End of the Year Letter to the Shareholders - 2025

Dear Shareholders, 

First and above all, we would like to sincerely thank our valued investors for their continued trust, particularly in the turbulent year 2025.

The past year was demanding and, in many respects, transformative for the company. 2025 was characterized by extensive and necessary historical clean-up efforts, originating from prior periods between 2021 and 2024. The scope and complexity of these legacy issues were, at times, overwhelming and required substantial management attention and difficult decisions. While we do not claim to be perfect, we remain committed to learning, improving, and becoming better every day as an organization.

These measures were necessary to establish a solid and transparent foundation for the future. We are pleased to report that the majority of these legacy matters have now been fully legally and financially addressed and concluded during the year.

With this phase largely behind us, the company enters 2026 with renewed clarity and focus. During 2025, we published our strategic vision ABAG 2.0, which defines a clear roadmap for the company’s future. The year 2026 and the years beyond will be dedicated to the full execution of this vision, with a strong emphasis on operational excellence, disciplined capital allocation, and the delivery of sustainable, core value.

We remain committed to constructive dialogue and value the continued engagement of our shareholders. Your trust and support have been instrumental in navigating a challenging period and positioning the company for its next phase of growth.

On behalf of the Executive Board and Supervisory Board, we thank you for your continued confidence and trust, and look forward to executing ABAG 2.0 with full focus and determination in 2026 and the years beyond.

Review of 2025

2025 Market Review:

In 2025, institutional exposure was driven mainly by spot Bitcoin ETFs and corporate treasuries. U.S. spot Bitcoin ETFs attracted roughly $22 billion of net inflows over the year. At the same time, public and private companies’ Bitcoin treasuries climbed to a record 1.3 million BTC - around 6.2% of total supply, effectively creating a new class of “digital asset treasury companies.”

Regulation in 2025 shifted from pure enforcement toward full frameworks. In the U.S., the GENIUS Act created the first dedicated federal regime for payment stablecoins, establishing licensing for “permitted payment stablecoin issuers,” and was signed into law in July 2025. In Europe, MiCA became fully applicable at the turn of 2025, with stablecoin rules live from mid-2024 and the broader licensing regime for crypto-asset service providers in force from 30 December 2024, making 2025 the first real year under a comprehensive EU crypto framework. On the accounting side, FASB’s ASU 2023-08 took effect for 2025 fiscal years, requiring in-scope crypto assets to be measured at fair value with changes through net income and enhanced disclosures - bringing U.S. GAAP closer to how public markets already treat other financial instruments.

Beyond the macro cycle and regulatory shifts, 2025 was defined by the emergence and consolidation of several distinct crypto verticals: 

• Prediction markets became one of the clearest “new vertical” winners. Polymarket, the leading crypto-native platform, secured a strategic investment of up to $2 billion from Intercontinental Exchange (ICE), valuing it around $8 billion. Public materials and investor decks now cite cumulative Polymarket volumes above $20 billion by late 2025, reflecting growing demand to trade probabilities on elections, macro data, and sports in a market microstructure. In parallel, regulated competitors such as Kalshi advanced in the U.S., reinforcing the idea that event markets are maturing into an institutional product category, not just a crypto curiosity. 
• Stablecoins in 2025 completed their evolution from trading collateral to a payments and settlement rail with macro relevance. The IMF’s Q3 2025 Crypto Assets Monitor puts the total stablecoin market cap above $290 billion, with roughly 25 million monthly senders and annual transaction volumes above $20–25 trillion. This growth is increasingly tied to real-economy use: such as remittances and cross-border payments.
• Real-world asset (RWA) tokenization quietly became one of the most structurally important trends of 2025. Tokenized U.S. Treasury products expanded from roughly $140 million less than two years ago to nearly $7-9 billion by late 2025. Smaller but notable experiments in tokenized gold, private credit and real estate are also happening in the crypto industry. 
• DeFi in 2025 looked less like a “yield farm” chasing game and more like an emerging capital market. Sector TVL approached roughly $280 billion by late 2025, with lending protocols alone responsible for on the order of $50–90 billion in outstanding loans, signalling more durable credit usage. Perpetual DEXs were the standout growth engine: by September, daily perp volume neared $97 billion and monthly turnover topped $1 trillion, as on-chain derivatives became competitive with centralized venues. Market-share studies show a shifting “perp DEX war,” where Hyperliquid, Aster and Lighter together command a large share of on-chain open interest and volume rather than a single dominant winner.

2026 Market Outlook:

The 2026 outlook shows divergence among market analysts, with both bullish and bearish predictions.

While some pessimists predict Bitcoin could fall to $50,000 in 2026, optimists envision a mini bull cycle similar to 2025, with selective verticals leading such uptrend moves. Key highlights for 2026 include:

1) Several analysts and market commentators believe the traditional Bitcoin four-year halving cycle has become less relevant as a price-timing tool — pointing to structural changes such as institutional demand, ETFs, and evolving market dynamics that have altered historical post-halving behavior — though opinions remain mixed and not all analysts agree.

