SUIG 10-Q
SUI Group Holdings Ltd. (SUIG)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM
__________________________
(Mark One) | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended |
or | |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from _______________________ to ___________________ |
Commission File Number
__________________________
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
(
(Registrant’s telephone number, including area code)
__________________________
Mill City Ventures III, LTD
(Former name, former address and former fiscal year, if changed since last report)
__________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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| The (Nasdaq Capital Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of August 3, 2026, Sui Group Holdings Limited had
SUI GROUP HOLDINGS LIMITED
Index to Form 10-Q
for the Quarter Ended June 30, 2026
| 2 |
| Table of Contents |
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q (the “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are neither historical facts nor assurances of future performance. You should not place undue reliance on any of these forward-looking statements. Forward-looking statements relate to future events or future financial performance of Sui Group Holdings Limited (the “Company,” “SUI Group,” or “we”), and can ordinarily be identified by terminology such as “aims,” “anticipates,” “believes,” “contemplates,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “objective,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “targets,” “will,” or “would” or the negative of these terms or other similar words. Some of the forward-looking statements contained in this Report relate to, and are based on the Company’s current assumptions regarding, the following:
| · | the ability of the Company to execute its plans; |
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| · | the Company’s digital asset treasury, stablecoin and treasury diversification strategies; |
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| · | the capabilities and limitations of the SUI blockchain; |
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| · | the digital assets to be held by us and the future performance thereof; |
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| · | the success of the Company’s investments; |
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| · | risk of nonperformance by borrowers, service providers and other counterparties; |
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| · | the Company’s relationships with third parties; |
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| · | the dependence of the Company’s success on the general economy and its impact on the industries in which the Company operates; |
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| · | the Company’s regulatory structure and tax treatment; |
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| · | the adequacy of the Company’s cash resources and working capital; and |
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| · | the timing of cash flows. |
Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Applicable risks and uncertainties include, among others, the Company’s ability to achieve profitable operations; fluctuations in the market price of SUI and other digital asset tokens that will impact the Company’s accounting and financial reporting; government regulation of cryptocurrencies; changes in securities laws or regulations; changes in business, market, financial, political and regulatory conditions; risks relating to the Company’s operations and business, including the highly volatile nature of the price of cryptocurrencies; the risk that the Company’s stock price may be highly correlated to the price of the digital assets that it holds; risks related to increased competition in the industries in which the Company does and will operate; risks relating to significant legal, commercial, regulatory and technical uncertainty regarding digital assets generally; risks relating to the treatment of crypto assets for U.S. and foreign tax purposes; expectations with respect to future performance, growth and anticipated acquisitions; potential litigation involving the Company or the validity or enforceability of the intellectual property of the Company; global economic conditions; geopolitical events and regulatory changes; access to additional financing, and the potential lack of such financing; and the Company’s ability to raise funding in the future and the terms of such funding, including dilution caused thereby; risks relating to minority investments in other sectors including financial technology and artificial intelligence; as well as other risks and uncertainties discussed under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2026 (the “Annual Report”), the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 8, 2026 (the “Quarterly Report”), and in other filings made by the Company from time to time with the SEC. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this filing. The forward-looking statements made in this Report relate only to events as of the date on which the statements are made.
| 3 |
| Table of Contents |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUI GROUP HOLDINGS LIMITED
CONDENSED BALANCE SHEETS
(In thousands, except for share and per share data)
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| June 30, 2026 (unaudited) |
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| December 31, 2025 (audited) |
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Assets |
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Current Assets |
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Cash and cash equivalents |
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Equity investments |
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Debt investments |
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Interest and dividend receivable |
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Digital asset loan receivable |
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Prepaid expenses |
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Income tax receivable |
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Total current assets |
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Digital assets |
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Digital asset loan receivable |
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Digital asset receivable |
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Debt investments |
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Equity investments |
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Other assets |
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Total Assets |
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Liabilities and Shareholders’ Equity |
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Current Liabilities |
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Accounts payable and other liabilities |
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Deferred income |
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Accrued payroll liabilities |
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Total current liabilities |
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Long-term Liabilities |
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Deferred income |
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Total long-term liabilities |
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Total liabilities |
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Commitments and Contingencies |
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Shareholders’ Equity |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
| $ |
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| $ |
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See accompanying Notes to Financial Statements
| 4 |
| Table of Contents |
SUI GROUP HOLDINGS LIMITED
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except for share and per share data)
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| Three Months Ended |
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| Six Months Ended |
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| June 30, 2026 |
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| June 30, 2025 |
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| June 30, 2026 |
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| June 30, 2025 |
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Revenues |
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SUI staking revenue |
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Digital lending interest income |
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Investment income |
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Total Revenues |
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Operating (Income) Expenses |
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Professional fees |
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Stock-based compensation |
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Asset and strategic management fees |
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Compensation expense |
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Insurance |
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Unrealized (gain) loss on digital assets and receivable, net |
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Realized loss on digital assets, net |
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Impairment of digital asset receivable |
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Provision for (recovery of) credit losses |
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Net realized and unrealized gain on investments |
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Other general and administrative |
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Total Operating Expenses |
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Operating Income (Loss) |
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| $ |
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Other Income (Loss) |
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Investment income |
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Net realized and unrealized gain (loss) on investments |
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Other income |
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Total Other Income (Loss) |
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Income (Loss) Before Taxes |
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Provision for Income Taxes |
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Net Income (Loss) |
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| $ |
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Earnings per Share |
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Basic |
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| $ |
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Diluted |
| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ |
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Weighted-average number of common shares outstanding - basic |
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Weighted-average number of common shares outstanding - diluted |
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See accompanying Notes to Financial Statements
| 5 |
| Table of Contents |
SUI GROUP HOLDINGS LIMITED
CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
(In thousands, except for share and per share data)
Three Months Ended June 30, 2026 |
| Common Shares |
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| Par Value |
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| Additional Paid In Capital |
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| Accumulated Deficit |
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| Total Shareholders’ Equity |
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Balance as of March 31, 2026 |
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| $ |
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| $ | ( | ) |
| $ |
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Stock-based compensation |
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Net loss |
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Balance as of June 30, 2026 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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Three Months Ended June 30, 2025 |
| Common Shares |
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| Par Value |
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| Additional Paid In Capital |
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| Accumulated Deficit |
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| Accumulated Undistributed Net Investment Gain (Loss) |
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| Accumulated Undistributed Net Realized Gain on Investments Transactions |
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| Net Unrealized Appreciation (Depreciation) in value of Investments |
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| Total Shareholders’ Equity |
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Balance as of March 31, 2025 |
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| $ | ( | ) |
| $ |
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| $ |
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| $ | ( | ) |
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Undistributed net investment gain |
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Undistributed net realized loss on investment transactions |
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Appreciation in value of investments |
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Balance as of June 30, 2025 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ |
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| $ |
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| $ |
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Six Months Ended June 30, 2026 |
| Common Shares |
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| Par Value |
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| Additional Paid In Capital |
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| Accumulated Deficit |
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| Total Shareholders’ Equity |
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Balance as of December 31, 2025 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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Stock-based compensation |
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Net loss |
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Balance as of June 30, 2026 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | 83,828 |
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Six Months Ended June 30, 2025 |
| Common Shares |
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| Par Value |
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| Additional Paid In Capital |
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| Accumulated Deficit |
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| Accumulated Undistributed Net Investment Gain (Loss) |
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| Accumulated Undistributed Net Realized Gain on Investments Transactions |
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| Net Unrealized Appreciation (Depreciation) in value of Investments |
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| Total Shareholders’ Equity |
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Balance as of December 31, 2024 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ |
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Repurchase of common shares |
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Undistributed net investment gain |
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Undistributed net realized loss on investment transactions |
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Appreciation in value of investments |
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Balance as of June 30, 2025 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ |
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| $ | 213 |
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| $ | 20,256 |
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See accompanying Notes to Financial Statements
| 6 |
| Table of Contents |
SUI GROUP HOLDINGS LIMITED
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands, except for share and per share data)
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| Six Months Ended |
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| June 30, 2026 |
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| June 30, 2025 |
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Cash flows from operating activities: |
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Net income (loss) |
| $ | ( | ) |
| $ |
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Adjustments to reconcile net income (loss) to net cash provided (used) in operating activities: |
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Deferred income taxes |
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Unrealized loss on digital assets and receivable, net |
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Realized loss on digital assets, net |
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Impairment of digital asset receivable |
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Net realized and unrealized loss/(gain) on investments |
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Provision for credit losses |
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Staking income |
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Digital lending interest income |
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Stock-based compensation |
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Purchases of investments |
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Proceeds from sales of investments |
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Changes in operating assets and liabilities: |
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Prepaid expenses |
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Interest and dividend receivable |
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Digital assets receivable |
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Other assets |
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Accounts payable and other liabilities |
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Net cash used in operating activities |
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Cash flows from investing activities: |
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Investments in equity securities |
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Proceeds from sales and repayments of investments |
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Purchases of digital asset receivable |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Payments for repurchase of common stock |
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Net cash used in financing activities |
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Net decrease in cash |
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Cash, beginning of period |
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Cash, end of period |
| $ |
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Supplemental disclosure of cash flow information: |
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Cash paid for interest |
| $ |
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| $ |
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Non-cash investing activity |
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Transfer of digital assets to digital asset receivable |
| $ | ( | ) |
| $ |
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Digital assets loan receivable |
| $ | ( | ) |
| $ |
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Digital assets loan receivable return |
| $ |
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| $ |
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See accompanying Notes to Financial Statements
| 7 |
| Table of Contents |
NOTE 1 – ORGANIZATION
Sui Group Holdings Limited (the “Company”, “Sui Group”, or “we”), formerly known as Mill City Ventures III, Ltd., is a Minnesota corporation headquartered in Wayzata, Minnesota. The Company changed its name to Sui Group Holdings Limited on August 26, 2025, following an amendment to our Articles of Incorporation filed with the Office of the Minnesota Secretary of State. This name change and concurrent rebranding coincide with a change in strategy toward digital asset treasury management.
Prior to the rebrand, the Company operated under the name Mill City Ventures III, Ltd. as a publicly traded specialty finance company listed on Nasdaq under the ticker symbol “MCVT”. Its legacy business centered on issuing short-term, collateralized loans to small businesses and individuals, with a focus on generating high-yield returns.
