | ||||||||||
| SOL | $ | $ | ||||||||||
| December 31, 2025 | ||||||||||||
| Units | Cost Basis | Fair Value | ||||||||||
| SOL | $ | $ | ||||||||||
The Company recognizes digital commodities at fair value.
| Six months ended June 30, 2026 | ||||||||||||||||||||
| Digital Commodity Units | SOL | Cost Basis $ USD | Realized Loss | Selling Price Per Unit | Cost Basis Per Unit | |||||||||||||||
| Beginning digital commodities | $ | |||||||||||||||||||
| Dispositions of digital commodities | ( |
) | ( |
) | ( |
) | ||||||||||||||
| Staking rewards received | ||||||||||||||||||||
| Rebate & Rewards Receivable Less Fees Paid | ||||||||||||||||||||
| Ending Digital Commodities | ||||||||||||||||||||
| Unrealized loss | ( |
) | ||||||||||||||||||
| Ending Digital Commodities | $ | |||||||||||||||||||
The following table summarizes the composition of SOL held broken out by liquid and locked as of June 30, 2026 and December 31, 2025:
| Number of SOL units | June 30, 2026 |
December 31, 2025 |
||||||
| Liquid SOL | ||||||||
| Locked SOL | ||||||||
| Total | ||||||||
| F-12 |
The following table summarizes the unlocking schedule of SOL tokens locked as of June 30, 2026 and December 31, 2025:
| Locked SOL Maturity | June 30, 2026 |
December 31, 2025 |
||||||
| Through Year End 2026 | ||||||||
| Through Year End 2027 | ||||||||
| Through Year End 2028 | ||||||||
| Total | ||||||||
The
margin loan at December 31, 2025 of $
Note 7. Debt Financing
On
September 20, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) and a
Senior Secured Note (the “Note”) for an aggregate principal amount of $
Note 8. Stockholders’ Equity
Capital Structure
On December 11, 2017, the Company was incorporated in Wyoming with shares of common stock authorized with a $ par value. Effective April 18, 2019, the Company’s authorized common stock was increased to shares of common stock. The articles of incorporation also authorized preferred shares with a $ par value.
Effective
March 22, 2022, the Company completed a plan and agreement of merger with Sharps Technology, Inc., a Nevada corporation (“Sharps
Nevada”).
In July 2024, the shareholders approved the increase of the authorized common stock from to shares, which was subsequently filed as an amendment to the articles of incorporation with the state of Nevada.
| F-13 |
On
October 7, 2024, at a special meeting of shareholders, the shareholders approved a proposal to authorize the Company’s Board of
Directors in its sole and absolute discretion, to file a certificate of amendment (the “Amendment”) to the Company’s
amended and restated certificate of incorporation to effect the reverse split at a ratio to be determined by the Board, not to exceed
a
On August 22, 2025, at the annual meeting of shareholders, the shareholders approved a proposal to authorize the Company’s Board of Directors in its sole and absolute discretion, to file a certificate of amendment (the “Amendment”) to the Company’s’ amended and restated certificate of incorporation to increase the authorized shares of common stock from shares to shares.
Common Stock
Securities Purchase Agreements
On
August 25, 2025, the Company entered into securities purchase agreements (the “Cash Securities Purchase Agreements”) with
certain accredited investors (the “Cash Purchasers”) pursuant to which the Company sold to the Cash Purchasers in a private
placement offering (the “Cash Offering”) an aggregate offering of (i) “Cash Shares”) of common stock
of the Company, par value $ per share (the “Common Stock”), at an offering price of $ per share (ii) and
pre-funded warrants (the “Cash Pre-Funded Warrants”) to purchase shares of Common Stock (the “Cash Pre-Funded Warrant
Shares,”) at an offering price of $ per Pre-Funded Warrant, and (ii) stapled warrants (the “Cash Stapled Warrants,”
and together with the Common Stock and Cash Pre-Funded Warrants, the “Cash Securities”) to purchase shares of
Common Stock (the “Cash Stapled Warrant Shares,”) at an exercise price of $
Each
of the Cash Pre-Funded Warrants is immediately exercisable for one share of Common Stock at the exercise price of $
On August 25, 2025, the Company also entered into securities purchase agreements (the “Cryptocurrency Securities Purchase Agreements,” and together with the Cash Securities Purchase Agreements, the “Securities Purchase Agreements”) with certain accredited investors (the “Cryptocurrency Purchasers,” and together with the Cash Purchasers, the “Purchasers”) pursuant to which the Company sold and issued to the Cryptocurrency Purchasers in a private placement offering (the “Cryptocurrency Offering” and together with the Cash Offering, the “Offerings”) (i) pre-funded warrants (the “Cryptocurrency Pre-Funded Warrants” and together with the Cash Pre-Funded Warrants, the “Pre-Funded Warrants”) to purchase shares of Common Stock (the “Cryptocurrency Pre-Funded Warrant Shares,” and together with the Cash Pre-Funded Warrant Share, the “Pre-Funded Warrant Shares”) at an offering price of $ per Pre-Funded Warrant, and (ii) stapled warrants (the “Cryptocurrency Stapled Warrants,” and together with the Cash Stapled Warrants, the “Stapled Warrants” to purchase shares of Common Stock (the “Cryptocurrency Stapled Warrant Shares,” and together with the Cash Stapled Warrant Share, the “Stapled Warrant Shares”) at an exercise price of $ per Cryptocurrency Stapled Warrant. In the Cryptocurrency Offering, the Cryptocurrency Purchasers will tender either Unlocked SOL tokens or Locked SOL tokens to the Company as consideration for the Cryptocurrency Pre-Funded Warrants and Cryptocurrency Stapled Warrants.
| F-14 |
The
exercise of the Cryptocurrency Pre-Funded Warrants and Cryptocurrency Stapled Warrants into Cryptocurrency Pre-Funded Warrant Shares
and Cryptocurrency Stapled Warrant Shares, respectively, was subject to stockholder approval (“Stockholder Approval”) which
was approved at the Special Shareholder meeting on October 14, 2025. Each of the Cryptocurrency Pre-Funded Warrants is exercisable for
one share of Common Stock at the exercise price of $
The
gross proceeds from the Cash Securities Purchase Agreements and Cryptocurrency Securities Purchase Agreements aggregated $
On September 26, 2025, the Company entered into Waiver and Consent (the “Waiver and Consent”) with certain holders of the Company’s securities (who collectively beneficially owned at least 50.1% of the then outstanding Registrable Securities, as defined in the Registration Rights Agreement dated August 25, 2025 (the “Registration Rights Agreement”). The Waiver and Consent waived the compliance of the September 29, 2025 filing date and extended the deadline for the Company to file the initial resale registration statement with the Securities and Exchange Commission to the 60th calendar day following the Closing Date, as defined in the Registration Rights Agreement. The initial resale registration statement was filed on October 23, 2025. The final prospectus was filed on January 8, 2026.
