Note 2 – Management’s Liquidity Plans

The Company’s primary source of liquidity has historically been cash generated from equity offerings and debt, along with recent additional income sources recently generated from the Company’s digital assets business strategies. Under Accounting Standards Codification (“ASC”) Subtopic 205-40, Presentation of Financial Statements—Going Concern, the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet future financial obligations as they become due within one year after the date that these financial statements are issued. Since the Company’s inception, it has had a history of recurring net losses from operations, recurring use of cash in operating activities and working capital deficits.

As of March 31, 2026, the Company had unrestricted cash and cash equivalents of approximately $7.4 million and working capital of $4.3 million. For the three months ended March 31, 2026, the Company earned net income of approximately $8.8 million. For the three months ended March 31, 2025, the Company incurred a net loss of approximately $3.5 million. For the three months ended March 31, 2026 and 2025, the Company used cash in operating activities of approximately $4.2 million and $4.4 million, respectively. Based on the Company’s current financial condition and forecast of cash flow needs for the next twelve months, Management expects that the Company’s existing resources will be sufficient to enable the Company to fund its anticipated level of operations through one year from the date of this report.

The Company’s financial condition is substantially dependent on the market price and liquidity of HYPE tokens, which are subject to extreme volatility and limited trading venues. Substantially all of the Company’s treasury assets are concentrated in HYPE tokens, the native cryptocurrency of the Hyperliquid protocol. HYPE tokens have experienced significant price volatility, and the Company’s financial results and carrying value of its digital assets will fluctuate materially based on HYPE token price movements. The Company depends on the continued success and adoption of the Hyperliquid protocol for the value of its treasury holdings.

On May 7, 2026, the Company closed a public offering of 2,777,778 common shares and received approximately $8.7 million in net proceeds. On May 13, 2026, pursuant to the Company’s grant to Chardan Capital Markets, LLC (“Chardan”) of a 30-day option to purchase up to 416,666 additional shares under the previously announced Underwriting Agreement dated May 5, 2026 (the “Underwriting Agreement”), the Company issued, and Chardan purchased, 132,249 shares of the Company’s common stock, resulting in approximately $0.4 million in net proceeds to the Company. The Company plans to continue to pursue additional capital through its at-the-market common stock offering programs in the future, however, such funding may not be available on terms acceptable to the Company or at all. Although Management believes that such capital sources will continue to be available, there can be no assurances that financing will be available to the Company when needed, or if available, on terms acceptable to the Company. If the Company is unable to obtain adequate financing on terms that are satisfactory to the Company, when the Company requires it, the Company’s ability to continue to cover operating expenses, to grow or support the business and to respond to business challenges could be significantly limited, which may adversely affect the Company’s business plans.

While the Company plans to hold its digital assets as part of a long-term treasury strategy, and deploy its assets for productive purposes including staking and HAUS agreements, the Company’s management has the discretion and ability to sell its digital assets as needed to cover liquidity obligations. As of March 31, 2026, the Company owns $25.4 million of HYPE digital assets, of which nearly all are native staked and therefore would be subject to a seven-day unstaking queue before the Company could sell or transfer the assets. In addition, approximately $22.3 million of the Company’s HYPE digital assets are also deployed into HAUS agreements or the Joint Validator Operator’s Agreement (as defined below) with additional 90-day contractual restrictions on transferability of the associated HYPE digital assets (See Note 9 - Commitments and Contingencies). The Company also has approximately $14.1 million HYPE Liquid Staking Tokens (including HiHYPE, kHYPE, and kmHYPE, each referred to as a “HYPE LST”) which can be traded, sold, or redeemed for HYPE and sold (subject to liquidity and redemption queue conditions, as well as the same seven-day unstaking queue as native staked HYPE).