To support the digital asset treasury strategy, the Company completed a $
To further institutionalize its position within the Sui ecosystem, the Company formalized its relationship with the Sui Foundation through the Digital Asset Purchase and Sale Agreement (the “Digital Asset Purchase Agreement”), under which the Sui Foundation agreed to sell
The Company’s strategy is to maximize the value of SUIG and support the growth of the Sui ecosystem through scalable, transparent, and long-term value creation strategies. The Company also seeks to enhance balance sheet productivity by investing opportunistically in the SUI ecosystem and allocating capital to high-conviction growth themes across the wider digital asset, financial technology and artificial intelligence sectors. Its Common Stock remains listed on the Nasdaq Capital Market and continues to be available for options trading on Cboe Global Markets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation: The accompanying unaudited condensed financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of the Company, the foregoing interim statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of June 30, 2026 and December 31, 2025, as well as its results of operations for the three months ended June 30, 2026 and 2025 and for the six months ended June 30, 2026 and 2025. The condensed balance sheet as of December 31, 2025 has been derived from the audited financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by rules and regulations of the SEC. Accordingly, the condensed financial statements do not include all information and footnotes required by GAAP for a complete financial statement presentation. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2026 (the “Annual Report”).
Use of estimates: The preparation of financial statements in conformity with GAAP requires management and the independent members of the Company’s board of directors (the “Board”) to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Significant estimates and assumptions include, but are not limited to, the determination of the fair value of investment assets, impairment assessment of equity investments in privately held companies, fair value of embedded derivatives associated with equity investments, digital asset loans, digital asset receivable, impairment assessment of certain digital asset receivable, and the allowance of credit losses on digital assets subject to the current expected credit loss model, which involve the use of observable and unobservable market inputs and management’s judgment. These estimates are based on management’s evaluation of available positive and negative evidence, including historical operating results and expectations of future taxable income. Actual results could differ from those estimates.
Cash and cash equivalents: The Company maintains the cash balances in financial institutions and with regulated financial investment brokers. The Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Cash equivalents as of June 30, 2026 include $
| 8 |
| Table of Contents |
Digital assets: The Company accounts for its digital assets, including SUI tokens, in accordance with ASC 350-60, Goodwill and Other – Crypto Assets, which requires eligible cryptocurrency assets to be measured at fair value, with changes in fair value recognized in net income. Fair value is determined in accordance with ASC 820, Fair Value Measurement, using quoted prices in active markets. The Company has designated Coinbase as its principal market based on the volume and level of activity.
Changes in fair value are reflected as unrealized gain or loss on digital assets and realized gains and losses from the derecognition are recognized upon disposition using the specific identification method.
For digital assets not in scope of ASC 350‑60, impairment is recognized when events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment losses are measured based on the excess of the carrying amount over the fair value of the digital asset, which is determined using the lowest observable market price during the period in which the impairment is identified.
Purchases and sales of digital assets are classified as investing activities in the statement of cash flows. Certain transfers of digital assets may be reflected as non-cash investing activities, as applicable.
Digital asset receivable: The Company recognizes digital asset receivable for digital assets that are held in wallets controlled by third parties. These receivables represent contractual rights to receive specified digital assets. Depending on the nature of the underlying digital asset and the associated settlement mechanics, the receivable may contain an embedded feature that requires evaluation under ASC 815. In circumstances where the underlying digital asset is not readily convertible to cash, the embedded feature may not meet the definition of a derivative.
As a result, the Company applies different subsequent measurement approaches based on the substance of the underlying rights. Digital asset receivable arising from decentralized lending pool arrangements are remeasured at fair value each reporting period, as these receivables represent rights to receive SUI tokens and contain embedded derivatives that require bifurcation. In contrast, digital asset receivable representing rights to receive liquid staking tokens or vault tokens do not contain embedded derivatives and are therefore carried at cost and assessed for impairment, as applicable.
Credit losses: Digital asset loan and certain digital asset receivables are subject to credit exposure and are evaluated for expected credit losses in accordance with ASC 326, Financial Instruments—Credit Losses. The allowance for credit losses is based on management’s evaluation of historical experience, current conditions, and reasonable and supportable forecasts.
Equity investments: The Company accounts for equity investments in which it does not have significant influence in accordance with ASC 321, Investments — Equity Securities.
Equity securities with readily determinable fair values are measured at fair value, with unrealized gains and losses recognized in net income in the period of the change. Fair value is determined in accordance with ASC 820, Fair Value Measurement. Dividends are recognized in earnings when the right to receive payment is established.
For equity investments that do not have a readily determinable fair value, the Company has elected the measurement alternative available under ASC 321. These investments are recorded at cost, less impairment, and adjusted for observable price changes in orderly transactions for identical or similar investments, with adjustments recognized in earnings in the period of the change. The Company evaluates these investments for impairment when indicators exist and records an impairment loss if the carrying amount is not recoverable. Gains or losses on disposals are recognized in earnings when realized.
Debt investments: The Company accounts for its debt investments in accordance with ASC 825, Financial Instruments, and has elected the fair value option for its debt investments, with changes in fair value recognized in earnings each reporting period.
Fair value is determined in accordance with ASC 820, using valuation techniques and inputs that reflect market participant assumptions. Because the fair value option has been elected, these debt investments are not evaluated for impairment or expected credit losses.
Interest income, including amounts attributable to payment-in-kind (PIK) features, is recognized based on the contractual terms of the instruments and recorded on an accrual basis when earned. Interest income recognition is suspended on loans on non-accrual status when collectability of principal or interest is not reasonably assured. Realized gains or losses on the disposition of debt investments are recognized in earnings upon sale.
Fair value measurement of investments: Investments measured at fair value are valued in accordance with ASC Topic 820, Fair Value Measurements, with changes in fair value recognized in earnings each reporting period.
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Fair value is generally based on quoted market prices provided by independent pricing services, broker or dealer quotations, or alternative price sources. When such observable inputs are not available, fair value is determined using valuation techniques that incorporate management judgment and consider all relevant facts and circumstances, consistent with the Company’s valuation policies and procedures.
Investments measured at fair value are classified within the fair value hierarchy based on the observability of the inputs used in the valuation. The determination of fair value, particularly for Level 3 investments, involves significant judgment. Due to the inherent uncertainty associated with valuation, actual results may differ materially from the values recorded.
Income taxes: The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect for the tax year in which the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will be realized. The Company’s assessment of realizability requires significant judgment.
The Company accounts for income taxes in interim periods using the estimated annual effective tax rate method. Under this method, the Company estimates its annual effective tax rate and applies that rate to year‑to‑date pre‑tax income or loss, with discrete income tax items recorded in the period in which they occur.
SUI staking revenue: Beginning in August 2025, the Company commenced SUI staking activities, including native staking, liquid staking and restaking. The Company delegates SUI tokens to third-party validator nodes to participate in proof-of-stake blockchain protocols and earns staking rewards in the form of additional SUI tokens.
The Company evaluated its staking arrangements in accordance with ASC 606, Revenue from Contracts with Customers, and determined that it acts as an agent as it does not control the validation services provided by the third-party validators. Accordingly, staking rewards are recognized on a net basis.
Staking rewards are recognized as non-cash consideration at the fair value of the SUI token earned on the date the rewards are earned, limited to the portion attributable to the Company for delegating its tokens.
Stock-based compensation: The Company’s stock-based compensation consists of stock options and warrants issued to certain employees, non-employees and directors of the Company. The Company recognizes compensation expense based on an estimated grant date fair value using the Black-Scholes option-pricing model or Monte Carlo simulation. If the factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. The Company recognizes stock-based compensation expense for these options and warrants on a straight-line basis over the requisite service period. The Company has elected to account for forfeitures as they occur.
Warrants: The Company evaluates warrants to determine whether they should be classified as equity or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. Warrants issued as compensation are accounted for in accordance with ASC 718, Compensation - Stock Compensation. Such warrants are measured at fair value on the grant date and recognized as compensation expense over the requisite service period.
Reclassifications: Certain prior‑period amounts have been reclassified to conform to the current financial statement presentation. These reclassifications primarily relate to the aggregation of previously separate operating expense line items into a single financial statement line within the statements of operations. The reclassifications had no impact on previously reported total assets, total liabilities, shareholders’ equity, net income (loss), or cash flows, and no changes were made to the underlying prior‑year balances.
NOTE 3 – DIGITAL ASSETS
During the six months ended June 30, 2026, the Company continued to hold SUI tokens acquired pursuant to the Digital Asset Purchase and Sale Agreement with the Sui Foundation, which remain subject to contractual transfer restrictions through August 30, 2027. The Company is permitted to stake the restricted SUI tokens during the restriction period.
The discount associated with the acquisition of
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The following table presents the activities in digital assets for the six months ended June 30, 2026:
Digital Assets (In thousands, except for token quantities) |
| Number of Tokens |
|
| Cost basis |
|
| Fair value |
| |||
|
|
|
|
|
| |||||||
Balance as of January 1, 2026 |
|
|
|
| $ |
|
| $ |
| |||
Return of digital asset loan |
|
|
|
|
|
|
|
|
| |||
Digital asset loan advanced |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Transfers of digital asset receivable |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Realized loss on transfer and digital asset loan advanced |
|
|
|
|
|
|
|
| ( | ) | ||
Staking rewards earned and received |
|
|
|
|
|
|
|
|
| |||
Lending rewards earned and received |
|
|
|
|
|
|
|
|
| |||
Staking/lending rewards accrued in prior period, received |
|
|
|
|
|
|
|
|
| |||
Unrealized gains (losses) |
|
|
|
|
| — |
|
|
| ( | ) | |
Balance as of June 30, 2026 |
|
|
|
| $ |
|
| $ |
| |||
Digital assets are measured at fair value on a recurring basis in accordance with ASC 820, Fair Value Measurement, using quoted prices in active markets (Level 1 inputs).
For the six months ended June 30, 2026, we incurred $
NOTE 4 – DIGITAL ASSET LOAN RECEIVABLE
The Company has entered into digital asset loan arrangements pursuant to which it has lent SUI tokens to third parties in exchange for stated fees payable in digital assets.
Under a digital asset loan arrangement entered into in September 2025 with Galaxy Digital LLC (“Galaxy Digital”), the Company lent SUI tokens under an evergreen facility that may be terminated with seven days’ notice at the Company’s election. The Company earns fees based on a stated annual rate, payable in SUI tokens. Repayment may be made either in kind or in cash equal to the fair value of the digital assets loaned. During the six months ended June 30, 2026, the loan arrangement was fully settled and all outstanding amounts were repaid. The realized loss recognized upon settlement primarily reflected changes in the market value of the underlying SUI tokens during the loan period, rather than any credit-related loss or shortfall in repayment.
