Forum Markets swings to $7.85M profit in Q3 2026
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Forum Markets (FRMM) reported third-quarter revenue of $1.998 million, down from $4.110 million a year earlier, while net income was $7.853 million versus a $216.742 million loss. The quarter included $13.882 million of digital-asset gains and $1.998 million of aircraft-engine rental revenue.
For the first nine months, revenue was $6.222 million, compared with $4.110 million, and net loss was $81.229 million versus $220.838 million. Aircraft rentals contributed $4.451 million after the company acquired five leased engines. It sold approximately 57,726 ETH for $128.1 million and repurchased 7,416,310 common shares for $33.2 million in cash. At September 30, it held 12,441 ETH, pledged as collateral on an approximately $26.0 million loan.
Operating cash use was $34.502 million for the nine months, compared with $18.419 million a year earlier; cash and cash equivalents were $3.221 million at September 30, 2026. Total assets were $166.762 million, down from $306.297 million at December 31, 2025.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Major pointNine-month net loss was $81.229 million, versus $220.838 million.
- Moderate pointNine-month revenue reached $6.222 million, versus $4.110 million.
- Moderate pointThird-quarter net income was $7.853 million, versus a $216.742 million loss.
Negative
- Major pointNine-month operating cash use was $34.502 million, versus $18.419 million.
- Major point. Forward-looking: it has not happened yet and may not happen.Remediation of a material weakness is identified as a financial-reporting risk.
- Moderate pointThird-quarter revenue fell to $1.998 million from $4.110 million.
Filing Explained
At September 30, 2026, 571,427 Zippy shares remained covered by the make-whole, with a $3.2 million estimated liability and the December 31, 2026, determination pending.
Form 10-Q is the company's unaudited quarterly report, here for the period ended
Common shares outstanding were 19,012,231 at
A June amendment divided Zippy's make-whole calculation among
Key Figures
Key Terms
Eurus Aero Tokens technical
Warehouse Facility financial
Community Recourse Loans financial
amortized cost financial
embedded derivative financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were FRMM’s third-quarter 2026 revenue and net income?
What were FRMM’s revenue and net loss for the first nine months of 2026?
How much ETH did FRMM sell in the first nine months of 2026?
What collateral secures FRMM’s Equities First loan?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
(The Nasdaq Capital Market) |
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 November 12, 2026,
FORUM MARKETS, INCORPORATED,
FORMERLY ETHZILLA CORPORATION AND SUBSIDIARIES
FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026
TABLE OF CONTENTS
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENT | II |
| PART I – FINANCIAL INFORMATION | 1 |
| Item 1. Financial Statements | 1 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 44 |
| Item 4. Controls and Procedures | 44 |
| PART II - OTHER INFORMATION | 46 |
| Item 1. Legal Proceedings | 46 |
| Item 1A. Risk Factors | 46 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 53 |
| Item 3. Defaults upon Senior Securities | 53 |
| Item 4. Mine Safety Disclosures | 53 |
| Item 5. Other Information | 53 |
| Item 6. Exhibits | 54 |
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Report”), contains forward-looking statements under federal securities laws, including within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by the following words: “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “targets,” “scheduled,” “anticipates,” “soon,” “goal,” “intends,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Report, including those factors described under the heading “Risk Factors” contained in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”) on April 1, 2026 (the “Annual Report”) and under “Part II—Item 1A. Risk Factors”, below, and our other filings with the SEC.
In particular, forward-looking statements include, but are not limited to, statements that are not statements of current or historical facts, such as statements relating to the Company’s consideration of strategic alternatives and the Company’s ability to execute its plans, undertake tokenization activities and achieve future performance.
Factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, among others:
| ● | failure to realize the anticipated benefits of the tokenization of real-world assets (“RWAs”); | |
| ● | the Company’s ability to expand into new markets, including the tokenization of RWAs, the timing and costs associated therewith, and regulatory compliance costs, compliance and issues related thereto; | |
| ● | the concentration of digital assets with custodians and service providers, including insolvency, non-performance, and limits on insurance coverage; | |
| ● | risks relating to the Company’s acquisitions and strategic investments; | |
| ● | risk that anticipated site capacity, power availability, permitting, equipment delivery or customer contracts are delayed or not obtained; | |
| ● | risk that equipment financing is not available on the terms or in the amounts assumed, or at all; | |
| ● | risks associated with the Company’s guarantee obligations in support of project-level financing; | |
| ● | our ability to identify, evaluate, and consummate strategic alternatives, including acquisitions, mergers, sales of the Company or material assets of the Company, strategic partnerships, capital raises and distributions of the Company’s capital and assets; | |
| ● | the performance of the Eurus Aero Token I (the “Aero Token”) or future tokens that we develop, including anticipated yields thereof; |
ii
| ● | digital asset market and network dynamics risks, including the slowing or stopping of the development or acceptance of blockchain networks and blockchain assets would have an adverse material effect on the successful development and adoption of the Company’s tokens; |
| ● | failure to realize the anticipated benefits of the Company’s digital asset holdings and tokenization strategies; | |
| ● | our ability to raise sufficient capital to support our operations, fund growth initiatives and repay outstanding indebtedness; |
| ● | the Company’s ability to achieve profitable operations; | |
| ● | the potential need for changes in our long-term strategy in response to future developments; | |
| ● | the Company’s success in retaining or recruiting, or changes required in, its officers, key employees or directors; | |
| ● | our ability to develop, finance, deploy, operate and expand our artificial intelligence (“AI”) infrastructure business, including through Forum Edge AI LLC and other strategic partnerships; | |
| ● | the anticipated timing, capacity and costs of our AI infrastructure deployments, including the availability of GPUs, electrical power, cooling, network connectivity and suitable sites; | |
| ● | our ability to secure and perform customer compute agreements, achieve anticipated utilization and pricing, and realize expected revenues, cash flows and investment returns from those agreements; | |
| ● | our ability to obtain equipment financing, customer prepayments and other capital on acceptable terms and satisfy related capital contribution, debt service and guarantee obligations; | |
| ● | anticipated demand for AI inference and other compute services, our competitive position, and the effects of technological developments on equipment useful lives, residual values and replacement requirements; | |
| ● | our ability to realize the anticipated benefits of our AI infrastructure investments and joint venture arrangements and manage the operational, cybersecurity and other risks associated with those activities; | |
| ● | expectations regarding the capitalization, resources and ownership structure of the Company; | |
| ● | the Company’s ownership of digital assets, the Company’s current and anticipated yield strategies, including its participation in decentralized finance industry (“DeFi”) protocols and tokenization of RWAs; | |
| ● | fluctuations in the market price of Ether (“ETH”), the native cryptocurrency of the Ethereum blockchain, that will impact the Company’s accounting and financial reporting; | |
| ● | government regulation of cryptocurrencies, digital assets, and tokenized securities, including evolving SEC interpretations thereof; | |
| ● | constrained access to banking or capital markets for digital asset-related companies; |
iii
| ● | the Company’s ability to repurchase shares of common stock, the timing thereof, purchase price thereof, and the fact that repurchases may not be undertaken under the stock repurchase program; | |
| ● | risks associated with the Company’s debt, liens, secured obligations and collateral provided in connection therewith; | |
| ● | exchange listing requirements and compliance; | |
| ● | changes in business, market, financial, political and regulatory conditions; | |
| ● | risks relating to the Company’s over-the-counter transactions, including the Company’s ability to repay such facilities, covenants associated therewith and security interests associated therewith, including security interests over certain of our cash and ETH; | |
| ● | risks relating to the Company’s at-the-market equity offering (the “ATM Program”), including potential downward pressure on the Company’s stock price associated therewith; | |
| ● | dilution associated with equity offerings and convertible instruments; | |
| ● | risks relating to the Company’s operations and business, including the highly volatile nature of the price of ETH and other cryptocurrencies; | |
| ● | the risk that the Company’s stock price may be highly correlated to the price of the digital assets that it holds; | |
| ● | risks related to increased competition in the industries in which the Company does and will operate; |
| ● | risks relating to significant legal, commercial, regulatory and technical uncertainty regarding digital assets generally; | |
| ● | dependence on access to reliable, low-cost electricity and hosting, uninterrupted internet activity, and the integrity and availability of the Ethereum network; | |
| ● | utility rate structures, curtailments, grid constraints and weather events; | |
| ● | evolving U.S. and foreign laws and policies applicable to digital assets, custody, staking, market structure, sanctions/anti-money laundering (“AML”), securities and commodities regulation, and tax treatment, and possible conflicting or extraterritorial regulations, potential investigations and litigation; | |
| ● | changes in the accounting treatment and taxation of the Company’s ETH and other digital asset holdings; | |
| ● | accounting risks associated with fair value measurements and potential impairment charges; | |
| ● | our ability to remediate a material weakness in our internal control over financial reporting and maintain an effective system of internal control over financial reporting; | |
| ● | cybersecurity incidents or technological difficulties which may compromise systems and secondary market platforms, digital wallets, custodial accounts, or third-party service providers; |
iv
| ● | token transactions may be irreversible and losses due to fraudulent or accidental transactions may not be recoverable; | |
| ● | potential litigation involving the Company; | |
| ● | global economic conditions; | |
| ● | geopolitical events and regulatory changes; | |
| ● | the concentration of digital assets with custodians and service providers, including insolvency, non-performance, and staking-related penalties and liquidity constraints; | |
| ● | the possibility that the Company could be classified as an investment company or again be deemed a shell company; | |
| ● | vulnerabilities in smart contracts, blockchain protocol changes or forks, and the limited operating history of the Company’s tokenization activities; | |
| ● | the Company’s stock trading at a premium or discount to the value of its digital asset holdings, and competition from spot ETH exchange-traded products; | |
| ● | access to additional financing, and the potential lack of such financing; and | |
| ● | the Company’s ability to raise funding in the future and the terms of such funding, including dilution caused thereby. |
Any forward-looking statement in this Report reflects our current views with respect to future events or to our future financial performance and involves known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. All forward-looking statements included herein speak only as of the date of the filing of this Report. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements above. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
General Information
The following discussion is based upon our unaudited Condensed Consolidated Financial Statements (the “Condensed Consolidated Financial Statements”) included elsewhere in this Report, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in other reports we file with the SEC, and in our most recent Annual Report.
v
This information should be read in conjunction with the interim unaudited Condensed Consolidated Financial Statements and the notes thereto included in this Report, and the audited financial statements and notes thereto and “Part II. Other Information – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contained in our Annual Report.
Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited Condensed Consolidated Financial Statements included under “Part I – Financial Information” – “Item 1. Financial Statements”.
Our logo and some of our trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service marks that are the property of others. Solely for convenience, trademarks, tradenames and service marks referred to in this Report may appear without the ®, ™ and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
The market data and certain other statistical information used throughout this Report are based on independent industry publications, reports by market research firms or other independent sources that we believe to be reliable sources. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information and have not commissioned any such information. We are responsible for all of the disclosures contained in this Report, and we believe these industry publications and third-party research, surveys and studies are reliable. While we are not aware of any misstatements regarding any third-party information presented in this Report, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under, and incorporated by reference in, the section entitled “Item 1A. Risk Factors” of this Report. These and other factors could cause our future performance to differ materially from our assumptions and estimates. Some market and other data included herein, as well as the data of competitors as they relate to the Company, are also based on our good faith estimates.
See also “Cautionary Statement Regarding Forward-Looking Statements”, above, which includes information on forward-looking statements used herein and other matters which are applicable to this Report, including, but not limited to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “Forum Markets”, and “Forum Markets, Incorporated” refer specifically to Forum Markets, Incorporated, formerly ETHZilla Corporation and its consolidated subsidiaries.
In addition, unless the context otherwise requires and for the purposes of this Report only:
“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
“SEC” refers to the United States Securities and Exchange Commission; and
“Securities Act” refers to the Securities Act of 1933, as amended.
Additional Information
We file annual, quarterly, and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at www.sec.gov and are available for download, free of charge, when such reports are filed with or furnished to the SEC, on the “Investors”– “SEC Filings” page of our website at https://forum-markets.com. Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our General Counsel, who can be contacted at the address and telephone number set forth on the cover page of this Report. The information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered a part of this Report.
We use, and will continue to use, our website (https://forum-markets.com), press releases and various social media channels, including our X account (https://x.com/forum markets) and our LinkedIn account (https://www.linkedin.com/company/forummarkets/), as additional means of disclosing public information to investors, the media and others interested in the Company. It is possible that certain information that we post on our website, disseminated in press releases and on social media could be deemed to be material information, and we encourage investors, the media and others interested in the Company to review the business and financial information that we post on our website and disseminate in press releases and on the social media channels identified above, as such information could be deemed to be material information. The contents on our website and our social media channels are not incorporated by reference into this Report and should not be considered a part of this Report.
vi
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
FORUM MARKETS INC., FORMERLY ETHZILLA CORPORATION
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
| September 30, 2026 |
December 31, 2025 |
|||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash equivalents | ||||||||
| Accounts receivable | ||||||||
| Loans receivable, current | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Current assets of discontinued operations | ||||||||
| Total Current Assets | ||||||||
| Marketable securities | ||||||||
| Non-marketable securities | ||||||||
| Digital assets | ||||||||
| Loans receivable, net of current portion | ||||||||
| Staking receivables | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets - operating | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable – related parties | ||||||||
| Accrued expenses | ||||||||
| Right of use liabilities - operating | ||||||||
| Loans payable - current portion | ||||||||
| Collateralized loan - current portion | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total Current Liabilities | ||||||||
| Collateralized loan - non current | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, $ | ||||||||
| Class B Convertible Preferred stock liability, $ | ||||||||
| Class C Preferred Stock; | ||||||||
| Class K Preferred Stock; | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
1
FORUM MARKETS INC., FORMERLY ETHZILLA CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share data)
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue: | ||||||||||||||||
| Aircraft engine rental revenue | $ | $ | $ | $ | ||||||||||||
| Staking revenue | ||||||||||||||||
| Reward revenue | ||||||||||||||||
| Total Revenue | ||||||||||||||||
| Cost of Revenue: | ||||||||||||||||
| Aircraft engine rental | ||||||||||||||||
| Total Cost of Revenue | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss From Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (Expense) Income: | ||||||||||||||||
| Dividend income | ||||||||||||||||
| Interest income | ||||||||||||||||
| Other income | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense | ( | ) | ( | ) | ||||||||||||
| Change in fair value of derivative instruments | ( | ) | ||||||||||||||
| Change in fair value of available for sale securities | ( | ) | ( | ) | ||||||||||||
| Digital asset gains and losses | ||||||||||||||||
| Change in fair value of long-term receivable derivative | ( | ) | ||||||||||||||
| Change in fair value of convertible debt | ||||||||||||||||
| Gain (loss) on make whole provision | ( | ) | ( | ) | ||||||||||||
| Total other (expense) income, net | ( | ) | ||||||||||||||
| Income (Loss) Before Income Taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax benefit | ||||||||||||||||
| Net Income (Loss) From Continuing Operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Income (Loss) From Discontinued Operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other Comprehensive Income (Loss): | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ||||||||||||||
| Change in fair value of held to maturity securities | ||||||||||||||||
| Total other comprehensive income (loss) | ( | ) | ||||||||||||||
| Total Comprehensive Income (Loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Basic and Diluted Net Income (Loss) per Common Share | ||||||||||||||||
| Continuing operation – basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Discontinued operation - basic | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Continuing operation – diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Discontinued operation - diluted | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Weighted Average Number of Common Shares Outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
2
| For the Three and Nine Months Ended September 30, 2026 and 2025 | ||||||||||||||||||||||||||||||||||||
| Series B Preferred | Common Stock | Treasury | Additional Paid-in |
Accumulated Other Comprehensive |
Accumulated | Total Stockholders’ Equity |
||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Stock | Capital | Income | Deficit | (Deficit) | ||||||||||||||||||||||||||||
| Balance - January 1, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
| Shares issued for cash, net | ||||||||||||||||||||||||||||||||||||
| Common stock cancelled for withholding taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||
| Comprehensive loss: | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance - March 31, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Common stock cancelled for withholding taxes | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||
| Comprehensive loss: | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | ||||||||||||||||||||||||||||||||||
| Balance - June 30, 2026 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Shares issued for cash, net | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Comprehensive income: | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | ||||||||||||||||||||||||||||||||||
| Balance - September 30, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Balance - January 1, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
| Cancelled shares | - | ( | ) | |||||||||||||||||||||||||||||||||
| Shares issued for settlement of liabilities | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||
| Conversion of Series B Convertible Preferred Stock | ( | ) | ||||||||||||||||||||||||||||||||||
| Comprehensive loss: | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance - March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Shares issued for settlement of liabilities | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||
| Commitment to repurchase common stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Comprehensive loss: | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance - June 30, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cancelled shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Shares issued for cash and warrants, net | ||||||||||||||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||||||||||||||
| Cashless exercise of warrants | ||||||||||||||||||||||||||||||||||||
| Exercise of options | ||||||||||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||
| Share repurchases | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Adjustment related to reverse stock split | ||||||||||||||||||||||||||||||||||||
| Comprehensive loss: | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | ||||||||||||||||||||||||||||||||||
| Balance - September 30, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
3
FORUM MARKETS INC., FORMERLY ETHZILLA CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of loan premiums | ||||||||
| Non-cash settlement expense | ( | ) | ||||||
| Non-cash staking and incentive revenue | ( | ) | ||||||
| Change in fair value of long-term receivable derivative | ||||||||
| Digital asset gains and losses | ( | ) | ( | ) | ||||
| Change in fair value of available for sale securities | ( | ) | ||||||
| Change in fair value of derivative instruments | ||||||||
| Non-cash staking and incentive revenue | ||||||||
| Loss on make whole provision | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Right of use asset – operating lease | ||||||||
| Accounts payable | ( | ) | ||||||
| Accounts payable - related parties | ( | ) | ( | ) | ||||
| Accrued expenses | ( | ) | ||||||
| Right of use lease liabilities | ( | ) | ||||||
| Total adjustments | ||||||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities from discontinued operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Purchases of marketable securities | ( | ) | ( | ) | ||||
| Purchases of digital assets | ( | ) | ( | ) | ||||
| Sale of cryptocurrency | ||||||||
| Purchase of loans receivable | ( | ) | ||||||
| Repayment of loans receivable | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash provided by (used in) investing activities from continuing operations | ( | ) | ||||||
| Net cash provided by investing activities from discontinued operations | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities | ||||||||
| Repurchases of common stock | ( | ) | ||||||
| Repayment of loans payable | ( | ) | ( | ) | ||||
| Repayment of loans payable related parties | ( | ) | ||||||
| Treasury stock purchases | ( | ) | ||||||
| Proceeds from collateralized loan | ||||||||
| Proceeds from convertible debt, net | ||||||||
| Proceeds from exercise of common stock options | ||||||||
| Proceeds from exercise of common stock warrants | ||||||||
| Proceeds from shares issued for cash, net | ||||||||
| Net cash provided by (used in) financing activities from continuing operations | ( | ) | ||||||
| Net cash used in financing activities from discontinued operations | ( | ) | ||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net Change In Cash, cash equivalents and restricted cash equivalents | ( | ) | ||||||
| Cash, cash equivalents and restricted cash equivalents - Beginning of Period | ||||||||
| Cash, cash equivalents and restricted cash equivalents - End of Period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash paid during the period for income taxes | $ | $ | ||||||
| Cash paid during the period for interest expense | $ | $ | ||||||
| Non cash investing and financing activities | ||||||||
| Shares issued for settlement of liabilities | $ | $ | ||||||
| Prepaid expense financed with notes payable | $ | $ | ||||||
| Commitment to repurchase common stock | $ | $ | ||||||
| Reclassification of deposits for fixed assets | $ | $ | ||||||
| Loan proceeds received in cryptocurrency | $ | $ | ||||||
| Loan repayments denominated in cryptocurrency | $ | $ | ||||||
| Capitalization of ROU assets and liabilities - operating | $ | $ | ||||||
| Common stock cancelled for withholding taxes | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
4
FORUM MARKETS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 1 – BUSINESS ORGANIZATION AND NATURE OF OPERATIONS
Forum Markets, Inc. (formerly ETHZilla Corporation) (the “Company”) was incorporated in the State of Delaware on
On February 24, 2026, the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation to change the Company’s name from “ETHZilla Corporation” to “Forum Markets, Incorporated,” which became effective at 12:01 a.m. Eastern Time on February 25, 2026. Effective March 2, 2026, the Company’s common stock (“Common Stock”) began trading on The Nasdaq Capital Market under the ticker symbol “FRMM,” replacing the ticker symbol “ETHZ.”