Controlled Equity Offering
On
September 2, 2025, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with each
of Cantor Fitzgerald & Co. (“Cantor”) and Aegis Capital Corp. (“Aegis”) (each, an “Agent” and
together, the “Agents”), pursuant to which the Company, from time to time, at its option may offer and sell shares (the “ATM
Shares”) of its Common Stock, to or through Cantor, acting as principal and/or the sole designated sales agent having an aggregate
sales price of up to $
The Common Stock to be sold under the Sales Agreement, if any, will be issued and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-274146), which was filed with the SEC on August 22, 2023, as amended on August 29, 2023 and declared effective by the SEC on September 5, 2023 and a registration statement on Form S-3 (File No. 333-289980) filed pursuant to Rule 462(b) under the Securities Act for the purpose of registering additional securities available to be sold under the registration statement on Form S-3 (File No. 333-274146) (collectively, the “Registration Statement”), including a base prospectus as part of the Registration Statement, and a prospectus supplement dated September 2, 2025 relating to the offer and sale of the ATM Shares pursuant to the Sales Agreement.
| F-15 |
During
the year ended December 31, 2025, the Company issued approximately M shares of common stock under the Sales Agreement and received
net proceeds from the Sales Offering of approximately $
January 2025 Offering
On
January 29, 2025, the Company closed on an offering (the “2025 Offering”) and received gross proceeds of approximately $
The
2025 Offering consisted of (pre-reverse – ) units consisting of (pre-reverse – ) Common
Units with gross proceeds of $
The
Pre-Funded Warrants were immediately exercisable and could be exercised at any time until exercised in full. Immediately after closing
The 2025 Offering was made pursuant to an effective registration statement on Form S-1 (No. 333-284237) previously filed with the U.S. Securities and Exchange Commission (SEC) and declared effective by the SEC on January 27, 2025.
The
2025 Series A Warrants are exercisable immediately and expire 60 months after stockholder approval. The 2025 Series B Warrants are exercisable
immediately and expire 30 months after stockholder approval. The exercise price of the 2025 Series A and B Warrants, were adjusted down
to $
On
August 25, 2025, the Company entered into an amendment (the “Series A Amendment”) with certain warrant holders which references
the Series A Warrants (the “Existing Warrants”) in the amount of shares of Common Stock, reflective of the reverse
stock split, underlying the Existing Warrants. Pursuant to the Series A Amendment, the holders of the Existing Warrants agreed to reduce
the exercise price of their Existing Warrants from $
| F-16 |
Warrants
| a) | In
connection with the strategic advisory consulting agreement entered into on August 28, 2025, with Sol Markets (related party), a Cayman Islands
exempt company, the Company issued warrants to purchase |
|
| b) | The Company allocated the proceeds of the January 2025 Offering based on the fair values for the Series A, Series B warrants and Prefunded Warrants. The Company determined the fair value of the Series A and Series B warrants at the Offering date using the Monte Carlo pricing model and treated the valuation as a liability in consideration of the variable number of the issuer’s equity shares in the warrant agreements. The fair value of the Prefunded warrants, also recorded as liability, was based on market price of the common shares. | |
|
As
a result of the August 2025 Series A Amendment, the outstanding |
Share Repurchase Program
On
October 2, 2025, the Board of Directors of the Company approved a share repurchase program (the “2025 Repurchase Program”)
providing for the repurchase of up to $
In connection with the 2025 Repurchase Program, on October 6, 2025, the Company entered into an Open Market Share Repurchase Agreement (the “Repurchase Agreement”) with Cantor Fitzgerald (the “Broker”) whereby the Broker has agreed to act as a non-exclusive agent on behalf of the Company to repurchase shares of Common Stock in the open market pursuant to Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The Repurchase Agreement will continue in effect until terminated by either the Company or the Broker, with or without cause, upon written notice to the other party. The Company will pay Broker a commission at a rate of $ for each share of Common Stock repurchased pursuant to the Repurchase Agreement.
Pursuant to the 2025 Repurchase Program, from January to June 2026, the Company repurchased a total of shares of its common stock at a cost of $, not including fees of .
Stockholder Rights Plan
On May 13, 2026, the Board of Directors (the “Board”) of the Company:
| ● | adopted a limited duration stockholder rights plan (the “Rights Plan”), the terms of which are set forth in a Rights Agreement entered into between the Company and VStock Transfer, LLC, as rights agent (the “Rights Agent”) dated May 14, 2026; and | |
| ● | pursuant to the Rights Plan, authorized and declared a dividend to stockholders of record at the close of business on May 26, 2026 (the “Record Date”) of one preferred share purchase right (each, a “Right”) for each outstanding share of the Company’s common stock, par value $ (“Common Stock”), held by such stockholders. |
| F-17 |
The
Rights Plan is similar to other rights plans adopted by publicly held companies. Generally, under the Rights Plan,
Note 9. Preferred Stock
On
July 15, 2025, the Company executed a Subscription and Investment Agreement (the “Subscription Agreement”) with Paul Danner
(“Subscriber”),
Note 10. Warrants
The warrants that are accounted for as liabilities in accordance with ASC 815-40, are presented as a Warrant liability in the accompanying condensed consolidated balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the condensed consolidated statement of operations.