In September 2025, the Company entered into a separate digital asset loan agreement with BlueFin Labs Inc. (“BlueFin”), pursuant to which
Neither of the above-mentioned arrangements contain a collateral requirement.
(In thousands) |
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Digital asset loan receivable — current |
| $ |
|
| $ |
| ||
Digital asset loan receivable — non current |
|
|
|
|
|
| ||
Less: allowance for credit loss |
|
| ( | ) |
|
| ( | ) |
Total Digital asset loan receivable (net) |
| $ |
|
| $ |
| ||
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Digital asset loan receivable activity for the six months ended June 30, 2026, is as follows (In thousands, except for token quantities):
|
| Number of Tokens |
|
| Cost basis |
|
| Fair value |
| |||
December 31, 2025 |
|
|
|
| $ |
|
| $ |
| |||
Loans advanced |
|
|
|
|
|
|
|
|
| |||
Return of digital asset loan |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Realized loss on return of digital asset loan |
|
| — |
|
|
|
|
|
| ( | ) | |
Digital asset loans interest earned |
|
|
|
|
|
|
|
|
| |||
Digital asset loans interest received |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Provision for credit losses |
|
| — |
|
|
|
|
|
| ( | ) | |
Unrealized gains losses |
|
|
|
|
|
|
|
|
| |||
June 30, 2026 |
|
|
|
| $ |
|
| $ |
| |||
Digital asset loan receivables are measured at fair value on a recurring basis in accordance with ASC 820, Fair Value Measurement, using quoted prices in active markets (Level 1 inputs).
NOTE 5 – DIGITAL ASSET RECEIVABLE
During the six months ended June 30, 2026, with the assistance of its asset manager, Galaxy Digital, the Company participated in decentralized finance (“DeFi”) protocols built on the SUI blockchain, including liquid staking pools, decentralized lending pools, and vault‑based arrangements governed by on‑chain smart contracts.
The DeFi activity occurred toward the end of the first quarter of 2026 and was unwound by the Company shortly thereafter, at the beginning of the second quarter of 2026 following a change in the Company’s risk assessment of DeFi activities due to DeFi-related security incidents at the time. All amounts deployed in these DeFi arrangements were subsequently collected. The balance remained recorded as a digital asset receivable because the related tokens continued to be held in wallets controlled by Galaxy Digital as of June 30, 2026.
As of June 30, 2026, the digital asset receivable primarily related to rights to receive SuiUSDe from Galaxy Digital and was separate from the DeFi positions described above, which had been unwound and collected at the beginning of the second quarter of 2026. Digital asset receivables are subsequently measured at fair value, with fair value determined using quoted prices in active markets for the underlying digital assets, when available. Changes in fair value are recognized in earnings in the period incurred. The reason for these amounts being recognized as digital asset receivables relates to these SuiUSDe tokens being held in wallets controlled by Galaxy Digital. Because Galaxy Digital controls the wallets holding the underlying assets, the Company does not have direct access to the associated private keys, and the assets are not protected from Galaxy Digital's creditors.
Digital asset receivables are subject to counterparty, liquidity, operational, and protocol-related risks. The Company evaluates these exposures at each reporting date and records allowances for expected credit losses in accordance with the current expected credit loss model.
NOTE 6 – INVESTMENTS
During the six months ended June 30, 2026, the Company executed the following investments in private entities, as part of the Company’s strategy to enhance balance sheet productivity by lending to its ecosystem and strategic partners on a risk adjusted basis and allocating capital to high-conviction growth themes across the digital asset, financial technology and artificial intelligence sectors.
In March 2026, the Company entered into a Simple Agreement for Future Equity ("SAFE") with Nof1 Holdings, Inc. ("Nof1"), an agentic artificial intelligence research and trading technology company, for total cash consideration of $
During the same period, the Company also invested $
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The Company does not have the ability to exercise significant influence over either investee, and neither of the two investments have a readily determinable fair value. Accordingly, each investment is carried at cost. As of June 30, 2026, the Company had not recorded any impairment related to these investments.
Investments as of June 30, 2026 and December 31, 2025, are as follows (In thousands):
|
| As of June 30, 2026 |
|
| As of December 31, 2025 |
| ||
Debt security investments measured at fair value |
|
|
|
|
|
| ||
Short-term Non-banking Loans |
|
|
|
|
|
| ||
Commercial Business Loans |
|
|
|
|
|
| ||
Equity investments in publicly traded companies |
|
|
|
|
|
| ||
Equity investments in privately held companies |
|
|
|
|
|
| ||
Total Investments |
| $ |
|
| $ |
| ||
Fair value measurement
The following table presents the fair value measurements of our investments by major class, as of June 30, 2026, according to the fair value hierarchy (In thousands):
|
| As of June 30, 2026 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
| ||||||||||
Short-term non-banking loans |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Commercial business loans |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity investments in publicly traded companies |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The following table presents the fair value measurements of our investments by major class, as of December 31, 2025, according to the fair value hierarchy (In thousands):
|
| As of December 31, 2025 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
| ||||||||||
Short-term non-banking loans |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Commercial business loans |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity investments publicly traded companies |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 investment assets for the three months ended June 30, 2026 (In thousands):
|
| Balance |
| |
| ||||
Balance as of January 1, 2026 |
| $ |
| |
Net change in unrealized depreciation |
|
| ( | ) |
Purchases and other adjustments to cost |
|
|
| |
Sales and redemptions |
|
| ( | ) |
Balance as of June 30, 2026 |
| $ |
| |
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| Table of Contents |
The following table lists our Level 3 investments held as of June 30, 2026 and the unobservable inputs used to determine their valuation:
Security Type |
| 6/30/26 FMV |
|
| Valuation Technique |
| Unobservable Inputs |
| Range | ||
Short-term non-banking loans |
| $ |
|
| discounted cash flow |
| determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness, including assessment related to individual note creditworthiness |
| |||
Commercial business loans |
|
|
|
| discounted cash flow |
| forecasted cash flows available to creditors in a foreclosure sale |
| |||
Total |
| $ |
|
|
|
|
|
|
| ||
The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 investment assets for the year ended December 31, 2025:
In thousands |
| Balance |
| |
|
|
|
| |
Balance as of January 1, 2025 |
| $ |
| |
Net change in unrealized depreciation |
|
| ( | ) |
Purchases and other adjustments to cost |
|
|
| |
Sales and redemptions |
|
| ( | ) |
Balance as of December 31, 2025 |
| $ |
| |
The following table lists our Level 3 investments held as of December 31, 2025 and the unobservable inputs used to determine their valuation:
Security Type |
| 12/31/25 FMV |
|
| Valuation Technique |
| Unobservable Inputs |
| Range | ||
Short-term non-banking loans |
| $ |
|
| discounted cash flow |
| determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness, including assessment related to individual note creditworthiness |
| |||
Commercial business loans |
|
|
|
| discounted cash flow |
| determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness |
| |||
Total |
| $ |
|
|
|
|
|
|
| ||
There were no transfers between Level 1, Level 2, or Level 3 of the fair value hierarchy during the reporting period.
NOTE 7 – STOCK-BASED COMPENSATION
During the six months ended June 30, 2026, the Company issued compensatory warrants to a newly appointed director. These warrants are equity‑classified and measured at fair value on the grant date. The warrants vest over 24 months in different tranches and have four different exercise prices. Because exercise prices significantly exceeded the fair value of the common stock on the grant date, they contain an implicit market condition. The Company used the graded vesting method to attribute expenses associated with the award.
For the six months ended June 30, 2026, the Company recognized a total stock-based compensation expense of $
The following table summarizes warrant activity for the period ended June 30, 2026:
|
| Number of |
|
|
|
|
|
|
| |||
|
| Shares |
|
|
|
|
| Weighted |
| |||
|
| Issuable |
|
| Weighted |
|
| Average |
| |||
|
| Upon |
|
| Average |
|
| Remaining |
| |||
|
| Exercise of |
|
| Exercise |
|
| Contractual |
| |||
|
| Warrants |
|
| Price |
|
| Life (years) |
| |||
Outstanding on December 31, 2025 |
|
|
|
| $ |
|
|
|
| |||
Issued |
|
|
|
|
|
|
|
|
| |||
Exercised |
|
| - |
|
|
|
|
|
|
|
| |
Expired |
|
| - |
|
|
|
|
|
|
|
| |
Outstanding on June 30, 2026 |
|
|
|
| $ |
|
|
|
| |||
Exercisable on June 30, 2026 |
|
|
|
| $ |
|
|
|
| |||
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NOTE 8 – PER-SHARE INFORMATION
Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of Common Shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of dilutive Common Shares outstanding during the period. The Company’s potential dilutive Common Shares include stock options and warrants that are in the money or were pre-funded. The Company uses the treasury stock method to compute the dilutive shares related to in-the-money stock options and warrants, to be included in the dilutive earning per share, when the effect is not anti-dilutive.
A reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings (loss) per share is set forth below (In thousands, except for share):
|
| For the Three Months Ended June 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Basic earnings per share: |
|
|
|
|
|
| ||
Numerator: |
|
|
|
|
|
| ||
Net income (loss) |
| $ | ( | ) |
| $ |
| |
Denominator: |
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding - basic |
|
|
|
|
|
| ||
Effect of dilutive share-based rewards |
|
| - |
|
|
|
| |
Weighted-average number of common shares outstanding - diluted |
|
|
|
|
|
| ||
Basic earnings (loss) per common share |
| $ | ( | ) |
| $ |
| |
Diluted earnings (loss) per common share |
| $ | ( | ) |
| $ |
| |
|
| For the Six Months Ended June 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Basic earnings per share: |
|
|
|
|
|
| ||
Numerator: |
|
|
|
|
|
| ||
Net income (loss) |
| $ | ( | ) |
| $ |
| |
Denominator: |
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding - basic |
|
|
|
|
|
| ||
Effect of dilutive share-based rewards |
|
| - |
|
|
|
| |
Weighted-average number of common shares outstanding - diluted |
|
|
|
|
|
| ||
Basic earnings (loss) per common share |
| $ | ( | ) |
| $ |
| |
Diluted earnings (loss) per common share |
| $ | ( | ) |
| $ |
| |
For the six months ended June 30, 2026, the following instruments were excluded from the computation of the dilutive earnings per share.
