40-F
Defi Technologies, Inc. (DEFT)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
40-F
☐
Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934
or
☒
Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2025
Commission
File Number 001-41056
DEFI
TECHNOLOGIES INC.
**(**Exact Name of Registrant as Specified in its Charter)
| Ontario, Canada | 6199 | N/A |
|---|
| (Province or Other Jurisdiction of<br> Incorporation or Organization | (Primary Standard Industrial<br> Classification Code Number) | (I.R.S. Employer <br><br>Identification Number) |
Suite
2400, 333 Bay Street
Toronto,
ON M5H 2T6
+1
(323) 537-7681
(Address and Telephone number of Registrant’s principal executive offices)
Cogency
Global Inc.
122
East 42nd Street, 18th Floor
New
York, NY 10168
(800)
221-0102
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)
Securities
registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (“Exchange Act”).
| Title<br>of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|
| Common Shares | DEFT | The Nasdaq Stock Market LLC |
Securities
registered or to be registered pursuant to Section 12(g) of the Exchange Act. None
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Exchange Act. None
For
annual reports, indicate by check mark the information filed with this Form:
| ☒<br>Annual Information Form | ☒ Audited Annual Financial Statements |
|---|
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 385,827,975 common shares of the Registrant were outstanding as of December 31, 2025.
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.
☒
Yes ☐ No
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).
☒
Yes ☐ No
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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. ☐
| ^†^ | The<br>term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board<br>to its Accounting Standards Codification after April 5, 2012. |
|---|
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Exchange Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
EXPLANATORY
NOTE
Defi Technologies Inc. (the “Company”, the “Registrant”, “DeFi Technologies”, “we” or “us”) is a Canadian issuer that is permitted, under the multijurisdictional disclosure system adopted in the United States, to prepare this Annual Report on Form 40-F (this “Annual Report”) pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in accordance with Canadian disclosure requirements, which are different from those of the United States. The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”). Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16(b) of the Exchange Act pursuant to Rule 3a12-3 thereunder.
This Annual Report is incorporated by reference into the Registration Statement on Form F-10 of the Registrant, which was originally filed with the Securities and Exchange Commission (the “SEC”) on September 4, 2025 (File No. 333-290048), as amended or supplemented.
1
CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report and the documents incorporated by reference herein contain or incorporate by reference “forward-looking information” with respect to the Company. Forward-looking information is characterized by words such as “plan”, “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may”, “will”, “could” or “should” occur, or by discussions of strategy, and includes any guidance and forecasts appearing in this Annual Report or in the documents incorporated by reference in this Annual Report. In order to give such forward-looking information, the Company has made certain assumptions about its business, operations, the economy and the decentralized finance industry in general. In this respect, the Company has assumed that its operations will remain consistent with management’s expectations, contracted parties will provide goods and services on agreed timeframes, required regulatory approvals will be received and maintained, no material adverse change will occur, and no significant events will occur outside of the Company’s normal course of business. No assurance can be given that the expectations in any forward-looking information will prove to be correct and, as such, the forward-looking information included in this Annual Report should not be unduly relied upon.
Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, or other statements that are not statements of fact. Forward-looking information is based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those described in, or implied by, the forward-looking information.
Except for statements of historical fact relating to DeFi Technologies, information contained in this Annual Report constitutes forward-looking information, including but not limited to, statements with respect to:
| ● | financial,<br> operational and other projections and outlooks as well as statements or information concerning<br> future operation plans, objectives, performance, revenues, growth, acquisition strategies,<br> profits or operating expenses of the Company and its subsidiaries; |
|---|---|
| ● | details<br> and expectations regarding the Company’s investment strategy |
| --- | --- |
| ● | details<br> and expectations regarding the Company’s investments in the decentralized finance (“DeFi”)<br> industry and the Company’s equity investments in digital assets; |
| --- | --- |
| ● | expectations<br> regarding revenue growth due to changes in the Company’s business strategy; |
| --- | --- |
| ● | expansion<br> and growth of the Company’s various business lines; |
| --- | --- |
| ● | development<br> of Exchange Traded Products (“ETPs”) and partnerships and joint ventures with<br> other companies; |
| --- | --- |
| ● | listing<br> of ETPs; |
| --- | --- |
| ● | geographic<br> expansion of the Company and its subsidiaries; |
| --- | --- |
2
| ● | identifying<br> and capitalizing on low-risk arbitrage opportunities within the digital asset market; |
|---|---|
| ● | investment<br> performance of ETPs, DeFi protocols and digital assets underlying ETPs and portfolio companies<br> that the Company has invested in; |
| --- | --- |
| ● | future<br> development of laws and regulations governing the DeFi industry; |
| --- | --- |
| ● | requirements<br> for additional capital and future financing options; |
| --- | --- |
| ● | publishing<br> and marketing plans; |
| --- | --- |
| ● | the<br> availability of attractive investments that align with the Company’s investment strategy; |
| --- | --- |
| ● | future<br> outbreaks of infectious diseases; |
| --- | --- |
| ● | the<br> impact of climate change; and |
| --- | --- |
| ● | other<br> expectations of the Company. |
| --- | --- |
This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in, or implied by, the forward-looking information, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward- looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on forward-looking information. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company’s expected financial and operational performance and its plans and objectives, and may not be appropriate for other purposes. See the section entitled “Risk Factors” in the Registrant’s Annual Information Form for the year ended December 31, 2025, attached hereto as Exhibit 99.1, and under similar headings in other filings that the Registrant has made and may make with applicable securities authorities in the future, for additional risk factors that could cause results to differ materially from forward-looking information.
All forward-looking information contained in this Annual Report and the documents incorporated by reference in this Annual Report is given as of the date hereof or thereof, as the case may be, and is based upon the opinions and estimates of management and information available to management of the Company as of the date hereof or thereof. The Company undertakes no obligation to update or revise the forward-looking information contained in this Annual Report and the documents incorporated by reference herein, whether as a result of new information, future events or otherwise, except as required by applicable laws.
3
DIFFERENCES
IN UNITED STATES AND CANADIAN REPORTING PRACTICES
The Registrant is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this Annual Report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Company has prepared its financial statements, which are filed as Exhibit 99.2 to this Annual Report and incorporated by reference herein, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and thus, such financial statements may not be comparable to financial statements of United States companies.
CURRENCY
Unless otherwise indicated, all amounts in this Annual Report on Form 40-F are in Canadian dollars.
ANNUAL
INFORMATION FORM
The Registrant’s Annual Information Form for the year ended December 31, 2025 is attached as Exhibit 99.1 to this Annual Report on Form 40-F and is incorporated by reference herein.
AUDITED
ANNUAL FINANCIAL STATEMENTS
The Registrant’s audited annual consolidated financial statements for the year ended December 31, 2025, including the report of the independent registered public accounting firm with respect thereto, are attached as Exhibit 99.2 to this Annual Report on Form 40-F and are incorporated by reference herein.
MANAGEMENT’S
DISCUSSION AND ANALYSIS
The Registrant’s Management’s Discussion and Analysis for the year ended December 31, 2025 is attached as Exhibit 99.3 to this Annual Report on Form 40-F and is incorporated by reference herein.
DISCLOSURE
CONTROLS AND PROCEDURES
As of the end of the period covered by this Annual Report, the Registrant carried out an evaluation, under the supervision of the Registrant’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Registrant’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Registrant’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Annual Report, the Registrant’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Registrant in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, due to the material weakness in internal control over financial reporting identified below under the heading “Restatement of Previously Issued Condensed Interim Consolidated Financial Statements due to Change in Valuation and Classification of Equity Investments in Digital Assets, at FVTPL.”
INTERNAL
CONTROL OVER FINANCIAL REPORTING
Management’sReport on Internal Control Over Financial Reporting
Management of the Registrant, under the supervision of the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining an adequate system of “internal control over financial reporting” as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Management, including the Chief Executive Officer and the Chief Financial Officer, have assessed the effectiveness of the Registrant’s internal control over financial reporting in accordance with Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management, including the Chief Executive Officer and the Chief Financial Officer, have determined that the Registrant’s internal control over financial reporting was not effective as of December 31, 2025 because of the material weakness identified below under the heading “Restatement of Previously Issued Condensed Interim Consolidated Financial Statements due to Change in Valuation and Classification of Equity Investments in Digital Assets, at FVTPL.”
Restatementof Previously Issued Condensed Interim Consolidated Financial Statements Due to Change in Valuation and Classification of Equity Investmentsin Digital Assets, at FVTPL
During our audit of the financial statements for the year ended December 31, 2024, we determined that locked tokens held by the Company were incorrectly accounted for in the Company’s June 30, 2024 and September 30, 2024 financial statements (the “Affected Periods”). The Company filed restated financial statements with respect to the Affected Periods on April 14, 2025.
4
During the quarter ended June 30, 2024, the Company acquired interests in two private investment funds which interests represent indirect interests in 1,614,608.41 Solana and 931,445.6 Avalanche tokens (or the proceeds from the sale of such tokens) acquired by the investment funds from a bankrupt company.
The Company reassessed the application of IFRS on the accounting for equity investments, at fair value through profit and loss (“FVTPL”) and determined that the appropriate accounting treatment is to classify the investments in the funds directly as financial assets as defined by IAS 32 and within the scope of IFRS 9. This is because such investments represent an equity interest in another entity rather than a direct interest in the underlying tokens. The tokens owned by the funds are subject to a lock up schedule extending to 2028 and, as a result, the Company has classified its equity investments as current and non-current reflecting the value of tokens which will unlock in the coming twelve months (current) and those that will unlock between 2027 through 2028 (non-current).
The investments are accounted for at FVTPL. Fair value is measured in accordance with IFRS 13 and includes a discount for lack of marketability (“DLOM”) on the locked tokens underlying the investments. The DLOM at December 31, 2024 is $86,517,729 (December 31, 2025: $32,811,983). This discount will amortize to zero by 2028 when the final tokens are unlocked.
The re-filed financial statements for the quarter ended June 30, 2024 include the following adjustments: a) application of a DLOM to reduce total assets and equity by $72,081,210; b) reclassification of $89,716,119 of current assets to non-current assets; and c) increase in the three and six months ended June 30, 2024 net loss of $72,616,392 and $72,616,392, respectively, due to the application of the DLOM.
The re-filed financial statements for the quarter ended September 30, 2024 include the following adjustments: a) application of a DLOM to reduce total assets and equity by $75,469,830; b) reclassification of $113,668,367 of current assets to non-current assets; and c) increase in the three and nine months ended September 30, 2024 net loss of $2,853,438 and $75,469,830, respectively, due to the application of the DLOM.
Due to the accounting error, the Company’s management has concluded that there was a material weakness in its internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements and Management’s Discussion and Analysis will not be prevented or detected on a timely basis.
Remediationof Material Weakness in Internal Control over Financial Reporting
We continue to work to fully remediate the above material weakness and are taking steps to strengthen our internal control over financial reporting. We are taking appropriate and reasonable steps to remediate this material weakness through the implementation of a new ERP system (NetSuite) and new cryptocurrency subledger (Cryptio). The implementation of both of these new IT systems commenced during our third quarter of 2025. We expect to conduct a parallel run with NetSuite and Cryptio with our legacy system during the first quarter of 2026 before going live. During the year ended December 31, 2025, we created a new accounting role for a dedicated accountant to oversee our digital assets and brought on an outsourced solution to process the large volume of transactions for our ETPs. During the year ended December 31, 2025, we engaged a Big Four CPA firm to assist us with internal control documentation and walkthroughs to help strengthen our control environment.
Management expects to continue to review and make necessary changes to the overall design of our internal control environment, as well as policies and procedures to improve the overall effectiveness of our internal control over financial reporting. We believe these measures, and others that may be implemented, will remediate the material weakness in internal control over financial reporting described above.
The material weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
5
Limitationson Effectiveness of Controls
The Company’s internal control over financial reporting may not prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.
The design of any system of controls is also based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions in the Company’s business, including increased complexity resulting from the Company’s growth and acquisitions, or 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 on a timely basis, notwithstanding the remediation efforts described above.
Changesin Internal Control Over Financial Reporting
Management has not identified any change in the Registrant’s internal control over financial reporting that occurred during the fiscal year ended December 31, 2025, that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting, other than the remediation activities described above.
ATTESTATION
REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
As of the fiscal year ended December 31, 2025, the Registrant qualifies as an “emerging growth company” under Section 3 of the Exchange Act, as a result of enactment of the Jumpstart Our Business Startups Act (the “JOBS Act”). Under the JOBS Act, “emerging growth companies” are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002, which generally requires that a public company’s registered public accounting firm provide an attestation report relating to management’s assessment of internal control over financial reporting. The Registrant qualifies as an “emerging growth company” and therefore has not included in, or incorporated by reference into, this Annual Report such an attestation report as of the end of the period covered by this Annual Report.
AUDIT
COMMITTEE
Identificationof the Audit Committee
Our Board of Directors has a separately designated standing Audit Committee established for the purpose of overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company in accordance with Section 3(a)(58)(A) of the Exchange Act and Rule 5602(c) of the NASDAQ Stock Market Rules. The following individuals currently serve on the Company’s Audit Committee: Mikael Tandetnik, Jonathan Dimitry and Chase Ergen. All of the members of the Audit Committee are considered independent based on the criteria for independence prescribed by Rule 10A-3 of the Exchange Act and Rule 5605(a)(2) of the NASDAQ Stock Market Rules.
Our Board of Directors has also determined that each member of the Audit Committee is financially literate, meaning each such member has the ability to read and understand a set of financial statements that present a breadth and level of complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
6
AuditCommittee Financial Expert
Our Board of Directors has determined that Jonathan Dimitry qualifies as an audit committee financial expert (as defined in Item 407(d)(5)(ii) of Regulation S-K under the Exchange Act and Rule 5605(c)(2)(A) of the NASDAQ Stock Market Rules) and is independent (as determined under Exchange Act Rule 10A-3 and Rule 5605(a)(2) of the NASDAQ Stock Market Rules).
The SEC has indicated that the designation or identification of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose any duties, obligations or liability on such person that are greater than those imposed on members of the audit committee and the board of directors who do not carry this designation or identification, or affect the duties, obligations or liability of any other member of the audit committee or board of directors.
CODE
OF ETHICS
The Company has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to its directors, officers and employees and other personnel that the Company may determine should be subject to the Code, such as contractors or consultants. The Code is posted on the Company’s website at https://www.defi.tech/investor-relations. The Code meets the requirements for a “code of ethics” within the meaning of that term in General Instruction 9(b) of Form 40-F.
All waivers of the Code with respect to any of the Company’s directors and executive officers covered by it will be promptly disclosed as required by applicable securities rules and regulations. Since adopted by the Company, and until December 31, 2025, the Company did not waive or implicitly waive any provision of the Code with respect to any of the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar function.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The following table sets out the fees billed to the Registrant by HDCPA Professional Corporation for professional services rendered for the fiscal periods ended December 31, 2025 and December 31, 2024. During this period, HDCPA Professional Corporation (PCAOB ID No. 7298) was the Registrant’s only external auditor.
| (inCanadian dollars) | Year ended December 31, 2025 | Year ended December 31, 2024 | ||
|---|---|---|---|---|
| Audit Fees | $ | 526,353 | $ | 382,787 |
| Audit-Related Fees | $ | 161,458 | Nil | |
| Tax Fees | Nil | $ | 21,000 | |
| All Other Fees | $ | 25,000 | $ | Nil |
| Total Fees Paid | $ | 712,811 | $ | 403,787 |
PRE-APPROVAL
OF AUDIT SERVICES PROVIDED BY INDEPENDENT AUDITOR
The audit committee pre-approves all audit services to be provided to the Company by its independent auditors. The audit committee sets forth its pre-approval and/or confirmation of services authorized by the audit committee in the minutes of its meetings.
OFF-BALANCE
SHEET TRANSACTIONS
The Registrant does not have any off-balance sheet transactions that have or are reasonably likely to have a current or future effect on the Registrant’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
7
CONTRACTUAL
OBLIGATIONS
The information provided under the heading “Management’s Discussion and Analysis - Liquidity and Capital Resources” contained in Exhibit 99.3 is incorporated by reference herein.
NASDAQ
CORPORATE GOVERNANCE PRACTICES
The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act and its common shares are listed on the Cboe Canada Exchange (formerly NEO Exchange Inc.) and the Nasdaq Capital Market (“Nasdaq”). Nasdaq Marketplace Rule 5615(a)(3) permits a foreign private issuer to follow its home country practices in lieu of certain requirements of the Nasdaq Listing Rules. A foreign private issuer that follows home country practices in lieu of certain corporate governance provisions of the Nasdaq Listing Rules must disclose each Nasdaq corporate governance requirement that it does not follow and include a brief statement of the home country practice the issuer follows in lieu of the Nasdaq corporate governance requirement(s), either on its website or in its annual filings with the SEC. A description of the significant ways in which the Company’s corporate governance practices differ from those followed by domestic companies pursuant to the applicable Nasdaq Listing Rules is available on the Company’s website at https://www.defi.tech/investor-relations.
NOTICES
PURSUANT TO REGULATION BTR
The Company was not required by Rule 104 of Regulation BTR to send any notices to any of its directors or executive officers during the fiscal year ended December 31, 2025.
RECOVERY
OF ERRONEOUSLY AWARDED COMPENSATION
The Registrant has adopted a compensation recovery policy (the “Clawback Policy”) as required by Nasdaq listing standards and pursuant to Rule 10D-1 of the Exchange Act. A copy of the Clawback Policy is attached hereto as Exhibit 97.1.
At no time during or after the fiscal year ended December 31, 2025, was the Registrant required to prepare an accounting restatement that required recovery of erroneously awarded compensation pursuant to the Clawback Policy. As of December 31, 2025, there was no outstanding balance of erroneously awarded compensation to be recovered from the application of the Clawback Policy to a prior restatement.
MINE
SAFETY DISCLOSURE
None.
DISCLOSURE
REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
UNDERTAKING
AND CONSENT TO SERVICE OF PROCESS
A.Undertaking
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.
B.Consent to Service of Process
The Registrant has previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this report arises.
Any change to the name or address of the agent for service of process of the Registrant shall be communicated promptly to the SEC by an amendment to the Form F-X referencing the file number of the Registrant.
8
EXHIBIT
INDEX
Exhibits 99.1, 99.2, 99.3 and 99.8 of this Annual Report on Form 40-F are incorporated by reference into the Registration Statement on Form F-10 of the Registrant, which was originally filed with the SEC on September 4, 2025 (File No. 333-290048), as amended or supplemented.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DEFI TECHNOLOGIES INC. | |
|---|---|
| By: | /s/ Johan Wattenström |
| Name: | Johan Wattenström |
| Title: | Chief Executive Officer |
Date: April 2, 2026
10
Exhibit 97.1
DEFI TECHNOLOGIES, INC.
COMPENSATION RECOVERY POLICY
(Adopted and approved on May 1, 2025)
| 1. | Purpose |
|---|
DeFi Technologies, Inc. (the “Company”) is committed to promoting high standards of honest and ethical business conduct and compliance with applicable laws, rules and regulations. As part of this commitment, the Company has adopted this Compensation Recovery Policy (this “Policy”). This Policy is designed to comply with the requirements of Section 10D of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), Rule 10D-1 promulgated thereunder and the rules of the national securities exchange on which the Company’s securities are traded and explains when the Company will pursue recovery of Incentive Compensation awarded or paid to a Covered Person. Please refer to Exhibit A attached hereto (the “Definitions Exhibit”) for the definitions of capitalized terms used throughout this Policy.
| 2. | Recovery of Recoverable Incentive Compensation |
|---|
In the event of a Restatement, the Company will pursue, reasonably promptly, recovery of all Recoverable Incentive Compensation from a Covered Person without regard to such Covered Person’s individual knowledge or responsibility related to the Restatement. Notwithstanding the foregoing, if the Company is otherwise required by this Policy to undertake a Restatement, the Company will not be required to recover the Recoverable Incentive Compensation if the Compensation Committee determines, after exercising a normal due process review of all the relevant facts and circumstances, that (a) a Recovery Exception exists and (b) it would be impracticable to seek such recovery under such facts and circumstances.
If such Recoverable Incentive Compensation was not awarded or paid on a formulaic basis, the Company will pursue recovery of the amount that the Compensation Committee determines in good faith should be recovered.
| 3. | Other Actions |
|---|
The Compensation Committee may, subject to applicable law, pursue recovery of Recoverable Incentive Compensation in the manner it chooses, including by pursuing reimbursement from the Covered Person of all or part of the compensation awarded or paid, by electing to withhold unpaid compensation, by set-off, or by rescinding or canceling unvested stock or option awards.
In the reasonable exercise of its business judgment under this Policy, the Compensation Committee may in its sole discretion determine whether and to what extent additional action is appropriate to address the circumstances surrounding a Restatement to minimize the likelihood of any recurrence and to impose such other discipline as it deems appropriate.
| 4. | No Indemnification or Reimbursement |
|---|
As required by applicable law, notwithstanding the terms of any other policy, program, agreement or arrangement, in no event will the Company or any of its affiliates indemnify or reimburse a Covered Person for any loss of Recoverable Incentive Compensation under this Policy and, to the extent prohibited by law, neither the Company nor any of its affiliates will pay premiums on any insurance policy that would cover a Covered Person’s potential obligations with respect to Recoverable Incentive Compensation under this Policy.
| 5. | Administration of Policy |
|---|
The Compensation Committee will have full authority to administer this Policy. The Compensation Committee will, subject to the provisions of this Policy and Rule 10D-1 of the Exchange Act, and the Company’s applicable exchange listing standards, make such determinations and interpretations and take such actions in connection with this Policy as it deems necessary, appropriate or advisable. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange Act, Rule 10D-1 thereunder and any applicable rules or standards adopted by the Securities and Exchange Commission or any national securities exchange on which the Company’s securities are listed. All determinations and interpretations made by the Compensation Committee will be final, binding and conclusive.
| 6. | Other Claims and Rights |
|---|
The requirements of this Policy are in addition to, and not in lieu of, any legal and equitable claims the Company or any of its affiliates may have or any actions that may be imposed by law enforcement agencies, regulators, administrative bodies, or other authorities. Further, the exercise by the Compensation Committee of any rights pursuant to this Policy will not impact any other rights that the Company or any of its affiliates may have with respect to any Covered Person subject to this Policy.
| 7. | Acknowledgement by Covered Persons; Condition to Eligibility for Incentive Compensation |
|---|
The Company will provide notice and seek acknowledgement of this Policy from each Covered Person, provided that the failure to provide such notice or obtain such acknowledgement will have no impact on the applicability or enforceability of this Policy. After the Effective Date, any grant of Incentive Compensation to a Covered Person will be deemed to have been made subject to the terms of this Policy, whether or not such Policy is specifically referenced in the documentation relating to such grant and this Policy shall be deemed to constitute an integral part of the terms of any such grant. All Incentive Compensation subject to this Policy will remain subject to this policy, even if already paid, until the Policy ceases to apply to such Incentive Compensation and any other vesting conditions applicable to such Incentive Compensation are satisfied.
-2-
| 8. | Amendment; Termination |
|---|
The Board or the Compensation Committee may amend or terminate this Policy at any time. In the event that Section 10D of the Exchange Act, Rule 10D-1 thereunder or the rules of the national securities exchange on which the Company’s securities are traded are modified or supplemented, whether by law, regulation or legal interpretation, such modification or supplement shall be deemed to modify or supplement this Policy to the maximum extent permitted by applicable law.
| 9. | Effectiveness |
|---|
Except as otherwise determined in writing by the Compensation Committee, this Policy will apply to any Incentive Compensation that is Received by a Covered Person on or after the Effective Date. This Policy will survive and continue notwithstanding any termination of a Covered Person’s employment with the Company and its affiliates.
| 10. | Successors |
|---|
This Policy shall be binding and enforceable against all Covered Persons and their successors, beneficiaries, heirs, executors, administrators, or other legal representatives.
-3-
Exhibit A
DEFI TECHNOLOGIES, INC.
COMPENSATION RECOVERY POLICY
DEFINITIONS EXHIBIT
“Applicable Period” means the three completed fiscal years of the Company immediately preceding the earlier of (i) the date the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes (or reasonably should have concluded) that a Restatement is required or (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare a Restatement. The “Applicable Period” also includes any transition period (that results from a change in the Company’s fiscal year) within or immediately following the three completed fiscal years identified in the preceding sentence.
“Board” means the Board of Directors of the Company.
“Compensation Committee” means the Company’s committee of independent directors responsible for executive compensation decisions, or in the absence of such a committee, a majority of the independent directors serving on the Board.
“Covered Person” means any person who is, or was at any time, during the Applicable Period, an Executive Officer of the Company. For the avoidance of doubt, a Covered Person may include a former Executive Officer that left the Company, retired, or transitioned to an employee role (including after serving as an Executive Officer in an interim capacity) during the Applicable Period.
“Effective Date” means May 1, 2025.
“Executive Officer” means the Company’s president, principal executive officer, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person (including an officer of the Company’s parent(s) or subsidiaries) who performs similar policy-making functions for the Company.
“Financial Reporting Measure” means a measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measure (including but not limited to, “non-GAAP” financial measures, such as those appearing in the Company’s earnings releases or Management Discussion and Analysis). Stock price and total shareholder return (and any measures derived wholly or in part therefrom) shall be considered Financial Reporting Measures.
A-1
“Recovery Exception” A recovery of Recoverable Incentive Compensation shall be subject to a “Recovery Exception” if the Compensation Committee determines in good faith that: (i) pursuing such recovery would violate the home country law of the jurisdiction of incorporation of the Company where that law was adopted prior to November 28, 2022 and the Company provides an opinion of home country counsel to that effect acceptable to the Company’s applicable listing exchange; (ii) the direct expense paid to a third party to assist in enforcing this Policy would exceed the Recoverable Incentive Compensation and the Company has (A) made a reasonable attempt to recover such amounts and (B) provided documentation of such attempts to recover to the Company’s applicable listing exchange; or (iii) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of 1986, as amended, and regulations thereunder.
“Incentive Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure. Incentive Compensation does not include any base salaries (except with respect to any salary increases earned wholly or in part based on the attainment of a Financial Reporting Measure performance goal); bonuses paid solely at the discretion of the Compensation Committee or Board that are not paid from a “bonus pool” that is determined by satisfying a Financial Reporting Measure performance goal; bonuses paid solely upon satisfying one or more subjective standards and/or completion of a specified employment period; non-equity incentive plan awards earned solely upon satisfying one or more strategic measures or operational measures; and equity awards that vest solely based on the passage of time and/or attaining one or more non-Financial Reporting Measures. Incentive Compensation includes any Incentive Compensation Received on or after May 1, 2025 pursuant to a preexisting contract or arrangement.
“Received” Incentive Compensation is deemed “Received” in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive Compensation award is attained, even if the payment or grant of the Incentive Compensation occurs after the end of that period.
“Recoverable Incentive Compensation” means the amount of any Incentive Compensation (calculated on a pre-tax basis) Received by a Covered Person during the Applicable Period that is in excess of the amount that otherwise would have been Received if the calculation were based on the Restatement. For Incentive Compensation based on (or derived from) stock price or total shareholder return where the amount of Recoverable Incentive Compensation is not subject to mathematical recalculation directly from the information in the applicable Restatement, the amount will be determined by the Compensation Committee based on a reasonable estimate of the effect of the Restatement on the stock price or total shareholder return upon which the Incentive Compensation was Received (in which case, the Company will maintain documentation of such determination of that reasonable estimate and provide such documentation to the Company’s applicable listing exchange).
“Restatement” means an accounting restatement of any of the Company’s financial statements filed with the Securities and Exchange Commission under the Exchange Act, or the Securities Act of 1933, as amended, due to the Company’s material noncompliance with any financial reporting requirement under U.S. securities laws, regardless of whether the Company or Covered Person misconduct was the cause for such restatement. “Restatement” includes any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (commonly referred to as “Big R” restatements), or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (commonly referred to as “little r” restatements).
A-2
Exhibit99.1
DEFITECHNOLOGIES INC.
ANNUALINFORMATION FORM
FORTHE FINANCIAL YEAR ENDED DECEMBER 31, 2025
Dated: April 2, 2026
TABLEOF CONTENTS
| EXPLANATORY NOTES AND CAUTIONARY STATEMENTS | 1 |
|---|---|
| CORPORATE STRUCTURE | 4 |
| GENERAL DEVELOPMENT OF THE BUSINESS | 5 |
| DESCRIPTION OF THE BUSINESS | 14 |
| Risk Factors | 25 |
| DIVIDENDS | 54 |
| DESCRIPTION OF SHARE CAPITAL | 54 |
| MARKET FOR SECURITIES | 55 |
| Escrowed securities | 56 |
| DIRECTORS AND OFFICERS | 56 |
| AUDIT COMMITTEE DISCLOSURE | 58 |
| PROMOTER | 60 |
| LEGAL PROCEEDINGS AND REGULATORY ACTIONS | 60 |
| INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 61 |
| TRANSFER AGENT AND REGISTRAR | 61 |
| MATERIAL CONTRACTS | 61 |
| INTERESTS OF EXPERTS | 61 |
| ADDITIONAL INFORMATION | 61 |
i
EXPLANATORY NOTES AND CAUTIONARY STATEMENTS
Explanatory Notes
In this Annual Information Form (the “AIF”), the term “Company” or “DeFi Technologies” refers to DeFi Technologies Inc. and its subsidiaries as a whole, unless otherwise specified or the context otherwise requires.
Information contained in this AIF is given as of December 31, 2025, being the date of the most recently completed financial year end of the Company, unless otherwise specifically stated.
Unless otherwise indicated, all currency amounts in this AIF and references to “$” are stated in U.S. dollars.
Market and industry data used throughout this AIF was obtained from various publicly available sources. Although the Company believes that these independent sources are generally reliable, the accuracy and completeness of such information is not guaranteed and has not been verified due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and the limitations and uncertainty inherent in any statistical survey of market size, conditions and prospects.
This AIF should be read in conjunction with the Company’s audited consolidated financial statements and management’s discussion and analysis for the financial year ended December 31, 2025. The financial statements and management’s discussion and analysis are available under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR+”) website at www.sedarplus.ca and on EDGAR at www.sec.gov/edgar. The Company’s financial statements are prepared in accordance with International Financial Reporting Standards.
1
Caution Regarding Forward-Looking Statements and Information
This AIF contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the U.S. Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the U.S. Securities Exchange Act of 1934, as amended and “forward-looking information” within the meaning of that term under Canadian securities laws. This information relates to future events or future performance and reflects the Company’s expectations and assumptions regarding such future events and performance. Forward-looking information and statements can be identified by the use of words such as, but not limited to, “plans”, “expects”, “project”, “predict”, “potential”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.
In particular, all statements, other than statements of historical facts, included in this AIF that address activities, events or developments that management of the Company expects or anticipates will or may occur in the future contain forward-looking information and statements, including but not limited to, statements with respect to:
| ● | financial,<br> operational and other projections and outlooks, as well as statements or information concerning<br> future operation plans, objectives, performance, revenues, growth, acquisition strategies,<br> profits or operating expenses of the Company and its subsidiaries; |
|---|---|
| ● | details<br> and expectations regarding the Company’s investments in the decentralized finance (“DeFi”)<br> industry and the Company’s Equity Investments in Digital Assets (as defined herein); |
| ● | expectations<br> regarding revenue growth due to changes in the Company’s business strategy; |
| ● | expansion<br> and growth of the Company’s Asset Management, Ventures and Infrastructure business<br> lines; |
| ● | development<br> of exchange traded products (“ETPs”) and partnerships, collaborations,<br> investments and joint ventures with other companies; |
| ● | growth<br> of assets under management (“AUM”); |
| ● | listing<br> of ETPs; |
| ● | identifying<br> and capitalizing on low-risk arbitrage opportunities within the digital asset market; |
| ● | digital<br> asset staking, lending or trading transactions; |
| ● | the<br> listing of Valour’s ETPs in Brazil; |
| ● | the<br> Company’s Normal Course Issuer Bid; |
| ● | Reflexivity<br> Research’s strategic partnerships; |
| ● | anticipated<br> lending and staking income and management fees charged on ETPs; |
| ● | hedging<br> activities; |
| ● | investment<br> performance of ETPs, DeFi protocols and digital assets underlying ETPs, and portfolio companies<br> that the Company has invested in; |
| ● | future<br> development of laws and regulations governing the DeFi industry; |
| ● | requirements<br> for additional capital and future financing options; |
| ● | publishing<br> and marketing plans; |
| ● | the<br> availability of attractive investments that align with the Company’s investment strategy; |
| ● | the Company’s ability to maintain compliance with the minimum required closing bid price for continued<br>listing on the Nasdaq Capital Market;<br> and |
| ● | other<br> expectations of the Company. |
2
Forward-looking information and statements involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Important factors that could cause actual results to differ materially from the Company’s expectations are described in the Company’s documents filed from time to time with the applicable regulatory authorities and such factors include, but are not limited to, risks related to the staking and lending of cryptocurrencies, DeFi protocol tokens, or other digital assets; risks relating to momentum pricing and volatility of cryptocurrencies, DeFi protocol tokens, and other digital assets; cybersecurity threats, security breaches and hacks; the relative novelty of cryptocurrency exchanges and other trading venues; regulatory risks; hedging risk; the U.S. classification of crypto assets and the Investment Company Act of 1940; the issuance of crypto ETPs in the EU and non-EU countries; risk related the Company’s Ventures portfolio exposure; risks associated with banks cutting off services to businesses that provide cryptocurrency related services; the impact of geopolitical events; the further development and acceptance of digital and DeFi networks; trade errors; dependence on investment manager; discretion as to distributions and timing of withdrawals; discretion as to form of payment; risks and uncertainties associated with custodians of digital assets; conditions on equity investments in digital assets; development and acceptance of the digital asset network; digital asset audit risk; risk of total loss of equity investment in digital assets; risk of loss, theft or destruction of cryptocurrencies; risks associated with the irrevocability of transactions; risks associated with the potential failure to maintain the cryptocurrency networks; risks associated with the potential manipulation of blockchain; risks that miners may cease operations; risks related to insurance; risks related to the concentration of investments; risks related to competition; risk related to investments in private issuers and illiquid securities; risks related to cash flow, revenue and liquidity; risk management; risks related to the Company’s dependence on management personnel; risks related to macro-economic conditions; risks related to the availability or opportunities and competition for investments; risks related the share prices of investments; risks related to additional financing requirements; risks related to the return on investments; failure to develop and execute successful investment or trading strategies; risks related to the management of the Company’s growth; social, political, environmental, and economic risks in the countries in which the Company’s investment interests are located; risks related to the due diligence process undertaken by the Company in connection with investment opportunities; risks related to exchange-rate fluctuations; risks related to non-controlling interests; risks related to changes in legislation and regulations; risks related to the fact the Company is likely a passive foreign investment company for U.S federal income tax purposes; risks associated with the Company’s limited operating history and no history of operating revenue and cash flow; risks associated with the Company having limited cash flow and funds in reserve which may not be sufficient to fund its ongoing activities at all times; risks associated with material weakness in the Company’s financial statements; risks related to the restatement of Company’s historical financial statements; lack of comprehensive accounting guidance for digital assets under IFRS accounting standards; risks associated with conflicts of interest; litigation risk; risks associated with the volatility of the Company’s common shares (“Common Shares”) market price and the Company’s ability to maintain compliance with the minimum required closing bid price for continued listing on the Nasdaq Capital Market; risks associated with the future dilution of shareholders interest in the Company; risks associated with the Company’s history of never paying dividends; and other risks described herein including under the heading “Risk Factors – Risks Relatingto the Business and Industry of the Company”.
When relying on forward-looking information and statements to make decisions, readers should ensure that the preceding information, the risks and uncertainties described in “Risk Factors” and the other contents of this AIF are all carefully considered. The forward-looking information and statements contained herein is current as of the date of this AIF, and, except as may be required by applicable law, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking information and statements contained herein to reflect any change in expectations, estimates and projections with regard thereto or any changes in events, conditions or circumstances on which any information is based. Readers should not place undue importance on such forward-looking information and statements and should not rely upon this information as of any other date. In addition to the disclosure contained herein, for more information concerning the Company’s various risks and uncertainties, please refer to the Company’s public filings available under its profile on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.
With regard to all information included herein relating to companies in the Company’s Venture portfolio, the Company has relied on information provided by the investee companies and on publicly available information disclosed by the respective companies.
3
CORPORATE STRUCTURE
Name, Address and Incorporation
The Company was incorporated in British Columbia pursuant to the Company Act (British Columbia) (the “BCCA”) under the name “Western Premium Resource Corp.” on April 14, 1986. On August 29, 1997, the Company filed a certificate of change of name under the BCCA and changed its name to “Zodiac Exploration Corp.” On December 18, 1998, the Company filed a certificate of change of name under the BCCA and changed its name to “Donnybrook Resources Inc.” On August 13, 2003, the Company filed a certificate of change of name under the BCCA and changed its name to “Rodinia Minerals Inc.” On November 3, 2009, the Company was continued under the Business Corporations Act (Ontario) (the “OBCA”), and on June 15, 2010, the Company filed articles of amendment under the OBCA and changed its name to “Rodinia Lithium Inc.” On August 16, 2016 the Company filed articles of amendment under the OBCA and changed its name to “Routemaster Capital Inc.” The Common Shares began trading on the TSX Venture Exchange (the “TSXV”) on June 30, 2010. The Company sold its sole subsidiary on December 29, 2015 and completed a change of business (“COB”) to a tier 2 investment issuer under the rules of the TSXV on September 16, 2016. On January 19, 2021, the Common Shares were uplisted to trade on the Cboe Canada, and on February 26, 2021, the Company filed articles of amendment under the OBCA and changed its name to “DeFi Technologies Inc.” On April 19, 2022, the Common Shares were listed for trading on the OTCQB Venture Market. On June 1, 2022, the Company filed articles of amendment under the OBCA and changed its name to “Valour Inc.” On July 10, 2023, the Company filed articles of amendment under the OBCA and changed its name to “DeFi Technologies Inc.” The Company’s head office and registered office is located at Suite 2400, 333 Bay Street, Toronto, Ontario, M5H 2T6.
As of the date of this AIF, the Company holds 100% of DeFi Holdings (Bermuda) Ltd., 100% of Reflexivity Research, LLC (“ReflexivityResearch”), 100% of Valour Inc. (“Valour Cayman”), 100% of Stillman Digital Inc. (“SDI”), 100% of Stillman Digital Bermuda Ltd. (“SDB” and together with SDI “Stillman Digital”). The following is an organizational chart illustrating the inter-corporate relationships between the Company and its subsidiaries and the jurisdiction of organization of each such entity, as at the date hereof:
Notes:
Valour Digital Securities Limited (“VDSL”), is owned by the charitable trust VLR Charitable Trust in Jersey, Channel Islands. VDSL entered into an arm’s-length relationship with Valour Cayman. pursuant to an arrangement agreement dated 5 April 2023, under which VDSL, as the Issuer, engaged Valour Cayman. as the Arranger to provide management, administration, and arrangement services. VDSL is incorporated in Jersey, Channel Islands, and subject to the regulations of the Jersey Financial Services Commission (JFSC). The principal activity of the Company is the issuance of a series of open-ended, limited recourse, non-interest bearing exchange-traded debt obligations. VDSL is consolidated in the financial statements of the Company even though it is legally owned by the VLR Charitable Trust.
4
VDSL and Valour Cayman are sometime referred to as “Valour”. Further detailed information about VDSL, is available in the EU VDSL Base Prospectus dated 15 May 2025 for the EU and the two UK VDSL Base Prospectuses dated 16 January 2026 for the UK. Further detailed information about Valour Cayman, is available in the Base prospectus dated January 23, 2026. These documents are freely available on the Valour’s website on the respective ETP pages: https://valour.com/products. pdf
DeFi Holdings (Bermuda) Ltd. was dissolved on January 30, 2026.
GENERAL DEVELOPMENT OF THE BUSINESS
The Company is a publicly listed company with its Common Shares listed for trading on Cboe Canada under the symbol “DEFI”, on The Nasdaq Stock Market LLC (the “Nasdaq”) under the symbol “DEFT”, and on FSE under the symbol “R9B” and with BDRs representing Common Shares listed for trading on B3 S.A. – Brazil, Bolsa, and Balcão (“B3”) under the symbol “DEFT31”. The Company operates five lines of business: Asset Management, Ventures, DeFi Alpha, Reflexivity Research and Stillman Digital, each of which is explained further below under their respective headings in “Description of Business”.
Three Year History
The following is a summary of the general development of the Company’s business over the three most recently completed financial years.
Subsequentto Fiscal 2025
On February 9, 2026, the Company announced the launch of the DEFT Valour Investment Opportunity (DVIO) Index.
On January 26, 2026, the Company announced that Valour has received UK regulatory approval and has begun offering select Valour ETPs to UK retail investors through the London Stock Exchange (“LSE”) starting January 26, 2026.
On March 23, 2026, the Company announced it may experience a delay in filings its annual financial statements, management’s discussion and analysis, and related CEO and CFO certifications for the year ended December 31, 2025 (the “Annual Filings”) relating solely to the possible timing of receipt of a SOC 2 Type 2 report from a material third-party counterparty that is relevant to the Company’s audit procedures. The Company also announced that, in connection with the potential delay and default in the completion of the Annual Filings, the Company has made an application to the Ontario Securities Commission (the “OSC”) as principal regulator, to approve a temporary management cease trade order (the “MCTO”) under National Policy 12-203 – Management Cease Trade Orders (“NP 12-203”).
Fiscal2025
Asset Management
On March 3, 2025, the Company announced that Valour launched four new ETPs on the Frankfurt Exchange: Valour Dogecoin (DOGE) EUR, Valour Aptos (APT) EUR, Valour Sui (SUI) EUR, and Valour Render (RENDER) EUR.
On July 17, 2025, the Company announced that Valour listed the following digital asset ETPs on the SIX Swiss Exchange: 1Valour Hedera (HBAR) Physical Staking and 1Valour Internet Computer (ICP) Physical Staking.
On September 18, 2025, the Company announced that Valour launched the world’s first physically backed Bitcoin staking ETP, 1Valour Bitcoin Physical Staking on the London Stock Exchange Main Market.
On September 25, 2025, the Company announced a strategic investment in Canada Stablecorp Inc. (“Stablecorp”) and a commercial collaboration centered on QCAD, Stablecorp’s Canadian dollar stablecoin product.
On December 4, 2025, the Company announced it received approval from B3 to list four digital asset ETPs, Valour Bitcoin (BTCV), Valour Ethereum (ETHV), Valour XRP (XRPV), and Valour SUI (VSUI), via BDR on ETP.
On December 15, 2025, the Company announced that B3 has approved the listing of BDRs representing the Company’s common shares for institutional investors in Brazil.
5
On December 16, 2025, the Company announced that Valour has received approval from B3 to list Valour Solana, a digital asset ETP providing exposure to the Solana network. On December 23, 2025, the Company announced that it has successfully launched BDRs representing its Nasdaq-listed common shares, together with five digital asset ETPs issued by Valour on B3.
In the year ending December 31, 2025 (“Fiscal 2025”) Valour announced the launch of the following ETPs on the Spotlight Stock Market.
| Date | ETP |
|---|---|
| 7<br> February 2025 | VALOUR<br> BITCOIN CASH (BCH) SEK |
| 7<br> February 2025 | VALOUR<br> UNUS SED LEO (LEO) SEK |
| 7<br> February 2025 | VALOUR<br> OKB (OKB) SEK |
| 7<br> February 2025 | VALOUR<br> POLYGON (POL) SEK |
| 7<br> February 2025 | VALOUR<br> ALGORAND (ALGO) SEK |
| 7<br> February 2025 | VALOUR<br> FILECOIN (FIL) SEK |
| 7<br> February 2025 | VALOUR<br> ARBITRUM (ARB) SEK |
| 7<br> February 2025 | VALOUR<br> STACKS (STX) SEK |
| 26<br> February 2025 | VALOUR<br> SUI (SUI) EUR |
| 26<br> February 2025 | VALOUR<br> APTOS (APT) EUR |
| 26<br> February 2025 | VALOUR<br> RENDER (RENDER) EUR |
| 26<br> February 2025 | VALOUR<br> DOGECOIN (DOGE) EUR |
| 7<br> May 2025 | VALOUR<br> CURVE (CRV) SEK |
| 7<br> May 2025 | VALOUR<br> LITECOIN (LTC) SEK |
| 18<br> June 2025 | VALOUR<br> MANTRA (OM) SEK |
| 18<br> June 2025 | VALOUR<br> TRON (TRX) SEK |
| 18<br> June 2025 | VALOUR<br> STELLAR (XLM) SEK |
| 18<br> June 2025 | VALOUR<br> TETHER GOLD (XAUT) SEK |
| 24<br> September 2025 | VALOUR<br> HYPERLIQUID (HYPE) SEK |
| 24<br> September 2025 | VALOUR<br> PEPE ( PEPE) SEK |
| 24<br> September 2025 | VALOUR<br> FLARE (FLR) SEK |
| 24<br> September 2025 | VALOUR<br> VIRTUALS (VIRTUAL) SEK |
| 24<br> September 2025 | VALOUR<br> OPTIMISM (OP) SEK |
| 24<br> September 2025 | VALOUR<br> STORY (IP) SEK |
| 24<br> September 2025 | VALOUR<br> IMMUTABLE (IMX) SEK |
| 24<br> September 2025 | VALOUR<br> QUANT (QNT) SEK |
| 24<br> September 2025 | VALOUR<br> THE GRAPH (GRT) SEK |
| 24<br> September 2025 | VALOUR<br> FLOKI (FLOKI) SEK |
| 24<br> September 2025 | VALOUR<br> THETA (THETA) SEK |
| 24<br> September 2025 | VALOUR<br> FOUR (FORM) SEK |
| 24<br> September 2025 | VALOUR<br> IOTA (IOTA) SEK |
| 22<br> October 2025 | VALOUR<br> SKY (SKY) SEK |
| 11<br> December 2025 | BULL<br> BITCOIN X2 VALOUR |
| 11<br> December 2025 | BULL<br> ETHEREUM X2 VALOUR |
In terms of assets, Valour and Genesis Global Capital LLC entered into that certain Master Loan Agreement. Pursuant to the MLA and the Loan Term Sheet dated September 9, 2022, GGC loaned $6,000,000 to Valour as an open term loan (the “Loan”) pursuant to the terms and conditions of the MLA and Term Sheet. As collateral for the Loan, Valour initially posted 362 BTC with Genesis, which was later increased to 475 BTC.
6
On January 19, 2023, Genesis and its group companies filed for bankruptcy protection in the US pursuant to a ‘Chapter 11’ bankruptcy filing under the US Bankruptcy Code and listed Valour as a creditor.
On June 26, 2024, the Court enters order granting motion for relief from stay and allowing Genesis to exercise set off rights permitting the parties to set off any Claimant Obligations ($6,000,000 loan plus interest) with corresponding Genesis obligations (475 BTC). According to the exhibit attached to the Order, Valour owed Genesis $5,990,953.70 in principal and $109,644 in interest against collateral of 475 BTC valued at $10,018,691, resulting in a claim by Valour against Genesis in the amount of $3,909,047 or 185.3 BTC. It was then agreed that the parties could set off leaving Valour with $3.9 million, which accounted for 185.3 BTC.
By the end of 2025, DeFi/Valour had already received 115.62 BTC. Since DeFi/Valour previously received a further 1.7 BTC in October 2025, the outstanding balance is 67.98 BTC. Accordingly, DeFi/Valour could expect to receive up to 67.98 BTC in the future.
Reflexivity Research
On June 10, 2025, the Company announced that Reflexivity Research entered into a strategic partnership with Beluga, designed to accelerate joint business development, enhance distribution reach, and deliver comprehensive research services across both retail and institutional services.
Partnerships and Acquisitions
On March 7, 2025, the Company announced it increased its stake in Neuronomics AG to 52.5%. The Company did not participate in a capital increase dated September 30, 2025 and thus its stake was diluted to 44.7%.
On April 21, 2025, the Company announced it entered into a strategic partnership with Valour, SovFi Inc. and the Nairobi Securities Exchange to design and establish the Kenya Digital Exchange.
On April 28, 2025, the Company announced Stillman Digital’s official integration with Talos, pursuant to which Talos users can directly access Stillman Digital’s regulated liquidity.
On May 15, 2025, the Company announced Valour Cayman partnered with GulfCap Investment Bank as its key transaction advisors for the proposed cross-listing of Valour’s ETPs on the Nairobi Securities Exchange.
On May 20, 2025, the Company announced a strategic joint venture and foundational equity investment in Fire Labs, Inc., a stablecoin infrastructure provider backed by America First Technology, pursuant to which the Company’s business lines will provide full-stack support and scale for the joint venture. In connection with the joint venture, the Company issued the Company issued 1,607,717 common shares of the Company, to CH Technical, in exchange for 19.2% of the capital of CH Technical.
On May 29, 2025, the Company announced a strategic collaboration with Misyon Bank and its crypto trading subsidiary Misyon Kripto to prepare for introducing a series of innovative digital investment products to Turkish Investors.
On August 25, 2025, the Company announced it secured an Advisory mandate with TenX Protocols. The Company was appointed as strategic advisor pursuant to an advisory agreement with TenX (the “Advisory Agreement”) and Stillman Digital was appointed as exclusive digital asset trading services provider pursuant to an exclusive OTC Agreement entered into with TenX.
On September 16, 2025, the Company announced a strategic investment in Continental Stablecoin Inc., driving development and advocacy for local currency stablecoins in Africa, notably including the developers of Nigeria’s premier regulated stablecoin infrastructure.
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On November 3, 2025, the Company announced that Stillman Digital joined as an early partner of GoDark, a purpose built institutional dark pool for digital assets developed.
Management and Board Changes
On March 3, 2025, the Company announced that it had appointed Chase Ergen to the board of directors of the Company (the “Board”). Mr. Ergen is an entrepreneur and the son of Charlie Ergen, founder of Dish Network, a subsidiary of Echostar (NASDAQ: SATS). Mr. Ergen’s appointment follows the resignation of Krisztian Toth from the Board who will transition into an advisory role.
On April 6, 2025, the Company announced the appointment of Andrew Forson as President of the Company and Chief Growth Officer of Valour.
On June 2, 2025, the Company appointed Manfred Knof as strategic advisor to the Company. Manfred Knof left the Company on 30 October 2025.
On November 17, 2025, the Company announced that Olivier Roussy Newton resigned as CEO and Executive Chairman of the Board and that Johan Wattenström, Co-Founder of Valour and the Company, has been appointed as Chief Executive Officer and Executive Chairman.
On December 22, 2025, the Company announced the resignation of Stefan Hascoet from the board or directors of the Company.
Financings and Listings
On May 12, 2025, the Common Shares began trading on the Nasdaq under the symbol “DEFT”.
On August 22, 2025, the Company announced its intention to commence a Normal Course Issuer Bid to buy back Common Shares through the facilities the Nasdaq, Cboe Canada, and/or other Canadian alternative trading platforms. The NCIB commenced on August 26, 2025, and will run through August 26, 2026 or on such earlier date as the NCIB is complete**.** The Company repurchased 1,235,900 shares for $2,769,629 representing an average purchase price of $2.24. All shares repurchased were cancelled. The Company’s NCIB program allows for the purchase of up to 31,673,791 shares and runs until August 26, 2026 (or earlier if completed).
On August 29, 2025, the Company filed a base shelf prospectus with the securities regulatory authorities in each of the provinces and territories of Canada and a corresponding shelf registration statement on Form F-10 with the United States Securities and Exchange Commission (the “SEC”), relying on the “well-known seasoned issuer” exemption.
On September 26, 2025, the Company closed its US$100 million registered direct offering (the “September Offering”). Pursuant to the Offering, the Company sold an aggregate of 45,662,101 Common Shares and warrants to purchase up to an additional 34,246,577 Common Shares at a combined purchase price of US$2.19. Each warrant has an exercise price of US$2.63 per common share, equal to 120% of the offering price (a 20% premium), is exercisable immediately upon issuance, and expires 3 years from the date of issuance, subject to an acceleration feature based upon share price appreciation and other factors.
Fiscal2024
Asset Management
On November 22, 2024, the Company announced that Valour had entered into a memorandum of understanding with Asia Digital Exchange Ptd. Ltd. (“AsiaNext”) and SovFi Inc. (“SovFi”) (the “Asia Next MOU”). AsiaNext, a global digital asset exchange regulated by the Monetary Authority of Singapore, bridges Asia and Europe by providing institutional investors with secure access to digital assets. The Asia Next MOU will evaluate and facilitate the listing and trading of Valour’s ETPs on AsiaNext’s securities exchange, enhancing AsiaNext’s position as a leading marketplace for institutional investors.
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On August 6, 2024, the Company announced that Valour had entered into a memorandum of understanding with the Nairobi Securities Exchange (“NSE”) and SovFi (the “NSE MOU”). The key objectives of the NSE MOU include facilitating the creation, issuance, and trading of digital asset ETPs on the NSE by leveraging Valour’s extensive expertise in digital assets and ETPs.
On June 11, 2024, the Company announced that it has deployed a Core Chain validator node to act as an independent validator for the network. The Company also staked 1,498 BTC on the Core Chain.
On April 8, 2024, the Company announced that Valour has launched a trading desk in the United Arab Emirates.
In Fiscal 2024, Valour invested US$61,741,683 in three tranches of a private investment fund designed to acquire Solana and Avalanche tokens from a bankrupt company (“Fund A”). The Company’s investment represents the acquisition of 491,249 Solana at US$105 per Solana and 931,446 Avalanche at US$11 per Avalanche. The Solana acquired by the Company is locked and staked, earning staking rewards during the lock period. Staking rewards will accrue while Solana is locked and will become distributable on the same unlocking schedule as the Solana. The Solana will be released in monthly increments from January 2025 through January 2028. The Avalanche acquired by the Company is locked and staked, earning staking rewards during the lock period. Staking rewards will accrue while Avalanche is locked and will become distributable on the same unlocking schedule as the Avalanche. The Avalanche will be released in weekly increments July 10, 2025 and continuing through July 1, 2027. The investment in the Fund A was valued based on the latest available net asset value, as determined by Fund A’s administrator less Discounts for Lack of Marketability. The fair values of the investments were remeasured based on monthly valuation reports provided to the Company by Fund A’s administrator.
In Fiscal 2024, Valour invested $153,516,846 (US$112,072,453) in two tranches of a private investment fund designed to acquire Solana tokens from a bankrupt company (“Fund B” and together with Fund A the “Equity Investments in Digital Assets”). The Company’s investment represents the acquisition of 1,123,360 Solana at US$100 per Solana. The Solana acquired by the Company is locked and staked, earning staking rewards during the lock period and thereafter until such Solana is sold by the fund manager or an in-kind distribution in the limited partners of the fund. Staking rewards will accrue while Solana is locked and will become distributable on the same unlocking schedule as the Solana. Approximately 25% of the Solana will be released in March 2025, while the remaining 75% of the Solana will be released linearly monthly until January 2028. The investment in the investment fund was valued based on the latest available net asset value, as determined by Fund B’s administrator less DLOM. The fair values of the investments were remeasured based on monthly valuation reports provided to the Company by Fund B’s administrator.
DeFi Alpha
On July 16, 2024, the Company announced that DeFi Alpha generated an additional approximately C$4.0 million (US$2.9 million) in USDT and C$15.3 million (US$11.2 million) in digital asset inventory through arbitrage trades in Q3 2024.
On June 3, 2024, the Company announced that its new business line, DeFi Alpha generated an additional C$59.2 million (US$43.4 million) from arbitrage trades, of which US$19.5 million was used to pay down debt.
Reflexivity Research
On September 13, 2024, the Company announced that Reflexivity Research was holding its inaugural Crypto Investor Day in New York City on October 25, 2024.
On June 24, 2024, the Company announced that Reflexivity Research has partnered with CoinMarketCap, the world’s largest crypto pricing and data aggregator, to educate users on various digital assets with in-depth fundamental research. Through this partnership, CoinMarketCap users will now have access to Reflexivity Research’s high-quality, actionable research on individual digital assets, including fundamental analysis, market structure updates, and technical breakdowns.
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On March 7, 2024, the Company announced that Reflexivity Research was holding its inaugural Bitcoin Investor Day on March 22, 2024 in New York City. The Bitcoin Investor Day, orchestrated by Reflexivity Research, aims to assemble hundreds of institutional investors, capital allocators, and forward-thinking entrepreneurs.
On January 9, 2024, the Company announced that it had entered into a binding letter of intent to acquire Reflexivity Research (the “ReflexivityAcquisition”). Reflexivity Research, co-founded by Anthony Pompliano and Will Clemente, offers high-quality crypto-native research designed for traditional finance investors. The firm is known for unique Bitcoin analysis, along with counting some of the most well-known cryptocurrency organisations as clients, including eToro, Solana, Avalanche, NEAR, Fantom, Sei Network, and many more. Reflexivity Research’s research is distributed via their homepage, a premium membership portal, and an email list of over 55,000 investors. On February 7, 2024, the Company announced that it had completed the Reflexivity Acquisition.
Partnerships and Acquisitions
On December 10, 2024, the Company announced that it has signed a letter of intent to increase its holdings of Neuronomics AG (“Neuronomics”), a Swiss asset management firm specializing in quantitative trading strategies powered by artificial intelligence, computational neuroscience, and quantitative finance, to 10%.
On July 30, 2024, the Company announced that it has entered into a strategic partnership with Zero Computing, a pioneer in verifiable computation on Ethereum and Solana. This partnership aims to build critical infrastructure to enhance the arbitrage discovery and execution capabilities of DeFi Alpha, and advance capabilities for capturing zero-knowledge enabled Maximal Extractable Value.
On July 9, 2024, the Company announced that it has signed a letter of intent to acquire Stillman Digital (the “Stillman Acquisition”). Stillman is a leading global liquidity provider offering industry-leading trade execution, settlement, and technology services. On October 7, 2024, the Company announced that it had completed the Stillman Acquisition.
Financial Statements and Auditor Matters
On September 6, 2024, the Company announced that it has refiled its 2023 annual consolidated financial statements (the “Refiled2023 FS”) to include an amended auditor’s report delivered by HDCPA Professional Corporation (the “Auditor”). The date of the 2023 FS remains unchanged and the Refiled 2023 FS have not been restated in any respect. In connection with a continuous disclosure review by the Ontario Securities Commission, the Company determined to refile the Auditor’s report on the Company’s previously filed 2023 annual consolidated financial statements (the “Original 2023 FS”) to correctly identify the period over which the Auditor is providing assurance. The Refiled 2023 FS include an amended Auditor’s report which (a) identifies that the Auditor did not audit or express an opinion on the Company’s 2022 financial statements, (b) corrects a typographical error in the “Other Matters” section to refer to “December 31, 2023”, and (c) adds certain note references under “Description of the Key Audit Matter”.
On April 1, 2024, the Company announced that it has filed its financial statements of the Company for fiscal-year 2023 with restated comparative information for fiscal 2022 and the corresponding management’s discussion and analysis. The Company became aware of an enforcement report issued by the Canadian Public Accountability Board (“CPAB”) on December 7, 2023 against BF Borgers CPA PC (“Former Auditor”) (the “Enforcement Report”) resulting from an engagement findings report dated October 12, 2023 (the “CPAB Report”). As a result of the Enforcement Report, the Auditor provided a consultation with respect to the CPAB Report, remediation plan requested by CPAB and the impact on the scope of the audit for fiscal 2023 (the “Consultation”). As a result of the Consultation, the Company reassessed the application of IFRS on the valuation of the Company’s holdings in 3iQ and AMINA Bank AG (formerly SEBA Bank AG) as well as the valuation of Valour’s Genesis loan and collateral posted to secure such loan. Compared with the previously filed fiscal 2022 financial statements of the Company, the Amended and Restated Financial Statements reflected a (i) reduction in digital assets by $2,433,348 to $104,148,728 as at December 31, 2022; and (ii) reduction in private investments, at fair value through profit and loss, by $13,489,824 to $30,015,445 as at December 31, 2022, with an opening retained earnings impact as at January 1, 2023 of $15,923,172.
On January 8, 2024, the Company announced that it has changed its auditor from the Former Auditor to the Auditor effective December 20, 2023. On December 7, 2023, CPAB issued the Enforcement Report against the Former Auditor resulting from the CPAB Report with respect to the audit of the Company’s financial statements for the fiscal year ended December 31, 2022 (“2022 Statements”).
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The Enforcement Report identified multiple significant inspection findings, each of which constitute a separate Violation Event (as defined in the Rules of CPAB) with respect to the Former Auditor. As a result of the CPAB Report, a remediation plan is required for the audit of the 2022 Statements. The Company has received information requests from the Former Auditor on its remediation plan, including third party confirmations from all of the Company’s digital asset custodians to confirm existence of the digital assets and fair market value, confirmations for all the private investments confirming the existence of the Company’s holdings and their latest financing details, management forecast files and schedules including all assumptions used in the goodwill impairment analysis, confirmation of ETPs, working papers on the calculation of staking and lending revenue, management fees and node revenue.
Director Appointments, NCIB, US Listing and Treasury Management
On October 29, 2024, the Company announced that Valour has successfully eliminated its outstanding debt following a final C$5.5 million (US$4 million) repayment completed on October 16, 2024.
On September 16, 2024, the Company announced that it filed a Form 40-F Registration Statement (“Form 40-F”) with the United States Securities and Exchange Commission (the “SEC”), in connection with its application to list the Common Shares on the Nasdaq.
On July 31, 2024, the Company announced the appointment of Andrew Forson to its board of directors. Andrew Forson is an experienced financial and risk engineer, software architect, and trust and estate practitioner. He serves as the Head of Ventures and Investments for the Hashgraph Group, the commercialization and enablement arm of Hedera, where he has been instrumental in driving strategic investments and fostering innovation in the digital asset sector.
On June 10, 2024, the Company announced that it has adopted Bitcoin as its primary treasury reserve asset and has purchased 110 Bitcoins to initiate this strategy.
On June 6, 2024, the Company announced a Normal Course Issuer Bid (“NCIB”) to buy back Common Shares through the facilities of Cboe Canada.
On May 7, 2024, the Company announced that it had fully repaid balances of US$6 million and US$13.5 million, which were secured by BTC and ETH collateral, respectively.
Fiscal2023
Asset Management
On August 29, 2023, the Company announced that Valour launched three new products on the Nordic Growth Market Exchange (“NGM”). Valour Ethereum Zero EUR precisely tracks the price of ETH without charging management fees, making an investment in the world’s second largest digital asset easy, secure and cost-effective. Valour Solana EUR precisely tracks the price of SOL, the native cryptocurrency fuelling the Solana network. Marketed as one the fastest blockchains, Solana has more than 400 live projects spanning its DeFi, NFT, and Web3 ecosystem. Valour’s Solana ETP makes an investment in this leading decentralised platform cost-effective, simple and secure. Valour Digital Asset Basket 10 (“VDAB10”) tracks the performance of the top 10 largest digital assets based on market capitalisation with a maximum cap of 30% for any constituent. Valour’s VDAB10 ETP provides investors with a diversified and dynamic exposure to the ever-evolving crypto landscape in a trusted and secure manner.
On August 22, 2023, the Company announced that VDSL launched 1Valour Ethereum Physical Staking ETP. The 1Valour Ethereum Physical Staking ETP simplifies network participation for investors. With a fixed yield, undefined expiry and a 1.49% management fee, investors have the potential to earn passive returns, sidestepping the technical challenges involved with staking, and actively contributing towards the evolving decentralized finance landscape. Enhanced security measures including slashing insurance and full collateralization mean investors benefit from additional transparency and security measures.
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On July 12, 2023, the Company announced that Valour launched its digital asset basket ETP - VDAB10 SEK. The VDAB10 ETP provides retail and institutional investors with trusted, secure, and diversified exposure to 10 of the largest cryptocurrencies by market capitalization. With a quarterly rebalancing, the multi-digital asset ETP enables investors to gain access to certain of the largest disruptive digital assets, offering an expanded entry into the rapidly developing digital asset ecosystem, without the need to set up a dedicated trading account.
On June 15, 2023, the Company announced that VDSL launched its first physically backed digital asset product, the 1Valour Bitcoin Physical Carbon Neutral ETP. The 1Valour Bitcoin Physical Carbon Neutral ETP provides investors with sustainable and climate-friendly exposure to Bitcoin with the low management fee of 1.49%. The ETP presents a trusted investment method that benefits the environment and aligns with environmental, social and governance (“ESG”) goals by funding certified carbon removal and offset initiatives in order to neutralise the associated Bitcoin carbon footprint.
On April 12, 2023, the Company announced the launch of VDSL, a Jersey-based securities issuer of ETPs for physically stored digital assets. VDSL obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain, and its products will be listed on regulated stock exchanges such as Deutsche Börse/Xetra in Frankfurt, Euronext in Paris and Amsterdam and SIX Swiss Exchange in Switzerland.
On March 21, 2023, the Company announced the listing of certain ETPs on Euronext Paris, providing availability to French investors.
On January 23, 2023, the Company announced that on January 19, 2023, Genesis Global Capital LLC (“Genesis”) and its group companies filed for bankruptcy protection in the US and listed Valour as a creditor. The Company clarified that Valour Cayman, its wholly-owned subsidiary, is a borrower of funds under a master loan agreement with Genesis dated January 22, 2022. The loan amount borrowed by Valour Cayman under the loan agreement is US$6 million which is collateralised.
On January 10, 2023, the Company announced the approval of its renewed EU-base prospectus covering digital assets ETPs by the Swedish Financial Supervisory Authority (“SFSA”).
Partnerships and Acquisitions
On December 18, 2023, the Company announced that it has entered into a definitive purchase agreement (the “Solana IP Agreement”) to acquire intellectual property (“Solana IP”) from prominent Solana developer Stefan Jørgensen (the “SolanaIP Acquisition”). Pursuant to the Solana IP Agreement, the Company issued a total of 7,297,090 Common Shares at a deemed price of $0.55 per Common Share to Mr. Jørgensen in exchange for all of the Solana IP. The Payment Shares will be issued in five tranches over a period of two years, and be subject to the continued involvement of Mr. Jørgensen with the Company and its subsidiaries at the time of issuance. The Solana IP acquired by the Company encompasses a suite of sophisticated features including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management, and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by both the Company and Valour. The Solana IP Acquisition positions the Company to significantly elevate its capabilities, offering cutting-edge trading solutions and unique strategies specifically designed for Solana, a blockchain platform rapidly gaining recognition for its outstanding performance capabilities. The Solana IP Acquisition closed on February 9, 2024.
On October 24, 2023, the Company announced that it has entered into a joint venture agreement with Neuronomics AG (“Neuronomics”) to collaborate on the development of AI-based ETPs, actively managed certificates, and asset backed tokens for global distribution. To further align the interests of the Company and Neuronomics, the Company entered into share exchange agreements with Olivier Roussy Newton, Chief Executive Officer of the Company and Johan Wattenström, Director of Valour, pursuant to which DeFi Technologies acquired from each of Mr. Newton and Mr. Wattenström 362 shares of Neuronomics with nominal value of CHF 1 for a total of 724 shares of Neuronomics.
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Management, Board, Auditor Changes and Name Change
On January 8, 2024, the Company announced the change of its auditors from BF Borgers CPA PC to HDCPA Professional Corporation effective December 20, 2023.
On July 7, 2023, the Company announced that it had changed its name from “Valour Inc.” to “DeFi Technologies Inc.”
On February 13, 2023, the Company announced that Russell Starr has elected to step down from his role as Executive Chairman but will remain as Head of Capital Markets. Olivier Francois Roussy Newton, CEO of Valour, assumed the role of Executive Chairman replacing Russell Starr.
On February 3, 2023, the Company announced the change of its auditors from RSM Canada LLP to BF Borgers CPA PC.
Financings
On November 13, 2023, the Company announced a non-brokered private placement financing of up to 6,250,000 units (a “Unit”) at a price of $0.16 per Unit (the “Unit Price”) for gross proceeds of up to $1,000,000 (the “Nov 2023 Offering”). Each Unit consisted of one common share of the Company (a “Unit Share”) and one common share purchase warrant (a “Warrant”), entitling the holder to acquire one additional common share of the Company (a “Warrant Share”) at an exercise price of $0.23 for a period of 24 months from issuance. The Nov 2023 Offering closed on an oversubscribed basis for 11,812,500 Units, representing aggregate gross proceeds of $1,890,000.
On November 1, 2023, the Company announced that Valour completed a non-brokered private placement financing of unsecured convertible notes (the “Notes”) for gross proceeds of C$3,000,000 (the “Convertible Offering”). The Notes issued in connection with the Convertible Offering accrue interest at a rate of 8% per annum and will mature on October 31, 2025 (“MaturityDate”). Upon the occurrence of certain trigger events, the principal amount of Notes and all accrued interest may be convertible (a “Conversion”), at the option of the holder, into (a) Common Shares (“Conversion Shares”) at a price of C$0.10 (“Conversion Price”) per Conversion Share and (b) an equal number of common share purchase warrants of the Company (“Conversion Warrants”) entitling the holder to acquire Common Shares at a price of C$0.20 for a period of five years from the date of issuance. Upon the Conversion, the Company will subscribe for such additional equity of Valour equal to the principal amount of Notes and accrued interest converted pursuant to the Conversion. As of the date hereof, all of the Notes were converted into Conversion Shares and Conversion Warrants.
On August 23, 2023, the Company announced that it entered into shares for debt settlement agreements with a lender, an officer and consultants of the Company to settle an aggregate amount of approximately C$604,543.34 of accrued debt obligations and accrued fees owing to such lender, officer and consultants of the Company by issuing Common Shares at a price of C$0.105 per Common Share for a total of 5,757,827 Common Shares.
On June 12, 2023, the Company announced that it entered into shares for debt settlement agreements with various officers and consultants of the Company to settle an aggregate amount of approximately C$674,837.78 of accrued fees owing to such officers and consultants of the Company by issuing Common Shares at a price of C$0.085 per Common Share for a total of 7,939,268 Common Shares.
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DESCRIPTION OF THE BUSINESS
General
The Company is a publicly listed company with its Common Shares listed for trading on Cboe Canada under the symbol “DEFI”, on the Nasdaq under the symbol “DEFT”, and on FSE under the symbol “R9B” and with BDRs representing Common Shares listed for trading on B3 under the symbol “DEFT31”. The Company is a technology company bridging the gap between traditional capital markets and decentralized finance through six primary business lines:
| ● | Asset<br> Management – Valour develops and lists ETPs on traditional stock exchanges that provide<br> indirect exposure to underlying digital assets, digital asset indexes, or other decentralized<br> finance instruments; |
|---|---|
| ● | Ventures<br> – The Company makes early-stage investments in companies, banks and foundations in<br> the digital asset space; |
| ● | DeFi<br> Alpha – The Company operates a specialized trading desk focused on opportunistic trading<br> and arbitrage across the digital asset ecosystem. The desk generates returns by identifying<br> attractive market dislocations and pricing inefficiencies, with opportunities sourced through<br> deep market experience and strong counterparty relationships; |
| ● | Reflexivity<br> Research – Reflexivity is a private research firm that specializes in producing research<br> reports on digital assets. |
| ● | Stillman<br> Digital – Stillman is an OTC desk and digital asset liquidity provider. |
| ● | DeFi<br> Advisory – supporting public digital asset companies with in-house infrastructure,<br> trading, custody, and research. |
“Decentralized finance” or “DeFi” refers to a financial system that seeks to operate as an alternative to the traditional financial system. DeFi seeks to allow people and companies to effect transactions on a “peer to peer” basis, typically employing blockchain or other distributed ledger technology to allow participants to interact with one another directly between each other. Because transactions are effected peer to peer, DeFi does not rely on traditional intermediaries such as banks, brokerages, and stock exchange, so transactions can be completed on a more timely basis and without the fees typically charged by intermediaries.