The Warrant liability at June 30, 2026 and December 31, 2025 consists of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Trading and Overallotment Warrants | $ | $ | ||||||
| Note Warrants | ||||||||
| Offering Warrants – May 2024 | ||||||||
| Offering Warrants – January 2025 – Series B | ||||||||
| Total Warrant Liability | $ | $ | ||||||
| F-18 |
The Warrants outstanding at June 30, 2026 and December 31, 2025, were as follows:
| June 30, 2026 | December 31, 2025 | |||||||
| Trading and Overallotment Warrants | ||||||||
| Note Warrants | ||||||||
| Offering Warrants – May 2024 | ||||||||
| Offering Warrants -January 2025 -Series A | ||||||||
| Offering Warrants – January 2025 – Series B | ||||||||
| Prefunded – cash and in kind | ||||||||
| Cash and stapled warrants | ||||||||
| Warrants issued to strategic advisor | ||||||||
| Warrants issued for services arrangement | ||||||||
| Total Warrants Outstanding | ||||||||
On August 22, 2025, the shareholders approved the Company’s Equity Incentive Plan (the “2025 Plan”), to provide for the issuance of up to options and/or shares of restricted stock be available for issuance to officers, directors, employees and consultants.
In August 2025, stock options were granted to directors, executives and other employees and consultants with an exercise price of $, a term of years and vesting % upon grant and the remainder 25% per quarter over the following nine months. Also in August 2025, options were granted to former employees and directors with immediate vesting and a term of years. In October 2025, an additional options were granted to a director and certain employees with a term of years and vesting % upon grant and the remainder 25% per quarter over the following nine months. The above options to purchase shares of the Company’s common stock, par value $per share, which were granted pursuant to the Company’s 2025 Equity Inventive Plan, have grant prices based on the closing price on the respective grant dates.
| Options |
Weighted Average Exercise Price |
Weighted Average Remaining Life |
||||||||||
| Outstanding at beginning of period | $ | |||||||||||
| Granted | - | |||||||||||
| Forfeited/cancelled | ( |
) | ||||||||||
| Outstanding at end of period | $ | |||||||||||
| Exercisable at end of period | $ | |||||||||||
For the six months ended June 30, 2026 and 2025, the Company recognized stock-based compensation expense of $ and $, respectively, which was recorded in general and administrative expense.
For the three months ended June 30, 2026 and 2025, the Company recognized stock-based compensation expense of $ and $, respectively, which was recorded in general and administrative expense.
As of June 30, 2026 and December 31, 2025, there was $, respectively, of unrecognized stock-based compensation related to unvested stock options, which is expected to be recognized over a weighted-average period of six months as of June 30, 2026.
At June 30, 2026, all of the stock options outstanding have exercise prices that exceed the market price at June 30, 2026 and as such, no intrinsic value exists. Intrinsic value is defined as the difference between the exercise price of the options and the market price of the Company’s common stock.
| F-19 |
Note 12. Income Taxes
At
the end of each interim reporting period, the Company estimates its effective tax rate expected to be applied for the full year. This
estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods.
Accordingly, the Company’s effective tax rate for the six months ended June 30, 2026 and 2025 was
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company has concluded OBBBA will have an immaterial impact on its income tax provision.
As
of June 30, 2026 and December 31, 2025, the liability for uncertain tax positions is
Note 13. Related Party Transactions and Balances
As
of June 30, 2026 and December 31, 2025, accounts payable and accrued liabilities include $
Consulting
expense for services provided by Sol Edge Limited (the “Consultant”) during the six months ended June 30, 2026 and 2025
was $
The Consultant is wholly-owned and controlled by James Zhang, the brother of Alice Zhang, our Chief Investment Officer and director.
Note 14. Fair Value Measurements
As of June 30, 2026, the following financial assets and liabilities were measured at fair value on a recurring basis presented on the Company’s condensed consolidated balance sheet:
| Fair Value Measurements Using | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||
| USDC | ||||||||||||||||
| USDT | ||||||||||||||||
| Digital commodities | ||||||||||||||||
| Digital commodities, Locked SOL | ||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Warrant liability | ||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||
| F-20 |
As of December 31, 2025, the following financial assets and liabilities were measured at fair value on a recurring basis presented on the Company’s condensed consolidated balance sheet:
| Fair Value Measurements Using | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||
| USDC | ||||||||||||||||
| USDT | ||||||||||||||||
| Digital commodities | ||||||||||||||||
| Digital commodities, Locked SOL | ||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Warrant liability | ||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||
Note 15. Commitments and Contingencies
Contingencies
At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.
Consulting Agreement
Effective
August 28, 2025 (“Effective Date”),
The Consulting Agreement commenced on the Effective Date and shall continue in full force and effect for a term of 20 years (the “Term”), unless earlier terminated in accordance with Section 13(c). Thereafter, the Consulting Agreement may be renewed for additional periods as mutually agreed in writing by the Parties. If the Consulting Agreement is terminated by the Company for any reason during the Term, or if the Consultant terminates the Consulting Agreement due to a material breach by the Company, the Company shall pay to the Consultant, as liquidated damages and not as a penalty, an amount equal to all fees and other compensation that would have accrued to the Consultant under this Agreement from the date of termination through the end of the Term, paid monthly throughout the Term in accordance with the payment provisions herein.
Beginning
on August 27, 2026,
The Consultant is wholly-owned and controlled by James Zhang, the brother of Alice Zhang, our Chief Investment Officer and Director.
| F-21 |
Leases
On
January 10, 2026, the Company executed a lease for a
Effective
May 2, 2026, the Company leased a
The
Company evaluated the Shenzhen and Hong Kong leases under ASC 842 and determined that both leases are operating leases. The rate implicit
in each lease was not readily determinable. Accordingly, the Company used its incremental borrowing rate based on information available
at lease commencement. The selected incremental borrowing rates were
The
Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of fixed lease payments
over the applicable lease term. Fixed lease payments included in the measurement of lease liabilities exclude refundable deposits, VAT,
utilities, property management fees, and other non-lease or variable components. Cash paid for amounts included in the measurement of operating lease liabilities was $
| Maturity period | Amount | |||
| Remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total undiscounted payments | ||||
| Less: imputed interest | ( |
) | ||
| Present value of lease liabilities | $ | |||
Note 16. Segment Reporting
The
Company determines operating segments based on metrics that our Chief Operating Decision Makers (“CODM”) review internally
to manage our business, including resource allocation and performance assessment. In August 2025, as a result of the new treasury strategy,
management re-evaluated the segment reporting structure and determined that the Company operates in
Medical Device: This segment is responsible for executing and managing the Company’s medical device sales and distribution business.