Options* |
|
|
| |
Warrants* |
|
|
|
*Options and Warrants were out-of-money for the period six months ended June 30, 2026
| 15 |
| Table of Contents |
NOTE 9 – RELATED-PARTY TRANSACTIONS
Karatage is a privately held entity co‑founded by the Company’s Chairman of the Board and the Company’s Chief Investment Officer. Accordingly, Karatage is considered a Related Party under ASC 850, Related Party Disclosures.
Under the arrangement with Karatage, to serve as a strategic advisor to support the Company’s business initiatives and long‑term strategic planning, the Company incurred advisory fees of $
NOTE 10 – INCOME TAXES
The Company’s effective income tax rate for the six months ended June 30, 2026 and 2025 was
The Company continues to assess the realizability of its deferred tax assets at each reporting date. Based on the weight of available evidence, management concluded that it is not more likely than not that the Company’s net deferred tax assets will be realized and, accordingly, the Company continues to maintain a full valuation allowance as of June 30, 2026.
NOTE 11 – SEGMENT
The Company has one reportable operating segment, which is a digital asset platform focused on maximizing SUI per share value and advancing the Sui ecosystem. The legacy financing solutions business is not considered a separate reportable segment, as the Company’s segment reporting has been to reflect the Company’s current strategic and operational decision-making.
During the quarter ended June 30, 2026, the Company’s chief operating decision makers (“CODM”) are the Company’s Chairman and the Chief Investment Officer, who, together, managed the Company’s operations as one operating segment for the purpose of evaluating financial performance and allocating resources. On July 8, 2026, Stephen Mackintosh resigned as the Company’s Chief Investment Officer. The resignation did not result from any disagreement with the Company regarding its operations, policies or practices.
The accounting policies of the Company’s segment are the same as those described in the summary of significant accounting policies. The CODMs use revenue, unrealized gain/loss on SUI and operating income to assess performance and allocate resources. The significant segment expense categories regularly provided to the CODMs are the same as those included on the condensed statements of operations. The measure of segment assets is total assets as reported on the balance sheets.
NOTE 12 – SUBSEQUENT EVENTS
The Company evaluated subsequent events through the date on which these condensed financial statements were issued. No events requiring recognition or disclosure in the condensed financial statements were identified.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As used in this section and unless otherwise indicated, the terms “we,” “us,” “our,” and “the Company” refer to Sui Group Holdings Limited.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of the Company’s financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors that may affect its future results. In addition, unless expressly stated otherwise, the comparisons presented in this MD&A refer to the same period in the prior year. The Company’s MD&A is presented in seven sections:
| · | Overview |
| · | SUI Treasury Management Activity |
| · | Investment Activity |
| · | Results of Operations |
| · | Liquidity and Capital Resources |
| · | Critical Accounting Estimates |
| · | Off-Balance Sheet Arrangements |
OVERVIEW
Sui Group Holdings Limited (“the Company”) was originally incorporated as Mill City Ventures III, Ltd. in the State of Minnesota on January 10, 2006. Since 2020, we operated as a publicly traded specialty finance company focused on short-term, non-bank lending solutions, generating revenue primarily from interest income, transaction fees, and capital appreciation from related investments.
Beginning in 2025, the Company undertook a strategic shift in its business model to establish a digital asset treasury strategy focused on holding and managing SUI tokens, the native cryptocurrency of the SUI blockchain (“SUI”). Under this strategy, SUI has become the principal asset held in the Company’s treasury. In connection with this shift, the Company entered into a strategic relationship with the Sui Foundation, an independent organization supporting the development and adoption of the SUI network, pursuant to which the Company acquired SUI tokens and participates in staking and other protocol‑level activities.
On August 26, 2025, the Company changed its corporate name to Sui Group Holdings Limited, following an amendment to its Articles of Incorporation filed with the Office of the Minnesota Secretary of State. In conjunction with the name change and the rebranding, we changed our ticker symbol from “MCVT” to “SUIG”, aligning our public identity with our core blockchain initiatives.
The Company’s strategy is to maximize the value of SUIG through scalable, transparent, and long-term value creation. The Company seeks to enhance balance sheet productivity by lending to its ecosystem and strategic partners on a risk adjusted basis, and allocating capital to high-conviction growth themes across the digital asset, financial technology and artificial intelligence sectors. To execute this strategy, the Company acquires SUI tokens through a combination of open‑market purchases, negotiated transactions, and other institutional‑grade sourcing arrangements, including an agreement with the Sui Foundation. In addition to holding SUI, the Company seeks to enhance the productivity of its SUI holdings through protocol‑level activities, including staking. During the three months ended March 31, 2026, the Company also engaged in selective decentralized finance (“DeFi”) activities, including liquid staking, protocol-level deployments, and stablecoin-related arrangements conducted through third‑party platforms operating on the SUI blockchain. Subsequent to March 31, 2026, the Company unwound all of its DeFi activities and recovered all amounts involved therein in response to security incidents affecting certain DeFi ecosystems. The Company has since adopted a strategy to deploy a portion of its digital asset holdings through trading-based activities, including high-frequency trading strategies; however, such activities had not commenced as of June 30, 2026.
As of June 30, 2026, the Company held approximately 91.1 million SUI tokens in our treasury (excluding SUI loaned to third parties), representing $62.8 million in digital assets. Including SUI tokens held through digital asset loan arrangements and digital asset receivable, the Company held approximately 108.9 million SUI tokens in our treasury, which equates to approximately 1.35 SUI per share of Common Stock and pre-funded warrants outstanding. The Company actively manages its digital asset holdings to balance liquidity requirements, risk exposure, and return objectives, including the use of third‑party asset managers to deploy portions of its holdings into approved blockchain‑native strategies.
The Company’s principal sources of income currently include staking rewards from our SUI holdings, yield earned from deployed digital assets, realized and unrealized gains or losses on digital assets, and rewards associated with participating in blockchain protocol, and, to a lesser extent, income or valuation changes from other investments. The Company continues to hold the legacy lending assets, some of which generated interest and fee income in the three months ended June 30, 2026; however, they represent a reduced share of the Company’s overall asset base and results of operations compared to prior periods.
Our operating expenses reflect the Company’s transition to a digital asset treasury model and include professional fees, payroll, custody and infrastructure costs related to blockchain asset management, and insurance, and other general administrative expenses. The Company seeks to achieve enhanced operational leverage as it scales its digital asset treasury operation.
This MD&A should be read in conjunction with (i) the accompanying unaudited condensed financial statements and the related notes included in Part I, Item 1 of this Report, (ii) the audited financial statements and related notes for the year ended December 31, 2025 included in our Annual Report and (iii) other publicly available information. All amounts herein are unaudited. In addition, the following discussion of our results of operations and financial condition should be read in the context of this overview.
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| Table of Contents |
SUI TREASURY MANAGEMENT ACTIVITY
In late July 2025, we formally launched our SUI treasury strategy, establishing SUI, the native token of the SUI blockchain, as a core component of our digital asset treasury platform. Since that time, our strategy has focused on building and actively managing a SUI‑based treasury designed to support long‑term value creation while enhancing the productivity of our digital assets through protocol‑level participation and selective yield‑generating activities. We also pursue opportunistic investments in the broader digital asset ecosystem and financial technology and artificial intelligence sectors with the aim of further enhancing balance sheet productivity.
SUI is a next-generation Layer 1 blockchain designed to deliver the scalability, speed, and security required to power decentralized applications and real-world crypto use cases across finance, gaming, artificial intelligence, stablecoins, and more.
During the current quarter, substantially all of our SUI holdings were deployed in staking, staking-related or lending arrangements. Approximately 82% of SUI holdings are staked, generating an estimated annualized yield of 1.7%. For the six months ended June 30, 2026, we earned $0.9 million in staking rewards, representing 796,302 SUI tokens, compared to no staking rewards earned during the six months ended June 30, 2025. We believe this staking strategy enhances the productivity of our treasury while maintaining exposure to potential SUI price appreciation.
We have also participated in ecosystem initiatives related to the deployment and promotion of SUI‑native stablecoins (“SuiUSDe”) in partnership with third‑party platforms and SUI Foundation‑supported programs. These initiatives are intended to support on‑chain liquidity, transactional use cases, and broader adoption of the SUI network. To date, these activities are primarily strategic in nature and are designed to support ecosystem growth rather than serve as a primary source of near‑term revenue. As of June 30, 2026, the Company held approximately $10.0 million of SuiUSDe in connection with these initiatives.
The Company also participates in strategic ecosystem initiatives designed to promote adoption and utility of the SUI network. As part of these efforts, the Company has entered into a digital asset lending arrangement with BlueFin Labs Inc., under which the Company has lent 6.0 million SUI tokens and is entitled to a percentage of revenues generated by certain BlueFin operations.
Our SUI treasury strategy is supported by our official relationship with the Sui Foundation, an independent organization dedicated to the development and adoption of the SUI ecosystem. We believe this relationship, together with our active participation in staking, lending, and other protocol‑level activities, positions us to benefit from continued expansion of the SUI network while providing shareholders with exposure to SUI through a publicly traded corporate structure. On July 28, 2026, we extended our Trademark Agreement with the Sui Foundation pursuant to the terms thereof.
We continue to monitor developments in the Sui ecosystem, including advancements in staking infrastructure, validator expansion, and adoption of SUI-native applications. These developments are expected to further support the intrinsic value of our SUI holdings and reinforce our strategic positioning.
INVESTMENT ACTIVITY
While our primary focus has shifted from our legacy finance operations, we still aim to enhance balance sheet productivity by lending to our ecosystem and strategic partners on a risk adjusted basis and allocating capital to high-conviction growth themes across the digital asset, financial technology and artificial intelligence sectors.
During the six months ended June 30, 2026, we made $6.0 million of strategic investment in artificial intelligence companies, consisting of a $3.0 million investment in Nof1 Holdings, Inc. through a SAFE and a $3.0 million investment in Recursive Superintelligence through an investment structure providing the Company with an indirect beneficial interest in preferred equity interests. Nof1 is an agentic artificial intelligence research and trading technology company focused on developing AI-driven solutions for financial markets, while Recursive Superintelligence is an artificial intelligence research company focused on developing self-improving AI systems. We believe these investments complement our broader strategy of obtaining exposure to emerging technologies, including digital assets, financial technology and artificial intelligence opportunities. These strategic investments are distinct from the Company's traditional specialty finance and loan investment activities.