AssetManagement
Valour ETPs
The Company’s wholly owned subsidiary Valour Cayman develops and lists ETPs on regulated stock exchanges and multilateral trading facilities in Europe that synthetically track the value of digital assets, or an index or basket thereof. ETPs simplify the ability for retail and institutional investors to gain exposure to cryptocurrencies and decentralized finance as they remove the need to manage wallets, various logins, custody and other intricacies that are linked to managing a digital asset portfolio. Rather, retail and institutional investors can simply purchase the associated ETP with the digital asset they wish to gain exposure to through a bank or brokerage account with access to the relevant stock exchanges and multilateral trading facilities.
As of the date hereof, Valour Cayman has listed 102 ETPs. Valour Cayman currently lists its ETPs on the following European stock exchanges: Spotlight Exchange, Deutsche Börse Xetra, Gettex, Frankfurt Exchange, Euronext Amsterdam, Euronext Paris and Lang and Schwarz Exchange. Valour Cayman also lists its EPTs on the B3 exchange in Brazil. The listing of ETPs are subject to exchange approval by the relevant exchange. A full list of ETPs listed by Valour Cayman can be found here: https://valour.com/en/products.
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Productsand Services
Valour Cayman ETPs are issued under a base prospectus dated January 23, 2026 (as amended and updated to the date hereof, the “BaseProspectus”), as supplemented by supplements or final terms from time to time (“Final Terms”), which together govern the ETP program (the “Program”). The Base Prospectus has been approved by the SFSA and the Swedish financial authority. The certificates may be offered to the public in Sweden, Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia and Spain, and subject to completion of relevant notification measures, any other member state within the European Economic Area (“EEA”). For further details on the terms and conditions of the ETPs, a copy of the Base Prospectus is available on Valour’s website on the respective ETP pages: https://valour.com/products.
Valour Cayman’s current ETP range are all open-ended certificates that provide exposure to a single digital asset, or an index or a basket thereof, as specified in the relevant Final Terms. The Final Terms for each of Valour Cayman’s ETPs are available on the Valour’s website on the respective ETP pages: https://valour.com/products. Valour Cayman is the issuer of the ETPs offered under the Program and also acts as calculation agent.
Valour Cayman’s policy is to substantially hedge market risk in the underlying asset. Hedging is primarily done continuously through an in-housed developed auto-hedger and in direct correspondence to the issuance of ETPs to investors, but Valour Cayman may elect to utilize other hedging methods it deems appropriate. In order to hedge its exposure to each digital asset, Valour Cayman relies on cryptocurrency exchanges and counterparties to be able to buy and sell the digital assets, or interests in funds that hold digital assets, which the ETPs track.
For its Bitcoin Zero and Ethereum Zero products, Valour Cayman charges zero management fees and for all other products, a management fee of 1.9% to 2.5% applies.
Valour Digital Securities Limited ETPs
Valour Digital Securities Limited (VDSL) is a special purpose vehicle incorporated as a public limited liability company under the laws of Jersey. VDSL is owned by the charitable trust VLR Charitable Trust in Jersey. In April 2023, VDSL obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering of physically backed ETPs to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain. Valour Cayman acts as arranger for all ETPs issued by VDSL.
As of the date hereof, VDSL has listed six ETPs. VDSL ETPs are currently listed on the Deutsche Börse Xetra, the London Stock Exchange and the SIX Swiss Stock Exchange. The listing of ETPs are subject to exchange approval by the relevant exchange.
Productsand Services
VDSL ETPs are issued under base prospectuses dated 15 May, 2025 for the EU (the “EU VDSL Base Prospectus”) and two prospectuses dated 16 January 2026 for the UK (the “UK VDSL Base Prospectus”), as supplemented by supplements or final terms from time to time (“VDSL Final Terms”), which together govern the VDSL ETP program (the “VDSL Program”). The EU VDSL Base Prospectus has been approved by the SFSA, the Swedish financial authority, and is passport eligible in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain. The UK VDSL Base Prospectuses have been approved by the Financial Conduct Authority (FCA). VDSL may also request the SFSA to publicize the approval of the EU VDSL Base Prospectus to other EEA states in accordance with Regulation (EU) 2017/1129. In addition, VDSL may decide to register this EU VDSL Base Prospectus in Switzerland with the reviewing body SIX Exchange Regulation AG or another FINMA approved reviewing body, as a foreign prospectus that is also deemed to be approved in Switzerland pursuant to Article 54 paragraph 2 FinSA, for the purpose of making a public offer of VDSL ETPs in Switzerland or admission to trading of all or a series of VDSL ETPs on a regulated stock exchange in Switzerland.
For further details on the terms and conditions of the ETPs, a copy of the EU VDSL Base Prospectus and UK VDSL Base Prospectus may be obtained for each of the VDSL’s ETPs on Valour’s website on the respective ETP pages: https://valour.com/products.
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Under the EU VDSL Base Prospectus, the VDSL Program permits VDSL to issue VDSL ETPs related to any one of 124 underlying digital currencies (“Digital Currencies”) (or more subject to supplements to the EU VDSL Base Prospectus), to a “basket” comprising two or more of such Digital Currencies or to an index linked to Digital Currencies, as specified in the relevant VDSL Final Terms. The VDSL Final Terms and each of VDSL’s ETPs are available on the company website on the respective ETP pages: https://valour.com/products. The VDSL ETPs are designed to offer investors a means of investing in Digital Currencies without having to acquire digital assets themselves and to enable investors to buy and sell that interest through the trading of a security on a stock exchange.
Under the UK VDSL Base Prospectus, the underlying digital assets are currently limited to BTC and ETH, given the regulatory requirements in the United Kingdom.
Each VDSL ETP is an open-ended, limited recourse, non-interest bearing exchange traded debt obligation of VDSL, which ranks equally with all other VDSL ETPs of the same class. VDSL ETP holders only have recourse to the assets of the class of VDSL ETP of which they are a holder. If the net proceeds are insufficient for VDSL to make all payments due, neither the trustee nor any person acting on behalf of the trustee will be entitled to take any further steps against the VDSL, and no debt shall be owed by the VDSL in respect of such further sum.
The underlying assets for the VDSL ETP of each class, by which they are backed and on which they are secured, comprise private keys evidencing ownership of Digital Currencies. These private keys are held in the name of VDSL in secure vaults at the premises of the relevant custodian of VDSL (“VDSL Custodian”) and are not fungible with other digital assets held by the relevant VDSL Custodian.
The VDSL ETPs are constituted under the trust instrument dated April 5, 2023 between VDSL and The Law Debenture Trust Corporation p.l.c. as trustee (the “Trustee”) for the holders of VDSL ETPs (“VDSL ETP Holders”) (the “Trust Instrument”). The Trustee holds all rights and entitlements under the Trust Instrument on trust for VDSL ETP Holders. In addition, VDSL and the Trustee have entered into a single security deed (the “Security Deed”) in respect of all pools of VDSL ETPs (“Pools”). The rights and entitlements held by the Trustee under the Security Deed, to the extent attributable to a Pool, are held by the Trustee on trust for the VDSL ETP Holders of that particular class of VDSL ETP. Under the terms of the Security Deed, VDSL has charged to the Trustee for the benefit of the Trustee and the relevant VDSL ETP Holders by way of first fixed charge the Digital Currencies held in custody attributable to the relevant class of VDSL ETP and all rights of VDSL in respect of the respective custody accounts to the extent attributable to the relevant Pool. VDSL has also, under the terms of the Security Deed, assigned to the Trustee by way of security the contractual rights of the issuer relating to such class under the custody agreements entered into by VDSL and has granted a first-ranking floating charge in favour of the Trustee over all of VDSL’s rights in relation to the secured property attributable to the applicable Pool, including but not limited to its rights under the custody agreements and the custody accounts attributable to that Pool.
VDSL charges management fees ranging from 1.9% to 2.5% on the VDSL ETPs.
Staking of Cryptocurrency and Defi Protocol Tokens
As part of Valour’s hedging policy, Valour purchases and sells the digital assets, and investments exposed to digital assets, which its ETPs track. Valour may trade, lend or stake such digital assets on its balance sheet to generate revenue in accordance with the policies in the Base Prospectus of Valour Cayman and as Staking Agent for VDSL in accordance to VDSL’s base prospectus. Lending or staking transactions are only conducted with institutional-grade counterparties and only up to a certain percentage for risk management purposes in accordance with Valour’s Lending and Staking Policy (the “Lending and Staking Policy”).
Pursuant to the Lending and Staking Policy, lending and staking activities are overseen by the Chief Investment Officer (“CIO”), Head of Finance (“CFO”) and the director of Valour. Prior to entering into any lending or staking transaction, due diligence will be conducted on all potential counterparties, and in particular counterparties in the following situations:
| ● | Custody<br> of assets of Valour by third parties, without legal separation from assets of such third<br> party. |
|---|---|
| ● | Deposits<br> of cash with banks and investment firms. |
| ● | Bilateral<br> FX transactions (settlement risk). |
| ● | Bilateral<br> transactions in digital assets (settlement risk). |
| ● | Lending<br> and borrowing transactions relating to digital assets (settlement risk). |
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In order to evaluate a counterparty, the following information is collected and documented in the counterparty scorecard:
Contact information. The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.
Current status. The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date.
Country of registration and regulation. The country in which the exchange/counterparty is registered must be documented. In addition, all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).
Country risk. The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.
Adverse media search. An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc. are documented.
Public exchange scores. Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.
Information security certification. The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.
Insurance coverage. Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.
Proof of reserves. It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.
Risk evaluation. The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty.
Business justification and restrictions. In cases where an exchange or counterparty presents increased risks, a business justification must be provided. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.
Recurring review schedule. The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.
Account closure. If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders. If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.
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When deciding whether to lend or stake a particular asset, the Lending and Staking Policy provides that the decision will initially be made based on the risk profile of the potential counterparties, then the highest yield available, and then prioritizing staking over lending.
“Staking” refers to the process of dedicating digital assets to a particular blockchain for a set period of time so as to verify transactions on that blockchain. The act of staking typically results in the staking person or company receiving newly-created digital assets of the same type as a reward verifying the transactions. In addition, having digital assets staked improves the integrity and security of the applicable blockchain ledger.
Custody of Digital Assets
The policies of Valour require the application of internal multi-signature cold-storage and external custody. External custody solutions include specialized third-party custody providers within the United States and Europe. Valour currently utilizes the following third-party custody providers to hold and safeguard Valour’s digital assets:
| Custodian | Location | % of digital assets custodied by market value | Regulatory Body |
|---|---|---|---|
| Binance | Cayman<br> Islands | 42.6% | Cayman<br> Islands Monetary Authority (CIMA) |
| B2C2<br> Overseas LTD | Cayman<br> Islands | 8.0% | Cayman<br> Islands Monetary Authority (CIMA) |
| Kraken | United<br> States | 0.7% | Office<br> of Comptroller of Currency |
| Laser<br> Digital | Switzerland | 4.7% | Financial<br> Services Standards Association (VQF). Zug. Switzerland |
| Copper | Switzerland | 33.5% | Financial<br> Services Standards Association (VQF). Zug. Switzerland |
| Bitgo<br> Trust | United<br> States | 1% | South<br> Dakota Division of Banking and Money Services Business (MSB) with Financial Crimes Enforcement Network (FinCEN) |
| Others | 2.9% | Anchorage,<br> Wintermute, Bitcoin Suisse, Coinbase (Deribit), Genesis | |
| Self<br> Custody | 6.5% | ||
| Total | 100% |
VDSL
| Custodian | Location | % of digital assets custodied by market value^(1)^ | Regulatory Body |
|---|---|---|---|
| Copper<br> Markets<br><br> (Switzerland) AG | Switzerland | 100% | Financial<br> Services Standards Association (VQF), Zug, Switzerland |
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Prior to engaging any prospective third-party to perform custody services, Valour conducts diligence and counterparty risk analysis of such third-party. Such measures include:
| ● | verifying<br> contact information of the third-party and the responsible onboarding owner on the Valour<br> Cayman side; |
|---|---|
| ● | reviewing<br> current status of the relationship with the third-party, the connection type, as well as<br> the services, products and currency pairs used by the third-party; |
| ● | documenting<br> the prospective third-party’s regulatory regime and licenses; |
| ● | assessing<br> the third-party’s jurisdiction of incorporation and regulatory regime for compliance<br> to international anti-terrorism and money laundering guidelines such as the Financial Action<br> Task Force (“FATF”) country evaluation, Transparency.org Corruption Perception<br> Index as well as the VQF SRO country risk recommendations; |
| ● | collecting<br> and documenting public exchange scores, such as Coinmarketcap and Coingecko, of the third-party; |
| ● | assessment<br> of the third-party’s information security certification, such as AICPA SOC 1, SOC 2<br> Type I and SOC 2 Type II, as well as ISO 27001; |
| ● | assessment<br> and documentation of the third-party’s insurance coverage with respect to investor<br> protection; |
| ● | verifying<br> if the third-party has made the public wallet addresses of its cold and hot storage publicly<br> available or if any other cryptographic means of verification of the reserves held in custody<br> are either publicly available or have been audited; |
| ● | searching<br> for any adverse public media results regarding the third-party; |
| ● | analyzing<br> risk exposure and business restrictions of engaging the third-party; and |
| ● | recurring<br> review of third-party custody providers. |
Valour’s current third-party custody providers do not engage sub-custodians to provide custody services. None of Valour ‘s current third-party custody providers are Canadian financial institutions or related parties of the Company. Each of Valour’s third-party custody providers maintain general commercial insurance on its own behalf and would be subject to their respective jurisdiction’s bankruptcy laws in the event of such an event. The Company and Valour are not aware of any aspect of the above custody providers that would adversely affect the Company from obtaining an unqualified audit opinion on its audited financial statements. The Company and Valour are not aware of any security breaches or similar incidents with respect to its third-party custody providers.
In addition, Valour utilizes custody solutions offered by institutional quality exchanges. The exchanges typically store between 95% and 100% of the assets in multi-signature cold storage. Different exchanges store different proportions of their assets in online wallets, and the proportion of assets in cold storage is one of the factors determining their risk weight in our model for capital adequacy. Cold storage means storage facilities where the private keys of a wallet are held off-line, protected physically, as well as by the multi-signature features of the wallet. By comparison, hot storage means storage facilities or platforms that are connected to the internet, which provide greater accessibility to digital assets for users, but are subject to greater cybersecurity risks.
The Company does self-custody some of the Company’s portfolio using meta mask and other hot wallets. The total value of the Company’s digital assets under self custody was $33,581,901 on December 31, 2025 (December 31, 2024 – $339,451,566).
The controls around the meta mask and other hot wallets include only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held by two members of the senior management in different locations.
The following principles are applied with regards to Valour’s internal safe keeping of digital assets:
| a. | the<br> quantities that are kept by means of hot storage shall be limited to what is reasonably estimated<br> as required for hedging of potential transactions in the near future; |
|---|---|
| b. | the<br> quantities that are kept by means of hot storage shall be distributed between a reasonable<br> number of the approved counterparties for such storage, taking practical aspects into consideration;<br> and |
| c. | the<br> allocation of assets between Valour’s counterparties shall be optimized with respect<br> to security and quality of Valour’s products within the limits set forth by the model<br> for capital adequacy. |
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Specialized Skill and Knowledge
Valour has assembled a team of employees, officers, directors and consultants with specialized skill and knowledge of regulated exchanges in Europe, investment banking, cryptocurrencies, digital assets and decentralized finance. In particular, Valour Cayman has retained Johan Wattenström as its CEO from November 2025, previously the CEO of the Company, Co-Founder & Director at Nortide Capital and the Founder of XBT Provider (now known as Coinshares), which created the world’s first ever Bitcoin ETP in 2015, and has served on the management committees of several Nordic investment banks.
Valour also retains external legal counsel with respect to regulatory compliance of its ETP programs. Additional information can be found in the Base Prospectus, the EU VDSL Base Prospectus and the UK VDSL Base Prospectus.
Competitive Conditions
There are several other issuers that have listed similar tracker-products in various forms and markets. Valour holds a strong competitive position, particularly in the Nordic countries, due to its competitive and transparent pricing model. Valour’s Bitcoin and Ethereum Zero ETPs are the first and only of their kind to track the two largest digital assets by market capitalisation and charge zero management fees. For its other products, Valour charges 1.9% management fees, whereas competitor products in the same markets charge up to 2.5% management fees.
Valour’s innovative product range is also a competitive advantage. As of the date of this AIF, Valour is the most comprehensive provider of crypto ETPs listed in the Nordic countries.
Cycles
As Valour’s products are financial markets products tracking digital assets of finite supply, the demand for ETPs may experience cycles resulting from fluctuating supply and demand, and as an alternative asset class, although the correlation between traditional markets and digital assets has been seen to be increasing.
Employees
As at December 31, 2025, Valour’s wholly owned service company, Valour Europe AG, employs 5 full-time employees. Valour has 5 consultants in specialized roles in marketing, finance, and IT Development. DeFi Middle East (DMCC) employs 3 employees.
Foreign Operations
Valour operates primarily out of the Cayman Islands and Switzerland, with a trading desk in the United Arab Emirates.
Ventures
The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the DeFi ecosystem to build a diversified portfolio of digital asset and venture investments, predominantly at Seed or Series A stage. As of December 31, 2025, the Company has participated in equity or token raises from the following ventures:
3iQCorp. is a Bitcoin and digital asset fund manager that offers digital asset investment products.
AMINABank is one of the first FINMA-regulated institutions to provide crypto banking services. The broad, vertically integrated spectrum of services, combined with the highest security standards, make AMINA’s value proposition unique. AMINA operates globally from its regulated hubs of Switzerland, Abu Dhabi and Hong Kong to offer fiat and crypto services to progressive investors, traditional and crypto-native alike, whether individuals, corporations or institutions.
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StablecorpInc. is the firm behind QCAD, a fully backed Canadian dollar stablecoin that seeks to maintain a stable value of 1 Canadian dollar, by holding 1-to-1 dollar reserves for each issued QCAD at regulated financial institutions.
LuxorTechnologies provides a range of solutions for scaling blockchain infrastructure including a globally distributed mining pool, a hashrate network-switching engine, and a wide variety of blockchain-related software.
NeuronomicsAG is a Swiss asset management firm specializing in quantitative trading strategies powered by artificial intelligence, computational neuroscience, and quantitative finance.
ZKPCorporation is a cloud platform dedicated to efficient zero-knowledge proof generation
Bloctois a UX-focused interoperable ecosystem that enables users to easily access decentralized (dApps), crypto and NFTs cross-chain.
Clover is a substrate-based smart contracts platform with Ethereum Virtual Machine (EVM) compatibility, providing cross-chain infrastructure for scaling dApps.
Sovyrn provides DeFi infrastructure for Bitcoin via a non-custodial and permissionless smart contract-based system that enables lending, borrowing and margin trading.
SaffronFinance is a peer-to-peer (P2P) risk exchange and decentralised marketplace for risk arbitrage, built on Ethereum.
OxygenProtocol is a Solana based DeFi prime brokerage service that democratises borrowing, lending, and leverage trading.
WilderWorld is the first full-scale, immersive 5D Metaverse being built out on Ethereum with full augmented reality (AR) and virtual reality (VR) integration.
Each of these ventures were selected for their innovative potential, high quality teams, growing and / or potential user bases, unique position in the market or market share, cutting edge technology, and/or leading investors. The ventures respective use cases include borrowing and lending, decentralized exchanges, derivatives and asset management.
Specialized Skill and Knowledge
The Company believes that the success of its Ventures line of business is dependent on the performance of its management team and the ability of the Company to leverage the network of its management, directors and advisory board. Management of the Company and its subsidiaries have extensive knowledge and understanding of evolving digital asset industry and have a strong track record of identifying sound investment opportunities and making prudent business decisions. In addition, the members of the advisory board have also been selected due to their wealth of experience in the digital asset industry. The Company has adequate personnel with the specialized skills required to successfully carry out its operations.
Competitive Conditions
As the DeFi industry is an emerging industry, competition in the space is constantly evolving. With respect to investment in DeFi projects, protocols and other ventures, the Company’s competitors range from established DeFi protocol trading companies to crypto and/or traditional VCs to individual angel investors. The Company may also compete with other emerging companies in the DeFi industry and established mutual funds, investment funds, hedge funds, investment companies, management companies and other investment vehicles for investment opportunities. Many of these competitors have greater financial, technical and other resources than the Company. To compete, the Company depends on the knowledge, experience and network of business contacts of the management, directors and the employees of the Company.
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ReflexivityResearch
Reflexivity Research is a digital asset research firm seeking to bridge traditional finance into the ever-evolving world of crypto. Reflexivity Research distributes newsletters for free to the general public, with portions of the content sponsored by corporate clients. Furthermore, Reflexivity Research produces commissioned reports and organizes thematic conferences. Reflexivity Research does not produce research reports on any equity securities. Additionally, Reflexivity Research holds conferences in the cryptocurrency sector, such as Bitcoin Investor Day held in New York on March 22, 2024 and Crypto Investor Day held on October 25, 2024, bringing together institutional investors, capital allocators, and entrepreneurs.
Specialized Skill and Knowledge
This business segment does require staff with experience in the cryptocurrency industry.
Competitive Conditions
The digital asset research space is new and there are low barriers to entry. Furthermore, there are no geographic restrictions on where digital asset research firms can be located. As a result, there are numerous competitors to Reflexivity Research, some of which include Messari, Blockworks Research, Delphi Digital, and The Block PRO.
Cycles
This business segment is influenced by cycles in the broader digital asset market, where periods of increased market activity, asset price appreciation, and institutional interest typically lead to higher demand for research, media content, and industry events, while periods of market contraction may result in reduced engagement across the sector.
Employees
As at December, 31, 2025, Reflexivity Research employs 2 employees and 1 consultant.
Foreign Operations
This segment operates out of the United States and distributes its research to customers globally.
DeFiAlpha
In Q2 2024, the Company formed DeFi Alpha, a specialized trading desk under DeFi Technologies focused on opportunistic trading and arbitrage across the digital asset ecosystem. The desk seeks to generate returns by identifying attractive market dislocations and pricing inefficiencies, with opportunities sourced through deep market experience and strong counterparty relationships. Its activities span both centralized and decentralized markets, with a focus on disciplined execution, prudent risk management, and capitalizing on opportunities as they arise.
Specialized Skill and Knowledge
DeFi Alpha draws from the specialized skill and knowledge of its employees and consultants at Valour, Stillman Digital and Reflexivity Research to identify and execute low-risk arbitrage opportunities. The Company relies on experienced cryptocurrency traders for its arbitrage trades. Such individuals are at the forefront of the digital asset industry and are often able to be one of the first to identify and capitalize on such opportunities given their day-to-day exposure to arbitrage opportunities within the digital asset space.
Competitive Conditions
The trading of digital assets is not restricted to geography, time or markets, and as such, it is a highly competitive industry. There are many firms operating in the same industry with much larger financial resources, including those that are publicly-traded. DeFi Alpha’s maintains its competitive position by primarily being the first-mover for such opportunities and by being part of the consolidated Company.
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Cycles
This business line is not seasonal but does rely on market conditions.
Employees
DeFi Alpha does not have any full-time employees and consultants, but draws from the employees and consultants at Valour, Stillman Digital, Reflexivity Research and the Company.
Foreign Operations
The Company runs this operation from the Cayman Islands.
StillmanDigital
Stillman Digital is a non-custodial, spot digital asset OTC desk and digital asset liquidity provider. With over US$15 billion in trade volume since 2021, Stillman Digital has built a strong reputation for OTC on/off ramp tradeflow, and block trading and market-making services.
Stillman Digital provides digital asset trade execution, OTC desk, liquidity provision and market-making services to clients in Canada, and maintains a regulatory registration with the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) as a money services business (MSB), which is required to offer its products and services to clients in Canada. As a registered MSB, Stillman Digital is required to comply with Canadian anti-money laundering and counter-terrorist financing laws and regulations. The regulation of digital assets in Canada is evolving. Changes in the laws and regulations applicable to Stillman Digital or its business, or changes regarding the application of or interpretation of existing legislation, including securities legislation, could require Stillman Digital to obtain a registration or otherwise bring its operations into compliance with securities laws.
Stillman Digital’s registration with FINTRAC does not imply that Stillman Digital maintains a registration or license with any securities regulatory authority, or that any securities regulatory authority has approved the operation of Stillman Digital’s business in Canada.
Stillman Digital’s core products and services are:
| ● | Electronic<br> Trade Execution: Stillman Digital generates over US$500 million in monthly volume with 24/7<br> streaming prices, providing deep liquidity across available assets. Clients can execute trades<br> via the Web Portal or API, with price feeds aggregated from over 30 global exchanges and<br> trading firms. |
|---|---|
| ● | OTC<br> Block Trading: Stillman Digital processes an average trade size of $2 million+, offering<br> a high-touch concierge service for large block trades. Trades are conducted via voice or<br> chat, with manual trade confirmations handled by the back office. Acting as a global on/off<br> ramp into the crypto markets, Stillman on-ramps US$40-80 million daily and processes over<br> US$1 billion+ in monthly trade volumes. |
| --- | --- |
| ● | Market-Making:<br> Stillman Digital provides liquidity to central limit order book products through strategic<br> partnerships and exchanges, currently handling US$400 million in monthly volume and experiencing<br> rapid growth. |
| --- | --- |
Specialized Skill and Knowledge
Stillman Digital requires its employees to be knowledgeable in digital asset trade execution, regulatory compliance in their respective place of operations, trading platform software engineering and financial reporting. Stillman Digital has employed a diverse group of employees with specialization in such skills and knowledge required to operate Stillman Digital.
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Competitive Conditions
The digital asset trading and liquidity provision industry is highly competitive, with numerous firms operating globally. However, regulatory compliance and licensing requirements create barriers to entry in certain jurisdictions. Stillman Digital maintains regulatory registrations and licenses in multiple jurisdictions, including a Class M Digital Asset Business license issued by the Bermuda Monetary Authority, registration with FinCEN in the United States (MSB Registration No. 31000290525436), the Nationwide Multistate Licensing System (NMLS No. 2383034), and FINTRAC in Canada (MSB Registration No. M22669214). Obtaining and maintaining these registrations requires significant legal, compliance and capital resources, which may limit the ability of new entrants to compete directly with established, regulated trading firms.
Intangible Properties
Stillman Digital’s intangible assets include its internally developed trading infrastructure and software systems used to facilitate electronic trade execution, pricing aggregation and connectivity to global digital asset exchanges, as well as its relationships with institutional clients, liquidity providers and trading counterparties. The Company also benefits from regulatory registrations and licenses required to operate its business, including its Class M Digital Asset Business license issued by the Bermuda Monetary Authority, its registration with FinCEN in the United States (MSB Registration No. 31000290525436), the Nationwide Multistate Licensing System (NMLS No. 2383034), and FINTRAC in Canada (MSB Registration No. M22669214). These assets support Stillman Digital’s ability to provide regulated digital asset trading, OTC liquidity provision and market-making services across multiple jurisdictions.
Cycles
This business line is influenced by cyclical activity levels in the broader digital asset markets, as periods of increased trading volumes, price volatility, and institutional participation typically lead to higher demand for OTC trading, liquidity provision, and market-making services.
Employees
As at December 31, 2025, Stillman Digital employs 16 employees and 9 consultants.
Foreign Operations
SDI is registered in Wyoming, United States of America and SDB is registered in Bermuda. Both hold relevant operating licenses or registrations in their respective jurisdictions and require the maintenance of such licenses or registrations to operate.
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Risk Factors
The Company’s business, operations, financial results and prospects are subject to the normal risks of its industry and are subject to various factors which are beyond the control of the Company. Certain of these risk factors are described below. The risks described below are not the only ones facing the Company. Additional risks not currently known to the Company, or that it currently considers immaterial, may also adversely impact the Company’s business, operations, financial results or prospects.
RisksRelating to the Business and Industry of the Company
Stakingand Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets
The Company (or entities the Company makes Equity Investments in Digital Assets in) may stake or lend digital assets to third parties or affiliates. The digital assets that are “staked” will earn rewards in the form of additional digital assets, which will accrue to the validator address, but neither the rewards nor the principal allocation of digital assets can be withdrawn for a predetermined period of time, and as a result, the liquidity of such digital assets will be limited. On termination of the staking arrangement or loan, the counterparty is required to return the digital assets to the owner; any gains or loss in the market price during the period would inure to the owner. Such limitations on liquidity could prevent the disposal of the applicable digital asset during certain periods. Liquid digital assets that are staked are maintained outside of cold storage during the staking process, locked into a smart contract and will generally not be maintained with a qualified custodian while being staked. The owner of the staked digital asset is provided with withdrawal keys that allow retrieval of the staked liquid tokens once withdrawals have been activated by the relevant protocol, on a defined timeline with daily limits on the number of digital assets that can be withdrawn. Withdrawal keys will be held by a qualified custodian, but the additional complexities of staking liquid digital assets can increase the risk of loss. Staked liquid tokens are also subject to higher risk of loss or theft due to malicious actions, network interruptions, or a failure by third-party validators to validate transactions. Staking creates exposure to smart contracts. Smart contracts are subject to certain risks and may result in losses stemming from errors, bugs or other failures. Staking provides no guarantee of return nor are there currently efficient ways to insure against such risks. To the extent that smart contract insurance is available, it may not cover all risks related to staking of the applicable digital asset, engaging with smart contracts, or other opportunities utilized.
In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its digital assets. In addition, to the extent that the value of the digital assets increases during the term of the loan, the value of the digital assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the digital assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of digital assets, including by failing to deliver additional collateral when required or by failing to return the digital assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.
Furthermore, the Company and its affiliates may also pledge and grant security over its digital assets to secure loans. In the event that the Company or its affiliates default under their obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged digital assets.
The digital assets that are staked, loaned or pledged to third parties by the Company include digital assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.
LockedTokens
The Company has purchased various locked tokens which cannot be freely sold due to resale conditions that generally last three years. By purchasing such locked tokens to hedge Valour’s ETPs, the Company does assume some balance sheet duration mismatch risk. The Company believes it has sufficient equity and liquidity to manage any ETP redemptions that are hedged by locked tokens. The Company can also employ various hedging and derivative strategies to manage liquidity risk due to locked tokens.
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CustodyRisk
The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line, its digital assets in treasury as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the execution of hedging ETPs, the value of our assets and the value of any investment in our securities. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines.
Cryptocurrencies,DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk
Momentum pricing is typically associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.
The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Any declines in the volume of digital asset transactions, the price of digital assets, or market liquidity for digital assets will generally adversely affect our operating results. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, our financial condition may be adversely affected, and we could determine that it is not economically feasible to continue activities.
The price and trading volume of any digital asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:
| ● | changes<br> in liquidity, market-making volume, and trading activities; |
|---|---|
| ● | investment<br> and trading activities of highly active retail and institutional users, speculators, miners,<br> and investors; |
| --- | --- |
| ● | decreased<br> user and investor confidence in digital assets and digital asset platforms; |
| --- | --- |
| ● | negative<br> publicity and unpredictable social media coverage of digital assets; |
| --- | --- |
| ● | the<br> ability for digital assets to meet user and investor demands; |
| --- | --- |
| ● | the<br> functionality and utility of digital assets and their associated ecosystems and networks; |
| --- | --- |
| ● | consumer<br> preferences and perceived value of digital asset markets; |
| --- | --- |
| ● | regulatory<br> or legislative changes and updates affecting the digital asset economy; |
| --- | --- |
| ● | the<br> characterization of digital assets under the laws of various jurisdictions around the world; |
| --- | --- |
| ● | the<br> maintenance, troubleshooting, and development of the blockchain networks; |
| --- | --- |
| ● | the<br> ability for digital asset networks to attract and retain miners or validators to secure and<br> confirm transactions accurately and efficiently; |
| --- | --- |
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| ● | interruptions<br> in service from or failures of major digital asset platforms; |
|---|---|
| ● | availability<br> of an active derivatives market for various digital assets; |
| --- | --- |
| ● | availability<br> of banking and payment services to support digital asset-related projects; |
| --- | --- |
| ● | level<br> of interest rates and inflation; |
| --- | --- |
| ● | national<br> and international economic and political conditions; |
| --- | --- |
| ● | global<br> digital asset supply; |
| --- | --- |
| ● | changes<br> in the software, software requirements or hardware requirements underlying a blockchain network; |
| --- | --- |
| ● | competition<br> for and among various digital assets; and |
| --- | --- |
| ● | actual<br> or perceived manipulation of the markets for digital assets. |
| --- | --- |
Cryptocurrencies,DeFi Protocol Tokens and Digital Assets Volatility Risk
As Valour’s ETPs track the market price of digital assets, cryptocurrencies and DeFi protocol tokens, the value of the Company’s securities relates partially to the value of such digital assets, cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Company’s securities. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or other third parties holding digital assets, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.
Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, securityholders may experience losses if they need to sell their Company securities at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Company securities. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.
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CybersecurityThreats, Security Breaches and Hacks
As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and/or DeFi protocol tokens can occur.
Security breaches, computer malware and computer hacking attacks have been a prevalent concern in Bitcoin and other cryptocurrency exchange markets since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Company’s securities, resulting in a reduction in the price of the Company’s securities. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.
Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s cryptocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.
As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack
CryptocurrencyExchanges and other Trading Venues are Relatively New
The Company and its affiliates manage its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, Valour relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.
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Regulatoryand Compliance Risks
As digital assets have grown in both popularity and market size, governments around the world have reacted differently to digital assets with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.
Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action and/or subject cryptocurrency mining companies to additional regulation.
The Company has not received any exemptive relief from regulators in Canada. The Company discusses regulatory compliance with its external legal counsel on a regular basis. Investments in the ETPs in the light of their exposure to digital assets must always be assessed by every investor based on the circumstances and legal and regulatory conditions applicable to that investor. An investor governed by such conditions may be subject to limited possibilities to invest in the ETPs and/or experience unforeseeable consequences of a holding in the ETPs. The combination of the nature of Valour’s activities, the markets to which it is exposed, the institutions with which it does business and the securities which it issues makes it particularly exposed to national, international and supranational regulatory action and taxation changes. The scope and requirements of regulation and taxation applicable to the issuer continues to change and evolve, and there is a risk that as a result it may prove more difficult or impossible, or more expensive, for Valour to continue to carry on their functions in the manner currently contemplated. This may require that changes are made in the future to the agreements applicable to Valour and may result in changes to the commercial terms of the ETPs and/or the inability to apply for and redeem ETPs and/or compulsory redemption of some or all of the ETPs and/or disruption to the pricing thereof.
Valour Cayman and VDSL are companies which are regulated by various laws and regulations of the Cayman Islands and Jersey, respectively. Valour Cayman and VDSL cannot fully anticipate all changes that may be made in the future to laws and regulations to which Valour Cayman and VDSL are subject to, nor the possible impact of all such changes. Valour Cayman and VDSL’s ability to conduct its business is dependent on the ability to comply with rules and regulations.
If the Company was found to be in breach of regulations applicable to Valour Cayman or VDSL or the terms and conditions of any ETPs or securities they have issued, it could result in fines or adverse publicity which could have a material adverse effect on the business which in turn may lead to decreased results of operations and the company’s financial condition. Valour Cayman or VDSL’s involvement in such proceedings or settlements as well as potential new legislation or regulations, decisions by public authorities or changes regarding the application of or interpretation of existing legislation, regulations or decisions by public authorities applicable to Valour Cayman or VDSL’s operations, the ETPs and/or the underlying assets, or the terms and conditions of any ETPs or securities they have issued, may adversely affect Valour Cayman or VDSL’s business or an investment in the ETPs.
The impact of any detrimental developments in the underlying digital asset’s regulation on Valour Cayman and VDSL’s ETPs becomes evident by considering an ETP’s product nature: An ETP is a financial instrument traded – like a share – on a stock exchange whereby typically the aim is to provide the same return as a specified benchmark or asset (before fees). Although ETPs can take a number of forms (ETFs/ETCs/ETNs), they share some common characteristics. ETPs are designed to replicate the return of an underlying benchmark or asset, with the easy access and tradability of a share or digital asset (that may otherwise only be bought via a decentralized exchange wallet-setup).
Valour Cayman’s ETPs are non-interest bearing debt securities that are designed to track the return of an underlying digital asset. The current Valour ETP program in place does not provide that those securities are collateralised, though the terms and conditions of any ETPs or securities may differ. Although their yield references an underlying benchmark or asset, the ETPs are similar to unsecured, listed bonds. As such, Valour ETPs are entirely reliant on the creditworthiness of Valour as the issuing entity. Hence, generally a change in that creditworthiness, or application and compliance with other hedging and other collateralization policies, might negatively impact the value of the ETP, irrespective of the performance of the underlying benchmark or digital asset.
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However, the primary appeal of these types of ETPs is that they provide exposure to a benchmark or an asset’s return (minus fees) even when the underlying markets or sectors suffer from liquidity shortages. Unlike physical replication, a synthetic ETP does not hold the underlying assets the product is designed to track. Instead, an ETP issuer like Valour enters into hedging and other transactions thereby directly or indirectly trading in the underlying assets, entering swap agreements, making investment in funds dedicated to holding the underlying digital assets etc. with a range of counterparties to provide the return of the underlying assets. Consequently, a negative change of regulation (tightening/restriction/prohibition) or change in compliance with applicable hedging or collateralization policies can have a direct impact on Valour’s issuer activity or – indirectly – by affecting its contractual counterparties. Restrictive and prohibitive regulation may lead to counterparty default, known as counterparty risk. If a counterparty defaults on its obligations under the hedging or other transactions described above, the ETP would not provide the return of the asset it is designed to track which could also expose investors to losses.
Canada
In Canada, the Canadian Securities Administrators (the “CSA”), the umbrella group for the provincial and territorial securities regulators, have generally taken the position that Canadian securities laws may apply to certain cryptocurrencies, cryptocurrency trading arrangements, token offerings, and platform activities, depending on the facts. The CSA, beginning in 2017, has published a series of Staff Notices outlining their position and explaining how securities laws apply to various aspects of the cryptocurrency industry. Many of those Staff Notices have dealt with cryptocurrency trading platforms and other businesses that hold cryptocurrencies or related contractual rights on behalf of clients, which the Company does not do as part of its business.
The CSA has also, however, published Staff Notices focused on the analysis of when a cryptocurrency constitutes a security for securities law purposes. On August 24, 2017 and June 11, 2018, the CSA published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws. Since then, the CSA has published several papers, notices and guidelines on securities law implications for offerings of tokens and operating cryptocurrency trading platforms. The Canadian Investment Regulatory Organization (“CIRO”) a self-regulatory organization, has established a regulatory framework applicable to crypto asset trading platforms (“CTPs”) operating in Canada, including a process for CTPs to become registered as investment dealers and approved as CIRO Dealer Members, together with guidance respecting matters such as digital asset custody. However, the Canadian regulatory framework applicable to crypto asset businesses continues to evolve, and certain requirements applicable to CTPs remain addressed through terms and conditions of membership and related guidance rather than a fully codified permanent rule framework
While the Company does not create or sell digital assets of its own issue, it holds a number of digital assets from a variety of issuers through its Valour Venture and Valour Infrastructure business lines. In the event that any of these were determined to be securities, it could negatively impact the issuers of those digital assets by making trading subject to prospectus requirements, which could reduce the market price of such assets and therefore devalue the holdings of the Company.
The Company’s Stillman Digital business line provides digital asset trade execution, institutional OTC desk, liquidity provision and market-making services to clients in Canada, and is registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as a foreign money services business (“FMSB”). As a registered FMSB, Stillman Digital is subject to prescribed know-your-client, reporting, recordkeeping and compliance program requirements under Canadian anti-money laundering and anti-terrorist financing (“AML/CFT”) laws and regulations. Such registration is for Canadian AML/CFT purposes only and does not constitute registration, licensing or approval under Canadian securities laws.
Legal or regulatory changes or interpretations of Stillman Digital’s existing and planned activities could require Stillman Digital not only to comply with AML/CFT rules, but also to obtain a registration or otherwise bring its operations into compliance with Canadian securities laws, depending on the nature of Stillman Digital’s activities and how Canadian securities regulatory authorities characterize such activities. This may include requirements to obtain registration, membership, approvals or exemptive relief, or to comply with regulatory obligations applicable to dealers, marketplaces or other regulated intermediaries.
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UnitedStates
The Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada and the Company’s listing on the Nasdaq. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and digital asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a digital asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to digital assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.
Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the securities of the Company. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s securityholders. The impact of any new laws, regulations and guidelines on the business of the Company, including increased costs of compliance and other potential risks cannot be predicted, and accordingly, the Company may experience adverse effects.
U.S.Classification of digital Assets and Investment Company Act of 1940
The SEC and its staff have taken the position that certain digital assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given digital asset is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any particular digital asset as a security. Furthermore, the SEC’s views in this area have evolved over time and it is difficult to predict the direction or timing of any continuing evolution. It is also possible that a change in the governing administration or the appointment of new SEC commissioners could substantially impact the views of the SEC and its staff. Public statements by senior officials at the SEC indicate that the SEC does not intend to take the position that Bitcoin or Ether are securities (in their current form). Bitcoin and Ether are the only digital assets as to which senior officials at the SEC have publicly expressed such a view. Moreover, such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized to any other digital asset. With respect to all other digital assets, there is currently no certainty under the applicable legal test that such assets are not securities, notwithstanding the conclusions we may draw based on our risk-based assessment regarding the likelihood that a particular digital asset could be deemed a “security” under applicable laws. Similarly, though the SEC’s Strategic Hub for Innovation and Financial Technology published a framework for analyzing whether any given digital asset is a security in April 2019, this framework is also not a rule, regulation or statement of the SEC and is not binding on the SEC.
Several foreign jurisdictions have taken a broad-based approach to classifying digital assets as “securities,” while other foreign jurisdictions, such as Switzerland, Malta, and Singapore, have adopted a narrower approach. As a result, certain digital assets may be deemed to be a “security” under the laws of some jurisdictions but not others. Various foreign jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of digital assets as “securities.” The classification of a digital asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, and clearing of such assets.
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Additionally, we do not currently intend to register as an investment company under the Investment Company Act of 1940, as amended (the “InvestmentCompany Act”). If certain digital assets that form a part of our ETPs are determined to be digital assets, we may be obligated to register as an investment company under the Investment Company Act, and we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:
| ● | limitations<br> on capital structure; |
|---|---|
| ● | restrictions<br> on specified investments; |
| --- | --- |
| ● | prohibitions<br> on transactions with affiliates; and |
| --- | --- |
| ● | compliance<br> with reporting, record keeping, voting, proxy disclosure and other rules and regulations<br> that would significantly increase our operating expenses. |
| --- | --- |
Further, the classification of certain digital assets as securities could draw negative publicity and a decline in the general acceptance of the digital asset, which could have a negative effect on our ETPs that contain such digital assets.
Issuanceof Crypto ETPs in the EU
As mentioned above, the Valour Cayman Base Prospectus and VDSL EU Base Prospectus covering the public offering of the ETPs in the EU has been approved by the SFSA, the Swedish financial authority, and is passported to Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain, where the ETPs can be offered and sold via the respective stock exchange listings.
The following provides an overview on the digital assets regulatory landscape on supra-national EU level, the various EU countries in which Valour-issued ETPs are available or the primary EU countries where Valour may issue ETPs in the future.
EU
The EU is the first major jurisdiction worldwide to provide a comprehensive, dedicated regulatory framework for crypto-assets, the EU Markets in Crypto-Asset Regulation (“MiCA”). MiCA has four specific objectives. The first is to provide a legal framework for crypto-assets not covered by existing EU legislation on financial services. Secondly, by setting up a sound and transparent legal framework, it would support innovation, promote crypto-assets and the wider use of distributed ledger technology (“DLT”). Thirdly, the proposal would secure an appropriate level of consumer and investor protection and market integrity. Finally, it would enhance financial stability, as some of the crypto-assets may ‘become widely accepted and potentially systemic’.
MiCA is set to regulate crypto-assets, including so-called stablecoins that do not already fall under existing EU rules, by setting regulatory requirements for the public offer and marketing of crypto-assets and the provision of services related to them. In addition, MiCA includes provisions to prevent market abuse involving crypto-assets. More specifically, with regard to stablecoins and with a view to mitigate risks to investors and financial stability, MiCA provides that issuers of stablecoins will need to be authorised (either as a credit institution or an e-money institution for e-money tokens, or under MiCA for asset-referenced tokens) and have in place a robust and segregated reserve of assets to support the peg, and in the case of e-money tokens, enable holders to redeem at par. For issuers of significant so-called stablecoins, supplemental requirements and EU-level (instead of national) supervision apply. Yet, while MiCA is intended to create a comprehensive regulatory framework for crypto assets, continuous monitoring will remain necessary. As the system continues to evolve quickly, with novel business models and emerging risks, further regulatory actions may be required through time. A wider crypto adoption among European citizens and institutions may also expand intersystem exposures. While asset service providers in the broader ecosystem may be subject to regulation under MiFID II (as defined below) or MiCA, it does not directly impact Valour as an issuer of Exchange Traded Products (ETPs).
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MiCAand Crypto-Assets
MiCA represents a landmark regulatory framework for the crypto industry in the EU, aiming to provide legal certainty, enhance consumer protection, and support innovation while maintaining financial stability. MiCA applies to crypto assets not covered by existing financial services legislation, including e-money tokens, asset-referenced tokens, and other tokens.
Crypto issuers must publish detailed white papers outlining specifics of crypto-assets, potential risks, and environmental impacts. White papers must be transparent, fair, and non-misleading and contain detailed information that mimic what is required in a prospectus. This is set to create a significant change in the drafting of white papers and include requirements that are not seen in other parts of the world, enhancing consumer protection while posing a significant regulatory burden for companies targeting EU clients.
Crypto Asset Service Providers (“CASPs”) will need to obtain authorization to provide digital asset services relating to digital assets within the EU, such as custody, digital asset trading platforms, exchange of digital assets for other assets or funds, advice, portfolio management, etc. The “target test” will apply and non-EU companies targeting EU clients must comply with MiCA standards and may need to establish an EU presence.
Providers must act in clients’ best interests, offering transparent information about pricing, fees, and risks. Specifically, client assets must be kept separate from providers’ own assets. Prompt and effective handling of client complaints is required.
By mid-2025, the European Commission will report on the need for additional laws to address NFTs and decentralized finance. Other EU laws impacting the crypto sector, such as those addressing money laundering, tax avoidance, and cybersecurity, will complement MiCA.
MiCA creates a regulatory framework for crypto-assets that are not covered by existing financial services legislation. This regulation focuses on the issuance, trading, and custody of crypto-assets, as well as the provision of crypto-asset services. Conversely, MiCA does not apply to crypto-assets that qualify as financial instruments under MiFID II (as defined below).
MiFIDII
Under the Markets in Financial Instruments Directive II (“MiFID II”), transferable securities are defined as classes of securities negotiable on the capital market, excluding instruments of payment. These include:
| 1. | Shares in companies and equivalent securities |
|---|---|
| 2. | Bonds and other forms of securitized debt |
| 3. | Any other securities giving the right to acquire or sell transferable<br>securities or leading to cash settlement |
While the provision of investment services related to these securities is regulated, the issuance of transferable securities itself is not a regulated activity under MiFID II.
Valour
The issuance of transferable securities linked to underlying assets is not inherently a regulated activity under MiFID II or MiCA. This remains true regardless of how the relevant underlying assets are classified or treated under these regulatory frameworks. Furthermore, the regulatory status of parties providing services related to these securities does not affect the issuer’s position. In essence, the issuer’s regulatory status remains unchanged under MiFID II or MiCA, irrespective of the nature of the underlying assets or the regulatory obligations of associated service providers.
The regulatory treatment of the underlying assets (whether they are traditional financial instruments or crypto-assets) does not directly impact the issuer’s regulatory position. Similarly, even if parties providing services related to these securities are regulated under MiFID II or MiCA, this does not alter the regulatory status of the issuer.
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Valour’s regulatory position therefore remains consistent, regardless of the complex interplay between the securities, their underlying assets, and the broader regulatory environment.
While the issuance itself may not be a regulated activity, Valour will continue to comply with other regulatory obligations, such as disclosure requirements or compliance with securities laws, depending on the nature of their offerings and the jurisdictions in which they operate.
Valour will continue to monitor the evolving regulatory landscape, as interpretations and applications of these regulations may change over time.
Sweden
The SFSA and the central bank have publicly declared that Bitcoin is legal but not an official form of payment or legal tender. From a tax perspective they are viewed as an asset, not a currency or cash. The SFSA has warned of the risks associated with cryptos and investment products with cryptos as underlying assets, such as ETPs. Sweden has imposed registration requirements that mean custodians, wallet providers and exchanges must comply with the Swedish Currency Exchange Act. The act requires certain types of financial institutions (which are otherwise largely unregulated and unsupervised) to comply with anti-money laundering (“AML”) provisions. The scope of the Currency Exchange Act now includes custodian wallet providers and providers of virtual currency exchange services in accordance with the implementation of the Fifth Anti-Money Laundering Directive (“AMLD5”). Mining activities are not regulated under Swedish law. There are no licensing or registration requirements specifically applicable to virtual currency mining activities. Sweden’s Central Bank, the Riksbanken, has been a leader in developing a Central Bank Digital Currency, the e-krona.
France
In April 2019, the French National Assembly adopted the Plan d’Action pour la Croissance et la Transformation de Enterprises (PACTE – Action Plan for Business Growth and Transformation) that will establish a framework for digital asset services providers. France’s Financial Market Authority (AMF) has adopted new rules and regulations for cryptocurrency service providers and ICOs, pursuant to PACTE Ordinance No. 2020-154452, issued on December 9, 2020, to compliment France’s cryptocurrency regulations. In June 2021, the regulations were finalized and went into effect. Firms are now subject to mandatory registration and subject to stricter KYC regulations. The rules established new anti-money laundering and counter-terrorist financing (“AML/CFT”) rules related to digital assets. They imposed new requirements on crypto exchanges and prohibit anonymous accounts, expand AML/CFT and KYC obligations to better harmonize the French AML framework with FATF principles and respond to new risks associated with digital assets. France has been actively involved in shaping EU-wide crypto regulations, such as MiCA, which will impact its domestic regulatory landscape and other EU Member States.
Germany
The German government was one of the first countries to provide legal certainty to financial institutions, allowing them to hold crypto-assets. Regulations stipulate that citizens and legal entities can buy or trade crypto-assets as long as it is done through licensed exchanges and custodians. Pursuant to those regulations crypto-assets qualify as financial instruments under the German Banking Act and firms providing services in regard to crypto-assets must be licensed by the German Federal Financial Supervisory Authority (BaFin). With the applicability of MiCA, the German supervisory framework for the provision of digital asset services has been changed by the German Financial Market Digitalization Act, with changes to the German Banking Act (KWG) set to come into effect on December 30, 2024. The German Banking Act is still applicable for crypto-assets which fall under the MiFID II regime. Crypto-assets falling within the scope of MiCA are exclusively subject to the requirements of MiCA. Germany has agreed to the requirements under AMLD5.
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Italy
In February 2022, Italy published new AML rules for crypto firms which outline registration and reporting requirements for VASPs that align with the EU AMLD5 and the FATF guidelines for crypto firms. The new rules also require virtual asset service providers to register in a special roster for crypto firms. Registration is required if firms offer any digital asset-related services in the country. Italy joined the European Blockchain Partnership (“EBP”) along with 22 other countries in April 2018. The EBP was established to enable member states to work together with the European Commission on blockchain technology. Cryptocurrencies and blockchain are regulated at the legislative level in Italy under Legislative Act no. 90. The decree in 2017 grouped cryptocurrency exchanges with foreign currency exchanges. Although the decree states that cryptocurrencies are not issued by the central bank and are not correlated with other currencies, it is a virtual currency used as a medium of exchange for goods and services.
Austria
The Financial Market Authority (“FMA”) has warned investors that cryptocurrencies are risky and that the FMA does not supervise or regulate virtual currencies, including Bitcoin, or cryptocurrency trading platforms. The FMA’s regulations follow Austria’s implementation of the AMLD5, defining crypto-assets as “financial instruments.” The FMA regulations provide registration requirements with respect to the issuance and selling of virtual currencies, as well as transferring them, providing trading and exchange platforms for them, and providing custodian wallets. Cryptocurrencies are legal but are not considered as legal tender. The Austrian Ministry of Finance classes cryptocurrencies as “other (intangible) commodities.”
Belgium
The Belgian Financial Services and Markets Authority and the National Bank of Belgium are the primary regulatory bodies for financial services in Belgium. The regulators have published guidance and warnings to the public that cryptocurrencies are not legal tender and have also issued statements regarding scams and investor protection. Belgium has, however, fostered a strong fintech community involved in digital assets and blockchain. The Minister of Justice has announced plans to establish a legal framework related to cryptos. In February 2022, Belgium announced new rules for certain virtual asset service providers. The rules, which took effect in May 2022, require service providers “to meet a series of conditions, including ones relating to their professional integrity and compliance with the anti-money laundering legislation.”
Denmark
The Danish Financial Supervisory Authority is the main regulator in Denmark. Cryptocurrency regulation is, however, influenced by EU law. An amendment in January 2020 to the Danish Act on Measures to Prevent Money Laundering and Financing of Terrorism defines a virtual currency as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.” There is no regulation of mining for virtual currencies in Denmark. Denmark amended the AML Act in 2020 to implement AMLD5, which is designed to bring virtual currencies within the scope of the existing AML-laws. The Danish central bank, the Nationalbanken, is researching the development of a digital currency, the “e-krone.”
Finland
In May 2019, Finland’s Financial Supervisory Authority (the “FFSA”) began regulating virtual currency exchange providers, wallets and issuers of virtual currencies. Registration is required to ensure compliance with statutory requirements surrounding reliability of the provider, protection of client money, segregation of assets, marketing and compliance with AML/CFT regulations. The FFSA has warned consumers of the risky, volatile and speculative nature of the investments. The FFSA has published stricter rulings regarding crypto marketing saying “Only registered virtual currency providers can market virtual currencies and related services in Finland. The marketing of virtual currencies in Finnish and in Finland is only allowed for entities registered as virtual currency providers in Finland.” The list of supervised entities operating in the cryptocurrency and digital currency sector is small; although, the FFSA does not advise on or restrict Finnish customers visiting foreign websites. Finland has joined the European Blockchain Partnership and agreed to AMLD5.
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Luxembourg
In Luxembourg, there is not yet a formal regulatory stance on crypto-assets, but the “Virtual Assets – FAQ” document published in November 2021 and updated in January 2022 by the Commission de Surveillance du Secteur Financier (“CSSF”) has shed a light on some aspects.
For instance, it clarified that Undertaking for Collective Investment in Transferable Securities (UCITS) funds and Undertakings for Collective Investment (UCIs) addressing non-professional customers and pension funds are forbidden to invest directly or indirectly in virtual assets. The document also outlines the conditions under which Alternative Investment Funds may invest in crypto-assets, as well as the requirements for the Alternative Investment Fund Manager and the specific AML considerations.
Lastly, in a FAQ document on virtual assets for credit institutions issued in January 2022 by the CSSF, the regulator states that credit institutions may directly invest in virtual assets and open accounts that allow customers to invest in virtual assets. On the other hand, credit institutions cannot open bank accounts in virtual assets, must submit a business case and an application file to the CSSF to provide virtual assets services, and must set up an effective investor protection framework.
TheNetherlands
The Dutch Central National Bank De Nederlandsche N.V. (“DNB”) requires crypto firms to register with it. Dutch regulations require VASPs to provide identifying information on themselves and their customers. The DNB also supervises crypto service providers’ compliance with the Sanctions Act 1977. The DNB defines cryptos as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency, and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.” In May 2020 the Dutch Implementation Act amended Dutch AML rules and implemented AMLD5.
Norway
Cryptocurrencies are legal. They are defined as an asset and not any type of money. Norway has been an attractive location for blockchain start-ups. The Financial Supervisory Authority of Norway (“Finanstilsynet”) and the country’s Ministry of Finance has established money laundering regulations which apply to “Norwegian providers of virtual currency exchange and storage services.” The legislation requires firms that provide storage services and exchanges that convert cryptos to fiat currency to comply with AML rules, but it does not impose regulatory obligations on other crypto services. “Finanstilsynet will ensure that virtual currency exchange and storage providers comply with the money laundering rules. However, FSA does not have any tasks monitoring other areas of these providers, such as investor protection,” the regulator said. In June 2021, Finanstilsynet published a warning which said, “Most cryptocurrencies are subject to extreme price fluctuations. The risk of loss is high… Price formation is in many cases not transparent.” It also warned of significant criminal activity. “Scammers use spam, computer viruses, fake drawings and a variety of other techniques to deceive consumers,” the warning stated.
Spain
Like its neighbor Portugal, Spain was a notable early hot spot for cryptocurrencies among EU members, with merchants accepting payments and Bitcoin kiosks in the streets. Despite having no formal legal status, virtual currencies in Spain are taxable as income and under VAT. In 2021 the Spanish Securities and Exchange Commission, the Comision Nacional del Mercado de Valores (“CNMV”) and the Bank of Spain issued a joint statement warning of the risks and volatility associated with cryptocurrencies. The joint statement also highlighted that, from a legal standpoint, cryptocurrencies are not a means of payment and are not backed by a central bank or other customer protection mechanisms or authority. Spain issued the Royal Decree Law 5/202176 which included a provision giving the CNMV power to regulate advertising related to cryptocurrencies. In January 2022, the CNMV published a circular saying it would begin to regulate rampant advertising of digital assets, including by social media influencers, to make sure investors are aware of risks.
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ETPissuance into non-EU countries
Valour offers a limited number of ETPs in Switzerland and the United Kingdom.
Switzerland
Switzerland is known as one of the most cryptocurrency-friendly nations in the world. Switzerland’s financial markets regulator, the Swiss Financial Market Supervisory Authority (“FINMA”) has defined licensing requirements for cryptocurrency businesses of all types including Bitcoin kiosk operations, and has created requirements for blockchain companies. Cryptocurrency businesses are subject to AML regulations and licensing requirements under FINMA. FINMA’s regulatory environment complies with the FATF’s digital asset regulation issued in June 2019. Switzerland further improved its regulations surrounding tokens with the August 2021 implementation of the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology.
TheUnited Kingdom
The crypto asset legal and regulatory landscape in the UK is rapidly evolving. Since January 10, 2020, certain types of crypto asset businesses operating in the UK (i.e. those offering exchange services and custody services) have been regulated by the Financial Conduct Authority (“FCA”) for AML/CFT purposes.
In 2023, the government announced plans to legislate for a comprehensive future financial services regime for crypto assets—accordingly, the FCA’s remit is expected to expand from the AML/CFT regime and financial promotions rules to cover wider conduct rules in relation to a broad variety of activities involving crypto assets (including stablecoins). Various projects are underway in relation to these matters but further final rules are not expected until 2026.
In March 2024, the London Stock Exchange (“LSE”) confirmed that it will accept applications for the admission of BTC and ETH-backed crypto ETNs commencing from the second quarter of 2024 (for professional investors only). The FCA concurrently updated its position on crypto assets and stated that it will not object to requests to create a UK listed market segment for asset-backed crypto ETNs. The first such ETNs were listed in 2024 and the market has grown since.
In September 2024, the Digital Securities Sandbox (“DSS”) formally opened for applications. The DSS is the first FMI sandbox created under the powers conferred on HM Treasury by FSMA 2023, and provides a regulated environment for firms, in particular financial market infrastructures (“FMIs”), to test new technologies such as distributed ledger technology (“DLT”) in the issuance, trading and settlement of transferable securities. Importantly, the UK government is seeking to deliver a pilot issuance of digital gilts (known as the Digital Gilt Instrument, or DIGIT) in the short to medium term, through the DSS.
In December 2024, the FCA published consultations on admissions and disclosures, and the market abuse regime for crypto assets. Additionally, in January 2025, new legislation came into force which clarifies that crypto asset staking arrangements do not fall within scope of the definition of “collective investment schemes”. The Prudential Regulatory Authority (“PRA”) and the Bank of England (“BoE”) are also developing their policy approach towards the prudential treatment of crypto asset exposures (in line with the standards set out in the updated Basel Framework) – to that effect, the PRA issued a data request in December 2024 seeking to gather information from firms to inform its approach.
In terms of legislative reform, the Law Commission of England and Wales has carried out extensive analysis on a number of digital asset related issues, including on smart contracts, property rights of digital assets, private international law challenges in matters involving digital assets, decentralised autonomous organisations, and electronic trade documents. Following the recommendation of the Law Commission, the Property (Digital Assets etc.) Bill was introduced into Parliament in 2024, which seeks to clarify that under English law, things (such as digital assets) are not prevented from being capable of attracting property rights on the basis that they do not fit easily into existing categories of “property” (as defined under historic common law). The Bill is currently progressing through the legislative process.
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VenturePortfolio Exposure
Given the nature of the Company’s Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early-stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and projects in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.
BanksMay Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services
A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system, harming public perception of cryptocurrencies, or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.
Impactof Geopolitical Events
Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of cryptocurrencies. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.
As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.
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FurtherDevelopment and Acceptance of Digital Assets and DeFi Networks
The further development and acceptance of digital assets and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:
| ● | continued<br> worldwide growth in the adoption and use of cryptocurrencies and DeFi; |
|---|---|
| ● | governmental<br> and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or<br> regulation of access to and operation of the network or similar cryptocurrency and DeFi systems; |
| --- | --- |
| ● | changes<br> in consumer demographics and public tastes and preferences; |
| --- | --- |
| ● | the<br> maintenance and development of the open-source software protocol of relevant networks; |
| --- | --- |
| ● | the<br> availability and popularity of other forms or methods of buying and selling goods and services,<br> including new means of using fiat currencies; |
| --- | --- |
| ● | general<br> economic conditions and the regulatory environment relating to digital assets and decentralized<br> finance; and |
| --- | --- |
| ● | negative<br> consumer sentiment and perception of cryptocurrencies. |
| --- | --- |
Currently, there is relatively small use of digital assets in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.
As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example, as a means of payment for goods and services by major retail and commercial outlets. Conversely, a significant portion of digital asset demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of digital assets. The relative lack of acceptance of digital assets in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.
TradeErrors
We may make, or otherwise be subject to, trade errors. Errors may occur with respect to trades executed on our behalf. Trade errors can result from a variety of situations, including, for example, when the wrong investment is purchased or sold or when the wrong quantity is purchased or sold. Trade errors frequently result in losses, which could be material. To the extent that an error is caused by a third party, we may seek to recover any losses associated with the error, although there may be contractual limitations on any third party’s liability with respect to such error.
Dependenceon Investment Manager
The success of the Company’s Equity Investments in Digital Assets is dependent upon the ability of the investment manager to manage the investment fund and effectively implement the investment fund’s investment program. The investment fund’s governing documents do not permit the Company participate in the management and affairs of the investment fund.
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Discretionas to Distributions and Timing of Withdrawal
The investment manager of the Company’s Equity Investment in Digital Assets is not obligated to distribute digital assets in-kind nor to distribute the proceeds from the sale of any digital assets. The Company is permitted to make withdrawals, however, the ability to make withdrawals may be limited while the investment manager is actively engaged in investment strategies or other activities. The Company is also required to be provide a significant advanced notice in respect of any withdrawal, and accordingly its ability to withdraw in a timely manner is limited.
Discretionas to Form of Payment.
The investment manager of the Company’s Equity Investments in Digital Assets has the discretion to make distribution and pay withdrawals in unlocked digital assets, cash or a combination. There can be no assurance as to (i) the form of distribution or payment, (ii) that the investment fund will have sufficient cash or unlocked digital assets to satisfy withdrawal requests, or that it will be able to liquidate investments at favorable prices at the time such withdrawals are requested. The Company has no right to request in-kind distributions and should not expect the investment fund to accommodate any such request.
Conditionson Equity Investments in Digital Assets
The digital assets held by the Equity Investments in Digital Assets are subject to staggered lock up periods pursuant to which the digital assets are not freely tradeable. As a result, the Company may only request to withdraw the portion of its capital account balance that corresponds to its pro-rata share of the applicable digital assets that is no longer locked-up and freely transferable by the investment fund.
Developmentand Acceptance of the Digital Asset Networks
The growth and use of digital assets generally is subject to a high degree of uncertainty. The future of the industry likely depends on several factors, including, but not limited to: (a) economic and regulatory conditions relating to both fiat currencies and digital assets; (b) government regulation of the use of and access to digital assets; (c) government regulation of digital asset service providers, administrators or exchanges; and (d) the domestic and global market demand for—and availability of—other forms of digital asset or payment methods. Any slowing or stopping of the development or acceptance of digital assets may adversely affect the Company.
DigitalAsset Audit Risk
Audits for entities holding digital assets are unlike audits for other types of entities. Special procedures must be taken to determine whether investments and transactions are properly accounted for and valued because independent confirmation of digital asset ownership (e.g., ownership of a balance on a digital asset exchange) differs dramatically from traditional confirmation with a securities broker or bank account. The Company requires satisfactory processes in place in order for the auditor to obtain the Company’s transaction history and properly prepare audited financials. Any breakdown in such processes may result in delays or other impediments of an audit. In addition, the complexity of digital assets generally may lead to difficulties in connection with the preparation of audited financials.
Riskof Total Loss of Equity Investment in Digital Assets.
While all investments risk the loss of capital, the equity investment in digital assets should be considered substantially more speculative and significantly more likely to result in a total loss of capital than most other investment funds. The investment manager will not attempt to mitigate the potential of loss of capital through the use of risk management techniques. Rather, the investment manager generally intends only to sell the digital assets when such sales are necessary in order to satisfy withdrawal requests. Furthermore, the investment manager does not intend to hedge potential losses and will not make investment decisions based on the price of the digital assets. Consequently, the equity investment in digital assets could result in the total loss of the Company’s capital.
Riskof Loss, Theft or Destruction of Cryptocurrencies
There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. Digital assets of Valour that are held internally via multi-signature cold storage may be prone to loss or theft as a result of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.
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Irrevocabilityof Transactions
Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.
PotentialFailure to Maintain Digital Asset Networks
Many digital asset networks, including the Bitcoin Network, operate based on an open-source protocol maintained by the core developers of such networks and other contributors. As such, protocols are not sold and their uses do not generate revenues for its development team, and the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks, and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, are currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with such network protocol and the core developers, and open source contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Company’s securities may be adversely affected.
PotentialManipulation of Blockchain
If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.
MinersMay Cease Operations
If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.
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RisksRelated to Insurance
The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.
Concentrationof Investments
Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As of December 31, 2023, the Company’s investments through its Venture business arm comprise of C$44,184,021, which represented approximately 7.5% of the Company’s total assets.
Competition
The Company operates in a highly competitive industry and competes against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.
The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. The Company’s business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:
| ● | greater<br> name recognition, longer operating histories, and larger market shares; |
|---|---|
| ● | larger<br> sales and marketing budgets and organizations; |
| --- | --- |
| ● | more<br> established marketing, banking, and compliance relationships; |
| --- | --- |
| ● | greater<br> resources to make acquisitions; |
| --- | --- |
| ● | lower<br> labor, compliance, risk mitigation, and research and development costs; |
| --- | --- |
| ● | operations<br> in certain jurisdictions with lower compliance costs and greater flexibility to explore new<br> product offerings; and |
| --- | --- |
| ● | substantially<br> greater financial, technical, and other resources. |
| --- | --- |
If the Company is unable to compete successfully, or if competing successfully requires the Company to take costly actions in response to the actions of the Company’s competitors, the Company’s business, operating results, and financial condition could be adversely affected.
Harm to the Company’s brand and reputation could adversely affect the Company’s business. The Company’s reputation and brand may be adversely affected by complaints and negative publicity about the Company, even if factually incorrect or based on isolated incidents. Damage to the Company’s brand and reputation may be caused by:
| ● | cybersecurity<br> attacks, privacy or data security breaches, or other security incidents; |
|---|---|
| ● | complaints<br> or negative publicity about the Company, its ETPs, its management team, its other employees<br> or contractors or third-party service providers; |
| --- | --- |
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| ● | actual<br> or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by<br> its management team, its other employees or contractors or third-party service providers; |
|---|---|
| ● | unfavorable<br> media coverage; |
| --- | --- |
| ● | litigation<br> involving the Company, or regulatory actions or investigations into its business; |
| --- | --- |
| ● | a<br> failure to comply with legal, tax and regulatory requirements;any perceived or actual weakness<br> in its financial strength or liquidity; |
| --- | --- |
| ● | any<br> regulatory action that results in changes to or prohibits certain lines of its business; |
| --- | --- |
| ● | a<br> failure to operate our business in a way that is consistent with its values and mission; |
| --- | --- |
| ● | a<br> sustained downturn in general economic conditions; and |
| --- | --- |
| ● | any<br> of the foregoing with respect to its competitors, to the extent the resulting negative perception<br> affects the public’s perception of the Company or its industry as a whole. |
| --- | --- |
PrivateIssuers and Illiquid Securities
Through its Ventures business line, the Company invests in securities and/or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.
The value attributed to securities and/or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.
The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.
The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.
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CashFlow, Revenue and Liquidity
The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to the Company, if the value of our investments decline resulting in losses upon disposition, if there is low demand for our ETPs resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.
RiskManagement
The Company seeks to mitigate risk and have established policies for the types of risk to which the Company is subject, including operational risk, credit risk, market risk, counterparty risk, exchange risk and liquidity risk. However, there are inherent limitations to our current and future risk management strategies, including risks that management has not appropriately anticipated or identified. Accurate and timely enterprise-wide risk information is necessary to enhance management’s decision-making in times of crisis. If the Company’s risk management framework proves ineffective or if our enterprise-wide management information is incomplete or inaccurate, we could suffer unexpected losses, which could materially adversely affect our business, results of operations and financial condition. The Company continually assesses its risk profile and risk management processes across the firm to identify opportunities for improvement and to consider whether it needs to address new technologies and innovations in its risk management processes and policies. While the Company has not identified any material gaps with respect to recent digital asset market events, the Company cannot guarantee that our risk management processes will continue to be effective in preventing or mitigating losses from future market events.
Dependenceon Management Personnel and Ability to Recruit and Retain Qualified Directors and Officers
The Company is dependent upon its ability to attract and retain highly qualified personnel and directors, as well as the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain as officers, employees or consultants of the Company. The loss of the services of any of these individuals or the loss of qualified directors, if not replaced in a timely manner, could have a material adverse effect on the Company’s revenues, net income and cash flows, and could harm its ability to maintain or grow existing assets and raise additional funds in the future.
Sensitivityto Macro-Economic Conditions
Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other digital assets, as the trading price for the Company’s securities may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.
AvailableOpportunities and Competition for Investments
The success of the Company’s Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.
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SharePrices of Investments
Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years, equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments. In addition, the price of the Company’s Common Shares, may be affected by its failure to comply with the continued listing requirements of stock exchanges on which it is listed. For example, the Company is not currently in compliance with the Nasdaq minimum bid price requirement. For more information, see “Risk Factors - Risks Relating to the Business and Industry of the Company – Noncompliance with Continued Listing Requirements of Nasdaq and Potential Delisting” elsewhere in this AIF.