Digital Commodity Treasury: This segment is responsible for executing and managing the Company’s digital treasury platform.
The CODM uses segment operating income (loss) to evaluate operating segment performance and allocate resources. The Company does not prepare separate balance sheets by operating segment for the CODM, as assets are not evaluated as part of operating segment performance and resource allocation.
Transactions between segments are reported as if each were a stand-alone business and are eliminated in consolidation. The Company ceased manufacturing operations in October 2025. Accordingly, for the three and six months ended June 30, 2026 the Medical Device segment includes only the continuing sales and distribution business.
| F-22 |
Certain payroll, consultant, and other selling, general and administrative expenses were allocated to the segment that they support, with the remaining expenses allocated to corporate.
The following table presents the Company’s segment results (unaudited) for the six months and three months ended June 30, 2026 and 2025:
|
SIX MONTHS ENDED JUNE 30, 2026 |
SIX MONTHS ENDED JUNE 30, 2025 |
|||||||||||||||||||||||||||||||
| Medical Device | Digital Asset Treasury | Corporate | Consolidated |
Medical Device DO |
Digital Asset Treasury | Corporate | Consolidated | |||||||||||||||||||||||||
| Net Revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||||||||
| Cost of goods sold - inventory reserve | ||||||||||||||||||||||||||||||||
| Total Cost of Goods Sold | ||||||||||||||||||||||||||||||||
| Gross Margin (Loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
| Staking Revenue, net | ||||||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||
| Consulting fees – related parties | ||||||||||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||||||||
| Unrealized loss on digital commodities | ||||||||||||||||||||||||||||||||
| Realized loss on digital commodities | ||||||||||||||||||||||||||||||||
| Digital commodity transaction expenses | ||||||||||||||||||||||||||||||||
| Total Operating Expenses | ||||||||||||||||||||||||||||||||
| Loss from Operations | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Other Income: | ||||||||||||||||||||||||||||||||
| Interest expense, net | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Fair market value adjustment on warrants | ||||||||||||||||||||||||||||||||
| Other expense | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Total Other Income | ||||||||||||||||||||||||||||||||
| Loss Before Provision for Taxes | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Tax Provision | ||||||||||||||||||||||||||||||||
| Income (Loss) from Continuing Operations | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||
|
THREE MONTHS ENDED JUNE 30, 2026 |
THREE MONTHS ENDED JUNE 30, 2025 |
|||||||||||||||||||||||||||||||
| Medical Device | Digital Asset Treasury | Corporate | Consolidated |
Medical Device DO |
Digital Asset Treasury | Corporate | Consolidated | |||||||||||||||||||||||||
| Net Revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||||||||
| Cost of goods sold - inventory reserve | ||||||||||||||||||||||||||||||||
| Total Cost of Goods Sold | ||||||||||||||||||||||||||||||||
| Gross Margin (Loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
| Staking Revenue, net | ||||||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||
| Consulting fees – related parties | ||||||||||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||||||||
| Unrealized loss on digital commodities | ||||||||||||||||||||||||||||||||
| Realized loss on digital commodities | ||||||||||||||||||||||||||||||||
| Digital commodity transaction expenses | ||||||||||||||||||||||||||||||||
| Total Operating Expenses | ||||||||||||||||||||||||||||||||
| Loss from Operations | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Other Income: | ||||||||||||||||||||||||||||||||
| Interest expense, net | ||||||||||||||||||||||||||||||||
| Fair market value adjustment on warrants | ||||||||||||||||||||||||||||||||
| Other expense | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Total Other Income | ||||||||||||||||||||||||||||||||
| Loss Before Provision for Taxes | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Tax Provision | ||||||||||||||||||||||||||||||||
| Income (Loss) from Continuing Operations | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||
| F-23 |
The following table presents the total assets by segment (unaudited) at June 30, 2026 and December 31, 2025:
| June 30, 2026 | DECEMBER 31, 2025 | |||||||||||||||||||||||||||||
|
Medical Device |
Digital Commodities |
Corporate | Consolidated |
Medical Device |
Digital Commodities |
Corporate | Consolidated | |||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Note: Net Loss by Segment includes Corporate, although not a reportable segment, only for reconciliation to the condensed consolidated statement of operations.
Note 17. Discontinued Operations
On October 6, 2025, the Company entered into definitive agreements, including a bill of sale, assignment and assumption agreement providing for the transfer by the Company of certain assets, and a contract for the transfer of business share providing for the assignment by the Company of all of the Company’s right, title and interest in and to the issued and outstanding shares of Safegard Medical Kft, the Hungarian subsidiary, which is reflected in the accompanying financial statements as a discontinued operation.
Loss from discontinued operations for the three and six months ended June 30, 2025 was as follows:
| THREE MONTHS ENDED | SIX MONTHS ENDED | |||||||
| JUNE 30, 2025 | JUNE 30, 2025 | |||||||
| NET REVENUE (LOSS ) | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Cost of goods sold - inventory reserve | ||||||||
| Gross Margin (Loss) | ( |
) | ( |
) | ||||
| OPERATING EXPENSES: | ||||||||
| Selling, general and administrative | $ | $ | ||||||
| Research and development | ||||||||
| Total Operating Expenses | ||||||||
| OTHER INCOME (EXPENSE): | ||||||||
| Foreign currency transaction loss and other | ( |
) | ( |
) | ||||
| Other Income (Expense), net | ( |
) | ( |
) | ||||
| Loss before income taxes (benefit) | ( |
) | ( |
) | ||||
| Income tax benefit | ||||||||
| Net Loss from Discontinued Operations | $ | ( |
) | $ | ( |
) | ||
There
were
Note 18. Subsequent Events
Trade Receivable Repayment Plan
On July 8, 2026, the Company and a trade customer agreed to a scheduled repayment plan with respect to the customer’s accounts receivable balance outstanding at June 30, 2026, under which the balance is payable in thirteen installments through July 2027. The Company received the first installment in July 2026. See Note 2 — Trade Receivables and Allowance for Credit Losses.
| F-24 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis summarizes the significant factors affecting the condensed consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and notes included in this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references in this Annual Report on Form 10-K to “we,” “us,” and “our” refer to SkyAI, Inc.