We also received $0.9 million of redemptions and repayments from legacy investments during the period. As of June 30, 2026, net investments of our traditional specialty finance and loan carried at amortized cost were $13.6 million.
During the six months ended June 30, 2025, we made $4.4 million of investment purchases and had $0.5 million of redemptions and repayments, resulting in net investments at amortized cost of $17.6 million at the end of that period.
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| Table of Contents |
RESULTS OF OPERATIONS
Our operating results for the three and six months ended June 30, 2026 and June 30, 2025 were as follows:
|
| For the Three Months Ended June 30, |
|
| Increase |
|
| Percentage |
| |||||||
(In thousands) |
| 2026 |
|
| 2025 |
|
| (Decrease) |
|
| Change |
| ||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Investment income |
| $ | — |
|
| $ | 948 |
|
| $ | (948 | ) |
|
| -100 | % |
Digital lending interest income |
|
| 36 |
|
|
| — |
|
|
| 36 |
|
|
| n/a |
|
SUI staking revenue |
|
| 327 |
|
|
| — |
|
|
| 327 |
|
|
| n/a |
|
Total Revenues |
|
| 363 |
|
|
| 948 |
|
|
| (585 | ) |
|
| -62 | % |
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
| 314 |
|
|
| 99 |
|
|
| 215 |
|
|
| 217 | % |
Stock-based compensation |
|
| 1,947 |
|
|
| — |
|
|
| 1,947 |
|
|
| n/a |
|
Asset and strategic management fees |
|
| 286 |
|
|
| — |
|
|
| 286 |
|
|
| n/a |
|
Compensation expense |
|
| 445 |
|
|
| 190 |
|
|
| 255 |
|
|
| 134 | % |
Insurance |
|
| 445 |
|
|
| — |
|
|
| 445 |
|
|
| n/a |
|
Unrealized gain on digital assets and receivable, net |
|
| (2,251 | ) |
|
| — |
|
|
| (2,251 | ) |
|
| n/a |
|
Realized loss on digital assets, net |
|
| 18,910 |
|
|
| — |
|
|
| 18,910 |
|
|
| n/a |
|
Recovery of credit losses |
|
| (81 | ) |
|
| — |
|
|
| (81 | ) |
|
| n/a |
|
Net realized and unrealized gain on investments |
|
| — |
|
|
| (314 | ) |
|
| 314 |
|
|
| 100 | % |
Other general and administrative |
|
| 92 |
|
|
| 27 |
|
|
| 65 |
|
|
| 241 | % |
Total Operating Expenses |
|
| 20,107 |
|
|
| 2 |
|
|
| 20,105 |
|
|
| 1,005,250 | % |
Operating Income (Loss) |
| $ | (19,744 | ) |
| $ | 946 |
|
| $ | (20,690 | ) |
|
| -2,187 | % |
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
SUI staking revenue
For the three months ended June 30, 2026, we generated $0.3 million in staking rewards from our SUI token holdings, compared to none for the three months ended June 30, 2025. This income reflects the accrual of 359,792 SUI tokens earned on 89,533,189 tokens staked, representing approximately 82% of our total SUI holdings during the period. The staking yield for the three months ended June 30, 2026, remains consistent with our estimated annualized return of 1.6%, and rewards were accrued daily in accordance with our treasury management strategy. The lack of staking income for the three months ended June 30,2025 is due to the Company not engaging in the holding, staking or investment of cryptocurrency prior to the Private Placement.
Digital lending interest income
During the three months ended June 30, 2026, our digital lending interest income was $35.6 thousand, compared to none for the three months ended June 30, 2025. This pertains to the interest income on digital assets lent to the borrowers, as well as yield earned on deployed digital assets as digital asset receivable. Additional information regarding these arrangements is included in Note 4 — Digital Asset Loan Receivable to the accompanying unaudited condensed financial statements. The lack of digital lending interest income for the three months ended June 30, 2025 is due to the Company not engaging in the holding, staking or investment of cryptocurrency prior to the Private Placement.
Investment income
For the three months ended June 30, 2026, our total investment income was $0 compared to $0.9 million for the three months ended June 30, 2025. The variance is attributable to the Company’s change in accounting presentation following its cessation of investment company accounting under ASC 946 with effect from August 2025. Accordingly, investment income for the three months ended June 30, 2026, is classified within other income and totaled $0.2 million.
Professional fees
During the three months ended June 30, 2026, and 2025, we had professional fees expense amounting to $0.3 million and $99.0 thousand, respectively. The increase was driven primarily by higher professional costs associated with the Company’s strategic transition and expanded public-company activities, including professional fees related to recruiting, accounting and audit‑related services, marketing and public relations in connection with the Company’s rebranding and investor communications, and legal fees related to SEC reporting and regulatory compliance.
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| Table of Contents |
Stock-based compensation
During the three months ended June 30, 2026, and 2025, we had stock-based compensation amounting to $1.9 million and $0, respectively. The increase was attributable to non-cash compensatory expenses incurred in connection with the issuance of warrants in the Private Placement to certain members of management, advisors and non-employee director in the third quarter of 2025 and the issuance of warrants to a non-employee director in the first quarter of 2026.
Asset and strategic management fees
During the three months ended June 30, 2026, we incurred $0.3 million in asset and strategic management fees under our strategic and asset management arrangements, compared to $0 during the three months ended June 30, 2025. These fees were calculated based on a tiered schedule applied to our average daily AUM, which includes SUI, cash, and cash equivalents, but excludes assets from our short-term lending business. Fees are calculated monthly in arrears and pro-rated for partial periods due to asset contributions or withdrawals. Due to the change in operations to our SUI strategy, there were no asset and strategic management fees for the three months ended June 30, 2025.
Compensation expense
During the three months ended June 30, 2026, and 2025, we had compensation expense amounting to $0.4 million and $0.2 million, respectively. The increase was primarily to additional salary paid to certain personnel beginning in the third quarter of 2025 and the appointment of three new independent directors in connection with the Company’s strategic transition.
Insurance expense
During the three months ended June 30, 2026, and 2025, we had insurance expense amounting to $0.4 million and $0, respectively. The increase was due to additional directors and officers’ insurance policies that the Company deemed necessary due to our change in strategy.
Unrealized gain on digital assets and receivable, net
During the three months ended June 30, 2026, we recognized a net unrealized gain of $2.3 million compared to $0 during the three months ended June 30, 2025. The net amount reflects a gross unrealized loss of $0.6 million on our digital asset and receivable holdings, offset by $2.9 million of amortized deferred income related to the discount received on the purchase of SUI tokens as discussed in “Note 3 — Digital Assets” of our financial statements. The remaining deferred income balance of $13.8 million will amortize on a straight-line basis over the period to August 30, 2027. This is due to decrease in the price of the SUI token during the current reporting period. The lack of unrealized gain on digital assets and receivables for the three months ended June 30, 2025 is due to the Company not investing in digital assets prior to the Private Placement.
Realized loss on digital assets, net
During the three months ended June 30, 2026, we recognized a net realized loss of $ 18.9 million compared to $0 during the three months ended June 30, 2025. The current-period loss primarily reflects a $2.4 million realized loss recognized upon the return of the principal balance of 961,550 SUI tokens receivable from Galaxy Digital, $14.0 million realized loss recognized on additional 4,000,000 SUI loaned to BlueFin. The loss also includes certain adjustments related to previously recognized digital asset activity, partially offset by a $1.1 million realized gain recognized upon the unwind of certain DeFi arrangements. Both the realized loss and realized gain were primarily attributable to fluctuations in the market price of SUI during the period and did not reflect any loss of principal or shortfall in the recovery of the underlying SUI tokens. The realized gain resulted from the recovery and subsequent disposition of digital assets for which impairment losses had been recognized in a prior period, resulting in a lower carrying value upon return of the underlying SUI tokens. The lack of unrealized loss on digital assets for the three months ended June 30, 2025 is due to the Company not investing in digital assets prior to the Private Placement.
Net realized and unrealized gain/loss on investment
During the three months ended June 30, 2026, our net realized and unrealized gain on investment was $0, compared to $0.3 million for the three months ended June 30, 2025. The decrease primarily reflects the Company’s change in accounting presentation following its cessation of investment company accounting under ASC 946 during the quarter ended September 30, 2025. As a result, realized and unrealized gains and losses are no longer presented within this line item and are instead reflected within other income (expense).
During the three months ended June 30, 2026, net realized and unrealized loss on investment of $0.5 million was recognized within other income, primarily reflecting downward fair value adjustments on certain legacy investment and loan-related positions due to increased credit risk and uncertainly arising from borrower delinquencies, and refinancing delays which outwaited mitigating factors such as guarantor support and prior repayment history as of June 30, 2026.
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| Table of Contents |
Recovery of credit losses
During the three months ended June 30, 2026, the Company recognized the recovery of credit losses of $81.0 thousand compared to $0 for the three months ended June 30, 2025. The recovery was primarily attributable to a decrease in the expected credit loss allowance recorded on the Company's digital asset receivables, reflecting changes in the underlying receivable balances subject to the allowance. No comparable provision was recognized during the three months ended June 30, 2025, as these arrangements were not in place during the prior-year period.