AdditionalFinancing Requirements
The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause securityholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.
NoGuaranteed Return
There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.
Failureto Develop and Execute Successful Investment or Trading Strategies
The success of the Company’s investment and trading activities, including through DeFi Alpha, will depend on the ability of the investment team to identify overvalued and undervalued investment opportunities and to exploit price discrepancies. This process involves a high degree of uncertainty. No assurance can be given that the Company will be able to identify suitable or profitable investment opportunities in which to deploy our capital. The success of the trading activities also depends on the Company’s ability to remain competitive with other DeFi providers. Competition in trading is based on price, offerings, level of service, technology, relationships and market intelligence. The success of investment activities depends on the Company’s ability to source deals and obtain favorable terms. The barrier to entry in each of these businesses is very low and competitors will likely provide similar services in the near future. The success of the Company’s Venture investments and trading business could suffer if the Company is not able to remain competitive.
Managementof the Company’s Growth
Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.
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Social,Political, Environmental and Economic Risks in the Countries in which the Company’s Investments are Located
The Company’s investments are affected in varying degrees by the political and social stability, environmental and economic conditions in the countries in which its investments are located. Such investments may also be affected in varying degrees by terrorism, military conflict or repression, crime, populism, activism, labour unrest, renegotiation, nullification or failure to renew or grant existing concessions, licences permits and contracts, unstable or unreliable legal systems, changes in fiscal regimes including taxation, and other risks arising out of sovereignty issues.
DueDiligence
The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available, including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunities. Moreover, such an investigation will not necessarily result in the investment being successful.
ExchangeRate Fluctuations
A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.
Non-controllingInterests
The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree, or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.
Changesin Legislation and Regulatory Risk
There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.
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Itis Likely that the Company is a Passive Foreign Investment Company for U.S. Federal Income Tax Purposes, Which Could Result in MateriallyAdverse U.S. Federal Income Tax Consequences to U.S. Holders of Company Securities
A non-U.S. entity treated as a corporation for U.S. federal income tax purposes will be a passive foreign investment company (“PFIC”), for any taxable year if either (i) at least 75% of its gross income for such year is passive income or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. Passive income generally includes, among other things, interest, dividends, rents, royalties, and other investment income and gains, with certain exceptions. In addition, cash and other assets readily convertible into cash are generally categorized as passive assets. The PFIC rules also contain a look through rule whereby we will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation of which we own, directly or indirectly, at least 25% (by value) of the stock.
Based on the current and anticipated value and composition of our income and assets, it is likely that the Company will be classified as a PFIC for U.S. federal income tax purposes for its current taxable year. A separate determination has to be made after the close of each taxable year as to whether we were a PFIC for that year. This determination will depend on, among other things, the composition of the income and assets, as well as the value of the assets, of us and our subsidiaries from time to time. The value of the assets for purposes of the PFIC determination will generally be determined by reference to the market price of the Company’s securities, which could fluctuate significantly. Moreover, the application of the PFIC rules is unclear in certain respects. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance as to our PFIC status for the current or any future taxable year.
If the Company is considered a PFIC, material adverse U.S. federal income tax consequences could apply to U.S. Holders (as defined in the section headed “Certain United States Federal Income Tax Considerations”). Potential investors are strongly advised to consult their own advisors regarding the consequences to them if we were to be considered a PFIC, including the availability of any elections that could mitigate the adverse U.S. federal income tax consequences of our PFIC status. Please see “Certain United States Federal Income Tax Considerations—Passive Foreign Investment Company” for more information.
Lossof Foreign Private Issuer Status in the Future
The Company may in the future lose its foreign private issuer status if a majority of the Common Shares are owned of record in the United States and the Company fails to meet the additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to the Company under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs the Company incurs as a Canadian foreign private issuer eligible to use the multijurisdictional disclosure system. If the Company is not a foreign private issuer, it would not be eligible to use the multijurisdictional disclosure system or other foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer.
Forward-LookingInformation and FOFI May Prove Inaccurate
Readers are cautioned not to place undue reliance on forward-looking information. By their nature forward-looking information and future-orientated financial information and financial outlook information (collectively, “FOFI”) involve numerous assumptions and known and unknown risks and uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those suggested by the forward-looking statements and/or FOFI or contribute to the possibility that predictions, forecasts or projections will prove to be materially inaccurate.
Risks Associated with its Internal ControlOver Financial Reporting.
The Company is subject to reporting and other obligations under applicable U.S. and Canadian securities laws and the rules of Nasdaq and Cboe Canada. The Company has significant requirements for enhanced financial reporting and internal control. The process of designing and implementing effective internal control is a continuous effort that requires the Company to anticipate and react to changes in its business and the economic and regulatory environments and to expend significant resources to maintain a system of internal control that is adequate to satisfy its reporting obligations as a public company. Any failure to implement or maintain internal control could cause the Company to fail to meet its reporting obligations on a timely basis, result in material misstatements in its consolidated financial statements and harm its business and results of operations. If the Company is unable to implement any required changes to its internal control over financial reporting effectively or efficiently, it could adversely affect the Company’s operations, financial reporting and results of operations. In addition, if the Company fails to maintain an effective system of disclosure controls and internal control over financial reporting, its ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected.
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In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, the Company may identify deficiencies related to internal control over financial reporting that it may not be able to remediate in time to meet the deadline imposed by U.S. and/or Canadian securities laws, including pursuant to Section 404 of the Sarbanes-Oxley Act. The Company’s testing may reveal deficiencies in its internal control over financial reporting that are deemed to be material weaknesses which could result in a material misstatement of its annual consolidated financial statements or its interim reports, or disclosures that may not be prevented or detected.
The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all error and fraud. The inherent limitations include the realities that judgements in decision making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by individual acts of certain persons, by collusion of two or more people or by management override of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected in a timely manner or at all. The Company may not be able to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with U.S. and/or Canadian securities laws, including, the Sarbanes-Oxley Act, for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, or its independent registered public accounting firm may not issue an unqualified opinion, as and when applicable. If the Company is unable to conclude that it has effective internal control over financial reporting, investors could lose confidence in the Company’s reported financial information, which could adversely affect the trading price of the Company’s Common Shares and make the Company subject to investigations by the stock exchanges on which its securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources. Failure to accurately report the Company’s financial performance on a timely basis could also jeopardize the Company’s listing on Nasdaq and Cboe Canada or any other stock exchange on which its Common Shares may be listed. Delisting of the Common Shares on any exchange would reduce the liquidity of the market for the Company’s Common Shares, which would reduce the price of and increase the volatility of the market price of its Common Shares.
For example, the Company identified a material weakness in its internal control over financial reporting and restated its financial statements for the three-month periods ended June 30, 2023, and September 30, 2023 as a result of factors related to that weakness. For more information, see “Risk Factors – Risks Relating to the Business and Financial Condition of the Company – Material Weakness in the Company’s Financial Statements” elsewhere in this AIF. The Company may not be able to successfully remediate the identified material weakness or may identify additional material weaknesses in the future or fail to maintain effective internal control over financial reporting, which may result in material misstatements of its consolidated financial statements or cause the Company to fail to meet its periodic reporting obligations, which could have a material adverse effect on the Company, its business, results of operations, financial condition and stock price.
Stock Exchange Listing Compliance Risk
The Company’s Common Shares are listed on Nasdaq and Cboe Canada. Continued listing on these stock exchanges is subject to compliance with their rules and continued listing requirements, including minimum bid price, minimum market value, and corporate governance standards. If the Company fails to meet these requirements, it may receive a deficiency notice and could face delisting proceedings. Delisting from the stock exchanges could adversely affect the liquidity and market price of the Common Shares, the Company’s ability to raise capital, and the Company’s reputation with investors and business partners. The Company is not currently in compliance with the Nasdaq minimum bid price requirement. For more information, see “Risk Factors - Risks Relating to the Business and Industry of the Company – Noncompliance with Continued Listing Requirements of Nasdaq and Potential Delisting” elsewhere in this AIF.
U.S. and Canadian securities laws as well as the rules of Nasdaq and Cboe Canada require, among other things, timely filing of financial statements and certain related documents and reports. If the Company is unable to meet these requirements, it could face stock exchange delisting proceedings and penalties under applicable U.S. and Canadian securities laws. On March 23, 2026, the Company announced it may experience a delay and default in filing its Annual Filings and it has applied to the OSC to approve the MCTO. A delay and default in filing the annual filings could have a material adverse effect on the Company, its business, results of operations, financial condition and stock price. Additionally, it is not certain the Company will receive the MCTO. Should the Company not receive the MCTO, the Company, its business, results of operations, financial condition and stock price could be materially adversely effected. For more information, see “General Development of the Business – Three Year History – Subsequent to Fiscal 2025” elsewhere in this AIF.
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Additionally, members of our management team and our board of directors have limited experience managing a publicly traded company and navigating the complex regulatory environment for public companies. We are subject to significant regulatory oversight and reporting obligations under the U.S. and Canadian securities laws and the continuous scrutiny of securities analysts and investors. These obligations and constituents require significant attention from our management and board of directors, and failure to effectively comply with the regulations applicable to public companies may materially and adversely affect DeFi’s reputation, business, results of operations, financial condition, prospects and valuation, and the value of its Common Shares.
Noncompliance with Continued Listing Requirementsof Nasdaq and Potential Delisting
The Company’s Common Shares are currently listed for trading on The Nasdaq Capital Market under the symbol “DEFT”. The continued listing of the Company’s Common Shares on Nasdaq is subject to the Company’s compliance with a number of listing standards. On March 5, 2026, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC notifying the Company that the minimum bid price per share of its Common Shares was below $1.00 for a period of 30 consecutive business days as of March 4, 2026 and that the Company did not meet the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”) to maintain a minimum bid price of $1.00 per share. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days, or until September 1, 2026, to regain compliance with the Minimum Bid Price Rule. To regain compliance, the closing bid price of the Company’s Common Shares must be at least $1.00 per Common Share for a minimum of ten consecutive business days (though Nasdaq staff may, in their discretion, extend this to generally up to 20 consecutive business days). There can be no assurance that the Company will be able to regain compliance with these requirements or that the Company’s Common Shares will continue to be listed on Nasdaq.
In the event the Company does not regain compliance by September 1, 2026, the Company may be eligible for an additional 180-calendar-day compliance period. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, including by effecting a reverse stock split, if necessary. If the Company is not eligible for the second compliance period or Nasdaq staff concludes that the Company will not be able to cure the deficiency during the second compliance period, Nasdaq will provide written notice to the Company that the Company’s Common Shares will be subject to delisting. In the event of such notification, the Company may appeal Nasdaq’s determination to delist its Common Shares, but there can be no assurance that Nasdaq would grant the Company’s request for continued listing.
The Company intends to monitor the closing bid price of its Common Shares and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Rule. There can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Rule, or will otherwise be in compliance with other Nasdaq Listing Rules. In addition, there can be no assurance that, if the Company were to effect a reverse stock split after obtaining any required approvals and intending to regain compliance, the reverse stock split would cause the Company’s Common Shares to meet the Minimum Bid Price Rule. If the Company fails to regain compliance with the Nasdaq continued listing standards, Nasdaq will provide notice that the Company’s Common Shares will be subject to delisting.
Such a delisting or even notification of failure to comply with such requirements would have a negative effect on the price of the Company’s Common Shares and would impair your ability to sell or purchase the Common Shares when you wish to do so. In addition, the delisting of the Common Shares could lead to a number of other negative implications such as a loss of media and analyst coverage, a determination that the Common Shares are a “penny stock” which will require brokers trading in the Common Shares to adhere to more stringent rules and likely result in a reduced level of trading activity in the secondary trading market for the Company’s securities, and materially adversely impact the Company’s ability to raise capital on acceptable terms or at all. Delisting from Nasdaq could also have other negative results, including the potential loss of confidence by the Company’s current or prospective third-party providers and partners, the loss of institutional investor interest, and fewer partnering opportunities. In the event of a delisting, the Company may take actions to restore its compliance with Nasdaq’s listing requirements, but the Company can provide no assurance that any such action would allow its Common Shares to become listed again, stabilize the market price or improve the liquidity of its Common Shares, prevent its Common Shares from dropping below the Nasdaq Minimum Bid Price Rule or prevent future non-compliance with Nasdaq’s listing requirements.
If the Company’s Common Shares were no longer listed on Nasdaq, investors would be limited to where they could trade, and might only be able to trade on Cboe Canada or on one of the over-the-counter markets. There is no assurance, however, that prices for the Company’s Common Shares would be quoted on one of these other trading systems or that an active trading market for its Common Shares would exist, which would materially and adversely impact the market value of its Common Shares and your ability to sell the Common Shares.
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RisksRelating to the Business and Financial Condition of the Company
LimitedOperating History as a DeFi Company
The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.
The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.
NoHistory of Operating Revenue and Cash Flow
The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.
The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.
InsufficientCash Flow and Funds in Reserve
The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.
The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.
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MaterialWeakness in the Company’s Financial Statements
We identified a material weakness in our internal control over financial reporting and restated our financial statements for the three-month periods ended June 30, 2023, and September 30, 2023 as a result of factors related to that weakness. This may adversely affect the accuracy and reliability of our financial statements and, if we fail to maintain effective internal financial control reporting (“ICFR”) it could impact our reputation, business and the price of the Company’s securities, as well as lead to a loss of investor confidence in us.
There can be no assurance that we will be able to successfully remediate the identified material weakness, or that we will not identify additional control deficiencies or material weaknesses in the future. If we are unable to successfully remediate our existing or any future material weaknesses in our ICFR, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities laws and CBOE Canada, Nasdaq and other securities exchange listing requirements regarding the timely filing of periodic reports, investors may lose confidence in our financial reporting and the price of our stock may decline.
We continue to execute our plan to remediate the material weakness identified. The remediation measures are ongoing, and although not all inclusive, include implementing additional policies, procedures, and controls. We are working to remediate our material weakness as efficiently and effectively as possible. At this time, we cannot provide an estimate of the timing for achieving full remediation or the costs expected to be incurred in connection with implementing this remediation plan; however, these remediation measures will be time consuming, could result in us incurring significant costs, and could place significant demands on our financial and operational resources. We cannot assure you that the measures undertaken to remediate the material weakness will be sufficient or that they will prevent future material weaknesses. Additional material weaknesses or failure to maintain effective internal control over financial reporting could cause us to fail to meet our reporting obligations as a public company and may result in a restatement of our financial statements for prior periods.
The preparation of financial statements and related disclosures in conformity with IFRS requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Our critical accounting policies describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider “critical” because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures. As a result, if future events or regulatory or auditor views differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case resulting in our needing to revise or restate prior period financial statements, cause damage to our reputation and the price of the Company’s securities, and adversely affect our business, financial condition and results of operations.
Risksrelated to the Expense and Impact of Restatement of the Company’s Historical Financial Statements
The Company restated certain historical financial statements to reflect a correction to its accounting for its digital assets. Specifically, the Company had previously valued its position in Equity Investments in Digital Assets subject to an extended lock-up period based on market price; however, in connection with the preparation of its financial statements for the year ended December 31, 2024, the Company’s auditors concluded that the valuation of the position should use a discounted valuation reflecting the lock-up. For more information, see “Restatement of Previously Issued Condensed Interim Consolidated Financial Statements” in the Company’s annual Management’s Discussion and Analysis for the year ended December 31, 2024.
It is difficult to predict all of the ramifications to the Company from the restatement. The restatement process is time and resource-intensive, involving substantial attention from management and significant costs and expenses, including for professional advisors assisting with the restatement. It is possible that the Company will receive inquiries from the Canadian securities regulators, Cboe Canada, the Nasdaq, and/or other securities exchanges regarding the restated financial statements or related matters, which could consume a significant amount of resources. Moreover, many companies that have been required to restate their historical financial statements have experienced volatility and decreases in stock prices and shareholder lawsuits, which can be expensive to defend and divert management attention and resources. The Company may suffer similar consequences as a result of the restatement.
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Lackof Comprehensive Accounting Guidance for Digital Assets under IFRS Accounting Standards
The holding of digital assets in Canada is an emerging industry with unique technological aspects and a number of novel auditing challenges have arisen. Audit firms, standard setters, and regulatory bodies continue to explore these challenges and potential solutions. Because there has been limited precedent set and a lack of specific accounting guidance for cryptocurrencies under certain applicable accounting standards, including, among other things, revenue recognition, it is unclear if DeFi companies (in particular, companies like the Company that utilize IFRS Accounting Standards) may be required to account for cryptocurrency operations, transactions and assets and related revenue recognition. A change in regulatory or financial accounting standards, or interpretations thereof by the CSA, particularly as they relate to the Company and the financial accounting of its DeFi-related operations, could result in changes in the Company’s accounting policies. Further, unlike in the case of U.S. generally accepted accounting principles, where the Financial Accounting Standards Board has recently issued ASU 2023-08, which addresses the accounting and disclosure requirements for certain crypto assets, no similar guidance has yet been issued in respect of IFRS Accounting Standards. In addition, the accounting policies of many Bitcoin mining companies are being subjected to heightened scrutiny by regulators and the public.
It is possible that, as a result of the determinations by applicable securities regulators as to the application of the relevant IFRS Accounting Standards, the Company could be obligated in the future to restate historical financial statements. In connection with any such restatement the market price of the Company’s securities could be adversely affected, and the Company could become subject to private litigation or to investigations or enforcement actions by the Ontario Securities Commission or other regulatory authorities, all of which could require the Company’s expenditure of additional financial and management resources. Furthermore, continued uncertainty with regard to financial accounting matters, particularly as they relate to the Company and the financial accounting of its DeFi-related operations, could negatively impact the Company’s business, prospects, financial condition and results of operations and its ability to raise capital on terms acceptable to the Company or at all.
Conflictsof Interest may Arise
Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matters.
HedgingRisk
Except as described in the Base Prospectus, and the VDSL EU Base Prospectus and VDSL UK Base Prospectuses, we are not obligated to, and often times may not, hedge our exposures. However, from time to time, we may use a variety of financial instruments and derivatives, such as options, swaps, and forward contracts, for risk management purposes, including to: protect against possible changes in the market value of our investment or trading assets resulting from fluctuations in cryptocurrency markets or securities markets and changes in interest rates; protect our unrealized gains in the value of our investments or trading assets; facilitate the sale of any such assets; enhance or preserve returns, spreads or gains on any trade or investment; hedge the interest-rate or currency-exchange risk on any of our liabilities or assets; protect against any increase in the price of any assets that we anticipate purchasing at a later date; or to any other end that we deem appropriate. The success of any hedging activities by us will depend, in part, on our ability to correctly assess the degree of correlation between the performance of the instruments used in the hedging strategy and the performance of the assets being hedged. Since the characteristics of many assets change as markets change or time passes, the success of our hedging strategy will also be subject to our ability to continually recalculate, readjust and execute hedges in an efficient and timely manner. In addition, while we may enter into hedging transactions to seek to reduce risk, such transactions may actually increase risk or result in a poorer overall performance for us than if we had not engaged in such hedging transactions.
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With respect to Valour, Valour’s hedging programs will not fully eliminate the market and other risks related to its ETPs, and the hedging programs themselves expose Valour to additional risks. Valour’s hedging programs are not designed to completely offset all risks associated with the various exposures embedded in the ETPs. The profit or loss on the hedge instruments employed may not completely offset the underlying losses or gains related to its ETPs for many potential reasons, including:
| ● | a<br> portion of the yield on any ETP may not be hedged; |
|---|---|
| ● | hedging<br> instruments may have differing liquidity attributes as compared to the liquidity requirements<br> of the ETPs; |
| --- | --- |
| ● | hedging<br> instruments introduce additional risks to Valour, including counterparty risk; |
| --- | --- |
| ● | performance<br> of the underlying funds hedged may differ from the performance of the corresponding hedge<br> instruments; and |
| --- | --- |
| ● | not<br> all other risks are hedged. |
| --- | --- |
Valour’s hedging programs may employ various types of instruments, including swaps, options, forwards and futures, but not long and short direct and indirect positions on underlying assets. Improper use of these instruments could have an adverse impact on earnings.
Litigation
The Company is and may become involved in, named as a party to, or be the subject of, various legal proceedings, including securities class action proceedings, regulatory proceedings, tax proceedings and legal actions. For example, the Company is a defendant in a putative securities class action lawsuit and a creditor in a bankruptcy proceeding, each as described under the heading “Legal Proceedings and Regulatory Actions” elsewhere in this AIF. Although the Company believes the securities class action lawsuit is without merit and intends to vigorously defend itself, such matter, and any other similar matters, could subject the Company to substantial costs, divert resources and the attention of management from its business, and harm its business, financial condition, and results of operations. Moreover, the outcome of outstanding, pending, or future proceedings cannot be predicted with certainty and may be determined adversely to the Company and as a result, could have a material adverse effect on the Company’s assets, liabilities, business, financial condition, and results of operations.
RisksRelating to the Common Shares
MarketPrice of Common Shares may Experience Volatility
The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.
Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.
In addition, the price of the Company’s Common Shares, may be affected by its failure to comply with the continued listing requirements of stock exchanges on which it is listed. For example, the Company is not currently in compliance with the Nasdaq minimum bid price requirement. For more information, see “Risk Factors - Risks Relating to the Business and Industry of the Company – Noncompliance with Continued Listing Requirements of Nasdaq and Potential Delisting” elsewhere in this AIF.
Securityholder’s Interest in the Company may be Diluted in the Future
If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of securityholders.
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TheCompany has Never Paid Dividends and may not do so in the Foreseeable Future
The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future. See “Dividends”.
DIVIDENDS
The Company has not paid any dividends since its incorporation. Any determination to pay any future dividends will be at the discretion of the Board and will be made based on the Company’s financial condition and other factors deemed relevant by the Board. There are currently no restrictions on the ability of the Company to pay dividends except as set out under the OBCA.
DESCRIPTION OF SHARE CAPITAL
The Company is authorized to issue an unlimited number of Common Shares without par value. The holders of Common Shares are entitled to dividends, subject to the rights of holders of any other class of shares of the Company, if, as and when declared by the Board. The holders of Common Shares are also entitled to one vote per Common Share at meetings of the shareholders of the Company and, subject to the rights of holders of any other class of shares of the Company, to share, on a pro rata basis with the other holders of Common Shares, the net assets of the Company, upon liquidation, dissolution or winding up of the Company. The Common Shares are not subject to call or assessment, nor do they carry any pre-emptive or conversion rights. There are no provisions attached to such shares for redemption, purchase for cancellation, surrender, sinking or purchase funds.
As of the date hereof, 387,777,239Common Shares are issued and outstanding.
As of the date hereof, the Company also has 19,737,217 options, 54,246,577 warrants, 8,403,692 deferred share units (“DSUs”), 200,000 performance share units (“PSUs”) and 2,224,760 restricted share units (“RSUs”) issued and outstanding. See the notes to the Company’s audited financial statements for the year ended December 31, 2025 for additional information regarding the Company’s convertible securities.
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MARKET FOR SECURITIES
Trading Price and Volume
The Company is a publicly listed company with its Common Shares listed for trading on Cboe Canada under the symbol “DEFI”, on the Nasdaq under the symbol “DEFT”, and on FSE under the symbol “R9B” and with BDRs representing Common Shares listed for trading on B3 under the symbol “DEFT31”. The following table sets forth, on a monthly basis, the reported high and low sale prices (which are not necessarily closing prices) and the aggregate volume of trading of the Common Shares on Cboe Canada and the Nasdaq during the financial year ended December 31, 2025.
| Cboe Canada | Nasdaq | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| High | Low | Volume | High | Low | Volume | |||||
| (Cdn) | (US) | |||||||||
| December 2025 | 1.00 | 9,484,564 | 0.73 | 176,036,616 | ||||||
| November 2025 | 1.30 | 14,407,404 | 0.91 | 212,170,798 | ||||||
| October 2025 | 2.48 | 11,969,546 | 1.77 | 227,811,838 | ||||||
| September 2025 | 2.71 | 15,739,845 | 1.95 | 191,090,086 | ||||||
| August 2025 | 2.8 | 8,476,802 | 2.04 | 88,715,074 | ||||||
| July 2025 | 3.70 | 12,237,975 | 2.71 | 107,584,560 | ||||||
| June 2025 | 3.50 | 10,688,355 | 2.54 | 44,040,212 | ||||||
| May 2025 | 3.91 | 19,793,797 | 2.84 | 46,037,747 | ||||||
| April 2025 | 2.31 | 1,096,981,836 | 1.65 | 12,987,604 | ||||||
| March 2025 | 2.43 | 27,794,190 | 1.70 | 18,540,631 | ||||||
| February 2025 | 3.08 | 20,146,439 | 2.15 | 20,626,099 | ||||||
| January 2025 | 3.57 | 15,967,110 | 2.50 | 18,821,323 |
All values are in US Dollars.
Prior Sales
During the financial year ended December 31, 2025, with respect to each class of securities of the Company that is outstanding as of the date of this AIF and not listed or quoted on a marketplace, the Company issued the following securities:
| Dateof Issuance | Type of Security | Number of Securities Issued | Exercise Price | Maturity /<br><br> <br>Expiry Date |
|---|---|---|---|---|
| January<br> 6, 2025 | Options | 100,000 | C$4.59 | January<br> 6, 2030 |
| January<br> 6, 2025 | DSUs | 100,000 | N/A | January<br> 6, 2028 |
| January<br> 28, 2025 | Options | 850.000 | C$4.52 | January<br> 28, 2030 |
| January<br> 28, 2025 | DSUs | 1,400,000 | N/A | January<br> 28, 2028 |
| May<br> 26, 2025 | Options | 171,030 | C$4.97 | May<br> 26, 2030 |
| May<br> 26, 2025 | DSUs | 295,362 | N/A | May<br> 26, 2027 |
| July<br> 11, 2025 | Options | 200,000 | C$4.00 | July<br> 11, 2030 |
| July<br> 11, 2025 | DSUs | 44,323 | N/A | July<br> 11, 2027 |
| September<br> 26, 2025 | Warrants^(3)^ | 34,246,577 | US$2.63 | September<br> 26, 2028 |
| October<br> 16, 2025 | RSU | 500,000 | N/A | October<br> 16, 2027 |
| October<br> 16, 2025 | RSU | 500,000 | N/A | None.<br> Vesting linked to stock price target |
| October<br> 30, 2025 | PSU | 2,000,000 | N/A | None.<br> Vesting linked to milestones |
| October<br> 30, 2025 | PSU | 2,000,000 | N/A | October<br> 30, 2026 |
| November<br> 5, 2025 | RSU | 695,000 | N/A | November<br> 5, 2027 |
| November<br> 5, 2025 | RSU | 300,000 | N/A | November<br> 5, 2026 |
| November<br> 5, 2025 | PSU | 200,000 | N/A | November<br> 5, 2026 |
| November<br> 28, 2025 | RSU | 150,000 | N/A | May<br> 28, 2026 |
| (1) | Issued<br> to CH Technical Solutions SA in connection with the acquisition of capital of CH Technical<br> Solutions SA. | |||
| --- | --- | |||
| (2) | Issued<br> to shareholders of Stillman Digital in connection with the acquisition of all issued and<br> outstanding securities of Stillman Digital | |||
| (3) | Issued<br> in connection with the September Offering. | |||
| (4) | For<br> RSU’s and PSU’s disclosed above, the maturity date represents the final vesting<br> date. |
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Escrowed securities
To the Company’s knowledge, no securities of the Company are held in escrow or are subject to a contractual restriction.
DIRECTORS AND OFFICERS
The following table sets forth for each director and executive officer of the Company as at the date of this AIF, each such individual’s name, province or state and country of residence, position(s) held with the Company, principal occupation(s) for the last five years, if currently a director, period(s) during which such individual has served as a director of the Company, and the number and percentage of issued and outstanding Common Shares beneficially owned, or controlled or directed, directly or indirectly, by such individual (for avoidance of doubt, excluding any convertible securities in the capital of the Company held by such individual). The statements as to principal occupation(s) for the last five years of, and the number and percentage of Common Shares beneficially owned, or controlled or directed, directly or indirectly, by the directors and executive officers of the Company are in each instance based upon information furnished by the individuals concerned. All directors of the Company hold office until the next annual meeting of shareholders of the Company or until their successors are elected or appointed.
| Name, Province/State and Country of Residence and Position(s)<br><br> <br>with the Company | Principal Occupation(s) for the Last Five Years | Period(s) Served<br><br> <br>as a Director | Number of<br><br> <br>Common Shares<br><br> <br>Beneficially Owned or Controlled or Directed | Percentage of Common Shares Beneficially Owned or Controlled or Directed |
|---|---|---|---|---|
| Johan<br> Wattenström<br><br> <br>Monte Carlo, Monaco<br><br> <br>Chief Executive Officer and Executive Chairman | Co-Founder<br> of Valour | November<br> 17, 2025 | 6,046,898 | 1.57% |
| Paul<br> Bozoki<br><br> <br>Toronto,<br> Canada<br><br> <br>Chief Financial Officer | Former<br> Chief Financial Officer of Apollo Healthcare Corp. | N/A | 201,250 | 0.01% |
| Mikael<br> Tandetnik^(1) (2) (3)^<br><br> <br>Geneva,<br> Switzerland<br><br> <br>Director | Founder<br> of Ariane Group SA | Since<br> June 20, 2023 | 1,016,666 | 0.26% |
| Andrew<br> Forson<br><br> <br>Switzerland<br><br> <br>President | Head<br> of Ventures and Investments at The Hasgraph Association | N/A | 57,000 | 0.01% |
| Chase<br> Ergen^(1) (3)^<br><br> <br>Leysin,<br> Switzerland<br><br> <br>Director | Security<br> Specialist at Nagravision SA | March<br> 3, 2025 | Nil | N/A |
| Silvia<br> Andriotto^(2) (3)^ Monte Carlo, Monaco<br><br> <br>Director | Associate Director at JTC Private Office | June<br> 30, 2025 | 3,174 | 0.00% |
| Per<br> von Rosen<br><br> <br>Sweden<br><br> <br>Director | Crypto Business Consultant | June<br> 30, 2025 | 3,174 | 0.00% |
| Jonathan Dimitry^(1) (3)^<br><br><br><br>Monaco<br><br><br><br>Director | Founder of BlueCaron | March 24, 2026 | 70,000 | 0.01% |
Notes:
| (1) | Member<br> of the Audit Committee. |
|---|---|
| (2) | Member<br> of the Compensation, Nomination and Governance Committee |
| (3) | Independent<br> director |
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As of the date hereof, the directors and executive officers of the Company, as a group, beneficially owned, or controlled or directed, directly or indirectly, 7,328,162 Common Shares, representing 1.90% of the total issued and outstanding Common Shares.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
No director or executive officer of the Company is, as at the date hereof, or has been, within the ten years before the date hereof, a director, chief executive officer or chief financial officer of any company (including the Company) that:
| (a) | was<br> subject to a cease trade or similar order, or an order that denied the relevant company access<br> to any exemption under securities legislation, that was in effect for a period of more than<br> 30 consecutive days and that was issued while the director or executive officer was acting<br> in the capacity as director, chief executive officer or chief financial officer; or |
|---|---|
| (b) | was<br> subject to a cease trade or similar order, or an order that denied the relevant company access<br> to any exemption under securities legislation, that was in effect for a period of more than<br> 30 consecutive days, that was issued after the director or executive officer ceased to be<br> a director, chief executive officer or chief financial officer and which resulted from an<br> event that occurred while that person was acting in the capacity as a director, chief executive<br> officer or chief financial officer. |
| --- | --- |
No director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company:
| (a) | is,<br> as at the date hereof, or has been, within the ten years before the date hereof, a director<br> or executive officer of any company (including the Company) that, while that person was acting<br> in that capacity, or within a year of that person ceasing to act in that capacity, became<br> bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was<br> subject to or instituted any proceedings, arrangement or compromise with creditors or had<br> a receiver, receiver manager or trustee appointed to hold its assets; or |
|---|---|
| (b) | has,<br> within the ten years before the date hereof, become bankrupt, made a proposal under any legislation<br> relating to bankruptcy or insolvency, or become subject to or instituted any proceedings,<br> arrangement or compromise with creditors, or had a receiver, receiver manager or trustee<br> appointed to hold the assets of the director, executive officer or shareholder. |
| --- | --- |
As at the date hereof, no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to:
| (a) | any<br> penalties or sanctions imposed by a court relating to securities legislation or by a securities<br> regulatory authority or has entered into a settlement agreement with a securities regulatory<br> authority; or |
|---|---|
| (b) | any<br> other penalties or sanctions imposed by a court or regulatory body that would likely be considered<br> important to a reasonable investor in making an investment decision. |
| --- | --- |
Conflicts of Interest
The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interests that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in a conflict is required to disclose his interest and abstain from voting on such matter in accordance with the OBCA. In appropriate cases, the Company will establish a special committee of independent non-executive directors to review a matter in which one or more directors or officers may have a conflict.
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To the best of the Company’s knowledge, and other than as disclosed herein, there are no known existing or potential material conflicts of interest between the Company or a subsidiary of the Company and any director or officer of the Company or a subsidiary of the Company, except that certain of the directors and officers serve as directors and officers of other public or private companies and therefore it is possible that a conflict may arise between their duties as a director or officer of the Company and their duties as a director or officer of such other companies.
AUDIT COMMITTEE DISCLOSURE
National Instrument 52-110 – Audit Committees of the CSA (“NI 52 110”) requires the Company to have a written audit committee charter and to make the disclosure required by Form 52-110F1.
Audit Committee Charter
A copy of the Charter of the Audit Committee of the Board, which has been adopted by the Board in order to comply with NI 52-110 and to more properly define the role of the Audit Committee in the oversight of the financial reporting process of the Company is attached hereto as Schedule “A”. Nothing in the Charter is intended to restrict the ability of the Board or Committee to alter or vary procedures in order to comply more fully with the Instrument, as amended from time to time.
The Audit Committee is composed of Jonathan Dimitry, Chase Ergen and Mikael Tandetnik. Each member of the Audit Committee is independent of the Company and financially literate, as such terms are defined in NI 52-110.
Relevant Education and Experience
The following is a brief summary of the education and experience of each member of the Audit Committee that is relevant to the performance of his or her responsibilities as a member of the Audit Committee.
Mr. Ergen is a technology and telecommunications executive with experience in digital security, satellite communications, and financial technology investments. Earlier in his career, Mr. Ergen worked as a security specialist at Nagravision SA, a provider of digital television security and conditional access systems, where he gained experience in content protection and broadcast security technologies. Mr. Ergen is the son of Charles Ergen, the founder of DISH Network, and has been involved in the broader telecommunications and technology ecosystem through both operational roles and strategic investments. In addition to his professional experience, Mr. Ergen is an active investor and maintains a broad network within the technology, telecommunications, and digital asset sectors. Through these experiences, Mr. Ergen brings to the Board insight into emerging technologies, infrastructure and capital markets.
Mr. Tandetnik is a seasoned wealth manager and CEO with a strong background in finance. He embarked on his career as a Salesperson for equity and structured products at BNP Paribas, gaining valuable experience in the field. Subsequently, he transitioned to various brokerage firms, honing his expertise in investment management. After founding LS Advisor in Paris and driven by his passion for the cryptocurrency industry, Mr. Tandetnik established Ariane Group SA in Geneva, a wealth management company specializing in catering to cryptocurrency clients and investments. He played a pivotal role in numerous fundraising initiatives for both listed and unlisted private crypto companies, demonstrating his deep involvement in the crypto space. Mr. Tandetnik’s academic qualifications include a Bachelor’s degree in Business from the Ecole Supérieure de Gestion et Finance (ESGF) in France and a Master’s degree from ESLSCA, where he specialized in Trading and Options.
Mr. Dimitry is a seasoned financial professional and technology company founder, investor and advisor with over two decades of experience spanning investment banking, principal investing, derivatives trading, large-scale funds management and technology company building.
Drawing on his early career at Goldman Sachs in Investment Banking and in its Principal Investments division, he has led the sourcing, analysis, detailed due diligence and execution of complex equity and credit investments for Goldman Sachs’ proprietary risk capital across multiple asset classes. He later served as a proprietary trader and pre-IPO shareholder at Glencore International AG, where he managed significant macro and oil derivatives exposures and led the Arabian Gulf oil products business, applying sophisticated portfolio construction and risk management methodologies to substantial portfolio positions.
Mr Dimitry is the Founder and Partner of BlueCarbon, a private investment company that focuses on undertaking transformative transactions to build category defining technology companies. He has played a pivotal role in building three technology company unicorns in the past 8 years including Prima Assicurazioni, an artificial intelligence focused insurance technology company which secured over EUR 100 million in financing from Blackstone and Goldman Sachs. Mr Dimitry conceived the idea for RIMAC to acquire Bugatti, advising RIMAC to form the Bugatti Rimac Group and create RIMAC Technology which transformed the profitability of the company and is an investor and adviser to SuperOrdinary, a software driven social commerce platform and other technology and financial technology companies. Mr Dimitry focuses predominantly on the application of artificial intelligence and shaping the strategic direction of BlueCarbon’s portfolio companies and continues to deploy his expertise in cross-asset allocation, complex deal structuring, management and risk oversight.
Mr. Dimitry holds a Bachelor of Commerce in Finance with distinction and a Bachelor of Laws from the University of New South Wales in Sydney, as well as Series 3 accreditation with the National Futures Association
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Audit Committee Oversight
At no time since the commencement of the Company’s most recently completed financial year has there been a recommendation of the Audit Committee to nominate or compensate an external auditor that was not adopted by the Board.
Reliance on Certain Exemptions
At no time since the commencement of the Company’s most recently completed financial year has the Company relied on any available exemption regarding the composition, responsibilities, independence, financial literacy or otherwise of the Audit Committee, other than in relation to the appoint of Mr. Wattenström to the Audit Committee to fill the vacancy following the resignation of Mr. Stefan Hascoet on December 22, 2025.
As Mr. Wattenström is not independent within the meaning of NI 52-110, the Company relied upon Section 3.5 (Death, Disability or Resignation of Audit Committee Member) of NI 52-110 that exempts the Company from the independence requirements under Section 3.1(1) of NI 52-110 until the later of the next annual meeting of the Company and the date that is six months from the date the vacancy was created. In addition, the Company utilized the phase-in provisions of Nasdaq Listing Rule 5615(b)(1)(B) for the Audit Committee composition requirement permitting one member to not satisfy the independence requirements under Nasdaq Listing Rule 5605(c)(2) for up to one year from the Company’s initial listing of its Common Shares on Nasdaq, including the one-year phase-in exemption permitted under Rule 10A-3(b)(iv)(A) of the U.S. Securities Exchange Act of 1934, as amended (“Rule 10A-3”), with respect to the independence requirements under such rule. The Company does not believe that reliance on this phase-in exemption provided under Rule 10A-3 would materially adversely affect the ability of the Audit Committee to act independently and to satisfy the other requirements of Rule 10A-3.
Pre-Approval Policies and Procedures
The Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services. In accordance with its charter, all non-audit services are pre-approved by the Audit Committee.
External Auditor Service Fees
AuditFees
The Company’s external auditors, HDCPA Professional Corporation, billed the Company $526,353 in the financial year ended December 31, 2025 for audit fees and $382,787 in the financial year ended December 31, 2024 for audit fees.
Audit-RelatedFees
The Company’s external auditors, HDCPA Professional Corporation, billed the Company $161,458 in the financial year ending December 31, 2025 and $NIL in the financial year ending December 31, 2024 for assurance and related services related to the performance of the audit or review of the Company’s financial statements, which are not included in audit fees.
TaxFees
The Company’s external auditors, HDCPA Professional Corporation, billed the Company $Nil in the financial year ending December 31, 2025 and $21,000 in the financial year ending December 31, 2024 for tax compliance, tax advice and tax planning.
AllOther Fees
Other of $25,000 was charged by the external auditors for the financial year ended December 31, 2025 and $Nil in the financial year ended December 31, 2024.
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PROMOTER
The Company does not have a promoter.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
Other than as set out herein, the Company has not been since, and was not during, the financial year ended December 31, 2025 a party to any legal proceedings, nor has any of its properties been since nor was any of its properties during the financial year ended December 31, 2025, the subject of any legal proceedings.
Class Action Lawsuit
On December 1, 2025, DeFi Technologies Inc. was named as a defendant—along with Olivier Roussy Newton, Paul Bozoki, and Stefan Hanssen (together with the Company, “Defendants”)—in a putative securities class action lawsuit captioned Linkedto PartnersLLC v. DeFi Technologies Inc., et al, Case No. 1:25-cv-06637-NRM-SDE filed in the United States District Court for the Eastern District of New York (the “Litigation”). The complaint alleges that certain of Defendants’ statements related to the Company’s revenues, growth prospects, and proprietary trading strategies were false and misleading and that Defendants failed to disclose that the Company (i) was facing delays in executing its DeFi arbitrage strategy; (ii) understated the extent of competition it faced from other digital asset treasury (“DAT”) companies; (iii) was unlikely to meet its revenue guidance for fiscal year 2025; and (iv) downplayed the scope and severity of the negative impact on the Company’s business and financial results. Plaintiff further alleges that Defendants failed to disclose adverse facts and circumstances and known trends and uncertainties, including the risks posed by the Company’s delays in executing its arbitrage strategy through DeFi Alpha and by the competition that the Company faced from other DAT companies.
The Company disagrees with the allegations made. It believes in the merits of its legal defenses and will vigorously defend itself in the matter.
Genesis Matter
In terms of assets, Valour and Genesis Global Capital LLC entered into that certain Master Loan Agreement. Pursuant to the MLA and the Loan Term Sheet dated September 9, 2022, GGC loaned $6,000,000 to Valour as an open term loan (the “Loan”) pursuant to the terms and conditions of the MLA and Term Sheet. As collateral for the Loan, Valour initially posted 362 BTC with Genesis, which was later increased to 475 BTC.
On January 19, 2023, Genesis and its group companies filed for bankruptcy protection in the US pursuant to a ‘Chapter 11’ bankruptcy filing under the US Bankruptcy Code and listed Valour as a creditor.
On June 26, 2024, the Court enters order granting motion for relief from stay and allowing Genesis to exercise set off rights permitting the parties to set off any Claimant Obligations ($6,000,000 loan plus interest) with corresponding Genesis obligations (475 BTC). According to the exhibit attached to the Order, Valour owed Genesis $5,990,953.70 in principal and $109,644 in interest against collateral of 475 BTC valued at $10,018,691, resulting in a claim by Valour against Genesis in the amount of $3,909,047 or 185.3 BTC. It was then agreed that the parties could set off leaving Valour with 3,9mil USD which accounted for 185.3 BTC.
By the end of 2025, DeFi/Valour had already received 115.62 BTC. Since DeFi/Valour previously received a further 1.7 BTC in October 2025, the outstanding balance is 67.98 BTC. Accordingly, DeFi/Valour could expect to receive up to 67.98 BTC in the future.
There have been no penalties or sanctions imposed against the Company by a court relating to securities legislation or by any securities regulatory authority since or during the financial year ended December 31, 2025, or any other penalties or sanctions imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision. The Company has not entered into any settlement agreements with a court relating to securities legislation or with a securities regulatory authority since or during the financial year ended December 31, 2025.
60
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Other than as disclosed herein, none of the directors or executive officers of the Company, nor any person or company that beneficially owns, or controls or directs, directly or indirectly, more than 10% of the issued and outstanding Common Shares, nor any associate or affiliate of the foregoing persons or companies, has or has had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Shares is Odyssey Trust Company, at 702-67 Yonge Street, Toronto ON M5E 1J8.
MATERIAL CONTRACTS
The Company has no material contracts.
INTERESTS OF EXPERTS
The Company’s external auditor during the financial year ended December 31, 2025 was HDCPA Professional Corporation. HDCPA Professional Corporation has advised the Company that it is independent of the Company in accordance with the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario.
ADDITIONAL INFORMATION
Additional information relating to the Company may be found under the Company’s profile on SEDAR+ at www.sedarplus.ca.
Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans, is contained in the Company’s management information circular dated May 20, 2025 prepared in connection with the Company’s annual and special meeting of shareholders held on June 30, 2025.
Additional financial information is provided in the Company’s annual consolidated financial statements and management’s discussion and analysis for the financial year ended December 31, 2025, both of which are available under the Company’s profile on SEDAR+ at www.sedarplus.ca.
61
Schedule “A”
DEFI TECHNOLOGIES INC.
AUDIT COMMITTEE CHARTER
(Adopted and approved on March 31, 2026)
Mandate
The primary function of the audit committee (the “Committee”) is to assist the board of directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Company’s systems of internal controls regarding finance and accounting and the Company’s auditing, accounting and financial reporting processes. Consistent with this function, the Committee will encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures and practices at all levels. The Committee’s primary duties and responsibilities are to
(i) serve as an independent and objective party to monitor the Company’s financial reporting and internal control system and review the Company’s financial statements; (ii) review and appraise the performance of the Company’s external auditors; and (iii) provide an open avenue of communication among the Company’s auditors, financial and senior management and the board of directors.
Composition
The Committee shall be comprised of three directors as determined by the board of directors, all of whom shall meet any independence requirements of NationalInstrument 52-110 – Audit Committees of the Canadian Securities Administrators (“NI 52-110”), any exchange upon which securities of the Company are traded, or any governmental or regulatory body exercising authority over the Company, and the more rigorous independence rules for members of the Audit Committee issued by the Securities and Exchange Commission (the “SEC”),^1^ subject in each case to applicable transition provisions or exceptions.
At least one member of the Committee must be an “audit committee financial expert” as defined under applicable SEC rules. All members of the Committee shall be financially literate. For the purposes of this Charter, the definition of “financially literate” is the ability to read and understand a set of fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement, that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
Committee members may be removed from the Committee, with or without cause, by the Board. Unless a Chair is elected by the full board of directors, the members of the Committee may designate a Chair by a majority vote of the full Committee membership.
Meetings and Authority
The Committee shall meet at least four times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee will meet periodically, and at least annually, with the Chief Financial Officer and the external auditors in separate sessions.
The Committee may retain any independent counsel, experts or advisors that the Committee believes to be necessary or appropriate. The Company must provide for appropriate funding, as determined by the Committee, for payment of compensation to any advisors employed by the Committee and for payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
| ^1^ | As required by Nasdaq Listing<br>Rule 5605(c)(2)(A). |
|---|
62
Responsibilities and Duties
To fulfil its responsibilities and duties, the Committee shall:
Documents/Reports Review
| (a) | Review and update this Charter annually. |
|---|---|
| (b) | Review the Company’s financial statements, management discussion and<br>analysis (“MD&A”) and any annual and interim earnings, press releases before the Company publicly discloses this information<br>and any reports or other financial information (including quarterly financial statements), which are submitted to any governmental body,<br>or to the public, including any certification, report, opinion or review rendered by the external auditors. |
| --- | --- |
External Auditors
| (a) | Review annually the performance of the external auditors who shall be ultimately<br>accountable to the board of directors and the Committee as representatives of the shareholders of the Company. |
|---|---|
| (b) | Obtain annually a formal written statement of the external auditors setting<br>forth all relationships between the external auditors and the Company, consistent with Independence Standards Board Standard 1. |
| --- | --- |
| (c) | Review and discuss with the external auditors any disclosed relationships<br>or services that may impact the objectivity and independence of the external auditors. |
| --- | --- |
| (d) | Take or recommend that the full board of directors take appropriate action<br>to oversee the independence of the external auditors. |
| --- | --- |
| (e) | Select and, where applicable, replace the external auditors nominated annually<br>for shareholder approval. |
| --- | --- |
| (f) | At each meeting, consult with the external auditors, without the presence<br>of management, about the quality of the Company’s accounting principles, internal controls and the completeness and accuracy of<br>the Company’s financial statements. |
| --- | --- |
| (g) | Review and approve the Company’s hiring policies regarding partners,<br>employees and former partners and employees of the present and former external auditors of the Company. |
| --- | --- |
| (h) | Review with management and the external auditors the audit plan for the year-<br>end financial statements and intended template for such statements. |
| --- | --- |
| (i) | Review and pre-approve all audit and audit-related services and the fees<br>and other compensation related thereto, and any non-audit services, provided by the Company’s external auditors. The pre-approval<br>requirement is waived with respect to the provision of non-audit services if: |
| --- | --- |
| (i) | the aggregate amount of all such non-audit services provided to the Company<br>constitutes not more than 5% of the total amount of revenues paid by the Company to its external auditors during the fiscal year in which<br>the non-audit services are provided; |
| --- | --- |
| (ii) | such services were not recognized by the Company at the time of the engagement<br>to be non-audit services; and |
| --- | --- |
| (iii) | such services are promptly brought to the attention of the Committee by the<br>Company and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members<br>of the board of directors to whom authority to grant such approvals has been delegated by the Committee. |
| --- | --- |
63
Provided the pre-approval of the non-audit services is presented to the Committee’s first scheduled meeting following such approval such authority may be delegated by the Committee to one or more independent members of the Committee.
Financial Reporting Processes
| (a) | In consultation with the external auditors, review with management the integrity<br>of the Company’s financial reporting process, both internal and external. |
|---|---|
| (b) | Consider the external auditor’s judgments about the quality and appropriateness<br>of the Company’s accounting principles as applied in its financial reporting. |
| --- | --- |
| (c) | Consider and approve, if appropriate, changes to the Company’s auditing<br>and accounting principles and practices as suggested by the external auditors and management. |
| --- | --- |
| (d) | Review significant judgments made by management in the preparation of the<br>financial statements and the view of the external auditors as to appropriateness of such judgments. |
| --- | --- |
| (e) | Following completion of the annual audit, review separately with management<br>and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope<br>of work or access to required information. |
| --- | --- |
| (f) | Review any significant disagreement among management and the external auditors<br>in connection with the preparation of the financial statements. |
| --- | --- |
| (g) | Review with the external auditors and management the extent to which changes<br>and improvements in financial or accounting practices have been implemented. |
| --- | --- |
| (h) | Review any complaints or concerns about any questionable accounting, internal<br>accounting controls or auditing matters. |
| --- | --- |
| (i) | Review certification process. |
| --- | --- |
| (j) | Establish a procedure for the confidential, anonymous submission by employees<br>of the Company of concerns regarding questionable accounting, internal accounting controls or auditing matters. |
| --- | --- |
Other
Review any related party transactions.
64
Exhibit 99.2
CONSOLIDATED
FINANCIAL STATEMENTS
For
the years ended December 31, 2025 and 2024
(expressed in U.S. dollars)
Reportof Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of DeFi Technologies Inc.
Opinionon the Financial Statements
We have audited the accompanying consolidated statements of financial position of DeFi Technologies Inc. and its subsidiaries (the Company) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income (loss), consolidated statements of changes in equity and consolidated statements of cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board.
MaterialUncertainty Related to Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a net working capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basisfor Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
CriticalAudit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| 1. | Digital Assets, Digital Assets Loaned and Digital Assets Staked, and Related Realized and Net Change in Unrealized Gains and (Losses) on Digital Assets and Staking and Lending Income |
|---|
Description of the critical audit matter:
The Company held material digital assets, digital assets loaned, and digital assets staked as of December 31, 2025. These balances were measured at fair value and involved self-custody arrangements, validator and staking arrangements, and assets held with counterparties and lending counterparties. These balances and arrangements also gave rise to related amounts recognized in realized and net change in unrealized gains and (losses) on digital assets and staking and lending income. See Note 6 to the consolidated financial statements for further details.
Why the matter is a critical audit matter:
We identified this matter as a critical audit matter because of the magnitude of the balances and the especially challenging auditor judgment involved in evaluating the Company’s valuation, existence, rights and ownership of the assets, including revenue recognition under lending and staking arrangements, and the completeness and accuracy of the related realized and net change in unrealized gains and (losses). A portion of the digital assets and digital assets staked were held in self-custody validator addresses, which increased the risk related to rights and ownership due to the anonymous nature of blockchain addresses and the need to demonstrate control over the related private keys. In addition, significant judgment was required in evaluating assets held with counterparties and lending counterparties, including confirmations, contractual rights, and valuation.
How our audit addressed the critical audit matter:
Our audit procedures related to digital assets, digital assets loaned, and digital assets staked and related realized and net change in unrealized gains and (losses) on digital assets and staking and lending income included, among others:
| ● | Performing<br> walkthroughs to understand the process, obtaining an understanding of relevant custody, lending,<br> and staking arrangements and evaluating service organization reports and related client user<br> entity controls where relevant; |
|---|---|
| ● | involving<br> subject matter specialists in planning and reviewing certain procedures; |
| --- | --- |
| ● | obtaining<br> confirmations from custodians and counterparties and reconciling confirmed balances to the<br> Company’s records; |
| --- | --- |
| ● | physically<br> observing the transfers of self-custodied digital assets to a qualified custodian during<br> and after year-end, including selected assets that remained staked at year-end due to lock-up<br> restrictions, to assess rights and ownership; |
| --- | --- |
| ● | corroborating<br> selected balances and transactions to public blockchain records and evaluating the reliability<br> of blockchain evidence; |
| --- | --- |
| ● | testing<br> roll-forwards and selected transactions for digital assets, digital assets loaned, and digital<br> assets staked, including evaluating relevant agreements and rights; and |
| --- | --- |
| ● | testing<br> selected staking and lending rewards recognized in staking and lending income by agreeing<br> amounts to external evidence; |
| --- | --- |
| ● | reperforming<br> and assessing the reasonableness of management’s calculation of realized and net change<br> in unrealized gains and (losses) on digital assets; |
| --- | --- |
| ● | testing<br> valuation using the Company’s reference pricing and other independent sources, and<br> evaluating the related disclosures. |
| --- | --- |
| 2. | Equity Investments in Digital Assets at Fair Value Through Profit or Loss (FVTPL) and Related Realized and Net Change in Unrealized Gains and (Losses) on Investments in Equity Investments through FVTPL |
|---|
Description of the critical audit matter:
The Company held material equity investments in digital asset funds measured at fair value through profit or loss as of December 31, 2025. Activity affecting the carrying amount of these investments, and the related realized and net change in unrealized gains and (losses) on investments in equity instruments through FVTPL, included purchases, distributions, staking-related activity within the underlying funds, and period-end fair value remeasurement. See Note 7 to the consolidated financial statements for further details.
Why the matter is a critical audit matter:
We identified this matter as a critical audit matter because auditing the fair value of these investments required especially challenging, subjective, and complex auditor judgment. The fair value measurement involved significant unobservable inputs and assumptions, including discounts for lack of marketability, unlock schedules, liquidity and transfer restrictions, and measurement-date pricing.
How our audit addressed the critical audit matter:
Our audit procedures related to equity investments in digital assets at FVTPL and related realized and net change in unrealized gains and (losses) on investments in equity investments through FVTPL included, among others:
| ● | Performing<br> walkthroughs to understand process and obtaining an understanding of the funds and related<br> agreements; |
|---|---|
| ● | obtaining<br> year-end statements and confirmations from fund managers and administrators and reconciling<br> them to the Company’s records; |
| --- | --- |
| ● | evaluating<br> the completeness and accuracy of unlock and vesting schedules, and agreeing significant restrictions<br> and key terms to legal agreements and fund documentation; |
| --- | --- |
| ● | testing<br> all purchases, distributions, staking income, and the roll-forward of the investments during<br> the year; |
| --- | --- |
| ● | reperforming<br> and assessing the reasonableness of management’s calculation of realized and net change<br> in unrealized gains and (losses) on equity investments at FVTPL; |
| --- | --- |
| ● | involving<br> valuation specialists to evaluate the reasonableness of significant assumptions, including<br> but not limited to discounts for lack of marketability, unlock schedules, restrictions, and<br> measurement-date pricing; and |
| --- | --- |
| ● | assessing<br> the reasonableness of valuation methodology and related disclosures in the consolidated financial<br> statements. |
| --- | --- |
| /s/ Harpreet Dhawan |
|---|
| HDCPA Professional Corporation |
We have served as the Company’s auditor since 2023.
Mississauga, Ontario, Canada
April 2, 2026
DeFiTechnologies Inc.
Tableof Contents
| Consolidated statements of financial<br> position | 1 |
|---|---|
| Consolidated statements of operations and comprehensive<br> income loss | 2 |
| Consolidated statements of cash flows | 3 |
| Consolidated statements of changes in equity | 4 |
| Notes to the consolidated financial statements | 5-68 |
i
DeFiTechnologies Inc.
ConsolidatedStatements of Financial Position
(Expressedin U.S. dollars)
| Note | December 31, 2025 | December 31, 2024 | January 1, 2024 | |||||
|---|---|---|---|---|---|---|---|---|
| (See Note 2 (e)) | (See Note 2 (e)) | |||||||
| Assets | ||||||||
| Current | ||||||||
| Cash and cash equivalents | 3,23 | |||||||
| Client cash deposits | 3 | |||||||
| Prepaid expenses and other assets | 4 | |||||||
| Public investments, at fair value through profit and loss | 5,23,26 | |||||||
| Investment in associate | 10 | |||||||
| Digital assets | 6 | |||||||
| Digital assets loaned | 6 | |||||||
| Digital assets staked | 6,7 | |||||||
| Equity investments in digital assets funds, at FVTPL | 6,7 | |||||||
| Total current assets | ||||||||
| Private investments, at fair value through profit and loss | 5,23,26 | |||||||
| Digital assets | 6 | |||||||
| Digital assets loaned | 6 | |||||||
| Equity investments in digital assets funds, at FVTPL | 6,7 | |||||||
| Equipment | ||||||||
| Right-of-use asset | 15 | |||||||
| Intangible assets | 9 | |||||||
| Goodwill | 9 | |||||||
| Total assets | ||||||||
| Liabilities and shareholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | 11,26,27 | |||||||
| Loans payable | 12,23 | |||||||
| Trading liabilities | 8 | |||||||
| ETP holders payable | 13 | |||||||
| Warrant liability | 14 | |||||||
| Lease liability - current portion | 15 | |||||||
| Total current liabilities | ||||||||
| Lease liability | 15 | |||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Share capital | 21 | |||||||
| Preferred shares | 21 | |||||||
| Share-based payments reserves | 22 | |||||||
| Accumulated other comprehensive income | ) | ) | ) | |||||
| Non-controlling interest | 8 | ) | ||||||
| Deficit | ) | ) | ) | |||||
| Total equity | ||||||||
| Total liabilities and equity | ||||||||
| Nature of operations and going concern | 1 | |||||||
| Commitments and contingencies | 27 |
All values are in US Dollars.
| Approved on<br> behalf of the Board of Directors: | |
|---|---|
| “Johan Wattenstrom” | “Per von Rosen” |
| Director | Director |
See
accompanying notes to these consolidated financial statements
1
DeFiTechnologies Inc.
ConsolidatedStatements of Operations and Comprehensive Income (Loss)
(Expressedin U.S. dollars)
| **** | **** | Year<br> ended December 31, | **** | ||
|---|---|---|---|---|---|
| **** | **** | 2025 | **** | 2024 | **** |
| **** | **** | **** | **** | ||
| **** | **** | **** | (See Note<br> 2 (e)) | **** | |
| Revenues | |||||
| Staking<br> and lending income | 19 | ||||
| Management<br> fees | |||||
| Trading<br> commissions | |||||
| Research<br> revenue | |||||
| Advisory<br> revenue | |||||
| Revenues<br> excluding realized and net change in unrealized gains (losses) | |||||
| Realized<br> and net change in unrealized (loss) gain on digital assets | 16 | ) | |||
| Realized<br> and net change in unrealized (loss) gain on equity investments at FVTPL | 17 | ) | |||
| Realized<br> and net change in unrealized gain (loss) on ETP payables | 18 | ) | |||
| Revenues<br> from realized and net change in unrealized gains (losses) | |||||
| Total<br> revenues | |||||
| Operating<br> expenses | |||||
| Operating,<br> general and administration | 20 | ||||
| Share based payments | 22 | ||||
| Depreciation<br> - equipment | |||||
| Amortization<br> - right-of-use assets | 15 | ||||
| Amortization<br> - intangibles | 9 | ||||
| Fees<br> and commissions | |||||
| Foreign<br> exchange (gain) loss | ) | ) | |||
| Total<br> operating expenses | |||||
| Operating<br> income (loss) | ) | ||||
| Realized<br> (loss) gain on investments | 5 | ) | |||
| Unrealized<br> (loss) gain on investments | 5 | ) | |||
| Interest<br> income | |||||
| Interest<br> recovery (expense) | ) | ||||
| Financing<br> expense | 21 | ) | |||
| Gain<br> on deconsolidation | |||||
| Loss<br> on investment in associate | 10 | ) | |||
| Change<br> in fair value of warrant liability | 14 | ||||
| Bad<br> debt expense | ) | ) | |||
| Impairment<br> loss | 9 | ) | ) | ||
| Total<br> other (expenses) income | |||||
| Net income<br> (loss) for the year before taxes | ) | ||||
| Current<br> income taxes | 30 | ||||
| Net income<br> (loss) for the year after taxes | ) | ||||
| Other comprehensive income Cumulative<br> translation adjustment | |||||
| Net<br> income (loss) and comprehensive income (loss) for the year | ) | ||||
| Net income<br> (loss) attributed to: | |||||
| Owners<br> of the parent | ) | ||||
| Non-controlling<br> interests | |||||
| ) | |||||
| Net income<br> (loss) and comprehensive income (loss) attributed to: | |||||
| Owners<br> of the parent | ) | ||||
| Non-controlling<br> interests | ) | ||||
| ) | |||||
| Income (loss) per share | |||||
| Basic | ) | ||||
| Diluted | ) | ||||
| Weighted average number of shares outstanding: | |||||
| Basic | |||||
| Diluted |
All values are in US Dollars.
See
accompanying notes to these consolidated financial statements
2
DeFiTechnologies Inc.
ConsolidatedStatements of Cash Flows
(Expressedin U.S. dollars)
| **** | Year<br> ended December 31, | **** | ||||
|---|---|---|---|---|---|---|
| **** | Note | 2025 | **** | 2024 | **** | |
| **** | **** | **** | ||||
| **** | **** | **** | (See Note<br> 2 (e)) | **** | ||
| Cash (used<br> in) provided by operations: | ||||||
| Net<br> income (loss) for the year after taxes | ) | |||||
| Adjustments<br> to reconcile net (loss) income to cash (used in) operating<br> activities: | ||||||
| Share-based<br> payments | 22 | |||||
| Impairment<br> loss | 9 | |||||
| Interest<br> expense | ||||||
| Depreciation<br> - equipment | ||||||
| Amortization<br> - right-of-use asset | 9 | |||||
| Amortization<br> - Intangible asset | 9 | |||||
| Realized<br> loss on investments, net | 23 | ) | ||||
| Unrealized<br> gain on investments, net | 23 | ) | ||||
| Realized<br> and net change in unrealized (loss) gain on digital assets | 16 | ) | ||||
| Realized<br> and net change in unrealized gain (loss) on ETP payables | 17 | ) | ||||
| Realized<br> and net change in unrealized (loss) gain on equity investments at FVTPL | 18 | ) | ||||
| Staking<br> and lending income | 19 | ) | ) | |||
| Management<br> fee revenue | ) | ) | ||||
| Non-cash<br> trading fees | ||||||
| Share<br> issuance costs expensed | 21 | |||||
| Change<br> in fair value of warrant liability | 14 | ) | ||||
| Lease<br> interest expense | ||||||
| Gain<br> on deconsolidation | ) | |||||
| Loss<br> on investment in associate | ||||||
| Unrealized<br> loss on foreign exchange | ) | |||||
| ) | ) | |||||
| Adjustment<br> for: | ||||||
| Purchase<br> of digital assets | 23 | ) | ) | |||
| Disposal<br> of digital assets | 23 | |||||
| Purchase<br> of equity investments | 6,7 | ) | ||||
| Disposal<br> of equity investments | 6,7 | |||||
| Purchase of investments | 23 | ) | ) | |||
| Disposal of investments | ||||||
| Treasury shares | ) | |||||
| Change<br> in client cash deposit | ||||||
| Change<br> in prepaid expenses and deposits | ) | ) | ||||
| Change<br> in accounts payable and accrued liabilities | ) | |||||
| Change<br> in trading liabilities | ||||||
| Change<br> in deferred revenue | ) | |||||
| Net<br> cash (used in) operating activities | ) | ) | ||||
| Investing<br> activities | ||||||
| Net cash<br> (paid for) received from acquisition of subsidiaries | 8 | ) | ||||
| Equipment<br> purchases | ) | |||||
| Net<br> cash (used in) provided by investing activities | ) | |||||
| Financing<br> activities | ||||||
| Proceeds<br> from ETP holders | ||||||
| Payments<br> to ETP holders | ) | ) | ||||
| Loan proceeds | ||||||
| Loan repaid | ) | ) | ||||
| Proceeds<br> from investments | ||||||
| Proceeds<br> from option exercises | 22 | |||||
| Proceeds from exercise of<br> warrants | 22 | |||||
| NCIB | ) | ) | ||||
| Proceeds<br> from private placement | 21 | |||||
| Share issuance costs | 21 | ) | ||||
| Lease payments | 15 | ) | ||||
| Net<br> cash provided by financing activities | ||||||
| Effect<br> of exchange rate changes on cash and cash equivalents | ||||||
| Change<br> in cash and cash equivalents | ||||||
| Cash,<br> beginning of year | ||||||
| Cash<br> and cash equivalents, end of year |
All values are in US Dollars.
See
accompanying notes to these consolidated financial statements
3
DeFiTechnologies Inc.
ConsolidatedStatements of Changes in Equity
(Expressedin U.S. dollars)
| **** | **** | **** | **** | **** | **** | **** | Share-based payments | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | Number of Common Shares | **** | Common Shares | **** | Number of Preferred Shares | Preferred Shares | Options | **** | Deferred Shares Unit (DSU) | **** | Restricted Shares Unit (RSU) | **** | Treasury shares | **** | Warrants | **** | Share-based Payments Reserve | **** | Accumulated other comprehensive income | **** | Non-controlling interest | **** | Deficit | **** | Total | **** | ||||||||||||||
| Balance,<br> December 31, 2024 | 321,257,689 | $ | 153,294,666 | 4,500,000 | $ | 3,190,601 | $ | 16,904,428 | $ | 8,768,445 | $ | - | $ | - | $ | 728,133 | $ | 26,401,006 | $ | (294,045 | ) | $ | - | $ | (163,448,031 | ) | $ | 19,144,197 | ||||||||||||
| Acquisition<br> of Neuronomics | 186,034 | 442,722 | - | - | - | - | - | - | - | - | - | 1,484,854 | - | 1,927,576 | ||||||||||||||||||||||||||
| Deconsolidation<br> of Neuronomics | - | - | - | - | - | - | - | - | - | - | - | (1,484,854 | ) | - | (1,484,854 | ) | ||||||||||||||||||||||||
| DSUs<br> cancelled | - | - | - | - | - | (145,850 | ) | - | - | - | (145,850 | ) | - | - | - | (145,850 | ) | |||||||||||||||||||||||
| DSU<br> exercised | 4,435,755 | 6,908,083 | - | - | - | (6,908,083 | ) | - | - | - | (6,908,083 | ) | - | - | - | |||||||||||||||||||||||||
| RSU<br> conversion | 112,500 | 216,250 | - | - | - | - | (216,250 | ) | - | - | (216,250 | ) | - | - | - | - | ||||||||||||||||||||||||
| Options<br> exercised | 9,237,595 | 14,735,950 | - | - | (6,432,505 | ) | - | - | - | - | (6,432,505 | ) | - | - | - | 8,303,445 | ||||||||||||||||||||||||
| Options<br> expired | - | - | - | - | (940,420 | ) | - | - | - | - | (940,420 | ) | - | - | 940,420 | - | ||||||||||||||||||||||||
| Warrant<br> exercised | 3,125,000 | 671,132 | - | - | - | - | - | - | (141,785 | ) | (141,785 | ) | - | - | - | 529,347 | ||||||||||||||||||||||||
| Share<br> purchase agreement | 1,607,717 | 3,909,861 | - | - | - | - | - | - | - | - | - | - | - | 3,909,861 | ||||||||||||||||||||||||||
| NCIB | (1,235,900 | ) | (2,769,629 | ) | - | - | - | - | - | - | - | - | - | - | - | (2,769,629 | ) | |||||||||||||||||||||||
| RSU<br> forfeited | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Share-based<br> payments | - | - | - | - | 4,521,451 | 7,394,757 | 1,439,745 | - | - | 13,355,953 | - | - | - | 13,355,953 | ||||||||||||||||||||||||||
| Private<br> placement | 45,662,101 | 46,758,112 | - | - | - | - | - | - | - | - | - | - | - | 46,758,112 | ||||||||||||||||||||||||||
| Share<br> issuance costs | - | (4,192,788 | ) | - | - | - | - | - | - | - | - | - | - | - | (4,192,788 | ) | ||||||||||||||||||||||||
| Treasury<br> shares acquired | 1,439,484 | 3,000,000 | - | - | - | - | - | - | - | - | - | - | - | 3,000,000 | ||||||||||||||||||||||||||
| Change<br> to functional currency | - | - | - | - | - | - | - | - | - | - | (1,481,289 | ) | - | - | (1,481,289 | ) | ||||||||||||||||||||||||
| Net<br> loss and comprehensive loss | - | - | - | - | - | - | - | - | - | - | 294,045 | - | 62,405,727 | 62,699,772 | ||||||||||||||||||||||||||
| Balance,<br> December 31, 2025 | 385,827,975 | $ | 222,974,359 | 4,500,000 | $ | 3,190,601 | $ | 14,052,954 | $ | 9,109,269 | $ | 1,223,495 | $ | - | $ | 586,348 | $ | 24,972,066 | $ | (1,481,289 | ) | $ | - | $ | (100,101,884 | ) | $ | 149,553,853 | ||||||||||||
| Balance,<br> December 31, 2023 (See Note 2(e)) | 276,658,208 | $ | 128,886,879 | 4,500,000 | $ | 3,190,601 | $ | 13,242,820 | $ | 5,943,892 | $ | - | $ | 20,268 | $ | 2,075,965 | $ | 21,282,945 | (1,209,379 | ) | (3,562 | ) | (135,504,167 | ) | 16,643,317 | |||||||||||||||
| Acquisition<br> of Reflexivity | 5,000,000 | 2,295,276 | - | - | - | - | - | - | - | - | - | - | - | 2,295,276 | ||||||||||||||||||||||||||
| Acquisition<br> of Solana CP | 7,297,090 | 4,659,113 | - | - | - | - | - | - | - | - | - | - | - | 4,659,113 | ||||||||||||||||||||||||||
| Acquisition<br> of Stillman Digital | 2,500,000 | 5,065,277 | - | - | - | - | - | - | - | - | - | - | - | 5,065,277 | ||||||||||||||||||||||||||
| Warrants<br> exercised | 22,737,789 | 4,802,641 | - | - | - | - | - | - | (1,347,414 | ) | (1,347,414 | ) | - | - | - | 3,455,227 | ||||||||||||||||||||||||
| Options<br> exercised | 3,912,405 | 2,839,539 | - | - | (1,138,528 | ) | - | - | - | - | (1,138,528 | ) | - | - | - | 1,701,011 | ||||||||||||||||||||||||
| DSUs<br> exercised | 6,432,281 | 4,517,142 | - | - | - | (4,517,142 | ) | - | - | - | (4,517,142 | ) | - | - | - | - | ||||||||||||||||||||||||
| Option<br> expiry | - | - | - | - | (800,683 | ) | - | - | - | - | (800,683 | ) | - | - | 800,683 | - | ||||||||||||||||||||||||
| Warrants<br> expired | - | - | - | - | - | - | - | - | (418 | ) | (418 | ) | - | - | 418 | - | ||||||||||||||||||||||||
| DSUs<br> surrendered | - | - | - | - | - | (82,095 | ) | - | - | - | (82,095 | ) | - | - | 51,593 | (30,502 | ) | |||||||||||||||||||||||
| NCIB | (1,840,600 | ) | (2,804,597 | ) | - | - | - | - | - | (20,268 | ) | - | (20,268 | ) | - | - | (264,363 | ) | (3,089,227 | ) | ||||||||||||||||||||
| Share-based<br> payments | - | - | - | - | 5,600,819 | 7,423,790 | - | 6,146,231 | - | 19,170,840 | - | - | (6,146,231 | ) | 13,024,609 | |||||||||||||||||||||||||
| Treasury<br> shares acquired | 3,998,508 | 6,146,231 | - | - | - | - | - | - | - | - | - | - | - | 6,146,231 | ||||||||||||||||||||||||||
| Treasury<br> shares paid out | (5,437,992 | ) | (3,112,835 | ) | - | - | - | - | - | (6,146,231 | ) | - | (6,146,231 | ) | - | - | 6,146,231 | (3,112,835 | ) | |||||||||||||||||||||
| Cumulative<br> translation adjustment | - | - | - | - | - | - | - | - | - | - | 915,334 | - | - | 915,334 | ||||||||||||||||||||||||||
| Other | 3,562 | - | 3,562 | |||||||||||||||||||||||||||||||||||||
| Net<br> loss and comprehensive loss | - | - | - | - | - | - | - | - | - | - | (28,532,195 | ) | (27,616,861 | ) | ||||||||||||||||||||||||||
| Balance,<br> December 31, 2024 | 321,257,689 | $ | 153,294,666 | 4,500,000 | $ | 3,190,601 | $ | 16,904,428 | $ | 8,768,445 | $ | - | $ | - | $ | 728,133 | $ | 26,401,006 | $ | (294,045 | ) | $ | - | $ | (163,448,031 | ) | $ | 19,144,197 |
See
accompanying notes to these consolidated financial statements
4
DeFi TechnologiesInc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 1. | Nature<br> of operations and going concern |
|---|
DeFi Technologies Inc. (the “Company” or “DeFi”), is a publicly listed company incorporated in the Province of British Columbia and continued under the laws of the Province of Ontario. The Company’s primary stock exchange listing is the CBOE Canada Exchange under the symbol “DEFI”. On May 2025, the Company dual listed its shares on the Nasdaq Capital Markets Exchange under the symbol of “DEFT” to gain improved access to U.S. capital markets. DeFi is a Canadian technology company bridging the gap between traditional capital markets and decentralized finance. The Company generates revenues through the issuance of exchange traded products that synthetically track the value of a single DeFi protocol, investments in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets, providing premium membership for research reports to investors and offering node management of decentralized protocols to support governance, security and transaction validation. The Company’s head office is located at 333 Bay Street, Suite 2400, Toronto, Ontario, Canada, M5H 2R2.