The Company’s continuing operations consist primarily of artificial intelligence infrastructure, and the development of a blockchain-based platform focused on the acquisition, structuring, and tokenization of RWAs, including assets such as aerospace equipment, auto loans, manufactured home loans, and commercial real estate and land, which the Company intends to structure into regulated, tokenized financial products.
During 2025, the Company determined to discontinue its historical pharmaceutical research activities and to cease pursuing commercialization of the blockchain-based gaming technology platform (the “Gaming Technology Platform”) acquired in September 2024. The assets and liabilities and results of operations related to these activities have been classified as discontinued operations for all periods presented.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The Condensed Consolidated Financial Statements include the accounts of the Company and entities in which the Company has a controlling financial interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. All intercompany transactions and balances have been eliminated in consolidation.
In September 2026, the Company formed the following new subsidiaries:
| Entity Name | State Incorporated | |
| Forum Edge AI, LLC (“FEAI”) | ||
| Forum Edge Vertical Bridge, LLC | ||
| Forum Edge Tower SBAC, LLC | ||
| Forum Edge NC Equipco LLC | ||
| Forum Edge TX Equipco LLC |
FEAI is a wholly-owned subsidiary of the Company, and each of the remaining entities listed above are wholly-owned subsidiaries of FEAI. On October 2, 2026, FEAI entered into the First Amended and Restated Limited Liability Company Agreement with a third party, which reduced the Company’s interest in FEAI to
The Condensed Consolidated Financial Statements, in the opinion of management, reflect all adjustments, which include normal and recurring adjustments, necessary to fairly state the Company’s financial position, results of operations, and cash flows for the periods presented herein. They have been prepared in accordance with GAAP. The Company reports financial results in U.S. dollars.
Additional information regarding the Company’s significant accounting policies is included in the Company’s Annual Report.
5
Use of Estimates
The preparation of accompanying financial statements, in conformity with GAAP, requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates and assumptions used in these Condensed Consolidated Financial Statements include, but are not limited to, the fair value of financial instruments (including staking receivables and convertible debt), the valuation of the Company’s digital assets, warrants, options, and embedded derivatives. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and may cause actual results to differ from those estimates.
Digital Assets
The Company accounts for crypto assets within the scope of ASC 350-60, Intangibles – Goodwill and Other – Crypto Assets (“ASC 350-60”), at cost with subsequent measurement at fair value, with changes in fair value recognized in earnings. Certain liquid staking arrangements are accounted for as non-monetary receivables with embedded derivatives, which are separated and accounted for under ASC 815, Derivatives and Hedging (“ASC 815”).
Cash, Cash Equivalents and Restricted Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents, including certificates of deposits and United States Treasury securities. As of September 30, 2026 and December 31, 2025, cash and cash equivalents totaled $
Concentrations of Credit Risk
The Company is subject to concentration of credit risk arising from its cash and cash equivalents, digital assets, and related counterparties, including financial institutions, custodians, and participants in liquid staking protocols. Cash balances may, at times, exceed federally insured limits. The Company mitigates this risk by placing cash with high-credit-quality financial institutions.
The Company also holds digital assets, including ETH, with third-party custodians and participates in liquid staking arrangements through third-party protocols. These arrangements expose the Company to risks related to counterparty nonperformance, custodian insolvency, and protocol-level events.
As of September 30, 2026, the Company’s maximum exposure to loss related to these concentrations, assuming complete nonperformance by counterparties and no recovery of collateral, consists primarily of (i) cash and cash equivalents, including restricted cash equivalents, with a carrying value of approximately $
The Company has not recognized an allowance for credit losses related to cash and receivable-type balances, including staking receivables, as of September 30, 2026.
Segment Reporting
ASC 280, Segment Reporting (“ASC 280”), requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker (the “CODM”) in deciding how to allocate resources and assess performance.
6
The CODM uses net income to evaluate and make key operating decisions. Because the Company has a reportable segment and the measure of segment profit or loss is consolidated net income, the required disclosures under ASC 280 are presented on a consolidated basis. Accordingly, no additional disaggregated segment disclosures are required.
Aircraft Engine Acquisition
The Company, through its wholly-owned subsidiary, ETHZilla Aerospace LLC, acquired five aircraft engines and related equipment in transactions accounted for as asset acquisitions. The aircraft engines are recorded at cost, including transaction costs directly attributable to the acquisition, and are presented within “Property and equipment, net” on the Condensed Consolidated Balance Sheets.
At the time of acquisition, the aircraft engines were subject to existing lease arrangements, which were assumed by the Company in connection with the transactions. The Company retained the prior classification of the leases as operating leases. Accordingly, the aircraft engines are depreciated on a straight-line basis over their estimated useful lives. Management reviews estimated useful lives and residual values periodically and revises such estimates prospectively, when appropriate.
Lease revenue is recognized in accordance with ASC 842, Leases (“ASC 842”). Lease income consists of fixed lease payments and variable consideration based on engine usage. Fixed lease payments are recognized on a straight-line basis over the lease term, while variable lease payments are recognized in the period in which the underlying usage occurs. Lease revenue is recognized only from the date control of the aircraft engines transfers to the Company and is presented within “Aircraft engine rental revenue” in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
The Company has entered into third-party servicing arrangements related to the aircraft engines. Fees associated with these servicing arrangements are expensed as incurred.
The aircraft engines are evaluated for impairment in accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”) whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized to the extent the carrying value exceeds the estimated fair value of the asset.
Eurus Aero Tokens
The Company, through its wholly-owned subsidiary, ETHZilla Aerospace LLC, issued profit participation interests in the form of cryptographic digital tokens (the “Eurus Aero Tokens”) that entitle holders to receive pro rata cash distributions derived from net cash flows generated by specified aircraft engines, including lease income and proceeds from a potential liquidity event. The Eurus Aero Tokens do not represent equity interests in the Company and do not convey voting or governance rights. Proceeds received from the issuance of the Eurus Aero Tokens are initially recorded as a liability, as the tokens represent contractual obligations to remit future cash flows to token holders. The liability is reduced as distributions are paid or become payable in accordance with the token documentation.
7
Warehouse Facility
The Company, through its wholly-owned subsidiary, ETHZilla Auto Loans LLC (“ETHZilla Auto Loans”), provides a revolving warehouse credit facility (the “Warehouse Facility”) to Anchored Finance, LLC (“Anchored Finance”) which is engaged in the business of funding auto loan receivables. Advances under the Warehouse Facility are secured by a first-priority perfected security interest in the underlying eligible receivables and related proceeds. The Company determined that advances made under the Warehouse Facility are classified as held for investment. As such, the loans will be reported on the balance sheet at their amortized cost basis.
In accordance with ASC 310, Receivables (“ASC 310”), loan receivables are recognized when advances are funded and are subsequently measured at amortized cost, net of an allowance for expected credit losses, as applicable. Interest income on funded advances is recognized over time using the effective interest method and presented as “Interest income” in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Warehouse Facility also provides for commitment fees on the unfunded portion of the commitment, which are recognized as income over the commitment period.
Loan receivables arising under the Warehouse Facility are derecognized upon repayment or settlement of the related advance, including repayment in connection with take-out of the pledged receivables. The Company evaluates these loan receivables for expected credit losses in accordance with ASC 326, Financial Instruments – Credit Losses (“ASC 326”), including consideration of historical experience, current conditions, reasonable and supportable forecasts, and the nature and value of collateral securing the advances.
Zippy Manufactured Home Loans
The Company, through its wholly-owned subsidiary, ETHZilla Modular Mortgage LLC (“ETHZilla Modular Mortgage”), acquires manufactured and modular home loan receivables (the “Zippy Loans”).
The Company determined that the Zippy Loans transaction represents the purchase of financial assets rather than a secured financing because control of the loans is transferred to the Company and the sale criteria under ASC 860, Transfer and Servicing are met. Accordingly, the Zippy Loans are accounted for as loan receivables under ASC 310. The Company also determined the transaction represents an asset acquisition under ASC 805, Business Combinations.
Zippy Loans are recognized when the Company obtains control of the loans and the contractual rights to principal and interest cash flows. The loans are initially recorded at cost, which includes the purchase price and directly attributable transaction costs, and are subsequently measured at amortized cost, net of an allowance for expected credit losses. Purchase price premiums or discounts that are integral to the loans’ yield are accreted or amortized into interest income over the expected life of the loans using the effective interest method. Interest income earned on the Zippy Loans is presented as “Interest income” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.
The Company evaluates the Zippy Loans for expected credit losses in accordance with ASC 326 and records an allowance for expected credit losses upon acquisition and reassesses the allowance at each reporting date. The Zippy Loans include Community Recourse Loans which management considers in assessing credit risk characteristics and estimating expected credit losses. In estimating expected credit losses, the Company considers the extent to which contractual recourse provisions mitigate the Company’s exposure to credit losses and evaluates expected credit losses based on the amounts expected to be collected from borrowers and, as applicable, from counterparties providing recourse.
Zippy Loans, LLC (or an affiliate) services the loans pursuant to a servicing arrangement. Servicing fees are recognized as incurred and included in “Loans receivable.” Loan purchases under the forward-flow arrangements are evaluated and accounted for as separate transactions at the time of acquisition, and the forward-flow arrangements do not, in and of themselves, result in recognition of loan receivables or liabilities prior to settlement. The Company determined that customary representations and warranties, indemnification, repurchase, recourse, and side letter provisions do not provide the seller with effective control over the transferred loans and do not give rise to separate liabilities at acquisition.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”), which amends ASC 220-40, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (“ASC 220-40”). In January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”), which also amends ASC 220-40 and clarifies the effective date of ASU 2024-03. ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement, including specific information about certain costs and expenses. As clarified by ASU 2025-01, the amendments are effective for the Company for annual reporting beginning in fiscal 2027 and interim reporting beginning in fiscal 2028, applied prospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting these standards on its Condensed Consolidated Financial Statements and related disclosures.
8
NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS, PROPERTY, PLANT AND EQUIPMENT
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
| September 30, 2026 | December 31, 2025 | |||||||
| Director and officer’s insurance | $ | $ | ||||||
| Aircraft engines deposit | ||||||||
| Derivative instruments, including collateral posted1 | ||||||||
| Leasehold improvement deposit | ||||||||
| Professional fees | ||||||||
| Other | ||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||
| (1) | Includes $ |
Property, Plant and Equipment
Property, plant and equipment consisted of the following (in thousands):
| September 30, 2026 | December 31, 2025 | |||||||
| Aircraft engines | $ | $ | ||||||
| Land | ||||||||
| Buildings | ||||||||
| Leasehold improvements | ||||||||
| Construction in process (1) | ||||||||
| Total property, plant and equipment | ||||||||
| Accumulated depreciation | ( | ) | ||||||
| Total Property, plant and equipment, net | $ | $ | ||||||
| (1) |
NOTE 4 – INVESTMENTS
Marketable Securities
The following table presents the amortized cost, gross unrealized gains and losses, and fair value of the Company’s marketable securities (in thousands):
| September 30, 2026 | ||||||||||||||||
| Security Type: | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
| Available-for-sale debt securities: | ||||||||||||||||
| Other fixed income securities | $ | $ | $ | ( | ) | $ | ||||||||||
| Equity securities measured at fair value: | ||||||||||||||||
| REITs | ( | ) | ||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ||||||||||
| (1) | Available for sale debt securities consist primarily of U.S. Treasury securities with contractual maturities of one year or less and other fixed income securities. |
| (2) | No allowance for credit losses was recorded for the periods presented. |
9
Equity Investments
Satschel Investment
The Company holds an investment representing approximately
Karus Investment
The Company holds an investment representing approximately
Zippy Investment
The Company holds an investment representing approximately
As of September 30, 2026, and December 31, 2025, the Company estimated the fair value of the final make whole amount (the “Final Make Whole Amount”) under the Zippy Purchase Agreement (the “Zippy Purchase Agreement”) to be $
On June 30, 2026, the Company entered into Side Letter Amendment No. 2 to the Series B-3 Preferred Stock Purchase Agreement with Zippy, which amended the timing of the Company’s make whole obligation by replacing the original determination date with three separate measurement dates. For additional information on the make whole obligation, see Note 7 – Accrued Expenses.