Other general and administrative
During the three months ended June 30, 2026, and 2025, we had other general and administrative expenses amounting to $92.0 thousand and $27.0 thousand, respectively. The increase was due to additional custody fees incurred due to digital asset activity increases.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
|
| For the Six Months Ended June 30, |
|
| Increase |
|
| Percentage |
| |||||||
(In thousands) |
| 2026 |
|
| 2025 |
|
| (Decrease) |
|
| Change |
| ||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Investment income |
| $ | — |
|
| $ | 1,726 |
|
| $ | (1,726 | ) |
|
| -100 | % |
Digital lending interest income |
|
| 106 |
|
|
| — |
|
|
| 106 |
|
|
| n/a |
|
SUI staking revenue |
|
| 850 |
|
|
| — |
|
|
| 850 |
|
|
| n/a |
|
Total Revenues |
|
| 956 |
|
|
| 1,726 |
|
|
| (770 | ) |
|
| -45 | % |
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
| 2,094 |
|
|
| 241 |
|
|
| 1,853 |
|
|
| 769 | % |
Stock-based compensation |
|
| 3,941 |
|
|
| — |
|
|
| 3,941 |
|
|
| n/a |
|
Asset and strategic management fees |
|
| 626 |
|
|
| — |
|
|
| 626 |
|
|
| n/a |
|
Compensation expense |
|
| 896 |
|
|
| 383 |
|
|
| 513 |
|
|
| 134 | % |
Insurance |
|
| 896 |
|
|
| 24 |
|
|
| 872 |
|
|
| 3,633 | % |
Unrealized loss on digital assets and receivable, net |
|
| 16,354 |
|
|
| — |
|
|
| 16,354 |
|
|
| n/a |
|
Realized loss on digital assets, net |
|
| 53,765 |
|
|
| — |
|
|
| 53,765 |
|
|
| n/a |
|
Impairment of digital asset receivable |
|
| 1,367 |
|
|
| — |
|
|
| 1,367 |
|
|
| n/a |
|
Provision for credit losses |
|
| 1,070 |
|
|
| — |
|
|
| 1,070 |
|
|
| n/a |
|
Net realized and unrealized gain on investments |
|
| — |
|
|
| (477 | ) |
|
| (477 | ) |
|
| 100 | % |
Other general and administrative |
|
| 197 |
|
|
| 47 |
|
|
| 150 |
|
|
| 319 | % |
Total Operating Expenses |
|
| 81,206 |
|
|
| 218 |
|
|
| 80,988 |
|
|
| 37,150 | % |
Operating Income (Loss) |
| $ | (80,250 | ) |
| $ | 1,508 |
|
| $ | (81,758 | ) |
|
| -5,422 | % |
SUI staking revenue
For the six months ended June 30, 2026, we generated $0.8 million in staking rewards from our SUI token holdings, compared to $0 for the six months ended June 30, 2025. This income reflects the accrual of 796,302 SUI tokens earned on average 95,538,678 SUI tokens staked, representing approximately 88% of our total SUI holdings during the period. The staking yield remains consistent with our estimated annualized return of 1.7%, and rewards were accrued daily in accordance with our treasury management strategy. The lack of staking revenue for the six months ended June 30, 2025 is due to the Company not engaging in the holding, staking or investment of cryptocurrency prior to the Private Placement.
Digital lending interest income
During the six months ended June 30, 2026, our digital lending interest income was $0.1 million, compared to $0 for the six months ended June 30, 2025. This pertains to the interest income on digital assets lent to the borrowers, as well as yield earned on deployed digital assets as digital asset receivable. Additional information regarding these arrangements is included in Note 4 — Digital Asset Loan Receivable to the accompanying unaudited condensed financial statements. The lack of digital lending interest income for the six months ended June 30, 2025 is due to the Company not engaging in the holding, staking or investment of cryptocurrency prior to the Private Placement.
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Investment income
For the six months ended June 30, 2026, our total investment income was $0, compared to $1.73 million for the six months ended June 30, 2025. The variance is attributable to the Company’s change in accounting presentation following its cessation of investment company accounting under ASC 946 with effect from August 2025. Accordingly, investment income for the six months ended June 30, 2026, is classified within other income and totaled $0.8 million.
Professional fees
During the six months ended June 30, 2026, and 2025, we had professional fees expense amounting to $2.1 million and $0.2 million, respectively. The increase was driven primarily by higher professional costs associated with the Company’s strategic transition and expanded public-company activities, including professional fees related to recruiting, accounting and audit‑related services, marketing and public relations in connection with the Company’s rebranding and investor communications, and legal fees related to SEC reporting and regulatory compliance.
Stock-based compensation
During the six months ended June 30, 2026, and 2025, we had stock-based compensation amounting to $3.9 million and $0, respectively. The increase was attributable to non-cash compensatory expenses incurred in connection with the issuance of warrants in the Private Placement to certain members of management, advisors and non-employee director in the third quarter of 2025 and the issuance of warrants to a non-employee director in the first quarter of 2026.
Asset and strategic management fees
During the six months ended June 30, 2026, we incurred $0.6 million in asset and strategic management fees under our strategic and asset management arrangements, compared to $0 during the six months ended June 30, 2025. These fees were calculated based on a tiered schedule applied to our average daily AUM, which includes SUI, cash, and cash equivalents, but excludes assets from our short-term lending business. Fees are calculated monthly in arrears and pro-rated for partial periods due to asset contributions or withdrawals. Due to the change in operations to our SUI strategy, there were no asset and strategic management fees for the six months ended June 30, 2025.
Compensation expense
During the six months ended June 30, 2026, and 2025, we had compensation expense amounting to $0.9 million and $0.4 million, respectively. The increase was primarily to additional salary paid to certain personnel beginning in the third quarter of 2025 and the appointment of three new independent directors in connection with the Company’s strategic transition.
Insurance expense
During the six months ended June 30, 2026, and 2025, we had insurance expense amounting to $0.9 million and $24 thousand, respectively. The increase was due to additional directors’ and officers’ insurance policies that the Company deemed necessary due to our change in strategy.
Unrealized loss on digital assets and receivable, net
During the six months ended June 30, 2026, we recognized a net unrealized loss of $16.4 million compared to $0 during the six months ended June 30, 2025. The net amount reflects a gross unrealized loss of $22.3 million on our digital asset and receivable holdings, partially offset by $5.9 million of amortized deferred income related to the discount received on the purchase of SUI tokens as discussed in “Note 3 — Digital Assets” of our financial statements. The remaining deferred income balance of $13.8 million will amortize on a straight-line basis over the period to August 30, 2027. This is due to decrease in the price of the SUI token during the current reporting period. Due to the change in operations to our SUI strategy, there were no unrealized gains or losses on digital assets and receivable for the six months ended June 30, 2025.
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Realized loss on digital assets, net
During the six months ended June 30, 2026, we recognized a net realized loss of $53.8 million compared to $0 during the six months ended June 30, 2025. The current-period loss primarily reflects a $38.5 million realized loss associated with the transfer of 11,900,024 SUI tokens to Galaxy Digital for deployment in blockchain protocol participation, stablecoin-related strategies, and selective DeFi activities. The net realized loss also includes a $2.4 million realized loss recognized upon the return of the principal balance of 961,550 SUI tokens receivable from Galaxy Digital and $14.0 million realized loss recognized on additional 4,000,000 SUI loaned to BlueFin, partially offset by a $1.1 million realized gain recognized upon the unwind of certain DeFi arrangements. Both the realized loss and realized gain were primarily attributable to fluctuations in the market price of SUI during the period and did not reflect any loss of principal or shortfall in the recovery of the underlying SUI tokens. The realized gain primarily resulted from the recovery of digital assets for which impairment losses had been recognized in a prior period. Due to the change in operations to our SUI strategy, there were no realized gains or losses for the six months ended June 30, 2025.
Net realized and unrealized gain/loss on investment
During the six months ended June 30, 2026, our net realized and unrealized gain on investment was $0, compared to $0.5 million for the six months ended June 30, 2025. The decrease primarily reflects the Company’s change in accounting presentation following its cessation of investment company accounting under ASC 946 during the quarter ended September 30, 2025. As a result, realized and unrealized gains and losses are no longer presented within this line item and are instead reflected within other income (expense).
During the six months ended June 30, 2026, net realized and unrealized loss on investment of $10.7 million was recognized within other income, primarily reflecting downward fair value adjustments on certain legacy investment and loan-related positions due to increased credit risk and uncertainly arising from borrower delinquencies, and refinancing delays which outwaited mitigating factors such as guarantor support and prior repayment history as of June 30, 2026.
Impairment of digital asset receivable
During the six months ended June 30, 2026, the Company recognized impairment charges of $1.4 million on its digital asset receivable. The impairment primarily reflected declines in the market price of SUI below the cost basis of certain receivable positions associated with previously deployed DeFi arrangements. The impairment did not result from a shortfall in the recovery of the underlying digital assets or a loss of principal, but rather from decreases in the fair value of the underlying SUI tokens. No such impairment was recognized during the six months ended June 30, 2025, as the Company did not hold digital asset receivables during the comparable prior-year period.
Provision for credit losses
During the six months ended June 30, 2026, the Company recognized a provision for credit losses of $1.1 million compared to $0 for the six months ended June 30, 2025. The increase was primarily attributable to the establishment of credit loss estimates associated with the Company's receivable positions. No comparable provision was recognized during the six months ended June 30, 2025, as these arrangements were not in place during the prior-year period.
Other general and administrative
During the six months ended June 30, 2026, and 2025, we had other general and administrative expenses amounting to $0.2 million and $47 thousand, respectively. The increase was due to additional custody fees incurred due to digital asset activity increases.
Cash Flows for the Six Months Ended June 30, 2026 and 2025
Cash flows used in or provided by operating activities are affected primarily by net income or loss, adjusted for non-cash items including net realized and unrealized loss on digital assets and investment, stock-based compensation, and changes in working capital.
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For the six months ended June 30, 2026, net cash used in operating activities was $3.7 million, compared to $3.9 million for the six months ended June 30, 2025. The decrease in net cash used in operating activities period over period was driven primarily by differences in accounting classification and non-cash adjustments between the periods.
Although the Company generated a net loss of $89.9 million during the six months ended June 30, 2026, a significant portion of the loss related to non‑cash items, including $70.1 million of realized and unrealized losses on digital assets and digital asset receivable, $3.9 million of stock-based compensation expense, $1.4 million of impairment of digital asset receivable, and a $10.7 million net realized loss on investments, which reduced net income but did not result in corresponding cash outflows during the period. By comparison, during the six months ended June 30, 2025, the Company generated net income of $1.1 million, but cash used in operating activities was higher due primarily to cash outflows associated with purchases of investments, which were classified as operating activities under the Company’s former accounting treatment as an investment company under ASC 946.
Cash flows used in investing activities are affected primarily by purchases and dispositions of digital assets and investments. For the six months ended June 30, 2026, net cash used in investing activities was $15.1 million, compared to $0 during the six months ended June 30, 2025. Cash used in investing activities during the current period was primarily attributable to purchases of SuiUSDe under the Company’s SUI treasury strategy, a $3.0 million SAFE investment in Nof1 Holdings, Inc., an artificial intelligence research and trading technology company, and a $3.0 million investment in Recursive Superintelligence, an artificial intelligence research company focused on developing self-improving AI systems, through an investment vehicle providing the Company with an indirect beneficial interest in the underlying equity interests. These investments were made as part of the Company's broader strategy to enhance balance sheet productivity by lending to its ecosystem and strategic partners on a risk adjusted basis, and allocating capital to high-conviction growth themes across the digital asset, financial technology and artificial intelligence sectors.