These consolidated financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. As at December 31, 2025, the Company has working capital deficit of $5,144,229 (December 31, 2024 – negative working capital deficiency of $188,453,809), including cash of $91,234,090 (December 31, 2024 - $15,931,525) and accumulated deficit of $100,101,884 (December 31, 2024 - $163,448,031), and for the year ended December 31, 2025 had a net income and comprehensive income of $62,699,772 (for the year ended December 31, 2024 – net loss and comprehensive loss of $27,616,861). The Company’s current source of operating cash flow is dependent on the success of its business model and operations which are also influenced by cryptocurrency prices and there can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company.
These consolidated financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.
International conflict and other geopolitical tensions and events, including war, military action, terrorism, trade disputes, and international responses thereto have historically led to, and may in the future lead to, uncertainty or volatility in global commodity and financial markets and supply chains. Volatility in digital asset prices and supply chain disruptions may adversely affect the Corporation’s business, financial condition, financing options, and results of operations.
| 2. | Material<br> accounting policy information |
|---|---|
| (a) | Statement of compliance |
| --- | --- |
These consolidated financial statements of the Company were prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”) The policies as set out below were consistently applied to all the periods presented unless otherwise noted. These consolidated financial statements of the Company were approved for issue by the Board of Directors on April 2, 2026.
| (b) | Basis of consolidation |
|---|
Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.
5
DeFi Technologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|
These consolidated financial statements comprise the financial statements of the Company and its wholly owned subsidiaries DeFi Holdings (Bermuda) Ltd. (“DeFi Bermuda”), Reflexivity LLC, Valour Inc., Valour Europe AG, DeFi Middle East DMCC, Stillman Digital Inc., and Stillman Digital Bermuda Ltd. Neuronomics AG was 52.5% owned until September 30, 2025 by the Company and is consolidated on the basis of control. On September 30, 2025, the Company’s ownership in Neuronomics dropped to 44.68% and the investment was reclassified to investment in associate. Valour Digital Securities Limited is 0% owned by the Company and consolidated on the basis of control. All material intercompany transactions and balances between the Company and its subsidiaries have been eliminated on consolidation. DeFi Holdings (Bermuda) Ltd. was dissolved on January 26, 2026.
Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the consolidated financial statements.
| (c) | Basis of preparation and functional currency |
|---|
These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments and investments that have been measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.
Foreign currency transactions are recorded at the exchange rate as at the date of the transaction. At each statement of financial position date, monetary assets and liabilities in foreign currencies other than the functional currency are translated using the year end foreign exchange rate. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities in foreign currencies other than the functional currency are translated using the historical rate. All gains and losses on translation of these foreign currency transactions and balances are included in the profit and loss. The functional currency for DeFi, DeFi Bermuda, Reflexivity LLC, Valour Inc., Valour Europe AG, Stillman Digital Inc., Stillman Digital Bermuda Ltd. and Valour Digital Securities Limited is the U.S Dollar. The functional currency of DeFi Middle East DMCC is the United Emirates Dirham. The functional currency of Neuronomics AG is the Swiss Franc.
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
| ● | assets<br> and liabilities for each balance sheet presented are translated at the closing rate at the<br> date of that balance sheet, |
|---|---|
| ● | income<br> and expenses for each statement of loss and comprehensive loss are translated at average<br> exchange rates (unless this is not a reasonable approximation of the cumulative effect of<br> the rates prevailing on the transaction dates, in which case income and expenses are translated<br> at the dates of the transactions), and |
| --- | --- |
| ● | all<br> resulting exchange differences are recognized in other comprehensive loss. |
| --- | --- |
On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recognized in other comprehensive loss. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
IFRS does not have clear and definitive guidance on the treatment of custodied digital assets. As such, the Company looked to industry practice and other standard setting bodies, such as SEC Staff Accounting Bulletins (“SAB”) and US GAAP for guidance on the treatment of these assets.
6
DeFi TechnologiesInc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|
Basis of preparation and functional currency (continued)
On January 23, 2025, the U.S. Securities and Exchange Commission published SAB 122 to rescind SAB 121 with an effective date of January 30, 2025. The application of SAB 122 is applicable for all annual reporting periods beginning on or after December 15, 2024.
Prior to the release of SAB 122, the Company accounted for client digital assets, held by its wholly owned subsidiary Stillman Digital Bermuda Ltd., in accordance with Staff Accounting Bulletin 121 due to the limited IFRS guidance applicable to custodians of digital assets.
To ensure the Company was in-line with other regulatory bodies on the treatments of these assets, the Company adopted SAB 122 during the year ended December 31, 2025. The implication of adoption of SAB 122 was that the Company removed its safeguarding obligation liability and corresponding client digital assets from its statement of financial position. The Company also retrospectively de-recognized $2,332,501 (CAD$3,356,235) of client digital assets and associated liabilities from its December 31, 2024 statement of financial position. No adjustments to retained earnings were made nor an accrual for loss contingency given the lack of loss events to date at Stillman Digital Bermuda Ltd.
| (d) | Change in presentation currency |
|---|
Effective April 1, 2025, the Company changed its presentation currency from Canadian dollars (CAD) to United States dollars (USD). This change has been made to better reflect the Company’s operational and financial exposure to USD, which has become increasingly significant given its activities in the global cryptocurrency and decentralized finance (DeFi) industry, where USD is the predominant currency for transactions, valuations, and investor reporting. The Company’s shares were listed on the Nasdaq Capital Market on May 12, 2025, further supporting the change to USD presentation currency. The Company determined that USD provides more relevant and reliable financial information to users of the financial statements, particularly international investors and stakeholders.
In accordance with IAS 21 – The Effects of Changes in Foreign Exchange Rates, the change in presentation currency has been applied retrospectively. Accordingly, the comparative financial statements for prior periods have been presented as if USD had always been the Company’s presentation currency.
The consolidated statements of loss and comprehensive loss and consolidated statements of cashflows have been translated into the presentation currency using the average exchange rates prevailing during each quarterly reporting period. All monetary assets and liabilities previously reported in CAD have been translated into USD at the closing exchange rate at each respective consolidated statement of financial position date. Share capital, reserves, and other equity components were translated at the historical exchange rates prevailing on the dates of the original transactions, if the date was not readily available items were translated using the average exchange rate for each quarter.
The exchange rates used to reflect the change in presentation currency were as follows:
| ****<br><br>CAD – USD Exchange rates | Q1 – 2024 | Q2 - 2024 | Q3 - 2024 | Q4 - 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| Closing rate | 0.7389 | 0.7306 | 0.7408 | 0.6950 | ||||
| Average rate | 0.7415 | 0.7315 | 0.7331 | 0.7152 | ||||
| CAD – USD Exchange rates | Q1 – 2023 | Q2 – 2023 | Q3 – 2023 | Q4 - 2023 | ||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Closing rate | 0.7289 | 0.7553 | 0.7396 | 0.7510 | ||||
| Average rate | 0.7394 | 0.7447 | 0.7455 | 0.7340 |
7
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material accounting policy information (continued) |
|---|
Change in presentation currency (continued)
The impact of the change in presentation currency is limited to presentation and translation of prior period figures. There was no impact on the Company’s previously reported net loss, total comprehensive loss, or cash flows, other than changes resulting from currency translation.
| (e) | Change in functional currency |
|---|
The financial statements of each company within the consolidated group are measured using their functional currency which is the currency of the primary economic environment in which an entity operates. DeFi changed its functional currency from the Canadian dollar (C$) to the United States dollar (US$) as of October 1, 2025. The change in functional currency was the result of a review of the primary economic environment in which the entity operates and the currency that mainly influences the underlying transactions entered into by the Company. The functional currency for DeFi, DeFi Bermuda, Reflexivity LLC, Valour Inc., DeFi Europe AG, Stillman Digital Inc., Stillman Digital Bermuda Ltd. and Valour Digital Securities Limited is the U.S Dollar. The functional currency for DeFi Middle East DMCC is the United Emirates Dirham.
| (f) | Warrant liability |
|---|
Warrants issued in September 26, 2025, were determined to be derivative instruments that did not meet the fixed-for-fixed criteria of IAS 32. As a result, these warrants are accounted for as a financial liability and are recorded at their estimated fair value at each reporting date, computed using the Black-Scholes valuation method. Changes in fair value during each reporting period are included in income or loss for the period.
| (g) | Reclassification of Comparative Amounts |
|---|
Certain amounts have been reclassified in the condensed consolidated interim statement of operations and comprehensive income/(loss) in previous periods to conform to the current period presentation. Only reclassifications have been made with no changes in accounting policies or revision of previously reported amounts. There is no change to previously reported net income (loss).
| (h) | Investment in associates |
|---|
An associate is an entity over which the Company has significant influence but not control. Investments in associates are based on the Company’s ability to exercise significant influence over the operating and financial policies of the investee. Investments in associates are accounted for using the equity method whereby the investment is initially recorded at cost and adjusted thereafter for additional investments made, dividends received and to recognize the Company’s proportionate share of the associate’s post acquisition income or loss.
The Company’s share of the associate’s profit or loss is recognized in the consolidated statement of loss, and its share of movements in other comprehensive income is recognized in the consolidated statement of other comprehensive loss with a corresponding adjustment to the carrying amount of the investment. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the consolidated statement of loss and comprehensive loss.
The Company classifies its investment in Neuronomics as an investment in associate, as the Company owns 44.68% of Neuronomics as of December 31, 2025.
8
DeFi TechnologiesInc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material accounting policy information (continued) |
|---|---|
| (h) | Significant accounting judgements, estimates and assumptions |
| --- | --- |
The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.
Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:
| (i) | Accounting<br> for digital assets |
|---|
Among its digital asset holdings, only USDC was classified by the Company as a financial asset. The rest of its digital assets were classified following the IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 6) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The cost to sell digital assets is nominal. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the mid-point price at 17:30 CET digital asset exchanges consistent with the final terms for each exchange traded product (“ETP”). The primary digital asset exchanges used to value digital assets are Kraken, Bitfinex, Binance, Coinbase and Bitstamp. Where digital assets held do not have pricing on these exchanges, other exchanges would be used. On all material coins, Kraken, Bitfinex, Coinbase and Bitstamp were used. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Volmex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company revalues its digital assets quarterly. The Company’s principal market for trading cryptocurrency is Binance. However, we use a weighted average price of several markets in accordance with our ETP prospectus. The difference in pricing between our principal market and the weighted average price in accordance with our ETP prospectus has been determined by management to not be material.
| (ii) | Accounting<br> for ETP holder payables |
|---|
Financial liabilities at fair value through profit or loss held includes ETP holders payable. Liabilities arising in connection with ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company elected not to designate this as a hedging instrument. The ETPS are actively traded on the Spotlight Stock Market, the London Stock Exchange (“LSE”), and Germany Borse Frankfurt Zertifikate AG.
| (iii) | Fair<br> value of financial derivatives |
|---|
Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments. Refer to Notes 5 and 21 for further details.
9
DeFi Technologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (h) | Significant accounting judgements,<br> estimates and assumptions (continued) |
| --- | --- |
| (iv) | Fair<br> value of equity investment not quoted in an active market or private company investments |
| --- | --- |
Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 5, 7 and 16 for further details.
| (v) | Share-based<br> payments |
|---|
The Company primarily uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company used a Monte-Carlo simulation to estimate the fair value of certain RSUs granted during the year ended December 31, 2025. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense. In the event services are provided to the Company by officers or consultants and settled in equity instruments, the Company has measured the fair value of the services received as the fair value of the equity instruments granted.
| (vi) | Business<br> combinations and goodwill |
|---|
Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.
| (vii) | Estimated<br> useful lives and impairment considerations |
|---|
Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.
| (viii) | Impairment<br> of non-financial assets |
|---|
The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 10 for the discussion regarding impairment of the Company’s non-financial assets.
| (ix) | Determination<br> of significant influence and impairment of investment in associate |
|---|
The Company has classified Neuronomics as an associate based on management’s judgment that the Company has significant influence through board representation and 44.68% of the voting rights. Other parties hold 51% of the voting rights and the Company does not exercise control over the board of directors and its operational decision-making process.
Impairment exists when the carrying value of the investment in associate exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The determination of impairment requires significant judgement and can be triggered by significant adverse changes in the market, economic or legal environment in which the associate operates.
10
DeFi TechnologiesInc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (h) | Significant accounting judgements,<br> estimates and assumptions (continued) |
| --- | --- |
| (x) | Functional<br> currency |
| --- | --- |
The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.
| (xi) | Assessment<br> of transaction as an asset purchase or business combination |
|---|
Assessment of a transaction as an asset purchase or a business combination requires judgements to be made at the date of acquisition in relation to determining whether the acquiree meets the definition of a business. The three elements of a business include inputs, processes and outputs. When the acquiree does not have outputs, it may still meet the definition of a business if its processes are substantive which includes assessment of whether the process is critical and whether the inputs acquired include both an organized workforce and inputs that the organized workforce could convert into outputs.
| (xii) | Control |
|---|
Significant judgment is involved in the determination whether the Company controls another entity under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.
| (xiii) | Accounting<br> for digital assets held as collateral |
|---|
The Company has provided digital assets as collateral for loans provided by digital asset liquidity provider. These digital assets held as collateral are included with digital assets and valued at fair value consistent with the Company’s accounting policy for its digital assets. See note 2(e). In cases where recoverability is uncertain, the Company estimates expected credit losses under IFRS 9 using a loss-rate approach. Where there is a legal right to set-off, the Company will set-off the asset and related liability in the consolidated statement of financial position.
| (xiv) | Valuation<br> of equity investments at FVTPL |
|---|
Significant judgement is required in the determination of the fair value of the Company’s investments in Equity investments (collectively the “Funds”) in digital asset at FVTPL given the lock up periods applied to the digital cryptocurrencies owned by the Funds. The Company assesses the discount for lack of marketability applied by the Fund managers for reasonableness in their calculated net asset values. The Fund managers calculate the discount for lack of marketability (“DLOM”) using an option pricing model.
| (i) | Financial instruments |
|---|
Financial assets and financial liabilities are recognized on the Company’s statement of financial position when the Company has become a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. The Company’s financial instruments consist of cash, amounts receivable, public investments, private investments, derivative asset, accounts payable and accrued liabilities and ETP holders payable.
11
DeFi TechnologiesInc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (i) | Financial<br> instruments (continued) |
| --- | --- |
| (i) | Investments |
| --- | --- |
Purchases and sales of investments where the Company cannot exert control or significant influence are recognized on a trade date basis. Public and private investments at fair value through profit or loss are initially recognized at fair value, with changes in fair value reported in profit (loss). At each financial reporting period, the Company’s management estimates the fair value of its investments based on the criteria below and reflects such valuations in the financial statements.
Transaction costs are expensed as incurred in the statements of loss. The determination of fair value requires judgment and is based on market information where available and appropriate. At the end of each financial reporting period, the Company’s management estimates the fair value of investments based on the criteria below and reflects such changes in valuations in the statements of loss. The Company is also required to present its investments (and other financial assets and liabilities reported at fair value) into three hierarchy levels (Level 1, 2, or 3) based on the transparency of inputs used in measuring the fair value, and to provide additional disclosure in connection therewith (see Note 21, “Financial instruments”). The three levels are defined as follows:
Level 1 – investment with quoted market price;
Level 2 – investment which valuation technique is based on observable market inputs; and
Level 3 – investment which valuation technique is based on non-observable market inputs.
Publicly traded investments:
1. Securities, including shares, options, and warrants which are traded on a recognized securities exchange and for which no sales restrictions apply are recorded at fair values based on quoted closing prices at the statement of financial position date or the closing price on the last day the security traded if there were no trades at the statement of financial position date. The Company utilizes the quoted closing prices. These are included in Level 1 as disclosed in Note 21.
2. Securities which are traded on a recognized securities exchange but which are escrowed or otherwise restricted as to sale or transfer are recorded at amounts discounted from market value. Shares that are received as part of a private placement that are subject to a standard four-month hold period are not discounted due the short term of the hold period. In determining the discount for such investments, the Company considers the nature and length of the restriction, business risk of the investee corporation, relative trading volume and price volatility and any other factors that may be relevant to the ongoing and realizable value of the investments. These are included in Level 2 in Note 21.
3. Warrants or options of publicly traded securities which do not have a quoted price are carried at an estimated fair value calculated using the Black-Scholes option pricing model if sufficient and reliable observable market inputs are available. These are included in Level 2 as disclosed in Note 21.
4. Securities which are traded on a recognized securities exchange but which do not have an active market are recorded at the most recent transaction price. These are included in Level 3 in Note 21.
12
DeFi Technologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (i) | Financial<br> instruments (continued) |
| --- | --- |
The amounts at which the Company’s publicly traded investments could be disposed of may differ from carrying values based on market quotes, due to market price changes and the fair value was determined at a specific time, the value at which significant ownership positions are sold is often different than the quoted market price due to a variety of factors such as premiums paid for large blocks or discounts due to illiquidity. Such differences could be material.
Privately held investments:
1. Securities in privately held companies (other than options and warrants) are initially recorded at cost, being the fair value at the time of acquisition. At the end of each financial reporting period, the Company’s management estimates the fair value of investments based on the criteria below and reflects such valuations in the financial statements. These are included in Level 3 as disclosed in Note 21. Options and warrants of private companies are carried at fair value using valuation technique.
With respect to valuation, the financial information of private companies in which the Company has investments may not always be available, or such information may be limited and/or unreliable. Use of the valuation approach described below may involve uncertainties and determinations based on the Company’s judgment and any value estimated from these may not be realized or realizable. In addition to the events described below, which may affect a specific investment, the Company will take into account general market conditions when valuing the privately held investments in its portfolio. In the absence of occurrence of any of these events or any significant change in general market conditions indicates generally that the fair value of the investment has not materially changed.
2. An upward adjustment is considered appropriate and supported by pervasive and objective evidence such as significant subsequent equity financing by an unrelated investor at a transaction price higher than the Company’s carrying value; or if there have been significant corporate, political or operating events affecting the investee company that, in management’s opinion, have a positive impact on the investee company’s prospects and therefore its fair value. In these
circumstances, the adjustment to the fair value of the investment will be based on management’s judgment and any value estimated may not be realized or realizable. Such events include, without limitation:
| ● | political<br> changes in a country in which the investee company operates which, for example, reduce the<br> corporate tax burden, or to an extent that, it was not previously allowed, or reduce or eliminate<br> the need for approvals; |
|---|---|
| ● | receipt<br> by the investee company of approvals, which allow the investee company to proceed with its<br> project(s); |
| --- | --- |
| ● | release<br> by the investee company of positive operational results, which either proves or expands their<br> investee’s prospects; and |
| --- | --- |
| ● | important<br> positive management changes by the investee company that the Company’s management believes<br> will have a very positive impact on the investee company’s ability to achieve its objectives<br> and build value for shareholders. |
| --- | --- |
13
DeFi Technologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (i) | Financial<br> instruments (continued) |
| --- | --- |
Privately held investments (continued):
3. Downward adjustments to carrying values are made when there is evidence of a decline in value as indicated by the assessment of the financial condition of the investment based on third party financing, operational results, forecasts, and other developments since acquisition, or if there have been significant corporate, political or operating events affecting the investee company that, in management’s opinion, have a negative impact on the investee company’s prospects and therefore its fair value. The amount of the change to the fair value of the investment is based on management’s judgment and any value estimated may not be realized or realizable. Such events include, without limitation:
| ● | political<br> changes in a country in which the investee company operates which increases the tax burden<br> on companies; |
|---|---|
| ● | denial<br> of the investee company’s application for approvals which prohibit the investee company<br> from proceeding with its projects; |
| --- | --- |
| ● | the<br> investee company releases negative operating results; |
| --- | --- |
| ● | changes<br> to the management of the investee company take place which the Company believes will have<br> a negative impact on the investee company’s ability to achieve its objectives and build<br> value for shareholders; |
| --- | --- |
| ● | the<br> investee company is placed into receivership or bankruptcy; and |
| --- | --- |
| ● | based<br> on financial information received from the investee company, it is apparent to the Company<br> that the investee company is unlikely to be able to continue as a going concern. |
| --- | --- |
The resulting values may differ from values that would be realized had a ready market existed. The amounts at which the Company’s privately held investments could be disposed of may differ from the carrying value assigned. Such differences could be material.
Equity investments in digital assets at fair value through profit and loss
Investments in equity instruments at fair value through profit or loss - Included in investments in equity instruments at fair value through profit or loss are investments in a US private company (LLC), and a U.S. Limited Liability Partnership via a Cayman Island domiciled feeder Limited Liability Partnership.
Management accounted for such investments at fair value to profit or loss under IFRS 9, because the Company does not exercise significant influence over the investee. The Company does not have any contractual right to appoint any representative to the investee’s board of directors. In addition, the Company does not have any participation in policymaking processes and does not have any material transactions with the investee. The fair value of investments in investment funds which are not quoted in an active market is determined by using net asset value as determined by the investment fund’s administrator and include a discount for lack of marketability (“DLOM”). Management deems the net asset value to be the fair value after considering key factors such as the liquidity of the investment fund or its underlying investments, any restrictions on redemptions and basis of accounting.
The Company classifies equity investments it intends to sell within twelve months as current and those where the expectation is to hold for periods longer than a year as non-current. These are included in Level 3 disclosed in Note 21.
| (ii) | Financial<br> assets other than investments at fair value and liabilities |
|---|
Financial assets
Initialrecognition and measurement
Non-derivative financial assets within the scope of IFRS 9 are classified and measured as “financial assets at fair value”, as either fair value through profit or loss (“FVPL”) or fair value through other comprehensive income (“FVOCI”), and “financial assets at amortized costs”, as appropriate. The Company determines the classification of financial assets at the time of initial recognition based on the Company’s business model and the contractual terms of the cash flows.
All financial assets are recognized initially at fair value plus, in the case of financial assets not at FVPL, directly attributable transaction costs on the trade date at which the Company becomes a party to the contractual provisions of the instrument.
14
DeFi TechnologiesInc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (i) | Financial<br> instruments (continued) |
| --- | --- |
Financial assets with embedded derivatives are considered in their entirety when determining their classification at FVPL or at amortized cost. Other accounts receivable held for collection of contractual cash flows are measured at amortized cost.
Subsequentmeasurement – financial assets at amortized cost
After initial recognition, financial assets measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the Effective Interest Rate (“EIR”) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.
Subsequentmeasurement – financial assets at FVPL
Financial assets measured at FVPL include financial assets management intends to sell in the short term and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial assets measured at FVPL are carried at fair value in the statements of financial position with changes in fair value recognized in other income or expense in the statements of earnings (loss). The Company’s investments are classified as financial assets at FVPL.
Subsequentmeasurement – financial assets at FVOCI
Financial assets measured at FVOCI are non-derivative financial assets that are not held for trading and the Company has made an irrevocable election at the time of initial recognition to measure the assets at FVOCI. The Company does not measure any financial assets at FVOCI.
After initial measurement, investments measured at FVOCI are subsequently measured at fair value with unrealized gains or losses recognized in other comprehensive income or loss in the statements of comprehensive income (loss). When the investment is sold, the cumulative gain or loss remains in accumulated other comprehensive income or loss and is not reclassified to profit or loss.
Dividends from such investments are recognized in other income in the statements of earnings (loss) when the right to receive payments is established.
Derecognition
A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or the Company no longer retains substantially all the risks and rewards of ownership.
Impairmentof financial assets
The Company has elected to apply the simplified approach to impairment as permitted by IFRS 9, which requires the expected lifetime loss to be recognized at the time of initial recognition of the receivable. To measure estimated credit losses, accounts receivable have been grouped based on shared credit risk characteristics, including the number of days past due. An impairment loss is reversed in subsequent periods if the amount of the expected loss decreases and the decrease can be objectively related to an event occurring after the initial impairment was recognized.
Financial liabilities
Initialrecognition and measurement
Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL as is the case for held for trading or derivative instruments, or the Company has opted to measure the financial liability at FVPL. ETP holders payable are designated as financial liability at fair value through profit or loss on initial recognition. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s financial liabilities also include accounts payable and liabilities and loans payable, which are measured at amortized cost. All financial liabilities are recognized initially at fair value and in the case of long-term debt, net of directly attributable transaction costs.
15
DeFi TechnologiesInc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (i) | Financial<br> instruments (continued) |
| --- | --- |
| (ii) | Financial<br> assets other than investments at fair value and liabilities (continued) |
| --- | --- |
Subsequentmeasurement – financial liabilities at amortized cost
After initial recognition, financial liabilities measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.
Subsequentmeasurement – financial liabilities at FVTPL
Financial liabilities measured at FVTPL include financial liabilities management intends to sell in the short term and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial liabilities measured at FVTPL are carried at fair value in the consolidated statements of financial position with changes in fair value recognized in other income or expense in the consolidated statements of loss.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires with any associated gain or loss recognized in other income or expense in the statements of earnings (loss).
| (j) | Cash |
|---|
Cash is comprised of cash on hand and deposits that generally mature within 90 days from the date of acquisition. Deposits are held in Canadian chartered bank, financial institutions controlled by a Canadian chartered bank, and broker and custodians in Switzerland. The Company also holds client cash deposits for trading purposes in the United States and Bermuda and has classified these deposits as client cash deposits on the statement of financial position.
| (k) | Revenue recognition |
|---|
Revenue is recognized at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for transferring services to a customer. For each contract with a customer, the Company: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct service to be delivered; and recognizes revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the services promised. Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the Company. However, when an uncertainty arises about the collectability of an amount already included in revenue, the uncollectible amount, or the amount in respect of which recovery has ceased to be probable, is recognized as an expense, rather than as an adjustment of the amount of revenue originally recognized.
Managementfees
The Company recognizes revenue from management fees earned on various ETP products. The management fee percentage is outlined in each ETP prospectus. The management fee is calculated daily based on the daily ETP net asset value and is recognized daily when the management fee is calculated. The management fee is deducted from the net asset value of the ETPs. The management fees are valued in the underlying ETPs base currency and converted into USD daily.
Tradingcommissions
The Company primarily generates revenue through commission fees charged on the Stillman Digital trading platform. The revenues are all recognized at a point in time upon the trade execution and settlement. The commission rates vary and depend on size of trade, asset and client. There is no general right of return in such arrangements.
Otherrevenues
The Company earns revenue from aggregating small individual trades during the day to facilitate hedging and optimize liquidity and hedging them periodically. These are computed as net fiat receivables and are measured based on the average daily USD rates at the end of each day.
16
DeFi Technologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (j) | Revenue<br> recognition (continued) |
| --- | --- |
Researchrevenues
The Company recognizes revenue from research reports as the reports are provided to customers.
Publicand private investments
Realized gains and losses on the disposal of investments and unrealized gains and losses in the value of investments are reflected in the statement of loss on a trade date basis. Upon disposal of an investment, previously recognized unrealized gains or losses are reversed, so as to recognize the full realized gain or loss in the period of disposition. All transaction costs are expensed as incurred.
| (k) | Lending, staking and node revenue |
|---|
Lendingand Staking
The Company earns a yield based on digital assets that are lent or staked with various reputable digital asset exchanges. The Company transfers digital asset to either staking account within the exchange platform and into staking custody accounts. The Company transfers the digital assets to those staking accounts and the counterparty delivers staking and lending rewards in return. The digital assets rewards are based on the rewards offered at the time the Company enters into staking or lending arrangements. The transaction price is an interest rate offered for the digital asset deposit. Over the period that the digital assets are staked or lent, the digital assets rewards are deposited into the Company’s custody accounts. The rewards are based on the amount of digital assets staked or lent and the rate offered by the custodian at that time.
Staking and lending rewards are recognized as revenue as they are earned over the period the digital assets are staked or loaned. Staking allows the Company to earn income through a process that is used to verify cryptocurrency transactions. It involves committing holdings to support a blockchain network and confirming transactions. Cryptocurrencies that allow staking use a “consensus mechanism” called Proof of Stake, which is the way they ensure that all transactions are verified and secured without a bank or payment processor in the middle.
Certain staking arrangements may be subject to protocol-imposed lockup, timelock, unbonding, or other withdrawal restrictions that affect when the underlying digital assets can be transferred or redeemed. These restrictions are taken into consideration in the Company’s accounting and disclosure assessment, with protocol specific terms disclosed in the digital asset note (Note 6).
| (l) | Validator Node revenue |
|---|
ValidatorNode Revenue
Validator Node revenue is earned as transactions are validated on a blockchain. When transactions are validated on the blockchain, the Company receives rewards from that blockchain. The transaction price are the rewards earned by the Company as transactions are validated by the Company’s node. The Company receives rewards for these services provided to the blockchain. The blockchain token rewards are only earned when the Company validates transactions that take place on the blockchain. When a transaction is validated by the Company’s node, rewards are deposited to the Company’s account. As the tokens are earned, revenue is calculated by summing up the tokens earned each day and multiplying the value of reward tokens for that day.
17
DeFi TechnologiesInc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (m) | Leases |
| --- | --- |
At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company, as a lessee, recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove any improvements made to branches or office premises. The right-of-use asset is subsequently amortized using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in net income if the carrying amount of the right-of-use asset has been reduced to zero. The Company presents right-of-use assets and lease liabilities in the Consolidated Statement of Financial Position. The Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
| (n) | Operating segments |
|---|
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer and Chief Operating Officer. See Note 27 for details.
| (o) | Income (loss) per share |
|---|
Basic income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of the Company’s common shares outstanding during the period. Diluted income (loss) per share is calculated by dividing the applicable net income (loss) by the sum of the weighted-average number of common shares outstanding if dilutive common shares had been issued during the period. The calculation of diluted income (loss) per share assumes that outstanding stock options and warrants with an average exercise price below market price of the underlying shares are exercised and the assumed proceeds are used to repurchase common shares of the Company at the average market price for the period. Diluted income per share for the years ended December 31, 2024 and 2023 all stock options and warrants were anti-dilutive and excluded from the calculation of dilutive loss per share.
| (p) | Comprehensive income (loss) |
|---|
Total comprehensive income (loss) comprises all components of profit or loss and other comprehensive income (loss). Other comprehensive income (loss) includes gains and losses from translating the financial statements of an entity’s whose functional currency differs from the presentation currency.
18
DeFi Technologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (q) | Income taxes |
| --- | --- |
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
| (r) | Share-based payments |
|---|
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period in which options vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. For options that expire unexercised, the recorded value is transferred to deficit.
| (s) | Cash settled synthetic shares |
|---|
Some performance share units are settled in cash. When these PSUs are designated for cash settlement, the liability is recorded as an accrued liability and the expense is recorded under compensation and consulting in the consolidated statement of loss. These PSUs are fair valued at the end of each period based on the market value of the Company’s common shares with the resulting increase or decrease in fair value recorded as an expense in the consolidated statement of loss.
19
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material<br> accounting policy information (continued) |
|---|---|
| (t) | Digital<br> Assets |
| --- | --- |
The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss.
Digital assets consist of cryptocurrency denominated assets (see Note 6) and are included in current assets. Digital assets are measured using unadjusted quoted prices taken from active markets, where available. Fair value measurement for digital assets with available active market prices has been classified as Level 1 in the fair value hierarchy. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase and other exchanges consistent with the final terms for each ETP. The Company revalues its digital assets quarterly.
Disclosure
The Company applies the disclosure requirements in the IFRS Standard applicable to its holding of cryptocurrencies. Accordingly, the Company applies the disclosure requirements in IAS 2 – Inventories for holdings of cryptocurrencies. If an entity measures its holding in cryptocurrencies at fair value, IFRS 13 Fair Value Measurement specifies applicable disclosure requirements. In applying IAS 1 Presentation of Financial Statements, the Company discloses judgements that its management has made regarding its accounting for holdings of cryptocurrencies if those are part of the judgements that had a significant effect on the amounts recognized in the consolidated financial statements.
The Company has evaluated the impact of the Agenda Paper and has determined that cryptocurrencies with an active market should be classified as digital assets and measured at fair value through profit or loss.
Increases and decreases in the fair value of digital assets are recognized through profit or loss. Digital assets are derecognized when the Company has transferred substantially all the risks and rewards of ownership on disposal.
| (u) | Digital<br> Asset Loaned |
|---|
Initial recognition and measurement
The Company enters into loan agreements with various digital asset exchanges to earn yield based on the digital assets that are lent. At the time the Company enters into the loan agreement, the digital asset is derecognized from digital assets as the borrower obtains the rights to direct the use of the digital asset and the Company recognizes this as digital assets loaned, measured at the fair value of the loaned digital asset.
Subsequent measurement
During the term of the digital asset loan, the digital asset loaned is measured at the fair value based on the fair market value of loaned digital assets with any gains / (losses) resulting from remeasuring the digital asset loaned to the realized and net change in unrealized gains and losses on digital assets. Digital asset loan receivables are assessed for expected credit losses under IFRS 9 using a loss-rate approach. Counterparty A is subject to a 1% Stage 1 expected credit loss, driven by the recall penalty. Counterparty H is not subject to any expected credit loss due to its recallability without penalty.
Some of the digital assets loaned are subject to a locked in period and as such, a DLOM is applied to the fair value of these assets to adjust for illiquidity and transfer restrictions, rather than recognized a separate expected credit loss for these assets.
Derecognition
At the end of the digital asset loan, the digital asset loaned is derecognized and re-recorded as digital assets at the carrying amount of the digital asset loaned.
20
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material accounting policy information (continued) |
|---|
| (v) | Intangible<br>assets |
|---|
Intangible assets consist of brand names, customer relationships and technology. The Company has estimated the brand names will contribute cash flows for between 5-10 years, and customer relationships and technology will contribute to cash flows for 5 years.
Intangible assets are carried at cost less accumulated amortization and impairment losses.
Impairment
Impairments are recorded when the recoverable amounts of assets are less than their carrying amounts. The recoverable amount is the higher of an asset’s fair value less costs to dispose or its value in use. Impairment losses are evaluated for potential reversals of impairment when events or changes in circumstances warrant such consideration.
The carrying values of all intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
| (w) | Goodwill |
|---|
Goodwill arising on a business acquisition is recognized as an asset at the date that control is acquired (the “acquisition date”). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over the fair value of the identifiable net assets.
Goodwill is not amortized but is reviewed for impairment at least annually or sooner if indicators of impairment exist. Goodwill is tested for impairment at the group level representing the lowest level at which management monitors it, the operating segment level. Any impairment loss is recognized immediately in profit or loss and is not subsequently reversed.
The Company recognized impairment losses related to the goodwill of $2,077,585 in the year ended December 31, 2025 (year ended December 31, 2024 - $nil), related to its investment in Reflexivity.
For the year ended December 31, 2024, the Company did not experience any triggering events or additional information that the goodwill’s recoverable amount was significantly different than its carrying amount and no impairment was recognized during the year ended December 31, 2024.
| (x) | Share capital |
|---|
Financial instruments issued by the Company are classified as share capital only to the extent that they do not meet the definition of a financial liability. The Company’s common shares are classified as equity instruments. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Repurchases by the Company of its own common shares under a Normal Course Issuer Bid (“NCIB”) are accounted for in accordance with IAS 32, Financial Instruments: Presentation. Upon reacquiring common shares under a NCIB, the Company deducts from equity the purchase price of these common shares and any costs to acquire such common shares. Any such common shares held by the Company are considered treasury shares until they are cancelled.
| (y) | Provisions |
|---|
Provisions are recognized when (a), the Company has a present obligation (legal or constructive) as a result of a past event, and (b), it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
21
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 2. | Material accounting policy information (continued) |
|---|---|
| (z) | New and future accounting change |
| --- | --- |
Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods on or after January 1, 2026 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded.
IFRS 7 and IFRS 9 - In May 2024, the IASB issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments – Disclosures. The amendments clarify the derecognition of financial liabilities and introduces an accounting policy option to derecognize financial liabilities that are settled through an electronic payment system. The amendments also clarify how to assess the contractual cash flow characteristics of financial assets that include environmental,
social and governance (ESG)-linked features and other similar contingent features and the treatment of nonrecourse assets and contractually linked instruments (CLIs). Further, the amendments mandate additional disclosures in IFRS 7 for financial instruments with contingent features and equity instruments classified at FVOCI. The amendments are effective for annual periods starting on or after January 1, 2026. Retrospective application is required and early adoption is permitted.
IFRS 18 - In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements to improve reporting of financial performance. The new standard replaces IAS 1 Presentation of Financial Statements. IFRS 18 introduces new categories and required subtotals in the statement of profit and loss and also requires disclosure of management-defined performance measures. It also includes new requirements for the location, aggregation and disaggregation of financial information. The standard is effective for annual reporting periods beginning on or after January 1, 2027, including interim financial statements. Retrospective application is required and early adoption is permitted.
| 3. | Cash and cash equivalents |
|---|
| **** | 31-Dec-25 | 31-Dec-24 | ||
|---|---|---|---|---|
| Cash at banks | $ | 73,374,606 | $ | 9,481,681 |
| Cash at brokers | 17,742,923 | $ | 6,421,996 | |
| Cash at digital currency exchanges | 116,561 | $ | 27,848 | |
| $ | 91,234,090 | $ | 15,931,525 |
The Company also holds client cash deposits for trading purposes in the United States and Bermuda and has classified these deposits as client cash deposits on the statement of financial position. As at December 31, 2025, the balance in client cash deposits was $5,615,054 (December 31, 2024 - $10,665,147).
| 4. | Prepaid expenses and other assets | |||
|---|---|---|---|---|
| **** | 31-Dec-25 | 31-Dec-24 | ||
| --- | --- | --- | --- | --- |
| Prepaid insurance | $ | 167,500 | $ | 41,481 |
| Prepaid expenses | 624,678 | 1,345,896 | ||
| Trading receivables | 8,214,295 | - | ||
| Other assets | 590,448 | 410,347 | ||
| $ | 9,596,921 | $ | 1,797,724 |
At December 31, 2025, the Company’s investment portfolio consisted of one publicly traded investment and eight private investments for a total estimated fair value of $29,372,628 (December 31, 2024 – one publicly traded investment and nine private investments for a total estimated fair value of $37,348,081).
22
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 5. | Investments, at fair value through profit and loss |
|---|
During the year ended December 31, 2025, the Company had a realized loss of $419,093 and an unrealized loss of $16,501,202 (December 31, 2024 – realized gain of $112,984 and an unrealized gain of $7,908,831) on private and public investments.
PublicInvestments
At December 31, 2025, the Company’s one public investment had a total fair value of $272,520.
| Public Issuer | Note | Security description | Cost | Estimated<br> Fair Value | % <br> of FV |
|---|
| TenX Protocols Inc. | | 1,334,000 common shares and 667,000 warrants | $ | 729,965 | $ | 272,520 | | 100.0 | % |
| Total public investments | | | $ | 729,965 | $ | 272,520 | | 100.0 | % |
At December 31, 2024, the Company’s one public investment had a total fair value of $778,085.
| Public Issuer | Note | Security description | Cost | Estimated<br> Fair Value | % <br> of FV |
|---|
| Brazil Potash Corp. | (i) | 404,200 common shares | $ | 1,389,024 | $ | 778,085 | | 100.0 | % |
| Total public investments | | | $ | 1,389,024 | $ | 778,085 | | 100.0 | % |
PrivateInvestments
At December 31, 2025, the Company’s twelve private investments had a total fair value of $29,372,628.
| Note | Note | Security description | Cost | Estimated<br> Fair Value | % <br> of FV |
|---|
| Amina Bank AG | | 3,906,250 non-voting shares | $ | 24,749,403 | $ | 24,285,752 | | 82.7 | % |
| Earnity Inc. | | 85,142 preferred shares | | 95,538 | | - | | 0.0 | % |
| Luxor Technology Corporation | | 201,633 preferred shares | | 460,016 | | 524,963 | | 1.8 | % |
| SDK:meta, LLC | | 1,000,000 units | | 2,495,232 | | - | | 0.0 | % |
| Skolem Technologies Ltd. | | 16,354 preferred shares | | 129,495 | | - | | 0.0 | % |
| VolMEX Labs Corporation | | Rights to certain preferred shares and warrants | | 30,000 | | - | | 0.0 | % |
| Global Benchmarks AB | (i) | 53,300 common shares | | 199,875 | | 199,875 | | 0.7 | % |
| ZKP Corporation | (i) | 370,370 common shares | | 1,000,000 | | 1,000,000 | | 3.4 | % |
| CH Technical Solutions SA | | 25 common shares | | 3,952,977 | | 362,038 | | 1.2 | % |
| Canada Stablecorp Inc. | | 303,030 common shares | | 500,000 | | 500,000 | | 1.7 | % |
| Continental Stable Coin | | Rights to certain preferred shares | | 500,000 | | 500,000 | | 1.7 | % |
| Bonsol Labs Inc. | | Rights to certain preferred shares | | 2,000,000 | | 2,000,000 | | 6.8 | % | | Total private investments | | | $ | 36,112,536 | $ | 29,372,628 | | 100.0 | % |
At December 31, 2024, the Company’s nine private investments had a total fair value of $37,348,081.
| Private Issuer | Note | Security description | Cost | Estimated<br> Fair Value | % <br> of FV |
|---|
| 3iQ Corp. | | 61,712 common shares | $ | 63,270 | $ | 300,459 | | 0.8 | % |
| Amina Bank AG | | 3,906,250 non-voting shares | | 25,286,777 | | 35,457,982 | | 95.0 | % |
| Earnity Inc. | | 85,142 preferred shares | | 102,205 | | - | | 0.0 | % |
| Luxor Technology Corporation | | 201,633 preferred shares | | 462,145 | | 500,058 | | 1.3 | % |
| Neuronomics AG | | 724 common shares | | 89,582 | | 89,582 | | 0.2 | % |
| SDK:meta, LLC | | 1,000,000 units | | 2,506,780 | | - | | 0.0 | % |
| Skolem Technologies Ltd. | | 16,354 preferred shares | | 130,095 | | - | | 0.0 | % |
| VolMEX Labs Corporation | | Rights to certain preferred shares and warrants | | 30,000 | | - | | 0.0 | % |
| ZKP Corporation | (i) | 370,370 common shares | | 1,000,000 | | 1,000,000 | | 2.7 | % |
| Total private investments | | | $ | 29,670,854 | $ | 37,348,081 | | 100.0 | % | | (i) | Investments<br>in related party entities - see Note 26 | | --- | --- | | 6. | Digital Assets, Digital Assets Loaned, and Digital Assets Staked | | --- | --- |
As at December 31, 2025, the Company’s digital assets consisted of the below digital currencies, with a fair value of $515,586,931 (December 31, 2024 - $ 555,838,900). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase, Bitstamp, Bybit OKX, Vinter, Compass and Gate.IO and other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Volmex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.
23
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 6. | Digital Assets, Digital Assets Loaned, and Digital Assets Staked (continued) |
|---|
The Company’s holdings of digital assets consist of the following:
| December 31, 2024 | |||||
|---|---|---|---|---|---|
| Quantity | |||||
| Binance Coin (BNB) | 1,763.4867 | 2,558.9747 | |||
| Bitcoin (BTC) | 2,596.9563 | 2,705.7708 | |||
| Ethereum (ETH) | 21,329.9035 | 20,676.9254 | |||
| Cardano (ADA) | 69,150,950.0310 | 69,671,396.7593 | |||
| Polkadot (DOT) | 3,340,140.2001 | 2,766,149.1833 | |||
| Solana (SOL) | 169,185.2128 | 43,414.4191 | |||
| Uniswap (UNI) | 399,616.8814 | 421,450.3048 | |||
| C | - | ||||
| T | - | ||||
| Litecoin (LTC) | 11,073.8030 | 541.8400 | |||
| Dogecoin (DOGE) | 56,534,119.7635 | 17,545,096.4535 | |||
| Cosmos (ATOM) | 12,005.8560 | 735.9223 | |||
| Avalanche (AVAX) | 461,501.5177 | 125,979.5440 | |||
| Polygon (POL) | 304,295.6891 | 183,654.4400 | |||
| Ripple (XRP) | 21,146,529.3119 | 17,223,963.4000 | |||
| Enjin (ENJ) | 576,307.9792 | 127,360.9806 | |||
| Tron (TRX) | 663,171.3819 | 341,529.3057 | |||
| Terra Luna (LUNA) | 141,177.2041 | 205,057.0760 | |||
| Shiba Inu (SHIB) | 20,643,542,012.0300 | 142,074,547.6000 | |||
| Pyth Network (PYTH) | 4,935,058.3767 | 3,444,248.6000 | |||
| AAVE (AAVE) | 4,429.5388 | 2,333.3875 | |||
| Algorand (ALGO) | 1,380,335.0800 | 90,930.8700 | |||
| Aptos Mainnet (APT) | 517,026.2356 | 287,849.7000 | |||
| Arweave (AR) | 64,940.4200 | 14,202.0100 | |||
| Aerodome (AERO0X91) | 2,113,572.4104 | - | |||
| Arbitrum (ARB) | 1,489,777.0200 | 24.0000 | |||
| Bitcoin Cash (BCH) | 860.1464 | 25.4800 | |||
| Core (CORE) | 12,500,445.6036 | 3,995,185.7910 | |||
| Curve DAO Token (CRV) | 3,939,395.2500 | 10,295.1200 | |||
| EOS (EOS) | 1,513.8200 | 13,419.9100 | |||
| Europa Coin (C) | 605,795.2800 | - | |||
| Fetch.ai (FET) | 4,619,586.9000 | 561,613.1000 | |||
| Filecoin (FIL) | 83,678.3922 | 8,471.8100 | |||
| Sonic (FTM) | - | 1,342,653.2600 | |||
| The Graph (GRT) | 542,238.9100 | 1,620.3700 | |||
| Hedera (HBAR) | 76,729,676.9089 | 49,611,593.1918 | |||
| Internet Computer (ICP) | 1,778,949.0942 | 1,436,614.1074 | |||
| Immutable (IMX) | 274,878.9400 | 10,992.0200 | |||
| Injective (INJ) | 335,577.3200 | 56,329.4200 | |||
| Jupiter (JUP) | 3,089,314.6000 | 499,299.1000 | |||
| Kusama (KSM) | 470.3390 | 470.3400 | |||
| Lido DAO (LDO) | 513,196.1600 | 36,961.1000 | |||
| Chainlink (LINK) | 347,418.3828 | 239,057.7313 | |||
| NEAR Protocol (NEAR) | 1,701,315.2684 | 1,300,877.8800 | |||
| Optimism (OP) | 173,791.6300 | 15,436.4300 | |||
| MANTRA (OM) | 453,091.4000 | - | |||
| Pendle (PDL) | 182,478.7000 | 31,265.4000 | |||
| Quant (QNT) | 1,014.7880 | 1,086.7000 | |||
| Ripple (RL) | 50,126.0000 | - | |||
| RENDERSOL (RNDR) | 1,703,278.0201 | 162,158.1000 | |||
| THORChain (RUNE) | 269,953.8000 | 91,192.7000 | |||
| Sei Network (SEI1) | 16,419,686.8978 | 2,078,991.0000 | |||
| SKY Governance Token (SKY) | 645,038.0000 | - | |||
| Stacks (STX) | 47,106.4000 | 203,450.0000 | |||
| Sui (SUI) | 14,683,690.6345 | 10,785,375.0000 | |||
| SushiSwap (SUSHI) | 135.0000 | 39,426.6800 | |||
| Bittensor (TAO) | 22,107.9024 | 9,851.6400 | |||
| The TON Coin (TON) | 454,318.1948 | 405,657.4300 | |||
| Wormhole (W) | 4,760,219.0000 | 722,403.0000 | |||
| Tether Gold (XAUT6) | 34.4628 | - | |||
| dogwifhat (WIF) | 56,581.9600 | - | |||
| Worldcoin (WLD2) | 2,002,365.2100 | 49,314.1000 | |||
| Stellar (XLM) | 3,704,385.3200 | 140,437.4500 | |||
| Tezos (XTZ) | 14,912.2100 | 17,822.5100 | |||
| StarkNet (STRK1) | 2,990,189.0056 | - | |||
| Sonic Labs (SONICLABS) | 3,959,492.2712 | - | |||
| Akash Network (AKT) | 375,586.0011 | - | |||
| Kaspa (KAS) | 24,576,822.7965 | - | |||
| Official Trump (TRUMP) | 2,309.3700 | - | |||
| Mantle (MNT) | 259,308.9369 | - | |||
| Story (IP) | 5,951.7992 | - | |||
| Crypto.com (CRO) | 1,453,014.1410 | - | |||
| Hyperliquid (HYPE) | 32,103.2182 | - | |||
| OKB (OKB) | 276.2829 | - | |||
| IOTA (IOTA) | 1,233,469.0000 | - | |||
| Ondo (ONDO) | 1,711,993.3233 | - | |||
| Theta Token (THETA) | 100,410.4000 | - | |||
| Celestia (TIA) | 111,295.8400 | - | |||
| Flare (FLR) | 3,689,429.0635 | - | |||
| Pi Network (PI) | 126,934.2148 | - | |||
| Ethna (ENA) | 1,686,126.1900 | - | |||
| Four (FORM) | 31,111.1000 | - | |||
| Virtuals Protocol (VIRTUAL) | 1,776,320.7111 | - | |||
| VeChain (VET) | 4,978,553.8000 | - | |||
| Penut the Squirrel (PNUT) | 445,601.2200 | - | |||
| Pepe (PEPE) | 40,164,090,458.7000 | - | |||
| Zcash (ZEC) | - | - | |||
| Other Coins | 1,903,696,977.2146 | 145,501.2142 | |||
| Current | |||||
| Clover (CLV) | - | 500,000.0000 | |||
| Solana (SOL) | 196,500.0000 | - | |||
| SUI (SUI) | 8,327,991.5556 | - | |||
| Wilder World (WILD) | - | 148,810.0000 | |||
| Other Coins | 271,406,137.0826 | 130,458,836.6519 | |||
| Long-Term | |||||
| Total Digital Assets |
All values are in US Dollars.
24
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 6. | Digital Assets, Digital Assets Loaned, and Digital Assets Staked (continued) |
|---|
| December 31, <br>2025 | December 31, <br>2024 | |
|---|---|---|
| Current digital assets | ||
| Digital assets | ||
| Digital assets loaned | ||
| Digital assets staked | ||
| Total current digital assets | ||
| Non-current digital assets | ||
| Digital assets | ||
| Digital assets loaned | ||
| Total non-current digital assets | ||
| Total digital assets |
All values are in US Dollars.
In addition to the above noted digital assets, the Company has the following equity investments at fair value through profit and loss (“FVTPL”). See Note 7 for further details.
| December 31, 2025 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current | Long Term | Total | ||||||||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | |||||||
| Fund A - Solana (SOL) | 192,949.9577 | $ | 19,860,832 | 220,396.5353 | $ | 22,685,979 | 413,346.4930 | $ | 42,546,811 | |||
| Fund A - Avalanche (AVAX) | 503,720.0812 | $ | 5,253,822 | 232,861.4009 | $ | 2,428,755 | 736,581.4821 | $ | 7,682,577 | |||
| $ | 25,114,654 | $ | 25,114,734 | $ | 50,229,388 | |||||||
| Fund B - Solana (SOL) | 470,185.9000 | $ | 50,297,302 | 294,049.0000 | $ | 31,455,370 | 764,234.9000 | $ | 81,752,672 | |||
| $ | 50,297,302 | $ | 31,455,370 | $ | 81,752,672 | |||||||
| Total | $ | 75,411,956 | $ | 56,570,104 | $ | 131,982,060 |
| December 31, 2024 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current | Long Term | Total | ||||||||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | |||||||
| Fund A - Solana (SOL) | 216,379.2216 | $ | 30,886,684 | 244,331.9458 | $ | 34,876,748 | 460,711.1675 | $ | 65,763,432 | |||
| Fund A - Avalanche (AVAX) | 223,905.1900 | $ | 6,020,811 | 707,540.4100 | $ | 19,025,762 | 931,445.6000 | $ | 25,046,572 | |||
| $ | 36,907,495 | $ | 53,902,510 | $ | 90,810,004 | |||||||
| Fund<br> B - Solana (SOL) | 626,365.7000 | $ | 89,409,506 | 540,869.9000 | $ | 77,205,553 | 1,167,235.6000 | $ | 166,615,059 | |||
| Total | $ | 126,317,001 | $ | 131,108,063 | $ | 257,425,063 |
The continuity of digital assets for the years ended December 31, 2025 and 2024 is as follows:
| December 31, <br> 2025 | December 31, <br> 2024 | |||||
|---|---|---|---|---|---|---|
| Opening balance | $ | 555,838,900 | $ | 370,469,700 | ||
| Digital assets acquired | 273,427,760 | 401,118,676 | ||||
| Digital assets disposed | (87,878,518 | ) | (514,217,138 | ) | ||
| Digital assets earned from staking, lending and fees | 13,072,141 | 26,075,437 | ||||
| Realized gain (loss) on digital assets | 48,283,105 | 306,744,937 | ||||
| Net change in unrealized gains and losses on digital assets | (282,272,597 | ) | (34,372,022 | ) | ||
| Settlement of Genesis loan | (6,100,598 | ) | - | |||
| Digital assets transferred in from (out to) equity investments at FVTPL | 2,749,352 | - | ||||
| Foreign exchange gain (loss) / Fees / Other | (1,532,614 | ) | 19,310 | |||
| $ | 515,586,931 | $ | 555,838,900 |
25
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 6. | Digital Assets, Digital Assets Loaned, and Digital Assets Staked (continued) |
|---|
Digital assets held by counterparty for the years ended December 31, 2025 and 2024 area as follows:
| December 31,<br><br> 2025 | December 31,<br><br> 2024 | |||
|---|---|---|---|---|
| Counterparty A | $ | 41,304,262 | $ | 6,918,688 |
| Counterparty B | - | - | ||
| Counterparty C | 3,460,154 | 719,776 | ||
| Counterparty D | - | - | ||
| Counterparty E | 1,492,892 | 7,007,055 | ||
| Counterparty F | 25,061,967 | 6,809,705 | ||
| Counterparty H | 171,980,818 | 58,438,204 | ||
| Counterparty K | 218,232,056 | 125,188,614 | ||
| Counterparty M | 4,954,135 | 3,787,814 | ||
| Other | 1,451,800 | 1,942,823 | ||
| Self custody | 47,648,847 | 345,026,221 | ||
| Total | $ | 515,586,931 | $ | 555,838,900 |
DigitalAssets held by lenders
The Company has a loan payable to Global Capital LLC (“Genesis”) for which Genesis holds digital assets as collateral against the loan. In prior periods, the digital assets and the loan payable were recorded separately on the statement of financial period. The Company has a loan payable to Genesis for which Genesis held digital assets as collateral. The digital assets and loan payable were previously recorded gross on the balance sheet at $6,100,598 and $6,100,598, respectively, with the digital assets being written down to the value of the loan payable. After the approval of the motion on June 26, 2024, the Company obtained the legally enforceable right to set off the digital assets being held as collateral against the loan payable. As a result, the Company has netted the asset and liability on the statement of financial position, reducing both the Company’s digital assets and loan payable by $6,100,598, which represents the principal amount of the loan plus interest..
Following the court approved set-off, the remaining exposure for the Genesis loan is 68 BTC. Considering Genesis’ low credit quality due to its bankruptcy, the Company has applied a loss rate approach of 75% to calculate it’s expected credit loss on digital assets held by Genesis based on management’s best estimate. The expected credit loss of $4,478,675 on these 68 BTC has been recorded under realized and net change in unrealized (loss) gain on digital assets in the consolidated statement of income.
As of December 31, 2025, digital assets held by lenders as collateral consisted of the following:
| Number of coins<br> on loan | Fair Value | |||
|---|---|---|---|---|
| Bitcoin (BTC) | 67.9793 | $ | 1,492,892 | |
| Total | 67.9793 | $ | 1,492,892 |
As of December 31, 2024, digital assets held by lenders as collateral consisted of the following:
| Number of coins<br> on loan | Fair Value | |||
|---|---|---|---|---|
| Bitcoin (BTC) | 365.4480 | 7,007,055 | ||
| Total | 365.4480 | 7,007,055 |
As at December 31, 2024, the 365.4480 Bitcoin held by Genesis as collateral against a loan has been written down to $7,007,055, the fair value of the loan and interest held with Genesis.
26
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 6. | Digital Assets, Digital Assets Loaned, and Digital Assets Staked (continued) |
|---|
In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.
DigitalAssets loaned
As of December 31, 2025, the Company loaned select digital assets to borrowers at annual rates ranging from approximately 1.98% to 12.00% and accrued interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.
As of December 31, 2024, the Company loaned select digital assets to borrowers at annual rates ranging from approximately 3.25% to 5.5% and accrued interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.
As of December 31, 2025, digital assets on loan consisted of the following:
| Number of coins<br> on loan | Fair Value | Fair Value <br><br>Share | |||||
|---|---|---|---|---|---|---|---|
| Bitcoin (BTC) | 420.0000 | 36,894,425 | 31 | % | |||
| Ethereum (ETH) | 8,000.0000 | 23,879,570 | 20 | % | |||
| Solana (SOL) | 326,500.0000 | 40,661,634 | 34 | % | |||
| SUI (SUI) | 18,737,981.0000 | 18,652,141 | 16 | % | |||
| Total | 19,072,901.0000 | 120,087,770 | 100 | % |
As of December 31, 2024, digital assets on loan consisted of the following:
| Number of coins<br> on loan | Fair Value | |||
|---|---|---|---|---|
| Current | ||||
| Bitcoin (BTC) | 120.0000 | 11,379,938 | ||
| Ethereum (ETH) | 8,000.0000 | 27,238,820 | ||
| Total current digital assets on loan | 8,120.0000 | 38,618,758 | ||
| Total | 8,120.0000 | 38,618,758 |
The digital assets loaned are classified as follows:
| Number of coins | ||||
|---|---|---|---|---|
| on loan | Fair Value | |||
| Current | ||||
| Bitcoin (BTC) | 420.0000 | 36,894,425 | ||
| Ethereum (ETH) | 8,000.0000 | 23,879,570 | ||
| Solana (SOL) | 130,000.0000 | 16,189,931 | ||
| SUI (SUI) | 10,409,989.4444 | 10,362,301 | ||
| Total current digital assets on loan | 10,548,409.4444 | 87,326,227 | ||
| Long-Term | ||||
| Solana (SOL) | 196,500.0000 | 24,471,703 | ||
| SUI (SUI) | 8,327,991.5556 | 8,289,840 | ||
| Total long-term digital assets on loan | 8,524,491.5556 | 32,761,543 | ||
| Total | 19,072,901.0000 | 120,087,770 |
27
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 6. | Digital Assets, Digital Assets Loaned, and Digital Assets Staked (continued) |
|---|
Digital Assets loaned(continued)
As of December 31, 2025, the digital assets on loan by significant borrowing counterparty is as follow:
| Interest rates | Number of coins<br> on loan | Fair Value | Geography | Fair Value Share | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Counterparty A | 12% | 326,500.0000 | 40,661,634 | Grand Cayman | 34 | % | ||||
| Counterparty F | 1.94% - 4.75% | 18,739,981.0000 | 24,622,033 | UAE | 21 | % | ||||
| Counterparty H | 3.75% - 4.5% | 6,420.0000 | 54,804,103 | Switzerland | 46 | % | ||||
| Total | 19,072,901.0000 | 120,087,770 | 100 | % | ||||||
| Current | ||||||||||
| Counterparty A | 130,000.0000 | 16,189,931 | Grand Cayman | 13 | % | |||||
| Counterparty F | 10,411,989.4444 | 16,332,193 | UAE | 14 | % | |||||
| Counterparty H | 6,420.0000 | 54,804,103 | Switzerland | 46 | % | |||||
| Total current digital assets on loan | 10,548,409.4444 | 87,326,227 | 73 | % | ||||||
| Long-term | ||||||||||
| Counterparty A | 196,500.0000 | 24,471,703 | Grand Cayman | 20 | % | |||||
| Counterparty F | 8,327,991.5556 | 8,289,840 | UAE | 7 | % | |||||
| Total long-term digital assets on loan | 8,524,491.5556 | 32,761,543 | 27 | % | ||||||
| Total loaned digital assets | 19,072,901.0000 | 120,087,770 | 100 | % |
As of December 31, 2024, the digital assets on loan by significant borrowing counterparty is as follow:
| Interest rates | Number of coins<br> <br>on loan | Fair Value | Geography | Fair Value<br> <br>Share | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Current | |||||||||||
| Counterparty F | 4.75% | 2,000.0000 | 6,809,705 | UAE | 18 | % | |||||
| Counterparty H | 3.25% to 5.50% | 6,120.0000 | 31,809,053 | Switzerland | 82 | % | |||||
| Total current digital assets on loan | 8,120.0000 | 38,618,758 | 100 | % | |||||||
| Total | 8,120.0000 | 38,618,758 | 100 | % |
The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. Digital asset loan receivables are assessed for expected credit losses under IFRS 9 using a loss-rate approach. Counterparty A is subject to a 1% Stage 1 expected credit loss, driven by the recall penalty. The $248,000 ECL on these coins has been expensed to bad debt expense. Counterparty H is not subject to any expected credit loss due to its recallability without penalty. The Company does not hold any collateral or other credit enhancements related to these loans.
The fair value of the SUI digital assets on loan include a discount for lack of marketability since the SUI coins are locked and not freely transferrable as at December 31, 2025. These coins unlock intermittently through April 2028. The DLOM was determined using the Finerty model. The model works by treating this loss of marketability as the equivalent of a European put option, which provides protection against price declines during the period the assets cannot be sold. By estimating the value of such a hypothetical put option, based on factors like the underlying stock price, volatility, risk-free rate, and expected holding period. No separate ECL was recorded for the SUI digital assets as management feels that any relevant default risk is captured in the fair value assumptions of the digital assets. The SUI digital assets are considered a level 3 in the financial instrument hierarchy (Note 23).
| Borrower | Asset | Quantity | Current | Non-current | Gross Total | ECL | **** | Net Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Counterparty A | SOL | 326,500.00 | 16,189,931 | 24,719,701 | 40,909,632 | (248,000 | ) | 40,661,632 | |||||||
| Counterparty H | BTC | 420.00 | 36,894,425 | - | 36,894,425 | - | 36,894,425 | ||||||||
| Counterparty H | ETH | 6,000.00 | 17,909,678 | - | 17,909,678 | - | 17,909,678 | ||||||||
| Counterparty F | ETH | 2,000.00 | 5,969,893 | - | 5,969,893 | - | 5,969,893 | ||||||||
| Counterparty F | SUI | 18,737,981.00 | 10,362,301 | 8,289,841 | 18,652,142 | - | 18,652,142 | ||||||||
| 87,326,228 | 33,009,542 | 120,335,770 | (248,000 | ) | 120,087,770 |
28
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 6. | Digital Assets, Digital Assets Loaned, and Digital Assets Staked (continued) |
|---|
As of December 31, 2025, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 1.24% to 14.93% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss. As of December 31, 2024, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 2.95% to 9.70% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss. As of December 31, 2024, the Bitcoin staked digital assets were locked up until January 2025.
As of December 31, 2025, digital assets staked consisted of the following:
| Number of coins<br> <br>staked | Fair Value | Fair Value Share | |||||
|---|---|---|---|---|---|---|---|
| Ethereum (ETH) | 128.0536 | 376,190 | 1 | % | |||
| Bitcoin (BTC) | 300.0000 | 26,747,151 | 69 | % | |||
| Cardano (ADA) | 43,639.3760 | 15,470 | 0 | % | |||
| Core (CORE) | 12,017,441.5404 | 1,325,524 | 3 | % | |||
| Polkadot (DOT) | 2,595,690.3230 | 4,762,573 | 12 | % | |||
| Solana (SOL) | 0.5094 | 64 | 0 | % | |||
| Hyperliquid (HYPE) | 25,600.4618 | 662,417 | 2 | % | |||
| Hedera (HBAR) | 22,663,998.5645 | 2,463,577 | 6 | % | |||
| Internet Computer (ICP) | 970,082.8229 | 2,633,775 | 7 | % | |||
| Total | 38,316,881.6517 | 38,986,741 | 100 | % |
As of December 31, 2024, digital assets staked consisted of the following:
| Number of coins<br> <br>staked | Fair Value | Fair Value Share | |||||
|---|---|---|---|---|---|---|---|
| Bitcoin | 1,803.0000 | 170,996,662 | 71 | % | |||
| Cardano | 57,965,439.1383 | 50,371,939 | 21 | % | |||
| Ethereum | 32.0000 | 108,955 | 0 | % | |||
| Core | 3,415,479.8499 | 3,676,423 | 2 | % | |||
| Polkadot | 1,941,230.3100 | 13,244,432 | 6 | % | |||
| Solana | 10,526.4620 | 1,633,234 | 1 | % | |||
| Total | 63,334,510.7602 | $ | 240,031,645 | 100 | % |
As of December 31, 2025, the digital assets staked by significant borrowing counterparty is as follow:
| Interest rates | Number of coins<br> <br>staked | Fair Value | Geography | Fair Value<br><br> Share | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Counterparty H | 2.76% - 7.67% | 23,634,179.8442 | 5,097,352 | Switzerland | 13 | % | ||||
| Counterparty M | 2.87% | 32.0023 | 95,663 | United States | 0 | % | ||||
| Self custody | 2.3% - 14.28% | 14,682,669.8053 | 33,793,726 | Switzerland | 87 | % | ||||
| Total | 38,316,881.6517 | 38,986,741 | 100 | % |
29
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 6. | Digital Assets, Digital Assets Loaned, and Digital Assets Staked (continued) |
|---|
As of December 31, 2024, the digital assets staked by significant borrowing counterparty is as follow:
| Interest rates | Number of coins<br> <br>staked | Fair Value | Geography | Fair Value<br> <br>Share | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Counterparty B | 2.95% | 57,965,407.1383 | 50,371,939 | Switzerland | 21 | % | ||||
| Counterparty M | 4.00% | 32.0000 | 108,955 | United States | 0 | % | ||||
| Self custody | 3.00% to 8.02% | 5,369,071.6219 | 189,550,751 | Switzerland | 79 | % | ||||
| Total | 63,334,510.7602 | 240,031,645 | 100 | % |
The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. These risks include:
| a) | Ethereum and Polkdot staking exposes the Company to an unbounding period liquidity restriction (approximately<br>28 days), during which time the tokens remain locked and do not earn rewards once unbounding has commenced. |
|---|---|
| b) | Polkadot, CORE and Hype staking may expose the Company to validator misconduct risk |
| --- | --- |
| c) | Bitcoin staking involves timelock risk, such that the coins are locked until expiry of the timelock and<br>require a redemption transaction after expiry. |
| --- | --- |
| d) | BTC staking is described by the protocol as self-custodied with no wrapping, bridging or smart contract<br>exposure. |
| --- | --- |
The Company places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2025 and 2024, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.
30
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 7. | Equity investments in digital assets at fair value through profit and loss (“FVTPL”) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2025 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Current | Long Term | Total | ||||||||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | |||||||
| Fund A - Solana (SOL) | 192,949.9577 | $ | 19,860,832 | 220,396.5353 | $ | 22,685,979 | 413,346.4930 | $ | 42,546,811 | |||
| Fund A - Avalanche (AVAX) | 503,720.0812 | $ | 5,253,822 | 232,861.4009 | $ | 2,428,755 | 736,581.4821 | $ | 7,682,577 | |||
| $ | 25,114,654 | $ | 25,114,734 | $ | 50,229,388 | |||||||
| Fund B - Solana<br> (SOL) | 470,185.9000 | $ | 50,297,302 | 294,049.0000 | $ | 31,455,370 | 764,234.9000 | $ | 81,752,672 | |||
| $ | 50,297,302 | $ | 31,455,370 | $ | 81,752,672 | |||||||
| Total | $ | 75,411,956 | $ | 56,570,104 | $ | 131,982,060 | ||||||
| December 31, 2024 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Current | Long Term | Total | ||||||||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | |||||||
| Fund A - Solana (SOL) | 216,379.2216 | $ | 30,886,684 | 244,331.9458 | $ | 34,876,748 | 460,711.1675 | $ | 65,763,432 | |||
| Fund A - Avalanche (AVAX) | 223,905.1900 | $ | 6,020,811 | 707,540.4100 | $ | 19,025,762 | 931,445.6000 | $ | 25,046,572 | |||
| $ | 36,907,495 | $ | 53,902,510 | $ | 90,810,004 | |||||||
| Fund<br> B - Solana (SOL) | 626,365.7000 | $ | 89,409,506 | 540,869.9000 | $ | 77,205,553 | 1,167,235.6000 | $ | 166,615,059 | |||
| Total | $ | 126,317,001 | $ | 131,108,063 | $ | 257,425,063 |
Fund A
During the year ended December 31, 2024, the Company through a subsidiary, invested $61,741,683 in three tranches of a private investment fund (“Fund A”) designed to acquire Solana and Avalanche tokens from a bankrupt company. The Company’s investment represents the acquisition by Fund A of 491,249 Solana at $105 per Solana and 931,446 Avalanche at $11 per Avalanche.