On July 31, 2026, the first of the three make-whole determination dates under Side Letter Amendment No. 2 to the Series B-3 Preferred Stock Purchase Agreement occurred (see Note 4 – Investments). Based on the determination, the Company paid Zippy $
10
NOTE 5 – DIGITAL ASSETS
Crypto assets within the scope of ASC 350-60
The following table presents the Company’s significant digital asset holdings (in thousands):
| September 30, 2026 | ||||||||||||
| Quantity | Cost Basis1 | Fair Value1 | ||||||||||
| ETH | $ | $ | ||||||||||
| USDC (USDC is a stablecoin meant to track the value of the U.S. dollar, backed by U.S. dollars and dollar-denominated assets) | ||||||||||||
| Liquid staking incentive tokens 2 | ||||||||||||
| Total digital asset holdings | $ | $ | ||||||||||
| (1) |
| (2) |
The following table presents a roll forward of the Company’s digital asset holdings, consisting of ETH and staking incentive tokens (in thousands):
| Nine Months Ended September 30, 2026 | ||||
| Digital Assets as of December 31, 2025 | $ | |||
| Additions1 | ||||
| Dispositions | ( | ) | ||
| Receipt and accrual of ETH from native staking activities | ( | ) | ||
| Receipt of ETH from derecognition of liquid staking activities | ||||
| Payment of loan collateral in cryptocurrency | ( | ) | ||
| Cryptocurrency denominated loan proceeds2 | ||||
| Cryptocurrency denominated loan repayments2 | ( | ) | ||
| Change in fair value of digital assets | ||||
| Digital assets fair value | $ | |||
| (1) |
| (2) |
During the nine months ended September 30, 2026, the Company sold approximately
As of September 30, 2026, the Company held approximately
11
Non-monetary receivable with an embedded derivative within the scope of ASC 310-10 and ASC 815-15
During the nine months ended September 30, 2026, the Company closed its liquid staking position. The Company recognized a change in fair value of the embedded derivative of $
As of September 30, 2026, the Company had no remaining staking receivable or associated embedded derivative, as the liquid staking position was closed during the nine months ended September 30, 2026. As of December 31, 2025, the carrying amount of the host contract (representing the
Derivative Instruments and Collateral Arrangements
The Company may transfer or pledge digital assets or cash as collateral in connection with certain derivative instruments. During the nine months ended September 30, 2026, the Company entered into a series of derivative trades with a single counterparty in connection with the Company’s disposal of digital asset holdings, including call and put options and non-deliverable forward contracts, with a total notional amount of approximately $
Collateral posted in connection with derivative instruments may be returned upon settlement or early termination of the related contracts. During the nine months ended September 30, 2026, certain derivative instruments were settled or early terminated and related collateral was returned. In connection with these derivative instruments, the Company was required to post cash collateral of $
As of September 30, 2026, the Company had open derivative positions.
Eurus Aero Tokens
On February 12, 2026, the Company, through its wholly-owned subsidiary, ETHZilla Aerospace LLC, launched a private offering of up to approximately $
During the nine months ended September 30, 2026, the Company had received gross proceeds of $
The Eurus Aero Tokens provide holders with contractual rights to pro rata distributions from the net cash flows generated by the aircraft engines, which are derived from monthly lease collections and, upon a liquidity event, proceeds from the sale of the aircraft engines. The Company’s obligations under the Eurus Aero Tokens are secured by collateral that includes the aircraft engines, related lease receivables, reserves, and insurance proceeds.
12
The Eurus Aero Tokens are digital securities issued on a blockchain network. The tokens themselves do not represent ownership interests in ETH, stablecoins, or other digital assets, nor do they constitute ownership interests in the aircraft engines.
The issuance of Eurus Aero Tokens did not result in the transfer or derecognition of the underlying aircraft engines or related lease receivables. Cash proceeds received from the token issuance are recorded separately from digital assets.
There was accrued payable related to declared but unpaid distributions as of September 30, 2026.
NOTE 6 – LOANS RECEIVABLE
The Company’s loans receivable consists primarily of loans acquired and financed in connection with its RWA platform activities. Loans receivable are carried at amortized cost, net of any allowance for expected credit losses, and are included in “Loans Receivable” on the Company’s Condensed Consolidated Balance Sheets. The Company evaluates expected credit losses on loans receivable in accordance with ASC 326, considering the underlying collateral, contractual recourse provisions, and the creditworthiness of counterparties. Based on this evaluation, management concluded no allowance was recorded as of the reporting date.
Warehouse Facility Loan Receivables
The Company, through its wholly-owned subsidiary ETHZilla Auto Loans, provides a revolving warehouse credit facility to Anchored Finance, LLC. Advances under the Warehouse Facility are secured by eligible auto loan receivables and related collateral and are subject to borrowing base requirements. The Warehouse Facility has a commitment amount of up to $
Warehouse Facility loan receivables are accounted for as loans held for investment and are measured at amortized cost, net of any allowance for expected credit losses.
As of September 30, 2026, an aggregate of $
As of September 30, 2026, the Company evaluated these warehouse facility loan receivables for expected credit losses in accordance with ASC 326, and the related allowance was immaterial.
Zippy Manufactured Home Loan Receivables
The Company owns manufactured and modular home loan receivables secured by first-lien manufactured home collateral. The loans are serviced by Zippy Loans, LLC pursuant to applicable servicing agreements (the “Community Recourse Loans”).
The loan portfolio currently consists of Community Recourse Loans. Community Recourse Loans relate to manufactured homes located in designated manufactured housing communities and benefit from community recourse or repurchase arrangements under defined conditions for a limited period of time. Non-Recourse Loans, which do not include such provisions and rely solely on recovery from the underlying collateral, may be acquired in future periods pursuant to forward-flow arrangements.
13
The Community Recourse Loans are accounted for as loans held for investment and are measured at amortized cost, including the effect of any unamortized premiums, net of any allowance for expected credit losses. During the three months ended June 30, 2026, the Company acquired additional loans for a total purchase price of $
As of September 30, 2026, the outstanding principal balance of the manufactured home loan receivables was $
The Company recognized interest income of $
Management concluded that an allowance for expected credit losses was not required as of September 30, 2026, as the Company’s exposure to credit losses is mitigated by the underlying collateral and contractual community recourse provisions.
As of September 30, 2026, the Company’s loan balance and scheduled principal repayments were as follows:
| Warehouse Facility | Community Recourse Loans | Total | ||||||||||
| Principal Repayments due | ||||||||||||
| June 2027 | $ | $ | $ | |||||||||
| June 2028 | ||||||||||||
| June 2029 | ||||||||||||
| June 2030 | ||||||||||||
| June 2031 | ||||||||||||
| Thereafter | ||||||||||||
| Total principal | $ | $ | $ | |||||||||
| Unamortized premium | ||||||||||||
| Accrued interest income | ||||||||||||
| Total Loans receivable | ||||||||||||
| Current portion | ( | ) | ( | ) | ( | ) | ||||||
| Loans receivable, non-current portion | $ | $ | $ | |||||||||
NOTE 7 – ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
| September 30, 2026 | December 31, 2025 | |||||||
| Final Make Whole Provision | $ | $ | ||||||
| Professional fees | ||||||||
| Other | ||||||||
| Total accrued expenses | $ | $ | ||||||
14
Zippy Final Make Whole Provision
On June 30, 2026, the Company and Zippy entered into Side Letter Amendment No. 2 to the Series B-3 Preferred Stock Purchase Agreement, as previously amended, to modify the timing and calculation of the Final Make Whole Provision. The amendment replaced the original single settlement date with three separate measurement dates occurring on July 31, 2026, September 30, 2026, and December 31, 2026. The amendment maintains Zippy’s economic protection to receive aggregate proceeds equivalent to $
In April 2026, Zippy sold
As of September 30, 2026, Zippy held
The December 31, 2026, determination date remains outstanding, and the related amounts are not yet determinable.
NOTE 8 – REVENUE RECOGNITION
The Company recognizes revenue from native staking and liquid staking activities on the Ethereum blockchain as well as aircraft engine rental revenue.
Revenue by Source
Revenue consisted of the following (in thousands):
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Native staking revenue | $ | $ | $ | $ | ||||||||||||
| Liquid staking revenue1 | ||||||||||||||||
| Reward revenue | ||||||||||||||||
| Aircraft engine rental | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
| (1) |
15
Revenue by Major Customers
The Company generated revenue from the following major customers, each of which represented 10% or greater of total revenue. All such revenue was generated within the Company’s single reportable segment (in thousands):
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Coinbase – staking income | $ | $ | $ | $ | ||||||||||||
| Ether.fi – liquid staking | ||||||||||||||||
| Ether.fi and Puffer Reward revenue | ||||||||||||||||
| Puffer – liquid staking | ( | ) | ||||||||||||||
| Delta Air Lines, Inc. | ||||||||||||||||
| American Airlines, Inc. | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
Aircraft Engine Purchase Agreements
The Company owns five aircraft engines that are leased to third-party customers under operating leases and accounted for in accordance with ASC 842. On January 17, 2026, the Company acquired two CFM56-7B24 aircraft engines from an unaffiliated seller for an aggregate purchase price of $
On March 27, 2026, the Company, through its wholly-owned subsidiary Eurus Aerospace Token I LLC, acquired one CFM56-5B5/P aircraft engine from Aero Engine Solutions, Inc. for $
On July 13, 2026, the Company, through Eurus Aerospace Token I LLC, acquired one CFM56-7B22 aircraft engine from Aero Engine Solutions, Inc., for a purchase price of $
On July 28, 2026, the Company, through Eurus Aerospace Token I LLC, acquired one CFM56-7B aircraft engine from Aero Engine Solutions, Inc. for a purchase price of $
The aircraft engines are recorded within property and equipment and depreciated using the straight-line method over an estimated useful life of two and one-half years. The Company recognized depreciation expense of $
Lease revenue is recognized in accordance with ASC 842. Lease income consists of fixed lease payments and variable consideration based on engine usage. Fixed lease payments are recognized on a straight-line basis over the lease term, while variable lease payments are recognized in the period in which the underlying usage occurs. Lease revenue is recognized only from the date control of the aircraft engines transfers to the Company and is presented within “Aircraft engine rental revenue” in the Condensed Consolidated Statements of Operations and Comprehensive Loss. During the three and nine months ended September 30, 2026, the Company recognized aircraft engine lease revenue of $
The servicing arrangements include a mutual purchase and sale option exercisable upon expiration or earlier termination of the related lease at a fixed option price of $
16
NOTE 9 – DEBT
The following tables summarize the activity of loans payable (in thousands):
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||
| Principal balance at December 31, 2025 | Principal additions | Principal repayments in cash | Repayments in cryptocurrency | Principal balance at September 30, 2026 | ||||||||||||||||
| First Insurance – 20251 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||
| Equities First Loan | ||||||||||||||||||||
| Aave Loan | ( | ) | ||||||||||||||||||
| Total loans payable and collateralized loans | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
| Less: loans payable and collateralized loans – current portion | ||||||||||||||||||||
| Loans and collateralized loans payable – noncurrent portion | $ | $ | ||||||||||||||||||
| (1) |
Loans Denominated in Digital Assets
Equities First Loan
The Company has an outstanding collateralized loan arrangement with Equities First Holdings, LLC. As of September 30, 2026, the outstanding principal balance of the loan was approximately $
The loan is secured by digital assets. As of September 30, 2026, the Company had transferred
There were material changes to the terms of the loan during the nine months ended September 30, 2026.
Aave Loan
During the nine months ended September 30, 2026, the Company repaid the Aave Loan (the “Aave Loan”) in full. There were no material changes to the terms of the Aave Loan prior to repayment, and the Company did not experience any liquidation events or loss of collateral.
NOTE 10 – FAIR VALUE MEASUREMENTS
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis by fair value hierarchy level (in thousands):
| September 30, 2026 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Prepaid expenses and other current assets (1) | ||||||||||||||||
| Marketable securities | ||||||||||||||||
| Digital Assets | ||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| (1) |
17
NOTE 11 – EARNINGS PER SHARE
The computation of net loss per share is as follows (in thousands, except per share data):
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) from continuing operations– basic and diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Denominator: | ||||||||||||||||
| Weighted average common shares outstanding – basic | ||||||||||||||||
| Weighted average common shares outstanding – diluted | ||||||||||||||||
| Income (Loss) per common share, basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Income (Loss) per common share, diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
For the three and nine months ended September 30, 2026, the weighted average common shares outstanding included
The following potentially dilutive securities were excluded from the computation of diluted net loss per share because their inclusion would have been antidilutive:
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Stock options | ||||||||
| Unvested PSU awards | ||||||||
| Warrants | ||||||||
| Convertible debt, net of discount | ||||||||
| Total | ||||||||
NOTE 12 – COMMITMENTS AND CONTINGENCIES
Litigation and Other Loss Contingencies
The Company is subject to legal proceedings, claims, regulatory inquiries, and contingencies that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that a loss has been incurred, and the amount of the loss can be reasonably estimated. As of September 30, 2026, the Company has not recorded any liabilities for loss contingencies, as management believes that any such matters are either not probable or not reasonably estimable.
Certain commitments, contractual arrangements, and contingent obligations are described in the Company’s audited Consolidated Financial Statements for the year ended December 31, 2025, included in the Company’s Annual Report. Except as described below, there have been no material changes to the matters previously disclosed in the Annual Report.
18
Value Added Tax Matters
The Company, through its United Kingdom subsidiary, is registered for Value Added Tax (“VAT”) under the accrual accounting scheme. Under this scheme, VAT output tax becomes due when invoices are issued, irrespective of cash settlement. Management has identified that the settlement of certain existing liabilities could give rise to an obligation to remit additional VAT to HM Revenue & Customs in respect of VAT that has already been invoiced or collected. During the three months ended September 30, 2026, the Company determined the amount owed to be GBP
Legal Proceedings and Settlements
As previously disclosed in the Company’s Annual Report, the Company has resolved certain litigation and other legal disputes through settlement agreements entered into during 2025. All material obligations under those settlement agreements have been satisfied, and there were no material developments related to such matters during the nine months ended September 30, 2026. Accordingly, no additional accruals or disclosures are required as of September 30, 2026.
Indemnification and Employment-Related Commitments
The Company has entered into indemnification agreements with its directors and officers and employment and separation agreements with certain current and former executives, as described in the Company’s Annual Report. These arrangements include customary indemnification, severance, and compensation provisions.
There have been no material modifications to these arrangements and no new material commitments entered into during the nine months ended September 30, 2026, that would require additional disclosure.
Zippy Make Whole Obligation
As of September 30, 2026, the estimated fair value of the Company’s make whole obligation related to its investment in Zippy was approximately $
Termination of Asset Management Agreement
On May 29, 2026 (the “Termination Date”), the Company and Electric Treasury Edge, LLC (the “Asset Manager”) mutually agreed to terminate, without cause, the Amended and Restated Asset Management Agreement dated September 5, 2025 (the “Asset Management Agreement”), pursuant to which the Asset Manager had managed and monitored a portion of the Company’s digital assets, including its ETH, staking rewards, and stablecoins. The termination followed the Company’s change in its ETH deployment strategy and the disposition of substantially all of its ETH.
In connection with the termination, the Company paid the Asset Manager all outstanding management fees and expenses due as of the Termination Date, together with an agreed portion of the liquidated damages specified in the Asset Management Agreement, which fully discharged the Asset Manager’s ongoing duties and obligations. The Company paid $
19
NOTE 13 – STOCK-BASED COMPENSATION
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation and recognizes compensation cost for equity awards based on their grant-date fair value over the requisite service period.