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
Overview
Since our inception in 2017 and through 2022, we devoted substantially all of our resources to the research and development of our safety syringe products. Commencing in 2022,` we started building inventory of syringe products. We commenced generating syringe revenues in 2025. In October 2025, we discontinued R&D and the manufacture of syringe products, and inventory marketed from that date was sourced from third-party manufacturers.
In August 2025, we adopted a digital commodity treasury strategy focused on accumulating Solana (“SOL”), the native digital commodity of the Solana blockchain. The Company earns staking rewards by delegating our digital commodities to third-party validators on proof-of-stake blockchain networks.
For the three and six months ended June 30, 2026, we reported a net loss of approximately $23.3 million and $109.5 million, primarily resulting from unrealized and realized losses on our Solana holdings of approximately $84.3 million and $14.7 million, respectively.
Our Medical Device segment has net revenues, cost of goods sold and gross margin/loss. We also have staking revenue from our Digital Commodities segment. Operating expenses include transaction expenses relating to digital commodity activities, research and development for our software under development and selling, general and administrative expenses related to both of our segments and our corporate office.
Substantially all of our research and development expenses to date have been incurred in connection with our syringe products. Following the transfer by the Company of certain assets, the Company is no longer engaged in medical device related research and development activities and is limiting its medical device activity to sales and distribution. The Company is now engaged in research and development for certain new products related to building an agentic finance platform. (see Recent Developments). We continue to prioritize long-term growth of the Company’s business, using cash and proceeds from the sale of SOL to fund operating expenses and our expansion plans.
On April 13, 2022, the Company’s Initial Public Offering was deemed effective with trading commencing on April 14, 2022. The Company received net proceeds of $14.2 million on April 19, 2022.
We maintain a corporate office located in Melville, New York. As of August 3, 2026, we had approximately 30 employees worldwide.
| 3 |
Recent Developments
On May 27, 2026, the Company announced its name change, the change in its ticker symbols, and a strategic transformation of its business, reflecting a shift from its legacy operations to the development of a technology-driven financial platform.
The Company is now focused on building an agentic finance platform designed to serve emerging markets across Asia, Latin America, and Africa (the “Global South”). By leveraging AI to aggregate and analyze on-chain financial data, the platform is being designed to enable users to better manage their assets and access global markets.
As part of its strategic transformation, the Company has established an international operational headquarters in Hong Kong to support strategic acquisitions, talent acquisition, and expansion efforts. The Company intends to utilize blockchain infrastructure, including the Solana network, as a foundational layer for its platform and treasury strategy.
Critical Accounting Policies and Significant Judgments and Estimates
This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements, as well as the reported revenues and expenses during the reported periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The fair market value adjustments related to investments in digital assets and warrants classified as liabilities, as well as inventory related adjustments, could impact the operating results in the reporting periods.
Summary of Significant Accounting Policies
Our significant accounting policies are described in Note 2 of the accompanying condensed consolidated financial statements and further discussed in our annual financial statements included in our annual report on Form 10-K for the year ended December 31, 2025.
| 4 |
Results of Operations
|
THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net Revenue | $ | - | $ | 136,080 | $ | 192,780 | $ | 136,080 | ||||||||
| Cost of goods sold | - | 148,620 | 202,578 | 148,620 | ||||||||||||
| Cost of goods – inventory reserve | 284,228 | - | 284,228 | - | ||||||||||||
| Total cost of goods sold | 284,228 | 148,620 | 486,806 | 148,620 | ||||||||||||
| Gross Margin (Loss) | (284,228 | ) | (12,540 | ) | (294,026 | ) | (12,540 | ) | ||||||||
| Staking Revenue, net | 2,323,547 | - | 5,457,656 | - | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Consulting fees – related party | 2,500,000 | - | 5,000,000 | - | ||||||||||||
| Research and development | 283,158 | - | 420,255 | - | ||||||||||||
| Selling, general and administrative | 5,163,257 | 1,411,161 | 10,216,580 | 2,775,456 | ||||||||||||
| Unrealized loss on digital commodities | 13,490,351 | - | 84,336,553 | - | ||||||||||||
| Realized loss on digital commodities | 3,926,958 | - | 14,716,799 | - | ||||||||||||
| Digital commodity transaction expenses | 64,686 | - | 128,508 | - | ||||||||||||
| Total Operating Expenses | 25,428,410 | 1,411,161 | 114,818,695 | 2,775,456 | ||||||||||||
| Loss from Operations | (23,389,091 | ) | (1,423,701 | ) | (109,655,065 | ) | (2,787,996 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income (expense), net | 76,746 | 96,953 | 86,784 | (530,038 | ) | |||||||||||
| Fair market value adjustment on warrants | 31,211 | 6,468,811 | 47,919 | 11,087,700 | ||||||||||||
| Other expense | 336 | (12 | ) | 329 | (12 | ) | ||||||||||
| Other Income, net | 108,293 | 6,565,752 | 135,032 | 10,557,650 | ||||||||||||
| Income (Loss) Before Provision for Taxes | (23,280,798 | ) | 5,142,051 | (109,520,033 | ) | 7,769,654 | ||||||||||
| Tax Provision | - | - | - | - | ||||||||||||
| Income (Loss) from Continuing Operations | (23,280,798 | ) | 5,142,051 | (109,520,033 | ) | 7,769,654 | ||||||||||
| Discontinued Operations: | ||||||||||||||||
| Loss from discontinued operations | - | (1,582,744 | ) | - | (2,413,513 | ) | ||||||||||
| Income tax benefit | - |
- | - |
132,000 | ||||||||||||
| Loss from Discontinued Operations | - |
(1,582,744 | ) | - |
(2,281,513 | ) | ||||||||||
| Net Income (Loss) | $ | (23,280,798 | ) | $ | 3,559,307 | $ | (109,520,033 | ) | $ | 5,488,141 | ||||||
Comparison of the Six Months Ended June 30, 2026 and 2025.