2) Bitwise analysts predicts that launched ETFs will purchase more than 100% of new supply of Bitcoin, Ethereum and Solana, given the recent approvals of of spot crypto ETFs at firms like Morgan Stanley and Bank of America Merrill Lynch. 

                                                                               Source: The Year Ahead: 10 Crypto Predictions for 2026 by Bitwise

3) The Block Research team expects stablecoin supply to surpass the $500 billion threshold, with transaction volumes projected to exceed those of the U.S. Automated Clearing House (ACH) system by Q3 2026. This growth is expected to be supported by an improving regulatory backdrop—most notably the implementation of the GENIUS Act, which provided clearer regulatory foundations for stablecoin issuance and usage in the U.S. Adoption is anticipated to accelerate along two parallel tracks: continued expansion in emerging markets and deeper integration into enterprise and institutional payment flows across developed economies.

4) Prediction markets, led by Polymarket, are expected to see renewed and accelerated growth in 2026. After Polymarket reached approximately $500 million in open interest during the 2024 U.S. election and subsequently retrenching, Polymarket is widely expected to surpass its prior highs without requiring another presidential election cycle. Key drivers include the opening of the U.S. market to domestic users, significant institutional backing and operational scaling following a major strategic investment by Intercontinental Exchange, and continued expansion into non-political markets such as sports, economics, crypto, and popular culture. With U.S. midterms approaching and broader mainstream integration underway, activity levels are projected to increase materially throughout 2026.

5) Rising sovereign debt and fiscal imbalances—particularly in the U.S.—are reinforcing interest in scarce digital assets as alternative stores of value, according to Grayscale Research. While unlike gold—whose value is supported by its tangible, physical nature—certain digital assets derive their store-of-value characteristics from programmability, decentralization, and verifiable scarcity. Grayscale highlights that a small subset of crypto assets with broad adoption and predictable supply dynamics, most notably Bitcoin and Ethereum, are increasingly viewed as digital complements to traditional hedges. With Bitcoin’s supply capped programmatically and macro imbalances persisting, portfolio demand for alternative stores of value is expected to remain a structural theme into 2026 and beyond.

6) New capital entering the crypto ecosystem is expected to flow primarily through spot ETPs. Since the launch of U.S. Bitcoin ETPs in January 2024, global crypto ETPs have attracted approximately $87 billion in net inflows, yet adoption remains at an early stage. Grayscale estimates that less than 0.5% of U.S. advised wealth is currently allocated to crypto, suggesting a significant runway as platforms complete due diligence, develop capital market assumptions, and integrate crypto into model portfolios. Beyond advised wealth, early institutional adopters—including major endowments and sovereign wealth funds—have already begun allocating via ETPs, with broader institutional participation expected to expand meaningfully in 2026.

                                                                       Source: Bloomberg, Grayscale Investments. Data snapshot as of December 11, 2025.

Taken together, the 2026 outlook reflects a market in transition rather than one defined by a single directional consensus. While near-term price expectations remain divided, the underlying structure of the crypto ecosystem continues to mature, driven by institutional adoption, regulatory progress, and the expansion of real-world use cases. As capital increasingly enters through regulated vehicles and select sectors demonstrate sustained traction, 2026 is likely to be shaped less by broad speculation and more by execution, differentiation, and long-term fundamentals.

Advanced Blockchain 2025 Recap:

2025 began with the positive announcement of the receipt of 13,105 Arweave tokens via Permanent Ventures Fund, which were deployed along with our staked Ether holding into AO farming that was later monetized ahead of the significant price decline.

Following the initial forensic review in late 2024, preparation for the auditing process had been initiated early in 2025. A comprehensive and resource-intensive forensic analysis was conducted, covering more than 5,000 individual cryptocurrency transactions, as well as all investment agreements available in the company’s internal systems and records since its inception, to ensure that all findings were properly identified and accurately reflected in the financial statements. Due to the scope and complexity of this work and the resulting findings, the process took significantly longer than initially envisaged and led to substantial one-off costs related to accounting, forensic and audit services.

Given the severity of the findings, the Cypriot auditor concluded that there was no alternative but to disclaim the audit opinion for the years 2023 and 2024. It is essential to note that the cause for these disclaimers relates to the suspected fraudulent activities identified throughout the period from  2021 through the first half of 2024. 

During the affected period, basic governance principles of managing a stock-listed company were not adhered to, and several assets of the company had been managed or controlled by external parties (including former directors and advisors), despite being funded by the company. Furthermore, an internal risk control system was not implemented until late August or early September 2024, which unfortunately facilitated these historical events.

As part of the historical cleanup process, the company and its respective governing bodies were legally obliged, due to their fiduciary duties, to initiate financial claims against former directors and advisors in connection with the identified misconduct.These claims are quite substantial and significantly offset the elevated associated legal costs.. These legal and consulting costs are expected to be significantly reduced in 2026.

As a consequence of the disclaimed audit opinion for 2023 and 2024 of Incredulous Labs, the German auditor issued a restricted  audit opinion. This restriction relates solely to the valuation of the intercompany liability between Advanced Blockchain and Incredulous Labs. It is worth noting that this liability was substantially reduced over the course of 2025.