On April 2, 2026, the Board of Directors of the Company upon the recommendation of the Compensation Committee of the Board (the “Compensation Committee”), approved (a) a one-time initial equity award and a pro-rated 2025 annual award to McAndrew Rudisill, the Chief Executive Officer and Chairman of the Company, and (b) an equity award to John Saunders, the Chief Financial Officer of the Company. Each award consists
For each award, the RSUs will vest in one-third installments on each of the first, second and third anniversaries of August 1, 2025 (the start date for both Mr. Rudisill and Mr. Saunders), subject to continued employment through the applicable anniversary, and the
The PSU awards were determined to have market-based and service-based vesting conditions. In accordance with ASC 718, the grant date fair value of the PSU’s was estimated using a Monte Carlo simulation model, which simulates price performance of the Company’s common stock over the performance period of
20
Stock Options
A summary of the option activity is presented below:
| Nine Months Ended September 30, 2026 | ||||||||||||||||
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Term (in Years) | Intrinsic Value | |||||||||||||
| Outstanding, December 31, 2025 | $ | $ | ||||||||||||||
| Granted | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Forfeited | - | |||||||||||||||
| Outstanding, September 30, 2026 | $ | $ | ||||||||||||||
| Exercisable, September 30, 2026 | $ | $ | ||||||||||||||
A summary of outstanding and exercisable stock options is presented below:
| September 30, 2026 | ||||||||||||||
| Stock Options Outstanding | Stock Options Exercisable | |||||||||||||
| Weighted Average | ||||||||||||||
| Exercise Price | Number of Shares | Remaining Life in Years | Number of Shares | |||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
Restricted Stock Units
A summary of RSU activity is presented below:
| Nine Months Ended September 30, 2026 | ||||||||
| Number of Shares | Weighted- Average Grant Date Fair Value Per Share | |||||||
| Non-vested at December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited and cancelled | ||||||||
| Non-vested at September 30, 2026 | $ | |||||||
21
During the three and nine months ended September 30, 2026, the Company recognized $
Performance Stock Units
A summary of PSU activity is presented below:
| Nine Months Ended September 30, 2026 | ||||||||
| Number of Shares | Weighted- Average Grant Date Fair Value Per Share | |||||||
| Non-vested at December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ||||||||
| Forfeited and cancelled | ||||||||
| Non-vested at September 30, 2026 | $ | |||||||
Stock-based Compensation
During the nine months ended September 30, 2026, the Company also issued
The effects of stock-based compensation on the Condensed Consolidated Statements of Operations and Comprehensive Loss and Condensed Consolidated Balance Sheets are as follows (in thousands):
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Statements of Operations and Comprehensive Loss | ||||||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
22
NOTE 14 – STOCKHOLDERS’ (DEFICIT) EQUITY
Shares Cancelled
During the nine months ended September 30, 2026, the Company cancelled
Warrants
A summary of the Common Stock underlying the warrants activity (including both liability and equity classified instruments) is presented below (in thousands, except number of shares, exercise price, and years data):
| Nine Months Ended September 30, 2026 | ||||||||||||||||
| Number of Shares of Common Stock Underlying Warrants | Weighted Average Exercise Price | Weighted Average Remaining Life in Years | Intrinsic Value | |||||||||||||
| Outstanding, December 31, 2025 | $ | $ | ||||||||||||||
| Issued | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Expired | ( | ) | - | |||||||||||||
| Outstanding, September 30, 2026 | $ | $ | ||||||||||||||
| Exercisable, September 30, 2026 | $ | |||||||||||||||
A summary of outstanding and exercisable Common Stock underlying the warrants is presented below:
| September 30, 2026 | ||||||||||||||
| Common Stock Underlying Warrants Outstanding | Common Stock Underlying Warrants Exercisable | |||||||||||||
| Exercise Price | Number of Shares | Weighted Average Remaining Life in Years | Number of Shares | |||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
Second Amended and Restated Sales Agreement
As previously reported, on August 13, 2025, the Company entered into a Sales Agreement (the “Initial Sales Agreement”) with Clear Street LLC (“Clear Street”) to sell from time to time through Clear Street, acting as sales agent for the Company’s “at the market offering” program, shares of the Company’s Common Stock pursuant to the Company’s registration statement on Form S-3 (File No. 333-288194) (the “June Registration Statement”) and the prospectus supplement initially filed on August 13, 2025 (the “Initial Prospectus Supplement”). On August 22, 2025, the Company entered into an Amended and Restated Sales Agreement (the “Amended Sales Agreement”) with Clear Street to, among other things, change the registration statement and prospectus supplement pursuant to which sales of the Common Stock were to be made to the registration statement on Form S-3ASR (File No. 333-289811) (the “WKSI Registration Statement”) and the prospectus supplement initially filed on August 22, 2025 (the “WKSI Prospectus Supplement”). On November 14, 2025, the Company entered into an Amended and Restated Sales Agreement (the “Second Amended Sales Agreement”) with Clear Street and TCBI Securities, Inc., doing business as Texas Capital Securities (“Texas Capital Securities”), and together with Clear Street, the “Agents”), which, among other things, amended and restated the Amended Sales Agreement to include Texas Capital Securities as a sales agent.
23
On April 8, 2026, the Company entered into the Second Amended and Restated Sales Agreement with the Agents to cease all sales of Common Stock pursuant to the WKSI Registration Statement and WKSI Prospectus Supplement and to transition the program back to the June Registration Statement and Initial Prospectus Supplement. From and after the date of the Second Amended and Restated Sales Agreement, the Company will not sell any Common Stock pursuant to the WKSI Registration Statement and WKSI Prospectus Supplement, and any future sales will be made pursuant to the June Registration Statement and Initial Prospectus Supplement. There were no other material changes to the terms of the Second Amended Sales Agreement as a result of such amendments.
During the nine months ended September 30, 2026, the Company sold
Stock Repurchase Program
During the nine months ended September 30, 2026,
NOTE 15 – RELATED PARTIES
The Company enters into transactions with related parties, including its officers, directors, and entities affiliated with such individuals.
Accounts Payable
As of September 30, 2026 and December 31, 2025, accounts payable to related parties were $
Zippy Transactions
Zippy is a greater than
NOTE 16 – DISCONTINUED OPERATIONS
During the prior period presented, the Company executed actions to abandon its pharmaceutical research operations and the Gaming Technology Platform which met the criteria to be classified as discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations (“ASC 205-20”).
24
Financial Information of Discontinued Operations
Summarized balance sheet information of discontinued operations is below (in thousands):
| September 30, 2026 | December 31, 2025 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Current assets of discontinued operations | ||||||||
| Intangible assets1 | ||||||||
| Total assets of discontinued operations | $ | $ | ||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable – related parties | ||||||||
| Accrued expenses | ||||||||
| Loan payable –current portion | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Loan payable –noncurrent portion | ||||||||
| Total liabilities of discontinued operations | $ | $ | ||||||
| (1) |
The statements of operations of discontinued operations are summarized below (in thousands):
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Research and development | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Research and development - related parties | ( | ) | ( | ) | ||||||||||||
| General and administrative | ( | ) | ( | ) | ( | ) | ||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Other expense | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Gain (loss) on settlement of liabilities | ||||||||||||||||
| Loss on IP R&D asset impairment | ( | ) | ( | ) | ||||||||||||
| Net income (loss) from discontinued operations | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
NOTE 17 – SUBSEQUENT EVENTS
The Company evaluated subsequent events that occurred after the balance sheet date through the date the financial statements were issued.
Aircraft Engine Acquisitions and Lease Arrangements
On July 13, 2026, the Company, through its wholly-owned subsidiary Eurus Aerospace Token I LLC, acquired one CFM International model CFM56-7B22 aircraft engine, together with all related parts and engine records, from Aero Engine Solutions, Inc. for a purchase price of approximately $
25
On July 27, 2026, the Company, through its wholly-owned subsidiary Eurus Aerospace Token I LLC, entered into an Engine Sale and Purchase Agreement with Aero Engine Solutions, Inc. to acquire one CFM International model CFM56-7B aircraft engine, together with all related parts and engine records, for a purchase price of approximately $
Edge Node Joint Venture
On October 2, 2026, the Company and Edge Node Inc., a Texas corporation (“Edge Node”), entered into the First Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) as members of Forum Edge AI LLC, a Delaware limited liability company (the “Joint Venture”). The Company is the sole manager of the Joint Venture.
Pursuant to the LLC Agreement, the Company and Edge Node have established a strategic partnership framework for data center real estate, compute infrastructure and compute reseller arrangements. The Company holds a
The LLC Agreement provides for, among other things (i) capital contributions by the members to fund LandCo and EquipCo investments for each project in proportion to their respective membership interests; (ii) certain consent rights of each member with respect to specified actions of the Joint Venture; (iii) a distribution waterfall for available cash from each project; (iv) remedies upon a member’s failure to fund capital contributions, including member loans and equity reallocation; (v) an equity exchange pursuant to which, after the Effective Date (as defined in the LLC Agreement) and upon achievement of specified performance milestones, the Company will issue shares of common stock, par value $
Pursuant to the LLC Agreement, Edge Node has agreed to enter into a voting agreement with respect to all shares of common stock held by Edge Node, pursuant to which Edge Node has granted to the Company an irrevocable proxy to vote such shares in accordance with the recommendation of the Company’s board of directors. In addition, members of the Edge Node Group (as defined in the LLC Agreement) have agreed to execute a lock-up agreement if requested by an underwriter in connection with a Company offering, subject to the condition that the Company’s officers and directors are similarly bound.
The Company may also elect to pay any buyout consideration under the Forum Call Right in shares of Company common stock.
In connection with the LLC Agreement, the Company incurred the following direct financial obligations:
Capital Contribution Obligations. The Company has committed to fund
Guaranty Obligations. The Company and Edge Node have each agreed to provide guaranties for EquipCo equipment financing proportional to their respective percentage interests. If a lender requires the Company to provide a sole guaranty, Edge Node is obligated to pay the Company a guaranty fee.
Member Loan Obligations. In the event Edge Node fails to fund a required capital contribution, the Company may advance member loans, which are secured by a security interest in project assets and pledged membership interests.
On October 26, 2026, the Joint Venture entered a definitive agreement with a third party for a 36-month reservation of Nvidia B300 GPU capacity at its existing, powered data center facility in Dallas, Texas. The agreement carried a combined total contract value of approximately $
On November 11, 2026, the Company entered into a mutual agreement with the customer that terminated the definitive agreement. The Company terminated the contract due to expectations that it would no longer provide adequate returns in the current market environment. The Company intends to recontract the compute with a new partner under more favorable terms and conditions.
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
Forum Markets, Incorporated is an innovative company that sources and structures cash-generating assets with attractive risk-adjusted returns in four core vertical markets: AI infrastructure, commercial aerospace, manufactured housing finance and auto credit. The Company draws on proprietary origination pipelines and strategic co-investment partnerships to scale its portfolio and generate durable operating income.
During 2025 and early 2026, the Company focused its business model on building and operating platforms designed to originate, finance and manage real-world assets. This evolution reflects management’s view that long-term value creation will be driven primarily by operating businesses that originate and structure income-generating assets, rather than by passive asset holdings. In early 2026, the Company adopted the name Forum Markets, Incorporated to reflect its strategy of building a new framework for how real-world assets are owned, managed and monetized.
The Company operates as a single reportable operating segment under Accounting Standards Codification (ASC) 280. The Company is focused on the acquisition, financing, structure and management of income-producing assets, with a current focus on artificial intelligence infrastructure, commercial aerospace and consumer finance. Our strategy is to generate operating income and investment returns through direct asset ownership, contractual revenue arrangements and strategic partnerships. These operations represent the Company’s primary revenue-generating activities, and all assets of the Company’s continuing operations are related to this single operating segment.
The Company has undergone several significant transformations over its operating history. Originally formed in 2016 as a clinical-stage biotechnology company operating under the name 180 Life Sciences Corp., the Company previously focused on the development of therapeutics for unmet medical needs. In subsequent periods, the Company expanded into software-enabled gaming initiatives, including the acquisition of certain blockchain-based gaming technology.
In August 2025, the Company rebranded as ETHZilla Corporation, reflecting an initial shift away from its legacy operations during which the Company completed a broader strategic transition, exiting its legacy biotechnology and gaming activities and refocusing its business on digital asset treasury management, investment activities, and tokenization-related strategies. The Company’s treasury activities are primarily centered on acquiring, holding, and deploying ETH to generate returns through staking and other yield-generating arrangements.
In early 2026, the Company completed a further rebrand to Forum Markets, Incorporated, aligning its name with its evolving strategy and business model. Under its current strategy, the Company focuses on, artificial intelligence infrastructure, digital asset activities and the development of tokenization-related investments.
Our AI infrastructure initiative focuses on developing and operating graphics processing unit (“GPU”) compute capacity at existing powered data centers and selected edge locations. Our other activities include owning commercial aircraft engines subject to leases and investing in consumer loan portfolios, including portfolios sourced through originators that use AI-driven underwriting or analytics. We may evaluate tokenization opportunities for certain assets to facilitate financing, distribution or liquidity. Our strategy for generating income from the underlying assets does not depend on completing such tokenization activities.
In the third quarter of 2026, the Company expanded its strategy to include AI compute infrastructure. In September 2026, the Company formed FEAI and related project-level subsidiaries. On October 2, 2026, the Company entered into the LLC Agreement with Edge Node, under which the Company holds a 51% membership interest and serves as sole manager of the Joint Venture. The Joint Venture is developing data center real estate, compute infrastructure and compute reseller arrangements, beginning with its Dallas, Texas and North Carolina regional hubs and an initial cohort of tower sites. See “—Recent Events—Edge Node Joint Venture.”
27
As a result of this strategic transformation, the Company’s current operations, revenue drivers, expense profile, and risk exposures differ materially from prior periods, and financial results for historical periods may not be comparable to those of the current period.
Key Factors Affecting Performance
The Company’s operating results, financial condition, and cash flows are influenced by a number of trends and uncertainties related to its digital asset–focused business model, several of which are expected to continue to affect performance in future periods.
Performance of Real-World Asset Investments
The Company’s results are increasingly affected by its investments in income-generating real-world assets, including aircraft engines subject to operating leases and acquired loan portfolios. Revenue and cash flows from these assets depend on lessee and borrower performance, lease and loan terms, utilization, collateral values, and the timing and scale of additional asset acquisitions. Deterioration in credit quality, lessee or borrower default, or declines in asset or collateral values could adversely affect the Company’s results of operations.
Development and Energization of AI Infrastructure
The Company’s future results will depend increasingly on the Joint Venture’s ability to develop and energize AI compute capacity on schedule. That capacity is planned for its Dallas and North Carolina hubs and an initial cohort of tower sites, with a Phase 0 target of approximately 11 MW by the second quarter of 2027. The GPUs for its first customer agreement are expected to be deployed in late December 2026 or early January 2027. Revenue will depend on site readiness, power, permitting and equipment delivery.
Digital Asset Price Volatility
The Company’s results are sensitive to fluctuations in the market price of Ether (ETH), the cryptocurrency that powers the Ethereum blockchain, and other digital assets held or deployed in its operations. Changes in digital asset prices may materially affect reported earnings, the fair value of assets, and the timing and availability of liquidity, and may contribute to increased volatility in results of operations.
Staking Yield Variability
Revenue generated from staking activities is subject to variability based on network conditions, protocol economics, validator performance, and other factors outside the Company’s control. Changes in staking reward rates, protocol rules, or the performance of third-party service providers may affect revenue levels and operating results.
Growth of Tokenization Initiatives
The Company is in the early stages of developing and scaling its RWA tokenization strategy. The timing, magnitude, and sustainability of revenues from tokenization activities may affect future results of operations and cash flows and will depend on factors such as market adoption, regulatory considerations, and the availability of distribution and secondary trading infrastructure.
Evolving Regulatory Environment
The regulatory framework applicable to digital assets, staking activities, and tokenized securities continues to evolve in the United States and other jurisdictions. Changes in laws, regulations, enforcement priorities, or regulatory interpretations could increase compliance costs, restrict certain activities, or require modifications to the Company’s treasury or tokenization strategies. Regulatory developments may also affect market participation and investor demand, which could impact future operating results and cash flows.
28
Recent Events
Special Committee and Review of Strategic Alternatives
On April 17, 2026, the Company announced that the Board of Directors had established a special committee (the “Special Committee”) comprised entirely of independent directors to evaluate proposals aimed at narrowing the gap between the Company’s current market value and the intrinsic value of its business and to identify an optimal outcome for stockholders. The Special Committee has been authorized to examine a full range of value-maximizing pathways available to the Company, including potential mergers with or acquisitions of private companies, the sale of the Company or material assets, partnerships with new capital partners to accelerate growth and platform development, or the return of substantially all of the Company’s capital and assets to stockholders, in an orderly fashion and in a form to be determined, if no other proposal meets the Special Committee’s valuation threshold.
Participation in AI Chip Infrastructure Financing
On April 8, 2026, the Company participated in an arrangement to deploy capital into short-term bridge loans financing the acquisition and deployment of Nvidia Artificial Intelligence (“AI”) chips — the graphics processing units that power modern AI data centers. Under the arrangement, a third-party AI infrastructure bridge credit originator may present the Company with short-duration financing opportunities, and the Company is not obligated to participate in any transaction. The arrangement is intended to target annualized returns in the mid-teens. The first contemplated transaction is expected to involve a U.S.-based neocloud operator, with the Company considering a commitment of $25 million to $50 million. No capital has been deployed into short-term bridge loans financing the acquisition and deployment of AI chips to date, and the Company may determine not to move forward with this arrangement in the future.
Second Amended and Restated Sales Agreement
As previously reported, on August 13, 2025, the Company entered into the Initial Sales Agreement with Clear Street to sell from time to time through Clear Street, acting as sales agent for the Company’s ATM program, shares of the Company’s Common Stock pursuant to the June Registration Statement and the Initial Prospectus Supplement. On August 22, 2025, the Company entered into the Amended Sales Agreement with Clear Street to, among other things, change the registration statement and prospectus supplement pursuant to which sales of the Common Stock were to be made to the WKSI Registration Statement and the WKSI Prospectus Supplement. On November 14, 2025, the Company entered into the Second Amended Sales Agreement with Clear Street and TCBI Securities, Inc., doing business as Texas Capital Securities (“Texas Capital Securities”), and together with Clear Street, the Agents, which, among other things, amended and restated the Amended Sales Agreement to include Texas Capital Securities as a sales agent.
On April 8, 2026, the Company entered into the Second Amended and Restated Sales Agreement with the Agents to cease all sales of Common Stock pursuant to the WKSI Registration Statement and WKSI Prospectus Supplement and to transition the program back to the June Registration Statement and Initial Prospectus Supplement. From and after the date of the Second Amended and Restated Sales Agreement, the Company will not sell any Common Stock pursuant to the WKSI Registration Statement and WKSI Prospectus Supplement, and any future sales will be made pursuant to the June Registration Statement and Initial Prospectus Supplement. There were no other material changes to the terms of the Second Amended Sales Agreement as a result of such amendments.