Product Net Revenue/Gross Margin
For the six months ended June 30, 2026 and June 30, 2025, revenue increased by $56,700 to $192,780 from $136,080 driven by the sale of the Sologard product line of syringes in 2026.
The inventory reserve increased by $284,228 for the six month period ended June 30, 2026, with the prior period ended June 30, 2025 reserve of $0.
| 5 |
Staking Revenue – net
For the six months ended June 30, 2026, the Company recognized net staking revenue of $5,457,656 resulting from the digital treasury strategy implemented during the third quarter of 2025. No staking revenue was recognized in the same period of 2025.
Transaction expense – digital commodities
For the six months ended June 30, 2026, $128,508 in transaction expenses relate to custodian and exchange for digital commodity investments. No digital commodity transaction expenses were incurred in the same period of 2025.
Unrealized loss on digital commodities
During the six months ended June 30, 2026, the Company recognized $84,336,553 in unrealized loss on investments in digital commodities.
The unrealized loss resulted from a decrease of the average fair market value per unit of our investments net of the reduction in the discount on our Locked SOL. No digital commodities were held in the same period of 2025.
Realized loss on digital commodities
During the six months ended June 30, 2026, the Company recognized $14,716,799 in losses on investments in digital commodities.
The realized loss reflected the difference between the average price of $92.09 received for the sale of 135,399 SOL and the cost basis of $200.79. No digital commodities were held in the same period of 2025.
Research and Development
For the six months ended June 30, 2026, Research and Development (“R&D”) expenses increased to $420,255 compared to none in continuing operations for the six months ended June 30, 2025. This increase resulted from new R&D activities related to the Company’s software development. Prior period R&D was related to the Company’s manufacturing activities that are now included in the Loss from discontinued operations.
Selling, General and Administrative
For the six months ended June 30, 2026, General and Administrative (“G&A”) expenses were $10,216,580 as compared to $2,775,456 for the six months ended June 30, 2025. The increase of $7,441,124 was primarily attributable to the following factors
| ● | An increase of approximately $4.3 million in payroll and related costs of, primarily due to an increase of $4.1 million in stock compensation expense due to the vesting of stock options. The remaining $0.2 million increase was mainly due to payroll from new hires. |
| ● |
An increase of approximately $2.3 million in professional services:
|
| ○ | $0.8 million related to audit, accounting and tax advisory services | |
| ○ | $0.4 million increase in legal fees | |
| ○ | $1.1 million increase in consulting and other professional services |
| ● | All other G&A expenses increased approximately $0.8 million primarily due to an increase of $0.6 million in insurance costs |
Consulting fees – related parties
This amount of $5,000,000 represents consulting fees to Sol Edge. See Note 13 to the Condensed Consolidated Financial Statements.
| 6 |
Net Interest expense (income)
Net interest income was $86,784 for the six months ended June 30, 2026, compared to interest expense of $ 530,038 for the six months ended June 30, 2025. Net interest changed by $616,822 due to a) interest earned on cash in 2026 of $117,884 as compared to $178,351 in 2025 b) interest expense of $708,390 for the accreted interest on the debt financing that originated in the third quarter of 2024 as compared to $19,229 in interest expense during 2026.
FMV Adjustment for Warrants
The value of the Warrants recorded as a liability requires the Fair Market Value (“FMV”) to be recorded at the date warrants are issued and then be remeasured at each reporting date while outstanding with recognition of the changes in fair value to other income or expense in the Condensed Consolidated Statement of Operations. For the six months ended June 30, 2026, and 2025 the Company recorded a FMV gain adjustment of $47,919 and $11,087,700, respectively.
Comparison of the Three Months Ended June 30, 2026 and 2025.
Product Net Revenue/Gross Margin
For the three months ended June 30, 2026 and June 30, 2025, we recognized revenues of $0 and $136,080 from the sale of the Sologard product line of syringes.
Staking Revenue – net
For the three months ended June 30, 2026, the Company recognized net staking revenue of $2,323,547 resulting from the digital treasury strategy implemented during the third quarter of 2025.
Transaction expense – digital commodities
For the three months ended June 30, 2026, $64,686 in transaction expenses relate to custodian and exchange for digital commodity investments.
Unrealized loss on digital commodities
During the three months ended June 30, 2026, the Company recognized $13,490,351 in unrealized loss on investments in digital commodities.
The unrealized loss resulted from a decrease of the average fair market value per unit of our investments net of the reduction in the discount on our Locked SOL. No digital commodities were held in the same period of 2025.
Realized loss on digital commodities
During the three months ended June 30, 2026, the Company recognized $3,926,958 in losses on investments in digital commodities.
The realized loss reflected the difference between the average price of $89.85 received for the sale of 35,399 SOL and the cost basis of $200.79.
Research and Development
For the three months ended June 30, 2026, R&D expenses increased to $283,158 compared to none in continuing operations for the three months ended June 30, 2025. This increase resulted from new R&D activities based at the Company’s Hong Kong operation.
| 7 |
Selling, General and Administrative
For the three months ended June 30, 2026, G&A expenses were $5,163,257 as compared to $1,411,161 for the three months ended June 30, 2025. The increase of $3,752,096 was primarily attributable to the following factors
| ● | An increase of approximately $2.2 million in payroll and related costs, consisting of $1.9 million increase in stock compensation expense and $0.3 million payroll increase. | |
| ● | All other G&A expenses increased approximately $ 1.5 million, primarily due to higher professional and legal fees $0.6 million, insurance costs $0.2 million and consulting fees $0.7 million. |
Consulting fees – related parties
This amount of $2,500,000 represents consulting fees to Sol Edge. See Note 13 to the Condensed Consolidated Financial Statements.
Net Interest expense (income)
Net Interest income was $76,746 for the three months ended June 30, 2026, compared to $ 96,953 for the three months ended June 30, 2025.