The Solana acquired by Fund A is locked and staked, earning staking rewards during the lock period. Staking rewards will accrue while Solana is locked and will become distributable on the same unlocking schedule as the Solana. The Solana will be released by Fund A in monthly increments from January 2025 through January 2028.
The Avalanche acquired by Fund A is locked and staked, earning staking rewards during the lock period. Staking rewards will accrue while Avalanche is locked and will become distributable on the same unlocking schedule as the Avalanche.
The Avalanche will be released by Fund A in weekly increments starting July 10, 2025 and continuing through July 1, 2027.
The investments in the investment fund were initially recognized based on the latest available net asset value as determined by the investment fund’s administrator less an applicable DLOM. The values of the investments were remeasured based on quarterly valuation reports provided by the investment fund administrator less an applicable DLOM.
Fund B
During the year ended December 31, 2024, the Company invested through a subsidiary, $112,072,453 in two tranches of limited partnership units of a private investment fund (“Fund B” and together with Fund A the “Equity Investments in Digital Assets”) designed to acquire Solana tokens from a bankrupt company.
The Company’s investment represents the acquisition by Fund B of 1,123,360 Solana at $100 per Solana. The Solana acquired by Fund B is locked and staked, earning staking rewards during the lock period and thereafter until such Solana is sold by the fund manager or an in-kind distribution to the limited partners of the fund. Staking rewards will accrue while Solana is locked and will become distributable on the same unlocking schedule as the Solana. Approximately 25% of the Solana were unlocked in March 2025, while the remaining 75% of the Solana will be unlocked linearly monthly until January 2028. The Company received a distribution of $71,685,819 in July 2025 from Fund B.
31
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 7. | Equity investments in digital assets at fair value through profit and loss (“FVTPL”) (continued) |
|---|
The investments in Fund B were initially recognized based on the latest available net asset value as determined by Fund B’s administrator less an applicable DLOM. The values of the investments were remeasured based on quarterly valuation reports provided by Fund B’s administrator less an applicable DLOM.
The continuity of equity investments for the years ended December 31, 2025 and 2024 is as follows:
| December 31,<br><br> 2025 | December 31,<br><br> 2024 | |||||
|---|---|---|---|---|---|---|
| Opening Balance | $ | 257,425,063 | $ | - | ||
| Acquisitions | - | 173,814,136 | ||||
| Disposals | (71,685,819 | ) | - | |||
| Staking income | 19,784,212 | 13,060,639 | ||||
| Net change in realized and unrealized gain/loss | (68,261,189 | ) | 77,360,769 | |||
| Management fees | (2,530,856 | ) | (1,396,016 | ) | ||
| Transfers out to Digital Assets | (2,749,352 | ) | (5,414,464 | ) | ||
| Closing Balance | $ | 131,982,060 | $ | 257,425,063 | ||
| 8. | Acquisitions | |||||
| --- | --- |
Reflexivity
On February 6, 2024, the Company acquired 100% interest in Reflexivity LLC (“Reflexivity”) by issuing 5,000,000 common shares. Reflexivity is a private company incorporated in the United States that operates a premier private research firm that specializes in producing cutting-edge research reports for the cryptocurrency industry. The primary reason for this business combination is to gain exposure to Reflexivity’s subscriber base.
Details of the consideration for acquisition, net assets acquired and goodwill are as follows:
| Purchase price consideration paid: | |||
|---|---|---|---|
| Fair value of shares issued | $ | 2,450,000 | |
| Fair value of shares issued | $ | 2,450,000 | |
| Fair value of assets and liabilities assumed: | |||
| Cash | $ | 236,668 | |
| Amounts receivable | 13,425 | ||
| Prepaid expenses | 15,879 | ||
| Client relationships | 277,000 | ||
| Brand name | 100,000 | ||
| Technology | 125,000 | ||
| Deferred tax liability | (133,000 | ) | |
| Accounts payable | (1,024 | ) | |
| Customer prepayment | (261,533 | ) | |
| Goodwill | 2,077,585 | ||
| Total net assets acquired | $ | 2,450,000 |
The goodwill acquired as part of the Reflexivity acquisition is made up of assembled workforce and implied goodwill related to Reflexivity’s management and staff experiences and Reflexivity’s reputation in the industry. It will not be deductible for tax purposes.
No material acquisition costs are recognized in the statement of operations. As Reflexivity was acquired on February 7, 2024, there is not a material difference in the amounts consolidated from February 7, 2024 and its full calendar year 2024 results.
32
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 8. | Acquisitions (continued) |
|---|
Stillman Digital
On October 7, 2024, the Company acquired 100% interest in Stillman Digital Inc. and Stillman Digital Bermuda Ltd. (collectively “Stillman Digital”) by issuing 2,500,000 common shares. Stillman Digital Inc. is a private company incorporated in the United States and Stillman Digital Bermuda Ltd. Is a private company incorporated in Bermuda. Stillman Digital is a global liquidity provider that provides digital asset products and services in electronic trade execution, market making and OTC block trading. The primary reason for this business combination is to gain access to Stillman Digital’s trading platform.
Under the terms of the transaction, 2,500,000 common shares were issued on the close of the transaction. 1,000,000 of the common shares issued are subject to a lock-up schedule, with 25% released on each of the 3, 6, 9, and 12-month anniversaries from October 7, 2024.
Details of the consideration for acquisition, net assets acquired and goodwill are as follows:
| Purchase price consideration paid: | |||
|---|---|---|---|
| Fair value of shares issued | $ | 5,065,277 | |
| Fair value of shares issued | $ | 5,065,277 | |
| Fair value of assets and liabilities assumed: | |||
| Cash | $ | 10,357,387 | |
| Amounts receivable | 1,970,550 | ||
| Prepaid expenses | 47,972 | ||
| Digital assets | 3,274,538 | ||
| Client relationships | 30,640 | ||
| Securities | 3,015,807 | ||
| Accounts payable | (13,494,510 | ) | |
| Other liabilities | (137,107 | ) | |
| Total net assets acquired | $ | 5,065,277 |
The goodwill acquired as part of the Stillman Digital’s acquisition is made up of assembled workforce and implied goodwill related to Stillman Digital’s management and staff experiences and Stillman Digital’s reputation in the industry. It will not be deductible for tax purposes.
Had the acquisition taken place on January 1, 2024, the Company would have consolidated $7,190,309 of revenues and net income of $4,249,060. As the acquisition took place October 7, 2024, the Company consolidated revenues of $2,106,286 and net income of $711,519. No material acquisition costs are recognized in the statement of operations.
33
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 8. | Acquisitions (continued) |
|---|
Neuronomics AG
On January 10, 2025, the Company closed an investment to acquire 10% of Neuronomics AG for $288,727 (CHF 262,684). On March 7, 2025, the Company announced that it increased its stake in Neuronomics AG, a Swiss asset management firm specializing in artificial intelligence and model driven quantitative trading strategies from 10% to 52.5%.
In connection with the acquisition, the Company issued 186,304 common shares of the Company, plus additional cash considerations, to the selling shareholders of Neuronomics AG. 152,433 of the Payment Shares are subject to a lock-up schedule, with 50% released in three months and the remainder released in six months. No finder fees were paid in connection with the acquisition.
Details of the consideration for acquisition, net assets acquired and goodwill are as follows:
| Purchase price consideration paid: | |||
|---|---|---|---|
| Cash consideration | $ | 816,372 | |
| Fair value of shares issued | 442,722 | ||
| Fair value of previously held investment | 379,906 | ||
| Fair value of shares issued | $ | 1,639,000 | |
| Fair value of assets and liabilities assumed: | |||
| Cash | $ | 271,408 | |
| Prepaid expenses and deposits | 12,473 | ||
| Goodwill | 2,907,440 | ||
| Trade and other payables | (69,418 | ) | |
| Non-controlling interest | (1,482,903 | ) | |
| Total net assets acquired | $ | 1,639,000 |
Had the acquisition taken place on January 1, 2025, the Company would have consolidated $19,013 of revenues and net losses of $114,695. As the acquisition took place March 7, 2025, the Company consolidated revenues of $19,013 and net income of $36,358 from March 7, 2025 through September 30, 2025, the date of deconsolidation. No material acquisition costs are recognized in the statement of operations.
On October 1, 2025, the Company’s ownership of Neuronomics decreased to 44.68% and the Company no longer had control over this subsidiary. As a result of this loss of control on October 1, 2025, the Company deconsolidated the subsidiary from its consolidated financial statements and recorded its investment in Neuronomics as an investment in associate (Note 10).
34
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 9. | Intangibles assets and goodwill | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cost | Client<br><br> relationships | Technology | Brand Name | Total | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Balance, December 31, 2023 | $ | - | $ | - | $ | 32,134,253 | $ | 32,134,253 | ||||
| Acquisition of Reflexivity LLC | 277,000 | 100,000 | 125,000 | 502,000 | ||||||||
| Acquisition of Solana IP | - | 3,622,456 | - | 3,622,456 | ||||||||
| Acquisition of Stillman Digital | 30,640 | - | - | 30,640 | ||||||||
| Balance, December 31, 2024 | $ | 307,640 | $ | 3,722,456 | $ | 32,259,253 | $ | 36,289,349 | ||||
| Acquisition of Neuronomics | - | - | 337,211 | 337,211 | ||||||||
| Additions | - | - | 203,562 | 203,562 | ||||||||
| Deconsolidation of Neuronomics | - | - | (498,065 | ) | (498,065 | ) | ||||||
| Balance, December 31, 2025 | $ | 307,640 | $ | 3,722,456 | $ | 32,301,961 | $ | 36,332,057 | ||||
| Accumulated<br> Amortization | Client<br><br> relationships | Technology | Brand Name | Total | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Balance, December 31, 2023 | $ | - | $ | - | $ | (29,473,628 | ) | $ | (29,473,628 | ) | ||
| Amortization | (21,323 | ) | (19,245 | ) | (1,503,427 | ) | (1,543,995 | ) | ||||
| Impairment loss | - | (3,622,456 | ) | - | (3,622,456 | ) | ||||||
| Balance, December 31, 2024 | $ | (21,323 | ) | $ | (3,641,701 | ) | $ | (30,977,055 | ) | $ | (34,640,079 | ) |
| Amortization | (27,700 | ) | (30,291 | ) | (1,273,590 | ) | (1,331,581 | ) | ||||
| Deconsolidation of Neuronomics | - | - | 39,811 | 39,811 | ||||||||
| Balance, December 31, 2025 | $ | (49,023 | ) | $ | (3,671,992 | ) | $ | (32,210,834 | ) | $ | (35,931,849 | ) |
| Balance, December 31, 2024 | $ | 286,317 | $ | 80,755 | $ | 1,282,198 | $ | 1,649,270 | ||||
| Balance, December 31, 2025 | $ | 258,617 | $ | 50,464 | $ | 91,127 | $ | 400,208 |
On February 9, 2024, the Company acquired intellectual property by issuing 7,297,090 common shares of the Company. The intellectual property acquired encompasses a suite of sophisticated features, including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by the Company. At the time of acquisition, the intangible assets were in an early stage of research and development, with significant uncertainties surrounding its future market demand, sales price and production costs, and as such, on February 9, 2024, the Company recognized an impairment loss of $3,622,456.
Goodwill
The continuity of the goodwill acquired as part of the acquisitions is as follows:
| Balance, December 31, 2023 | $ | 35,080,194 | |
|---|---|---|---|
| Acquisition of Reflexivity LLC | 2,077,585 | ||
| Balance, December 31, 2024 | $ | 37,157,779 | |
| Acquisition of Neuronomics | 2,907,440 | ||
| Deconsolidation of Neuronomics | (2,907,440 | ) | |
| Impairment | (2,077,585 | ) | |
| Balance, December 31, 2025 | $ | 35,080,194 |
35
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 9. | Intangibles assets and goodwill (continued) |
|---|
Impairment test of goodwill
The Company tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The review led to the recognition of an impairment loss of $2,077,585 (December 31, 2024 - $Nil) at the Reflexivity CGU. The recoverable amount of each of the Company’s CGUs has been assessed by reference to the value in use (“VIU”).
The key assumptions used included in the year ended December 31, 2025 impairment test: AUM long term growth rate of 2%, annualized rate of staking return of 3.4%, percentage of AUM staked of 65%, expense growth rate of 2.0% and the discount rate used of 25.4%. December 31, 2024: AUM long term growth rate of 2%, annualized rate of staking return 6.5%, percentage of AUM staked of 65%, expense growth rate of 2.4% and a discount rate of 27.5% The expected future cash flows were projected for five years in both the 2025 and 2024 test.
The directors and management have considered and assessed reasonably possible changes for other key assumptions and have not identified any instances that could cause the carrying amount of the ETP CGU to exceed its recoverable amount.
| 10. | Investment in associate |
|---|
On January 10, 2025, the Company closed an investment to acquire 10% of Neuronomics AG for $288,727 (CHF 262,684). On March 7, 2025, the Company announced that it increased its stake in Neuronomics AG, a Swiss asset management firm specializing in artificial intelligence and model driven quantitative trading strategies from 10% to 52.5% and Neuronomics was fully consolidated with the Company’s consolidated financial statements (Note 8). On October 1, 2025, the Company’s ownership was reduced to 44.68% and as a result, Neuronomics was deconsolidated and accounted for as an investment in associate.
The Company’s ownership of Neuronomics during the year ended December 31, 2025 was 44.68%.
A continuity of the investment in Neuronomics as an associate is as follows:
| Balance as at December 31, 2024 | $ | - | |
|---|---|---|---|
| Investment in associate | 2,499,440 | ||
| Share of loss for the year | (75,506 | ) | |
| Balance as at December 31, 2025 | $ | 2,423,934 |
Summarized financial information for Neuronomics as at December 31, 2025 and for the year ended December 31, 2025 is as follows:
| December 31,<br> 2025 | |||
|---|---|---|---|
| Current and total assets | $ | 514,391 | |
| Current and total liabilities | (111,333 | ) | |
| Total shareholders’ equity | (403,058 | ) | |
| **** | Year ended December 31, 2025 | **** | |
| --- | --- | --- | --- |
| Revenue | $ | 514,020 | |
| Operating expenses | (843,777 | ) | |
| Net loss | (329,757 | ) |
36
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 11. | Accounts payable and accrued liabilities | |||
|---|---|---|---|---|
| **** | 31-Dec-25 | 31-Dec-24 | ||
| --- | --- | --- | --- | --- |
| Corporate payables | $ | 8,828,351 | $ | 3,380,341 |
| Related party payable (Note 21) | 441,759 | 102,123 | ||
| $ | 9,270,110 | $ | 3,482,464 | |
| 12. | Loans payable | |||
| --- | --- |
Margin loan
The Company has a $10,000,000 credit line for a margin loan from a crypto liquidity provider. As at December 31, 2025, the Company has drawn $2,611,009 (December 31, 2024: $2,686,239) on the credit line. The loan is secured by the equity in the Company’s margin trading account.
Genesis loan
On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan and interest payable at December 31, 2025 is $6,100,598 and secured with 69.68 BTC (December 31, 2024 - $7,007,055, secured by 365.448 BTC).
In prior periods, the digital assets and the loan payable related to the Genesis loan payable were recorded separately on the statement of financial position. The Company has obtained a legally enforceable right to set off the digital assets being held as collateral against the loan payable. As such, the Company has netted the digital assets and loan payable on the statement of financial position, reducing both the Company’s digital assets and loan payable by $6,100,598, which represents the principal amount of the loan plus interest.
37
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 13. | ETP holders payable |
|---|
The fair market value of the Company’s ETPs as at December 31, 2025 and 2024 were as follows:
| December 31, 2024 | |||
|---|---|---|---|
| Valour AAVE SEK | 616,350 | 729,499 | |
| Valour Aerodome SEK | 905,243 | 383,088 | |
| Valour Akash SEK | 132,566 | 311,261 | |
| Valour Algorand SEK | 152,328 | - | |
| Valour Aptos | 3,000 | - | |
| Valour Aptos SEK | 857,715 | 2,560,659 | |
| Valour Arweave SEK | 220,187 | 225,498 | |
| Valour Arbitrum SEK | 277,287 | - | |
| Valour ASI SEK | 931,407 | 732,181 | |
| Valour Avalanche | 142,626 | 284,496 | |
| Valour BCIX STOXX | 373,434 | 1,148,298 | |
| Valour Avalanche SEK | 9,220,824 | 22,146,770 | |
| Valour Binance | 84,953 | 53,964 | |
| Valour Binance SEK | 1,156,463 | 1,285,371 | |
| Valour Bitcoin Carbon Neutral | 15,575 | 18,546 | |
| Valour Bitcoin Physical Carbon Neutral | 889,656 | 811,050 | |
| Valour Bitcoin Cash SEK | 83,327 | - | |
| Valour Bitcoin Staking SEK | 3,881,877 | 4,590,500 | |
| Valour Bitcoin Zero | 20,476,740 | 23,403,581 | |
| Valour Bitcoin Zero SEK | 199,124,760 | 203,609,067 | |
| Valour Bittensor SEK | 4,879,220 | 4,404,154 | |
| Valour BTC Staking | 54,774 | 115,021 | |
| Valour Cardano | 201,420 | 280,720 | |
| Valour Cardano SEK | 23,005,260 | 59,141,651 | |
| Valour Celestia (Tia) Sek | 50,886 | - | |
| Valour Chainlink SEK | 4,260,531 | 4,842,016 | |
| Valour Core SEK | 206,379 | 2,310,748 | |
| Valour Cosmos | 5,112 | 2,703 | |
| Valour Cronos (Cro) Sek | 131,790 | - | |
| Valour Curve DAO SEK | 1,391,928 | - | |
| Valour Digital Asset Basket 10 | 476,270 | 514,870 | |
| Valour Digital Asset Basket 10 SEK | 1,728,809 | 2,076,557 | |
| Valour Dogecoin | 203,516 | - | |
| Valour Dogecoin SEK | 6,295,278 | 5,512,539 | |
| Valour Ethereum Physical Staking | 292,932 | 336,805 | |
| Valour Enjin | 10,116 | 10,689 | |
| Valour Ethena (Ena) Sek | 324,078 | - | |
| Valour Ethereum Zero | 2,527,907 | 2,293,175 | |
| Valour Ethereum Zero SEK | 58,650,705 | 65,394,894 | |
| Valour Fantom SEK | 292,946 | 913,954 | |
| Valour Filecoin SEK | 104,428 | - | |
| Valour Flare SEK | 38,686 | - | |
| Valour Floki SEK | 30,504 | - | |
| Valour Four SEK | 10,248 | - | |
| Valour Hedera | 1,181,185 | 2,463,347 | |
| Valour Hedera Physical Staking | 2,431,247 | 4,462,562 | |
| Valour Hedera SEK | 4,672,437 | 7,957,619 | |
| Valour Hyperliquid (Hype) Sek | 763,491 | - | |
| Valour ICP SEK | 1,938,780 | 4,485,250 | |
| Valour ICP | 2,845,037 | 10,046,563 | |
| Valour Immutable SEK | 60,145 | - | |
| Valour Injective SEK | 1,446,640 | 1,135,831 | |
| Valour Iota SEK | 101,737 | - | |
| Valour Jupiter SEK | 569,432 | 422,782 | |
| Valour Kaspa SEK | 1,060,250 | 530,550 | |
| Valour KRG BULL BTC X2 SEK | 50,613 | - | |
| Valour KRG BULL ETH X2 SEK | 14,830 | - | |
| Valour Lido SEK | 290,233 | 68,585 | |
| Valour Litecoin SEK | 207,192 | - | |
| Valour Mantle (Mnt) Sek | 253,785 | - | |
| Valour Mantra SEK | 30,117 | - | |
| Valour Near SEK | 2,479,574 | 6,578,213 | |
| Valour OKB SEK | 29,248 | - | |
| Valour Ondo (Ondo) Sek | 614,176 | - | |
| Valour Optimism SEK | 19,050 | - | |
| Valour Pendle SEK | 338,093 | 157,125 | |
| Valour Pepe SEK | 137,595 | - | |
| Valour Pi (Pi) Sek | 25,329 | - | |
| Valour Polkadot | 48,121 | 185,163 | |
| Valour Polkadot SEK | 5,705,512 | 17,577,389 | |
| Valour Polygon SEK | 23,902 | - | |
| Valour PYTH SEK | 276,689 | 346,458 | |
| Valour Quant SEK | 70,819 | - | |
| Valour Render | 36,049 | - | |
| Valour Render SEK | 2,170,348 | 1,115,875 | |
| Valour Ripple SEK | 37,594,228 | 35,958,640 | |
| Valour SEI SEK | 1,810,747 | 848,165 | |
| Valour Shiba Inu (Shib) Sek | 51,886 | - | |
| Valour Short BTC SEK | 987,903 | 214,871 | |
| Valour Sky SEK | 37,632 | - | |
| Valour Solana | 5,795,075 | 9,286,531 | |
| Valour Solana SEK | 169,092,078 | 302,344,070 | |
| Valour Stacks SEK | 9,172 | - | |
| Valour Starknet SEK | 216,327 | 97,429 | |
| Valour Stellar SEK | 724,295 | - | |
| Valour Story SEK | 7,514 | - | |
| Valour Sui | 174,515 | - | |
| Valour SUI SEK | 25,440,018 | 45,854,560 | |
| Valour Tether SEK | 128,098 | - | |
| Valour The Graph SEK | 7,459 | - | |
| Valour Theta SEK | 26,660 | - | |
| Valour Thorchain SEK | 143,906 | 416,122 | |
| Valour Toncoin SEK | 721,620 | 2,215,154 | |
| Valour Tron SEK | 99,144 | - | |
| Valour Uniswap | 289,717 | 249,785 | |
| Valour Uniswap SEK | 2,020,979 | 5,380,580 | |
| Valour Unus Sed Leo SEK | 5,265 | - | |
| Valour Vechain (Vet) Sek | 52,197 | - | |
| Valour Virtuals SEK | 1,172,290 | - | |
| Valour Worldcoin SEK | 950,460 | 105,712 | |
| Valour Wormhole SEK | 133,785 | 213,091 | |
| - | |||
| 622,304,667 | 871,162,347 |
All values are in Euros.
38
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 13. | ETP holders payable (continued) |
|---|
The Company’s ETP certificates are unsecured and trade on the following European stock exchanges: Spotlight Exchange, Deutsche Borse Xetra, Gettex, Frankfurt Exchange, Euronext Amsterdam, Euronext Paris and Lang and Schwarz Exchanges and the B3 exchange in Brazil. The Company’s ETP certificates traded on the Nordic Growth Market (“NGM”) until September 2024. ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s policy is to hedge 100% of the market risk by holding directly or indirectly the underlying digital asset. Hedging is done continuously and in direct correspondence to the issuance of certificates to investors.
| 14. | Warrant liability |
|---|
On September 25, 2025, the Company issued 34,246,577 warrants in association with the Company’s non-brokered private placement offering (Note 21). Each warrant entitles the holder to acquire 0.75 common share of the Company at a price of $2.63 for a period of three years.
On the date of issuance, the Company determined that the fair value of the warrant liability was $53,241,889 with the residual of $46,758,112 allocated to common shares. The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions: an underlying share price of $2.125, an exercise price of $2.63, a risk-free rate of 3.66%, an expected volatility of 131.5%, an expected life of 3 years and an expected dividend yield of 0%.
As at December 31, 2025, the Company had the following common share purchase warrants and compensation options outstanding that are classified as liabilities:
| Number<br> outstanding & exercisable | Grant<br> date | Expiry date | Exercise price | Fair Value | Share price | Expected volatility | Expected life (yrs) | Expected dividend yield | Risk-free interest rate |
|---|
| Warrant liability | | 34,246,577 | 26-Sep-25 | 26-Sep-28 | $ | 2.63 | | 13,599,316 | $ | 0.75 | | 128.1 | % | | 2.75 | | 0 | % | | 3.55 | % |
| | | 34,246,577 | | | | | | 13,599,316 | | | | | | | | | | | | | |
The expected volatility is based on historical share prices of the Company. The weighted average life of the outstanding warrants was 2.75 years at December 31, 2025.
39
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 15. | Right-of-use asset and lease liability |
|---|
In August 2025, the Company entered into a lease agreement for an office in Switzerland. The monthly rent payable under the terms of the lease was $66,258 (CHF53,280). The lease is for fixed term of five years commencing September 2025. The Company used a discount rate of 9% in determining the present value of the lease payments. The Company has recorded a right-of-use asset and a lease liability on the statement of financial position in association with this office lease.
Right-of-use asset
| Right-of-use<br> asset | |||
|---|---|---|---|
| Cost: | |||
| Balance, December 31, 2024 | $ | - | |
| Additions | 3,208,882 | ||
| Foreign exchange | (2,301 | ) | |
| Balance, December 31, 2025 | $ | 3,206,581 | |
| Depreciation: | |||
| Balance, December 31, 2024 | $ | - | |
| Depreciation charge for the year | 207,328 | ||
| Balance, December 31, 2025 | $ | 207,328 | |
| Net book value: | |||
| As at December 31, 2025 | $ | 2,999,253 |
Lease liability
| Lease liability as at December 31, 2024 | $ | - | ||
|---|---|---|---|---|
| Additions | 3,208,882 | |||
| Interest expense | 92,080 | |||
| Lease payments | (198,774 | ) | ||
| Lease liability as at December 31, 2025 | $ | 3,102,188 | ||
| December 31,<br> 2025 | December 31,<br> 2024 | |||
| --- | --- | --- | --- | --- |
| Current lease liability | $ | 553,973 | $ | - |
| Non-current lease liability | 2,548,215 | - | ||
| $ | 3,102,188 | $ | - |
Future undiscounted minimum lease paymentsfor the lease agreements are as follows:
| December 31,<br> 2025 | December 31,<br> 2024 | |||
|---|---|---|---|---|
| Within one year | $ | 800,652 | $ | - |
| After one year but not more than five years | 2,984,620 | - | ||
| More than five years | - | - | ||
| $ | 3,785,272 | $ | - |
40
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 16. | Realized and net change in unrealized gains and (losses) on digital assets | |||||
|---|---|---|---|---|---|---|
| Year ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | |||||
| Realized gain on digital assets | $ | 49,635,380 | $ | 306,744,938 | ||
| Unrealized loss on digital assets | (283,624,873 | ) | (54,704,565 | ) | ||
| $ | (233,989,493 | ) | $ | 252,040,373 | ||
| 17. | Realized and net change in unrealized gains and (losses) on investments in equity instruments through FVTPL | |||||
| --- | --- | |||||
| Year ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | |||||
| Unrealized (loss) gain on equity investments | $ | (99,070,915 | ) | $ | 97,251,065 | |
| Realized gain on equity investments | 31,217,931 | - | ||||
| Staking revenue | 19,485,581 | 13,060,639 | ||||
| Management | (2,640,440 | ) | (1,396,016 | ) | ||
| $ | (51,007,843 | ) | $ | 108,915,688 | ||
| 18. | Realized and net change in unrealized gains and (losses) on ETP payables | |||||
| --- | --- | |||||
| Year ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | |||||
| Realized loss on ETPs | $ | (55,922,051 | ) | $ | (271,659,058 | ) |
| Unrealized gain / (loss) on ETPs | 406,887,155 | (80,869,696 | ) | |||
| $ | 350,965,104 | $ | (352,528,754 | ) | ||
| 19. | Staking and lending income | |||||
| --- | --- | |||||
| For the year ended | December 31, <br> 2025 | December 31,<br> 2024 | ||||
| --- | --- | --- | --- | --- | ||
| Validator nodes | 6,756,611 | 6,995,098 | ||||
| All other counterparties | 6,315,530 | 6,019,699 | ||||
| Total | $ | 13,072,141 | $ | 13,014,797 | ||
| 20. | Expenses by nature | |||||
| --- | --- | |||||
| Year ended December 31, | ||||||
| --- | --- | --- | --- | --- | ||
| 2025 | 2024 | |||||
| Compensation and consulting | $ | 16,251,498 | $ | 25,796,482 | ||
| Marketing expenses | 8,815,238 | 5,590,366 | ||||
| General and administration | 2,688,879 | 1,999,788 | ||||
| Professional fees | 5,316,890 | 2,686,031 | ||||
| Regulatory and transfer agent | 427,320 | 140,611 | ||||
| Travel expenses | 719,308 | 522,387 | ||||
| $ | 34,219,133 | $ | 36,735,665 |
41
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 21. | Share Capital |
|---|
| a) | As at December 31, 2025 and 2024, the Company is authorized to issue: |
|---|---|
| I. | Unlimited number of common shares with no par value; |
| --- | --- |
| II. | 20,000,000 preferred shares at par value, 9% cumulative dividends,<br>non-voting, non-participating, non-redeemable, non-retractable, and non-convertible by the holder. The preferred shares are redeemable<br>by the Company in certain circumstances. The cumulative preference dividends have not been recognized by the Company to date. |
| --- | --- |
| b) | Issued and outstanding shares |
|---|
| Common Shares | Amount | |||||
|---|---|---|---|---|---|---|
| Balance, December 31, 2023 | 276,658,208 | $ | 128,886,879 | |||
| Acquisition of Reflexivity LLC | 5,000,000 | 2,295,276 | ||||
| Acquisition of Solana IP | 7,297,090 | 4,659,113 | ||||
| Acquisition of Stillman Digital Inc. and Stillman Bermuda Inc. | 2,500,000 | 5,065,277 | ||||
| Warrants exercised | 22,737,789 | 4,802,641 | ||||
| Options exercised | 3,912,405 | 2,839,539 | ||||
| DSU exercised | 6,432,281 | 4,517,142 | ||||
| Treasury shares paid out | 3,998,508 | 6,146,231 | ||||
| Treasury shares acquired | (5,437,992 | ) | (3,112,835 | ) | ||
| NCIB | (1,840,600 | ) | (2,804,597 | ) | ||
| Balance, December 31, 2024 | 321,257,689 | $ | 153,294,666 | |||
| Acquisition of Reflexivity LLC (see Note 8) | 186,034 | 442,722 | ||||
| DSU exercised | 4,435,755 | 6,908,083 | ||||
| RSU conversion | 112,500 | 216,250 | ||||
| Options exercised | 9,237,595 | 14,735,950 | ||||
| Warrants exercised | 3,125,000 | 671,132 | ||||
| Share purchase agreement | 1,607,717 | 3,909,861 | ||||
| NCIB | (1,235,900 | ) | (2,769,629 | ) | ||
| Private placement | 45,662,101 | 46,758,112 | ||||
| Share issuance costs | - | (4,192,788 | ) | |||
| Treasury shares paid out | 1,439,484 | 3,000,000 | ||||
| Balance, December 31, 2025 | 385,827,975 | $ | 222,974,359 |
42
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 21. | Share Capital (continued) |
|---|---|
| b) | Issued and outstanding shares (continued) |
| --- | --- |
On June 11, 2024, under the terms of the NCIB, the Company may, if considered advisable, purchase its common shares in open market transactions through the facilities of the exchange and/or other Canadian alternative trading platforms, not to exceed up to 10 per cent of the public float for the common shares as of June 3, 2024, or 26,996,392 common shares, purchased in aggregate. The price that the Company paid for the common shares was the prevailing market price at the time of purchase and all purchased common shares were cancelled by the Company. In accordance with exchange rules, daily purchases (other than pursuant to a block purchase exception) on the exchange under the NCIB cannot exceed 25 per cent of the average daily trading volume on the exchange, as measured from Dec. 1, 2023, to May 31, 2024. The NCIB commenced on June 10, 2024, and ran through June 9, 2025.
On August 21, 2025, the Company entered a one-year period under the terms of the NCIB, allowing the Company to purchase up to 10 percent of the public float for the common shares as of August 21, 2025, or 31,673,791 common shares, purchased in aggregate. The price that the Company paid for repurchased common shares was the prevailing market price at the time of purchase. All purchased common shares were cancelled by the Company. The NCIB commenced again on August 21, 2025 and runs through August 21, 2026.
During the year ended December 31, 2025, the Company purchased and cancelled 1,235,900 shares at an average price of $2.24 (December 31, 2024 – 1,840,000 shares purchased and cancelled at an average price of $1.54).
On September 26, 2025, the Company closed a non-brokered private placement offering of 45,662,101 units, at a price of $2.19 per unit, for aggregate gross proceeds of $100,000,001. Each unit consists of one common share of the Company and three-quarter common share purchase warrant. Each full warrant entitles the holder to purchase one common share of the Company at an exercise price of $2.63 per full common share purchase warrant for a period of 36 months from the issuance date.
The terms of the warrant agreement stated that if at any time during the term of the warrant, there is no effective registration statement, the warrant holder could elect to exercise the warrants by way of a cashless exercise. This violated the fixed-for-fixed criterion due to the cashless exercise option, and accordingly these warrants had been accounted for as a liability on issuance.
The Company also incurred transaction costs of $8,819,331 on the issuance. The transaction costs were allocated based on the fair value of the shares and warrant liability. $4,123,753 of transaction costs related to the shares were recorded as a reduction to the transaction price of the instruments within equity and $4,695,578 of transaction costs related to the warrant liability were expensed.
43
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 22. | Share-based payments reserves |
|---|
Stock options, DSUs, RSUs, PSUs, and Warrants
| Options | DSU | RSUs and PSUs | Warrants | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of<br> Options | Weighted average<br> exercise <br> price (CAD) | Value of <br> options | Number of<br> DSU | Value <br> of <br> DSU | Number of<br> RSUs and PSUs | Value <br> of <br> RSU | Number of<br> warrants | Weighted average<br> exercise <br> price (CAD) | Value of <br> warrants | Total Value | |||||||||||||||||||||
| December 31, 2023 | 23,405,000 | $ | 0.72 | 13,242,820 | 9,644,286 | $ | 5,943,892 | - | $ | - | 45,868,426 | $ | 0.30 | $ | 2,075,965 | $ | 21,262,677 | ||||||||||||||
| Granted | 9,461,187 | 1.82 | 5,600,819 | 10,914,007 | 7,423,790 | - | - | - | - | - | 13,024,609 | ||||||||||||||||||||
| Exercised | (3,912,405 | ) | 0.28 | (1,138,528 | ) | (6,432,281 | ) | (4,517,142 | ) | - | - | (22,737,789 | ) | 0.06 | (1,347,414 | ) | (7,003,084 | ) | |||||||||||||
| Expired / cancelled | (700,000 | ) | 2.08 | (800,683 | ) | (1,000,000 | ) | (82,095 | ) | - | - | (5,637 | ) | 0.30 | (418 | ) | (883,196 | ) | |||||||||||||
| December 31, 2024 | 28,253,782 | $ | 1.32 | $ | 16,904,428 | 13,126,012 | $ | 8,768,445 | - | $ | - | 23,125,000 | $ | 0.20 | $ | 728,133 | $ | 26,401,006 | |||||||||||||
| Granted / vested | 1,671,030 | 4.51 | 4,521,451 | 1,839,685 | 7,394,757 | 2,345,000 | 1,439,745 | - | - | - | 13,355,953 | ||||||||||||||||||||
| Exercised | (9,237,595 | ) | 1.14 | (6,432,505 | ) | (637,500 | ) | (6,908,083 | ) | (112,500 | ) | (216,250 | ) | (3,125,000 | ) | 0.23 | (141,785 | ) | (13,698,623 | ) | |||||||||||
| Expired / cancelled | (950,000 | ) | 3.77 | (940,420 | ) | (4,435,755 | ) | (145,850 | ) | - | - | - | - | - | (1,086,270 | ) | |||||||||||||||
| December 31, 2025 | 19,737,217 | $ | 1.54 | $ | 14,052,954 | 9,892,442 | $ | 9,109,269 | 2,232,500 | $ | 1,223,495 | 20,000,000 | $ | - | $ | 586,348 | $ | 24,972,066 |
Stock option plan
The Company has an ownership-based compensation scheme for executives and employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, officers, directors and consultants of the Company may be granted options to purchase common shares with the exercise prices determined at the time of grant. The Company has adopted a Floating Stock Option Plan (the “Plan”), whereby the number of common shares reserved for issuance under the Plan is equivalent of up to 10% of the issued and outstanding shares of the Company from time to time.
Each employee share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
On January 6, 2025, the Company granted 100,000 stock options to an officer of the Company to purchase common shares of the Company for the price of CAD$4.59 for a period of five years from the date of grant. The options shall vest in four equal instalments every month such that all options shall fully vests on the date that is 4 months from the date of grant. These options have an estimated grant date fair value of $304,449 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151%; risk-free interest rate of 2.96%; and an expected average life of 5 years.
On January 28, 2025, the Company granted 1,200,000 stock options to various consultants of the Company to purchase common shares of the Company for the price of CAD$4.52 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $3,591,500 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 150%; risk-free interest rate of 2.89%; and an expected average life of 5 years.
On May 26, 2025, the Company granted 50,304 stock options to an officer of the Company to purchase common shares of the Company for the price of CAD$4.97 for a period of five years from the date of grant. The options shall vest in 12 equal instalments every month commencing one month from the grant date and upon completion of certain performance conditions. The performance conditions have not been met as of December 31, 2025 and as such, none of the options have vested. These options have an estimated grant date fair value of $162,653 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 143%; risk-free interest rate of 2.92%; and an expected average life of 5 years.
On May 26, 2025, the Company granted 50,304 stock options to an officer of the Company to purchase common shares of the Company for the price of CAD$4.97 for a period of five years from the date of grant. The options shall vest in 12 equal instalments every month such that all options shall fully vest on the date that is 12 months from the date of grant.
44
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 22. | Share-based payments reserves (continued) |
|---|
Stock option plan (continued)
These options have an estimated grant date fair value of $162,653 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 143%; risk-free interest rate of 2.92%; and an expected average life of 5 years.
On May 26, 2025, the Company granted 70,422 stock options to a consultant of the Company to purchase common shares of the Company for the price of CAD$4.97 for a period of five years from the date of grant. The options shall vest in four equal instalments every three month such that all options shall fully vest on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $227,702 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 143%; risk-free interest rate of 2.92%; and an expected average life of 5 years.
On July 11, 2025, the Company granted 200,000 stock options to a consultant of the Company to purchase common shares of the Company for the price of CAD$4.00 for a period of five years from the date of grant. The options shall vest in 12 months from the date of grant. These options have an estimated grant date fair value of $523,906 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 143%; risk-free interest rate of 3.03%; and an expected average life of 5 years.
On March 12, 2024, the Company granted 125,000 stock options to a consultant of the Company to purchase common shares of the Company for the price of CAD$0.69 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $58,646 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.1%; risk-free interest rate of 3.71%; and an expected average life of 5 years.
On April 23, 2024, the Company granted 250,000 stock options to a consultant of the Company to purchase common shares of the Company for the price of CAD$0.77 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $120,370 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.3%; risk-free interest rate of 3.79%; and an expected average life of 5 years.
On May 1, 2024, the Company granted 250,000 stock options to a consultant of the Company to purchase common shares of the Company for the price of CAD$0.77 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $127,463 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.3%; risk-free interest rate of 3.63%; and an expected average life of 5 years.
On May 21, 2024, the Company granted 200,000 stock options to a consultant of the Company to purchase common shares of the Company for the price of CAD$1.03 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $140,309 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.3%; risk-free interest rate of 3.79%; and an expected average life of 5 years.
On June 4, 2024, the Company granted 4,000,000 stock options to a company controlled by management of Valour Inc. to purchase common shares of the Company for the price of CAD$1.26 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $3,432,925 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.5%; risk-free interest rate of 4.08%; and an expected average life of 5 years.
45
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 22. | Share-based payments reserves (continued) |
|---|
Stock option plan (continued)
On July 29, 2024, the Company granted 3,667,187 stock options to a company controlled by management to purchase common shares of the Company for the price of CAD$2.17 for a period of five years from the date of grant. The options shall vest (a) on December 31, 2024 and (b) upon a company controlled by management having entered into a contract with an employee or consultant of the Corporation or its subsidiaries to transfer the underlying shares subject to the option, subject to performance hurdles. These options have an estimated grant date fair value of $6,000,617 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 156.0%; risk-free interest rate of 3.20%; and an expected average life of 5 years. No agreement had been entered as at December 31, 2025 and as such, the options have not vested.
On November 4, 2024, the Company granted 46,500 stock options to employees of the company. to purchase common shares of the Company for the price of CAD$2.28 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $72,368 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 150%; risk-free interest rate of 3.04%; and an expected average life of 5 years.
On November 4, 2024, the Company granted 100,000 stock options to a consultant of the company to purchase common shares of the Company for the price of CAD$2.28 for a period of five years from the date of grant. The options shall vest in four equal instalments every month such that all options shall fully vest on the date that is four months from the date of grant. These options have an estimated grant date fair value of $155,335 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 150%; risk-free interest rate of 3.04%; and an expected average life of 5 years.
On December 6, 2024, the Company granted 35,000 stock options to a consultant of the company to purchase common shares of the Company for the price of CAD$4.50 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $124,892 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151%; risk-free interest rate of 2.81%; and an expected average life of 5 years.
On December 6, 2024, the Company granted 100,000 stock options to a consultant of the company to purchase common shares of the Company for the price of CAD$4.50 for a period of five years from the date of grant. The options shall vest in four equal instalments every month such that all options shall fully vests on the date that is four months from the date of grant. These options have an estimated grant date fair value of $356,834 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151%; risk-free interest rate of 2.81%; and an expected average life of 5 years.
On December 6, 2024, the Company granted 500,000 stock options to a consultant of the company to purchase common shares of the Company for the price of CAD$4.50 for a period of five years from the date of grant. The options were to vest upon the closing of a merger and acquisition transaction by the Company with a Target Company as described in a finder agreement between the Company and the consultant. These options have an estimated grant date fair value of $1,784,168 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151%; risk-free interest rate of 2.81%; and an expected average life of 5 years. The merger and acquisition transaction did not close within the prescribed timeline of the finder agreement and as such, the options were cancelled during the year ended December 31, 2025.
The Company recorded $5,600,819 of share-based payments related to stock options during the year ended December 31, 2025 (year ended December 31, 2024 - $4,521,451).
46
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 22. | Share-based payments reserves (continued) |
|---|
Stock option plan (continued)
The following stock options were outstanding at December 31, 2025:
| Number outstanding | Number exercisable | Grant date | Expiry date | Exercise price | Vested fair value at reporting date | Grant date share price (CAD) | Expected volatility | Expected life (yrs) | Expected dividend yield | Risk-free interest rate |
|---|
| | - | | - | 16-Nov-20 | 16-Nov-25 | $ | 0.09 | | - | $ | 0.09 | | 139 | % | | 5 | | 0 | % | | 0.46 | % |
| | 325,000 | | 325,000 | 22-Mar-21 | 22-Mar-26 | $ | 1.58 | | 474,537 | $ | 2.12 | | 146 | % | | 5 | | 0 | % | | 0.99 | % |
| | 920,000 | | 920,000 | 09-Apr-21 | 09-Apr-26 | $ | 1.58 | | 1,120,241 | $ | 1.78 | | 145 | % | | 5 | | 0 | % | | 0.95 | % |
| | 700,000 | | 700,000 | 18-May-21 | 18-May-26 | $ | 1.22 | | 83,230 | $ | 1.25 | | 146 | % | | 5 | | 0 | % | | 0.95 | % |
| | 400,000 | | 400,000 | 18-May-21 | 18-May-26 | $ | 1.22 | | 832,151 | $ | 1.25 | | 146 | % | | 5 | | 0 | % | | 0.95 | % |
| | 500,000 | | 500,000 | 13-Aug-21 | 13-Aug-26 | $ | 1.58 | | 469,962 | $ | 1.43 | | 144 | % | | 5 | | 0 | % | | 0.84 | % |
| | 210,000 | | 210,000 | 13-Oct-21 | 13-Oct-26 | $ | 2.10 | | 292,262 | $ | 2.10 | | 144 | % | | 5 | | 0 | % | | 1.27 | % |
| | 500,000 | | 500,000 | 09-Nov-21 | 09-Nov-26 | $ | 3.92 | | 478,839 | $ | 3.92 | | 144 | % | | 5 | | 0 | % | | 1.37 | % |
| | 500,000 | | 500,000 | 09-May-22 | 09-May-27 | $ | 2.00 | | 437,859 | $ | 1.34 | | 146 | % | | 5 | | 0 | % | | 2.76 | % |
| | 500,000 | | 500,000 | 20-May-22 | 20-May-27 | $ | 1.00 | | 247,278 | $ | 0.75 | | 147 | % | | 5 | | 0 | % | | 2.70 | % |
| | 500,000 | | 500,000 | 17-Oct-22 | 17-Oct-27 | $ | 0.17 | | 55,736 | $ | 0.17 | | 150 | % | | 5 | | 0 | % | | 3.60 | % |
| | 500,000 | | 500,000 | 24-Nov-23 | 24-Nov-28 | $ | 0.29 | | 102,077 | $ | 0.29 | | 152 | % | | 5 | | 0 | % | | 3.83 | % |
| | 4,500,000 | | 4,500,000 | 04-Dec-23 | 04-Dec-28 | $ | 0.45 | | 1,599,727 | $ | 0.45 | | 152 | % | | 5 | | 0 | % | | 3.54 | % |
| | 100,000 | | 100,000 | 12-Mar-24 | 12-Mar-29 | $ | 0.69 | | 47,089 | $ | 0.69 | | 154 | % | | 5 | | 0 | % | | 3.47 | % |
| | 62,500 | | 62,500 | 23-Apr-24 | 23-Apr-29 | $ | 0.77 | | 30,202 | $ | 0.77 | | 154 | % | | 5 | | 0 | % | | 3.79 | % |
| | 250,000 | | 250,000 | 01-May-24 | 01-May-29 | $ | 0.77 | | 127,929 | $ | 0.77 | | 154 | % | | 5 | | 0 | % | | 3.63 | % |
| | 4,000,000 | | 4,000,000 | 04-Jun-24 | 04-Jun-29 | $ | 1.26 | | 3,445,474 | $ | 1.26 | | 155 | % | | 5 | | 0 | % | | 4.08 | % |
| | 3,667,187 | | - | 29-Jul-24 | 29-Jul-29 | $ | 2.17 | | - | $ | 2.39 | | 156 | % | | 5 | | 0 | % | | 3.20 | % |
| | 100,000 | | 75,000 | 04-Nov-24 | 04-Nov-29 | $ | 2.28 | | 155,335 | $ | 2.30 | | 150 | % | | 5 | | 0 | % | | 3.04 | % |
| | 46,500 | | 46,500 | 04-Nov-24 | 04-Nov-29 | $ | 2.28 | | 72,368 | $ | 2.30 | | 150 | % | | 5 | | 0 | % | | 3.04 | % |
| | 100,000 | | 75,000 | 06-Dec-24 | 06-Dec-29 | $ | 4.50 | | 355,534 | $ | 5.24 | | 151 | % | | 5 | | 0 | % | | 2.81 | % |
| | 35,000 | | 35,000 | 06-Dec-24 | 06-Dec-29 | $ | 4.50 | | 124,892 | $ | 5.24 | | 151 | % | | 5 | | 0 | % | | 2.81 | % |
| | 100,000 | | 100,000 | 06-Jan-25 | 06-Jan-30 | $ | 4.59 | | 304,449 | $ | 4.59 | | 151 | % | | 5 | | 0 | % | | 2.96 | % |
| | 850,000 | | 637,500 | 28-Jan-25 | 28-Jan-30 | $ | 4.52 | | 2,465,004 | $ | 4.52 | | 150 | % | | 5 | | 0 | % | | 2.89 | % |
| | 50,304 | | 29,344 | 26-May-25 | 26-May-30 | $ | 4.97 | | 144,510 | $ | 4.97 | | 143 | % | | 5 | | 0 | % | | 2.92 | % |
| | 50,304 | | 29,344 | 26-May-25 | 26-May-30 | $ | 4.97 | | 144,510 | $ | 4.97 | | 143 | % | | 5 | | 0 | % | | 2.92 | % |
| | 70,422 | | 35,211 | 26-May-25 | 26-May-30 | $ | 4.97 | | 193,176 | $ | 4.97 | | 143 | % | | 5 | | 0 | % | | 2.92 | % |
| | 200,000 | | - | 11-Jul-25 | 11-Jul-30 | $ | 4.00 | | 248,583 | $ | 4.00 | | 143 | % | | 5 | | 0 | % | | 3.03 | % |
| | 19,737,217 | | 15,530,399 | | | | | | 14,052,954 | | | | | | | | | | | | | |
47
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 22. | Share-based payments reserves (continued) |
|---|
Stock option plan (continued)
The weighted average remaining contractual life of the options exercisable at December 31, 2025 was 2.70 years (December 31, 2024 – 3.04 years).
Warrants
As at December 31, 2025, the Company had share purchase warrants outstanding as follows:
| Number outstanding & exercisable | Grant date | Expiry date | Exercise price | Fair Value | Grant date share price (CAD) | Expected volatility | Expected life (yrs) | Expected dividend yield | Risk-free interest rate |
|---|
| Warrants | | 20,000,000 | 06-Nov-23 | 06-Nov-28 | $ | 0.20 | | 591,881 | | $ | 0.17 | | 151.9 | % | | 5 | | 0 | % | | 3.87 | % |
| Warrant issue costs | | | | | | | | (5,533 | ) | | | | | | | | | | | | | |
| | | 20,000,000 | | | | | | 586,348 | | | | | | | | | | | | | | |
See Note 14 for warrant liability.
Deferred Share Units Plan (DSUs)
In August 2025, the Company adopted the Omnibus Plan. Eligible participants of the Omnibus Plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the Omnibus Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant. The grant date fair value of DSUs is based on the share price on the grant date, unless stated otherwise.
On January 6, 2025, the Company granted 100,000 DSUs to an officer of the Company. These DSUs have a grant day fair value of $330,000 and vest in three equal installments every year, with the first installment vesting one year from the grant date.
On January 28, 2025, the Company granted 1,400,000 DSUs to an officer of the Company. These DSUs have a grant day fair value of $4,553,000 and vest in three equal installments every year, with the first installment vesting one year from the grant date.
On May 26, 2025, the Company granted 35,000 DSUs to consultants of the Company. These DSUs have a grant day fair value of $125,165 and vest in one year from the date of grant.
On May 26, 2025, the Company granted 200,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $715,000 and vested on completion of certain performance conditions. These conditions were met during the year ended December 31, 2025 and as such, the DSUs vested during this period.
On May 26, 2025, the Company granted 60,362 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $216,000 and vest in four equal installments every six months, with the first installment vesting six months from the grant date.
On July 11, 2025, the Company granted 44,323 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $128,000 and vest in four equal installments every six months, with the first installment vesting six months from the grant date.
On May 21, 2024, the Company granted 200,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of CAD$174,000 and vest in in 12 months from the grant day.
48
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 22. | Share-based payments reserves (continued) |
|---|
Deferred Share Units Plan (DSUs) (continued)
On July 29, 2024, the Company granted 475,000 DSUs to officers and directors of the Company. These DSUs have a grant date fair value of $832,000 and vest in four equal installments every six months following the grant date, with the first installment vesting six months after the grant date.
On September 24, 2024, the Company granted 1,125,000 DSUs to officers and consultants of the Company. These DSUs have a grant day fair value of $2,433,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is three months from the grant day.
On November 4, 2024, the Company granted 100,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $154,000 and vest in four equal installments every month, with the first instalment vesting on the date that is one month from the grant day.
On November 21, 2024, the Company granted 950,000 DSUs to consultants of the Company. These DSUs have a grant day fair value of $2,478,000 and vest immediately
On December 6, 2024, the Company granted 100,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $384,000 and vest in four equal installments every month, with the first instalment vesting on the date that is one month from the grant day.
On December 6, 2024, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $1,920,000 and vest upon the closing of a merger and acquisition transaction by the Company with a Target Company as described in a finder agreement between the Company and the consultant. The merger and acquisition transaction did not close within the prescribed timeline of the finder agreement and as such, the DSUs were cancelled during the year ended December 31, 2025.
The Company recorded $7,423,790 in share-based compensation related to DSUs during the year ended December 31, 2025 (year ended December 31, 2024 - $7,394,757).
Restricted Share Units Plan (RSUs)
On May 20, 2025, the Company adopted the Omnibus Plan, which allows for the issuance of RSUs. Eligible participants of the plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting RSUs. The number of RSUs that may be granted under the Omnibus Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant. The grant date fair value of DSUs is based on the share price on the grant date, unless stated otherwise.
On October 16, 2025, the Company granted 500,000 RSUs to consultants of the Company. These RSUs have a grant date fair value of $500,000 and vest in eight equal installments every three months following the grant date, with the first installment vesting on the grant date.
On October 16, 2025, the Company granted 500,000 RSUs to consultants of the Company. These RSUs have a grant date fair value of $500,000 and vest on the closing price of the Company’s common shares hitting a specified price. The Company used a Monte Carlo simulation to determine the fair value of these RSUs. The awards were fair valued using the Monte Carlo simulation with the assumptions of a risk free rate of 2.4%, expected volatility of 130.0%, a random variable of nil, a dividend yield of 0.0% and a term of 3.16 years. These RSUs have not vested as of December 31, 2025.
On November 5, 2025, the Company granted 695,000 RSUs to consultants and officers of the Company. These RSUs have a grant date fair value of $1,216,250 and vest in eight equal installments every three months following the grant date, with the first installment vesting on the grant date.
On November 5, 2025, the Company granted 300,000 RSUs to an officer of the Company. These RSUs have a grant date fair value of $525,000 and vest in four equal installments every three months following the grant date, with the first installment vesting on the grant date.
49
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 22. | Share-based payments reserves (continued) |
|---|
Restricted Share Units Plan (RSUs) (continued)
On November 28, 2025, the Company granted 150,000 RSUs to a consultant of the Company. These RSUs have a grant date fair value of $262,500, with 50,000 RSUs vesting immediately and the remaining 150,000 RSUs vesting six months from the grant date.
Performance Share Units Plan (PSUs)
On May 20, 2025, the Company adopted the share incentive plan, which allows for the issuance of PSUs. Eligible participants of the share incentive plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting PSUs. The number of PSUs that may be granted under the share incentive plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant.
On October 30, 2025, the Company granted 2,000,000 PSUs to an officer of the Company. These PSUs have a grant date fair value of $3,580,000 and vest when the Company hits specific milestones. As at December 31, 2025, these milestones have not been achieved and no amount has been expensed in relation to this grant. These PSUs will be cash settled with the officer and as such, have been recorded as an accrue liability and have not been included in share-based payment reserve at December 31, 2025.
On October 30, 2025, the Company granted 2,000,000 PSUs to an officer of the Company. These PSUs have a grant date fair value of $3,580,000 and vest in four equal installments every three months following the grant date, with the first installment vesting three months from the grant date. These PSUs will be cash settled with the officer and as such, have been recorded as an accrue liability and have not been included in share-based payment reserve at December 31, 2025.
On November 5, 2025, the Company granted 200,000 PSUs to an officer of the Company. These PSUs have a grant date fair value of $151,000 and vest in four equal installments every four months following the grant date, with the first installment vesting on the grant date.
50
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments |
|---|
Financial assets and financial liabilities as at December 31, 2025 and 2024 are as follows:
| **** | Asset / (liabilities) at amortized cost | **** | Assets /(liabilities) at fair value through profit/(loss) | **** | Total | **** | |||
|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | |||||||||
| Cash | $ | 15,931,525 | $ | - | $ | 15,931,525 | |||
| Client Cash Deposits | 10,665,147 | - | 10,665,147 | ||||||
| Digital assets, digital assets loaned, and digital assets staked | - | 555,838,900 | 555,838,900 | ||||||
| Equity investments | - | 257,425,063 | 257,425,063 | ||||||
| Public investments | - | 778,085 | 778,085 | ||||||
| Private investments | - | 37,348,081 | 37,348,081 | ||||||
| Accounts payable and accrued liabilities | (3,482,464 | ) | - | (3,482,464 | ) | ||||
| Loan payable | (9,693,294 | ) | - | (9,693,294 | ) | ||||
| Trading liabilities | - | (15,109,375 | ) | (15,109,375 | ) | ||||
| ETP holders payable | - | (871,162,347 | ) | (871,162,347 | ) | ||||
| December 31, 2025 | |||||||||
| Cash | $ | 91,234,090 | $ | - | $ | 91,234,090 | |||
| Client Cash Deposits | 5,615,054 | - | 5,615,054 | ||||||
| Digital assets, digital assets loaned, and digital assets staked | - | 515,586,931 | 515,586,931 | ||||||
| Equity investments | - | 131,982,050 | 131,982,050 | ||||||
| Public investments | - | 272,520 | 272,520 | ||||||
| Private investments | - | 29,372,628 | 29,372,628 | ||||||
| Accounts payable and accrued liabilities | (9,270,110 | ) | - | (9,270,110 | ) | ||||
| Loan payable | (2,611,009 | ) | - | (2,611,009 | ) | ||||
| Lease liability | (3,102,188 | ) | - | (3,102,188 | ) | ||||
| Warrant liability | - | (13,599,316 | ) | (13,599,316 | ) | ||||
| Trading liabilities | - | (24,122,640 | ) | (24,122,640 | ) | ||||
| ETP holders payable | - | (622,304,667 | ) | (622,304,667 | ) |
The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:
Credit risk
Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada, the United States and Europe. Deposits held with this institution may exceed the amount of insurance provided on such deposits.
Expected credit losses related to digital assets loaned are recorded in the bad debt expense on the consolidated statement of operations (Note 6 and Note 12). Expected credit losses related to collateral provided on the Company’s loan payable has been recorded through unrealized losses on digital assets in the statement of operations. Expected credit losses for the year ended December 31, 2025, are as follows:
| **** | Asset | Quantity | Current | Non-current | Gross Total | ECL | **** | Net Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Counterparty A | SOL | 326,500.00 | 16,189,931 | 24,719,701 | 40,909,632 | (248,000 | ) | 40,661,632 | |||||||
| Genesis | BTC | 67.98 | 5,971,565 | - | 5,971,565 | (4,478,673 | ) | 1,492,892 |
51
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments (continued) |
|---|
Regulatory Risks
As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company. Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation.
Custodian Risks
The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line as well as for digital assets underlying Valour Cayman ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.
Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.
The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at December 31, 2025, the Company had current assets of $667,317,486 (December 31, 2024 - $710,993,671) to settle current liabilities of $672,461,715 (December 31, 2024 - $899,447,480).
52
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments (continued) |
|---|
The following table shows the Company’s source of liquidity by assets / (liabilities) as at December 31, 2025 and 2024:
| December 31, 2025 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Total | Less than 1 year | 1-3 years | |||||||
| Cash | $ | 91,234,090 | $ | 91,234,090 | $ | - | |||
| Client cash deposits | 5,615,054 | 5,615,054 | - | ||||||
| Prepaid expenses | 9,596,921 | 9,596,921 | - | ||||||
| Digital assets, digital assets loaned, and digital assets staked | 515,586,931 | 482,763,021 | 32,823,910 | ||||||
| Public Investments | 272,520 | 272,520 | - | ||||||
| Private investments | 29,372,628 | - | 29,372,628 | ||||||
| Equity investments | 131,982,050 | 75,411,946 | 56,570,104 | ||||||
| Accounts payable and accrued liabilities | (9,270,110 | ) | (9,270,110 | ) | - | ||||
| Loan payable | (2,611,009 | ) | (2,611,009 | ) | - | ||||
| Trading liabilities | (24,122,640 | ) | (24,122,640 | ) | |||||
| Lease liability | (3,102,188 | ) | (553,973 | ) | (2,548,215 | ) | |||
| ETP holders payable | (622,304,667 | ) | (622,304,667 | ) | - | ||||
| Total assets / (liabilities) | $ | 122,249,580 | $ | 6,031,153 | $ | 116,218,427 | |||
| December 31, 2024 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| Total | Less than 1 year | 1-3 years | |||||||
| Cash | $ | 15,931,525 | $ | 15,931,525 | $ | - | |||
| Client cash deposits | 10,665,147 | 10,665,147 | - | ||||||
| Prepaid expenses | 1,797,724 | 1,797,724 | - | ||||||
| Digital assets, digital assets loaned, and digital assets staked | 555,838,900 | 555,504,190 | 334,710 | ||||||
| Public Investments | 778,085 | 778,085 | - | ||||||
| Private investments | 37,348,081 | - | 37,348,081 | ||||||
| Equity investments | 257,425,063 | 126,317,000 | 131,108,063 | ||||||
| Accounts payable and accrued liabilities | (3,482,464 | ) | (3,482,464 | ) | - | ||||
| Loan payable | (9,693,294 | ) | (9,693,294 | ) | - | ||||
| Trading liabilities | (15,109,375 | ) | (15,109,375 | ) | |||||
| ETP holders payable | (871,162,347 | ) | (871,162,347 | ) | - | ||||
| Total assets / (liabilities) | $ | (19,662,955 | ) | $ | (188,453,809 | ) | $ | 168,790,854 |
53
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments (continued) |
|---|
Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.
Market risk
The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. At December 31, 2025, one investment made up approximately 0.3% (December 31, 2024 – one investment of 3.4%) of the total assets of the Company.
| (a) | Price and concentration risk |
|---|
The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. At December 31, 2025, the company had one investment exposed to market risk (December 31, 2024 – no investments) of the total assets of the Company.
| (b) | Interest rate risk |
|---|
The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at December 31, 2025, a 1% change in interest rates could result in approximately $912,000 change in net loss.
| (c) | Currency risk |
|---|
Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to Canadian dollar, Euro, Swiss Franc, Swedish Krona and British Pound. Fluctuations in the exchange rates between this currency and the U.S. dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.
As at December 31, 2025 and 2024, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies: ****
| **** | December 31, 2025 | **** | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | Canadian Dollars | **** | British Pound | Swiss Franc | **** | Swedish Krona | **** | European Euro | **** | Arab Emirates Dirham | **** | ||||||
| Cash | $ | 2,284,909 | $ | 51,536 | $ | 8,928,624 | $ | 12,978,875 | $ | 4,570,541 | $ | 457,515 | |||||
| Private investments | 27,944,774 | - | - | - | - | - | |||||||||||
| Prepaid investment | - | - | 528,255 | - | - | 34,278 | |||||||||||
| Accounts payable and accrued liabilities | (1,003,289 | ) | - | (449,107 | ) | - | (20,219 | ) | (14,057 | ) | |||||||
| ETP holders payable | - | - | - | (285,235,369 | ) | (9,211,650 | ) | - | |||||||||
| Net assets (liabilities) | $ | 29,226,394 | $ | 51,536 | $ | 9,007,772 | $ | (272,256,494 | ) | $ | (4,661,328 | ) | $ | 477,736 |
| **** | December 31, 2024 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | Canadian Dollars | **** | Britsh Pound | **** | Swiss Franc | **** | Swedish Krona | European Euro | **** | Arab Emirates Dirham | ||||||
| Cash | $ | 1,768,319 | $ | - | $ | 3,573,221 | $ | 6,823,399 | $ | 2,533,427 | $ | 61,252 | ||||
| Private investments | 1,367,716 | - | 35,457,990 | - | - | - | ||||||||||
| Prepaid investment | 447,753 | - | - | - | - | - | ||||||||||
| Accounts payable and accrued liabilities | (1,695,248 | ) | (55,416 | ) | (247,501 | ) | - | (15,562 | ) | - | ||||||
| Net assets (liabilities) | $ | 1,888,540 | $ | (55,416 | ) | $ | 38,783,710 | $ | 6,823,399 | $ | 2,517,865 | $ | 61,252 |
54
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments (continued) |
|---|
A 10% increase (decrease) in the value of the US dollar against all foreign currencies in which the Company held financial instruments as of December 31, 2025 would result in an estimated increase (decrease) in net income of approximately $23,815,000, (December 31, 2024 - $5,002,000).
| (d) | Digital currency risk factors: Perception, Evolution, Validation and Valuation |
|---|
A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.
Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.
The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.
| (e) | Fair value of financial instruments |
|---|
The Company has determined the carrying values of its financial instruments as follows:
| i. | The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate<br>their fair values due to the short-term nature of these instruments. |
|---|---|
| ii. | Public and private investments are carried at amounts in accordance with the Company’s accounting<br>policies as set out in Note 2 in the Company’s December 31, 2025 financial statements. |
| --- | --- |
| iii. | Digital assets classified as financial assets relate to USDC which is measured at fair value. |
| --- | --- |
| iv. | Warrant liability carried at its fair value. |
| --- | --- |
The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at December 31, 2025 and 2024.
55
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments (continued) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (e) | Fair value of financial instruments (continued) | |||||||||
| --- | --- | |||||||||
| Level 1<br> <br>(Quoted Market<br> <br>price) | Level 2<br> <br>(Valuation<br> <br>technique -observable<br> <br>market Inputs) | Level 3<br> <br>(Valuation<br> <br>technique -<br> <br>non-observable market<br> <br>inputs) | Total | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Privately traded investments | $ | - | $ | - | $ | 37,348,081 | $ | 37,348,081 | ||
| Digital assets | - | 555,838,900 | - | 555,838,900 | ||||||
| Equity investments | - | - | 257,425,063 | 257,425,063 | ||||||
| Publicly traded investments | 778,085 | - | - | 778,085 | ||||||
| December 31, 2024 | $ | 778,085 | $ | 555,838,900 | $ | 294,773,144 | $ | 851,390,129 | ||
| Privately traded investments | $ | - | $ | - | $ | 29,372,628 | $ | 29,372,628 | ||
| Digital assets | - | 496,934,790 | 18,652,141 | 515,586,931 | ||||||
| Equity investments | - | - | 131,982,050 | 131,982,050 | ||||||
| Publicly traded investments | 272,520 | - | - | 272,520 | ||||||
| Warrant liability | - | - | (13,599,316 | ) | (13,599,316 | ) | ||||
| December 31, 2025 | $ | 272,520 | $ | 496,934,790 | $ | 166,407,503 | $ | 663,614,813 |
Level 1 Hierarchy
The following table presents the changes in fair value measurements of financial instruments classified as Level 1 during the years ended December 31, 2025 and 2024. These financial instruments are measured at fair value based utilizing quoted market prices. The net realized losses and net unrealized gains are recognized in the statements of loss.
| Level 1 investments, financial assets at fair value | December 31,<br> 2025 | December 31,<br> 2024 | |||
|---|---|---|---|---|---|
| Opening balance | $ | 778,085 | $ | - | |
| Realized loss on investments | (419,093 | ) | - | ||
| Transferred from level 3 | 272,520 | 778,085 | |||
| Investments sold | (358,992 | ) | - | ||
| $ | 272,520 | $ | 778,085 |
56
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments (continued) |
|---|---|
| (e) | Fair value of financial instruments (continued) |
| --- | --- |
Level 2 Hierarchy
The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the years ended December 31, 2025 and 2024. These financial instruments are measured at fair value utilizing observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.
| Level 2 investments, financial assets at fair value | December 31,<br> 2025 | December 31,<br> 2024 | ||||
|---|---|---|---|---|---|---|
| Opening balance | $ | 555,838,900 | $ | 370,469,700 | ||
| Digital assets acquired | 232,267,760 | 401,118,676 | ||||
| Digital assets disposed | (87,878,518 | ) | (514,217,138 | ) | ||
| Digital assets earned from staking, lending and fees | 12,332,036 | 26,075,436 | ||||
| Realized gain on digital assets | 49,635,380 | 306,744,938 | ||||
| Unrealized losses on digital assets | (260,376,909 | ) | (34,372,022 | ) | ||
| Settlement of Genesis loan | (6,100,598 | ) | - | |||
| Digital assets transferred in from level 3 | 2,749,352 | - | ||||
| Fees and other | (1,532,613 | ) | 19,310 | |||
| $ | 496,934,790 | $ | 555,838,900 |
Level 3 Hierarchy
The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the years ended December 31, 2025 and 2024. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.
| Level 3 investments, financial assets at fair value | December 31,<br> 2025 | December 31,<br> 2024 | ||||
|---|---|---|---|---|---|---|
| Opening balance | $ | 294,773,144 | $ | 32,717,095 | ||
| Purchases | 50,865,445 | 173,814,141 | ||||
| Transferred to level 1 | (272,520 | ) | (778,085 | ) | ||
| Acquired as subsidiary | (379,906 | ) | - | |||
| Realized gain | 31,217,931 | 83,723,906 | ||||
| Unrealized (loss)/ gain | (121,974,940 | ) | 5,296,087 | |||
| Transferred to level 2 | (2,749,352 | ) | - | |||
| Foreign exchange gain | (527,269 | ) | - | |||
| Equity investments disposed | (71,685,819 | ) | - | |||
| Digital assets earned from staking, lending and fees | 740,105 | - | ||||
| $ | 180,006,819 | $ | 294,773,144 |
Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.
57
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments (continued) | ||||
|---|---|---|---|---|---|
| (e) | Fair value of financial instruments (continued) | ||||
| --- | --- | ||||
| Level 3 investments, financial liabilities at fair value | December 31, 2025 | December 31, 2024 | |||
| --- | --- | --- | --- | --- | --- |
| Opening balance | $ | - | $ | - | |
| Warrants granted | 53,195,195 | - | |||
| Change in fair value | (39,595,879 | ) | - | ||
| $ | 13,599,316 | $ | - |
As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.
The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at December 31, 2025 and 2024.
| Description | Fair value | Valuation <br> technique | Significant Unobservable<br> <br>input(s) | Range of significant unobservable<br> <br>input(s) |
|---|
| 3iQ Corp. | $ | 300,460 | Recent financing | Marketability of shares | 0% discount |
| Luxor Technology Corporation | | 500,050 | Recent financing | Marketability of shares | 0% discount |
| Neuronomics AG | | 89,581 | Recent financing | Marketability of shares | 0% discount |
| Amina Bank | | 35,457,990 | Market approach | Marketability of shares | 0% discount |
| ZKP Corporation | | 1,000,000 | Recent financing | Marketability of shares | 0% discount |
| Brazil Potash Corp. | | 778,085 | Market approach | Marketability of shares | 0% discount |
| Equity Investments in digital | | 257,425,063 | Market approach | Discount for lack of marketability | 25% discount |
| December 31, 2024 | $ | 295,551,229 | | | |
| Luxor Technology Corporation | $ | 524,963 | Recent financing | Marketability of shares | 0% discount |
| Amina Bank | | 24,285,752 | Market approach | Marketability of shares | 0% discount |
| ZKP Corporation | | 1,000,000 | Recent financing | Marketability of shares | 0% discount |
| Global Benchmarks AB | | 199,875 | Recent financing | Marketability of shares | 0% discount |
| CH Technical Solutions SA | | 362,038 | Recent financing | Marketability of shares | 0% discount |
| Canada Stablecorp Inc. | | 500,000 | Recent financing | Marketability of shares | 0% discount |
| Continental Stable Coin | | 500,000 | Recent financing | Marketability of shares | 0% discount |
| Bonsol Labs Inc. | | 2,000,000 | Recent financing | Marketability of shares | 0% discount |
| TenX Protocols Inc. | | 272,520 | Recent financing | Marketability of shares | 0% discount |
| Equity Investments in digital | | 131,982,050 | Market approach | Discount for lack of <br>marketability | 16% discount |
| Digital assets on loan | | 18,652,141 | Market approach | Discount for lack of marketability | 30% discount |
| December 31, 2025 | $ | 180,279,339 | | | |
58
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments (continued) |
|---|
| (e) | Fair value of financial instruments (continued) |
|---|
3iQ Corp. (“3iQ”)
On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. During the year ended December 31, 2024, the Company sold 125,295 common shares of 3iQ. On September 3, 2025, the Company sold its remaining 61,712 shares of 3iQ for proceeds of $481,484 resulting in a gain on sale of $181,015. As at December 31, 2025, the Company owned no shares of 3iQ.