Side Letter Amendment No. 2 with Zippy
On June 30, 2026, the Company and Zippy, Inc. (“Zippy”) entered into Side Letter Amendment No. 2 (the “Second Amendment”) to the Series B-3 Preferred Stock Purchase Agreement, dated as of December 9, 2025, as previously amended by the Side Letter Amendment dated March 25, 2026 (as so amended, the “Zippy Purchase Agreement”). As further detailed below, the Company and Zippy entered into the Second Amendment in furtherance of the parties’ ongoing strategic partnership, to provide both parties with greater flexibility with respect to the timing and measurement of the Final Make Whole Amount (as defined below) and to spread the risk associated with the performance of the Company’s common stock by replacing the single true-up determination date with three separate measurement and payment dates.
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Under the Zippy Purchase Agreement as previously in effect, the Company was obligated to pay Zippy a single “Final Make Whole Amount,” measured as of a single true-up determination date of June 30, 2026 (the “Original True-Up Determination Date”), equal to the difference, if any, between the value of the Retained Stock (as defined in the Zippy Purchase Agreement) based on a per share price of $10.50 and the value of the Retained Stock based on the volume-weighted average price of the Company’s common stock for the ten (10) trading days prior to that date.
The Second Amendment amends Section 6.2 of the Zippy Purchase Agreement to replace the single Original True-Up Determination Date with a trifurcated true-up framework consisting of three separate measurement and payment dates, a first true-up date of July 31, 2026, a second true-up date of September 30, 2026, and a third true-up date of December 31, 2026, each with its own independent make-whole calculation and payment obligation. During a corresponding sell period to each true-up date, Zippy may sell, in its sole discretion, up to a designated number of shares of the Company’s common stock (up to 285,714 shares per period), and any eligible shares not sold during a prior period that are carried forward and become eligible for sale in the following period(s). After each true-up date, Zippy is required to deliver to the Company a written settlement statement, and the Company is required to pay the applicable make-whole amount, if any, in cash by wire transfer of immediately available funds within ten (10) business days after its receipt of the settlement statement (and in no event later than ten (10) business days after the applicable true-up date).
For each of the first two sell periods, the applicable make-whole amount equals the number of eligible shares actually sold during that period multiplied by the $10.50 per share price, less the aggregate gross proceeds Zippy received from those sales; no amount is payable with respect to unsold shares, and the make-whole amount is zero if gross proceeds equal or exceed the guaranteed amount. For the third true-up period, the make-whole amount is calculated both with respect to shares sold during the third sell period (measured against gross proceeds) and with respect to shares retained by Zippy through December 31, 2026 (measured against the volume-weighted average price of the Company’s common stock for the ten (10) trading days prior to December 31, 2026), with Zippy able to elect sale or retention treatment for shares in any combination in its sole discretion. The Second Amendment provides that the three make-whole amounts are calculated on distinct, non-overlapping pools of shares so that no double recovery occurs, and that the Company’s aggregate make-whole obligation will not exceed the amount necessary for Zippy to receive, in the aggregate, proceeds equivalent to $10.50 per share for each share originally comprising the stock consideration.
The Second Amendment also makes certain conforming changes, including (i) providing that the Company’s obligation to pay the Final Make Whole Amount for purposes of the forfeiture provisions of the Zippy Purchase Agreement will be deemed satisfied if the Company timely pays each of the three true-up make-whole amounts, while confirming that the Company’s failure to timely pay any such amount constitutes a failure to timely pay a cash amount for purposes of the “ETHZ Forfeiture Event” definition under the Zippy Purchase Agreement, and (ii) extending Zippy’s monthly stock transaction reporting covenant through December 31, 2026 and applying it separately with respect to each true-up determination date.
On July 31, 2026, the first of the three make-whole determination dates under Side Letter Amendment No. 2 occurred and Zippy sold an additional 285,714 shares subject to the Final Make Whole Provision at an average price of $6.01 per share in August 2026. Based on the determination, the Company paid Zippy $1.3 million.
The December 31, 2026 determination date remains outstanding, and the related amounts are not yet determinable.
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Edge Node Joint Venture
On October 2, 2026, the Company and Edge Node entered into the LLC Agreement as members of the Joint Venture. The Company is the sole manager of the Joint Venture.
Pursuant to the LLC Agreement, the Company and Edge Node have established a strategic partnership framework for data center real estate, compute infrastructure and compute reseller arrangements. The Company holds a 51% membership interest and Edge Node holds a 49% membership interest in the Joint Venture. The Joint Venture is expected to serve as the parent entity holding equity interests in project-level special purpose vehicles organized as separate limited liability companies when formed for each project, LandCo and EquipCo.
The LLC Agreement provides for, among other things (i) capital contributions by the members to fund LandCo and EquipCo investments for each project in proportion to their respective membership interests; (ii) certain consent rights of each member with respect to specified actions of the Joint Venture; (iii) a distribution waterfall for available cash from each project; (iv) remedies upon a member’s failure to fund capital contributions, including member loans and equity reallocation; (v) an equity exchange pursuant to which, after the Effective Date (as defined in the LLC Agreement) and upon achievement of specified performance milestones, the Company will issue shares of common stock, par value $0.0001 per share, of the Company representing 9.95% of the Company’s outstanding shares of common stock to Edge Node, and the Company will receive 9.95% of Edge Node’s fully diluted equity; (vi) buyout rights, including the Forum Call Right and a put right in favor of Edge Node, in each case at a formula-determined price; (vii) mutual exclusivity covenants restricting each member from pursuing data center or similar projects with third parties in the United States; (viii) a right of first refusal in favor of the Company on future acquisitions and compute capacity; (ix) an exclusive, royalty-free license from Edge Node of its background intellectual property to the Joint Venture; and (x) drag-along rights in favor of Forum with respect to a sale of the Joint Venture. The final quantity of shares to be issued fto Edge Node and the Company is subject to certain closing conditions that have not yet been met.
Pursuant to the LLC Agreement, Edge Node has agreed to enter into a voting agreement with respect to all shares of common stock held by Edge Node, pursuant to which Edge Node has granted to the Company an irrevocable proxy to vote such shares in accordance with the recommendation of the Company’s board of directors. In addition, members of the Edge Node Group (as defined in the LLC Agreement) have agreed to execute a lock-up agreement if requested by an underwriter in connection with a Company offering, subject to the condition that the Company’s officers and directors are similarly bound.
The Company may also elect to pay any buyout consideration under the Forum Call Right in shares of Company common stock.
In connection with the LLC Agreement, the Company incurred the following direct financial obligations:
Capital Contribution Obligations. The Company has committed to fund 51% of the LandCo and EquipCo investments across multiple projects pursuant to the terms set forth in the LLC Agreement.
Guaranty Obligations. The Company and Edge Node have each agreed to provide guaranties for EquipCo equipment financing proportional to their respective percentage interests. If a lender requires the Company to provide a sole guaranty, Edge Node is obligated to pay the Company a guaranty fee.
Member Loan Obligations. In the event Edge Node fails to fund a required capital contribution, the Company may advance member loans, which are secured by a security interest in project assets and pledged membership interests.
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On October 26, 2026, the Joint Venture entered a definitive agreement with a third party for a 36-month reservation of Nvidia B300 GPU capacity at its existing, powered data center facility in Dallas, Texas. The agreement carried a combined total contract value of approximately $94.4 million, reflecting GPU capacity and associated CPU management node fees payable over the 36-month term.
On November 11, 2026, the Company entered into a mutual agreement with the customer that terminated the definitive agreement. The Company terminated the contract because it felt the contract no longer provided adequate returns in the current market environment. The Company intends to recontract the compute with a new partner under more favorable terms and conditions.
Components of Results of Operations
Revenue
Aircraft engine rental revenue consists of lease income earned from leasing the Company’s aircraft engines to third-party lessees, comprising fixed lease payments recognized on a straight-line basis over the lease term and variable payments based on engine usage. Staking revenue consists of our share of rewards earned from native and liquid ETH staking arrangements through third-party validator operators and staking protocols. Incentive revenue consists of incentive tokens earned from participation in certain liquid staking protocols based on deposited ETH and program-specific incentive structures.
Cost of Revenue
Cost of revenue consists of cost related to the Company’s aircraft engine rental agreements, including engine servicing agreements and depreciation on the aircraft engines.
General and Administrative
General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation, as well as professional fees (such as legal, accounting, and consulting services).
Other general and administrative expenses include office-related and overhead expenses (including rent, utilities, software, insurance, and dues and subscriptions), marketing and investor relations costs, bank charges, travel and entertainment expenses, and public company costs such as audit fees and SEC filing fees.
Dividend Income
Dividend income consists of cash distributions received from marketable securities that the Company holds as part of its strategic investment portfolio.
Interest Income
Interest income consists of interest earned on cash balances and short-term investments held by the Company, including interest earned on U.S. Treasury securities and interest-bearing accounts. Interest income includes interest income recognized on loan receivables related to the Zippy loan portfolio and warehouse facility.
Interest Expense
Interest expense consists of interest incurred on outstanding debt obligations, primarily the Equities First loan and the Aave loan.
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Other Expense
Other expenses consist primarily of the reversal of previously recognized reward revenue associated with protocol-based incentive arrangements.
Change in Fair Value of Derivative Instruments
Change in Fair Value of Derivative Instruments consists of net realized and unrealized gains and losses on the Company’s ETH-denominated derivative instruments. Gains and losses arise from changes in market prices and changes in fair value and settlement of the instruments, as applicable.
Change in Fair Value of Available for Sale Securities
Change in fair value of available-for-sale securities reflects unrealized gains and losses resulting from changes in market prices of investment securities held by the Company.
Digital Asset Gains and Losses
Digital asset gains and losses consist of realized and unrealized gains and losses on ETH and liquid staking incentive tokens held by the Company. Gains and losses arise from changes in market prices and the sale, transfer, or redeployment of ETH.
Change in Fair Value of Long-Term Receivable Derivative
Change in fair value of long-term receivable derivative represents the change in fair value of the cryptocurrency holdings under liquid staking protocols.
Gain (Loss) on Make Whole Provision
Gain (loss) on make whole provision represents the estimated make whole amount pursuant to the Zippy shares in accordance with the Zippy Purchase Agreement.
Income Tax Expense (Benefit)
Income tax expense consists primarily of state income taxes and deferred income tax effects. The Company maintains valuation allowances against certain deferred tax assets where realization is not considered more likely than not.
Net Loss from Discontinued Operations
Net loss from discontinued operations reflects the results of operations of business components that have been disposed of or otherwise exited and are no longer part of the Company’s continuing operations. The results of discontinued operations are presented separately from continuing operations to provide comparability across periods. Discontinued operations include all revenues, expenses, gains, and losses directly attributable to those exited activities.
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Consolidated Results of Operations
For the Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
The following table presents the results of our operations (in thousands) for the three months ended September 30, 2026 and 2025:
| Three Months Ended September 30, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Revenue: | ||||||||||||||||
| Aircraft engine rental revenue | $ | 1,998 | $ | - | $ | 1,998 | 100 | |||||||||
| Staking revenue | - | 846 | (846 | ) | (100 | ) | ||||||||||
| Reward revenue | - | 3,264 | (3,264 | ) | (100 | ) | ||||||||||
| Total Revenue | 1,998 | 4,110 | (2,516 | ) | (61 | ) | ||||||||||
| Cost of Revenue: | ||||||||||||||||
| Aircraft engine rental | 404 | - | 404 | 100 | ||||||||||||
| Total Cost of Revenue | 404 | - | 404 | 100 | ||||||||||||
| Gross Profit | 1,594 | 4,110 | (2,516 | ) | (61 | ) | ||||||||||
| Operating Expenses: | ||||||||||||||||
| General and administrative | 8,700 | 224,634 | (215,934 | ) | (96 | ) | ||||||||||
| Total Operating Expenses | 8,700 | 224,634 | (215,934 | ) | (96 | ) | ||||||||||
| Loss From Operations | (7,106 | ) | (220,524 | ) | 213,418 | (97 | ) | |||||||||
| Other (Expense) Income: | ||||||||||||||||
| Dividend income | 86 | 617 | (531 | ) | (86 | ) | ||||||||||
| Interest income | 523 | 340 | 183 | 54 | ||||||||||||
| Other income | - | (13 | ) | 13 | (100 | ) | ||||||||||
| Interest expense | (236 | ) | (320 | ) | 84 | (26 | ) | |||||||||
| Other expense | (12 | ) | - | (12 | ) | (100 | ) | |||||||||
| Change in fair value of derivative instruments | 803 | - | 803 | 100 | ||||||||||||
| Change in fair value of available for sale securities | 74 | (75 | ) | 149 | (199 | ) | ||||||||||
| Digital asset gains and losses | 13,882 | 7,550 | 6,332 | 84 | ||||||||||||
| Change in fair value of convertible debt | - | 3,724 | (3,724 | ) | (100 | ) | ||||||||||
| Loss on make whole provision | (155 | ) | - | (155 | ) | (100 | ) | |||||||||
| Total other income, net | 14,965 | 11,823 | 3,142 | 27 | ||||||||||||
| Income (Loss) Before Income Taxes | 7,859 | (208,701 | ) | 216,560 | (104 | ) | ||||||||||
| Income tax benefit | - | - | - | - | ||||||||||||
| Net Income (Loss) From Continuing Operations | 7,859 | (208,701 | ) | 216,560 | (104 | ) | ||||||||||
| Net Loss From Discontinued Operations | (6 | ) | (8,041 | ) | 8,035 | (100 | ) | |||||||||
| Net Income (Loss) | $ | 7,853 | $ | (216,742 | ) | $ | 224,595 | (104 | ) | |||||||
Revenue
Revenue for the three months ended September 30, 2026 was $2.0 million and $4.1 million for the three months ended September 30, 2025. The decrease compared to the prior period was driven by the Company’s shift from a digital asset-focused business model, to its current revenues which were primarily derived from aircraft engine leasing activities. Over time, the Company expects revenue generation to expand through the continued development of its tokenization strategies, AI business expansion and related investment activities. The following discussion disaggregates total revenue into two primary revenue streams.
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The following discussion disaggregates total revenue into two primary revenue streams.
| i. | i. | Staking revenue. Staking revenue consists of native staking revenue, liquid staking revenue and reward revenue, each as more fully described below. |
| a. | Native staking revenue. There was no native staking revenue for the three months ended September 30, 2026. Native staking revenue was $1.5 million for the nine months ended September 30, 2026. The change was attributable to the commencement of the Company’s native ETH staking activities during the second half of 2025. Native staking revenue is generally driven by the amount of ETH staked, applicable staking reward rates and validator arrangements, and the market price of ETH at the time rewards are earned and or received. |
| b. | Liquid staking revenue. There was no liquid staking revenue for the three months ended September 30, 2026. Liquid staking revenue was $0.3 million for the nine months ended June 30, 2026. There was no liquid staking revenue for the three months ended September 30, 2026. The change was attributable to the commencement of the Company’s liquid staking activities during the second half of 2025. Liquid staking revenue is generally driven by the amount of ETH deposited into liquid staking protocols, applicable protocol reward rates and incentive structures, and the market price of ETH at the time rewards are earned and or received. |
| ii. | Aircraft engine rental revenue. Aircraft engine rental revenue was $2.0 million for the three months ended September 30, 2026. There was no aircraft rental revenue for the three months ended September 30, 2025. The increase was attributable to the acquisition of aircraft engines subject to operating lease arrangements during the period. Aircraft rental revenue is generally driven by the contractual lease rates, the timing of lease commencement, and the number of engines under lease during the period. |
Cost of Revenue
Cost of revenues for the three months ended September 30, 2026 was $0.4 million. There was no cost of revenue for the three months ended September 30, 2025. The increase in cost of revenue compared to the prior year was attributable to depreciation and other costs related to our aircraft engine lease arrangements.
General and Administrative
General and administrative expenses for the three months ended September 30, 2026 were $8.7 million, compared to $224.6 million for the three months ended September 30, 2025.
The decrease in general and administrative expenses compared to the prior year was primarily attributable to an approximately $202.3 million reduction in stock-based compensation expense, driven by the issuance of options and warrants in the prior year period.
Dividend Income
Dividend income for the three months ended September 30, 2026, was $0.08 million, compared to $0.6 million for the three months ended September 30, 2025, reflecting returns earned on marketable securities acquired during 2025 as part of the Company’s strategic investment activities.
Interest Income
Interest income for the three months ended September 30, 2026 were $0.5 million, compared to $0.3 million for the three months ended September 30, 2025, reflecting interest earned on cash and interest-bearing accounts following the Company’s capital-raising activities during 2025. Interest income also reflects interest earned on loan receivables. During the three months ended September 30, 2026, interest income recognized on loan receivables related to the Zippy loan portfolio and warehouse facility was approximately $0.5 million and $0.1 million, respectively.