FMV Adjustment for Warrants
For the three months ended June 30, 2026, and 2025 the Company recorded a FMV gain adjustment of $31,211 and $6,468,811, respectively.
Liquidity and Capital Resources
At June 30, 2026, and December 31, 2025, we had a cash balance of $12,071,008 and $10,382,745, respectively. The Company had working capital of $12,627,942 at June 30, 2026 as compared to a working capital of $14,187,484 as of December 31, 2025. The decrease in our working capital of $1,559,542, after net proceeds from the sale of Solana in 2026 of $12,469,465, was primarily related to increases use of cash of $5,672,370 in operations, cash used to repay the margin loan of $3,084,931 and the share repurchase program of $2,011,573.
The Company intends to finance its future development and commercialization activities and its working capital needs with a combination of the sale of a portion of its Solana holdings, the sale of equity securities and/or with additional funding from other traditional financing sources until such time that funds provided by operations are sufficient to fund working capital requirements. The Company is debt free and intends to maintain sufficient cash and other immediately liquid resources on hand to satisfy current obligations.
Cash Flows
Net Cash Used in Operating Activities
The Company used cash of $5,672,370 and $2,276,940 in operating activities for the six months ended June 30, 2026 and 2025, respectively. The change in cash used was principally due to the Company incurring higher G&A expenses and new R&D activities, as described above, during the six months ended June 30, 2026.
Net Cash Provided By Investing Activities
For the six months ended June 30, 2026, the Company provided cash from investing activities of $12,457,526. For the six months ended June 30, 2025, the Company had no cash provided by or used for continuing operations. The increase in net cash provided by investing activities was indicative of the changing nature of the business driven by the sale of Solana and the decrease in fixed asset additions.
| 8 |
Net Cash Provided by Financing Activities
For the six months ended June 30, 2026 and 2025, the Company used and provided cash from financing activities of $5,096,894 and $ 13,953,030 respectively. In the 2025 period, the cash provided was from the $18.2 million in net proceeds from the Offering in January 2025 offset by the debt repayment of $4.2 million. In the 2026 period, the cash was used for the repayment of the margin loan $3,084,931 and the share repurchase program $ 2,011,573.
Off-Balance Sheet Arrangements
During the periods presented, we did not have any off-balance sheet arrangements as defined under Regulation S-K Item 303(a)(4).
Emerging Growth Company Status
We are an “emerging-growth company”, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, we can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to avail ourselves of these options. Once adopted, we must continue to report on that basis until we no longer qualify as an emerging growth company.
We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the initial public offering; (ii) the first fiscal year after our annual gross revenue are $1.07 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If, as a result of our decision to reduce future disclosure, investors find our common shares less attractive, there may be a less active trading market for our common shares and the price of our common shares may be more volatile.
We are also a “smaller reporting company”, meaning that the market value of our stock held by non-affiliates plus the aggregate amount of gross proceeds to us as a result of the IPO is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time, we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
| 9 |
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation of internal controls that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS
Except for the additional risk factors set forth below, factors that could cause our actual results to differ materially from those in this Quarterly Report are described in the Form 10-K for the year ended December 31, 2025, any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. Except as described below, as of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the Form 10-K for the year ended December 31, 2025. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
We have recently undergone a fundamental transformation of our business and strategic direction, and there can be no assurance that our new strategy will be successful.
Beginning in the second quarter of 2026, we discontinued our legacy business of marketing and distribution of syringe products and related drug-delivery systems, and adopted a new business strategy focused on building an agentic finance platform serving the global south. We have limited operating history in the agentic finance platform markets, and our ability to execute our new strategy is unproven. Our management team, while experienced in corporate strategy, mergers and acquisitions and capital markets, has not previously managed a publicly traded finance platform company. There can be no assurance that our strategic pivot will result in successful acquisitions, revenue growth or profitability, and the failure to execute our strategy could have a material adverse effect on our business, financial condition and results of operations.
Our use and integration of AI, including generative AI, in connection with our Solana treasury strategy and broader business operations expose us to operational, legal, regulatory, reputational, and competitive risks.
AI technologies, particularly generative AI, remain in relatively early stages of commercial deployment and are inherently complex and rapidly evolving. These technologies may produce inaccurate, incomplete, misleading, or “hallucinatory” outputs and may embed unintended biases or discriminatory or otherwise flawed results that may not be readily detectable. To the extent that AI-driven analyses, forecasts, or decision-making tools are used in connection with our treasury management, digital asset strategies, or related services, any deficiencies, inaccuracies or perceived flaws in such outputs could adversely affect our decision-making, financial performance, reputation, and competitive position.
| 10 |
In addition, our reliance on AI-powered tools may increase the risk of inadvertent disclosure or misuse of confidential or proprietary information. If our employees, contractors, or service providers input sensitive information into third-party AI systems, such information could become part of external training datasets or otherwise be exposed to third parties, potentially impairing our ability to protect our intellectual property or maintain the confidentiality of our strategic or financial data. Our ability to mitigate these risks depends in large part on the effectiveness of our internal controls, policies, and safeguards governing the use of AI technologies.
The legal and intellectual property landscape surrounding generative AI is uncertain and evolving. Content generated using AI tools may not be eligible for copyright protection, which could limit our ability to commercialize such content or assert ownership rights. Furthermore, AI-generated outputs may inadvertently infringe upon third-party intellectual property, privacy, or publicity rights, including where such outputs are derived from or resemble protected materials used in training underlying models. Any such claims could result in litigation, liability, regulatory scrutiny, or restrictions on our use of AI technologies.
Our use of AI may also increase our exposure to cybersecurity risks, including potential data breaches or unauthorized access to sensitive information processed through AI systems. Any such incidents could result in legal liability, regulatory enforcement, reputational harm, and increased costs associated with remediation and compliance.
Additionally, competitors or other market participants may adopt AI technologies more effectively or more rapidly than we do, which could impair our ability to compete, particularly in the context of digital asset treasury management and analytics. As AI adoption continues to expand, we expect to incur additional costs and devote significant resources to developing, maintaining, and monitoring our AI capabilities, as well as addressing associated ethical, operational, and compliance challenges.
