NOTE 13. SUBSEQUENT EVENTS

Private placement and adoption of digital asset treasury strategy

On October 20, 2025, the Company entered into subscription agreements for a private placement of Class A common stock and pre-funded warrants, such pre-funded warrants being subscribed for in U.S. dollars, USDC or USDT (or a combination thereof) or BERA, the native digital asset of the Berachain blockchain. The BERA consideration was valued at $1.9477 per BERA, based on a a seven-day trailing VWAP $0.9836 in the case of the Berachain Foundation. On October 23, 2025, the Company closed the private placement, and received approximately $24.3 million in cash and approximately $19.0 million in USDT and USDC, and held approximately 54.2 million BERA at closing. Beginning with periods after October 23, 2025, in-scope crypto assets will be measured at fair value with changes recognized in net income; no amounts are reflected in the Company’s financial statements for the period ended September 30, 2025. See the Company’s Current Report on Form 8-K filed on October 20, 2025 for the terms of the private placement, including the issuance of pre-funded warrants, exercise price, automatic cashless exercise upon stockholder approval, and beneficial ownership limits related to the pre-funded warrants.

The Company intends to use the majority of proceeds to acquire BERA and to establish digital asset treasury operations, with approximately $3.0 million earmarked for legacy operations.

The private placement and associated adoption of a digital asset treasury strategy are non-recognized subsequent events under ASC 855. The nature of the transactions and the expected financial statement impact in future periods are disclosed below.

Accounting policy and GAAP implications

Crypto assets that meet the scope of ASU 2023-08 (ASC 350-60) are measured at fair value each reporting period with changes recognized in net income. Beginning with periods after October 23, 2025, the Company will present subsequent changes in the fair value of its crypto assets in the consolidated statements of operations and will provide the required ASC 820 fair value and ASC 350-60 roll-forward disclosures, including principal market, pricing sources, and significant holdings. Because these transactions occurred after September 30, 2025, no amounts related to these crypto assets are recognized in the accompanying 2025’s third quarter financial statements.

Subsequent to September 30, 2025, the Company established a digital-asset treasury and expects to begin holding crypto assets in the fourth quarter of 2025. See Part II, Item 1A “Risk Factors” for a discussion of risks related to custody, valuation, pricing volatility, and regulatory matters.

Equity Incentive Plan

Subsequent to September 30, 2025, the Company included in its proxy statement a proposal to increase the share reserve under the Company’s equity incentive plan to 3,000,000 shares. The plan already includes an evergreen provision, approved at the December 2024 annual meeting, that automatically increases the plan reserve on January 1 each year by 15 percent of the total number of shares outstanding as of the prior December 31. The Company expects to file a registration statement on Form S-8 to register any additional shares following stockholder approval. These proposed changes are not reflected in the Company’s balances as of September 30, 2025.

Governance update

On October 23, 2025, the Board established a Digital Assets Committee to oversee the Company’s digital-asset treasury strategy.

Related-party

On October 24, 2025, the Company entered into an employment agreement with its Chief Investment Officer to manage the BERA treasury strategy. The executive has disclosed ownership interests and ongoing activities in a separate digital asset trading business and an economic interest in BERA awards from a Berachain-affiliated entity. Management has concluded there were no related-party transactions requiring disclosure under Item 404(a) of Regulation S-K as of the 8-K filing date; however, the Company will treat the officer as a related party under ASC 850 and will monitor transactions with the Berachain Foundation or other Berachain-affiliated entities and will disclose any material related-party transactions in future periods.

Strategic Alternatives

After September 30, 2025, the Board began evaluating strategic alternatives for the legacy distribution business.

Inventory

After September 30, 2025, the Company initiated an Inventory Monetization Project to accelerate disposition of aged inventory.