As of June 30, 2025, we did not hold any derivatives carried at fair value. The following table presents our consolidated balance sheets classification of derivatives carried at fair value (in thousands):


		2026
Derivative	Balance Sheet Line	Asset		Liability
Derivatives not designated as hedging instruments:
SAFE and Token Warrants	Investments in SAFE and Token Warrants	$	1,000	$	—
Covered Call Options	Accrued liabilities		—		40
Total derivatives		$	1,000	$	40

During the fiscal year ended June 30, 2025, we did not hold any Covered Call Options. The following table presents our statements of operations classification of derivatives carried at fair value for the period presented (in thousands):


Derivative	Statements of Operations Line	For the Fiscal Year Ended June 30, 2026
Derivatives not designated as hedging instruments:
Covered Call Options	Gain on derivative liabilities, net	$	813
Total derivatives		$	813

On June 15, 2026 (the Effective Date), we entered into a SAFE agreement for an initial investment amount of $1.0 million in exchange for a right to participate in a future equity financing of preferred stock to be issued by ZK Innovations, Inc. (ZK Innovations). Alternatively, upon a liquidity event such as a change in control, a direct listing or an initial public offering, we are entitled to receive the greater of (i) the SAFE investment amount (the Purchase Amount) or (ii) the amount payable on the number of shares of ZK Innovations common stock equal to the SAFE investment amount divided by the liquidity price. In a dissolution event, such as a bankruptcy, we are entitled to receive the Purchase Amount. In the event of a qualifying financing, this instrument will automatically convert into the greater of (i) the number of standard preferred shares equal to the Purchase Amount divided by the lowest price per share of the standard preferred shares or (ii) the number of SAFE preferred shares equal to the Purchase Amount divided by the liquidity price.

In addition, we received a warrant to purchase tokens (the Token Warrant) which expires the earlier of 10 years following the issuance date or the date we and other related entities irrevocably and affirmatively decide not to develop any token. In connection with the SAFE and Token Warrants, we recorded $1.0 million as an investment in the consolidated balance sheets. We accounted for this investment under ASC 321 and elected the fair value option for the SAFE investment pursuant to ASC 825, Financial Instruments, which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value recorded in the consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The decision to elect the fair value option is determined on an instrument-by-instrument basis on the date the instrument is initially recognized, is applied to the entire instrument, and is irrevocable once elected. For instruments measured at fair value, embedded conversion or other features are not required to be separated from the host instrument. Issuance costs related to convertible securities carried at fair value are not deferred and are recognized as incurred on the consolidated statements of operations.

We carry our Covered Call Options at fair value with any realized gains or losses and/or changes in fair value recognized within gain on derivative liabilities, net, a component of other (expense) income, net, in our consolidated statements of operations.

In estimating the fair value of our Covered Call Options, we use the Black-76 Model, a derivation of the BSM Model, which includes several inputs and assumptions, including the forward price of the underlying asset (LTC), the underlying asset’s implied volatility, the risk-free interest rate, and the expected term of the Covered Call Options. The expected term of the Covered Call Options is the contractual term given the Covered Call Options can only be exercised on their expiration date (i.e., European-style options). We determined that the Covered Call Options are Level 2 liabilities given all inputs are observable.

During the fiscal year ended June 30, 2026, we issued Covered Call Options of $63.8 million notional for proceeds of $0.9 million, to generate cash flows on a portion of our digital assets, which is expected to be utilized in our Share Repurchase Program. We transferred LTC to GSR Markets as collateral in a quantity equal to the underlying notional for the Covered Call Options sold. The Covered Call Options are only exercisable upon the date of expiration, are automatically exercised if the underlying reference price was greater than the strike price of the Covered Call Option, and settled with delivery of the underlying LTC. The reference price for the Covered Call Options is/was GSR's internal pricing index, aggregating prices from multiple exchanges, quoted in USD at 6:00pm UTC time for a given date.

During the fiscal year ended June 30, 2026, Covered Call Options of $55.9 million notional expired with the underlying reference price below their strike price and we recognized realized gains of $0.8 million. As of June 30, 2026, we had four Covered Call Options outstanding on $7.9 million notional. During the fiscal year ended June 30, 2026, we recognized unrealized gains and unrealized losses of approximately $17,000 and $23,000, respectively.