Luxor Technology Corporation (“LTC”)
On December 29, 2020, the Company subscribed $100,000 to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed to additional rights of $62,500. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025 the valuation of LTC was $524,963 (December 31, 2024L $500,050). As at December 31, 2025, a +/- 10% change in the fair value of LTC will result in a corresponding +/- $302,446 (December 31, 2024 - $50,005) change in the carrying amount.
Amina Bank AG (“Amina”)
On January 14, 2022, the Company invested $25,286,777 (CAD$34,498,750) to acquire 3,906,250 non-votes shares of Amina. During the year ended December 31, 2025, the Company impaired its investment in Amina due to the decrease in Amina’s assets under management. As at December 31, 2025, the valuation of Amina was $24,285,752 (December 31, 2024 - $35,457,990). As at December 31, 2025, a +/- 10% change in the fair value of Amina will result in a corresponding +/- $2,428,575 (December 31, 2024 +/- $3,545,799) change in the carrying amount.
ZKP Corporation (“ZKP”)
On August 2, 2024, the Company invested $1,000,000 to acquire shares of ZKP. As at December 31, 2025, the valuation of ZKP was based on the recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of ZKP will result in a corresponding +/- $100,000 change in the carrying amount (December 31, 2024 - $100,000).
Global Benchmarks AB (“Global Benchmarks”)
On September 24, 2024, the Company invested $199,875 to acquire shares of Global Benchmarks. As at December 31, 2025, the valuation of Global Benchmarks was based on a recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of Global Benchmarks will result in a corresponding +/- $19,988 change in the carrying amount (December 31, 2024 - $19,988).
CH Technical Solutions SA (“CH Technical”)
On September 24, 2024, the Company invested $3,971,272 to acquire 25 shares of CH Technical. During the year ended December 31, 2025, the Company impaired its investment in CH Technical based on the investments in CH Technical. As at December 31, 2025, the valuation of CH Technical was $272,520 (December 31, 2024 - $nil). As at December 31, 2025, a +/- 10% change in the fair value of CH Technical will result in a corresponding +/- $27,252 change in the carrying amount (December 31, 2024 - $nil).
TenX Protocols Inc. (“TenX”)
On July 24, 2025, the Company invested $718,339 to acquire 1,334,000 subscription receipts of TenX. During the year ended December 31, 2025, the Company converted its 1,334,000 subscription receipts into 1,334,000 common shares and 667,00 common share purchase warrants. As a result of this conversion, the Company revalued its investment in TenX based on the December 31, 2025 market price of the TenX shares. As at December 31, 2025, the valuation of TenX was $362,038 (December 31, 2024 - $nil). As at December 31, 2025, a +/- 10% change in the fair value of TenX will result in a corresponding +/- $36,204 change in the carrying amount (December 31, 2024 - $nil).
Canada Stablecorp Inc.
On September 9, 2025, the Company invested $499,999 to acquire 303,030 shares of Canada Stablecorp Inc. As at December 31, 2025, the valuation of Canada Stablecorp Inc. was based on a recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of Canada Stablecorp Inc. will result in a corresponding +/- $50,000 change in the carrying amount (December 31, 2024 - $nil).
59
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 23. | Financial instruments (continued) |
|---|---|
| (e) | Fair value of financial instruments (continued) |
| --- | --- |
Continental Stable Coin
On July 25, 2025, the Company invested $500,000 to acquire rights to certain preferred shares of Continental Stable Coin. As at December 31, 2025, the valuation of Continental Stable Coin was based on a recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of Continental Stable Coin will result in a corresponding +/- $50,000 change in the carrying amount (December 31, 2024 - $nil).
Bonsol Labs Inc. (“Bonsol”)
On November 13, 2025, the Company invested $2,000,000 to acquire rights to certain preferred shares of Bonsol. As at December 31, 2025, the valuation of Bonsol was based on a recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of Bonsol will result in a corresponding +/- $200,000 change in the carrying amount (December 31, 2024 - $nil)
SUI Digital Assets Loaned at FVTPL
During Q2 2025, the Company invested $41,160,000 to acquire SUI digital assets. Management used the net asset values as determined by market pricing and applied a 16% discount for lack of marketability. As at December 31, 2025, a +/- 10% change in the fair value of the SUI digital assets loaned will result in a corresponding +/- $1,865,214 change in the carrying amount.
Equity Investments in Digital Assets Funds at FVTPL (“Equity Investments”)
During Q2 2024, the Company invested $173,814,136 to acquire interest in two entities set up to hold SOL and AVAX acquired from a bankrupt estate. Management used the net asset values as determined by the entities managers and applied a 16% discount for lack of marketability. As at December 31, 2025, a +/- 10% change in the fair value of the Equity Investments will result in a corresponding +/- $13,198,205 change in the carrying amount (December 31, 2024 - $25,742,506).
| 24. | Digital asset risk |
|---|---|
| (a) | Digital currency risk factors: Risks due to the technical design of cryptocurrencies |
| --- | --- |
The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.
Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.
Protocols for most digital assets or cryptocurrencies are public open-source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.
60
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 24. | Digital asset risk (continued) |
|---|---|
| (b) | Digital currency risk factors: Ownership, Wallets |
| --- | --- |
Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:
| - | Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private<br>keys and public keys/addresses. |
|---|---|
| - | Paper wallets are simply paper printouts of private and public<br>addresses. |
| --- | --- |
| - | Desktop wallets are installable software programs/apps downloaded from the internet that hold your private<br>and public keys/addresses. |
| --- | --- |
| - | Mobile wallets are wallets installed on a mobile device and are thus always available and connected to<br>the internet. |
| --- | --- |
| - | Web wallets are hot wallets that are always connected to the internet that can be stored in a browser<br>or can be “hosted” by third party providers such as an exchange. |
| --- | --- |
| (c) | Digital currency risk factors: Political, regulatory risk and<br>technology in the market of digital currencies |
| --- | --- |
The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such market. It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.
The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).
As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack.
| 25. | Capital management |
|---|
The Company considers its capital to consist of share capital, share based payments reserves and deficit. The Company’s objectives when managing capital are:
| a) | to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the<br>Company’s ability to purchase new investments; |
|---|---|
| b) | to give shareholders sustained growth in value by increasing shareholders’ equity; while |
| --- | --- |
| c) | taking a conservative approach towards financial leverage and management of financial risks. |
| --- | --- |
The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:
| a) | raising capital through equity financings; and |
|---|---|
| b) | realizing proceeds from the disposition of its investments |
| --- | --- |
The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the (a) CBOE Canada (formerly NEO Exchange) which requires one of the following to be met: (i) shareholders equity of at least CAD$2.5 million, (ii) net income from continuing operations of at least CAD$375,000, (iii) market value of listed securities of at least CAD$25 million, or (iv) assets and revenues of at least CAD$25 million, and (b) Nasdaq Capital
61
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 26. | Related party disclosures | |
|---|---|---|
| a) | The consolidated financial statements include the financial statements of the Company and its subsidiaries<br>and its respective ownership listed below: | |
| --- | --- | |
| **** | % equity interest | |
| --- | --- | --- |
| DeFi Holdings (Bermuda) Ltd. | 100 | |
| Reflexivity LLC | 100 | |
| Valour Inc. | 100 | |
| DeFi Europe AG | 100 | |
| Stillman Digital Inc. | 100 | |
| Stillman Bermuda Ltd. | 100 | |
| Valour Digital Securities Limited | 0 |
| b) | Compensation of key management personnel of the Company |
|---|
In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the years ended December 31, 2025 and 2024 were as follows:
| **** | Year ended December 31, | |||
|---|---|---|---|---|
| **** | 2025 | 2024 | ||
| Short-term benefits | $ | 4,351,709 | $ | 21,725,185 |
| Shared-based payments | 1,670,174 | 9,552,181 | ||
| $ | 6,021,883 | $ | 31,277,366 |
During the year ended December 31, 2024, the Company paid management $20,000,000 and 3,998,508 DeFi shares valued at $6,273,870 related to DeFi Alpha trading profits.
| c) | During the year ended December 31, 2025, the Company incurred $502,545 (December 31, 2024: $43,393) in<br>legal fees to a firm in which a former director of the Company is a partner. At December 31, 2024, the Company had recorded $nil in accounts<br>payable and accrued liabilities related to these legal expenses incurred in the ordinary course of business with this law firm. |
|---|
During the year ended December 31, 2024, Valour purchased 1,320,130 USDT for EUR1,213,237 from a former director of Valour.
During the year ended December 31, 2024, the Company paid management $20,000,000 and 3,998,508 DeFi shares valued at $6,273,870 related to DeFi Alpha trading profits.
The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at December 31, 2025.
The Company announced a full-stack sovereign finance framework to modernize the $100 trillion sovereign debt market with SovFi, an entity held by the CEO, an Advisor and the President of the Company. The Company incurred $20,000 of legal fees related to SovFi in the twelve month period ended December 31, 2025 (December 31, 2024 - $Nil).
62
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 26. | Related party disclosures (continued) |
|---|---|
| d) | The Company’s directors and officers may have investments in and hold management and/or director<br>and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of<br>the relationship of the Company’s directors or officers with the investment as of December 31, 2025 and 2024. |
| --- | --- |
| Investment | Nature of relationship to investment | Estimated<br> <br>Fair Value |
|---|
| ZKP Corporation* | Former Director (Olivier Roussy Newton) of investee | $ | 1,000,000 |
| Global Benchmarks AB* | Share ownership of investee by director (Per Von Rosen) | | 199,875 |
| Total investment - December 31, 2025 | | $ | 1,199,875 |
* Private company ****
| Investment | Nature of relationship to investment | Estimated<br> <br>Fair Value |
|---|
| Brazil Potash Corporation | Former Officer (Ryan Ptolemy) of investee | $ | 778,085 |
| ZKP Corporation* | Former Director (Olivier Roussy Newton) of investee | | 1,000,000 |
| Total investment - December 31, 2024 | | $ | 1,778,085 |
* Private company ****
| 27. | Commitments and contingencies |
|---|
Management Contracts Commitments
The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,576,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed consolidated interim financial statements. Minimum commitments remaining under these contracts were approximately $4,294,000, all due within one year.
Legal Commitments and Class ActionLawsuit in the United States
The Company is, from time to time, involved in various claims and legal proceedings including a class action lawsuit filed against the Company and certain officers in the United States District Court for the Eastern District of New York which alleges that the Defendants made false and / or misleading statements and / or failed to disclose that: (i) DeFi Technologies was facing delays in executing its DeFi arbitrage strategy, which at all relevant times was a key revenue driver for the Company; (ii) DeFi Technologies had understated the extent of competition it faced from other Digital Asset Treasury companies and the extent to which that competition would negatively impact its ability to execute its DeFi arbitrage strategy; (iii) as a result of the foregoing issues, the Company was unlikely to meet its previously issued revenue guidance for the fiscal year 2025; (iv) accordingly, Defendants had downplayed the true scope and severity of the negative impact that the foregoing issues were having on DeFi Technologies’ business and financial results; and (v) as a result, Defendants’ public statements were materially false and misleading at all relevant times.
The Company does not agree with the allegations in the Class Action Lawsuit and intends to vigorously defend itself in Court. Based on the input from its external legal counsel and the early stage of this dispute, the Company believes in the merits of its legal defenses and as such has not accrued for any potential loss in these financial statements. The Company cannot reasonably predict the likelihood or outcome of these activities. This litigation is at an early stage and the Company cannot presently estimate the likelihood of loss or amount of loss that may be incurred as a result of this lawsuit.
63
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 28. | Operating segments |
|---|
The Company operates in various business lines based on where the subsidiaries operate. Valour operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs as well as any DeFi Alpha related transactions. Reflexivity operates the Company’s research firm and Stillman and Stillman Bermuda operate the trading platform.
Information about the Company’s assets by segment is detailed below.
| December 31, 2025 | DeFi | Reflexivity | Stillman Digital | Valour Inc | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash | 52,948,491 | 2,101 | 9,203,569 | 29,079,929 | 91,234,090 | |||||
| Client cash deposits | - | - | 5,615,054 | - | 5,615,054 | |||||
| Public investments, at fair value through profit and loss | 272,520 | - | - | - | 272,520 | |||||
| Prepaid expenses | 562,981 | 75,343 | 8,267,050 | 691,547 | 9,596,921 | |||||
| Digital assets, digital assets loaned, and digital assets staked | - | 65,040 | 14,066,946 | 501,454,945 | 515,586,931 | |||||
| Equity instruments | - | - | - | 131,982,050 | 131,982,050 | |||||
| Right-of-use assets | - | - | - | 2,999,253 | 2,999,253 | |||||
| Investment in associate | 2,423,934 | - | - | - | 2,423,934 | |||||
| Other non-current assets | 28,172,752 | - | - | 36,680,278 | 64,853,030 | |||||
| Total assets | 84,380,678 | 142,484 | 37,152,619 | 702,888,002 | 824,563,783 | |||||
| Accounts payable and accrued liabilities | 2,151,846 | 49,421 | 5,458,569 | 1,610,274 | 9,270,110 | |||||
| Loans payable | - | - | - | 2,611,009 | 2,611,009 | |||||
| Trading liabilities | - | - | 24,122,640 | - | 24,122,640 | |||||
| Warrant liability | 13,599,316 | - | - | - | 13,599,316 | |||||
| Lease liability | - | - | - | 3,102,188 | 3,102,188 | |||||
| ETP holders payable | - | - | - | 622,304,667 | 622,304,667 | |||||
| Total liabilities | 15,751,162 | 49,421 | 29,581,209 | 629,628,138 | 675,009,930 | |||||
| December 31, 2024 | DeFi | Reflexivity | Stillman Digital | Valour Inc | Total | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Cash | 1,771,331 | 151,150 | 1,155,607 | 12,853,437 | 15,931,525 | |||||
| Client cash deposits | - | - | 10,665,147 | - | 10,665,147 | |||||
| Prepaid expenses | 547,856 | 72,017 | 701,222 | 476,629 | 1,797,724 | |||||
| Public investments, at fair value through profit and loss | 778,085 | - | - | - | 778,085 | |||||
| Digital assets, digital assets loaned, and digital assets staked | 530,601 | 158,649 | 5,718,748 | 549,430,902 | 555,838,900 | |||||
| Equity instruments | - | - | - | 257,425,063 | 257,425,063 | |||||
| Property, plant and equipment | - | - | - | 103 | 103 | |||||
| Other non-current assets | 36,054,408 | - | - | 40,100,722 | 76,155,130 | |||||
| Total assets | 39,682,281 | 381,816 | 18,240,724 | 860,286,856 | 918,591,677 | |||||
| Accounts payable and accrued liabilities | 2,336,456 | 194,014 | 577,997 | 373,997 | 3,482,464 | |||||
| Loans payable | - | - | - | 9,693,294 | 9,693,294 | |||||
| Trading liabilities | - | - | 15,109,375 | - | 15,109,375 | |||||
| ETP holders payable | - | - | - | 871,162,347 | 871,162,347 | |||||
| Total liabilities | 2,336,456 | 194,014 | 15,687,372 | 881,229,638 | 899,447,480 |
64
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 28. | Operating segments (continued) |
|---|
Information about the Company’s revenues and expenses by segment is detailed below:
| Year ended December 31, 2025 | DeFi | Reflexivity | Stillman Digital | Neuronomics | Valour Inc. | Total | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Staking and lending income | - | 114 | - | - | 13,072,027 | 13,072,141 | ||||||||||||
| Trading commissions | - | - | 9,579,010 | - | - | 9,579,010 | ||||||||||||
| Management fees | - | - | - | 123,706 | 9,573,286 | 9,696,992 | ||||||||||||
| Research revenue | - | 533,000 | - | - | - | 533,000 | ||||||||||||
| Advisory revenue | 287,558 | - | - | - | - | 287,558 | ||||||||||||
| Revenues excluding realized and net change in unrealized gains (losses) | 287,558 | 533,114 | 9,579,010 | 123,706 | 22,645,313 | 33,168,701 | ||||||||||||
| Realized and net change in unrealized (losses) gains on digital assets | (688,965 | ) | (33,658 | ) | 258,220 | - | (233,525,090 | ) | (233,989,493 | ) | ||||||||
| Realized and net change in unrealized loss on equity investments | - | - | - | - | (51,007,843 | ) | (51,007,843 | ) | ||||||||||
| Realized and net change in unrealized gains on ETP payables | - | - | - | - | 350,965,104 | 350,965,104 | ||||||||||||
| Revenues from realized and net change in unrealized (losses) gains | (688,965 | ) | (33,658 | ) | 258,220 | - | 66,432,171 | 65,967,768 | ||||||||||
| Total revenues | (401,407 | ) | 499,456 | 9,837,230 | 123,706 | 89,077,484 | 99,136,469 | |||||||||||
| Expenses | ||||||||||||||||||
| Operating, general and administration | 14,902,029 | 585,836 | 8,714,090 | 210,211 | 9,806,967 | 34,219,133 | ||||||||||||
| Share based payments | 13,210,103 | - | - | - | 13,210,103 | |||||||||||||
| Depreciation - property, plant and equipment | - | - | 1,563 | - | 103 | 1,666 | ||||||||||||
| Amortization - right-of-use asset | - | - | - | - | 207,328 | 207,328 | ||||||||||||
| Amortization - intangibles | 1,286,479 | - | 5,291 | 39,811 | - | 1,331,581 | ||||||||||||
| Fees and commissions | 19,707 | - | 938,361 | - | 5,242,613 | 6,200,681 | ||||||||||||
| Foreign exchange (gain) loss | (291,840 | ) | - | (1,109 | ) | 5,911 | (2,271,481 | ) | (2,558,519 | ) | ||||||||
| Total operating expenses | 29,126,478 | 585,836 | 9,658,196 | 255,933 | 12,985,530 | 52,611,973 | ||||||||||||
| Operating<br> (loss) income | (29,527,885 | ) | (86,380 | ) | 179,034 | (132,227 | ) | 76,091,954 | 46,524,496 | |||||||||
| Realized (loss) on investments, net | (482,026 | ) | - | (55,320 | ) | - | 118,253 | (419,093 | ) | |||||||||
| Unrealized (loss) on investments, net | (16,501,202 | ) | - | - | - | - | (16,501,202 | ) | ||||||||||
| Interest income | 504,084 | - | 2,023 | 33,278 | 3,237 | 542,622 | ||||||||||||
| Finance costs | (935 | ) | - | (1,401 | ) | (582 | ) | 776,162 | 773,244 | |||||||||
| Financing expense | (4,677,123 | ) | - | - | - | - | (4,677,123 | ) | ||||||||||
| Gain on deconsolidation | - | - | - | 583,966 | - | 583,966 | ||||||||||||
| Loss on investment in associate | (75,506 | ) | - | - | - | - | (75,506 | ) | ||||||||||
| Change in fair value of warrant liabilities | 39,595,879 | - | - | - | - | 39,595,879 | ||||||||||||
| Bad debt expense | (478,240 | ) | - | - | - | (248,000 | ) | (726,240 | ) | |||||||||
| Impairment loss | - | (2,077,585 | ) | - | - | - | (2,077,585 | ) | ||||||||||
| Total other income (expenses) | 17,884,931 | (2,077,585 | ) | (54,698 | ) | 616,662 | 649,652 | 17,018,962 | ||||||||||
| Net (loss) income for the year before taxes | (11,642,954 | ) | (2,163,965 | ) | 124,336 | 484,435 | 76,741,606 | 63,543,458 | ||||||||||
| Current taxes | 403,546 | (1,972 | ) | 732,823 | 779 | 2,555 | 1,137,731 | |||||||||||
| Net (loss) income after tax | (12,046,500 | ) | (2,161,993 | ) | (608,487 | ) | 483,656 | 76,739,051 | 62,405,727 | |||||||||
| Other comprehensive income (loss) | ||||||||||||||||||
| Foreign currency translation (loss) gain | - | - | - | - | 294,045 | 294,045 | ||||||||||||
| Net (loss)<br> income and comprehensive (loss) income for the period | (12,046,500 | ) | (2,161,993 | ) | (608,487 | ) | 483,656 | 77,033,096 | 62,699,772 |
65
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 28. | Operating segments (continued) |
|---|
| For the year ended December 31, 2024 | DeFi | Reflexivity | Stillman Digital | Valour Inc. | Total | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Staking and lending income | - | - | - | 13,014,797 | 13,014,797 | ||||||||||
| Management fees | - | - | - | 6,443,983 | 6,443,983 | ||||||||||
| Trading commissions | - | - | 2,106,286 | - | 2,106,286 | ||||||||||
| Research revenue | - | 1,433,378 | - | - | 1,433,378 | ||||||||||
| Revenues excluding realized and net change in unrealized gains (losses) | - | 1,433,378 | 2,106,286 | 19,458,780 | 22,998,444 | ||||||||||
| Realized and net change in unrealized gains and (losses) on digital assets | 165,358 | 54,158 | - | 251,820,857 | 252,040,373 | ||||||||||
| Unrealized gain on equity investments | - | - | - | 108,915,688 | 108,915,688 | ||||||||||
| Realized and net change in unrealized gains and (losses) on ETP payables | - | - | - | (352,528,754 | ) | (352,528,754 | ) | ||||||||
| Revenues from realized and net change in unrealized gains (losses) | 165,358 | 54,158 | - | 8,207,791 | 8,427,307 | ||||||||||
| Total revenues | 165,358 | 1,487,536 | 2,106,286 | 27,666,571 | 31,425,751 | ||||||||||
| Expenses | |||||||||||||||
| Operating, general and administration | 8,486,775 | 1,216,107 | 1,154,579 | 25,878,204 | 36,735,665 | ||||||||||
| Share based payments | 12,924,154 | - | - | 6,325,531 | 19,249,685 | ||||||||||
| Depreciation - property, plant and equipment | 4,168 | - | - | 1,822 | 5,990 | ||||||||||
| Amortization - intangibles | 1,543,995 | - | - | - | 1,543,995 | ||||||||||
| Fees and commissions | 32,753 | - | 251,319 | 3,823,030 | 4,107,102 | ||||||||||
| Foreign exchange (gain) loss | 91,484 | - | (348,048 | ) | (64,758 | ) | (321,322 | ) | |||||||
| Total operating expenses | 23,083,329 | 1,216,107 | 1,057,850 | 35,963,829 | 61,321,115 | ||||||||||
| Operating income (loss) | (22,917,971 | ) | 271,429 | 1,048,436 | (8,297,258 | ) | (29,895,364 | ) | |||||||
| Realized (loss) on investments, net | - | - | - | 112,984 | 112,984 | ||||||||||
| Unrealized (loss) on investments, net | 3,553,228 | - | - | 4,355,603 | 7,908,831 | ||||||||||
| Interest income | 3,926 | - | 611 | - | 4,537 | ||||||||||
| Finance costs | - | - | 953 | (2,825,045 | ) | (2,824,092 | ) | ||||||||
| Provision on accounts receivable | 93,814 | - | (310,449 | ) | - | (216,635 | ) | ||||||||
| Impairment loss | (3,622,456 | ) | - | - | - | (3,622,456 | ) | ||||||||
| Total other income (expenses) | 28,512 | - | (308,885 | ) | 1,643,542 | 1,363,169 | |||||||||
| Net income (loss) for the period | (22,889,459 | ) | 271,429 | 739,551 | (6,653,716 | ) | (28,532,195 | ) | |||||||
| Other comprehensive income (loss) | |||||||||||||||
| Foreign currency translation (loss) gain | 10,602 | (21,587 | ) | 336,058 | 590,261 | 915,334 | |||||||||
| Net (loss) income and comprehensive (loss) income for the period | (22,878,857 | ) | 249,842 | 1,075,609 | (6,063,455 | ) | (27,616,861 | ) |
DeFi Alpha is a division within Valour Inc. looking for arbitrage trading opportunities. It does not have its own statement of financial position but leverages Valour Inc’s equity for its trades. The CODM only reviews DeFi Alpha’s trading operating results as part of its consolidated review of Valour and hence it has not been presented separately in the table above. The comparative period has been restated to align with the current period presentation.
66
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 29. | Earning per share |
|---|
The following table presents the calculation of basic and fully diluted earnings per common share for the years ended December 31, 2025 and 2024:
| Year ended December 31, | |||||
|---|---|---|---|---|---|
| 2025 | 2024 | ||||
| Numerator: | |||||
| Net income (loss) after taxes | $ | 62,405,727 | $ | (28,532,195 | ) |
| Denominator:<br> <br>Weighted average number of common shares - basic | $ | 344,919,433 | $ | 295,591,423 | |
| Weighted average effect of dilutive warrants* | $ | 18,845,738 | $ | - | |
| Weighted average effect of dilutive options* | $ | 10,080,939 | $ | - | |
| Weighted average effect of dilutive DSUs* | $ | 3,562,188 | $ | - | |
| Weighted average effect of dilutive RSUs* | $ | 124,375 | $ | - | |
| Weighted average number of common shares - diluted | $ | 377,532,673 | $ | 295,591,423 | |
| Basic earnings (loss) per share | $ | 0.18 | $ | (0.10 | ) |
| Diluted earnings (loss) per share | $ | 0.17 | $ | (0.10 | ) |
| * | Maximum dilution if all warrants, options and DSUs were exercised would be 55,862,159 | ||||
| --- | --- |
| 30. | Taxation |
|---|
| a) | Provision for Income Taxes |
|---|
The reconciliation of the combined Canadian Federal and Provincial statutory income tax rate of 26.5% (2024: 26.5%) to the effective tax rate is as follows:
| 2025 | 2024 | |||
|---|---|---|---|---|
| (Loss) before income taxes | ) | |||
| Expected income tax recovery based on statutory rate | ) | |||
| Adjustment to expected income tax recovery: | ||||
| Change in foreign exchange rates | ||||
| Permanent differences and other | ) | |||
| Provision to return adjustment | ) | ) | ||
| Share based compensation | ||||
| Other | ||||
| Change in unrecorded deferred tax asset | ) | |||
| Current tax provision (recovery) | ||||
| Deferred income tax provision (recovery) |
All values are in US Dollars.
The Company expensed $1,137,731 of taxes paid related to prior periods in the year ended December 31, 2025.
67
DeFiTechnologies Inc.
Notesto the consolidated financial statements
For theyears ended December 31, 2025 and 2024
(Expressedin U.S. dollars unless otherwise noted)
| 30. | Taxation (continued) |
|---|---|
| b) | Deferred Income Tax (continued) |
| --- | --- |
Deferred taxes are a result of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities.
| 2025 | 2024 | |
|---|---|---|
| Non-capital loss carry-forwards | ||
| Undepreciated capital cost (UCC) | ||
| Reserves | ||
| Share issue costs | ||
| Exploration and evaluation assets | ||
| Investments | ||
| Intangible assets | ||
| Capital losses carried forward | ||
| Total |
All values are in US Dollars.
The
Company has approximately $52,378,000 of non-capital loss carry forwards in Canada which may be used to reduce the taxable income of future years. These losses expire from 2026 to 2045.
| 31. | Reclassification of Comparative Amounts |
|---|
Certain amounts have been reclassified in the Condensed Consolidated Interim Statement of Operations and Comprehensive Income /(Loss) in previous periods to conform to the current period presentation. Only reclassifications have been made with no changes in accounting policies or revision of previously reported amounts. There is no change to the previously reported net income (loss).
68
Exhibit 99.3
MANAGEMENT’S DISCUSSION AND ANALYSIS
Year ended December 31, 2025
Background
This Management’s Discussion and Analysis (“MD&A”) has been prepared based on information available to DeFi Technologies Inc. (“we”, “our”, “us”, “DeFi” or the “Company”) containing information through April 2, 2026, unless otherwise noted.
The MD&A provides a detailed analysis of the Company’s operations and compares its financial results for the year ended December 31, 2025 and 2024. The December 31, 2025 annual consolidated financial statements and related notes of DeFi have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”). Please refer to the notes of the December 31, 2025 annual audited consolidated financial statements for disclosure of the Company’s significant accounting policies. Commencing with the Company’s June 30, 2025 quarter-end, the Company’s presentation currency is the U.S. dollar. Unless otherwise noted, all references to currency in this MD&A refer to U.S. dollars.
Additional information, including our Annual Information Form, have been filed electronically through “SEDAR+ and is available online under the Company’s SEDAR profile at www.sedarplus.ca.
CautionaryStatement Regarding Forward Looking Information
This MD&A contains “forward-looking information” within the meaning of that term under Canadian securities laws. This information relates to future events or future performance and reflects the Company’s expectations and assumptions regarding such future events and performance. Forward-looking information can be identified by the use of words such as, but not limited to, “plans”, “expects”, “project”, “predict”, “potential”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.
In particular, all statements, other than statements of historical facts, included in this MD&A that address activities, events or developments that management of the Company expects or anticipates will or may occur in the future contain forward-looking information, including but not limited to, statements with respect to:
| ● | financial, operational and other projections and outlooks as well as statements or information concerning<br>future operation plans, objectives, performance, revenues, growth, acquisition strategies, profits or operating expenses of the Company<br>and its subsidiaries; |
|---|---|
| ● | details and expectations regarding the Company’s investments in the decentralized finance (“DeFi”)<br>industry and the Company’s Equity Investments in Digital Assets (as defined herein); |
| --- | --- |
| ● | expectations regarding revenue growth due to changes in the Company’s business strategy; |
| --- | --- |
| ● | expansion and growth of the Company’s Asset Management, Ventures and Infrastructure business lines; |
| --- | --- |
| ● | development of ETPs and partnerships and joint ventures with other companies; |
| --- | --- |
| ● | growth of assets under management (“AUM”); |
| --- | --- |
| ● | listing of ETPs; |
| --- | --- |
| ● | identifying and capitalizing on low-risk arbitrage opportunities within the digital asset market; |
| --- | --- |
| ● | digital asset staking, lending or trading transactions; |
| --- | --- |
| ● | the Company becoming more active in the stablecoin market in the future; |
| --- | --- |
| ● | the continued listing of the Company’s common shares on Nasdaq; |
| --- | --- |
| ● | DeFi Advisory and the development of digital asset treasury companies; |
| --- | --- |
| ● | anticipated lending and staking income and management fees charged on ETPs; |
| --- | --- |
| ● | hedging activities; |
| --- | --- |
| ● | the Company receiving the outstanding balance of BTC owed to it by<br>Genesis; |
| --- | --- |
| ● | investment performance of ETPs, DeFi protocols and digital assets underlying ETPs and portfolio companies<br>that the Company has invested in; |
| --- | --- |
| ● | additional locations and distribution channels coming online in 2026, and the Company being able to expand<br>presence across Europe and Latin America, and bringing new regions, such as Africa and the Middle East, into the platform; |
| --- | --- |
| ● | the Company’s global expansion positioning the Company for long-term growth, leveraging strategic<br>partnerships, market-first advantages, and increasing investor demand to strengthen its market leadership; |
| --- | --- |
| ● | future development of laws and regulations governing the DeFi industry, in particular in the United States; |
| --- | --- |
| ● | requirements for additional capital and future financing options; |
| --- | --- |
| ● | publishing and marketing plans; |
| --- | --- |
| ● | the availability of attractive investments that align with the Company’s investment strategy; |
| --- | --- |
| ● | future outbreaks of infectious diseases; |
| --- | --- |
| ● | the impact of climate change; |
| --- | --- |
| ● | the Company’s ability to maintain compliance with the<br>minimum required closing bid price for continued listing on the Nasdaq Capital Market; and |
| --- | --- |
| ● | other expectations of the Company. |
| --- | --- |
2
Forward-looking information and statements above involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Important factors that could cause actual results to differ materially from the Company’s expectations are described in the Company’s documents filed from time to time with the applicable regulatory authorities and such factors include, but are not limited to, risks related to the staking and lending of cryptocurrencies, DeFi protocol tokens, or other digital assets; risks relating to momentum pricing and volatility of cryptocurrencies, DeFi protocol tokens, and other digital assets; cybersecurity threats, security breaches and hacks; the relative novelty of cryptocurrency exchanges and other trading venues; regulatory risks; hedging risk; the U.S. classification of crypto assets and the Investment Company Act of 1940; the issuance of crypto ETPs in the EU and non-EU countries; risk related the Company’s Ventures portfolio exposure; risks associated with the lending and staking of digital assets, risks related to the Company’s internal arbitrage and trading business, risks associated with banks cutting off services to businesses that provide cryptocurrency related services; the impact of geopolitical events; the further development and acceptance of digital and DeFi networks; trade errors; dependence on investment manager, discretion as to distributions and timing of withdrawals, discretion as to form of payment, risks and uncertainties associated with custodians of digital assets; conditions on equity investments in digital assets; development and acceptance of the digital asset network, digital asset audit risk, risk of total loss of equity investment in digital assets, risk of loss, theft or destruction of cryptocurrencies; risks associated with the irrevocability of transactions; risks associated with the potential failure to maintain the cryptocurrency networks; risks associated with the potential manipulation of blockchain; risks that miners may cease operations; risks related to insurance; risks related to the concentration of investments; risks related to competition; risk related to investments in private issuers and illiquid securities; risks related to cash flow, revenue and liquidity; risk management, risks related to the Company’s dependence on management personnel; risks related to macro-economic conditions; risks related to the availability or opportunities and competition for investments; risks related the share prices of investments; risks related to additional financing requirements; risks related to the return on investments; failure to develop and execute successful investment or trading strategies, risks related to the management of the Company’s growth; social, political, environmental, and economic risks in the countries in which the Company’s investment interests are located; risks related to hostilities, geo-political events and wars, risks related to the due diligence process undertaken by the Company in connection with investment opportunities; risks related to exchange-rate fluctuations; risks related to non-controlling interests; risks related to changes in legislation and regulations; risks related to the fact the Company is likely a passive foreign investment company for U.S. federal income tax purposes; risks associated with the Company’s limited operating history and no history of operating revenue and cash flow; risks associated with the Company having limited cash flow and funds in reserve which may not be sufficient to fund its ongoing activities at all times; risks associated with material weakness in the Company’s financial statements, risk related to the restatement of the Company’s historical financial statements, lack of comprehensive accounting guidance for digital assets under IFRS accounting standards; risks associated with conflicts of interest; litigation risk, risks associated with the volatility of the Company’s common shares market price and the Company’s ability to maintain compliance with the minimum required closing bid price for continued listing on the Nasdaq Capital Market, risks associated with share imbalances, risks associated the future dilution of shareholders’ interest in the Company; and risks associated with the Company’s history of never paying dividends; and other risks described herein including under the heading “Risks and Uncertainties”.
When relying on forward-looking information to make decisions, readers should ensure that the preceding information, the risks and uncertainties described in “Risks and Uncertainties” and the other contents of this MD&A are all carefully considered. The forward-looking information contained herein is current as of the date of this MD&A, and, except as may be required by applicable law, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking information contained herein to reflect any change in expectations, estimates and projections with regard thereto or any changes in events, conditions or circumstances on which any information is based. Readers should not place undue importance on such forward-looking information and should not rely upon this information as of any other date. In addition to the disclosure contained herein, for more information concerning the Company’s various risks and uncertainties, please refer to the Company’s public filings available under its profile on SEDAR+ at www.sedarplus.ca and at www.cboe.ca.
With regard to all information included herein relating to companies in the Company’s Venture portfolio, the Company has relied on information provided by the investee companies and on publicly available information disclosed by the respective companies.
3
Overviewof the Company
The Company is a publicly listed issuer on the CBOE Canada stock exchange trading under the symbol “DEFI” and the Nasdaq stock market in the United States under the symbol “DEFT”. The Company is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance. The Company’s mission is to expand investor access to industry-leading decentralized technologies which it believes lie at the heart of the future of finance. On behalf of its shareholders and investors, it identifies opportunities and areas of innovation and builds and invests in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. The Company does so through six distinct business lines: Asset Management, DeFi Alpha, Stillman Digital, DeFi Ventures, Reflexivity Research LLC and DeFi Advisory.
The Company’s condensed consolidated interim financial statements have been prepared in accordance with IFRS applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying condensed consolidated interim financial statements.
InvestmentPillars
DeFi operated through six core pillars during 2025:
Asset Management
The Company through its wholly-owned subsidiary Valour Inc. (“Valour”), and Valour Digital Securities Limited (“VDSL” and together with Valour Cayman, “Valour”) is developing Exchange Traded Products (“ETPs”) that synthetically track the value of a single DeFi protocol or a basket of protocols. ETPs simplify the ability for retail and institutional investors to gain exposure to DeFi protocols or basket of protocols as it removes the need to manage a self-custodial wallet, two-factor authentication, various logins, and other intricacies that are linked to managing a decentralized finance protocol portfolio.
The Company does not simply list ETP products and collect a management fee. The Company has monetized the entire issuance stack end to end:
| ● | Market making and liquidity provisioning |
|---|---|
| ● | Staking and yield generation on underlying assets |
| --- | --- |
DeFi Alpha
DeFi Alpha is a specialized trading desk within DeFi Technologies focused on opportunistic trading and arbitrage across the digital asset ecosystem. The desk seeks to generate returns by identifying attractive market dislocations and pricing inefficiencies, with opportunities sourced through deep market experience and strong counterparty relationships.
Its activities span both centralized and decentralized markets, with a focus on disciplined execution, prudent risk management, and capitalizing on opportunities as they arise.
4
Stillman Digital
Stillman Digital is a digital asset trading firm that provides OTC trading, liquidity solutions, and market-making services to institutional counterparties across global cryptocurrency markets.
DeFi Ventures
The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets.
Reflexivity Research LLC
Research Reflexivity LLC specializes in producing cutting-edge research reports for the cryptocurrency industry. Reflexivity has also focused on creating a large third-party distribution channel for its research, which has been accomplished by partnering with platforms such as CoinMarketCap, Beluga Inc, and others.
DeFi Advisory
DeFi Advisory positions the Company to further capitalize on the proliferation of public digital asset treasury companies being formed across global markets. With proven in-house infrastructure in ETPs, trading, custody, and research, DeFi Technologies is uniquely equipped to support these companies in navigating go-public transactions, producing research, managing digital asset portfolios, and executing institutional-grade trades, all under one roof.
Given the revenues generated during 2025 (with challenging growth prospects) by DeFi Advisory ($287,558) and Reflexivity Research ($533,000), the Company will discontinue separately reporting on these investment pillars commencing in Q1 2026. The minor revenues generated by these activities going forward will be included in an “other revenue” line as part of the main asset management business.
5
Highlights For The Year endedDecember 31, 2025:
Readers should refer to the Company’s Quarterly MD&A’s for a summary of all developments during 2025. The list below represents the most significant items during 2025.
New Product Launches
By December 31, 2025, Valour reached 102 listed ETPs and built a more diversified regulated digital asset shelf globally.
The Company’s growth to more than 100 listed ETPs is not just a product milestone. It reflects a simple strategic goal: to give investors optionality and the choice to allocate to the world’s top digital assets in a regulated, exchange-traded format, using the same brokerage and custody rails they already trust.
These are not only spot Bitcoin and Ether products. Our lineup spans many of the most important networks and themes shaping digital assets, giving investors exposure across the sector without wallets, private keys, and unregulated venues. The Company now offers the most diverse regulated digital asset ETP lineups globally, and that breadth is a durable competitive advantage.
Investors can review the full list of the Company’s ETP products on its website at www.valour.com.
Valour’s Top ETPs by AUM
Valour’s AUM on December 31, 2025 was $622.3 million. Average AUM for 2025 increased to $809.9 million from $645.3 million 2024. Valour monetizes its AUM primarily through trading, staking, management fees, and trade-flow arbitrage. In addition to management fees, Valour retains staking yields as revenue, capturing value directly from the digital assets held in its ETPs. This vertically integrated model enables recurring, protocol-driven revenue as AUM grows. As of December 31, 2025, Valour’s ETPs with the highest AUM were:
| ● | VALOUR BTC: $226,518,547 |
|---|---|
| ● | VALOUR SOL: $176,086,342 |
| --- | --- |
| ● | VALOUR ETH: $61,907,800 |
| --- | --- |
| ● | VALOUR XRP: $38,395,788 |
| --- | --- |
| ● | VALOUR SUI: $25,850,564 |
| --- | --- |
| ● | VALOUR ADA: $24,221,997 |
| --- | --- |
6
A chart showing the development of the Company’s AUM is below:
Valour’s Global Expansion and Strategic MarketDevelopment
In 2025, we grew globally with meaningful progress across key markets and listings. We advanced our footprint through:
| ● | London Stock Exchange |
|---|---|
| ● | SIX Swiss Exchange |
| --- | --- |
| ● | B3 – Brazil Stock Exchange, including listings that established<br>a strategic beachhead in LATAM |
| --- | --- |
Brazil matters because it is not just another listing. It is proof that we can bring our platform into new regulatory environments, connect to local market infrastructure, and build distribution pathways beyond our historical base.
Looking forward, the Company expects additional locations and distribution channels to come online in 2026, with particular focus on expanding our presence across Europe and Latin America, and bringing new regions into the platform such as Africa and the Middle East.
DeFi Technologies Announces Closing of US$100 Million RegisteredDirect Offering
DeFi Technologies announced the closing of a US$100 million registered direct offering led by cornerstone investor Galaxy Digital. Investors purchased 45,662,101 common shares and warrants to buy up to 34,246,577 additional shares at a combined price of US$2.19 per share and three-quarters of a warrant. Each whole warrant is exercisable immediately at US$2.63 and has a three-year term with an acceleration feature. The Company plans to use net proceeds to expand Valour’s ETP lineup, pursue digital-asset trading, lending and staking transactions, fund potential acquisitions, and advance recently announced growth initiatives.
7
Normal Course Issuer Bid (NCIB)
During the year ended December 31, 2025, the Company repurchased 1,235,900 shares for $2,769,629 representing an average purchase price of $2.24. All shares repurchased were cancelled. The Company’s current NCIB program allows for the purchase of up to 31,673,791 shares and runs until August 26, 2026 (or earlier if completed).
DeFi Technologies Announces StrategicInvestment and Partnership with Canada’s Stablecorp, Backer of QCAD Canadian-Dollar Stablecoin
DeFi Technologies invested in and partnered with Stablecorp Inc. (“Stablecorp”) to help scale their QCAD product alongside Coinbase Ventures, Circle Ventures, Side Door Ventures, and other industry leaders. With RPAA oversight of payment service providers taking effect on September 8, 2025, and growing attention from the Bank of Canada and FCAC as retail CBDC work remains paused, compliant CAD stablecoins are positioned for payments, cross-border trade, payroll, and treasury use. Execution includes launching QCAD-integrated products through Valour and naming Stillman Digital as a preferred liquidity provider for on/off-ramps and mint/redeem flows, subject to certain conditions.
DeFi Technologies Invests in Continental Stablecoin Inc.,Backers of cNGN, to Accelerate Regulated Stablecoin Adoption Across Africa
DeFi Technologies announced it invested in Continental Stablecoin Inc. (“Continental Stablecoin”), alongside Coinbase Ventures, Adaverse, and other industry leaders, to advance regulated local currency stablecoins across Africa with an initial focus on Nigeria’s cNGN. cNGN, issued by Wrapped CBDC Limited, had ~602.9 million tokens in circulation as of September 15, 2025, with more than 75,000 on-chain transactions and ~20.1 billion cNGN in cumulative volume. The investment was intended to align with DeFi Technologies’ strategy to support compliant, bank- and fintech-ready digital-asset infrastructure, complement the Company’s broader platform spanning liquidity provision for the cNGN stablecoin via Stillman Digital, and create cNGN related Valour ETPs in Europe.
Nasdaq Listing
On May 12, 2025, the Company announced that its common shares started trading on the Nasdaq Capital Market under the symbol “DEFT”. Upon commencement of trading on Nasdaq, the Company’s common shares ceased to be quoted on the OTC Markets. DeFi Technologies continues to trade on the CBOE Canada exchange (CBOE: “DEFI”) and the Börse Frankfurt exchange (GR: R9B)
SUBSQUENT EVENTS
Possible Filing Delay
On March 23, 2026, the Company announced it may experience a delay in filings its annual financial statements, management’s discussion and analysis, and related CEO and CFO certifications for the year ended December 31, 2025 (the “Annual Filings”) relating solely to the possible timing of receipt of a SOC 2 Type 2 report from a material third-party counterparty that is relevant to the Company’s audit procedures. The Company also announced that, in connection with the potential delay and default in the completion of the Annual Filings, the Company has made an application to the Ontario Securities Commission (the “OSC”) as principal regulator, to approve a temporary management cease trade order (the “MCTO”) under National Policy 12-203 – Management Cease Trade Orders (“NP 12-203”).
8
Outlook
DeFi continues to cement its leadership in regulated digital asset ETPs, with 102 listed ETPs. The Company remains focused on expanding investor access to secure, transparent, and compliant digital asset exposure.
DeFi Technologies also reiterated its focus on accelerating growth through product innovation and geographic expansion. In 2025, DeFi Technologies, through Valour, advanced distribution across regulated venues, including the London Stock Exchange and SIX Swiss Exchange, and established a strategic beachhead in Brazil through B3.
DeFi Technologies aims to be the global leading provider of asset management services and investment products worldwide with a scalable, vertically integrated platform of investment vehicles and capital markets infrastructure aimed at disrupting traditional, over-regulated, and inefficient markets for investments, primary, and secondary markets. The legacy system is captured by obsolete infrastructure, bloated with inefficient and expensive middlemen who impose misguided regulation, affecting investors and entrepreneurs alike.
The Company is building in both centralized and decentralized finance, positioning ourselves for the convergence of these paradigms over time which will provide a better path for payments, storage of value, and frictionless capital markets.
The Company plans to announce a series of internally incubated innovations across these fields, lowering costs, increasing value added and scalability, enabling unparalleled customer value.
The Company is advancing second-generation products designed to be more institutionally compatible and suited to larger pools of capital. This next phase includes but is not limited to UCITS type fund structures (the EU’s Undertaking for the Collective Investment in Transferable Securities), actively managed certificates and exchange traded notes, fund of funds structures, and additional institutionally focused vehicles, which are intended to broaden distribution, expand addressable liquidity, and increase the durability of AUM.
The Company’s global expansion positions the Company for long-term growth, leveraging strategic partnerships, market-first advantages, and increasing investor demand to strengthen its market leadership.
The Company also constantly evaluates adjacent businesses that can add non-AUM driven revenues that perform well in both crypto bull and bear market cycles. The Company’s acquisition of Stillman Digital in October 2024 is an example of such a business. In terms of new initiatives, the Company expects to become more active in the stablecoin market going forward as demonstrated by its venture investments in Stablecorp and Continental Stablecoin.
9
Digital Assets, Digital assetsloaned and Digital assets Staked
As at December 31, 2025, the Company’s digital assets consisted of the below digital currencies, with a fair value of $515,586,931 (December 31, 2024 - $ 555,838,900). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase, Bitstamp, Bybit OKX, Vinter, Compass and Gate.IO and other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Volmex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.
| December 31, 2025 | December 31, 2024 | |
|---|---|---|
| Current digital assets | ||
| Digital assets **** | ||
| Digital assets loaned **** | ||
| Digital assets staked **** | ||
| Total current digital assets | ||
| Non-current digital assets | ||
| Digital assets **** | ||
| Digital assets loaned **** | ||
| Total non-current digital assets | ||
| Total digital assets |
All values are in US Dollars.
In addition to the above noted digital assets, the Company has the following equity investments at fair value through profit and loss (“FVTPL”). See Note 7 of the audited consolidated financial statements for the year ended December 31, 2025 for further details.
| December 31, 2025 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current | Long Term | Total | ||||||||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | |||||||
| Fund A - Solana (SOL) | 192,949.9577 | $ | 19,860,832 | 220,396.5353 | $ | 22,685,979 | 413,346.4930 | $ | 42,546,811 | |||
| Fund A - Avalanche (AVAX) | 503,720.0812 | $ | 5,253,822 | 232,861.4009 | $ | 2,428,755 | 736,581.4821 | $ | 7,682,577 | |||
| $ | 25,114,654 | $ | 25,114,734 | $ | 50,229,388 | |||||||
| Fund B - Solana (SOL) | 470,185.9000 | $ | 50,297,302 | 294,049.0000 | $ | 31,455,370 | 764,234.9000 | $ | 81,752,672 | |||
| $ | 50,297,302 | $ | 31,455,370 | $ | 81,752,672 | |||||||
| Total | $ | 75,411,956 | $ | 56,570,104 | $ | 131,982,060 | ||||||
| December 31, 2024 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Current | Long Term | Total | ||||||||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | |||||||
| Fund A - Solana (SOL) | 216,379.2216 | $ | 30,886,684 | 244,331.9458 | $ | 34,876,748 | 460,711.1675 | $ | 65,763,432 | |||
| Fund A - Avalanche (AVAX) | 223,905.1900 | $ | 6,020,811 | 707,540.4100 | $ | 19,025,762 | 931,445.6000 | $ | 25,046,572 | |||
| $ | 36,907,495 | $ | 53,902,510 | $ | 90,810,004 | |||||||
| Fund B - Solana (SOL) | 626,365.7000 | $ | 89,409,506 | 540,869.9000 | $ | 77,205,553 | 1,167,235.6000 | $ | 166,615,059 | |||
| Total | $ | 126,317,001 | $ | 131,108,063 | $ | 257,425,063 |
10
The Company’s holdings of digital assets consist of the following:
| December 31, 2024 | |||||
|---|---|---|---|---|---|
| Quantity | |||||
| Binance Coin (BNB) | 1,763.4867 | 2,558.9747 | |||
| Bitcoin (BTC) | 2,596.9563 | 2,705.7708 | |||
| Ethereum (ETH) | 21,329.9035 | 20,676.9254 | |||
| Cardano (ADA) | 69,150,950.0310 | 69,671,396.7593 | |||
| Polkadot (DOT) | 3,340,140.2001 | 2,766,149.1833 | |||
| Solana (SOL) | 169,185.2128 | 43,414.4191 | |||
| Uniswap (UNI) | 399,616.8814 | 421,450.3048 | |||
| C | - | ||||
| T | - | ||||
| Litecoin (LTC) | 11,073.8030 | 541.8400 | |||
| Dogecoin (DOGE) | 56,534,119.7635 | 17,545,096.4535 | |||
| Cosmos (ATOM) | 12,005.8560 | 735.9223 | |||
| Avalanche (AVAX) | 461,501.5177 | 125,979.5440 | |||
| Polygon (POL) | 304,295.6891 | 183,654.4400 | |||
| Ripple (XRP) | 21,146,529.3119 | 17,223,963.4000 | |||
| Enjin (ENJ) | 576,307.9792 | 127,360.9806 | |||
| Tron (TRX) | 663,171.3819 | 341,529.3057 | |||
| Terra Luna (LUNA) | 141,177.2041 | 205,057.0760 | |||
| Shiba Inu (SHIB) | 20,643,542,012.0300 | 142,074,547.6000 | |||
| Pyth Network (PYTH) | 4,935,058.3767 | 3,444,248.6000 | |||
| AAVE (AAVE) | 4,429.5388 | 2,333.3875 | |||
| Algorand (ALGO) | 1,380,335.0800 | 90,930.8700 | |||
| Aptos Mainnet (APT) | 517,026.2356 | 287,849.7000 | |||
| Arweave (AR) | 64,940.4200 | 14,202.0100 | |||
| Aerodome (AERO0X91) | 2,113,572.4104 | - | |||
| Arbitrum (ARB) | 1,489,777.0200 | 24.0000 | |||
| Bitcoin Cash (BCH) | 860.1464 | 25.4800 | |||
| Core (CORE) | 12,500,445.6036 | 3,995,185.7910 | |||
| Curve DAO Token (CRV) | 3,939,395.2500 | 10,295.1200 | |||
| EOS (EOS) | 1,513.8200 | 13,419.9100 | |||
| Europa Coin (C) | 605,795.2800 | - | |||
| Fetch.ai (FET) | 4,619,586.9000 | 561,613.1000 | |||
| Filecoin (FIL) | 83,678.3922 | 8,471.8100 | |||
| Sonic (FTM) | - | 1,342,653.2600 | |||
| The Graph (GRT) | 542,238.9100 | 1,620.3700 | |||
| Hedera (HBAR) | 76,729,676.9089 | 49,611,593.1918 | |||
| Internet Computer (ICP) | 1,778,949.0942 | 1,436,614.1074 | |||
| Immutable (IMX) | 274,878.9400 | 10,992.0200 | |||
| Injective (INJ) | 335,577.3200 | 56,329.4200 | |||
| Jupiter (JUP) | 3,089,314.6000 | 499,299.1000 | |||
| Kusama (KSM) | 470.3390 | 470.3400 | |||
| Lido DAO (LDO) | 513,196.1600 | 36,961.1000 | |||
| Chainlink (LINK) | 347,418.3828 | 239,057.7313 | |||
| NEAR Protocol (NEAR) | 1,701,315.2684 | 1,300,877.8800 | |||
| Optimism (OP) | 173,791.6300 | 15,436.4300 | |||
| MANTRA (OM) | 453,091.4000 | - | |||
| Pendle (PDL) | 182,478.7000 | 31,265.4000 | |||
| Quant (QNT) | 1,014.7880 | 1,086.7000 | |||
| Ripple (RL) | 50,126.0000 | - | |||
| RENDERSOL (RNDR) | 1,703,278.0201 | 162,158.1000 | |||
| THORChain (RUNE) | 269,953.8000 | 91,192.7000 | |||
| Sei Network (SEI1) | 16,419,686.8978 | 2,078,991.0000 | |||
| SKY Governance Token (SKY) | 645,038.0000 | - | |||
| Stacks (STX) | 47,106.4000 | 203,450.0000 | |||
| Sui (SUI) | 14,683,690.6345 | 10,785,375.0000 | |||
| SushiSwap (SUSHI) | 135.0000 | 39,426.6800 | |||
| Bittensor (TAO) | 22,107.9024 | 9,851.6400 | |||
| The TON Coin (TON) | 454,318.1948 | 405,657.4300 | |||
| Wormhole (W) | 4,760,219.0000 | 722,403.0000 | |||
| Tether Gold (XAUT6) | 34.4628 | - | |||
| dogwifhat (WIF) | 56,581.9600 | - | |||
| Worldcoin (WLD2) | 2,002,365.2100 | 49,314.1000 | |||
| Stellar (XLM) | 3,704,385.3200 | 140,437.4500 | |||
| Tezos (XTZ) | 14,912.2100 | 17,822.5100 | |||
| StarkNet (STRK1) | 2,990,189.0056 | - | |||
| Sonic Labs (SONICLABS) | 3,959,492.2712 | - | |||
| Akash Network (AKT) | 375,586.0011 | - | |||
| Kaspa (KAS) | 24,576,822.7965 | - | |||
| Official Trump (TRUMP) | 2,309.3700 | - | |||
| Mantle (MNT) | 259,308.9369 | - | |||
| Story (IP) | 5,951.7992 | - | |||
| Crypto.com (CRO) | 1,453,014.1410 | - | |||
| Hyperliquid (HYPE) | 32,103.2182 | - | |||
| OKB (OKB) | 276.2829 | - | |||
| IOTA (IOTA) | 1,233,469.0000 | - | |||
| Ondo (ONDO) | 1,711,993.3233 | - | |||
| Theta Token (THETA) | 100,410.4000 | - | |||
| Celestia (TIA) | 111,295.8400 | - | |||
| Flare (FLR) | 3,689,429.0635 | - | |||
| Pi Network (PI) | 126,934.2148 | - | |||
| Ethna (ENA) | 1,686,126.1900 | - | |||
| Four (FORM) | 31,111.1000 | - | |||
| Virtuals Protocol (VIRTUAL) | 1,776,320.7111 | - | |||
| VeChain (VET) | 4,978,553.8000 | - | |||
| Penut the Squirrel (PNUT) | 445,601.2200 | - | |||
| Pepe (PEPE) | 40,164,090,458.7000 | - | |||
| Zcash (ZEC) | - | - | |||
| Other Coins | 1,903,696,977.2146 | 145,501.2142 | |||
| Current | |||||
| Clover (CLV) | - | 500,000.0000 | |||
| Solana (SOL) | 196,500.0000 | - | |||
| SUI (SUI) | 8,327,991.5556 | - | |||
| Wilder World (WILD) | - | 148,810.0000 | |||
| Other Coins | 271,406,137.0826 | 130,458,836.6519 | |||
| Long-Term | |||||
| Total Digital Assets |
All values are in US Dollars.
11
The continuity of digital assets for the years ended December 31, 2025 and 2024:
| December 31,<br><br> 2025 | December 31,<br><br> 2024 | |||||
|---|---|---|---|---|---|---|
| Opening balance | $ | 555,838,900 | $ | 370,469,700 | ||
| Digital assets acquired | 273,427,760 | 401,118,676 | ||||
| Digital assets disposed | (87,878,518 | ) | (514,217,138 | ) | ||
| Digital assets earned from staking, lending and fees | 13,072,141 | 26,075,437 | ||||
| Realized gain (loss) on digital assets | 48,283,105 | 306,744,937 | ||||
| Net change in unrealized gains and losses on digital assets | (282,272,597 | ) | (34,372,022 | ) | ||
| Settlement of Genesis loan | (6,100,598 | ) | - | |||
| Digital assets transferred in from (out to) equity investments at FVTPL | 2,749,352 | - | ||||
| Foreign exchange gain (loss) / Fees / Other | (1,532,614 | ) | 19,310 | |||
| $ | 515,586,931 | $ | 555,838,900 |
Digital assets held by counterparty for the period ended December 31, 2025 and December 31, 2024 are as follows:
| December 31,<br><br> 2025 | December 31,<br><br> 2024 | |||
|---|---|---|---|---|
| Counterparty A | $ | 41,304,262 | $ | 6,918,688 |
| Counterparty C | 3,460,154 | 719,776 | ||
| Counterparty E | 1,492,892 | 7,007,055 | ||
| Counterparty F | 25,061,967 | 6,809,705 | ||
| Counterparty H | 171,980,818 | 58,438,204 | ||
| Counterparty K | 218,232,056 | 125,188,614 | ||
| Counterparty M | 4,954,135 | 3,787,814 | ||
| Other | 1,451,800 | 1,942,823 | ||
| Self custody | 47,648,847 | 345,026,221 | ||
| Total | $ | 515,586,931 | $ | 555,838,900 |
Digital Assets held by lenders
The Company and Genesis Global Capital LLC (“Genesis”) entered into that certain master loan agreement (the “MLA”). Pursuant to the MLA and the loan term sheet dated September 9, 2022 (the “Term Sheet”), Genesis loaned $6,000,000 to Valour as an open term loan (the “Loan”) pursuant to the terms and conditions of the MLA and Term Sheet. As collateral for the Loan, Valour initially posted 362 BTC with Genesis, which was later increased to 475 BTC.
On January 19, 2023, Genesis and its group of companies filed for bankruptcy protection in the U.S. pursuant to a ‘Chapter 11’ bankruptcy filing under the U.S. Bankruptcy Code and listed the Company as a creditor.
On June 26, 2024, the Court entered an order (the “Order”) granting motion for relief from stay and allowing Genesis to exercise set off rights permitting the parties to set off any Company obligations ($6,000,000 loan plus interest) with corresponding Genesis obligations (475 BTC). According to the exhibit attached to the Order, the Company owed Genesis $5,990,953.70 in principal and $109,644 in interest against collateral of 475 BTC valued at $10,018,691, resulting in a claim by the Company against Genesis in the amount of $3,909,047 or 185.3 BTC. It was then agreed that the parties could set off leaving the Company with $3. 9 million which amounted to 185.3 BTC.
By the end of 2025, the Company had already received 115.62 BTC. Since DeFi and Valour previously received a further 1.7 BTC in October 2025, the outstanding balance is 67.98 BTC. Accordingly, the Company expects to receive up to 67.98 BTC in the future.
The digital assets and loan payable were previously recorded gross on the balance sheet at $6,100,598 and $6,100,598, respectively, with the digital assets being written down to the value of the loan payable. After the approval of the motion on June 26, 2024, the Company obtained the legally enforceable right to set off the digital assets being held as collateral against the loan payable. As a result, the Company has netted the asset and liability on the statement of financial position, reducing both the Company’s digital assets and loan payable by $6,100,598, which represents the principal amount of the loan plus interest.
12
Following the court approved set-off, the remaining exposure for the Genesis loan is 68 BTC. Considering Genesis’ low credit quality due to its bankruptcy, the Company has applied a loss rate approach of 75% to calculate it’s expected credit loss on digital assets held by Genesis based on management’s best estimate. The expected credit loss of $4,478,675 on these 68 BTC has been recorded under realized and net change in unrealized (loss) gain on digital assets in the consolidated statement of income.
As of December 31, 2025, digital assets held by lenders as collateral consisted of the following:
| Number of coins<br> on loan | Fair Value | |||
|---|---|---|---|---|
| Bitcoin (BTC) | 67.9793 | $ | 1,492,892 | |
| Total | 67.9793 | $ | 1,492,892 |
As of December 31, 2024, digital assets held by lenders as collateral consisted of the following:
| Number of coins<br> on loan | Fair Value | |||
|---|---|---|---|---|
| Bitcoin (BTC) | 365.4480 | 7,007,055 | ||
| Total | 365.4480 | 7,007,055 |
As at December 31, 2024, the 365.4480 Bitcoin held by Genesis as collateral against a loan has been written down to $7,007,055, the fair value of the loan and interest held with Genesis.
In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.
Digital Assets loaned
As of December 31, 2025, the Company loaned select digital assets to borrowers at annual rates ranging from approximately 1.98% to 12.00% and accrued interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.
As of December 31, 2024, the Company has loaned select digital assets to borrowers at annual rates ranging from approximately 3.25% to 5.5% and accrued interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.
As of December 31, 2025, digital assets on loan consisted of the following:
| Number of coins<br> on loan | Fair Value | Fair Value Share | |||||
|---|---|---|---|---|---|---|---|
| Bitcoin (BTC) | 420.0000 | 36,894,425 | 31 | % | |||
| Ethereum (ETH) | 8,000.0000 | 23,879,570 | 20 | % | |||
| Solana (SOL) | 326,500.0000 | 40,661,634 | 34 | % | |||
| SUI (SUI) | 18,737,981.0000 | 18,652,141 | 16 | % | |||
| Total | 19,072,901.0000 | 120,087,770 | 100 | % |
As of December 31, 2024, digital assets on loan consisted of the following:
| Number of coins<br> on loan | Fair Value | |||
|---|---|---|---|---|
| Current | ||||
| Bitcoin (BTC) | 120.0000 | 11,379,938 | ||
| Ethereum (ETH) | 8,000.0000 | 27,238,820 | ||
| Total current digital assets on loan | 8,120.0000 | 38,618,758 | ||
| Total | 8,120.0000 | 38,618,758 |
13
The digital assets loaned are classified as follows:
| Number of coins<br> on loan | Fair Value | |||
|---|---|---|---|---|
| Current | ||||
| Bitcoin (BTC) **** | 420.0000 | 36,894,425 | ||
| Ethereum (ETH) **** | 8,000.0000 | 23,879,570 | ||
| Solana (SOL) **** | 130,000.0000 | 16,189,931 | ||
| SUI (SUI) | 10,409,989.4444 | 10,362,301 | ||
| Total current digital assets on loan **** | 10,548,409.4444 | 87,326,227 | ||
| Long-Term | ||||
| Solana (SOL) | 196,500.0000 | 24,471,703 | ||
| SUI (SUI) | 8,327,991.5556 | 8,289,840 | ||
| Total long-term digital assets on loan | 8,524,491.5556 | 32,761,543 | ||
| Total | 19,072,901.0000 | 120,087,770 |
As of December 31, 2025, the digital assets on loan by significant borrowing counterparty is as follow:
| Interest rates | Number of coins<br> on loan | Fair Value | Geography | Fair Value Share | |||||
|---|---|---|---|---|---|---|---|---|---|
| Counterparty A | 12% | 326,500.0000 | 40,661,634 | Grand Cayman | 34 | % | |||
| Counterparty F | 1.94% - 4.75% | 18,739,981.0000 | 24,622,033 | UAE | 21 | % | |||
| Counterparty H | 3.75% - 4.5% | 6,420.0000 | 54,804,103 | Switzerland | 46 | % | |||
| Total | 19,072,901.0000 | 120,087,770 | 100 | % | |||||
| Current | |||||||||
| Counterparty A | 130,000.0000 | 16,189,931 | Grand Cayman | 13 | % | ||||
| Counterparty F | 10,411,989.4444 | 16,332,193 | UAE | 14 | % | ||||
| Counterparty H | 6,420.0000 | 54,804,103 | Switzerland | 46 | % | ||||
| Total current digital assets on loan | 10,548,409.4444 | 87,326,227 | 73 | % | |||||
| Long-term | |||||||||
| Counterparty A | 196,500.0000 | 24,471,703 | Grand Cayman | 20 | % | ||||
| Counterparty F | 8,327,991.5556 | 8,289,840 | UAE | 7 | % | ||||
| Total long-term digital assets on loan | 8,524,491.5556 | 32,761,543 | 27 | % | |||||
| Total loaned digital assets | 19,072,901.0000 | 120,087,770 | 100 | % |
As of December 31, 2024, the digital assets on loan by significant borrowing counterparty is as follow:
| Interest rates | Number of coins<br> on loan | Fair Value | Geography | Fair Value Share | |||||
|---|---|---|---|---|---|---|---|---|---|
| Current | |||||||||
| Counterparty F | 4.75% | 2,000.0000 | 6,809,705 | UAE | 18 | % | |||
| Counterparty H | 3.25% to 5.50% | 6,120.0000 | 31,809,053 | Switzerland | 82 | % | |||
| Total current digital assets on loan | 8,120.0000 | 38,618,758 | 100 | % | |||||
| Total | 8,120.0000 | 38,618,758 | 100 | % |
The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. Digital asset loan receivables are assessed for expected credit losses under IFRS 9 using a loss-rate approach. Counterparty A is subject to a 1% Stage 1 expected credit loss, driven by the recall penalty. The $248,000 ECL on these coins has been expensed to bad debt expense. Counterparty H is not subject to any expected credit loss due to its recallability without penalty. The Company does not hold any collateral or other credit enhancements related to these loans.
14
The fair value of the SUI digital assets on loan include a discount for lack of marketability since the SUI coins are locked and not freely transferrable as at December 31, 2025. These coins unlock intermittently through April 2028. The DLOM was determined using the Finerty model. The model works by treating this loss of marketability as the equivalent of a European put option, which provides protection against price declines during the period the assets cannot be sold. By estimating the value of such a hypothetical put option, based on factors like the underlying stock price, volatility, risk-free rate, and expected holding period. No separate ECL was recorded for the SUI digital assets as management feels that any relevant default risk is captured in the fair value assumptions of the digital assets. The SUI digital assets are considered a level 3 in the financial instrument hierarchy.
| Borrower | Asset | Quantity | Current | Non-current | Gross Total | ECL | **** | Net Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Counterparty A | SOL | 326,500.00 | 16,189,931 | 24,719,701 | 40,909,632 | (248,000 | ) | 40,661,632 | ||||||
| Counterparty H | BTC | 420.00 | 36,894,425 | - | 36,894,425 | - | 36,894,425 | |||||||
| Counterparty H | ETH | 6,000.00 | 17,909,678 | - | 17,909,678 | - | 17,909,678 | |||||||
| Counterparty F | ETH | 2,000.00 | 5,969,893 | - | 5,969,893 | - | 5,969,893 | |||||||
| Counterparty F | SUI | 18,737,981.00 | 10,362,301 | 8,289,841 | 18,652,142 | - | 18,652,142 | |||||||
| 87,326,228 | 33,009,542 | 120,335,770 | (248,000 | ) | 120,087,770 |
As of December 31, 2025, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 1.24% to 14.93% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss. As of December 31, 2024, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 2.95% to 9.70% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss. As of December 31, 2024, the Bitcoin staked digital assets were locked up until January 2025.
As of December 31, 2025, digital assets staked consisted of the following:
| Number of coins<br> staked | Fair Value | Fair Value Share | |||||
|---|---|---|---|---|---|---|---|
| Ethereum (ETH) | 128.0536 | 376,190 | 1 | % | |||
| Bitcoin (BTC) | 300.0000 | 26,747,151 | 69 | % | |||
| Cardano (ADA) | 43,639.3760 | 15,470 | 0 | % | |||
| Core (CORE) | 12,017,441.5404 | 1,325,524 | 3 | % | |||
| Polkadot (DOT) | 2,595,690.3230 | 4,762,573 | 12 | % | |||
| Solana (SOL) | 0.5094 | 64 | 0 | % | |||
| Hyperliquid (HYPE) | 25,600.4618 | 662,417 | 2 | % | |||
| Hedera (HBAR) | 22,663,998.5645 | 2,463,577 | 6 | % | |||
| Internet Computer (ICP) | 970,082.8229 | 2,633,775 | 7 | % | |||
| Total | 38,316,881.6517 | 38,986,741 | 100 | % |
15
As of December 31, 2024, digital assets staked consisted of the following:
| Number of coins<br> staked | Fair Value | Fair Value Share | |||||
|---|---|---|---|---|---|---|---|
| Bitcoin | 1,803.0000 | 170,996,662 | 71 | % | |||
| Cardano | 57,965,439.1383 | 50,371,939 | 21 | % | |||
| Ethereum | 32.0000 | 108,955 | 0 | % | |||
| Core | 3,415,479.8499 | 3,676,423 | 2 | % | |||
| Polkadot | 1,941,230.3100 | 13,244,432 | 6 | % | |||
| Solana | 10,526.4620 | 1,633,634 | 1 | % | |||
| Total | 63,334,510.7602 | $ | 240,031,645 | 100 | % |
As of December 31, 2025, the digital assets staked by significant borrowing counterparty is as follow:
| Interest rates | Number of coins<br> staked | Fair Value | Geography | Fair Value Share | |||||
|---|---|---|---|---|---|---|---|---|---|
| Counterparty H | 2.76% - 7.67% | 23,634,179.8442 | 5,097,352 | Switzerland | 13 | % | |||
| Counterparty M | 2.87% | 32.0023 | 95,663 | United States | 0 | % | |||
| Self custody | 2.3% - 14.28% | 14,682,669.8053 | 33,793,726 | Switzerland | 87 | % | |||
| Total | 38,316,881.6517 | 38,986,741 | 100 | % |
As of December 31, 2024, the digital assets staked by significant borrowing counterparty is as follow:
| Interest rates | Number of coins<br> staked | Fair Value | Geography | Fair Value Share | |||||
|---|---|---|---|---|---|---|---|---|---|
| Counterparty B | 2.95% | 57,965,439.1383 | 50,371,939 | Switzerland | 21 | % | |||
| Counterparty M | 4.00% | 32.0000 | 108,955 | United States | 0 | % | |||
| Self custody | 3.00% to 8.02% | 5,369,071.6219 | 189,550,751 | Switzerland | 79 | % | |||
| Total | 63,334,542.7602 | 240,031,645 | 100 | % |
The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. These risks include:
| a) | Ethereum and Polkdot staking exposes the Company to an unbounding period liquidity restriction (approximately<br>28 days), during which time the tokens remain locked and do not earn rewards once unbounding has commenced. |
|---|---|
| b) | Polkadot, CORE and Hype staking may expose the Company to validator misconduct risk |
| --- | --- |
| c) | Bitcoin staking involves timelock risk, such that the coins are locked until expiry of the timelock and<br>require a redemption transaction after expiry. |
| --- | --- |
| d) | BTC staking is described by the protocol as self-custodied with no wrapping, bridging or smart contract<br>exposure. |
| --- | --- |
The Company places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2025 and 2024, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.