There was no comparable interest income in the prior period, as these balances were generated during the current period.
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Interest Expense
Interest expense for the three months ended September 30, 2026 was $0.2 million, compared to $0.3 million for the three months ended September 30, 2025, primarily reflecting interest incurred in the current period on the Equities First Loan. The prior period interest expense balance was associated with convertible debt.
Change in Fair Value of Derivative Instruments
Change in fair value of derivative instruments for the three months ended September 30, 2026 was $0.8 million, primarily reflecting the change in fair value of the Company’s ETH-denominated derivative instruments entered into during the period in connection with the Company’s disposition of digital asset holdings, as well as settlement and early termination of certain contracts during the period. There was no comparable change in the prior year, as the Company did not enter into or hold similar derivative instruments during that period.
Change in Fair Value of Available for Sale Securities
Change in fair value of available-for-sale securities for the three months ended September 30, 2026 and 2025 was $0.07 million, reflecting unrealized gains and losses resulting from changes in market prices of equity investment securities acquired during the period.
Digital Asset Gains and Losses
Digital asset gains for the three months ended September 30, 2026 were $13.9 million, compared to $7.6 million, primarily reflecting unrealized gains resulting from changes in market prices of ETH and liquid staking incentive tokens held during the period. There were no digital assets held in the prior period.
Change in Fair Value of Convertible Debt
Change in fair value of convertible debt for the three months ended September 30, 2025, was $3.7 million, primarily reflecting gain on certain convertible notes issued in August 2025 and September 2025, which have since been retain in full (the “Convertible Notes”). There was no change in fair value of convertible debt in the current period
Gain on Make Whole Provision
Gain on make whole provision represents changes in the estimated make-whole obligation associated with the Company’s cost-method investment in Zippy, resulting in a $0.2 million loss for the three months ended September 30, 2026, primarily driven by changes in the Company’s stock price relative to the agreed valuation terms during the period. There was no comparable activity for the three months ended September 30, 2025. See also Note 4 to the consolidated financial statements included above.
Net Loss from Discontinued Operations
During the year ended December 31, 2025, the Company made a strategic decision to discontinue its pharmaceutical research operations and Gaming Technology Platform. Accordingly, the results of these operations are presented as discontinued operations for all periods presented.
Net loss from discontinued operations for the three months ended September 30, 2026 was $0.006 million, primarily reflecting operating losses related to the Company’s former pharmaceutical research operations, compared to net loss from discontinued operations of $8.0 million for the three months ended September 30, 2025.
The exits were part of management’s strategic decision to discontinue legacy operations and focus on digital asset and tokenization activities. The Company does not expect discontinued operations to have a material impact on future results of operations or cash flows.
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For the Nine months Ended September 30, 2026 Compared to the Nine months Ended September 30, 2025
The following table presents the results of our operations (in thousands) for the nine months ended September 30, 2026 and 2025:
| Nine Months Ended September 30, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Revenue: | ||||||||||||||||
| Aircraft engine rental revenue | $ | 4,451 | $ | - | $ | 4,451 | 100 | |||||||||
| Staking revenue | 1,771 | 846 | 925 | 109 | ||||||||||||
| Reward revenue | - | 3,264 | (3,264 | ) | (100 | ) | ||||||||||
| Total Revenue | 6,222 | 4,110 | 2,112 | 51 | ||||||||||||
| Cost of Revenue: | ||||||||||||||||
| Aircraft engine rental | 1,877 | - | 1,877 | 100 | ||||||||||||
| Total Cost of Revenue | 1,877 | - | 1,877 | 100 | ||||||||||||
| Gross Profit | 4,345 | 4,110 | 235 | 6 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| General and administrative | 26,026 | 227,954 | (201,928 | ) | (89 | ) | ||||||||||
| Total Operating Expenses | 26,026 | 227,954 | (201,928 | ) | (89 | ) | ||||||||||
| Loss From Operations | (21,681 | ) | (223,844 | ) | 202,163 | (90 | ) | |||||||||
| Other (Expense) Income: | ||||||||||||||||
| Dividend income | 558 | 617 | (59 | ) | (10 | ) | ||||||||||
| Interest income | 1,004 | 340 | 664 | 195 | ||||||||||||
| Interest expense | (1,474 | ) | (320 | ) | (1,154 | ) | 361 | |||||||||
| Other expense | (2,243 | ) | - | (2,243 | ) | (100 | ) | |||||||||
| Change in fair value of derivative instruments | (9,571 | ) | - | (9,571 | ) | (100 | ) | |||||||||
| Change in fair value of available for sale securities | 200 | (75 | ) | 275 | (367 | ) | ||||||||||
| Digital asset gains and losses | 1,103 | 7,550 | (6,447 | ) | (85 | ) | ||||||||||
| Change in fair value of long-term receivable derivative | (48,637 | ) | - | (48,637 | ) | (100 | ) | |||||||||
| Change in fair value of convertible debt | - | 3,724 | (3,724 | ) | (100 | ) | ||||||||||
| Loss on make whole provision | (1,355 | ) | - | (1,355 | ) | (100 | ) | |||||||||
| Total other income (expense), net | (60,415 | ) | 11,836 | (72,251 | ) | (610 | ) | |||||||||
| Loss Before Income Taxes | (82,096 | ) | (212,008 | ) | 129,912 | (61 | ) | |||||||||
| Income tax benefit | - | - | - | - | ||||||||||||
| Net Loss From Continuing Operations | (82,096 | ) | (212,008 | ) | (129,912 | ) | (61 | ) | ||||||||
| Net Income (Loss) From Discontinued Operations | 867 | (8,830 | ) | 9,697 | (110 | ) | ||||||||||
| Net Loss | $ | (81,229 | ) | $ | (220,838 | ) | $ | 139,609 | (63 | ) | ||||||
Revenue
Revenue for the nine months ended September 30, 2026 was $6.2 million, compared to $4.1 million for the nine months ended September 30, 2026. The increase compared to the prior period was driven by the Company’s shift from digital asset focused business model, to its current revenues which were primarily derived from aircraft engine leasing activities. Going forward, revenues are expected to be driven primarily by the continued development of the Company’s tokenization strategies, new AI infrastructure being deployed, and the aircraft engine leasing activity.
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The following discussion disaggregates total revenue into two primary revenue streams.
| i. | Staking revenue. Staking revenue consists of native staking revenue, liquid staking revenue and reward revenue, each as more fully described below. |
| a. | Native staking revenue. Native staking revenue was $1.7 million for the nine months ended September 30, 2026, compared to $0.8 million for the nine months ended September 30, 2025. The increase was attributable to the commencement of the Company’s native ETH staking activities during the second half of 2025. Native staking revenue is generally driven by the amount of ETH staked, applicable staking reward rates and validator arrangements, and the market price of ETH at the time rewards are earned and or received. |
| b. | Liquid staking revenue. Liquid staking revenue was $0.3 million for the nine months ended September 30, 2026. There was no liquid staking revenue for the nine months ended September 30, 2025. The increase was attributable to the commencement of the Company’s liquid staking activities during the second half of 2025. Liquid staking revenue is generally driven by the amount of ETH deposited into liquid staking protocols, applicable protocol reward rates and incentive structures, and the market price of ETH at the time rewards are earned and or received. |
| ii. | Aircraft engine rental revenue. Aircraft engine rental revenue was $4.5 million for the nine months ended September 30, 2026. There was no aircraft rental revenue for the nine months ended September 30, 2025. The increase was attributable to the acquisition of aircraft engines subject to operating lease arrangements during the period. Aircraft rental revenue is generally driven by the contractual lease rates, the timing of lease commencement, and the number of engines under lease during the period. |
Cost of Revenue
Cost of revenue for the nine months ended September 30, 2026, was $1.9 million. There was no cost of revenue for the nine months ended September 30, 2025. The increase in cost of revenue compared to the prior year was attributable to depreciation and other costs related to our aircraft engine lease arrangements.
General and Administrative
General and administrative expenses for the nine months ended September 30, 2026 were $26.0 million, compared to $228.0 million for the nine months ended September 30, 2025.
The decrease in general and administrative expenses compared to the prior year was driven primarily by $203 million of stock-based compensation expense in the prior period, compared to $3.2 million in the current period, related to equity awards granted.
Dividend Income
Dividend income for the nine months ended September 30, 2026 and 2025, were $0.6 million, reflecting returns earned on marketable securities acquired during 2025 as part of the Company’s strategic investment activities.
Interest Income
Interest income for the nine months ended September 30, 2026 was $1.0 million, compared to $0.3 million for the nine months ended September 30, 2025, reflecting interest earned on cash and interest-bearing accounts following the Company’s capital-raising activities during 2025. Interest income also reflects interest earned on loan receivables. During the nine months ended September 30, 2026, interest income recognized on loan receivables related to the Zippy loan portfolio and warehouse facility was approximately $1.0 million and $0.1 million, respectively.
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Interest Expense
Interest expense for the nine months ended September 30, 2026 was $1.5 million, compared to $0.3 million for the nine months ended September 30, 2025, primarily reflecting interest incurred in the current period on the Equities First Loan. The prior period interest expense balance was associated with convertible debt. See also Note 9 to the consolidated financial statements included above.
Other Expense
Other expense for the nine months ended September 30, 2026 was $2.2 million, primarily reflecting the reversal of previously recognized reward revenue associated with the early exit from a protocol-based incentive arrangement. This expense was recognized during the first quarter of 2026, with no corresponding expense recognized during the nine months ended September 30, 2026. Upon exit, the Company retained a pro rata portion of the incentive tokens earned during the participation period and returned a portion of previously granted tokens. There was no comparable expense in the prior-year period, as the Company did not participate in these arrangements until the second half of 2025.
Change in Fair Value of Derivative Instruments
Change in fair value of derivative instruments for the nine months ended September 30, 2026 was $9.6 million, primarily reflecting the change in fair value of the Company’s ETH-denominated derivative instruments entered into during the period in connection with the Company’s disposition of digital asset holdings, as well as settlement and early termination of certain contracts during the period. There was no comparable change in the prior year, as the Company did not enter into or hold similar derivative instruments during that period.
Change in Fair Value of Available for Sale Securities
Change in fair value of available-for-sale securities for the nine months ended September 30, 2026 and 2025 was $0.2 million gain and $0.1 million loss, respectively, reflecting unrealized gains and losses resulting from changes in market prices of equity investment securities acquired during the period. There was no comparable, meaningful change in the prior period, as these investments were not held previously.
Digital Asset Gains and Losses
Digital asset gains for the nine months ended September 30, 2026 and 2025 were $1.1 million and $7.5 million, respectively, primarily reflecting realized gains recognized upon the sale, transfer, or redeployment of ETH, partially offset by unrealized losses resulting from changes in market prices of ETH and liquid staking incentive tokens held during the period. Unrealized gains and losses were driven primarily by fluctuations in the market price of ETH and changes in the quantity of digital assets held during the period. There were no digital assets held in the prior period.
Change in Fair Value of Convertible Debt
Change in fair value of convertible debt for the nine months ended September 30, 2025, was $3.7 million, primarily reflecting the gains on the Convertible Notes. There was no change in fair value of convertible debt in the current period
Change in Fair Value of Long-Term Receivable Derivative
The change in fair value of the long-term receivable derivative for the nine months ended September 30, 2026 was $48.6 million, primarily driven by changes in the market price of ETH, the accrual of staking rewards under liquid staking arrangements, and changes in the quantity of assets deployed in such protocols during the period. There was no comparable activity for the nine months ended September 30, 2025.
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Loss on Make Whole Provision
Loss on make whole provision represents changes in the estimated make-whole obligation associated with the Company’s cost-method investment in Zippy, resulting in a $1.4 million loss for the nine months ended September 30, 2026, primarily driven by changes in the Company’s stock price relative to the agreed valuation terms during the period. There was no comparable activity for the nine months ended September 30, 2025. See also Note 4 to the consolidated financial statements included above.
Net Income from Discontinued Operations
During the year ended December 31, 2025, the Company made a strategic decision to discontinue its pharmaceutical research operations and Gaming Technology Platform. Accordingly, the results of these operations are presented as discontinued operations for all periods presented.
Net income from discontinued operations for the nine months ended September 30, 2026, was $0.9 million, primarily reflecting operating losses of approximately $0.5 million related to the Company’s former pharmaceutical research operations and gain on settlement of liabilities of approximately $1.4 million related to a settlement with a former consultant.
The exits were part of management’s strategic decision to discontinue legacy operations and focus on digital asset and tokenization activities. The Company does not expect discontinued operations to have a material impact on future results of operations or cash flows.
Non-GAAP Financial Measures
Although we believe that net income or loss, as determined in accordance with GAAP, is the most appropriate earnings measure, we use EBITDA and Adjusted EBITDA as key profitability measures to assess the performance of our business. We believe these measures help illustrate underlying trends in our business and we use these measures to establish budgets and operational goals, and communicate internally and externally, in managing our business and evaluating its performance. We also believe these measures help investors compare our operating performance with its results in prior periods in a way that is consistent with how management evaluates such performance. EBITDA is a non-GAAP profitability measure that represents net income or loss for the period before the impact of the interest expense, income tax expense (benefit) and depreciation and amortization of property, plant and equipment and intangible assets. EBITDA eliminates potential differences in performance caused by variations in capital structures (affecting financing expenses), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense).
Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, we exclude from Adjusted EBITDA certain costs that are required to be expensed in accordance with GAAP, including non-cash stock-based compensation, business development and integration expenses, offering costs, non-cash adjustments to the fair value of earnout consideration, and non-cash adjustments to the fair value of outstanding warrants. Our management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future.
Each of the profitability measures described below are not recognized under GAAP and do not purport to be an alternative to net income or loss determined in accordance with GAAP as a measure of our performance. Such measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for our results as reported under GAAP. EBITDA and Adjusted EBITDA exclude items that can have a significant effect on our profit or loss and should, therefore, be used only in conjunction with our GAAP profit or loss for the period. Our management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, these measures may not be comparable to other similarly titled measures of other companies.
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EBITDA and Adjusted EBITDA are unaudited, and have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, or future or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, capital expenditures or working capital needs; EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments; although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. In addition, other companies in this industry may calculate EBITDA and Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure. For more information on these non-GAAP financial measures, please see the below reconciliation of these non-GAAP financial measures to their GAAP counterparts.
The Company defines EBITDA as earnings before interest, taxes, depreciation, and amortization, and Adjusted EBITDA as EBITDA plus stock-based compensation.
The reconciliation of Net loss from continuing operations, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA (in thousands) for the three and nine months ended September 30, 2026 and 2025, is as follows:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net Income (Loss) From Continuing Operations | $ | 7,859 | $ | (208,701 | ) | $ | (82,096 | ) | $ | (212,008 | ) | |||||
| Interest | 236 | 320 | 1,474 | 320 | ||||||||||||
| Taxes | - | - | - | - | ||||||||||||
| Depreciation and Amortization | 2,020 | - | 3,429 | - | ||||||||||||
| EBITDA | 10,115 | (208,381 | ) | (77,193 | ) | (211,688 | ) | |||||||||
| Stock-based compensation1 | 1,984 | 208,242 | 5,901 | 208,923 | ||||||||||||
| Adjusted EBITDA | $ | 12,099 | $ | (139 | ) | $ | (71,292 | ) | $ | (2,765 | ) | |||||
| (1) | Represents non-cash stock-based compensation expense associated with employee and non-employee equity awards, including restricted stock units and performance stock units granted to directors and management, included in “General and administrative” expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss. |
Liquidity and Capital Resources
During the year ended December 31, 2025, the Company completed significant equity and debt financing transactions, generating proceeds of approximately $860.0 million, that materially improved its liquidity position and extended the maturity profile of its obligations. As of September 30, 2026 and December 31, 2025, the Company had $3.2 million and $8.0 million of cash and cash equivalents on hand, respectively, and $12.1 million and $4.4 million of marketable securities, respectively.
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Management monitors liquidity based on expected operating cash requirements, capital commitments and near-term obligations relative to available liquid resources and planned financing activities. Our liquidity management strategy focuses on maintaining sufficient liquidity to fund operations and support the execution of our strategic initiatives. Management also considers known uncertainties, including changes in market conditions that could affect the value and liquidity of certain assets and the timing of access to restricted balances.
The Company may also pursue additional offering transactions as needed to fund operations and financing obligations. Future offering transactions may include Common Stock (including through at-the-market sales under the Second Amended and Restated Sales Agreement), warrant coverage or other convertible securities, subject to Board of Directors approval and applicable Nasdaq stockholder approval requirements. As of the date of this Report, the Company has not agreed to any definitive funding terms or finalized any offering structures. Future capital requirements will depend on operating performance, market conditions, and the execution of our business strategy, including potential periods of digital asset price volatility. Additionally, the Company expects to utilize cash on hand, customer deposits and equipment financing arrangements to fund the development of its AI infrastructure. The Company may also pursue utilizing existing assets such as its aircraft engines or thee Warehouse Agreement to provide additional debt financing as needed.