For the six months ended June 30, 2026, net cash provided by financing activities was $0, compared to $0.6 million of cash used in financing activities during the six months ended June 30, 2025. Cash used in financing activities during the six months ended June 30, 2025 related primarily to the repurchase of shares of the Company’s common stock pursuant to the Company’s stock repurchase program.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2026, we had cash and cash equivalents of $3.1 million, a decrease of $18.8 million from $21.9 million as of December 31, 2025. The decrease was driven primarily by cash outflows related to purchases of SuiUSDe and other investing activities during the period.
The primary uses of the Company’s existing liquidity and any funds raised in the future are expected to support the Company’s value-creation strategies and for other general corporate purposes, including funding operating expenses or to service debt to the extent we borrow or issue senior securities. In addition to cash and cash equivalents, the Company’s investments may include highly liquid stable coins, including SuiUSDe, as well as temporary investments consisting of cash equivalents (including USDC), U.S. government securities, and high‑quality debt securities with maturities of one year or less from the time of investment.
To support our ongoing liquidity and capital needs, we also have access to additional financing under the equity line of credit established pursuant to our purchase agreement with A.G.P./Alliance Global Partners (“A.G.P.”). Subject to the terms and conditions of the agreement, we may, from time to time at our discretion, direct A.G.P. to purchase shares of our Common Stock, providing us with a flexible source of capital to fund operations or strategic initiatives. Any sales of Common Stock under the agreement will be made at our discretion and are subject to customary limitations, including share volume restrictions and conditions relating to market pricing and effectiveness of our registration statement. The A.G.P. purchase agreement provides additional optional capacity up to $500 million that we may utilize if needed to supplement liquidity.
Management believes our existing liquidity sources, together with the cash generated from operations, will be sufficient to meet our liquidity needs in the short and long term. However, we recognize that a significant portion of our assets consist of SUI tokens, which are less liquid than cash and cash equivalents. As of June 30, 2026, approximately 88% of our SUI holdings are staked and subject to a one-day unbonding period, which may limit our ability to rapidly access liquidity from these assets. While we view our SUI holdings as strategic assets and do not currently expect to need to sell SUI to meet our operating liquidity requirements over the next twelve months, we may periodically sell SUI or utilize other liquid digital asset holdings, including stablecoins, for general corporate purposes, including to generate cash for treasury management, acquisitions, or strategies that generate tax benefits in accordance with applicable law.
In the short term, we expect to meet our operating expenses, investment activities, and working capital needs through our existing cash and cash equivalents, stablecoin holdings, and other liquid investments and cash generated from operations.
We do not have material contractual obligations that we believe would impair our ability to meet our liquidity needs or otherwise impact our short- or long-term financial condition. Our existing contractual arrangements, including our strategic advisory agreement with Karatage, advisory agreement with the Sui Foundation and agreements with key executives are not expected to materially affect our liquidity.
In the long term, our liquidity will depend on our ability to generate cash from operations, the performance and realizable value of our SUI holdings, and our ability to access capital markets or secure additional financing arrangements.
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Summary cash flow data is as follows (In thousands):
|
| For the Six Months Ended June 30, |
| |||||
Cash flows used by: |
| 2026 |
|
| 2025 |
| ||
Operating activities |
| $ | (3,688 | ) |
| $ | (3,898 | ) |
Investing activities |
|
| (15,107 | ) |
|
| — |
|
Financing activities |
|
| — |
|
|
| (630 | ) |
Net decrease in cash |
|
| (18,795 | ) |
|
| (4,528 | ) |
Cash, beginning of period |
|
| 21,936 |
|
|
| 6,026 |
|
Cash, end of period |
| $ | 3,141 |
|
| $ | 1,498 |
|
CRITICAL ACCOUNTING ESTIMATES
Our financial statements are prepared in conformity with the Generally Accepted Accounting Principles in the United States of America (“GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods.
In preparing the financial statements, management utilizes available information—including historical performance, industry benchmarks, and current economic conditions—to inform its estimates and judgments, with appropriate consideration of materiality. Actual results may differ materially from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.
As our operations have evolved to include blockchain-native treasury management, our critical accounting policies now encompass both legacy finance and digital asset activities. The critical accounting policies include fair value measurement of digital assets and digital asset receivable, digital asset loan receivable, as well as the application of the current expected credit loss (“CECL”) model to digital asset receivable and digital asset loan receivable. The most significant estimates affecting the Company’s results of operations and financial position currently relate to the following:
| · | Investment valuation: We continue to hold certain short-term, secured loans and equity-linked investments from our specialty finance operations. These assets are measured at fair value and are evaluated quarterly for impairment. Valuation inputs include expected cash flows, collateral assessments, and market comparables, with oversight from management and the Audit Committee. |
|
|
|
| · | CECL: The Company estimates expected credit losses on digital asset loan receivable and digital asset receivable using a forward‑looking CECL model. Significant judgments include counterparty creditworthiness, collateral coverage and volatility of the underlying digital assets, structure and duration of the arrangements, and current and forecasted market conditions. Changes in these assumptions could materially affect the allowance for expected credit losses and related results of operations. |
|
|
|
| · | Impairment assessment of equity investments in privately held companies: The Company evaluates equity investments in privately held companies without readily determinable fair values for impairment based on qualitative factors, including the financial condition and operating results of the investee, changes in business strategy, market conditions, recent financing activities, and other company‑specific events. |
|
|
|
| · | Fair value of embedded derivatives associated with equity investments: Certain equity investments contain embedded derivative features that are required to be separately accounted for at fair value. The determination of fair value requires management to apply judgment in selecting valuation methodologies and key assumptions, including volatility, probability‑weighted outcomes, and other inputs that may not be directly observable. |
|
|
|
| · | Impairment assessment of certain digital asset receivables: The Company evaluates certain digital asset receivables carried at cost, net of impairment, for recoverability based on observable market data and qualitative factors, including volatility in the market prices of the underlying digital assets, protocol performance, liquidity conditions, counterparty considerations, and other relevant events or changes in circumstances. |
We will continue to evaluate and disclose additional critical accounting policies as our operations expand and as new standards or interpretations emerge. For further detail, refer to our Annual Report.
OFF-BALANCE-SHEET ARRANGEMENTS
During the six months ended June 30, 2026, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company”, the Company is not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. 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.
As of June 30, 2026, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were not effective as of June 30, 2026 due to the material weakness in our internal control over financial reporting identified and disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2025.
During the quarter ended June 30, 2026, the Company continued its remediation plan to address the previously identified material weakness. As part of these efforts, the Company has engaged outside consultants with expertise in accounting, financial reporting, and internal controls to assist management in evaluating and enhancing our accounting processes and controls. In addition, these consultants are supporting management in implementing our new strategic initiatives designed to strengthen financial oversight and operational accountability.
The Company expects that the actions taken and those planned, including the continued involvement of external resources, will remediate the identified material weakness; however, the material weakness will not be considered fully remediated until the applicable controls have been designed, implemented, and operated effectively for a sufficient period of time, and management has completed testing to confirm their effectiveness.
Changes in Internal Control over Financial Reporting
Other than the steps taken to remediate material weaknesses as described above, there were no significant changes in our internal controls over financial reporting that occurred during the fiscal quarter covered by this report that materially affected, or were reasonably likely to materially affect such controls.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time we may become involved in various legal proceedings that arise in the ordinary course of business, including actions related to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, we are currently not aware of any such legal proceedings or claims that we believe, either individually or in the aggregate, will have a material adverse effect on our business, financial condition, or results of operations.
ITEM 1A. RISK FACTORS
In addition to the risk factors set forth below, you should carefully consider the factors discussed in “Item 1A. Risk Factors” in our Annual Report and in our Quarterly Report. The risks described below and in those documents are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and/or operating results.
Risks Related to Our Investments
We have made, and may continue to make, loans to and minority investments in the digital asset, financial technology and artificial intelligence sectors, which subject us to distinct operational, regulatory, valuation, and liquidity risks that are separate from, and in addition to, the risks associated with our digital asset treasury strategy.
In addition to our digital asset treasury strategy, we selectively allocate capital to loans to and minority equity investments in private digital asset, financial technology and artificial intelligence entities that we believe are complementary to our broader investment thesis. These investments diversify our capital allocation but differ in nature and risk profile from our digital asset treasury and staking strategy, and there can be no assurance that these investments will perform in a manner consistent with, or will enhance the value of, our SUI treasury strategy.
Digital assets, financial technology and artificial intelligence are dynamic sectors, each subject to its own rapidly evolving and unsettled regulatory landscape. Financial technology entities in which we invest may be subject to evolving money transmission, banking, consumer protection, and other financial services regulation that varies by jurisdiction. Artificial intelligence entities in which we invest are subject to a separate and equally unsettled body of law, including emerging AI-specific legislation such as the European Union's Artificial Intelligence Act and a growing number of U.S. state AI laws, the application and enforcement of which remain difficult to predict. Changes in, or new interpretations of, the laws and regulations applicable to either sector could materially and adversely affect the business, financial condition, or prospects of the entities in which we invest, and in turn, the value of our investments.
Because these are minority investments, we generally do not, and may not in the future, control the management, strategic direction, development, or commercialization of the underlying technologies or businesses. While we may seek to negotiate board observer rights, information rights, or other protective provisions in connection with such investments, there is no assurance that we will obtain such rights, or that any rights we do obtain will be sufficient to protect our investment or allow us to meaningfully influence the entity's strategic or operational decisions. Other investors in these entities may have business goals and interests that differ from, or conflict with, our own.
These entities are frequently early-stage, unproven, and face significant competition, and their technologies may never be successfully developed, commercialized, or adopted by the market. Our investments in these entities are illiquid and non-marketable at the time of investment, are typically subject to transfer restrictions, and generally have no public trading market. Any return of, or return on, our capital depends on the performance of the technology and the operating company and may depend on a future liquidity event — such as an initial public offering, acquisition, or follow-on financing at a higher valuation — that may never occur, or that may occur on terms less favorable than we anticipate. If any entity in which we hold a minority investment is unable to obtain additional financing, fails to achieve commercial success, or ceases operations, we could lose all or a substantial portion of our invested capital.
As our capital allocated to non-digital-asset investments increases, we may also become subject to additional risks under the Investment Company Act of 1940, as described in the Risk Factor included in our Annual Report and titled “If we were deemed to be an investment company under the 1940 Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated.”