16
EQUITY INVESTMENTS IN DIGITAL ASSETS FUNDS AT FAIR VALUE THROUGHPROFIT AND LOSS
Equity investments were as follows at December 31, 2025 and December 31,2024:
| December 31, 2025 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current | Long Term | Total | ||||||||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | |||||||
| Fund A - Solana (SOL) | 192,949.9577 | $ | 19,860,832 | 220,396.5353 | $ | 22,685,979 | 413,346.4930 | $ | 42,546,811 | |||
| Fund A - Avalanche (AVAX) | 503,720.0812 | $ | 5,253,822 | 232,861.4009 | $ | 2,428,755 | 736,581.4821 | $ | 7,682,577 | |||
| $ | 25,114,654 | $ | 25,114,734 | $ | 50,229,388 | |||||||
| Fund<br> B - Solana (SOL) | 470,185.9000 | $ | 50,297,302 | 294,049.0000 | $ | 31,455,370 | 764,234.9000 | $ | 81,752,672 | |||
| $ | 50,297,302 | $ | 31,455,370 | $ | 81,752,672 | |||||||
| Total | $ | 75,411,956 | $ | 56,570,104 | $ | 131,982,060 | ||||||
| December 31, 2024 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Current | Long Term | Total | ||||||||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | |||||||
| Fund A - Solana (SOL) | 216,379.2216 | $ | 30,886,684 | 244,331.9458 | $ | 34,876,748 | 460,711.1675 | $ | 65,763,432 | |||
| Fund A - Avalanche (AVAX) | 223,905.1900 | $ | 6,020,811 | 707,540.4100 | $ | 19,025,762 | 931,445.6000 | $ | 25,046,572 | |||
| $ | 36,907,495 | $ | 53,902,510 | $ | 90,810,004 | |||||||
| Fund<br> B - Solana (SOL) | 626,365.7000 | $ | 89,409,506 | 540,869.9000 | $ | 77,205,553 | 1,167,235.6000 | $ | 166,615,059 | |||
| Total | $ | 126,317,001 | $ | 131,108,063 | $ | 257,425,063 |
Fund A
During the year ended December 31, 2024, the Company through a subsidiary, invested $61,741,683 in three tranches of a private investment fund (“Fund A”) designed to acquire Solana and Avalanche tokens from a bankrupt company. The Company’s investment represents the acquisition by Fund A of 491,249 Solana at $105 per Solana and 931,446 Avalanche at $11 per Avalanche.
The Solana acquired by Fund A is locked and staked, earning staking rewards during the lock period. Staking rewards will accrue while Solana is locked and will become distributable on the same unlocking schedule as the Solana. The Solana will be released by Fund A in monthly increments from January 2025 through January 2028.
The Avalanche acquired by Fund A is locked and staked, earning staking rewards during the lock period. Staking rewards will accrue while Avalanche is locked and will become distributable on the same unlocking schedule as the Avalanche.
The Avalanche will be released by Fund A in weekly increments starting July 10, 2025 and continuing through July 1, 2027.
The investments in the investment fund were initially recognized based on the latest available net asset value as determined by the investment fund’s administrator less an applicable DLOM. The values of the investments were remeasured based on quarterly valuation reports provided by the investment fund administrator less an applicable DLOM.
17
Fund B
During the year ended December 31, 2024, the Company invested through a subsidiary, $112,072,453 in two tranches of limited partnership units of a private investment fund (“Fund B” and together with Fund A the “Equity Investments in Digital Assets”) designed to acquire Solana tokens from a bankrupt company.
The Company’s investment represents the acquisition by Fund B of 1,123,360 Solana at $100 per Solana. The Solana acquired by Fund B is locked and staked, earning staking rewards during the lock period and thereafter until such Solana is sold by the fund manager or an in-kind distribution to the limited partners of the fund. Staking rewards will accrue while Solana is locked and will become distributable on the same unlocking schedule as the Solana. Approximately 25% of the Solana were unlocked in March 2025, while the remaining 75% of the Solana will be unlocked linearly monthly until January 2028. The Company received a distribution of $71,685,819 in July 2025 from Fund B.
The investments in Fund B were initially recognized based on the latest available net asset value as determined by Fund B’s administrator less an applicable DLOM. The values of the investments were remeasured based on quarterly valuation reports provided by Fund B’s administrator less an applicable DLOM.
The investments in Fund B were initially recognized based on the latest available net asset value as determined by Fund B’s administrator less an applicable DLOM. The values of the investments were remeasured based on quarterly valuation reports provided by Fund B’s administrator less an applicable DLOM.
The continuity of equity investments for the years ended December 31, 2025 and 2024 is as follows:
| December 31, <br><br>2025 | December 31, <br><br>2024 | |||||
|---|---|---|---|---|---|---|
| Opening Balance | $ | 257,425,063 | $ | - | ||
| Acquisitions | - | 173,814,136 | ||||
| Disposals | (71,685,819 | ) | - | |||
| Staking income | 19,784,212 | 13,060,639 | ||||
| Net change in realized and unrealized gain/loss | (68,261,189 | ) | 77,360,769 | |||
| Management fees | (2,530,856 | ) | (1,396,016 | ) | ||
| Transfers out to Digital Assets | (2,749,352 | ) | (5,414,464 | ) | ||
| Closing Balance | $ | 131,982,060 | $ | 257,425,063 |
18
ThirdParty Exchanges, Custodians and Funds
As of December 31, 2025, the Company used the following third-party exchanges and custodians and in the ordinary course of business:
| Exchange | Location |
|---|---|
| Binance | Cayman Islands |
| B2C2 Overseas LTD | Cayman Islands |
| Bitcoin Suisse AG | Switzerland |
| OKX | Seychelles |
| Kraken | United States |
| Wintermute | United Kingdom |
| Coinbase | United States |
| Laser Digital | Switzerland |
| Custodian | |
| Anchorage Digital | United States |
| Bitgo Trust | United States |
| Copper | Switzerland |
Each of the Custodians and Exchanges have not appointed a sub-custodian to hold crypto assets owned by the Company. The Custodian and Exchanges hold and safeguard the digital assets deposited by the Company and its subsidiaries. The Custodians and Exchanges also offer lending and staking services. The Custodians and Exchanges are not Canadian financial institutions. None of the Custodians and Exchanges are related parties of the Company.
Each Custodian maintains general commercial insurance on its own behalf, but the Corporation and other clients of such Custodians are not named insured under such policies. The Company is not aware of any security breaches or similar incidents at the Custodians. The Company believes that any event of insolvency or bankruptcy of a Custodian would be treated in accordance with the insolvency or bankruptcy laws of the applicable jurisdiction of such Custodian.
19
As of December 31, 2025, the breakdown of digital assets deposited with each of the Custodians, or Exchanges as a percentage of total digital assets custodied by the Company and its subsidiaries is as follows:
| Custodian | Location | % of digital assets custodied by market value | Regulatory Body |
|---|---|---|---|
| Binance | Cayman Islands | 42.6% | Cayman Islands Monetary Authority (CIMA) |
| B2C2 Overseas LTD | Cayman Islands | 8.0% | Cayman Islands Monetary Authority (CIMA) |
| Kraken | United States | 0.7% | Office of Comptroller of Currency |
| Laser Digital | Switzerland | 4.7% | Financial Services Standards Association (VQF). Zug. Switzerland |
| Copper | Switzerland | 33.5% | Financial Services Standards Association (VQF). Zug. Switzerland |
| Bitgo Trust | United States | 1% | South Dakota Division of Banking and Money Services Business (MSB) with Financial Crimes Enforcement Network (FinCEN) |
| Others | 2.9% | Anchorage, Wintermute, Bitcoin Suisse, Coinbase (Deribit), Genesis | |
| Self Custody | 6.5% | ||
| Total | 100% |
Valour conducts diligence and reviews counterparty risk in accordance with the following principles:
| ● | Valour shall strive to spread counterparty risk between several counterparties, where relevant and practical. |
|---|---|
| ● | In relevant situations and as far as possible, counterparty (and settlement) risk shall be mitigated by<br>conducting transactions in well-established settlement systems based on the principles of delivery versus payment or payment versus payment. |
| --- | --- |
| ● | The below methodology is to be applied when proposing and selecting counterparties and when granting limits<br>on counterparty risk score. |
| --- | --- |
| ● | The counterparties are reviewed in regular intervals and re-evaluated. |
| --- | --- |
| ● | In case of significant events such as negative news or credit events, Valour can decide to close the business<br>relationship with a counterparty irrespective of the review cycle. |
| --- | --- |
| ● | Valour manages a counterparty scorecard and captures, assesses and monitors the below information. |
| --- | --- |
20
| 1. | Contact information |
|---|
The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.
| 2. | Current status |
|---|
The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date
| 3. | Country of registration and regulation |
|---|
The country in which the exchange/counterparty is registered must be documented. In addition, all countries in which the exchange/counterparty holds a regulatory license have to be assessed and documented by stating the license number (if applicable).
| 4. | Country risk |
|---|
The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.
| 5. | Adverse media search |
|---|
An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc. are documented.
| 6. | Public exchange scores |
|---|
Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.
| 7. | Information security certification |
|---|
The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.
| 8. | Insurance coverage |
|---|
Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.
| 9. | Proof of reserves |
|---|
It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.
| 10. | Risk evaluation |
|---|
The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty. By carefully evaluating the risk score, we can ensure that we are making responsible business decisions and protecting our customers and stakeholders.
21
| 11. | Business justification and restrictions |
|---|
In cases where an exchange or counterparty presents increased risks, a business justification must be provided. We must carefully consider the potential exposure and take appropriate measures to limit it through restrictions, thresholds, or other means. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.
| 12. | Recurring review schedule |
|---|
The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.
| 13. | Account closure |
|---|
If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to end the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders.
If it is determined that the business relationship should be terminated, a plan for closing the relationship in a controlled and orderly manner is developed. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.
By following this process, we can ensure that we are taking a responsible and proactive approach to closing business relationships with risky counterparties. This can help protect our customers and stakeholders and maintain the integrity of our business operations.
Self-Custodyof Digital Assets
At December 31, 2025, the Company had self-custody of digital assets totaling $35,581,901 (December 31, 2024 - $339,451,566).
The Company maintains controls around the hot and cold wallets with only certain senior management having access to the accounts, passwords and seed phases. All copies of passwords and seed phases are secured and partitioned with certain senior management. Duplicate partial copies of the passwords and seed phases are accessible by a minimum of two members of senior management in different secure locations.
Stakingand Lending Policy
It is Valour’s policy to hedge 100% of the market risk, subject to allowing a US$2 million maximum unhedged exposure as a trading buffer. Valour purchases and sells the digital assets which its ETPs track. Valour may lend or stake such digital assets on its balance sheet to generate revenue in accordance with the policies in the product prospectus. Lending or staking transactions are only conducted with institutional-grade counterparties and only up to a certain percentage for risk management purposes in accordance with Valour’s lending and staking policy (the “Lendingand Staking Policy”), which is reviewed and approved by Valour’s board of directors. The Lending and Staking activities undertaken by Fund A and Fund B in respect of the Company’s Equity Investments in Digital Assets are not subject to the Lending and Staking Policy and the Company has no control over how Fund A and Fund B lend and stake digital assets.
When deciding whether to lend or stake a particular asset, the Lending and Staking Policy provides that the decision will initially be made based on the risk profile of the potential counterparties, then the highest yield available, then prioritizing staking over lending.
22
The Lending and Staking Policy provides the following limits for lending and staking of digital assets:
| Digital Asset | Lending and staking limits |
|---|---|
| Bitcoin, Ethereum, Solana, Avalanche | Up to 75% of unrestricted tokens may be lent on<br> open terms to eligible counterparties, 50% of tokens may be lent on terms up to six months.<br><br> <br><br><br> <br>100% of tokens may be staked |
| All other Digital Assets | Up to 75% of unrestricted tokens may be lent on<br> open terms to eligible counterparties, 50% of tokens may be lent on terms up to six months.<br><br> <br>If total AUM is greater than US$5 million, up<br> to 95% may be staked, else 75% may be staked |
The Company’s typical lending arrangements have terms as follows:
(a) which party has legal title
The lender authorizes the counterparty e.g., Anchorage to draw down lent assets. Typically, the counterparty / borrower is then permitted to use Client’s Designated Assets for any lawful purpose.
(b) the status of the assets in the event ofinsolvency of the borrower
The lender shall have full recourse to Counterparty for any obligations hereunder in equity and at law. Upon any event of default, the lender shall be entitled to seek all remedies available at law or in equity for the full amount or any unpaid principal of any advance, accrued but unpaid fees or other amounts or property payable hereunder against Lender in addition to enforcing its security interest.
(c) contractual limitation on use and transferof lent items by borrower
Typically, the Counterparty is then permitted to use client’s designated assets for any lawful purpose.
(d) borrower’s ability to initiate transactionswith the borrowed assets, including but not limited to: sell, lend, pledge, and/or hypothecate
Typically, the Counterparty is then permitted to use Client’s Designated Assets for any lawful purpose, including selling, lending, pledging and/or hypothecating. Certain lending agreements require Counterparties to grant a security interest to the Company on any assets that are further lent out.
(e) borrowers’ rights regarding “co-mingling”
There is no specific language in the lending agreement but given the Counterparties can use for any lawful purpose, the Company’s believes that comingling can occur.
23
(f) callability terms and conditions (including“notice period”, if any).
Termination. Client may terminate any Advance of its Designated Assets upon three (3) business days’ prior notice (the date of such termination, the “Termination Date”), from time to time at its sole discretion through an Electronic Notice.
Investments,At Fair Value, Through Profit and Loss, As At December 31, 2025
At December 31, 2025, the Company’s twelve private investments had a total fair value of $29,372,628.
| Note | Note | Security description | Cost | Estimated Fair Value | % <br> of FV | ||||
|---|---|---|---|---|---|---|---|---|---|
| Amina Bank AG | 3,906,250 non-voting shares | $ | 24,749,403 | $ | 24,285,752 | 82.7 | % | ||
| Earnity Inc. | 85,142 preferred shares | 95,538 | - | 0.0 | % | ||||
| Luxor Technology Corporation | 201,633 preferred shares | 460,016 | 524,963 | 1.8 | % | ||||
| SDK:meta, LLC | 1,000,000 units | 2,495,232 | - | 0.0 | % | ||||
| Skolem Technologies Ltd. | 16,354 preferred shares | 129,495 | - | 0.0 | % | ||||
| VolMEX Labs Corporation | Rights to certain preferred shares and warrants | 30,000 | - | 0.0 | % | ||||
| Global Benchmarks AB | (i) | 53,300 common shares | 199,875 | 199,875 | 0.7 | % | |||
| ZKP Corporation | (i) | 370,370 common shares | 1,000,000 | 1,000,000 | 3.4 | % | |||
| CH Technical Solutions SA | 25 common shares | 3,952,977 | 362,038 | 1.2 | % | ||||
| Canada Stablecorp Inc. | 303,030 common shares | 500,000 | 500,000 | 1.7 | % | ||||
| Continental Stable Coin | Rights to certain preferred shares | 500,000 | 500,000 | 1.7 | % | ||||
| Bonsol Labs Inc. | Rights to certain preferred shares | 2,000,000 | 2,000,000 | 6.8 | % | ||||
| Total private investments | $ | 36,112,536 | $ | 29,372,628 | 100.0 | % | |||
| (i) | Investments<br>in related party entities - see Note 26 | ||||||||
| --- | --- |
At December 31, 2024, the Company’s nine private investments had a total fair value of $37,348,081.
| Private Issuer | Note | Security description | Cost | Estimated Fair Value | % <br> of FV | ||||
|---|---|---|---|---|---|---|---|---|---|
| 3iQ Corp. | 61,712 common shares | $ | 63,270 | $ | 300,459 | 0.8 | % | ||
| Amina Bank AG | 3,906,250 non-voting shares | 25,286,777 | 35,457,982 | 95.0 | % | ||||
| Earnity Inc. | 85,142 preferred shares | 95,980 | - | 0.0 | % | ||||
| Luxor Technology Corporation | 201,633 preferred shares | 462,145 | 500,058 | 1.3 | % | ||||
| Neuronomics AG | 724 common shares | 89,582 | 89,582 | 0.2 | % | ||||
| SDK:meta, LLC | 1,000,000 units | 2,506,780 | - | 0.0 | % | ||||
| Skolem Technologies Ltd. | 16,354 preferred shares | 130,095 | - | 0.0 | % | ||||
| VolMEX Labs Corporation | Rights to certain preferred shares and warrants | 21,989 | - | 0.0 | % | ||||
| ZKP Corporation | (i) | 370,370 common shares | 1,000,000 | 1,000,000 | 2.7 | % | |||
| Total private investments | $ | 29,656,618 | $ | 37,348,081 | 100.0 | % | |||
| (i) | Investments<br>in related party entities | ||||||||
| --- | --- |
24
Fi****nancialResults
The following is a discussion of the results of operations of the Company for the three and twelve months ended December 31, 2025, and 2024. They should be read in conjunction with the Company’s annual consolidated financial statements for the three and twelve months ended December 31, 2025 and 2024 and related notes. All amounts are in U.S. dollars.
| Three months ended<br> December 31, | Year ended <br>December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||
| Revenues | ||||||||
| Staking and lending income | ||||||||
| Management fees | ||||||||
| Trading commissions | ||||||||
| Research revenue | ||||||||
| Advisory revenue | ||||||||
| Revenues excluding realized and net change in unrealized gains (losses) | ||||||||
| Realized and net change in unrealized (loss) gain on digital assets | ) | ) | ||||||
| Realized and net change in unrealized (loss) gain on equity investments at FVTPL | ) | ) | ||||||
| Realized and net change in unrealized gain (loss) on ETP payables | ) | ) | ||||||
| Revenues from realized and net change in unrealized gains (losses) | ) | |||||||
| Total revenues | ) | |||||||
| Operating expenses | ||||||||
| Operating, general and administration | ||||||||
| Share based payments | ||||||||
| Depreciation - equipment | ||||||||
| Amortization - right-of-use assets | ||||||||
| Amortization - intangibles | ||||||||
| Fees and commissions | ||||||||
| Foreign exchange (gain) loss | ) | ) | ) | ) | ||||
| Total operating expenses | ||||||||
| Operating income (loss) | ) | ) | ||||||
| Realized (loss) gain on investments | ) | ) | ) | |||||
| Unrealized (loss) gain on investments | ) | ) | ||||||
| Interest income | ||||||||
| Interest recovery (expense) | ) | ) | ||||||
| Financing expense | ) | ) | ||||||
| Gain on deconsolidation | ||||||||
| Loss on investment in associate | ) | ) | ||||||
| Change in fair value of warrant liability | ||||||||
| Bad debt expense | ) | ) | ) | ) | ||||
| Impairment loss | ) | ) | ) | |||||
| Total other (expenses) income | ||||||||
| Net income (loss) for the year before taxes | ) | ) | ||||||
| Current income taxes | ) | |||||||
| Net income (loss) for the year after taxes | ) | ) | ||||||
| Other comprehensive income | ||||||||
| Cumulative translation adjustment | ) | |||||||
| Net income (loss) and comprehensive income (loss) for the year | ) | ) |
All values are in US Dollars.
The Company’s business is highly dependent on cryptocurrency prices, in particular the Bitcoin price. Developments in cryptocurrency friendly legislation in the United States (such as the Genius Act and the Clarity Act) and similar legislation in other jurisdictions such as the European Union may positively impact the Company’s business.
25
Revenue Review
For the three and twelve months ended December 31, 2025, the Company recorded revenues of $19,992,158 and $99,136,469 respectively, compared with ($19,875,246) and $31,425,751 in the three and twelve months ended December 31, 2024.
The Company earned direct staking and lending income of $2,222,610 and $13,072,141 for the three and twelve months ended December 31, 2025 compared to $385,696 and $6,443,983 in the comparative periods in 2024. The increases of $1,836,914 and $57,344 respectively in the three and twelve months ended December 31, 2025 over the three and twelve months ended December 31, 2024 is due to higher average AUM in 2025 ($809.9 million) compared to 2024 ($645.3 million).
The Company also earns staking and lending income indirectly via its equity investments at fair value through profit or loss (“FVTPL”) which are included in the “realized and net change in unrealized gain (loss) on equity investments at FVTPL. The chart below shows the total staking / lending income earned by the Company which it uses when it refers to its monetization rate of its AUM.
| Three months ended<br> December 31, <br> 2025 | Three months ended<br> December 31, <br> 2024 | Year ended<br> December 31, <br> 2025 | Year ended<br> December 31, <br> 2024 | |||||
|---|---|---|---|---|---|---|---|---|
| Staking / lending income earned directly | $ | 2,222,610 | $ | 385,696 | $ | 13,072,141 | $ | 13,014,797 |
| Staking / lending income earned via Fund investments | 6,254,363 | 8,882,069 | 19,485,581 | 13,060,639 | ||||
| Total Staking / Lending Income | $ | 8,476,973 | $ | 9,267,765 | $ | 32,557,722 | $ | 26,075,436 |
The average staking yield in Q4 2025 was 4.7% which is an increase from the 3.4% earned in Q2 2025 due to more aggressive staking and lending. The Company actively stakes and lends its digital assets to earn additional revenue. Staking income does fluctuate based on average AUM, percentage of AUM staked and staking yields in general on various coins.
The Company staked 44.4% of its coins at December 31, 2025 compared to 58% at September 30, 2024. The lower coin staking percentage at December 31, 2025 is just a timing difference on portfolio rebalancing. The Company does generally stake in excess of 60% of its coins.
The Company earned management fee revenue of $2,149,585 and $9,696,992 for the three and twelve months ended December 31, 2025 compared to $2,073,007 and $6,443,983 in the three and twelve months ended December 31, 2024. The increase in management fees earned in 2025 over 2024 is due to higher average AUM in 2025 of $809.9 million compared to $645.3 million in 2024.
The average effective management fee yield earned during the fourth quarter of 2025 was 1.2% on the average AUM of $728.3 million, which is consistent with the 1.2% rate earned in Q3 2025. The Company reminds investors that while it charges 1.9% management fees on most of its ETP products, its BTC and ETH products have management fees of NIL bringing the effective average management fee rate down to the 1.2% range.
Total AUM monetization in the fourth quarter of 2025 increased to 5.8% from 4.6% in the third quarter of 2025 due to more aggressive staking and higher yields. Average AUM monetization during 2025 was 5.2% (2024 average: 5.0%).
The Company recorded trading commissions from its Stillman business of $3,348,146 and $9,579,010 in the three and twelve months ended December 31, 2025 compared to $2,106,286 and $2,106,286 in the comparative periods. Stillman was acquired during Q4 2024. Management feels Stillman is performing well and, subject to favourable market conditions anticipates 15-20% organic revenue growth in 2026.
The Company recorded research revenue of $65,000 and $533,000 in the three and twelve months ended December 31, 2025 compared to $619,593 and $1,433,378 in the three and twelve months ended December 31, 2024. The research business line was negatively affected by the departure of the original founders.
26
The Company recorded advisory revenue of $95,151 and $287,558 in the three and twelve months ended December 31, 2025 compared with $Nil and $Nil. The advisory business did not exist in the comparative periods and was created to take advantage of the proliferation of digital asset treasury companies.
Revenues from realized and net change in unrealized gains (losses) for the three and twelve months ended December 31, 2025 was $13,604,558 and $67,460,660 respectively, compared with ($24,520,148) and $8,427,307 for the three and twelve months ended December 31, 2024 as per the table below.
| Three months ended December 31, | Year ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||
| Realized and net change in unrealized gain (loss) on digital assets | ) | ) | ||||||
| Realized and net change in unrealized gain (loss) on equity investments at FVTPL | ) | ) | ||||||
| Realized and net change in unrealized loss (gain) on ETP payables | ) | ) | ||||||
| Revenues<br> from realized and net change in unrealized gains (losses) | ) |
All values are in US Dollars.
The Company considers its asset management business (with the assets and liabilities being on its own statement of financial position) similar to a broker dealer and thus the net movement in the realized and unrealized gains (losses) of the Company’s digital assets less the net movements in realized and unrealized gains (losses) of the Company’s ETP obligations are considered the Company’s revenues.
For the three and twelve months ended December 31, 2025, the Company made two DeFi Alpha trades which were to acquire locked 18,737,981 SUI tokens. The total unrealized DLOM at the time of acquisition on the tokens was $23,786,368, calculated using the Finerty model. Assuming the tokens are held to final unlock maturity in 2028 and the price of SUI is the same or greater than $3.51 per token will become a realized gain. This DeFi Alpha trade is included in the realized and net change in unrealized gains on digital assets line in our income statement.
On November 6, 2025, the Company announced a second DeFi Alpha trade in 2025 to acquire 160,035 locked SOL tokens. The total unrealized DLOM at the time of acquisition of the tokens was $3,178,845, calculated using the Finerty model. Assuming the tokens are held to final unlock maturity in 2028 and the price of SOL is the same or greater than $167 per token will become a realized gain. This DeFi Alpha trade is included in the realized and net change in unrealized gain on equity investments at FVTPL line in our income statement.
The total remaining DLOM from all locked token transactions (SOL, AVAX held in the Equity Investments at FVTPL and SUI tokens held directly) purchased during 2024 and 2025 was $32,811,983 at December 31, 2025, a $53,705,749 decrease from the $86,517,729 balance at December 31, 2024. The decrease in the DLOM from Q3 to Q4 was $31,737,876.
This $31,737,876 and $53,705,749 reduction in the DLOM reserves for the three and twelve month periods ended December 31, 2025 respectively is included in the revenues from realized and net change in unrealized gains (losses) for the three and twelve months ended December 31, 2025.
The Company uses the Finnerty model to calculate DLOM on its locked tokens. With constant token prices, the DLOM is expected to decrease over time as the unlock maturity date approaches. The fair value of the Company’s tokens at December 31, 2025 has been reduced by $53,705,749 to take into account the DLOM. The Company holds locked tokens in its Equity Investments at FVTPL (see financial statement notes details for token quantities) and 18,737,981 SUI tokens held directly.
The Company shows how its revenues and EBITDA would present without the DLOM being applied in the non-IFRS measures section of this MD&A.
27
The Company intends to hold its equity investments in digital assets at FVTPL and locked SUI tokens until the digital assets become unlocked. The tokens are subject to a release schedule with intermittent releases with the last release in 2028 such that any eventual sale of the digital assets would not be expected to occur at a discounted price. In the event the Company requires additional unlocked SOL, AVAX or SUI to meet ETP redemptions, the Company would seek to borrow tokens against its investments to meet redemptions, so as to avoid a sale of the locked tokens prior to the tokens becoming unlocked. The locked tokens held by the Company are scheduled to be released through 2028. The $32,811,983 DLOM balance at December 31, 2025 will reverse to $nil by 2028 and increase net income and shareholders’ equity once fully reversed.
Operating, general and administration
| Three months ended<br><br> December 31, | Year ended<br><br> December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||
| Compensation and consulting | $ | 7,594,168 | $ | 3,011,098 | $ | 16,251,498 | $ | 25,796,482 |
| Marketing expenses | 861,473 | 2,089,862 | 8,815,238 | 5,590,366 | ||||
| General and administration | 931,975 | 479,740 | 2,688,879 | 1,999,788 | ||||
| Professional fees | 1,372,633 | 1,791,865 | 5,316,890 | 2,686,031 | ||||
| Regulatory and transfer agent | 21,911 | 20,790 | 427,320 | 140,611 | ||||
| Travel expenses | 368,332 | 122,469 | 719,308 | 522,387 | ||||
| $ | 11,150,492 | $ | 7,515,824 | $ | 34,219,133 | $ | 36,735,665 |
Compensation and consulting fees were $7,594,158 and $16,251,498 during the three and twelve months ended December 31, 2025 compared to $3,011,098 and $25,796,482 during the comparative three and twelve months ended December 31, 2024. During the second and third quarters of 2025, the Company brought on additional executives and consultants to support its growth post its Nasdaq listing. The comparative twelve months ended December 31, 2024 includes a $20 million bonus paid after a DeFi Alpha trade.
Marketing expense was $861,473 and $8,815,238 during three and twelve months ended December 31, 2025 compared with $2,089,862 and $5,590,366 in the comparative three and twelve months ended December 31, 2024. The Company ramped up marketing spending around its debut on Nasdaq in May 2025 (and continued it throughout Q3 2025) in an effort to create more awareness in the United States. Marketing spend was reduced in Q4 2025 given the decline in crypto-currency prices post BTC peaking on October 10, 2025.
General and administration expenses were $931,975 and $2,688,879 during the three and twelve months ended December 31, 2025 compared to $479,740 and $1,999,788 in the comparative three and twelve months ended December 31, 2024. G&A comprises mainly office expenses, D&O insurance and bank charges. The Company incurred additional insurance expenses as it increased its coverage limits.
Professional fees were $1,372,633 and $5,316,890 in the three and twelve months ended December 31, 2025 compared to $1,791,865 and $2,686,031 in the comparative three and twelve months ended December 31, 2024. The Company incurred additional legal fees associated with its Nasdaq listing and other costs incurred with the development of new markets and settlement of various legal claims.
Regulatory and transfer agent fees were $21,911 and $427,320 during the three and twelve months ended December 31, 2025 compared with $20,790 and $140,611 during the comparative three and twelve months ended December 31, 2024. The increase is due to higher market cap and increased listing fees associated with the Nasdaq listing.
Travel expenses were $368,322 and $719,308 during the three and twelve months ended December 31, 2025 compared with $122,469 and $522,387 in the three and twelve months ended December 31, 2024. The increased travel expense is due to team members travelling more frequently for business development.
28
Total depreciation and amortization was $529,110 and $1,745,944 for the three and twelve months ended December 31, 2025 compared to $390,723 and $1,543,995 during the three and twelve months ended December 31, 2024. The depreciation and amortization relates to the equipment, right of use assets and intangible assets acquired as part of the Company’s acquisitions. The Company entered into a new office lease in Geneva, Switzerland during its Q3 2025. The lease has been capitalized in accordance with IFRS 16 and the associated right of use asset amortized in sync with the underlying lease.
Share-based payments were $1,944,748 and $13,210,103 during the three and twelve months ended December 31, 2025 compared to $6,742,900 and $19,249,685 in the three and twelve months ended December 31, 2024. The lower stock based compensation expenses are driven mainly due to lower share prices reducing the accounting value of grants.
Fees and commissions were $1,175,290 and $6,200,681 for the three and twelve months ended December 31, 2025 compared to $2,022,714 and $4,107,102 in the three and twelve months ended December 31, 2024. The overall increase in fees and commissions during 2025 relates to the trading of digital assets as brokerage commission and ETP issuance costs associated with the increased average AUM in 2025 ($809.9 million) over 2024 ($796 million). Fees and commissions decreased during Q4 2025 compared to Q4 2024 due to lower ETP activity due to the Bitcoin price peaking on October 10, 2025 and drifting down throughout the quarter compared to Q4 2024 which show Bitcoin price steadily increase and thus drove more interest in the Company’s ETP products.
Foreign (gain) loss was ($2,191,260) and ($2,558,519) for the three and twelve months ended December 31, 2025 compared to ($4,069,658) and ($321,322) in the three and twelve months ended December 31, 2024. The (gains) loss reflects the currency fluctuations primarily in Company’s cash balances which are denominated in Swedish Krona, Euro and Swiss Franc.
Impairment loss was $2,077,585 and $2,077,585 in the three and twelve months ended December 31, 2025 compared to $Nil and $3,662,456 in the three and twelve months ended December 31, 2024. In 2025, the Company impaired the goodwill associated with its Reflexivity acquisition in Q4 2025 given its substantially lower actual and expected future cash flows than previously expected. The Company impaired the costs related to the Solana IP acquisition in Q1 2024.
Other income (expenses)
Realized gain (loss) on investments was ($118,289) and ($419,093) for the three and twelve months ended December 31, 2025 compared with ($353,251) and $112,984 for the three and twelve months ended December 31, 2024. The year-to-date loss of $419,093 is due to a loss realized on the disposal of Brazil Potash shares during Q1 2025.
The Company had unrealized loss on investments of $16,503,925 and $16,501,202 for the three and twelve months ended December 31, 2025 compared to $8,168,662 and $7,908,831 in the three and twelve months ended December 31, 2024. During Q4 2025, the Company reduced the fair value of its investment in Amina by $11,033,305 given its reduced AUM and a general compression in EV/AUM valuation ratios and CH Technical by $3,529,924 due to delays in executing its business plan which accounted for the majority of the $16,501,202 reduction in fair value. The Company confirms that all investments are carried at estimated fair value.
Interest recovery was $1,148,796 and $773,244 for the three and twelve months ended December 31, 2025 compared with ($287,629) and ($2,824,092) in the three and twelve months ended December 31, 2024. The recoveries in the 2025 periods are a result of an adjustment to the Genesis related interest due to a set off agreement reached on its debt and the Company’s associated Bitcoin collateral. The decrease in financing costs is due to the Company repaying more of its loans (Genesis loan and a margin trading facility balance at a counter party outstanding at September 30, 2025).
Financing expense of $1,924 and $4,677,123 for the three and twelve months ended December 31, 2025 compared to $Nil and $Nil in the three and nine months ended December 31, 2024. The financing expense represents the portion of the $8,819,331 cost of issue associated with the $100 million equity offering allocated to the warrant value which was expensed in accordance with IFRS.
29
Cash Flows
Cash used in operating activities was $20,230,951 and $133,356,798 for the three and twelve months ended December 31, 2025 compared with cash used of $77,016,360 and $94,883,298 in the comparative period. Cash used in operations before adjustments for working capital, investments and purchases and sales digital assets was $8,924,455 and $27,005,208 for the three and twelve months ended December 31, 2025 compared with $6,618,521 and $31,981,844 in the comparative periods in 2024. The Company generally maintains its surplus working capital in digital assets like USDC or USDT Stablecoins, as well as speculative crypto-currencies such as BTC, ETH, SOL, and AVAX and thus the operating cash flow statements will show a use of cash as long as more money is invested in cryptocurrencies than converted to U.S. dollars or other fiat currencies.
During the three and twelve months ended December 31, 2025, $8,517,212 (used in) and $207,729,581 (provided by) financing activities compared to $67,108,382 and $94,930,388 (provided by) in the comparative periods.
Cash used in financing activities is primarily driven by flows into the Company’s ETP products. The Company had net ETP redemptions of $6,086,250 in Q4 2025 and a net inflow of $110,154,439 for the twelve months ended December 31, 2025 compared to Q4 2024 inflow of $65,051,243 and twelve months ended December 31, 2024 inflow of $124,580,877. The Company attributes the net ETP outflow in Q4 2025 to Bitcoin’s peak pricing on October 10, 2025 (“10/10”) and the subsequent slide in crypto prices through December 31, 2025 and general crypto market apathy.
Other more significant financing activities included $Nil and $100,000,000 equity raise in the three and twelve months ended December 31, 2025 (three and twelve months ended December 31, 2024: $Nil and $Nil). Investors purchased 45,662,101 common shares and warrants to buy up to 34,246,577 additional shares at a combined US$2.19 per share and three-quarters of a warrant. Each whole warrant is exercisable immediately at US$2.63 (120% of the offering price; a 20% premium) and has a three-year term with an acceleration feature. The Company also spent $324,749 and $2,769,629 in the three and twelve months ended December 31, 2025 on its normal course issuer bid ($1,684,002 and $3,166,609 in the comparative period in 2024). During the year ended December 31, 2025, the Company repurchased 1,235,900 shares for $2,769,629 representing an average purchase price of $2.24. All shares repurchased were cancelled.
Disclosure Related to Previously DisclosedMaterial Forward-Looking Information
The Company’s actual annual revenue for the year ended December 31, 2025, was approximately $99.1 million, compared to an expected annual revenue of $116.6 million for the year ended December 31, 2025 (the “Forecast”) disclosed in a news release of the Company dated November 14, 2025 which has been filed electronically through SEDAR+ and is available online under the Company’s SEDAR+ profile at www.sedarplus.ca (the “News Release”). Actual revenues for the year ended December 31, 2025, differed from the Forecast primarily as a result of the Bitcoin price falling below the US$100,000 price assumed for purposes of revenues in the revised guidance. Prior to the News Release, the Company had disclosed expected annual revenue for the year ended December 31, 2025 of $218.6 million, which was updated with the Forecast in the News Release.
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Non-IFRSMeasures
The Company has included certain non-IFRS performance measures, namely Adjusted Revenue, Adjusted Net Income, EBITDA, Adjusted EBITDA and Adjusted Net Income Per Share throughout this document. These non-IFRS measures are used by management to assess the Company’s performance and provide additional information and transparency to investors with respect to the Company’s revenue and net income performance.
Non-IFRS performance measures, including Adjusted Revenue, Adjusted Net Income, EBITDA and, Adjusted EBITDA and Adjusted Net Income Per Share do not have a standardized meaning. As a result, these measures may not be comparable to similar measures presented by other companies. Non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
“Adjusted Revenue” is a non-IFRS financial measure that is defined as revenue excluding the application of the DLOM.
“Adjusted Net Income” is a non-IFRS financial measure that is defined as net income excluding the application of the DLOM.
“Adjusted EBITDA” is a non-IFRS financial measure that is defined as Adjusted Net Income and adding back interest, taxes, depreciation, amortization of property and equipment, right-of-use assets and other intangible assets.
“Adjusted Net Income Per Share” is a non-IFRS financial measure that is defined as Adjusted Net Income divided by the total number of common shares of the Company issued and outstanding.
With respect to the DLOM adjustment, the Company intends to hold its equity investments until the underlying digital assets become unlocked such that any eventual sale of the underlying digital assets would not be expected to occur at a discounted price resulting from their lack of marketability as at the date of the Financial Statements. In the event the Company requires additional unlocked SOL or AVAX to meet SOL and AVAX ETP redemptions, the Company will seek to borrow SOL or AVAX against its equity investments to meet redemptions, so as to avoid a sale of the equity investments prior to the underlying digital assets becoming unlocked. The Company will also seek to employ various other hedging strategies so as to short the underlying tokens and cover the short with tokens released from the equity investments over time. Tokens underlying the investments are expected to be released from 2025 through 2028.
For a reconciliation of these measures to the most directly comparable financial information presented in the Financial Statements in accordance with IFRS, see the tables below:
| Three months ended December 31 | Year Ended December 31 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||
| REVENUE RECONCILIATION | ||||||||
| Total Revenue (IFRS) | ) | |||||||
| Price movement on equity investment distribution timing loss | ||||||||
| Discount for Lack of Marketability (DLOM) loss / (gain) | ) | ) | ||||||
| ADJUSTED REVENUE | ) | ) | ||||||
| NET LOSS (INCOME) RECONCILIATION | ||||||||
| Net Income (Loss) | ) | ) | ||||||
| Price movement on equity investment distribution timing loss | ||||||||
| Impairment charges | ||||||||
| Non-cash valuation of investments adjustments | ) | ) | ||||||
| Share based payments | ||||||||
| Change in fair value of warrants | ) | ) | ||||||
| Discount for Lack of Marketability (DLOM) loss / (gain) | ) | ) | ||||||
| ADJUSTED NET INCOME (LOSS) | ) | ) | ) | |||||
| EBITDA RECONCILIATION | ||||||||
| Net Income (Loss) | ) | ) | ||||||
| Interest Expense (recovery) | ) | ) | ||||||
| Financing expense (recovery) | ||||||||
| Depreciation & Amortization | ||||||||
| Taxes (recovery) | ) | |||||||
| EBITDA | ) | ) | ||||||
| Discount for Lack of Marketability (DLOM) loss / (gain) | ) | ) | ||||||
| Price movement on equity investment distribution timing loss | ||||||||
| Non-cash valuation of investments adjustments | ) | ) | ||||||
| Impairment | ||||||||
| Change in fair value of warrants | ) | ) | ||||||
| Share based payments | ||||||||
| ADJUSTED EBITDA | ) | ) | ) |
All values are in US Dollars.
31
Liquidityand Capital Resources
The Company relies upon various sources of funds for its ongoing operating activities. These resources include operating profits, proceeds from dispositions of investments, interest and dividend income from investments and equity financings. In management’s opinion, the $100 million registered direct equity offering which closed on September 26, 2025, in management’s opinion provided the Company significant additional working capital for initiatives to generate future growth and to provide sufficient working capital for its asset management business. Management believes that the asset management business requires approximately 5% of its AUM in working capital to accommodate the timing required to settle cryptocurrency purchases and sales driven by ETP purchases and sales. The Company has nominal capital expenditure commitments. There are also no practical restrictions on the ability of subsidiaries to transfer funds to the Company as required.
The Company loaned and staked more digital assets in 2025 compared to 2024 and as a result the Company earned more revenue via staking and lending. Higher AUM in the Company’s fee earning ETPs in 2025 compared to 2024 resulted in higher management fees. Overall, the Company’s total revenues improved in 2025 as a result of improving digital asset markets.
In management’s view, given the nature of the Company’s operations, the most relevant financial information relates primarily to current liquidity, solvency and planned expenditures. The Company’s financial success will be dependent upon the execution and development of its new investment strategy and business operations. Such execution and development may take years to complete and the amount of resulting income, if any, is difficult to determine.
The Company’s performance is also influenced by cryptocurrency prices which are beyond the Company’s control. Higher crypto-currency prices (with ETP investment flows constant) generally drive higher AUM which increase management fee and staking revenues. Lower crypto-currency prices (with ETP investment flows constant) would generally reduce AUM and thus also reduce management fee and staking revenues. The Company has some ability to reduce its cost structure should cryptocurrency prices dramatically decrease and be expected to remain low for a longer period of time.
We believe that our current available cash and cash equivalents and other sources of capital will be sufficient to meet our working capital needs for at least the next twelve months and beyond.
Loans Payable
The Company has a $10,000,000 credit line for a margin loan from a crypto liquidity provider. As at December 31, 2025, the Company has drawn $2,611,009 (December 31, 2024: $2,686,239) on the credit line. The loan is secured by the equity in the Company’s margin trading account.
As of December 31, 2024, loan principal of $6,000,000 was outstanding The $6,000,000 loan payable is held with Genesis. On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan and interest payable at December 31, 2025 is $6,100,598 and secured with 69.68 BTC (December 31, 2024 - $7,007,055, secured by 365.448 BTC).
In prior periods, the digital assets and the loan payable related to the Genesis loan payable were recorded separately on the statement of financial position. The Company has obtained a legally enforceable right to set off the digital assets being held as collateral against the loan payable. As such, the Company has netted the digital assets and loan payable on the statement of financial position, reducing both the Company’s digital assets and loan payable by $6,100,598, which represents the principal amount of the loan plus interest.
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Operating Segments
The Company operates in various business lines based on where the subsidiaries operate. Valour operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs as well as any DeFi Alpha related transactions. DeFi Alpha is a trading desk designed to identify low-risk arbitrage opportunities within the crypto ecosystem. Reflexivity Research operates the Company’s research firm and Stillman Digital and Stillman Bermuda operate the trading platform.
Information about the Company’s assets by segment is detailed below.
| December 31, 2025 | DeFi | Reflexivity | Stillman Digital | Valour Inc | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash | 52,948,491 | 2,101 | 9,203,569 | 29,079,929 | 91,234,090 | |||||
| Client cash deposits | - | - | 5,615,054 | - | 5,615,054 | |||||
| Public investments, at fair value through profit and loss | 272,520 | - | - | - | 272,520 | |||||
| Prepaid expenses | 562,981 | 73,144 | 8,267,050 | 693,747 | 9,596,921 | |||||
| Digital assets, digital assets loaned, and digital assets staked | - | 65,040 | 14,066,946 | 501,454,945 | 515,586,931 | |||||
| Equity instruments | - | - | - | 131,982,050 | 131,982,050 | |||||
| Right-of-use assets | - | - | - | 2,999,253 | 2,999,253 | |||||
| Investment in associate | 2,423,934 | - | - | - | 2,423,934 | |||||
| Other non-current assets | 28,172,752 | - | - | 36,680,278 | 64,853,030 | |||||
| Total assets | 84,380,678 | 140,285 | 37,152,619 | 702,890,202 | 824,563,784 | |||||
| Accounts payable and accrued liabilities | 2,151,846 | 49,421 | 7,754,780 | 1,610,274 | 11,566,321 | |||||
| Loans payable | - | - | - | 2,611,009 | 2,611,009 | |||||
| Trading liabilities | - | - | 21,826,430 | - | 21,826,430 | |||||
| Warrant liability | 13,599,316 | - | - | - | 13,599,316 | |||||
| Lease liability | - | - | - | 3,102,188 | 3,102,188 | |||||
| ETP holders payable | - | - | - | 622,304,667 | 622,304,667 | |||||
| Total liabilities | 15,751,162 | 49,421 | 29,581,210 | 629,628,138 | 675,009,931 | |||||
| December 31, 2024 | DeFi | Reflexivity | Stillman Digital | Valour Inc | Total | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Cash | 1,771,331 | 151,150 | 1,155,607 | 12,853,437 | 15,931,525 | |||||
| Client cash deposits | - | - | 10,665,147 | - | 10,665,147 | |||||
| Prepaid expenses | 547,856 | 72,017 | 701,222 | 476,629 | 1,797,724 | |||||
| Public investments, at fair value through profit and loss | 778,085 | - | - | - | 778,085 | |||||
| Digital assets, digital assets loaned, and digital assets staked | 530,601 | 158,649 | 5,718,748 | 549,430,902 | 555,838,900 | |||||
| Equity instruments | - | - | - | 257,425,063 | 257,425,063 | |||||
| Property, plant and equipment | - | - | - | 103 | 103 | |||||
| Other non-current assets | 36,054,408 | - | - | 40,100,722 | 76,155,130 | |||||
| Total assets | 39,682,281 | 381,816 | 18,240,724 | 860,286,856 | 918,591,677 | |||||
| Accounts payable and accrued liabilities | 2,336,456 | 194,014 | 577,997 | 373,997 | 3,482,464 | |||||
| Loans payable | - | - | - | 9,693,294 | 9,693,294 | |||||
| Trading liabilities | - | - | 15,109,375 | - | 15,109,375 | |||||
| ETP holders payable | - | - | - | 871,162,347 | 871,162,347 | |||||
| Total liabilities | 2,336,456 | 194,014 | 15,687,372 | 881,229,638 | 899,447,480 |
33
Information about the Company’s revenues and expenses by segment is detailed below
| Year ended December 31, 2025 | DeFi | Reflexivity | Stillman Digital | Neuronomics | Valour Inc. | Total | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Staking and lending income | - | 114 | - | - | 13,072,027 | 13,072,141 | ||||||||||||
| Trading commissions | - | - | 9,579,010 | - | - | 9,579,010 | ||||||||||||
| Management fees | - | - | - | 123,706 | 9,573,286 | 9,696,992 | ||||||||||||
| Research revenue | - | 533,000 | - | - | - | 533,000 | ||||||||||||
| Advisory revenue | 287,558 | - | - | - | - | 287,558 | ||||||||||||
| Revenues excluding realized and net change in unrealized gains (losses) | 287,558 | 533,114 | 9,579,010 | 123,706 | 22,645,313 | 33,168,701 | ||||||||||||
| Realized and net change in unrealized (losses) gains on digital assets | (688,965 | ) | (33,658 | ) | 258,220 | - | (233,525,090 | ) | (233,989,493 | ) | ||||||||
| Realized and net change in unrealized loss on equity investments | - | - | - | - | (51,007,843 | ) | (51,007,843 | ) | ||||||||||
| Realized and net change in unrealized gains on ETP payables | - | - | - | - | 350,965,104 | 350,965,104 | ||||||||||||
| Revenues from realized and net change in unrealized (losses) gains | (688,965 | ) | (33,658 | ) | 258,220 | - | 66,432,171 | 65,967,768 | ||||||||||
| Total revenues | (401,407 | ) | 499,456 | 9,837,230 | 123,706 | 89,077,484 | 99,136,469 | |||||||||||
| Expenses | ||||||||||||||||||
| Operating, general and administration | 14,902,029 | 585,836 | 8,714,090 | 210,211 | 9,806,967 | 34,219,133 | ||||||||||||
| Share based payments | 13,210,103 | - | - | - | 13,210,103 | |||||||||||||
| Depreciation - property, plant and equipment | - | - | 1,563 | - | 103 | 1,666 | ||||||||||||
| Amortization - right-of-use asset | - | - | - | - | 207,328 | 207,328 | ||||||||||||
| Amortization - intangibles | 1,286,479 | - | 5,291 | 39,811 | - | 1,331,581 | ||||||||||||
| Fees and commissions | 19,707 | - | 938,361 | - | 5,242,613 | 6,200,681 | ||||||||||||
| Foreign exchange (gain) loss | (291,840 | ) | - | (1,109 | ) | 5,911 | (2,271,481 | ) | (2,558,519 | ) | ||||||||
| Total operating expenses | 29,126,478 | 585,836 | 9,658,196 | 255,933 | 12,985,530 | 52,611,973 | ||||||||||||
| Operating<br> (loss) income | (29,527,885 | ) | (86,380 | ) | 179,034 | (132,227 | ) | 76,091,954 | 46,524,496 | |||||||||
| Realized (loss) on investments, net | (482,026 | ) | - | (55,320 | ) | - | 118,253 | (419,093 | ) | |||||||||
| Unrealized (loss) on investments, net | (16,501,202 | ) | - | - | - | - | (16,501,202 | ) | ||||||||||
| Interest income | 504,084 | - | 2,023 | 33,278 | 3,237 | 542,622 | ||||||||||||
| Finance costs | (935 | ) | - | (1,401 | ) | (582 | ) | 776,162 | 773,244 | |||||||||
| Financing expense | (4,677,123 | ) | - | - | - | - | (4,677,123 | ) | ||||||||||
| Gain on deconsolidation | - | - | - | 583,966 | - | 583,966 | ||||||||||||
| Loss on investment in associate | (75,506 | ) | - | - | - | - | (75,506 | ) | ||||||||||
| Change in fair value of warrant liabilities | 39,595,879 | - | - | - | - | 39,595,879 | ||||||||||||
| Bad debt expense | (478,240 | ) | - | - | - | (248,000 | ) | (726,240 | ) | |||||||||
| Impairment loss | - | (2,077,585 | ) | - | - | - | (2,077,585 | ) | ||||||||||
| Total other income (expenses) | 17,884,931 | (2,077,585 | ) | (54,698 | ) | 616,662 | 649,652 | 17,018,962 | ||||||||||
| Net (loss) income for the year before taxes | (11,642,954 | ) | (2,163,965 | ) | 124,336 | 484,435 | 76,741,606 | 63,543,458 | ||||||||||
| Current taxes | 403,546 | (1,972 | ) | 732,823 | 779 | 2,555 | 1,137,731 | |||||||||||
| Net (loss) income after tax | (12,046,500 | ) | (2,161,993 | ) | (608,487 | ) | 483,656 | 76,739,051 | 62,405,727 | |||||||||
| Other comprehensive income (loss) | ||||||||||||||||||
| Foreign currency translation (loss) gain | - | - | - | - | 294,045 | 294,045 | ||||||||||||
| Net (loss) income and <br> comprehensive (loss) income for the period | (12,046,500 | ) | (2,161,993 | ) | (608,487 | ) | 483,656 | 77,033,096 | 62,699,772 |
34
| For the year ended December 31, 2024 | DeFi | Reflexivity | Stillman Digital | Valour Inc. | Total | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Staking and lending income | - | - | - | 13,014,797 | 13,014,797 | ||||||||||
| Management fees | - | - | - | 6,443,983 | 6,443,983 | ||||||||||
| Trading commissions | - | - | 2,106,286 | - | 2,106,286 | ||||||||||
| Research revenue | - | 1,433,378 | - | - | 1,433,378 | ||||||||||
| Revenues excluding realized and net change in unrealized gains (losses) | - | 1,433,378 | 2,106,286 | 19,458,780 | 22,998,444 | ||||||||||
| Realized and net change in unrealized gains and (losses) on digital assets | 165,358 | 54,158 | - | 251,820,857 | 252,040,373 | ||||||||||
| Unrealized gain on equity investments | - | - | - | 108,915,688 | 108,915,688 | ||||||||||
| Realized and net change in unrealized gains and (losses) on ETP payables | - | - | - | (352,528,754 | ) | (352,528,754 | ) | ||||||||
| Revenues from realized and net change in unrealized gains (losses) | 165,358 | 54,158 | - | 8,207,791 | 8,427,307 | ||||||||||
| Total revenues | 165,358 | 1,487,536 | 2,106,286 | 27,666,571 | 31,425,751 | ||||||||||
| Expenses | |||||||||||||||
| Operating, general and administration | 8,486,775 | 1,216,107 | 1,154,579 | 25,878,204 | 36,735,665 | ||||||||||
| Share based payments | 12,924,154 | - | - | 6,325,531 | 19,249,685 | ||||||||||
| Depreciation - property, plant and equipment | 4,168 | - | - | 1,822 | 5,990 | ||||||||||
| Amortization - intangibles | 1,543,995 | - | - | - | 1,543,995 | ||||||||||
| Fees and commissions | 32,753 | - | 251,319 | 3,823,030 | 4,107,102 | ||||||||||
| Foreign exchange (gain) loss | 91,484 | - | (348,048 | ) | (64,758 | ) | (321,322 | ) | |||||||
| Total operating expenses | 23,083,329 | 1,216,107 | 1,057,850 | 35,963,829 | 61,321,115 | ||||||||||
| Operating income (loss) | (22,917,971 | ) | 271,429 | 1,048,436 | (8,297,258 | ) | (29,895,364 | ) | |||||||
| Realized (loss) on investments, net | - | - | - | 112,984 | 112,984 | ||||||||||
| Unrealized (loss) on investments, net | 3,553,228 | - | - | 4,355,603 | 7,908,831 | ||||||||||
| Interest income | 3,926 | - | 611 | - | 4,537 | ||||||||||
| Finance costs | - | - | 953 | (2,825,045 | ) | (2,824,092 | ) | ||||||||
| Provision on accounts receivable | 93,814 | - | (310,449 | ) | - | (216,635 | ) | ||||||||
| Impairment loss | (3,622,456 | ) | - | - | - | (3,622,456 | ) | ||||||||
| Total other income (expenses) | 28,512 | - | (308,885 | ) | 1,643,542 | 1,363,169 | |||||||||
| Net income (loss) for the period | (22,889,459 | ) | 271,429 | 739,551 | (6,653,716 | ) | (28,532,195 | ) | |||||||
| Other comprehensive income (loss) | |||||||||||||||
| Foreign currency translation (loss) gain | 10,602 | (21,587 | ) | 336,058 | 590,261 | 915,334 | |||||||||
| Net (loss) income and <br> comprehensive (loss) income for the period | (22,878,857 | ) | 249,842 | 1,075,609 | (6,063,455 | ) | (27,616,861 | ) |
DeFi Alpha is a division within Valour focused on arbitrage trading opportunities. It does not have its own statement of financial position but leverages Valour’s equity for its trades. The CODM only reviews DeFi Alpha’s trading operating results as part of its consolidated review of Valour and hence it has not been presented separately in the table above. The comparative period has been restated to align with the current period presentation.
Capital Management
The Company considers its capital to consist of share capital, equity reserve and deficit. The Company’s objectives when managing capital are:
| ● | to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to<br>purchase new investments; |
|---|---|
| ● | to give shareholders sustained growth in value by increasing shareholders’ equity; while |
| --- | --- |
| ● | taking a conservative approach towards financial leverage and management of financial risks. |
| --- | --- |
35
The Company’s management reviews its capital structure on an on-going basis and adjusts it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:
| ● | raising capital through equity financings (including US$100 million in September 2025); and |
|---|---|
| ● | realizing proceeds from the disposition of its investments |
| --- | --- |
The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than (a) CBOE Canada (formerly the NEO Exchange) which requires one of the following to be met: (i) shareholders’ equity of at least CAD$2.5 million, (ii) net income from continuing operations of at least CAD$375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least CAD$25 million and (b) Nasdaq Capital Market which requires, one of the following to be met: (i) shareholder equity of at least $2.5 million, (ii) market value of listed securities of at least $35 million or (iii) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the three most recently competed fiscal years.
Readers should refer to the Risk Factors - Regulatory Risks section of this MD&A for a discussion of pertinent governmental and political policies that could materially affect, directly or indirectly investments in the Company.
There were no changes to the Company’s capital management during the three and twelve months ended December 31, 2025.
Commitments
Management Contract Commitments
The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,576,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed consolidated interim financial statements. Minimum commitments remaining under these contracts were approximately $4,294,000, all due within one year.
Legal Commitments and Class Action Lawsuitin the United States
The Company is, from time to time, involved in various claims and legal proceedings including a class action lawsuit filed against the Company and certain officers in the United States District Court for the Eastern District of New York which alleges that the Defendants made false and / or misleading statements and / or failed to disclose that: (i) DeFi Technologies was facing delays in executing its DeFi arbitrage strategy, which at all relevant times was a key revenue driver for the Company; (ii) DeFi Technologies had understated the extent of competition it faced from other Digital Asset Treasury companies and the extent to which that competition would negatively impact its ability to execute its DeFi arbitrage strategy; (iii) as a result of the foregoing issues, the Company was unlikely to meet its previously issued revenue guidance for the fiscal year 2025; (iv) accordingly, Defendants had downplayed the true scope and severity of the negative impact that the foregoing issues were having on DeFi Technologies’ business and financial results; and (v) as a result, Defendants’ public statements were materially false and misleading at all relevant times.
The Company does not agree with the allegations in the Class Action Lawsuit and intends to vigorously defend itself in Court. Based on the early stage of this dispute and the Company’s belief in the merits of its legal defenses, it has not accrued for any potential loss in the annual consolidated financial statements. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any existing or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.
36
Summaryof Quarterly Results
The following is a summary of the Company’s financial results for the eight most recently completed quarters:
| 31-Dec-25 | 30-Sep-25 | 30-Jun-25 | 31-Mar-25 | 31-Dec-24 | 30-Sep-24 | 30-Jun-24 | 31-Mar-24 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 19,992,158 | $ | 22,527,831 | $ | 13,423,306 | $ | 43,193,174 | $ | (19,335,566 | ) | $ | 28,152,839 | $ | 25,330,339 | $ | (2,721,861 | ) | ||
| Net income (loss) and comprehensive income (loss) | $ | 28,909,722 | $ | 2,992,998 | $ | 866,524 | $ | 29,930,528 | $ | (22,319,306 | ) | $ | 15,018,065 | ($ | 6,057,109 | ) | $ | (14,258,511 | ) |
| Income (loss) per Share - basic | 0.07 | 0.01 | 0.01 | 0.09 | (0.08 | ) | 0.06 | (0.02 | ) | (0.06 | ) | ||||||||
| Income (loss) per Share - diluted | 0.07 | 0.01 | 0.01 | 0.08 | (0.07 | ) | 0.05 | (0.02 | ) | (0.06 | ) | ||||||||
| Total Assets | $ | 824,563,784 | $ | 918,591,677 | $ | 874,051,988 | $ | 723,514,763 | $ | 917,869,655 | $ | 685,285,551 | $ | 573,679,281 | $ | 724,871,388 | |||
| Total Long Term Liabilities | $ | 2,548,215 | $ | 2,691,216 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
SelectedAnnual Information
The highlights of financial data for the Company for the three most recently completed financial years are as follows:
| **** | 31-Dec-25 | 31-Dec-24 | **** | 31-Dec-23 | **** | |||
|---|---|---|---|---|---|---|---|---|
| (a) Net Revenue | $ | 99,136,469 | $ | (31,425,751 | ) | $ | 7,672,827 | |
| (b) Net Income (Loss) and Comprehensive Income (Loss) | ||||||||
| (i) Total income (loss) | $ | 62,405,727 | $ | (28,532,195 | ) | $ | (15,034,425 | ) |
| (ii) Income (loss) per share – basic | $ | 0.18 | $ | (0.10 | ) | $ | (0.07 | ) |
| (iii) Income (loss) per share – diluted | $ | 0.17 | $ | (0.10 | ) | $ | (0.07 | ) |
| (c) Total Assets | $ | 824,563,783 | $ | 918,591,677 | $ | 437,044,148 | ||
| (d) Total Liabilities | $ | 675,009,930 | $ | 899,447,480 | $ | 423,426,896 |
OffBalance Sheet Arrangements
There are no off-balance sheet arrangements to which the Company is committed.
37
RelatedParty Transactions
| a) | The consolidated financial statements include the financial statements of the Company and its subsidiaries<br>and its respective ownership listed below: | |
|---|---|---|
| **** | % equity interest | |
| --- | --- | --- |
| DeFi Holdings (Bermuda) Ltd. | 100 | |
| Reflexivity LLC | 100 | |
| Valour Inc. | 100 | |
| DeFi Europe AG | 100 | |
| Stillman Digital Inc. | 100 | |
| Stillman Bermuda Ltd. | 100 | |
| Valour Digital Securities | 0 | |
| b) | Compensation of key management personnel of the Company (continued) | |
| --- | --- |
In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the three and twelve months ended December 31, 2025 and 2024 were as follows:
| **** | Year ended December 31, | |||
|---|---|---|---|---|
| **** | 2025 | 2024 | ||
| Short-term benefits | $ | 4,351,709 | $ | 21,725,185 |
| Shared-based payments | 1,670,174 | 9,552,181 | ||
| $ | 6,021,883 | $ | 31,277,366 |
During the year ended December 31, 2024, the Company paid management $20 million and 3,998,508 DeFi shares valued at $6,273,870 related to DeFi Alpha trading profits.
More detailed information regarding the compensation of officers and directors of the Company is disclosed in the management information circular and such information is incorporated by reference herein. The management information circular is available under profile of the Company on SEDAR+ at www.sedarplus.ca
| c) | During the year ended December 31, 2025, the Company incurred $502,545 (December 31, 2024: $43,393) in<br>legal fees to a firm in which a former director of the Company is a partner. At December 31, 2024, the Company had recorded $nil in accounts<br>payable and accrued liabilities related to these legal expenses incurred in the ordinary course of business with this law firm. |
|---|
During the year ended December 31, 2024, Valour purchased 1,320,130 USDT for EUR1,213,237 from a former director of Valour.
The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at December 31, 2025.
The Company announced a full-stack sovereign finance framework to modernize the $100 trillion sovereign debt market with SovFi, an entity held by the CEO, an Advisor, and the President of the Company. The Company incurred $20,000 of legal fees related to SovFi in the twelve month period ended December 31, 2025 (December 31, 2024 - $Nil).
| d) | The Company’s directors and officers may have investments in and hold management and/or director<br>and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of<br>the relationship of the Company’s directors or officers with the investment as of December 31, 2025 and December 31, 2024. | ||
|---|---|---|---|
| Investment | Nature of relationship to investment | Estimated <br> Fair Value | |
| --- | --- | --- | --- |
| ZKP Corporation* | Former Director (Olivier Roussy Newton) of investee | $ | 1,000,000 |
| Global Benchmarks AB* | Share ownership of investee by director (Per Von Rosen) | 199,875 | |
| Total investment - December 31, 2025 | $ | 1,199,875 | |
| * | Private<br>company | ||
| --- | --- | ||
| Investment | Nature of relationship to investment | Estimated <br> Fair Value | |
| --- | --- | --- | --- |
| Brazil Potash Corporation | Former Officer (Ryan Ptolemy) of investee | $ | 778,085 |
| ZKP Corporation* | Former Director (Olivier Roussy Newton) of investee | 1,000,000 | |
| Total investment - December 31, 2024 | $ | 1,778,085 | |
| * | Private<br>company | ||
| --- | --- |
38
Financial Instruments and Other Instruments
Financial assets and financial liabilities as at December 31 2025 and December 31, 2024 are as follows:
| Asset / (liabilities) <br> at amortized cost | Assets /<br> (liabilities) at fair value through profit/(loss) | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | |||||||||
| Cash | $ | 15,931,525 | $ | - | $ | 15,931,525 | |||
| Client Cash Deposits | 10,665,147 | - | 10,665,147 | ||||||
| Digital assets, digital assets loaned, and digital assets staked | - | 555,838,900 | 555,838,900 | ||||||
| Equity investments | - | 257,425,063 | 257,425,063 | ||||||
| Public investments | - | 778,085 | 778,085 | ||||||
| Private investments | - | 37,348,081 | 37,348,081 | ||||||
| Accounts payable and accrued liabilities | (3,482,464 | ) | - | (3,482,464 | ) | ||||
| Loan payable | (9,693,294 | ) | - | (9,693,294 | ) | ||||
| Trading liabilities | - | (15,109,375 | ) | (15,109,375 | ) | ||||
| ETP holders payable | - | (871,162,347 | ) | (871,162,347 | ) | ||||
| December 31, 2025 | |||||||||
| Cash | $ | 91,234,090 | $ | - | $ | 91,234,090 | |||
| Client Cash Deposits | 5,615,054 | - | 5,615,054 | ||||||
| Digital assets, digital assets loaned, and digital assets staked | - | 515,586,931 | 515,586,931 | ||||||
| Equity investments | - | 131,982,050 | 131,982,050 | ||||||
| Public investments | - | 272,520 | 272,520 | ||||||
| Private investments | - | 29,372,628 | 29,372,628 | ||||||
| Accounts payable and accrued liabilities | (9,270,110 | ) | - | (9,270,110 | ) | ||||
| Loan payable | (2,611,009 | ) | - | (2,611,009 | ) | ||||
| Lease liability | (3,102,188 | ) | - | (3,102,188 | ) | ||||
| Warrant liability | - | (13,599,316 | ) | (13,599,316 | ) | ||||
| Trading liabilities | - | (24,122,640 | ) | (24,122,640 | ) | ||||
| ETP holders payable | - | (622,304,667 | ) | (622,304,667 | ) |
The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:
Credit risk
Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada, the United States and Europe. Deposits held with this institution may exceed the amount of insurance provided on such deposits.
39
Regulatory Risks
As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company. Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation.
Custodian Risks
The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line as well as for digital assets underlying Valour Cayman ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.
Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.
The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at December 31, 2025, the Company had current assets of $667,317,486 (December 31, 2024 - $710,993,671) to settle current liabilities of $672,742,419 (December 31, 2024 - $899,447,480).
40
The following table shows the Company’s source of liquidity by assets / (liabilities) as at December 31, 2025 and December 31, 2024:
| December 31, 2025 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Total | Less than<br> 1 year | 1-3 years | ||||||
| Cash | $ | 91,234,090 | $ | 91,234,090 | $ | - | ||
| Client cash deposits | 5,615,054 | 5,615,054 | - | |||||
| Prepaid expenses | 9,596,921 | 9,596,921 | - | |||||
| Digital assets, digital assets loaned, and digital assets staked | 515,586,931 | 482,763,021 | 32,823,910 | |||||
| Public Investments | 272,520 | 272,520 | - | |||||
| Private investments | 29,372,628 | - | 29,372,628 | |||||
| Equity investments | 131,982,050 | 75,411,946 | 56,570,104 | |||||
| Accounts payable and accrued liabilities | (9,270,110 | ) | (9,270,110 | ) | - | |||
| Loan payable | (2,611,009 | ) | (2,611,009 | ) | - | |||
| Trading liabilities | (21,826,430 | ) | (21,826,430 | ) | ||||
| Lease liability | 3,102,188 | 553,973 | 2,548,215 | |||||
| ETP holders payable | (622,304,667 | ) | (622,304,667 | ) | - | |||
| Total assets / (liabilities) | $ | 128,453,956 | $ | 7,139,099 | $ | 121,314,857 | ||
| December 31, 2024 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| **** | **** | Total | **** | **** | Less than 1 year | **** | **** | 1-3 years |
| Cash | $ | 15,931,525 | $ | 15,931,525 | $ | - | ||
| Client cash deposits | 10,665,147 | 10,665,147 | - | |||||
| Prepaid expenses | 1,797,724 | 1,797,724 | - | |||||
| Digital assets, digital assets loaned, and digital assets staked | 555,838,900 | 555,504,190 | 334,710 | |||||
| Public Investments | 778,085 | 778,085 | - | |||||
| Private investments | 37,348,081 | - | 37,348,081 | |||||
| Equity investments | 257,425,063 | 126,317,000 | 131,108,063 | |||||
| Accounts payable and accrued liabilities | (3,482,464 | ) | (3,482,464 | ) | - | |||
| Loan payable | (9,693,294 | ) | (9,693,294 | ) | - | |||
| Trading liabilities | (15,109,375 | ) | (15,109,375 | ) | ||||
| ETP holders payable | (871,162,347 | ) | (871,162,347 | ) | - | |||
| Total assets / (liabilities) | $ | (19,662,955 | ) | $ | (188,453,809 | ) | $ | 168,790,854 |
Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.
Market risk
Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices.
| (a) | Price and concentration risk |
|---|
The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. As of December 31, 2025, the Company had no investments exposed to market risk (December 31, 2024 – no investments).
41
| (b) | Interest rate risk |
|---|
The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at December 31, 2025, a 1% change in interest rates could result in an approximately $912,000 change in net loss.
| (c) | Currency risk |
|---|
Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to United States dollar, Euro, Swiss Franc, Swedish Krona and British Pound. Fluctuations in the exchange rates between this currency and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.
As at December 31, 2025 and December 31, 2024, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:
| **** | December 31, 2025 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | Canadian Dollars | **** | British Pound | Swiss Franc | **** | Swedish Krona | **** | European Euro | **** | Arab Emirates Dirham | **** | ||||||
| Cash | $ | 2,284,909 | $ | 51,536 | $ | 8,928,624 | $ | 12,978,875 | $ | 4,570,541 | $ | 457,515 | |||||
| Private investments | 25,172,753 | - | - | - | - | - | |||||||||||
| Prepaid investment | - | - | 528,255 | - | - | 34,278 | |||||||||||
| Accounts payable and accrued liabilities | (1,003,289 | ) | - | (449,107 | ) | - | (20,219 | ) | (14,057 | ) | |||||||
| ETP holders payable | - | - | - | (285,235,369 | ) | (9,211,650 | ) | - | |||||||||
| Net assets (liabilities) | $ | 26,454,373 | $ | 51,536 | $ | 9,007,772 | $ | (272,256,494 | ) | $ | (4,661,328 | ) | $ | 477,736 | |||
| December 31, 2024 | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| **** | Canadian Dollars | **** | British Pound | **** | Swiss Franc | **** | Swedish Krona | European Euro | **** | Arab Emirates Dirham | |||||||
| Cash | $ | 1,768,319 | $ | - | $ | 3,573,221 | $ | 6,823,399 | $ | 2,533,427 | $ | 61,252 | |||||
| Private investments | 1,367,716 | - | 35,457,990 | - | - | - | |||||||||||
| Prepaid investment | 447,753 | - | - | - | - | - | |||||||||||
| Accounts payable and accrued liabilities | (1,695,248 | ) | (55,416 | ) | (247,501 | ) | - | (15,562 | ) | - | |||||||
| Net assets (liabilities) | $ | 1,888,540 | $ | (55,416 | ) | $ | 38,783,710 | $ | 6,823,399 | 2,517,865 | $ | 61,252 |
A 10% increase (decrease) in the value of the Canadian dollar against all foreign currencies in which the Company held financial instruments as of December 31, 2025 would result in an estimated increase (decrease) in net income of approximately $23,815,000, (December 31, 2024 - $5,002,000).
| (d) | Digital currency risk factors: Perception, Evolution, Validation and Valuation |
|---|
A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.
Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.
The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.
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| (e) | Fair value of financial instruments |
|---|
The Company has determined the carrying values of its financial instruments as follows:
| i. | The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate their fair values due to the<br>short-term nature of these instruments. |
|---|---|
| ii. | Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note<br>2 in the Company’s December 31, 2025 financial statements. |
| --- | --- |
| iii. | Digital assets classified as financial assets relate to USDC which is measured at fair value. |
| --- | --- |
The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at December 31, 2025 and December 31, 2024.
| **** | Level 1 (Quoted Market price) | Level 2 (Valuation technique - observable market Inputs) | Level 3 (Valuation technique - non-observable market inputs) | **** | Total | **** | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| Privately traded investments | $ | - | $ | - | $ | 37,348,081 | $ | 37,348,081 | ||
| Digital assets | - | 555,838,900 | - | 555,838,900 | ||||||
| Equity investments | - | - | 257,425,063 | 257,425,063 | ||||||
| Publicly traded investments | 778,085 | - | - | 778,085 | ||||||
| December 31, 2024 | $ | 778,085 | $ | 555,838,900 | $ | 294,773,144 | $ | 851,390,129 | ||
| Privately traded investments | $ | - | $ | - | $ | 29,372,628 | $ | 29,372,628 | ||
| Digital assets | - | 496,934,790 | 18,652,141 | 515,586,931 | ||||||
| Equity investments | - | - | 131,982,050 | 131,982,050 | ||||||
| Publicly traded investments | 272,520 | - | - | 272,520 | ||||||
| Warrant liability | - | - | (13,599,316 | ) | (13,599,316 | ) | ||||
| December 31, 2025 | $ | 272,520 | $ | 496,934,790 | $ | 166,407,503 | $ | 663,614,813 |
Level 1 Hierarchy
The following table presents the changes in fair value measurements of financial instruments classified as Level 1 during the periods ended December 31, 2025 and December 31, 2024. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.
| Level 1 investments, financial assets at fair value | December 31, 2025 | **** | December 31, 2024 | ||
|---|---|---|---|---|---|
| Opening balance | $ | 778,085 | $ | - | |
| Realized loss on investments | (419,093 | ) | - | ||
| Transferred from level 3 | 272,520 | 778,085 | |||
| Investments sold | (358,992 | ) | - | ||
| $ | 272,520 | $ | 778,085 |
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Level 2 Hierarchy
The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the periods ended December 31, 2025 and December 31, 2024. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.
| Level 2 investments, financial assets at fair value | December 31, 2025 | **** | December 31, 2024 | **** | ||
|---|---|---|---|---|---|---|
| Opening balance | $ | 555,838,900 | $ | 370,469,700 | ||
| Digital assets acquired | 232,267,760 | 401,118,676 | ||||
| Digital assets disposed | (87,878,518 | ) | (514,217,138 | ) | ||
| Digital assets earned from staking, lending and fees | 12,332,036 | 26,075,436 | ||||
| Realized gain on digital assets | 49,635,380 | 306,744,938 | ||||
| Unrealized losses on digital assets | (260,376,909 | ) | (34,372,022 | ) | ||
| Settlement of Genesis loan | (6,100,598 | ) | - | |||
| Digital assets transferred in from level 3 | 2,749,352 | - | ||||
| Fees and other | (1,532,613 | ) | 19,310 | |||
| $ | 496,934,790 | $ | 555,838,900 |
Level 3 Hierarchy
The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the periods ended December 31, 2025 and December 31, 2024. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.
| Level 3 investments, financial assets at fair value | December 31, 2025 | **** | December 31, 2024 | **** | ||
|---|---|---|---|---|---|---|
| Opening balance | $ | 294,773,144 | $ | 32,717,095 | ||
| Purchases | 50,865,445 | 173,814,141 | ||||
| Transferred to level 1 | (272,520 | ) | (778,085 | ) | ||
| Acquired as subsidiary | (379,906 | ) | - | |||
| Realized gain | 31,217,931 | 83,723,906 | ||||
| Unrealized (loss)/ gain | (121,974,940 | ) | 5,296,087 | |||
| Transferred to level 2 | (2,749,352 | ) | - | |||
| Foreign exchange gain | (527,269 | ) | - | |||
| Equity investments disposed | (71,685,819 | ) | - | |||
| Digital assets earned from staking, lending and fees | 740,105 | - | ||||
| $ | 180,006,819 | $ | 294,773,144 |
Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.
| Level 3 investments, financial liabilities at fair value | December 31,<br> 2025 | December 31,<br> 2024 | |||
|---|---|---|---|---|---|
| Opening balance | $ | - | $ | - | |
| Warrants granted | 53,195,195 | - | |||
| Change in fair value | (39,595,879 | ) | - | ||
| $ | 13,599,316 | $ | - |
As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.
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The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at December 31, 2025 and December 31, 2024.
| Description | Fair value | Valuation technique | Significant unobservable input(s) | Range of significant unobservable input(s) | |
|---|---|---|---|---|---|
| 3iQ Corp. | $ | 300,460 | Recent financing | Marketability of shares | 0% discount |
| Luxor Technology Corporation | 500,050 | Recent financing | Marketability of shares | 0% discount | |
| Neuronomics AG | 89,581 | Recent financing | Marketability of shares | 0% discount | |
| Amina Bank | 35,457,990 | Market approach | Marketability of shares | 0% discount | |
| ZKP Corporation | 1,000,000 | Recent financing | Marketability of shares | 0% discount | |
| Brazil Potash Corp. | 778,085 | Market approach | Marketability of shares | 0% discount | |
| Equity Investments in digital | 257,425,063 | Market approach | Discount for lack of marketability | 25% discount | |
| December 31, 2024 | $ | 295,551,229 | |||
| Luxor Technology Corporation | $ | 524,963 | Recent financing | Marketability of shares | 0% discount |
| Amina Bank | 24,285,752 | Market approach | Marketability of shares | 0% discount | |
| ZKP Corporation | 1,000,000 | Recent financing | Marketability of shares | 0% discount | |
| Global Benchmarks AB | 199,875 | Recent financing | Marketability of shares | 0% discount | |
| CH Technical Solutions SA | 362,038 | Recent financing | Marketability of shares | 0% discount | |
| Canada Stablecorp Inc. | 500,000 | Recent financing | Marketability of shares | 0% discount | |
| Continental Stable Coin | 500,000 | Recent financing | Marketability of shares | 0% discount | |
| Bonsol Labs Inc. | 2,000,000 | Recent financing | Marketability of shares | 0% discount | |
| TenX Protocols Inc. | 272,520 | Recent financing | Marketability of shares | 0% discount | |
| Equity Investments in digital | 131,982,050 | Market approach | Discount for lack of marketability | 16% discount | |
| Digital assets on loan | 18,652,141 | Market approach | Discount for lack of marketability | 30% discount | |
| December 31, 2025 | $ | 180,279,339 |
3iQ Corp. (“3iQ”)
On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. During the year ended December 31, 2024, the Company sold 125,295 common shares of 3iQ. On September 3, 2025, the Company sold its remaining 61,712 shares of 3iQ for proceeds of $481,484 resulting in a gain on sale of $181,015. As at December 31, 2025, the Company owned no shares of 3iQ.
Luxor Technology Corporation (“LTC”)
On December 29, 2020, the Company subscribed $100,000 to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed to additional rights of $62,500. As at December 31, 2025, the valuation of LTC was based on secondary sale of shares and as a result, the Company increased the value of its investment during the year ended December 31, 2025. As at December 31, 2025, the valuation of LTC was $524,963 (December 31, 2024 - $500,050). As at December 31, 2025. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $302,446 (December 31, 2024 - $50,005) change in the carrying amount.
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Amina Bank AG (“Amina”)
On January 14, 2022, the Company invested $25,286,777 (CAD$34,498,750) to acquire 3,906,250 non-votes shares of Amina. During the year ended December 31, 2025, the Company impaired its investment in Amina due to the decrease in Amina’s assets under management. As at December 31, 2025, the valuation of Amina was $24,285,752 (December 31, 2024 - $35,457,990). As at December 31, 2025, a +/- 10% change in the fair value of Amina will result in a corresponding +/- $2,428,575 (December 31, 2024 +/- $3,545,799) change in the carrying amount.
ZKP Corporation (“ZKP”)
On August 2, 2024, the Company invested $1,000,000 to acquire shares of ZKP. As at December 31, 2025, the valuation of ZKP was based on the recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of ZKP will result in a corresponding +/- $100,000 change in the carrying amount (December 31, 2024 - $100,000).
Global Benchmarks AB (“Global Benchmarks”)
On September 24, 2024, the Company invested $199,875 to acquire shares of Global Benchmarks. As at December 31, 2025, the valuation of Global Benchmarks was based on a recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of Global Benchmarks will result in a corresponding +/- $19,988 change in the carrying amount (December 31, 2024 - $19,988).
CH Technical Solutions SA (“CH Technical”)
On September 24, 2024, the Company invested $3,971,272 to acquire 25 shares of CH Technical. During the year ended December 31, 2025, the Company impaired its investment in CH Technical based on the investments in CH Technical. As at December 31, 2025, the valuation of CH Technical was $272,520 (December 31, 2024 - $nil). As at December 31, 2025, a +/- 10% change in the fair value of CH Technical will result in a corresponding +/- $27,252 change in the carrying amount (December 31, 2024 - $nil).
Canada Stablecorp Inc.
On September 9, 2025, the Company invested $499,999 to acquire 303,030 shares of Canada Stablecorp Inc. As at December 31, 2025, the valuation of Canada Stablecorp Inc.was based on a recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of Canada Stablecorp Inc. will result in a corresponding +/- $50,000 change in the carrying amount (December 31, 2024 - $nil).
Continental Stable Coin
On July 25, 2025, the Company invested $500,000 to acquire rights to certain preferred shares of Continental Stable Coin. As at December 31, 2025, the valuation of Continental Stable Coin was based on a recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of Continental Stable Coin will result in a corresponding +/- $50,000 change in the carrying amount (December 31, 2024 - $nil).
Bonsol Labs Inc. (“Bonsol”)
On November 13, 2025, the Company invested $2,000,000 to acquire rights to certain preferred shares of Bonsol. As at December 31, 2025, the valuation of Bonsol was based on a recent financing price. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2025. As at December 31, 2025, a +/- 10% change in the fair value of Bonsol will result in a corresponding +/- $200,000 change in the carrying amount (December 31, 2024 - $nil).
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SUI Digital Assets Loaned at FVTPL
During Q2 2025, the Company invested $41,160,000 to acquire SUI digital assets. Management used the net asset values as determined by market pricing and applied a 16% discount for lack of marketability. As at December 31, 2025, a +/- 10% change in the fair value of the SUI digital assets loaned will result in a corresponding +/- $1,865,214 change in the carrying amount.
Equity Investments in Digital Assets Funds at FVTPL (“Equity Investments”)
During Q2 2024, the Company invested $173,814,136 to acquire interest in two entities set up to hold SOL and AVAX acquired from a bankrupt estate. Management used the net asset values as determined by the entities managers and applied a 16% discount for lack of marketability. As at December 31, 2025, a +/- 10% change in the fair value of the Equity Investments will result in a corresponding +/- $13,198,205 change in the carrying amount (December 31, 2024 - $25,742,506).
Digital asset risk
| (a) | Digital currency risk factors: Risks due to the technical design of cryptocurrencies |
|---|
The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.
Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.
Protocols for most digital assets or cryptocurrencies are public open-source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.
| (b) | Digital currency risk factors: Ownership, Wallets |
|---|
Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:
| - | Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private<br>keys and public keys/addresses. |
|---|---|
| - | Paper<br>wallets are simply paper printouts of private and public<br>addresses. |
| --- | --- |
| - | Desktop wallets are installable software programs/apps downloaded from the internet that hold your private and public keys/addresses. |
| --- | --- |
| - | Mobile wallets are wallets installed on a mobile device and are thus always available and connected to<br>the internet. |
| --- | --- |
| - | Web wallets are hot wallets that are always connected to the internet that can be stored in a browser<br>or can be “hosted” by third party providers such as an exchange. |
| --- | --- |
| (c) | Digital currency risk factors: Political, regulatory risk and<br>technology in the market of digital currencies |
| --- | --- |
The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such markets . It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.
The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).
As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack.
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OutstandingShare Data
As of March 29, 2026, the following securities are outstanding:
Authorized unlimited common shares without par value – 387,777,239 are issued and outstanding.
Authorized 20,000,000 preferred shares, at 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible – 4,500,000 are issued and outstanding.
Stock options and convertible securities outstanding are as follows:
Stock Options:
19,737,217 with an exercise price ranging from CAD$0.09 to CAD$4.97 expiring between November 16, 2025 and July 11, 2030.
Warrants:
20,000,000 with an exercise price of CAD$0.20 expiring on November 6, 2028.
34,246,577 with an exercise price of US$2.63 expiring on September 26, 2028.
Deferred share units:
9,629,942 with vesting terms ranging from six months to three years.
Restricted share units:
2,032,500 with vesting terms of two years
Performance share units:
200,000 with vesting term of ten months
Risksand Uncertainties
The Company is exposed to a number of risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. The following outlines certain risk factors specific to the Company. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward–looking information relating to the Company. Please also refer to the Company’s AIF for the year ended December 31, 2025 filed on SEDAR+ for a full description of the Company’s risks in addition to those highlighted below.
Staking and Lending of Cryptocurrencies,DeFi Protocol Tokens or other Digital Assets
The Company (or entities the Company makes Equity Investments in Digital Assets in) may stake or lend digital assets to third parties or affiliates. The digital assets that are “staked” will earn rewards in the form of additional digital assets, which will accrue to the validator address, but neither the rewards nor the principal allocation of digital assets can be withdrawn for a predetermined period of time, and as a result, the liquidity of such digital assets will be limited. On termination of the staking arrangement or loan, the counterparty is required to return the digital assets to the owner; any gains or loss in the market price during the period would inure to the owner. Such limitations on liquidity could prevent the disposal of the applicable digital asset during certain periods. Liquid digital assets that are staked are maintained outside of cold storage during the staking process, locked into a smart contract and will generally not be maintained with a qualified custodian while being staked. The owner of the staked digital asset is provided with withdrawal keys that allow retrieval of the staked liquid tokens once withdrawals have been activated by the relevant protocol, and on a defined timeline with daily limits on the number of digital assets that can be withdrawn. Withdrawal keys will be held by a qualified custodian, but the additional complexities of staking liquid digital assets can increase the risk of loss. Staked liquid tokens are also subject to higher risk of loss or theft due to malicious actions, network interruptions, or a failure by third-party validators to validate transactions. Staking creates exposure to smart contracts. Smart contracts are subject to certain risks and may result in losses stemming from errors, bugs or other failures. Staking provides no guarantee of return nor are there currently efficient ways to insure against such risks. To the extent that smart contract insurance is available, it may not cover all risks related to staking of the applicable digital asset, engaging with smart contracts, or other opportunities utilized.
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In the event of the bankruptcy of the counterparty, the Company could experience losses and/or in recovering its digital assets. In addition, to the extent that the value of the digital assets increases during the term of the loan, the value of the digital assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the digital assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of digital assets, including by failing to deliver additional collateral when required or by failing to return the digital assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.
Furthermore, the Company and its affiliates may also pledge and grant security over its digital assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession of such pledged digital assets.
The digital assets that are staked (if such staking requires the locking up of the assets), loaned or pledged to third parties by the Company include digital assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceeds the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.
Locked Tokens
The Company has purchased various locked tokens which cannot be freely sold due to resale conditions that generally last three years. By purchasing such locked tokens to hedge Valour’s ETPs, the Company does assume some balance sheet duration mismatch risk. The Company believes it has sufficient equity and liquidity to manage any ETP redemptions that are hedged by locked tokens. The Company can also employ various hedging and derivative strategies to manage liquidity risk due to locked tokens.
Custody Risk
The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line, its digital assets in treasury as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.
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Cryptocurrencies, DeFi Protocol Tokensand Digital Assets Momentum Pricing Risk
Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.
The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Any declines in the volume of digital asset transactions, the price of digital assets, or market liquidity for digital assets generally may adversely affect our operating results. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, our financial condition may be adversely affected, and we could determine that it is not economically feasible to continue activities.
The price and trading volume of any digital asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:
| ● | changes in liquidity, market-making volume, and trading activities; |
|---|---|
| ● | investment and trading activities of highly active retail and institutional users, speculators, miners,<br>and investors; |
| --- | --- |
| ● | decreased user and investor confidence in digital assets and digital asset platforms; |
| --- | --- |
| ● | negative publicity or events and unpredictable social media coverage or “trending” of digital<br>assets; |
| --- | --- |
| ● | the ability for digital assets to meet user and investor demands; |
| --- | --- |
| ● | the functionality and utility of digital assets and their associated ecosystems and networks; |
| --- | --- |
| ● | consumer preferences and perceived value of digital asset markets; |
| --- | --- |
| ● | regulatory or legislative changes and updates affecting the digital asset economy; |
| --- | --- |
| ● | the characterization of digital assets under the laws of various jurisdictions around the world; |
| --- | --- |
| ● | the maintenance, troubleshooting, and development of the blockchain networks; |
| --- | --- |
| ● | the ability for digital asset networks to attract and retain miners or validators to secure and confirm<br>transactions accurately and efficiently; |
| --- | --- |
| ● | interruptions in service from or failures of major digital asset platforms; |
| --- | --- |
| ● | availability of an active derivatives market for various digital assets; |
| --- | --- |
| ● | availability of banking and payment services to support digital asset-related projects; |
| --- | --- |
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| ● | level of interest rates and inflation; |
|---|---|
| ● | national and international economic and political conditions; |
| --- | --- |
| ● | global digital asset supply; |
| --- | --- |
| ● | changes in the software, software requirements or hardware requirements underlying a blockchain network; |
| --- | --- |
| ● | competition for and among various digital assets; and |
| --- | --- |
| ● | actual or perceived manipulation of the markets for digital assets. |
| --- | --- |
Cryptocurrencies, DeFi Protocol Tokensand Digital Assets Volatility Risk
As Valour’s ETPs track the market price of digital assets, cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such digital assets, cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or other third parties holding digital assets, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.
Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.
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Cybersecurity Threats, Security Breachesand Hacks
As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.
Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.
Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s cryptocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.
As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack.
Cryptocurrency Exchanges and other TradingVenues are Relatively New
The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets in part through cryptocurrency exchanges. In particular, Valour relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in many cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.
Regulatory Risks
As digital assets have grown in both popularity and market size, governments around the world have reacted differently to digital assets with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.
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Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation.
The Company has not received any exemptive relief from regulators in Canada. The Company discusses regulatory compliance with its external legal counsel on a regular basis. Investments in the ETPs in the light of their exposure to digital assets must always be assessed by every investor based on the circumstances and legal and regulatory conditions applicable to that investor. An investor governed by such conditions may be subject to limited possibilities to invest in the ETPs and/or experience unforeseeable consequences of a holding in the ETPs. The combination of the nature of Valour’s activities, the markets to which it is exposed, the institutions with which it does business and the securities which it issues makes it particularly exposed to national, international and supranational regulatory action and taxation changes. The scope and requirements of regulation and taxation applicable to the issuer continues to change and evolve and there is a risk that as a result it may prove more difficult or impossible, or more expensive, for Valour to continue to carry on their functions in the manner currently contemplated. This may require that changes are made in the future to the agreements applicable to Valour and may result in changes to the commercial terms of the ETPs and/or the inability to apply for and redeem ETPs and/or compulsory redemption of some or all of the ETPs and/or disruption to the pricing thereof.
Valour Cayman and VDSL are companies which are regulated by various laws and regulations of the Cayman Islands and Jersey, respectively. Valour Cayman and VDSL cannot fully anticipate all changes that in the future may be made to laws and regulations to which Valour Cayman and VDSL are subject to in the future, nor the possible impact of all such changes. Valour Cayman and VDSL’s ability to conduct its business is dependent on the ability to comply with rules and regulations.
If the Company was found to be in breach of regulations applicable to Valour Cayman or VDSL, it could result in fines or adverse publicity which could have a material adverse effect on the business which in turn may lead to decreased results of operations and the company’s financial condition.
Valour Cayman or VDSL’s involvement in such proceedings or settlements as well as potential new legislation or regulations, decisions by public authorities or changes regarding the application of or interpretation of existing legislation, regulations or decisions by public authorities applicable to Valour Cayman or VDSL’s operations, the ETPs and/or the underlying assets, may adversely affect Valour Cayman or VDSL’s business or an investment in the ETPs.
The impact of any detrimental developments in the underlying digital asset’s regulation on Valour Cayman and VDSL’s ETPs becomes evident by considering an ETP’s product nature: An Exchange Traded Product is a financial instrument traded – like a share - on a stock exchange whereby typically the aim is to provide the same return as a specified benchmark or asset (before fees). Although ETPs can take a number of forms (ETFs/ETCs/ETNs), they share some common characteristics. ETPs are designed to replicate the return of an underlying benchmark or asset, with the easy access and tradability of a share or digital asset (that otherwise may only be bought via a decentralized exchange wallet-setup). Investors can benefit from the broad diversification of a benchmark, gaining exposure to hundreds or thousands of individual underlying securities – or digital assets - in a single transaction. Additionally, the wide range of asset classes covered by ETPs opens up more exotic investment areas which historically could only be accessed by institutional investors (such as individual commodities, emerging markets or digital assets). ETPs generally do all this with a lower fee than actively managed funds and therefore compete with traditional index funds on cost.
Valour Cayman’s ETPs are non-interest-bearing debt securities that are designed to track the return of an underlying digital asset. The current Valour ETP program in place does not provide that those securities are collateralised. Although their yield references an underlying benchmark or asset, the ETPs are similar to unsecured, listed bonds. As such, Valour ETPs are entirely reliant on the creditworthiness of Valour as issuing entity. Hence, generally a change in that creditworthiness might negatively impact the value of the ETP, irrespective of the performance of the underlying benchmark or digital asset.
However, the primary appeal of these types of ETPs is that they guarantee exposure to a benchmark or an asset’s return (minus fees) even when the underlying markets or sectors suffer from liquidity shortages. The return is guaranteed by the issuing entity and not reliant on the access (direct or via a directive) to the underlying assets. Unlike physical replication, a synthetic ETP does not hold the underlying assets the product is designed to track. Instead, an ETP issuer like Valour enters into hedging transactions thereby directly or indirectly trading in the underlying assets, entering swap agreements, making investment in funds dedicated to holding the underlying digital assets etc. with a range of counterparties to provide the return of the underlying assets. Consequently, a negative change of regulation (tightening/restriction/prohibition) can have a direct impact on Valour’s issuer activity or – indirectly – by affecting its contractual counterparties. Restrictive and prohibitive regulation may lead to counterparty default, known as counterparty risk. If a counterparty defaults on its obligations under the hedging transactions described above, the ETP would not provide the return of the asset it is designed to track which could also expose investors to losses.
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Loss of Foreign Private Issuer Status inthe Future
The Company may in the future lose its foreign private issuer status if a majority of the Common Shares are owned of record in the United States and the Company fails to meet the additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to the Company under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs the Company incurs as a Canadian foreign private issuer eligible to use the multijurisdictional disclosure system. If the Company is not a foreign private issuer, it would not be eligible to use the multijurisdictional disclosure system or other foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer.
Forward-Looking Information and FOFI MayProve Inaccurate
Readers are cautioned not to place undue reliance on forward-looking information. By their nature forward-looking information and future-orientated financial information and financial outlook information (collectively, “FOFI”) involve numerous assumptions and known and unknown risks and uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those suggested by the forward-looking statements and/or FOFI or contribute to the possibility that predictions, forecasts or projections will prove to be materially inaccurate.
Class action litigation may also arise in connection with forward-looking statements, even where such statements are accompanied by cautionary language.
Risks Associated with its Internal ControlOver Financial Reporting.
The Company is subject to reporting and other obligations under applicable U.S. and Canadian securities laws and the rules of Nasdaq and Cboe Canada. The Company has significant requirements for enhanced financial reporting and internal control. The process of designing and implementing effective internal control is a continuous effort that requires the Company to anticipate and react to changes in its business and the economic and regulatory environments and to expend significant resources to maintain a system of internal control that is adequate to satisfy its reporting obligations as a public company. Any failure to implement or maintain internal control could cause the Company to fail to meet its reporting obligations on a timely basis, result in material misstatements in its consolidated financial statements and harm its business and results of operations. If the Company is unable to implement any required changes to its internal control over financial reporting effectively or efficiently, it could adversely affect the Company’s operations, financial reporting and results of operations. In addition, if the Company fails to maintain an effective system of disclosure controls and internal control over financial reporting, its ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected.
In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, the Company may identify deficiencies related to internal control over financial reporting that it may not be able to remediate in time to meet the deadline imposed by U.S. and/or Canadian securities laws, including pursuant to Section 404 of the Sarbanes-Oxley Act. The Company’s testing may reveal deficiencies in its internal control over financial reporting that are deemed to be material weaknesses which could result in a material misstatement of its annual consolidated financial statements or its interim reports, or disclosures that may not be prevented or detected.
The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all error and fraud. The inherent limitations include the realities that judgements in decision making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by individual acts of certain persons, by collusion of two or more people or by management override of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected in a timely manner or at all. The Company may not be able to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with U.S. and/or Canadian securities laws, including, the Sarbanes-Oxley Act, for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, or its independent registered public accounting firm may not issue an unqualified opinion, as and when applicable. If the Company is unable to conclude that it has effective internal control over financial reporting, investors could lose confidence in the Company’s reported financial information, which could adversely affect the trading price of the Company’s Common Shares and make the Company subject to investigations by the stock exchanges on which its securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources. Failure to accurately report the Company’s financial performance on a timely basis could also jeopardize the Company’s listing on Nasdaq and Cboe Canada or any other stock exchange on which its Common Shares may be listed. Delisting of the Common Shares on any exchange would reduce the liquidity of the market for the Company’s Common Shares, which would reduce the price of and increase the volatility of the market price of its Common Shares.
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For example, the Company identified a material weakness in its internal control over financial reporting and restated its financial statements for the three-month periods ended June 30, 2023, and September 30, 2023 as a result of factors related to that weakness. For more information, see “Risk Factors – Risks Relating to the Business and Financial Condition of the Company – Material Weakness in the Company’s Financial Statements” elsewhere in this MD&A. The Company may not be able to successfully remediate the identified material weakness or may identify additional material weaknesses in the future or fail to maintain effective internal control over financial reporting, which may result in material misstatements of its consolidated financial statements or cause the Company to fail to meet its periodic reporting obligations, which could have a material adverse effect on the Company, its business, results of operations, financial condition and stock price.
Stock Exchange Listing Compliance Risk
The Company’s Common Shares are listed on Nasdaq and Cboe Canada. Continued listing on these stock exchanges is subject to compliance with their rules and continued listing requirements, including minimum bid price, minimum market value, and corporate governance standards. If the Company fails to meet these requirements, it may receive a deficiency notice and could face delisting proceedings. Delisting from the stock exchanges could adversely affect the liquidity and market price of the Common Shares, the Company’s ability to raise capital, and the Company’s reputation with investors and business partners. The Company is not currently in compliance with the Nasdaq minimum bid price requirement.
U.S. and Canadian securities laws as well as the rules of Nasdaq and Cboe Canada require, among other things, timely filing of financial statements and certain related documents and reports. If the Company is unable to meet these requirements, it could face stock exchange delisting proceedings and penalties under applicable U.S. and Canadian securities laws. On March 23, 2026, the Company announced it may experience a delay and default in filing its Annual Filings and it has applied to the OSC to approve the MCTO. A delay and default in filing the annual filings could have a material adverse effect on the Company, its business, results of operations, financial condition and stock price. Additionally, it is not certain the Company will receive the MCTO. Should the Company not receive the MCTO, the Company, its business, results of operations, financial condition and stock price could be materially adversely effected.
Additionally, members of our management team and our board of directors have limited experience managing a publicly traded company and navigating the complex regulatory environment for public companies. We are subject to significant regulatory oversight and reporting obligations under the U.S. and Canadian securities laws and the continuous scrutiny of securities analysts and investors. These obligations and constituents require significant attention from our management and board of directors, and failure to effectively comply with the regulations applicable to public companies may materially and adversely affect DeFi’s reputation, business, results of operations, financial condition, prospects and valuation, and the value of its Common Shares.
Noncompliance with Continued Listing Requirementsof Nasdaq and Potential Delisting
The Company’s Common Shares are currently listed for trading on The Nasdaq Capital Market under the symbol “DEFT”. The continued listing of the Company’s Common Shares on Nasdaq is subject to the Company’s compliance with a number of listing standards. On March 5, 2026, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC notifying the Company that the minimum bid price per share of its Common Shares was below $1.00 for a period of 30 consecutive business days as of March 4, 2026 and that the Company did not meet the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”) to maintain a minimum bid price of $1.00 per share. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days, or until September 1, 2026, to regain compliance with the Minimum Bid Price Rule. To regain compliance, the closing bid price of the Company’s Common Shares must be at least $1.00 per Common Share for a minimum of ten consecutive business days (though Nasdaq staff may, in their discretion, extend this to generally up to 20 consecutive business days). There can be no assurance that the Company will be able to regain compliance with these requirements or that the Company’s Common Shares will continue to be listed on Nasdaq.
In the event the Company does not regain compliance by September 1, 2026, the Company may be eligible for an additional 180-calendar-day compliance period. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, including by effecting a reverse stock split, if necessary. If the Company is not eligible for the second compliance period or Nasdaq staff concludes that the Company will not be able to cure the deficiency during the second compliance period, Nasdaq will provide written notice to the Company that the Company’s Common Shares will be subject to delisting. In the event of such notification, the Company may appeal Nasdaq’s determination to delist its Common Shares, but there can be no assurance that Nasdaq would grant the Company’s request for continued listing.
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The Company intends to monitor the closing bid price of its Common Shares and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Rule. There can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Rule, or will otherwise be in compliance with other Nasdaq Listing Rules. In addition, there can be no assurance that, if the Company were to effect a reverse stock split after obtaining any required approvals and intending to regain compliance, the reverse stock split would cause the Company’s Common Shares to meet the Minimum Bid Price Rule. If the Company fails to regain compliance with the Nasdaq continued listing standards, Nasdaq will provide notice that the Company’s Common Shares will be subject to delisting.
Such a delisting or even notification of failure to comply with such requirements would have a negative effect on the price of the Company’s Common Shares and would impair your ability to sell or purchase the Common Shares when you wish to do so. In addition, the delisting of the Common Shares could lead to a number of other negative implications such as a loss of media and analyst coverage, a determination that the Common Shares are a “penny stock” which will require brokers trading in the Common Shares to adhere to more stringent rules and likely result in a reduced level of trading activity in the secondary trading market for the Company’s securities, and materially adversely impact the Company’s ability to raise capital on acceptable terms or at all. Delisting from Nasdaq could also have other negative results, including the potential loss of confidence by the Company’s current or prospective third-party providers and partners, the loss of institutional investor interest, and fewer partnering opportunities. In the event of a delisting, the Company may take actions to restore its compliance with Nasdaq’s listing requirements, but the Company can provide no assurance that any such action would allow its Common Shares to become listed again, stabilize the market price or improve the liquidity of its Common Shares, prevent its Common Shares from dropping below the Nasdaq Minimum Bid Price Rule or prevent future non-compliance with Nasdaq’s listing requirements.
If the Company’s Common Shares were no longer listed on Nasdaq, investors would be limited to where they could trade, and might only be able to trade on Cboe Canada or on one of the over-the-counter markets. There is no assurance, however, that prices for the Company’s Common Shares would be quoted on one of these other trading systems or that an active trading market for its Common Shares would exist, which would materially and adversely impact the market value of its Common Shares and your ability to sell the Common Shares.
Risks Related to Legal Proceedings andRegulatory Matters
We may be subject to class action lawsuits and other litigation, which could adversely affect our business, financial condition, results of operations, and reputation.
From time to time, we may be involved in class action lawsuits, shareholder derivative actions, and other litigation, including claims arising under Canadian laws, U.S. federal securities laws, state securities laws, and other statutes or common law theories. Such actions may be initiated by shareholders, customers, employees, regulators, or other third parties, and may relate to, among other things, disclosures made by us or on our behalf, alleged violations of securities laws, fiduciary duties, employment practices, privacy or cybersecurity matters, product or service performance, or other aspects of our business.
Securities class action lawsuits and other complex litigation are often expensive, time-consuming, and disruptive to normal business operations. The defense and resolution of such matters, whether through litigation, settlement, or otherwise, may require significant management time and attention and could result in substantial costs, including legal fees, settlement payments, damages, or other remedies, which may not be covered by insurance or may exceed our available insurance coverage.
As a foreign private issuer, we may face additional complexity and expense in defending class action litigation in the United States, including differences in legal standards, procedures, and potential remedies.
In addition, the outcome of class action litigation is inherently uncertain, and adverse judgments or settlements could materially harm our financial condition, results of operations, cash flows, and reputation. Even claims that are without merit may result in significant expense and diversion of resources. The pendency of class action lawsuits may also negatively affect our stock price, increase volatility in the trading price of our securities, and impair our ability to raise capital on acceptable terms, or at all.
Furthermore, class action lawsuits and related publicity may result in reputational harm, loss of investor confidence, and increased scrutiny from regulators, which could have a material adverse effect on our business. Any of these factors, individually or in the aggregate, could materially and adversely affect us.
Although we maintain directors’ and officers’ liability insurance and other insurance coverage, such coverage may be insufficient to cover all losses or may not be available for certain claims.
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Canada
In Canada, the Canadian Securities Administrators (the “CSA”), the umbrella group for the provincial and territorial securities regulators, have generally taken the position that Canadian securities laws may apply to certain cryptocurrencies, cryptocurrency trading arrangements, token offerings, and platform activities, depending on the facts. The CSA, beginning in 2017, has published a series of Staff Notices outlining their position and explaining how securities laws apply to various aspects of the cryptocurrency industry. Many of those Staff Notices have dealt with cryptocurrency trading platforms and other businesses that hold cryptocurrencies or related contractual rights on behalf of clients, which the Company does not do as part of its business.
The CSA has also, however, published Staff Notices focused on the analysis of when a cryptocurrency constitutes a security for securities law purposes. On August 24, 2017 and June 11, 2018, the CSA published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities LawImplications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws. Since then, the CSA has published several papers, notices and guidelines on securities law implications for offerings of tokens and operating cryptocurrency trading platforms. The Canadian Investment Regulatory Organization (“CIRO”) a self-regulatory organization, has established a regulatory framework applicable to crypto asset trading platforms (“CTPs”) operating in Canada, including a process for CTPs to become registered as investment dealers and approved as CIRO Dealer Members, together with guidance respecting matters such as digital asset custody. However, the Canadian regulatory framework applicable to crypto asset businesses continues to evolve, and certain requirements applicable to CTPs remain addressed through terms and conditions of membership and related guidance rather than a fully codified permanent rule framework
While the Company does not create or sell digital assets of its own issue, it holds a number of digital assets from a variety of issuers through its Valour Venture business line. In the event that any of these were determined to be securities, it could negatively impact the issuers of those digital assets by making trading subject to prospectus requirements, which could reduce the market price of such assets and therefore devalue the holdings of the Company.
The Company’s Stillman Digital business line provides digital asset trade execution, institutional OTC desk, liquidity provision and market-making services to clients in Canada, and is registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as a foreign money services business (“FMSB”). As a registered FMSB, Stillman Digital is subject to prescribed know-your-client, reporting, recordkeeping and compliance program requirements under Canadian anti-money laundering and anti-terrorist financing (“AML/CFT”) laws and regulations. Such registration is for Canadian AML/CFT purposes only and does not constitute registration, licensing or approval under Canadian securities laws.
Legal or regulatory changes or interpretations of Stillman Digital’s existing and planned activities could require Stillman Digital not only to comply with AML/CFT rules, but also to obtain a registration or otherwise bring its operations into compliance with Canadian securities laws, depending on the nature of Stillman Digital’s activities and how Canadian securities regulatory authorities characterize such activities. This may include requirements to obtain registration, membership, approvals or exemptive relief, or to comply with regulatory obligations applicable to dealers, marketplaces or other regulated intermediaries.
United States
The Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of the United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and digital asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a digital asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to digital assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.
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Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.
U.S. Classification of Digital Assetsand Investment Company Act of 1940
The SEC and its staff have taken the position that certain digital assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given digital asset is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any particular digital asset as a security. Furthermore, the SEC’s views in this area have evolved over time and it is difficult to predict the direction or timing of any continuing evolution. It is also possible that a change in the governing administration or the appointment of new SEC commissioners could substantially impact the views of the SEC and its staff. Public statements by senior officials at the SEC indicate that the SEC does not intend to take the position that Bitcoin or Ether are securities (in their current form). Moreover, such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized to any other digital asset. With respect to all other digital assets, there is currently no certainty under the applicable legal test that such assets are not securities, notwithstanding the conclusions we may draw based on our risk-based assessment regarding the likelihood that a particular digital asset could be deemed a “security” under applicable laws.
Several foreign jurisdictions have taken a broad-based approach to classifying digital assets as “securities,” while other foreign jurisdictions, such as Switzerland, Malta, and Singapore, have adopted a narrower approach. As a result, certain digital assets may be deemed to be a “security” under the laws of some jurisdictions but not others. Various foreign jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of digital assets as “securities.” The classification of a digital asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, and clearing of such assets.
Additionally, we do not currently intend to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). If certain digital assets that form a part of our ETPs are determined to be securities, we may be obligated to register as an investment company under the Investment Company Act, and we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:
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| ● | compliance with reporting, record keeping, voting, proxy disclosure<br>and other rules and regulations that would significantly increase our operating expenses. |
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Further, the classification of certain digital assets as securities could draw negative publicity and a decline in the general acceptance of the digital asset, which could have a negative effect on our ETPs that contain such digital assets.
Venture Portfolio Exposure
Given the nature of the Company’s Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and projects in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.
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Banks May Cut off Banking Services toBusinesses that Provide Cryptocurrency-related Services
A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.
Impact of Geopolitical Events
Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.
As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.
Further Development and Acceptance ofDigital Assets and DeFi Networks
The further development and acceptance of digital assets and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:
| ● | continued worldwide growth in the adoption and use of cryptocurrencies<br>and DeFi; |
|---|---|
| ● | governmental and quasi-governmental regulation of cryptocurrencies<br>and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems; |
| --- | --- |
| ● | changes in consumer demographics and public tastes and preferences; |
| --- | --- |
| ● | the maintenance and development of the open-source software<br>protocol of relevant networks; |
| --- | --- |
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| ● | the availability and popularity of other forms or methods of<br>buying and selling goods and services, including new means of using fiat currencies; |
|---|---|
| ● | general economic conditions and the regulatory environment relating<br>to digital assets and decentralized finance; and |
| --- | --- |
| ● | negative consumer sentiment and perception of cryptocurrencies. |
| --- | --- |
Currently, there is relatively small use of digital assets in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.
As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of digital asset demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of digital assets. The relative lack of acceptance of digital assets in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.
Trade Errors
We may make, or otherwise be subject to, trade errors. Errors may occur with respect to trades executed on our behalf. Trade errors can result from a variety of situations, including, for example, when the wrong investment is purchased or sold or when the wrong quantity is purchased or sold. Trade errors frequently result in losses, which could be material. To the extent that an error is caused by a third party, we may seek to recover any losses associated with the error, although there may be contractual limitations on any third party’s liability with respect to such error.
Dependence on Investment Manager.
The success of the Company’s Equity Investments in Digital Assets is dependent upon the ability of the investment manager to manage the investment fund and effectively implement the investment fund’s investment program. The investment fund’s governing documents do not permit the Company participate in the management and affairs of the investment fund.
Discretion as to Distributions and Timingof Withdrawal
The investment manager of the Company’s Equity Investment in Digital Assets is not obligated to distribute digital assets in-kind nor to distribute the proceeds from the sale of any digital assets. The Company is permitted to make withdrawals, however, the ability to make withdrawals may be limited while the investment manager is actively engaged in investment strategies or for other purposes. The Company is required to provide a significant advance notice in respect of any withdrawal and accordingly its ability to withdraw in a timely manner is limited.
Discretion as to Form of Payment.
The investment manager of the Company’s Equity Investments in Digital Assets has the discretion to make distribution and pay withdrawals in unlocked digital assets, cash or a combination. There can be no assurance as to (i) the form of distribution or payment, (ii) that the investment fund will have sufficient cash or unlocked digital assets to satisfy withdrawal requests, or that it will be able to liquidate investments at favorable prices at the time such withdrawals are requested. The Company has no right to request in-kind distributions, and should not expect the investment fund to accommodate any such request.
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Conditions on Equity Investments inDigital Assets
The digital assets held by the Equity Investments in Digital Assets are subject to staggered lock up periods pursuant to which the digital assets are not freely tradeable. As a result, the Company may only request to withdraw the portion of its capital account balance that corresponds to its pro-rata share of the applicable digital assets that are no longer locked-up and freely transferable by the investment fund.
Development and Acceptance of the DigitalAsset Networks
The growth and use of digital assets generally is subject to a high degree of uncertainty. The future of the industry likely depends on several factors, including, but not limited to: (a) economic and regulatory conditions relating to both fiat currencies and digital assets; (b) government regulation of the use of and access to digital assets; (c) government regulation of digital asset service providers, administrators or exchanges; and (d) the domestic and global market demand for—and availability of—other forms of digital asset or payment methods. Any slowing or stopping of the development or acceptance of digital assets may adversely affect the Company.
Digital Asset Audit Risk
Audits for entities holding digital assets are unlike audits for other types of entities. Special procedures must be taken to determine whether investments and transactions are properly accounted for and valued because independent confirmation of digital asset ownership (e.g., ownership of a balance on a digital asset exchange) differs dramatically from traditional confirmation with a securities broker or bank account. The Company requires satisfactory processes in place in order for the auditor to obtain the Company’s transaction history and properly prepare audited financials. Any breakdown in such processes may result in delays or other impediments of an audit. In addition, the complexity of digital assets generally may lead to difficulties in connection with the preparation of audited financials.
Risk of Total Loss of Equity Investmentin Digital Assets.
While all investments risk the loss of capital, the equity investment in digital assets should be considered substantially more speculative and significantly more likely to result in a total loss of capital than most other investment funds. The investment manager will not attempt to mitigate the potential of loss of capital through the use of risk management techniques. Rather, the investment manager generally intends only to sell the digital assets when such sales are necessary in order to satisfy withdrawal requests. Furthermore, the investment manager does not intend to hedge potential losses and will not make investment decisions based on the price of the digital assets. Consequently, the equity investment in Digital Assets could result in the total loss of the Company’s capital.
Risk of Loss, Theft or Destruction ofCryptocurrencies
There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. Digital assets of Valour that are held internally via multi-signature cold storage may be prone to loss or theft as a result of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.
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Irrevocability of Transactions
Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.
Potential Failure to Maintain DigitalAsset Networks
Many digital asset networks, including the Bitcoin Network, operate based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, are currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with such network protocol and the core developers and open source contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.
Potential Manipulation of Blockchain
If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.
Miners May Cease Operations
If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.
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Risks Related to Insurance
The Company intends to insure its operations in accordance with technology industry practice and in accordance with public company practices in the United States. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.
Concentration of Investments
Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at December 31, 2024, the Company’s investments through its Venture business arm comprise of C$53,740,154, which represented approximately 4% of the Company’s total assets.
Competition
The Company operates in a highly competitive industry and competes against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.
The crypto economy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. The Company’s business line competes against several companies and expects that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:
| ● | greater name recognition, longer operating histories, and larger market shares; |
|---|---|
| ● | larger sales and marketing budgets and organizations; |
| --- | --- |
| ● | more established marketing, banking, and compliance relationships; |
| --- | --- |
| ● | greater resources to make acquisitions; |
| --- | --- |
| ● | lower labor, compliance, risk mitigation, and research and development costs; |
| --- | --- |
| ● | operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new<br>product offerings; and |
| --- | --- |
| ● | substantially greater financial, technical, and other resources. |
| --- | --- |
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If the Company is unable to compete successfully, or if competing successfully requires the Company to take costly actions in response to the actions of the Company’s competitors, the Company’s business, operating results, and financial condition could be adversely affected.
Harm to the Company’s brand and reputation could adversely affect the Company’s business. The Company’s reputation and brand may be adversely affected by complaints and negative publicity about the Company, even if factually incorrect or based on isolated incidents. Damage to the Company’s brand and reputation may be caused by:
| ● | cybersecurity attacks, privacy or data security breaches, or other security incidents; |
|---|---|
| ● | complaints or negative publicity about the Company, its ETPs, its management team, its other employees<br>or contractors or third-party service providers; |
| --- | --- |
| ● | actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by its<br>management team, its other employees or contractors or third-party service providers; |
| --- | --- |
| ● | unfavorable media coverage; |
| --- | --- |
| ● | litigation involving, or regulatory actions or investigations into its business; |
| --- | --- |
| ● | a failure to comply with legal, tax and regulatory requirements; |
| --- | --- |
| ● | any perceived or actual weakness in its financial strength or liquidity; |
| --- | --- |
| ● | any regulatory action that results in changes to or prohibits certain lines of its business; |
| --- | --- |
| ● | a failure to operate our business in a way that is consistent with its values and mission; |
| --- | --- |
| ● | a sustained downturn in general economic conditions; and |
| --- | --- |
| ● | any of the foregoing with respect to its competitors, to the extent the resulting negative perception<br>affects the public’s perception of the Company or its industry as a whole. |
| --- | --- |
Private Issuers and Illiquid Securities
Through its Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.
The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.
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The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.
The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.
Cash Flow, Revenue and Liquidity
The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.
Risk Management
The Company seeks to mitigate risk and have established policies for the types of risk to which the Company is subject, including operational risk, credit risk, market risk, counterparty risk, exchange risk and liquidity risk. However, there are inherent limitations to our current and future risk management strategies, including risks that management has not appropriately anticipated or identified. Accurate and timely enterprise-wide risk information is necessary to enhance management’s decision- making in times of crisis. If the Company’s risk management framework proves ineffective or if our enterprise-wide management information is incomplete or inaccurate, we could suffer unexpected losses, which could materially adversely affect our business, results of operations and financial condition. The Company continually assesses its risk profile and risk management processes across the firm to identify opportunities for improvement and to consider whether it needs to address new technologies and innovations in its risk management processes and policies. While the Company has not identified any material gaps with respect to recent digital asset market events, the Company cannot guarantee that our risk management processes will continue to be effective in preventing or mitigating losses from future market events.
Dependence on Management Personnel
The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.
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Sensitivity to Macro-Economic Conditions
Due to the Company’s focus on the decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other digital assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.
Available Opportunities and Competitionfor Investments
The success of the Company’s Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.
Share Prices of Investments
Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.
Additional Financing Requirements
The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.
No Guaranteed Return
There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.
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Failure to Develop and Execute SuccessfulInvestment or Trading Strategies
The success of the Company’s investment and trading activities, including through DeFi Alpha, will depend on the ability of the investment team to identify i) overvalued and undervalued investment opportunities and to exploit price discrepancies; ii) creators or holders of digital assets that have liquidity requirements that can be met through the company’s DeFi Alpha programme. This process involves a high degree of uncertainty. No assurance can be given that the Company will be able to identify suitable or profitable investment opportunities in which to deploy our capital. The success of the trading activities also depends on the Company’s ability to remain competitive with other DeFi providers. Competition in trading is based on price, offerings, level of service, technology, relationships and market intelligence. The success of investment activities depends on the Company’s ability to source deals and obtain favorable terms. The barrier to entry in each of these businesses is very low and competitors can easily and will likely provide similar services in the near future. The success of the Company’s Venture investments and trading business could suffer if the Company is not able to remain competitive.
Management of the Company’s Growth
Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.
Social, Political, Environmental andEconomic Risks in the Countries in which the Company’s Investments are Located
The Company’s investments are affected in varying degrees by the political and social stability, environmental and economic conditions in the countries in which its investments are located. Such investments may also be affected in varying degrees by geo-political tensions, terrorism, military conflict or repression, crime, populism, activism, labour unrest, renegotiation, nullification or failure to renew or grant existing concessions, licences permits and contracts, unstable or unreliable legal systems, changes in fiscal regimes including taxation, and other risks arising out of sovereignty issues.
Due Diligence
The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunities. Moreover, such an investigation will not necessarily result in the investment being successful.
Exchange Rate Fluctuations
A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.
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Non-controlling Interests
The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.
Changes in Legislation and Regulatory Risk
There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.
Risks Relating to the Business and Financial Condition of the Company
Limited Operating History as a DeFiCompany
The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.
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The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this MD&A, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.
Insufficient Cash Flow and Funds in Reserve
The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of the Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.
The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.
Material Weakness in the Company’sFinancial Statements
We identified a material weakness in our internal control over financial reporting and restated our financial statements for the three-month periods ended June 30, 2024, and September 30, 2024 as a result of factors related to that weakness. This may adversely affect the accuracy and reliability of our financial statements and, if we fail to maintain effective internal financial control reporting (“ICFR”) it could impact our reputation, business and the price of the Common Shares, as well as lead to a loss of investor confidence in us.
There can be no assurance that we will be able to successfully remediate the identified material weakness, or that we will not identify additional control deficiencies or material weaknesses in the future. If we are unable to successfully remediate our existing or any future material weaknesses in our ICFR, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities laws and CBOE listing requirements regarding the timely filing of periodic reports, investors may lose confidence in our financial reporting and the price of our stock may decline.
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We continue to execute our plan to remediate the material weakness identified. The remediation measures are ongoing, and although not all inclusive, include implementing additional policies, procedures, and controls. We are working to remediate our material weakness as efficiently and effectively as possible. At this time, we cannot provide an estimate of the timing for achieving full remediation or the costs expected to be incurred in connection with implementing this remediation plan; however, these remediation measures will be time consuming, could result in us incurring significant costs, and could place significant demands on our financial and operational resources. We cannot assure you that the measures undertaken to remediate the material weakness will be sufficient or that they will prevent future material weaknesses. Additional material weaknesses or failure to maintain effective internal control over financial reporting could cause us to fail to meet our reporting obligations as a public company and may result in a restatement of our financial statements for prior periods.
The preparation of financial statements and related disclosures in conformity with IFRS requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Our critical accounting policies describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider “critical” because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures. As a result, if future events or regulatory or auditor views differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case resulting in our needing to revise or restate prior period financial statements, cause damage to our reputation and the price of our common shares, and adversely affect our business, financial condition and results of operations.
Risks related to the Expense and Impactof Restatement of the Company’s Historical Financial Statements
The Company restated certain historical quarterly financial statements during 2024 to reflect a correction to its accounting for its digital assets. Specifically, the Company had previously valued its position in Equity Investments in Digital Assets subject to an extended lock-up period based on market price; however, in connection with the preparation of its financial statements for the year ended December 31, 2024, the Company’s auditors concluded that the valuation of the position should use a discounted valuation reflecting the lock-up. For more information, see “Restatement of Previously Issued Condensed Interim Consolidated Financial Statements” in the Company’s Annual Management’s Discussion and Analysis for the year ended December 31, 2024.
It is difficult to predict all of the ramifications to the Company from the restatement. The restatement process is time and resource-intensive and involved substantial attention from management and significant costs and expenses, including for professional advisors assisting with the restatement. It is possible that the Company will receive inquiries from the Canadian securities regulators, and/or Cboe Canada regarding the restated financial statements or related matters, which could consume a significant amount of resources. Moreover, many companies that have been required to restate their historical financial statements have experienced volatility in stock prices and declines in stock prices and shareholder lawsuits, which can be expensive to defend and divert Management attention and resources. The Company may suffer similar consequences as a result of the restatement.
Lack of Comprehensive Accounting Guidancefor Digital Assets under IFRS Accounting Standards
The holding of digital assets in Canada is an emerging industry with unique technological aspects, a number of novel auditing challenges have arisen. Audit firms, standard setters, and regulatory bodies continue to explore these challenges and potential solutions. Because there has been limited precedent set and a lack of specific accounting guidance for cryptocurrencies under certain applicable accounting standards, including, among other things, revenue recognition, it is unclear if DeFi companies (in particular, companies like the Company that utilize IFRS Accounting Standards) may be required to account for cryptocurrency operations, transactions and assets and related revenue recognition. A change in regulatory or financial accounting standards, or interpretations thereof by the Canadian Securities Administrators, particularly as they relate to the Company and the financial accounting of its DeFi-related operations, could result in changes in the Company’s accounting policies. Further, unlike in the case of U.S. generally accepted accounting principles where the Financial Accounting Standards Board has recently issued ASU 2023-08, which addresses the accounting and disclosure requirements for certain crypto assets, no similar guidance has yet been issued in respect of IFRS Accounting Standards. In addition, the accounting policies of many Bitcoin mining companies are being subjected to heightened scrutiny by regulators and the public.
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It is possible that, as a result of the determinations by applicable securities regulators as to the application of the relevant IFRS Accounting Standards, the Company could be obligated in the future to restate historical financial statements. In connection with any such restatement the market price of the Common Shares could be adversely affected, and the Company could become subject to private litigation or to investigations or enforcement actions by the OntarioSecurities Commission or other regulatory authorities, all of which could require the Company’s expenditure of additional financial and management resources. Furthermore, continued uncertainty with regard to financial accounting matters, particularly as they relate to the Company, the financial accounting of its DeFi-related operations, could negatively impact the Company’s business, prospects, financial condition and results of operations and its ability to raise capital on terms acceptable to the Company or at all.
Conflicts of Interest may Arise
Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.
Hedging Risk
Except as described in the Base Prospectus and the VDSL Base Prospectus We are not obligated to, and oftentimes, may not, hedge our exposures. However, from time to time, we may use a variety of financial instruments and derivatives, such as options, swaps, and forward contracts, for risk management purposes, including to: protect against possible changes in the market value of our investment or trading assets resulting from fluctuations in cryptocurrency markets or securities markets and changes in interest rates; protect our unrealized gains in the value of our investments or trading assets; facilitate the sale of any such assets; enhance or preserve returns, spreads or gains on any trade or investment; hedge the interest-rate or currency-exchange risk on any of our liabilities or assets; protect against any increase in the price of any assets that we anticipate purchasing at a later date; or to any other end that we deem appropriate. The success of any hedging activities by us will depend, in part, on our ability to correctly assess the degree of correlation between the performance of the instruments used in the hedging strategy and the performance of the assets being hedged. Since the characteristics of many assets change as markets change or time passes, the success of our hedging strategy will also be subject to our ability to continually recalculate, readjust and execute hedges in an efficient and timely manner. In addition, while we may enter into hedging transactions to seek to reduce risk, such transactions may actually increase risk or result in a poorer overall performance for us than if we had not engaged in such hedging transactions.
With respect to Valour, Valour’s hedging programs will not fully eliminate the market and other risks related to its ETPs, and the hedging programs themselves expose Valour to additional risks. Valour’s hedging programs are not designed to completely offset all risks associated with the various exposures embedded in the ETPs. The profit (loss) on the hedge instruments employed may not completely offset the underlying losses (gains) related to its ETPs for many potential reasons including
| ● | a portion of the yield on any ETP may not hedged; |
|---|---|
| ● | hedging instruments may have differing liquidity attributes<br>as compared to the liquidity requirements of the ETPs; |
| --- | --- |
| ● | hedging instruments introduce additional risks to Valour, including<br>counterparty risk; |
| --- | --- |
| ● | performance of the underlying funds hedged may differ from the<br>performance of the corresponding hedge instruments; and |
| --- | --- |
| ● | not all other risks are hedged. |
| --- | --- |
Valour’s hedging programs may employ various types of instruments including, but not long and short direct and indirect positions on underlying assets, swaps, options, forwards and futures. Improper use of these instruments could have an adverse impact on earnings.
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Litigation
The Company is and may become involved in, named as a party to, or be the subject of, various legal proceedings, including securities class action proceedings, regulatory proceedings, tax proceedings and legal actions. For example, the Company is a defendant in a putative securities class action lawsuit and a creditor in a bankruptcy proceeding, each as described under the heading “Legal Proceedings and Regulatory Actions” elsewhere in this MD&A. Although the Company believes the securities class action lawsuit is without merit and intends to vigorously defend itself, such matter, and any other similar matters, could subject the Company to substantial costs, divert resources and the attention of management from its business, and harm its business, financial condition, and results of operations. Moreover, the outcome of outstanding, pending, or future proceedings cannot be predicted with certainty and may be determined adversely to the Company and as a result, could have a material adverse effect on the Company’s assets, liabilities, business, financial condition, and results of operations.
Risks Relating to the Common Shares
Market Price of Common Shares may ExperienceVolatility
The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.
Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares. Limited analyst coverage or negative analyst reports may further contribute to volatility and reduced liquidity in our stock.
In addition, the price of the Company’s Common Shares, may be affected by its failure to comply with the continued listing requirements of stock exchanges on which it is listed. For example, the Company is not currently in compliance with the Nasdaq minimum bid price requirement.
Shareholders’ Interest in the Companymay be Diluted in the Future
If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.
The Company has Never Paid Dividends andmay not do so in the Foreseeable Future
The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future. See “Dividends”.
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MultilateralInstrument 52-109 Disclosure
In accordance with National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, management is responsible for the establishment and maintenance of DC&P and ICFR. The Company’s management, including the CEO and CFO, has designed the DC&P and ICFR based on the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO 2013 Framework”) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS.
Regardless of how well the DC&P and ICFR are designed, internal controls have inherent limitations and can only provide reasonable assurance that the controls are meeting the Corporation’s objectives in providing reliable financial reporting information in accordance with IFRS. These inherent limitations include, but are not limited to, human error and circumvention of controls and as such, there can be no assurance that the controls will prevent or detect all misstatements due to errors or fraud, if any.
The CEO and the CFO have concluded that the Corporation’s ICFR were not effective as of December 31, 2025 because of the material weakness identified above under the heading “Restatement of Previously Issued Condensed Interim Consolidated Financial Statements due to Change in Valuation and Classification of Equity Investments in Digital Assets, at FVTPL.”
Remediation of Material Weakness in ICFR
We continue to work to fully remediate the material weakness and are taking steps to strengthen our internal control over financial reporting. We are taking appropriate and reasonable steps to remediate this material weakness through the implementation of a new ERP system (NetSuite) and new cryptocurrency subledger (Cryptio). The implementation of both of these new IT systems commenced during our third quarter of 2025. We expect to conduct a parallel run with NetSuite and Cryptio with our legacy system during the first quarter of 2026 before going live. During the year ended December 31, 2025, we created a new accounting role for a dedicated accountant to oversee our digital assets and brought on an outsourced solution to process the large volume of transactions for our ETPs. During the year ended December 31, 2025, we engaged a Big Four CPA firm to assist us with internal control documentation and walkthroughs to help strengthen our control environment.
Management expects to continue to review and make necessary changes to the overall design of our internal control environment, as well as policies and procedures to improve the overall effectiveness of our internal control over financial reporting. We believe these measures, and others that may be implemented, will remediate the material weakness in ICFR described above.
The material weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
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MaterialAccounting Policies
The Company’s material accounting policies can be found in Note 2 of its audited annual consolidated financial statements for the years ended December 31, 2025 and 2024.
New Accounting Policies Adopted during the Three and Twelve MonthsEnded December 31, 2025
On January 23, 2025, the U.S. Securities and Exchange Commission published Staff Accounting Bulletin (“SAB”) 122 to rescind SAB 121 with an effective date of January 30, 2025. The application of SAB 122 is applicable for all annual reporting periods beginning on or after December 15, 2024.
Prior to the release of SAB 122, the Company accounted for client digital assets, held by its wholly owned subsidiary Stillman Digital Bermuda Ltd., in accordance with Staff Accounting Bulletin 121 due to the limited IFRS guidance applicable to custodians of digital assets.
The Company adopted SAB 122 during the three months ended March 31, 2025. The implication of adoption of SAB 122 was that the Company removed its safeguarding obligation liability and corresponding client digital assets from its statement of financial position. The Company also retrospectively de-recognized $3,356,235 of client digital assets and associated liabilities from its December 31, 2024 statement of financial position. No adjustments to retained earnings were made nor an accrual for loss contingency given the lack of loss events to date at Stillman Digital Bermuda Ltd.
Reclassification of Comparative Amounts
Certain amounts have been reclassified in Condensed Consolidated Interim Statement if Operations and Comprehensive Income /(Loss) previous periods to conform to the current period presentation. Only reclassifications have been made with no changes in accounting policies or revision of previously reported amounts. There is no change to previously reported net income (loss).
Restatementof previously issued condensed interim consolidated financial statements due to Change in Valuation and classification of Equity Investmentsin Digital Assets, at FVTPL
During our audit of the Fiscal 2024 Financial Statements, we determined that locked tokens held by the Company were incorrectly accounted for in the Company’s June 30, 2024 and September 30, 2024 financial statements (the “Affected Periods”). The Company filed restated the financial statements with respect to the Affected Periods on April 14, 2025.
During its quarter-ended June 30, 2024, the Company acquired interests two private investments funds which interest represent an indirect interest in 1,614,608.41 Solana and 931,445.6 Avalanche tokens (or the proceeds from the sale of such tokens) acquired by the investment funds from a bankrupt company.
The Company reassessed the application of IFRS on the accounting for Equity Investments, at fair value through profit and loss (“FVTPL”) and determined that the appropriate accounting treatment is to classify the investments in the funds directly as financial assets as defined by IAS 32 and within the scope of IFRS 9. This is because such investments represent an equity interest in another entity rather than a direct interest in the underlying tokens. The tokens owned by the funds are subject to a lock up schedule extending to 2028 and as a result the Company has classified its equity investments as current and non-current reflecting the value of tokens which will unlock in the coming twelve months (current) and those that will unlock between 2026 through 2028 (non-current).
The investments are accounted for at FVTPL. Fair value is measured in accordance with IFRS 13 and includes a discount for lack of marketability (“DLOM”) on the locked tokens underlying the investments. The DLOM at December 31, 2024 is $86,517,729. This discount will amortize to zero by 2028 when the final tokens are unlocked.
The re-filed Q2 2024 financial statements include the following adjustments: a) application of a DLOM to reduce total assets and equity by $72,081,210 b) reclassification of $89,716,119 of current assets to non-current assets c) increase in the three and six months ended net loss of $72,616,392 and $72,616,392 respectively due to the application of the DLOM.
The re-filed Q3 2024 financial statements include the following adjustments: a) application of a DLOM to reduce total assets and equity by $75,469,830 b) reclassification of $113,668,367 of current assets to non-current assets c) increase in the three and nine months ended September 30, 2024 net loss of $2,853,438 and $75,469,830 due to the application of the DLOM.
Due to the accounting error, the Company’s management has concluded that there was a material weakness in its internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements and Management’s Discussion and Analysis will not be prevented or detected on a timely basis. Readers should refer to the Multilateral Instrument 52-109 disclosure section of this MD&A for additional commentary on the material weakness and its remediation activities.
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CriticalAccounting Estimates and Assumptions
The preparation of the Company’s Consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.
Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the Consolidated financial statements are as follows:
Accounting for digital assets
The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 7) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase and other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.
Equity investments in digital assets at fairvalue through profit and loss
Investments in equity instruments at fair value through profit or loss - Included in investments in equity instruments at fair value through profit or loss are investments in a US private company (LLC), and a U.S. Limited Liability Partnership via a Cayman Island domiciled feeder Limited Liability Partnership.
Management accounted for such investments at fair value to profit or loss under IFRS 9, because the Company does not exercise significant influence over the investee. The Company does not have any contractual right to appoint any representative to the investee’s board of directors. In addition, the Company does not have any participation in policymaking processes and does not have any material transactions with the investee. The fair value of investments in investment funds which are not quoted in an active market is determined by using net asset value as determined by the investment fund’s administrator and include a discount for lack of marketability (“DLOM”). Management deems the net asset value to be the fair value after considering key factors such as the liquidity of the investment fund or its underlying investments, any restrictions on redemptions and basis of accounting.
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Fair value of financial derivatives
Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation techniques, such as the Black- Scholes model, are used to value these instruments.
Fair value of investment in securities notquoted in an active market or private company investments
Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values.
Share-based payments
The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.
Business combinations and goodwill
Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.
Estimated useful lives and impairment considerations
Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.
Impairment of non-financial assets
The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 8 for the discussion regarding impairment of the Company’s non-financial assets.
Functional currency
The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.
Assessment of transaction as an asset purchaseor business combination
Significant acquisitions require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future performance of these assets.
Control
Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.
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Exhibit 99.4
CERTIFICATION REQUIRED BY RULE 13a-14(a) ORRULE 15d-14(a), PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Johan Wattenström, certify that:
| 1. | I have reviewed this Annual Report on Form 40-F of Defi Technologies<br>Inc. (the “issuer”); | |
|---|---|---|
| 2. | Based on my knowledge, this report does not contain any untrue<br>statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under<br>which such statements were made, not misleading with respect to the period covered by this report; | |
| --- | --- | |
| 3. | Based on my knowledge, the financial statements, and other<br>financial information included in this report, fairly present in all material respects the financial condition, results of operations<br>and cash flows of the issuer as of, and for, the periods presented in this report; | |
| --- | --- | |
| 4. | The issuer’s other certifying officer and I are responsible<br>for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the<br>issuer and have: | |
| --- | --- | |
| (a) | designed such disclosure controls and procedures, or caused<br>such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer,<br>including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which<br>this report is being prepared; | |
| --- | --- | |
| (b) | [Paragraph omitted in accordance with Exchange Act Rules 13a-14(a)<br>and 15d-14(a)]; | |
| --- | --- | |
| (c) | evaluated the effectiveness of the issuer’s disclosure<br>controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,<br>as of the end of the period covered by this report based on such evaluation; and | |
| --- | --- | |
| (d) | disclosed in this report any change in the issuer’s<br>internal control over financial reporting that occurred during the period covered by the annual report that has materially affected,<br>or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and | |
| --- | --- | |
| 5. | The issuer’s other certifying officer and I have disclosed,<br>based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee<br>of the issuer’s board of directors (or persons performing the equivalent functions): | |
| --- | --- | |
| (a) | all significant deficiencies and material weaknesses in the<br>design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability<br>to record, process, summarize and report financial information; and | |
| --- | --- | |
| (b) | any fraud, whether or not material, that involves management<br>or other employees who have a significant role in the issuer’s internal control over financial reporting. | |
| --- | --- | |
| Date: April 2, 2026 | ||
| --- | --- | --- |
| /s/ Johan Wattenström | ||
| Name: | Johan Wattenström | |
| Title: | Chief Executive Officer <br><br>(Principal Executive Officer) |
Exhibit 99.5
CERTIFICATION REQUIRED BY RULE 13a-14(a) ORRULE 15d-14(a), PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul Bozoki, certify that:
| 1. | I have reviewed this Annual Report on Form 40-F of Defi Technologies<br>Inc. (the “issuer”); | |
|---|---|---|
| 2. | Based on my knowledge, this report does not contain any untrue<br>statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under<br>which such statements were made, not misleading with respect to the period covered by this report; | |
| --- | --- | |
| 3. | Based on my knowledge, the financial statements, and other<br>financial information included in this report, fairly present in all material respects the financial condition, results of operations<br>and cash flows of the issuer as of, and for, the periods presented in this report; | |
| --- | --- | |
| 4. | The issuer’s other certifying officer and I are responsible<br>for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the<br>issuer and have: | |
| --- | --- | |
| (a) | designed such disclosure controls and procedures, or caused<br>such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer,<br>including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which<br>this report is being prepared; | |
| --- | --- | |
| (b) | [Paragraph omitted in accordance with Exchange Act Rules 13a-14(a)<br>and 15d-14(a)]; | |
| --- | --- | |
| (c) | evaluated the effectiveness of the issuer’s disclosure<br>controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,<br>as of the end of the period covered by this report based on such evaluation; and | |
| --- | --- | |
| (d) | disclosed in this report any change in the issuer’s<br>internal control over financial reporting that occurred during the period covered by the annual report that has materially affected,<br>or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and | |
| --- | --- | |
| 5. | The issuer’s other certifying officer and I have disclosed,<br>based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee<br>of the issuer’s board of directors (or persons performing the equivalent functions): | |
| --- | --- | |
| (a) | all significant deficiencies and material weaknesses in the<br>design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability<br>to record, process, summarize and report financial information; and | |
| --- | --- | |
| (b) | any fraud, whether or not material, that involves management<br>or other employees who have a significant role in the issuer’s internal control over financial reporting. | |
| --- | --- | |
| Date: April 2, 2026 | ||
| --- | --- | --- |
| /s/ Paul Bozoki | ||
| Name: | Paul Bozoki | |
| Title: | Chief Financial Officer <br><br>(Principal Financial Officer) |
Exhibit 99.6
CERTIFICATION PURSUANT TO18 U.S.C. §1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Defi Technologies Inc. (the “Company”) on Form 40-F for the period ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Johan Wattenström, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section<br>13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|---|---|
| (2) | The information contained in the Report fairly presents,<br>in all material respects, the financial condition and results of operations of the Company. |
| --- | --- |
April 2, 2026
| /s/ Johan Wattenström | |
|---|---|
| Name: | Johan Wattenström |
| Title: | Chief Executive Officer |
| (Principal Executive Officer) |
A signed original of this written statement required by Section 906 has been provided to Defi Technologies Inc. and will be retained by Defi Technologies Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit99.7
CERTIFICATIONPURSUANT TO18 U.S.C. §1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Defi Technologies Inc. (the “Company”) on Form 40-F for the period ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul Bozoki, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The<br> Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange<br> Act of 1934; and |
|---|---|
| (2) | The<br> information contained in the Report fairly presents, in all material respects, the financial<br> condition and results of operations of the Company. |
| --- | --- |
April 2, 2026
| /s/ Paul Bozoki | |
|---|---|
| Name: | Paul Bozoki |
| Title: | Chief Financial Officer |
| (Principal Financial Officer) |
A signed original of this written statement required by Section 906 has been provided to Defi Technologies Inc. and will be retained by Defi Technologies Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit99.8
April 2, 2026
Consentof Independent Registered Public Accounting Firm
We hereby consent to the use in this Annual Report on Form 40-F (the “Annual Report”) of DeFi Technologies Inc. (the “Company”) of our report dated April 2, 2026, relating to the Company’s financial statements for the years ended December 31, 2025 and 2024, which are filed as an exhibit to the Annual Report.
We also consent to the incorporation by reference in the Registration Statement on Form F-10 (File No. 333-290048) of the Company of our report dated April 2, 2026, referred to above. We also consent to the reference to us under the heading “Interests of Experts,” which appears in the Annual Information Form filed as Exhibit 99.1 to the Annual Report and is also incorporated by reference in such Registration Statement.
| Yours<br> truly, |
|---|
| /s/ Harpreet<br> Dhawan |
| Harpreet<br> Dhawan CPA, CA |
| HDCPA<br> Professional Corporation |
| 206-5250<br> Solar Drive, Mississauga, ON L4W 0G4 |
www.hdcpa.ca | 647-793-8100
5250 Solar Drive, Suite 206, Mississauga, ON, L4W 0G4