As a result of the foregoing, our use of AI technologies could materially and adversely affect our business, financial condition and results of operations.
Evolving laws, regulations, and regulatory interpretations relating to artificial intelligence may adversely affect our business, including our ability to use AI in connection with our Solana treasury strategy.
The regulatory environment governing AI, machine learning, and automated decision-making is rapidly developing and remains uncertain across jurisdictions. New laws and regulations may be adopted, and existing laws may be interpreted or applied in ways that restrict or impose additional requirements on our use of AI technologies. We may be required to modify our operations, limit certain uses of AI, or incur significant costs to achieve compliance, any of which could adversely affect our business, financial condition and results of operations.
For example, the European Union’s Artificial Intelligence Act (the “AI Act”), which entered into force on August 1, 2024 and is expected to become fully applicable by August 2, 2026, establishes a risk-based framework governing the development and deployment of AI systems. The AI Act imposes varying levels of obligations depending on the classification of AI systems, including prohibitions on certain uses and stringent requirements for systems deemed “high-risk.” To the extent our current or future AI applications fall within the scope of the AI Act or similar regulatory regimes, we may be subject to increased compliance burdens, operational constraints, and potential liability.
Similarly, in the United States and other jurisdictions, regulatory authorities have begun adopting and enforcing laws and guidance relating to AI, data privacy, and consumer protection. These developments may require us to obtain additional consents, implement enhanced governance frameworks, or modify our use of AI technologies. Regulatory authorities, including the Federal Trade Commission, have also taken enforcement actions requiring companies to disgorge data or models derived from allegedly non-compliant AI practices. Any such actions directed or expected to be directed against us could have a material impact on our operations.
If we are unable to effectively anticipate, manage, and comply with evolving AI-related legal and regulatory requirements, or if our use of AI technologies becomes restricted or economically impractical, our business may become less efficient, we may face increased costs or liability, our financial condition or results of operations could suffer, and our competitive position could be adversely affected.
| 11 |
Sales, or the perception of sales, of our shares of common stock by us or our existing stockholders in the public market could cause the market price for our common stock to decline.
The sale of substantial amounts of shares of common stock in the public market or the perception that such sales could occur, could harm the prevailing market price of our common stock. These sales, by us or our existing stockholders, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sale of Unregistered Equity Securities
During the quarter ended June 30, 2026, no unregistered sales of equity securities occurred.
Repurchases of Equity Securities
During the three months ended June 30, 2026, the Company repurchased 345,991 shares of our common stock for $422,712. The following table presents information with respect to purchases of common stock of the Company during the three months ended June 30, 2026, by the Company or an “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Exchange Act:
| Period |
Total Number of Shares Purchased (1) |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) |
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs |
||||||||||||
| April 1, 2026 to April 30, 2026 | 27,400 | $ | 1.86 | 27,400 | ||||||||||||
| May 1, 2026 to May 31, 2026 | - | - | - | |||||||||||||
| June 1, 2026 to June 30, 2026 | 318,591 | $ | 1.17 | 318,591 | ||||||||||||
| Total | 345,991 | $ | 1.22 | 345,991 | $ | 97,988,427 | ||||||||||
| (1) | The shares were purchased pursuant to our share repurchase program (the “2025 Repurchase Program”) which was publicly announced by the Company on October 9, 2025. The 2025 Repurchase Program provides for the repurchase of up to $100 million of our outstanding shares of common stock and will continue in effect until terminated. | |
| (2) | This column discloses the number of shares purchased pursuant to the program during the indicated time periods. |
Item 3. Default Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
| 12 |
Item 5. Other Information
During
the quarterly period ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange
Act)
ITEM 6. EXHIBITS
| * | Filed herewith. |
| ** | Furnished herewith. |
| 13 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on the 7th day of August 2026.
| SKYAI, INC. | |
| August 7, 2026 | /s/ Paul K. Danner |
| Paul K. Danner | |
| Executive Chairman and Principal Executive Officer (Principal Executive Officer) | |
| August 7, 2026 | /s/ Arthur Levine |
|
Arthur Levine Chief Financial Officer (Principal Financial Officer) |
| 14 |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Paul K. Danner, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of SkyAI, Inc. (the Registrant); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiary, is made known to me by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| c) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| /s/ Paul K. Danner | |
| Paul K. Danner | |
| Executive Chairman and Principal Executive Officer | |
| Date: August 7, 2026 |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Arthur Levine, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of SkyAI, Inc. (the Registrant); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and we have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| c) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| /s/ Arthur Levine | |
| Arthur Levine | |
| Principal Financial Officer | |
| Date: August 7, 2026 |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Quarterly Report on Form 10-Q of SkyAI, Inc. for the period ended June 30, 2026, I, Paul K. Danner, Executive Chairman and Principal Executive Officer of SkyAI, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
| (1) | Such Quarterly Report on Form 10-Q of SkyAI, Inc. for the period ended June 30, 2026, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in such Quarterly Report on Form 10-Q of SkyAI, Inc. for the period ended June 30, 2026, fairly presents, in all material respects, the financial condition and results of operations of SkyAI, Inc. |
| /s/ Paul K. Danner | |
| Paul K. Danner | |
| Executive Chairman and Principal Executive Officer | |
| Date: August 7, 2026 |
A signed original of the certification required by Section 906 has been provided to SkyAI, Inc. and will be retained by SkyAI, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Quarterly Report on Form 10-Q of SkyAI, Inc. for the period ended June 30, 2026 I, Paul K. Danner, Interim Chief Financial Officer of SkyAI, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
| (1) | Such Quarterly Report on Form 10-Q of SkyAI, Inc. for the period ended June 30, 2026, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in such Quarterly Report on Form 10-Q of SkyAI, Inc. for the period ended June 30, 2026, fairly presents, in all material respects, the financial condition and results of operations of SkyAI, Inc. |
| /s/ Arthur Levine | |
| Arthur Levine | |
| Principal Financial Officer | |
| Date: August 7, 2026 |
A signed original of the certification required by Section 906 has been provided to SkyAI, Inc. and will be retained by SkyAI, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.