Risks Related to Agentic Artificial Intelligence
The rapid development and deployment of AI models capable of autonomous decision-making, task execution, and interaction with external systems with limited or no human oversight—known as agentic artificial intelligence (“agentic AI”)— pose significant and evolving risks to our financial condition and results of operations.
We, our contract counterparties, entities we invest in, or our service providers may integrate agentic AI tools into our operations, including in connection with trading, compliance monitoring, cybersecurity and blockchain analytics. While these tools may enhance efficiency, because these systems operate with reduced human supervision relative to traditional software and earlier AI applications, they also introduce novel and potentially significant risks, including risks related to model accuracy and reliability, unintended actions, data security and privacy, third-party system dependencies, intellectual property, regulatory compliance, and potential liability for outcomes produced or actions taken by such systems. Agentic AI may take actions that are unintended, erroneous, or inconsistent with our policies, risk tolerances, or applicable legal and regulatory requirements. Errors or unintended behaviors may propagate rapidly and at scale before they are detected and corrected, potentially resulting in material financial losses, regulatory violations or reputational harm.
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Agentic AI may also significantly enhance the offensive capabilities of malicious actors targeting our systems or infrastructure. Unlike traditional cyberattacks that require sustained human direction, agentic AI can autonomously identify vulnerabilities, adapt attack strategies in real time, and coordinate complex, multi-stage intrusions across various attack surfaces, such as smart contracts, cross-chain protocols and third-party integrations, with minimal human involvement. These AI-driven offensive capabilities may lower the cost and technical expertise required to launch attacks, broaden the pool of potential threat actors, and enable attacks of a speed, scale, and complexity that exceed the capacity of our existing security infrastructure. As a result, traditional perimeter controls and static security rules are no longer the most effective security mechanisms. As agentic AI tools become more widely accessible, we anticipate that the frequency, sophistication, and severity of AI-powered attacks will increase, and there can be no assurance that our defensive measures will keep pace.
Our competitors and other participants in the cryptocurrency industry may also deploy agentic AI in ways that could adversely affect us, including through AI-driven trading strategies that increase market volatility, which could materially and adversely impact the value of our digital assets and our revenues. We may also face increased liability and litigation risk arising from the actions or outputs of agentic AI, and the legal and regulatory frameworks governing autonomous AI-driven actions are unsettled and evolving rapidly. Furthermore, the market for AI talent is highly competitive, and our inability to attract and retain personnel with the specialized expertise necessary to oversee agentic AI or counteract these threats could further impair our ability to manage these risks.
No assurance can be given that we will be able to effectively anticipate, manage, or mitigate the risks associated with agentic AI. The failure to do so could have a material adverse effect on our business, financial condition and results of operations.
Our $10 million in principal amount loan to Mustang Funding, LLC is subordinated to Senior Lenders in right of payment, in respect of our exercise of rights and remedies, and in right of collateral, with the result that we could lose a significant portion or all of our investment.
On December 12, 2022, contemporaneously with our entry into a non-binding letter of intent with Mustang Funding, LLC (“Mustang”) contemplating a combination or merger transaction, we entered into a lending agreement with Mustang pursuant to which we loaned Mustang the principal amount of $5 million maturing in September 2023. Among other things, our related loan agreement with Mustang requires us to consent to any additional indebtedness Mustang may incur, subject to certain limitations and exceptions.
Although our loan to Mustang was not secured at the time that it was made, we negotiated for and obtained the right in the governing documents to seek and obtain collateral in the event that there were a default by Mustang or our negotiations for a combination transaction were to break down. At that time, we believed it was important to obtain this right because (i) Mustang was contemporaneously seeking a senior secured lending facility with whom we had no previous working experience, and (ii) any breakdown in combination negotiations, combined with our anticipated subordination (discussed below) could mean that we would need to extend the terms of this loan beyond nine months. In sum, as a creditor, we believed that we needed to secure our loan on more traditional commercial lending terms in order to better protect our investment.
On December 28, 2022, we entered into a subordination agreement with Orion Pip LLC, in its capacity as administrative and collateral agent for itself and other senior lenders (the “Senior Lenders”) under a senior secured lending agreement with Mustang, pursuant to which we subordinated our right to payment (subject to certain exceptions) and our right to exercise rights and remedies, to Mustang’s prior repayment in full of all amounts owing to the Senior Lenders. The subordination agreement prohibited the Senior Lenders or Mustang from extending the stated maturity of amounts owing under the senior secured lending agreement beyond December 2026. The Senior Lenders are owed $15.675 million in principal amount under the senior secured lending agreement as of December 31, 2025.
In June, August and September 2023, we advanced additional principal to Mustang as we continued working with them on a potential definitive merger agreement and related deliverables. These additional principal advances resulted in the loan principal growing to an aggregate of $10 million. In connection with these advances, the maturity date of our loan was ultimately extended to June 2024. In April 2024, we agreed to a final extension of the maturity date to the earlier of December 31, 2024, or 90 days after the termination of negotiations for our combination transaction with Mustang.
On August 20, 2024, we terminated the non-binding letter of intent with Mustang. As a result, amounts owing under our $10 million loan to Mustang were to mature on November 18, 2024. Nevertheless, the subordination agreement with the Senior Lenders effectively worked to prohibit Mustang’s payment, and our collection, of our loan. Accordingly, at that time we invoked our right to obtain collateral security from Mustang for our loan for the purpose of protecting our investment and essentially converting our loan position from a short-term unsecured loan to a longer-term loan involving standard commercial lending terms, including terms relating to collateral security. Ultimately, in late January 2025 we were able to enter into an amendment to our loan agreement with Mustang that extended the maturity date of our loan to March 2027 and increased the interest rate on our loan principal to 20% per annum (with 15% per annum remaining payable in cash on a monthly basis, and the additional 5% per annum being payable upon maturity), and also enter into an amended and restated subordination agreement with Orion Pip LLC that subordinated our right to collateral on customary and negotiated terms and conditions.
On April 2, 2026, we received from a Senior Lender a notice of foreclosure and public sale of all or a material portion of Mustang’s assets. This notice of foreclosure has been extended multiple times since then. Presently, we understand that the foreclosure has been postponed pending further negotiations between Mustang and its creditors. The timing and outcome of any such foreclosure, restructuring, insolvency or similar proceeding are uncertain and may be protracted, contested and costly. If a foreclosure or other enforcement action continues, or if there is no improvement in Mustang’s financial or business condition, we may lose a substantial portion or all of our investment in Mustang or be required to accept cash or securities with a value that is significantly less than the carrying value of the loan, any of which could result in significant losses and have a material adverse effect on our business, financial condition and results of operations.
We have not received interest payments when due under our loan agreement with Mustang since February 2026, and, based on Mustang’s current financial condition and the foreclosure action described above, we do not expect to receive the overdue or any future interest payments in the foreseeable future. Continued non-payment could adversely affect our revenues, results of operations and financial condition.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
Kristina Campbell
On July 6, 2026, the Board appointed Ms. Kristina Campbell (“Ms. Campbell”) to serve as a member of the Board and chair of the audit committee. As compensation for her services on the Board, Ms. Campbell will receive an annual director fee of $250,000, to be paid on a quarterly basis. In addition, the Company granted to Ms. Campbell warrants (the “Campbell Warrants”) to purchase 207,565 shares of the Company’s common stock (the “Common Stock”) at various prices per share of Common Stock as follows: (i) 83,026 shares of Common Stock at an exercise price of $5.420 per share of Common Stock; (ii) 41,513 shares of Common Stock at an exercise price of $5.962 per share of Common Stock; (iii) 41,513 shares of Common Stock at an exercise price of $6.504 per share of Common Stock; and (iv) 41,513 shares of Common Stock at an exercise price of $7.046 per share of Common Stock. The Campbell Warrants are exercisable for a period of five years. The Campbell Warrants will vest over a period of 24 months starting six months from the Issue Date (July 6, 2026) in four equal installments (being 25% every six months), subject to Ms. Campbell (i) being a director of the Company at each respective vesting date and (ii) not having been legally and validly terminated or removed as a director pursuant to the Company’s bylaws and applicable law. The Campbell Warrants are subject to vesting conditions and will not become exercisable unless and until stockholders approve the grant of the Campbell Warrants. The Campbell Warrants were issued in reliance on the exemption(s) from registration set forth in Section 4(a)(2) and/or Regulation D of the Securities Act.
Howard Liszt
On July 6, 2026, as compensation for his ongoing services on the Board, the Board approved the award to Howard Liszt of warrants (the “Liszt Warrants”) to purchase 83,026 shares of Common Stock at various prices per share of Common Stock as follows: (i) 33,211 shares of Common Stock at an exercise price of $5.420 per share of Common Stock; (ii) 16,605 shares of Common Stock at an exercise price of $5.962 per share of Common Stock; (iii) 16,605 shares of Common Stock at an exercise price of $6.504 per share of Common Stock; and (iv) 16,605 shares of Common Stock at an exercise price of $7.046 per share of Common Stock. The Liszt Warrants are exercisable for a period of five years. The Liszt Warrants will vest over a period of 24 months starting six months from the Issue Date (July 6, 2026) in four equal installments (being 25% every six months), subject to Mr. Liszt (i) being a director of the Company at each respective vesting date and (ii) not having been legally and validly terminated or removed as a director pursuant to the Company’s bylaws and applicable law. The Liszt Warrants are subject to vesting conditions and will not become exercisable unless and until stockholders approve the grant of the Liszt Warrants. The Liszt Warrants were issued in reliance on the exemption(s) from registration set forth in Section 4(a)(2) and/or Regulation D of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
(a) None.
(b) None.
(c) None.
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ITEM 6. EXHIBITS
Exhibit Number | Description | |
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| Warrant Agreement, dated July 6, 2026, between Sui Group Holdings Limited and Kristina Campbell. | |
| Warrant Agreement, dated July 6, 2026, between Sui Group Holdings Limited and Howard Liszt. | |
| ||
| ||
| ||
101.INS* |
| Inline XBRL Instance Document |
101.SCH* |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104* |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SUI GROUP HOLDINGS LIMITED | |||
| Date: August 6, 2026 | By: | /s/ Douglas Polinsky | |
|
| DOUGLAS M. POLINSKY | |
Chief Executive Officer | |||
|
| (Principal Executive Officer) |
|
SUI GROUP HOLDINGS LIMITED | |||
| Date: August 6, 2026 | By: | /s/ Joseph Geraci | |
|
| JOSEPH A. GERACI, II | |
Chief Financial Officer | |||
|
| (Principal Financial and Accounting Officer) |
|
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