Stablecoin Development Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported net income of $50.4 million ($0.23 per basic and diluted share) for the quarter ended September 30, 2026, driven by a $58.8 million non-cash unrealized gain on digital assets as the SKY token price increased approximately 49%.
• Staking revenue totaled $2.1 million for the quarter and $6.8 million for the first nine months of 2026.
• General and administrative expenses were $5.0 million for the quarter and $13.3 million for the first nine months; cash operating expenses (excluding non-cash stock-based compensation) were $1.8 million for the quarter and $6.8 million for the nine-month period.
• Income tax expense was $5.6 million for the quarter and nine months, substantially all of which was non-cash deferred income tax on the unrealized gain.
• Total assets were $188.2 million, consisting of $7.2 million in cash and $180.2 million in digital assets (SKY tokens) at fair value.
• Total liabilities were $6.1 million, primarily a $5.6 million non-cash deferred tax liability; the company had no debt and no warrant liabilities outstanding.
• Total stockholders' equity was $182.2 million with 51,751,359 shares of common stock outstanding as of September 30, 2026.
• For the first nine months of 2026, GAAP net income was $561.7 million ($3.33 basic, $2.65 diluted), driven by non-cash warrant fair value items including a $5.3 billion day-one loss offset by $5.8 billion in gains.

Guidance and Future Outlook:

• Management stated the company is positioned to continue executing with discipline and evaluate opportunities within Board-approved frameworks to build long-term shareholder value.
• The company intends to hold SKY tokens as a long-term strategic position and has not monetized any tokens to date.
• Forward-looking statements indicate potential for significant fluctuation in the market value of SKY holdings based on market price and token count.

Business Segments and Product Lines:

• The company holds 2,321,079,862 SKY tokens as of September 30, 2026, representing approximately 10% of the total SKY supply, with a cost basis of $149.3 million and a fair value of $180.2 million.
• Earned 34.6 million SKY tokens in staking rewards during the quarter, bringing cumulative staking rewards to 101,701,388 SKY tokens.
• Substantially all SKY holdings remain staked in the Sky Protocol ecosystem, carrying governance voting rights.
• Since the January 2026 Private Placement, the company acquired approximately 1.3 billion additional SKY tokens via open market purchases at an average price of $0.066 per token, in addition to staking rewards.

Market and Competitive Landscape:

• The company focuses on the Sky Protocol ecosystem, a decentralized finance platform evolved from MakerDAO that enables the creation of USDS, a decentralized stablecoin.
• SKY is the governance token of the Sky Protocol, with a maximum and total supply of approximately 23.46 billion tokens.
• The company provides public market access to the stablecoin economy through its on-chain holding structure.

Risks and Challenges:

• Risks include volatility of digital asset markets, concentration of assets in a single digital asset (SKY), regulatory developments, and changes in protocol governance parameters.
• Specific risks include cybersecurity and custody risks, the impact of non-cash fair value adjustments on reported results, and liquidity concerns regarding SKY tokens.
• The company notes an unremediated material weakness in its internal control over financial reporting.
• Potential dilution from the exercise of outstanding pre-funded warrants and sales under the ATM Program is a noted risk.

Management Commentary and Tone:

• CEO Michael Kazley stated that third-quarter results reflected both price appreciation and staking rewards, noting the SKY holdings remain unencumbered.
• Management expressed confidence that the fundamentals of the Sky Protocol ecosystem remain attractive and highlighted the company's lean cost base and lack of debt.
• The tone emphasized discipline in execution and a focus on long-term value creation for shareholders.

Other Key Points:

• Received approximately $45.9 million in net proceeds from the ATM Program subsequent to quarter-end (through October 26, 2026).
• Expanded the Board of Directors from five to six members on September 2, 2026, appointing David Garcia Rios as an independent Class II director and chartering an Investment Advisory Committee.
• Subsequent to quarter-end, Tether Investments exercised a portion of its January 2026 Pre-Funded Warrants on a cashless basis, resulting in the net issuance of 5,546,110 shares.
• As of October 26, 2026, the company held approximately 2.33 billion SKY tokens (approx. 10% of supply) with a market value of $157.6 million, reflecting a 13% decrease in SKY price since September 30.
• Approximately $36.4 million of common stock remained available for issuance under the ATM Program as of October 26, 2026.
• The January 2026 Pre-Funded Warrants remained outstanding for 161,795,465 shares as of October 26, 2026.