Principal and Potential Sources of Liquidity
Our principal and potential sources of liquidity consist primarily of cash and cash equivalents, cash flows from operating activities, and proceeds from financing activities. We believe that our existing sources of liquidity are, and will continue to be, sufficient to meet our working capital and capital expenditure requirements in both the short and long term.
We also hold ETH which is accounted for as a digital asset. While ETH is not considered a cash equivalent and is subject to market volatility, these holdings may be converted into cash and used as a source of liquidity if needed, subject to market conditions and strategic considerations.
We also maintain restricted cash equivalents, which are not available for general corporate purposes as they are subject to contractual restrictions (including being maintained as collateral under certain arrangements). These balances may become available for liquidity purposes upon the satisfaction of the applicable release conditions.
Cash Flows
As of September 30, 2026 and December 31, 2025, we had cash balances of $3.2 million and $8.0 million, respectively, and working capital deficit of $14.4 million and $27.4 million, respectively.
Operating Activities
For the nine months ended September 30, 2026, cash used in operating activities from continuing operations totaled $34.0 million compared to cash used in operating activities from continuing operations of $18.3 million for the nine months ended September 30, 2025. Cash used in operating activities during the nine months ended September 30, 2026 was primarily attributable to our net loss of $82.1 million, partially offset by non-cash items in the aggregate amount of $68.8 million, including a $48.6 million change in fair value of long term receivable derivative, a $9.6 million change in the fair value of derivative instruments, $1.1 million of digital asset gains and losses, and a $1.4 million loss on the make-whole provision, together with depreciation and amortization and stock-based compensation expense. Operating cash flows were also impacted by changes in operating assets and liabilities, primarily driven by a $11.9 million increase in prepaid expenses and other current assets, a $5.5 million decrease in accrued expenses, a $1.2 million decrease in accounts payable, and $1.4 million increase in accounts receivable.
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Our cash used in operating activities for the nine months ended September 30, 2025, was primarily attributable to our net loss of $212.0 million, adjusted for non-cash expenses of $193.6 million, including $208.9 million in stock-based compensation expense and $7.6 million of digital asset gains and losses.
Investing Activities
For the nine months ended September 30, 2026, cash provided by investing activities from continuing operations totaled $56.0 million compared to cash used in investing activities from continuing operations of $252.4 million for the nine months ended September 30, 2025. Cash provided by investing activities during the nine months ended September 30, 2026, was primarily attributable to $128.1 million in proceeds from the sale of cryptocurrency, partially offset by $7.5 million of purchases of marketable securities, $0.8 million of purchases of digital assets, $43.1 million of purchases of aircraft engines, and $21.8 million of purchases of loan receivables. In addition, the Company had $1.1 million of cash inflows from repayments of loans receivable during the period.
Our cash used in investing activities for the nine months ended September 30, 2025, was attributable to $243.5 million of purchases of digital assets and $8.9 million purchases of marketable securities.
Financing Activities
For the nine months ended September 30, 2026, cash used in financing activities from continuing operations totaled $27.4 million compared to cash provided by financing activities from continuing operations of $825.3 million for the nine months ended September 30, 2025. Cash used in financing activities during the nine months ended September 30, 2026 was primarily attributable to $33.2 million for the repurchase of common stock, offset by $6.1 million in net proceeds from shares issued for cash under the ATM Program.
For the nine months ended September 30, 2025, cash provided by financing activities from continuing operations totaled $825.3 million. Cash used in financing activities from discontinued operations was $0.15 million. Net cash provided by financing activities for the nine months ended September 30, 2025, was $825.1 million. Cash provided by financing activities for the nine months ended September 30, 2025, primarily related to cash proceeds from shares issued for cash and warrants, net of $286.8 million (mainly due to the closing of the transactions contemplated by that certain July 29, 2025 securities purchase agreement entered into with certain accredited institutional investors (the “Purchasers”) pursuant to which the Company agreed to sell and issue to the Purchasers in a private placement an aggregate of (i) 14,288,217 shares of common stock, at an offering price of $26.50 per share, and (ii) $26.499 per pre-funded warrant (warrants to purchase up to an aggregate of 1,749,585 shares of common stock), proceeds from convertible debt, net of $500.0 million (in connection with the sale of the Convertible Notes), proceeds from collateralized loan of $50.0 million and cash proceeds from the exercise of warrants of $5.6 million, which were offset by treasury stock purchases of $16.1 million and repayment of loan payable – related party of $1.0 million for the nine months ended September 30, 2025.
Capital Requirements and Contractual Obligations
Our capital requirements primarily relate to supporting ongoing operations, funding working capital needs, servicing existing obligations, and executing our tokenization and investment strategy. We expect to continue to incur operating losses in the near term as we execute our strategy.
Our contractual obligations are limited in nature and consist primarily of professional services agreements incurred in the ordinary course of business. The Company incurs ongoing professional services costs and custody, servicing, and asset management fees related to its digital asset activities and owned assets, which are generally short-term in nature and variable based on activity levels.
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In connection with certain investment and financing arrangements, the Company may be subject to contingent or conditional obligations, including potential true-up or repurchase mechanisms, such as those related to the Zippy investment. As of September 30, 2026, management does not believe that any such contingent obligations are reasonably likely to have a material adverse effect on the Company’s liquidity or capital resources.
The Company does not have any material long-term debt maturities, other than a collateralized loan totaling $26.0 million which is secured by 12,441 ETH, material purchase obligations, or other significant contractual commitments that are reasonably likely to have a material adverse effect on its liquidity or capital resources. In addition, the Company does not have any material off-balance-sheet arrangements that are reasonably likely to have a material effect on liquidity, capital resources, or results of operations.
Critical Accounting Estimates
Our Condensed Consolidated Financial Statements are prepared in accordance with GAAP and require management to apply judgment in selecting accounting policies and in making estimates and assumptions. These judgments and estimates affect the reported amounts of assets and liabilities, the recognition and presentation of revenues and expenses, and the disclosures included in these financial statements. Certain estimates are sensitive to changes in assumptions, including estimates that depend on market data and valuations, as well as the interpretation of contractual terms in our arrangements. Actual results could differ from our estimates, and those differences could impact our results of operations and financial position in future periods. There have been no material changes to our critical accounting estimates as compared to those disclosed in our Annual Report.
Significant Accounting Policies
See Note 2 – Summary of Significant Accounting Policies to our Condensed Consolidated Financial Statements included in this Report for a discussion about significant accounting policies relevant to the Company. Additional information regarding the Company’s significant accounting policies is included in the Company’s Annual Report.
Recently Issued Accounting Pronouncements
See Note 2 – Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements of our Consolidated Financial Statements included in this Report for a discussion about new accounting pronouncements issued and adopted as of the date of this Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Item 10(f)(1) of Regulation S-K.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in the reports 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 that such information is accumulated and communicated to our management, including our CEO and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2026. Based on the evaluation, our management concluded that, as of September 30, 2026, the Company’s disclosure controls and procedures were not effective to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures as of September 30, 2026.
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Inherent Limitations on Effectiveness of Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO, or persons performing similar functions, and effected by our Board of Directors to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. A company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
A material weakness is a control deficiency or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. As a company with limited accounting resources, a significant amount of management’s time and attention has been and will be diverted from our business to ensure compliance with these regulatory requirements.
We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies.
As previously reported, management, including our CEO and CFO, conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control - Integrated Framework” (2013). Management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2025, based on those criteria.
The material weakness in internal control over financial reporting identified was related to controls over the classification and technical accounting review of significant, one-time accounting transactions.
Management continues to take steps to remediate the material weakness described above and has implemented the following control enhancement:
| ● | Implemented an added layer of technical review by an internal financial reporting director for one-time significant entries to ensure appropriate classification is assessed. |
| ● | Hired additional third-party accounting consultants to assist with accounting treatment, controls design, reconciliation and close procedures, and financial disclosures. |
Management will consider the material weakness to be fully remediated once the controls have been operating effectively for sufficient contiguous reporting periods, and after management has validated the effective operation of the controls through testing.
Changes in Internal Control over Financial Reporting
During the quarter ended September 30, 2026, management evaluated the Company’s internal control over financial reporting in connection with the Company’s strategic transition and concluded that there were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be a party to litigation that arises in the ordinary course of our business; however, we are not currently a party to any material legal proceeding. In addition, we are not aware of any material legal or governmental proceedings against us or contemplated to be brought against us.
Prior litigation and other legal proceedings which have now been settled are described in, and incorporated by reference in, this “Item 1. Legal Proceedings” of this Form 10-Q from, “Part I – Item 1. Financial Statements” in the Notes to Condensed Consolidated Financial Statements in “Note 12 – Commitments and Contingences”, under the heading Legal Proceedings and Settlements.
Item 1A. Risk Factors.
Except as discussed below, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report, under the heading “Risk Factors”, and investors should review the risks provided herein and in the Annual Report, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Annual Report, under “Risk Factors”, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial conditions and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
The risk factors below which we have marked with an asterisk (*) reflect substantive changes from, or additions to, the risks described in the Annual Report.
The Joint Venture may not be successful and we may not realize the anticipated benefits of the Joint Venture, which could adversely affect our business, financial condition and results of operations.
Joint ventures involve a lesser degree of control over business operations and their success depends in part on the financial health, capabilities and cooperation of our partners. Our partners may have interests inconsistent with ours, and disagreements could result in delays, increased costs, or an inability to pursue key opportunities. Our partners may also fail to fund required capital contributions, become insolvent, or take actions contrary to our interests, any of which could impose additional financial burdens on us.
We have incurred, and expect to continue to incur, significant transaction and development costs in connection with the Joint Venture.
We have incurred significant costs associated with the Joint Venture and expect to continue to incur significant costs associated with the development and deployment of the Joint Venture AI infrastructure platform. These costs include, among other things, expenses related to structuring and capitalizing separate special purpose vehicles for each project site, negotiating master service agreements with tower site owners, securing equipment supply agreements for graphic processing unit pod procurement, and deploying modular compute pods across the Dallas and North Carolina regional hubs and initial tower site cohort. Additional costs may be incurred in connection with site preparation, power upgrades, liquid cooling installation and integration of standardized pod configurations at each deployment location. Although we expect that the modular, repeatable nature of the pod deployment model should allow us to achieve operational efficiencies and reduce per-site deployment costs over time, this net benefit may not be achieved in the near term, or at all. Furthermore, unanticipated costs may arise from delays in site energization, equipment delivery, or the negotiation of additional tower site contracts necessary to reach the Phase 0 target of approximately 11 MW of energized capacity by the second quarter of 2027.
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The exclusivity covenants and related restrictions in the LLC Agreement limit our ability to pursue data center and compute opportunities outside the Joint Venture.
The LLC Agreement contains mutual exclusivity covenants that restrict each member from pursuing data center or similar projects with third parties in the United States. As a result, we generally must pursue these opportunities through the Joint Venture, in which Edge Node holds a 49% membership interest and has consent rights over specified actions. We cannot pursue them independently or with other partners who may offer more favorable terms, capabilities or capital. We have a right of first refusal on future acquisitions and compute capacity, but that right may not give us access to opportunities on acceptable terms, or at all. These restrictions may cause us to forgo attractive opportunities and limit our flexibility to respond to market developments.
We may be adversely affected by increased power costs, outages, curtailment or constraints on interconnection and transmission.
The Joint Venture’s operations require significant amounts of electrical power and high-speed connectivity. Electricity prices can be volatile, and the Joint Venture may not be able to pass cost increases through to customers. Outages, grid-directed curtailment during periods of extreme demand, weather events, and limitations on generation, transmission or interconnection could interrupt operations or limit expansion. The Joint Venture’s initial operations are concentrated in Texas and North Carolina. This concentration exposes it to regional regulatory, grid and weather conditions, including conditions on the ERCOT grid in Texas. In addition, regulators and local communities are increasingly scrutinizing data center power and water use. That scrutiny could result in restrictive regulation or opposition that delays or prevents development. Any of these developments could increase costs, reduce revenue and adversely affect the value of our investment.
The Joint Venture has a limited number of customer contracts and if it does not obtain and retain sufficient customer commitments, it may not generate revenue sufficient to support its investments and obligations.
The Joint Venture is in ongoing discussions with multiple potential customers for offtake of dedicated GPU capacity. Until the Joint Venture secures additional customers, a significant portion of its revenue is expected to come from a limited number of customers. Customer concentration exposes the Joint Venture to the risk that a customer fails to pay, becomes insolvent, disputes its obligations, terminates or reduces its commitment, or declines to renew when its term expires. Market pricing for compute capacity may also decline as additional supply comes online. If the Joint Venture cannot contract capacity at sufficient volumes and prices, or loses a significant customer, it may be unable to cover operating expenses, debt service and reserves. In that case we may be required to make additional capital contributions or advances or to perform on our guaranties.
Rapid technological change and shifting market conditions in artificial intelligence infrastructure could reduce demand for, or the value of, the Joint Venture’s compute capacity.
The AI infrastructure market is characterized by rapid technological change and evolving customer requirements. The Joint Venture’s servers and related equipment may become obsolete or less competitive before the end of their useful lives or the terms of customer contracts. This could reduce pricing on renewal and impair the value of equipment that collateralizes project-level financing. Demand for third-party compute capacity may also decline because of improvements in model efficiency, changes in customer strategies, market consolidation, or increased supply from competitors. In addition, the Joint Venture depends on a limited number of equipment manufacturers and suppliers, which may face supply constraints, price increases, export restrictions or tariffs. Any of these developments could reduce the Joint Venture’s revenue, increase its costs and adversely affect the value of our investment.
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Our stock repurchases are discretionary and even if effected, they may not achieve the desired objectives.*
On August 22, 2025, the Board of Directors authorized and approved a stock repurchase program for up to $250.0 million of the outstanding shares of the Company’s common stock, which was amended on June 29, 2026, to extend and decrease the repurchase program. Subject to any future extension in the discretion of the Board of Directors, the repurchase program is scheduled to expire upon the earliest of (i) June 30, 2027, (ii) when a maximum of $100.0 million of the Company’s common stock has been repurchased or (iii) when such program is discontinued by the Board of Directors. Repurchases are made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. The program does not obligate the Company to acquire a minimum amount of shares. Since August 22, 2025, the Company has purchased an aggregate of 9,656,093 shares of common stock for $80.2 million, at an average purchase price of $8.31. As of November 10, 2026, a total of $19.8 million remains available for future repurchases under the program.
The repurchase program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase a particular number of, or any, shares. There is no guarantee as to the exact number or value of shares that will be repurchased by the Company, if any.
There can be no assurance that any repurchases pursuant to our stock repurchase program will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchase such shares. The amounts and timing of the repurchases may also be influenced by general market conditions, regulatory developments (including legislative actions which, subject to certain conditions, may impose an excise tax of 1% on our stock repurchases) and the prevailing price and trading volumes of our common stock. If our financial condition deteriorates or we decide to use our cash for other purposes, we may suspend repurchase activity at any time.
The issuance of our common stock in the equity exchange with Edge Node in connection with the Joint Venture will dilute existing stockholders, and the interest we receive may not provide equivalent value.
Upon satisfaction of the performance and condition requirements set forth in the LLC Agreement, we are required to issue common stock to Edge Node or its permitted recipients in exchange for an equity interest in Edge Node. The performance requirements include delivery of specified power capacity at both a Dallas and North Carolina project as well as closing and funding equipment financing for both projects at the required loan-to-cost ratio set forth in the LLC Agreement. The number of our shares to be issued is based on 9.95% of our common shares outstanding at closing. The issuance will reduce existing stockholders’ proportionate ownership in the Company and participation in future earnings, if any. The dilution will occur even though the shares issued are subject to voting arrangements and resale restrictions. Achievement of the performance requirements does not establish that the projects will operate profitably or generate sufficient cash to support their obligations. We will receive 9.95% of Edge Node’s fully diluted equity at closing rather than cash proceeds. The value, liquidity and future returns of that interest may be insufficient to offset the value of the shares we issue. Actual or anticipated sales of the issued shares, when permitted, could also adversely affect our stock price.
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Our capital contribution commitments, equipment financing guaranties and potential member loans under the LLC Agreement may require substantial expenditures, expose us to losses and adversely affect our liquidity.
