DEFT

• Core Business & Market Context

• Q2 2026 results were negatively impacted by broad digital asset market volatility and lower crypto prices, which reduced AUM and led to unfavorable mark-to-market adjustments.
• Management reaffirmed long-term conviction in digital assets, with a current strategic focus on gaining market share during the downturn and investing for future growth.
• The company maintains a fortress balance sheet with $119.8 million in total liquidity, providing flexibility to invest through market cycles, pursue acquisitions, and support product innovation.

• Product Development Milestones

• Valor will add 8 more ETPs to its platform in Q3 2026, bringing the total listed products over 110. Valor Custody platform remains on track for a beta launch in H2 2026, which will bring custody in-house, reduce third-party costs, and improve margins.
• The first hedge fund launch has no remaining formal obstacles, with all trading partners onboarded; launch is expected within 1-3 weeks, definitely in Q3 2026. Arbitrage strategies will be expanded in H2 2026 to diversify revenue.
• After the Swedish FSA rejected the initial fund domicile application, management has appealed the decision and is simultaneously advancing a new fund structure in Luxembourg, targeting launch within 2026.
• AI integration is expanding to improve operational efficiency and develop new AI-enabled investment products that complement existing crypto offerings.

• Institutional Growth & Distribution

• Over 40% of Q2 2026 net inflows came from institutional outreach and events, with closed deals originating from events held as early as December 2025. The newly built institutional sales platform, developed in under 12 months, is now fully operational and driving inflows even in bear market conditions.
• The DVO Index platform saw increased partner adoption in Q2, supporting better product positioning across the Valor platform. A proprietary data-driven business intelligence system has been developed to provide unique competitive and operational insights, supporting new product development for third-party asset managers.

• Strategic Direction

• Management's long-term goal is to build a diversified, institutional-focused digital asset platform with revenue streams less dependent on crypto price movements. New institutional products will add performance-based revenue and institutional mandates, complementing the existing AUM-based fee model.
• As tokenization of real-world assets grows, the company's existing infrastructure is positioned to support expansion into this new asset class over time. Management only announces products once they are fully operational, regulatory compliant, and commercially ready to maintain credibility.

• Total annualized cash operating costs are targeted to reach $36-$39 million, with Q2 2026 annualized run rates already tracking below this target range as management maintains disciplined cost cutting.

• Break-even is estimated to require approximately $550 million in AUM at a 4.25% average monetization rate, which management views as achievable in moderately stronger crypto market conditions.
• Stillman Digital is expected to deliver a record full-year 2026 revenue. 8 new ETPs will be launched on Valor's platform in Q3 2026.
• The hedge fund will launch in Q3 2026, with the regulated domiciled fund (alternative to Sweden) targeting launch within 2026. Valor Custody is on track for a beta launch in H2 2026.
• Management's 4.25% budgeted average monetization rate reflects current distressed yields in the bear market; yields are expected to recover as crypto markets improve and altcoin positioning in AUM increases.

1. Valor (ETP/structured product segment): Ended Q2 2026 with 102 listed ETPs and structured products. Generated $22.8 million in net inflows during the quarter. Average Q2 AUM was $471.5 million, with quarter-end AUM at $397.2 million. Effective management fee yield held at 1%, and effective staking yield moderated to 2.4% due to lower crypto prices, compressed lending rates, and AUM composition shifts. Total segment revenue was not separately broken out, but it remains the core revenue driver via management and staking fees.
2. Stillman Digital: Generated approximately $5.4 million in revenue in H1 2026, representing 30.2% year-over-year revenue growth. It contributes approximately 30% of total company revenue in H1 2026 and is on track for a record full-year 2026 revenue. Its revenue is tied to trading volumes and realized spreads, not crypto price movements, making it a key diversification contributor.

• Broad digital asset market volatility and prolonged crypto bear market conditions continue to pressure AUM, reduce average monetization rates, and lead to negative mark-to-market adjustments on the company's treasury and venture holdings.

• Regulatory uncertainty exists for fund approval in Europe: the Swedish FSA rejected the initial domicile application, creating uncertainty around timing even with an appeal and alternative Luxembourg structure in progress.
• The company is currently out of compliance with NASDAQ's $1 minimum share price requirement, and while management is optimistic about receiving an additional 180-day extension to regain compliance, approval is not guaranteed until the application is formally reviewed.
• Investments in higher-yield alternative treasury assets (such as MicroStrategy Stretch preferred shares) are subject to fair value volatility, which impacted quarterly net results in Q2 2026.
• Product development and regulatory approval timelines are subject to external factors outside management control, including broader geopolitical and macroeconomic conditions that can delay launches.

Q: When will the smart crypto/hedge fund launch, and what is the status of the regulated fund domicile approval in Europe?

A: All formal obstacles for the hedge fund are cleared, with all key trading partners onboarded after a three-month delay. Launch is expected within 1-3 weeks, definitely in Q3 2026. For the regulated domicile, after the Swedish FSA rejected the initial application, management has appealed and refiled in Sweden, while advancing a structure in Luxembourg. The firm targets to launch the regulated fund by the end of 2026, though exact timing depends on regulatory approval.

Q: With the share price at an 80% discount to the last capital raise, why not initiate a larger share buyback to capitalize on this valuation?

A: Management prioritizes deploying cash for strategic growth initiatives, M&A, and product development, which they believe will deliver a higher long-term impact on shareholder value than buybacks. Buybacks of retired shares permanently remove capital from the balance sheet, and management believes it is more prudent to retain liquidity for strategic opportunities during the bear market, rather than deploying it for buybacks when the company does not generate significant free cash flow. This is not a permanent rejection of buybacks, just a prioritization of other uses of capital at this time.

Q: What drivers of AUM growth does the company have outside of increases in crypto prices?

A: New institutional and unique ETP products address underserved market segments with little existing competition. The newly built global institutional distribution platform drives inflows to existing products, and 40% of Q2 inflows already came from institutional outreach. New fund products are geographically unrestricted, enabling global distribution to non-European institutional investors that were previously out of reach, creating untapped AUM growth potential that is not dependent on crypto price appreciation.

Q: What is the breakdown of Q2 2026 net inflows, and what drove these inflows despite weak market conditions?

A: There was a large $11 million inflow for the Hedera (HBAR) product that made up a significant portion of total inflows, but inflows were broadly based across the product line, with 70% of AUM concentrated in Bitcoin, Ethereum, and Solana. Inflows were driven by over a year of targeted outreach to broker-dealers and institutional investors, focused brand building in the Nordics and EU, and granular competitive data that lets the firm optimize product positioning. The team capitalized on the slow market to build relationships that are now generating inflows.