We have committed to fund our applicable share of the Joint Venture’s project investments generally 51% of real estate, infrastructure and equipment investments subject to project-specific terms and the exclusion of certain real estate. Funding requirements may include initial investments, improvements, cost overruns, reserve replenishment and amounts required to prevent financing defaults or respond to emergencies. These requirements may exceed our estimates and occur before projects generate sufficient cash. We may need to divert cash from other operations, incur indebtedness, issue securities or sell assets to meet these funding obligations. Financing may be unavailable on favorable terms, if at all, or impose restrictive terms, higher costs or cause additional dilution. Our contributed capital may remain invested for an extended period or be lost.
We must also provide guaranties reasonably necessary to support project equipment financing, generally in proportion to our membership interest and on commercially reasonable terms negotiated with lenders. A lender may require us to provide a sole guaranty, exposing us to payments exceeding our proportionate interest or invested capital, depending on the final documents. Although Edge Node must pay a guaranty fee and reimburse its applicable share of payments in the event we are required to solely guaranty an obligation, it may lack the resources to do so. Those rights do not limit a lender’s recourse against us, and a sole guaranty does not itself increase our ownership interest. Guaranty payments could materially reduce our liquidity and borrowing capacity.
If Edge Node fails to fund required contributions, or budgets remain unresolved, we may elect to provide member loans or other advances. Although these advances are discretionary under the applicable provisions of the LLC Agreement, protecting existing investments and avoiding project defaults may create substantial commercial pressure to fund them. Repayment will depend on available cash after operating expenses, debt service and reserves. Conversion of an unpaid loan into additional project economics would increase our exposure without providing cash recovery. These commitments and advances could materially adversely affect our financial condition and results of operations.
Member defaults, governance disputes and restrictions on distributions may disrupt the Joint Venture, increase costs and impair our ability to manage or realize value from our investment.
The Joint Venture depends on both members’ funding and performance, including Edge Node’s personnel, intellectual property and operational support. If Edge Node fails to fund a project and the applicable funding lapse provisions take effect, a reallocation of project economics may increase our interest while leaving us with greater funding exposure. Contractual remedies and replacement operators may not prevent interruptions, disputes or losses. An uncured default by us may permit Edge Node to make advances carrying a priority return, restrict our discretion over the affected project and exercise its contractual put right, potentially increasing our obligations and reducing cash otherwise available to us.
Although we are the sole manager and majority member, Edge Node retains consent rights over specified matters. Disagreements may delay development, increase costs and require dispute resolution or additional advances. We may have to meet funding and guaranty obligations with outside resources while project cash remains unavailable. These circumstances could materially adversely affect project operations, our liquidity and the value of our investment.
Buyout and equity unwind provisions may create additional cash, debt and share issuance requirements at an unfavorable time.
The LLC Agreement permits us to acquire Edge Node’s interest in the Joint Venture following specified events and permits Edge Node to require us to acquire that interest following an uncured default, subject to contractual timing and closing conditions. The applicable pricing provisions could result in substantial consideration even when our liquidity is constrained or a project is underperforming. Payment in cash could reduce resources available for operations, payment through a promissory note could increase indebtedness and future debt service, and payment in our common stock could cause additional dilution and potential selling pressure. There can be no assurance that the available payment alternatives or contractual protections will allow us to complete a buyout without materially adverse financial consequences.
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We have a limited operating history in AI infrastructure, and we may not successfully develop, operate or scale this business or achieve anticipated returns.
Our AI infrastructure business represents a significant expansion of our operations into the ownership, financing and operation of GPU compute infrastructure. We have a limited operating history in this business, and our historical financial results do not provide a reliable basis for evaluating its future performance. Our success will depend on our ability, together with our joint venture partner and service providers, to acquire suitable equipment and sites, obtain financing, deploy and operate compute capacity, secure customers and manage operating costs. These activities require specialized technical, commercial and operational capabilities, and we may be unable to recruit or retain qualified personnel or obtain adequate support from third parties on acceptable terms.
Developing this business may require substantial capital expenditures and management attention before meaningful revenue or positive cash flow is generated. Our assumptions regarding customer demand, deployment schedules, pricing, operating expenses and investment returns may prove inaccurate. Rapid expansion could also strain our personnel, financial resources, reporting systems and internal controls. We may incur substantial costs without achieving sufficient utilization, revenue or profitability, and we may need to modify, delay or abandon portions of our strategy. Any failure to execute this strategy successfully could materially adversely affect our business, financial condition, and results of operations.
Delays in obtaining equipment, financing, power or other infrastructure could postpone the commencement of AI compute services, increase our costs and impair our ability to satisfy customer commitments.
Our ability to generate revenue from AI infrastructure depends on completing a series of preliminary activities, including securing sites and financing, acquiring GPUs and related equipment, obtaining sufficient electrical power and network connectivity, completing installation and commissioning, and satisfying applicable customer acceptance requirements. Even existing facilities may require upgrades, additional approvals or modifications before compute services can commence. We expect to depend on equipment manufacturers, distributors, utilities, telecommunications providers, contractors and other third parties whose performance we do not control. Equipment shortages, delivery delays, installation difficulties, utility constraints, permitting issues or failures to obtain financing could delay deployment or increase project costs. Delays at one stage may prevent completion of other stages and may require us to renegotiate customer, supplier or financing arrangements. We may incur interest, site expenses, personnel costs and other obligations before the affected equipment generates revenue. Depending on the applicable contractual terms, deployment delays could also result in customer cancellations, refund obligations, damages or other remedies. These developments could reduce expected returns, impair our liquidity and materially adversely affect our results of operations.
Our AI infrastructure business may depend on a limited number of customers, and announced contract values may not translate into revenue, cash flow or profitability.
We expect our AI infrastructure business initially to depend on a limited number of customer relationships. The loss of a significant customer, a payment default or a material reduction in contracted capacity could therefore have a disproportionate effect on our business. A customer’s financial condition, funding needs or business strategy may change, and the financial resources or reputation of its investors do not guarantee the customer’s performance of its obligations.
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Announced aggregate contract values represent expected amounts associated with services to be provided over time and should not be viewed as revenue already earned, cash available for general corporate purposes or expected profit. Actual revenue and collections will depend on the applicable contract terms, commencement and delivery of services, performance and customer payment obligations. Customer deposits may be applied against future fees and may be subject to contractual restrictions or refund requirements. Depending on the applicable agreement, failures to meet deployment deadlines, availability standards or other requirements could give rise to service credits, fee reductions, termination rights or other remedies.
If a significant customer defaults, terminates an agreement or disputes its obligations, we may be unable to replace that customer promptly or on comparable terms. Equipment configured for a particular customer may require additional investment or downtime before it can serve another customer. We could consequently experience reduced revenue while continuing to incur financing and operating costs, materially adversely affecting our liquidity and results of operations.
Rapid technological change, competition and changes in AI computing demand could reduce the utilization, pricing and value of our planned GPU infrastructure.
AI computing technology and the markets for training and inference services are evolving rapidly. New generations of GPUs, alternative computing architectures, more efficient AI models and changes in software may reduce demand for the equipment we plan to acquire or permit customers to obtain equivalent performance at lower cost. Demand for equipment configurations or deployment locations may also change. We may be required to replace or upgrade equipment sooner than anticipated, and newer equipment may require additional power, cooling, networking or other infrastructure investments.
We may face competition from large cloud providers, specialized compute providers, data center operators and customers that develop their own infrastructure. Competitors may have greater financial resources, lower operating costs, preferential access to equipment or the ability to offer integrated services at prices we cannot match. Increased industry capacity, slower adoption of AI applications or improvements in computing efficiency could reduce utilization and market pricing.
Our AI investment returns are expected to depend in part on assumptions regarding equipment useful lives, utilization, pricing and residual values. If these assumptions prove incorrect, we may generate insufficient cash flow to recover our investment or satisfy associated obligations. Declining equipment values could also reduce collateral coverage, limit refinancing options and result in impairment charges or losses on disposition. These developments could materially adversely affect our financial condition and results of operations.
Our AI infrastructure strategy requires substantial capital, and financing obligations and guarantees could expose us to losses exceeding our investment in individual projects.
Acquiring GPUs, developing sites and maintaining AI infrastructure require substantial capital. Our ability to execute our strategy depends in part on obtaining equipment financing, customer prepayments and other funding on acceptable terms. Anticipated financing may not be available on favorable terms if at all, may provide lower advance rates than expected or may require additional equity, collateral, reserves, guarantees or restrictive covenants. Customer deposits and project financing may be insufficient to cover equipment costs, construction overruns, operating expenses or working capital needs.
Our arrangements with Edge Node contemplate capital contributions and guarantees supporting equipment financing, including circumstances in which we may provide a sole guarantee, as discussed above. Accordingly, using separate project entities does not necessarily limit our exposure to the amount invested in a particular project. If a project cannot meet its obligations, we could be required to fund a shortfall or make payments under a guarantee. Our ability to recover amounts from Edge Node or project assets may be limited.
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Debt service and other fixed obligations may continue during deployment delays, customer defaults or periods of low utilization. Financing arrangements may also restrict distributions, require cash reserves or permit lenders to exercise remedies against collateral following a default. If additional funding is required, we may need to sell assets, reduce other investments or issue securities that dilute existing stockholders. An inability to obtain sufficient funding or meet our financing obligations could materially adversely affect our business, liquidity and financial condition.
Our dependence on Edge Node and other strategic partners could constrain our operations, require additional capital or prevent us from realizing the anticipated benefits of our AI infrastructure investments.
We expect to conduct our principal AI infrastructure initiative through Forum Edge AI LLC, our joint venture with Edge Node Inc. Although we hold a majority interest and serve as sole manager, the joint venture arrangements provide Edge Node with consent rights over certain actions and include capital contribution requirements, funding-default remedies, exclusivity provisions and buyout rights. These provisions may constrain our flexibility, delay decisions or require us to commit resources at times or on terms we would not otherwise choose.
Our interests and priorities may differ from those of Edge Node. Edge Node could fail to provide required capital, experience financial difficulties, lose key personnel or fail to perform operational or other responsibilities. We may need to provide additional funding or arrange replacement services to preserve a project’s value, and contractual remedies may not fully compensate us for resulting losses. Disputes could disrupt operations, delay expansion and result in substantial legal expenses or a restructuring or termination of the relationship.
Our strategy also depends on access to third-party technology, operating expertise, sites and commercial relationships. Replacing a key partner or service provider could be costly, time-consuming or impracticable. Restrictions on pursuing opportunities with other parties could further limit our alternatives. The exercise of put or call rights could change our ownership or require additional financing, while equity issuances contemplated by our arrangements could dilute existing stockholders. These risks could materially adversely affect our ability to develop the business and realize anticipated investment returns.
Power interruptions, equipment failures, cybersecurity incidents and other disruptions could impair our AI compute services and expose us to significant costs and liabilities.
AI compute infrastructure depends on reliable electrical power, cooling, network connectivity, hardware and software. Utility outages, voltage fluctuations, cooling failures, equipment defects, telecommunications interruptions, fires, severe weather and other events could damage equipment or interrupt service. Deploying infrastructure across multiple locations may increase the complexity of monitoring, maintenance, physical security and incident response. Redundant systems and contingency arrangements may not prevent or adequately mitigate disruptions.
Our facilities and systems, and those of our partners and service providers, may also be subject to ransomware, unauthorized access, denial-of-service attacks, supply-chain compromises and other cybersecurity threats. An incident could interrupt customer workloads, compromise sensitive information, damage equipment or require substantial investigation, remediation and restoration costs. Our ability to prevent or respond to incidents may depend on third parties whose security practices and response capabilities we do not control.
Service interruptions or security incidents could result in lost revenue, contractual remedies, litigation, regulatory scrutiny and reputational harm. Customers may reduce their use of our services or decline to renew agreements. Insurance coverage and contractual limitations of liability may be unavailable or insufficient to cover our losses. Any significant disruption could materially adversely affect our business, financial condition and results of operations.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
There have been no sales of unregistered securities during the quarter ended September 30, 2026 which have not previously been reported in a Current Report on Form 8-K, except as disclosed below:
On September 16, 2026, the Company issued a family office 14,600 shares of restricted common stock of the Company in consideration for services agreed to be rendered by the family office in connection with events associated with the Company’s tokenization of RWAs over a period of six months.
Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. The recipient of the securities represented its intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. The recipient of the foregoing transaction either received adequate information about us or had access, through its relationship with us, to such information.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table presents information regarding our repurchases of shares of our common stock on a monthly basis during the three months ended September 30, 2026:
| Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs (in thousands) (1) | ||||||||||||
| July 1, 2026 – July 31, 2026 | 329,499 | $ | 5.88 | 9,515,782 | $ | 20,549 | ||||||||||
| August 1, 2026 – August 31, 2026 | 140,311 | $ | 5.160 | 9,656,093 | $ | 19,825 | ||||||||||
| September 1, 2026 – September 30, 2026 | - | $ | - | - | $ | 19,825 | ||||||||||
| Total | 469,810 | $ | 19,825 | |||||||||||||
| (1) | On August 22, 2025, the Board of Directors authorized and approved a stock repurchase program for up to $250.0 million of the currently outstanding shares of the Company’s common stock, which was amended on June 29, 2026, to extend and decrease the repurchase program. Subject to any future extension in the discretion of the Board of Directors, the repurchase program is scheduled to expire upon the earliest of (i) June 30, 2027, (ii) when a maximum of $100.0 million of the Company’s common stock has been repurchased, or (iii) when such program is discontinued by the Board of Directors. From August 22, 2025 to December 31, 2025, the Company repurchased an aggregate of 2,099,472 shares of common stock for $46,211,259 inclusive of fees, at an average price of $22.01 per share, which have been cancelled. From January 1, 2026 through September 30, 2026, the Company repurchased an aggregate of 7,416,310 shares of common stock for $33,240,072, inclusive of fees, at an average price of $4.49 per share, which have been cancelled. Also includes 140,311 shares of common stock surrendered by employees to satisfy tax withholding obligations arising upon the vesting of equity awards during the quarter ended September 30, 2026. The Company subsequently cancelled these shares. The average price paid per share reflects the value attributed to the shares for purposes of satisfying the applicable tax withholding obligations. These transactions were not made pursuant to a publicly announced share repurchase plan or program. |
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
| (c) | Rule 10b5-1 Trading Plans. Our directors and executive officers may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended September 30, 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f)) |
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Item 6. Exhibits.
The following exhibits are filed herewith or incorporated by reference herein:
| Exhibit No. | Description | |
| 3.1 | Second Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on November 12, 2020 and incorporated by reference herein). | |
| 3.2 | Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of Delaware on December 15, 2022 (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on December 16, 2022 and incorporated by reference herein). | |
| 3.3 | Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of Delaware on February 26, 2024 (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on February 28, 2024 and incorporated by reference herein). | |
| 3.4 | Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of Delaware on July 24, 2025 (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on July 24, 2025 and incorporated by reference herein). | |
| 3.5 | Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of Delaware on August 12, 2025 (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on August 13, 2025 and incorporated by reference herein). | |
| 3.6 | Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of Delaware on October 8, 2025 (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on October 8, 2025 and incorporated by reference herein). | |
| 3.7 | Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of Delaware on October 14, 2025 (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on October 15, 2025 and incorporated by reference herein). | |
| 3.8 | Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of Delaware on February 24, 2026 (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on February 26, 2026 and incorporated by reference herein). | |
| 3.9 | Fourth Amended and Restated Bylaws of the Company, effective as of February 11, 2026 (filed as Exhibit 3.9 to the registrant’s Annual Report on Form 10-K filed on April 1, 2026 and incorporated by reference herein). | |
| 3.10 | Certificate of Designations of the Company Establishing the Designations, Preferences, Limitations and Relative Rights of Its Series B Convertible Preferred Stock (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on October 3, 2024 and incorporated by reference herein). | |
| 10.1‡ # | Engine Sale and Purchase Agreement, dated as of July 13, 2026, between Aero Engine Solutions, Inc., as seller, and Eurus Aerospace Token I LLC, as buyer (filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on July 16, 2026 and incorporated by reference herein). | |
| 10.2 ‡ # | Engine Sale and Purchase Agreement, dated as of July 27, 2026, between Aero Engine Solutions, Inc., as seller, and Eurus Aerospace Token I LLC, as buyer filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on July 30, 2026 and incorporated by reference herein). | |
| 10.3‡ # | First Amended and Restated Limited Liability Company Agreement of Forum Edge AI, LLC, dated as of October 2, 2026, by and between Forum Markets, Incorporated and Edge Node Inc. (filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on October 5, 2026 and incorporated by reference herein). | |
| 31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. | |
| 31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act. | |
| 32.1** | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act. | |
| 32.2** | Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act. | |
| 101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set |
| * | Filed herewith. |
| ** | Furnished herewith. |
| ‡ | Certain confidential portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) are the type that the registrant customarily and actually treats as private or confidential. |
| # | Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FORUM MARKETS, INCORPORATED | ||
| Date: November 13, 2026 | By: | /s/ McAndrew Rudisill |
| McAndrew Rudisill | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 13, 2026 | By: | /s/ John Saunders |
| John Saunders | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
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