In line with previous years, we have conducted external valuations of some of our top 15 holdings (i.e., equity and not-yet-launched tokens) with AVS-Valuation GmbH. However, due to the general downturn in the altcoin market throughout 2025 and our disproportionately large exposure to peaq tokens, the total value of our holdings was materially impacted.

Overall, we remain positive on the outlook on our peaq position, but possibly aim to monetize it further in order to further strengthen our BTC/ETH reserve and fund the different initiatives for our recently announced strategic vision, ABAG 2.0, which was announced after the conclusion of the historical cleanup in the second half of 2025. It is also important to note that we have monetized a portion of our ETH holdings above the $4,000 level, thereby generating profits and positioning the company for potential redeployment opportunities in 2026 at more favorable market entry points.

We have started building our in-house algorithms with key integrated parameters, such as ETF and institutional capital flows, corporate and treasury wallet movements, long-term holder behavior, exchange and whale flow dynamics, stablecoin issuance trends, and macroeconomic indicators, among others, supported by our regime-based strategy framework, which we have begun to leverage to enable better-informed decision-making on when to enter or exit new or existing positions. The first iteration of the algorithm was successful in predicting the future development of some of our assets, enabling their partial monetization during the second half of 2025.

Beyond our peaq position, several portfolio companies had meaningful developments, among others:

• zCloak Network launched zCloak money, a fully on-chain, self-custody enterprise multi-signature (multisig) digital asset wallet and onboarded several institutional clients.
• Peaq continued to evolve as the backbone of the Machine Economy, further expanding its ecosystem with more than 55 DePINs built on it and more than 6 million connected machines on-chain.
• Panoptic initiated the development of V2, the next iteration of its protocol, following the identification of a vulnerability and after reaching more than $3 million in total value locked with V1.
• Teneo secured a $3 million seed funding round co-led by Borderless Capital, Generative Ventures, and RockawayX. Additional backers included Outlier Ventures, Certik Ventures, Moonrock Capital.
• Talisman concluded its Token Generation Event (TGE) during the year’s end and Incredulous allocation was delivered. 
• XMAQUINA ran several funding auctions, raising more than $2 million, and invested in key robotics companies such as Apptronik, Figure AI, and 1X Technologies, among others. 

Across the ecosystem, we saw meaningful progress among several key companies, while also witnessing a number of projects that, as is typical in early-stage investments, unfortunately failed to deliver on their original vision. As a result, several impairments will need to be recognized in 2025.

Lastly, due to strong interest from our shareholders, the general Q&A session at our initial AGM on 20 October 2025 took longer than initially expected. As a result, there was insufficient time to address all questions and vote on the AGM agenda items. The new AGM is now scheduled for 10 February 2026. While we expect a lively event, we also aim to foster a constructive dialogue with all our shareholders and look forward to their continued support of the historical clean-up efforts that have been already concluded in Q3 2025 and our operational growth going forward.

Looking Ahead:

Our team is currently working intensively on finalizing the financial statements for 2025, both for Advanced Blockchain AG as well as Incredulous Labs Ltd and their subsidiaries, with the objective of providing our investors with a clearer and more transparent view of the group’s financial position. 

We aim to continue our quarterly investor update calls to shed light on our ongoing operational activities, which are expected to be executed with full force over the course of 2026 to deliver on the new group vision and its respective pillars, while also generating preliminary revenues in 2026.

We expect further TGEs from our portfolio companies, equity exits from some of our key holdings—discussions for which were already initiated in 2025—and a capital distribution from our investment in Permanent Ventures fund to take place in the first half of 2026, along with other portfolio-relevant and asset monetization activities. These measures are intended to further optimize the portfolio and increase the share of liquid assets relative to illiquid holdings, initiatives which were already initiated in 2025. Further details will be communicated through the respective company communication channels.

Further dormant group entities will be liquidated to enable more efficient operations and further costs optimization, as communicated previously. In line with these efficiency measures, the company aims to in-house all accounting activities across the Group in 2026, which is expected to further streamline processes and reduce external service costs.

The development of ABX Analytics is expected to be initiated in the first half of 2026, beginning with an initial proof-of-concept phase to validate the viability of the overall concept and business idea, while maintaining a disciplined cost level. We acknowledge that the initiation of this project has been delayed, primarily due to the prioritization of resolving historical issues.

Toward the end of 2025, we initiated several conversations with multiple VCs in our network regarding the potential collaboration and establishment of an accelerator program. These discussions are currently ongoing and, once a common ground is established with a potential partner, the initiative will require an appropriate level of resources upon initiation.

Beyond the above, our main focus is to deliver on the communicated milestones in the Strategic Vision Paper which can be accessed here.

For 2026, the following events are currently scheduled. In addition, the company expects to participate in further capital markets and investor-focused events over the course of the year to strengthen its capital market presence. The financial calendar will be updated accordingly on the company’s Investor Relations website.

Q1 2026

• February 10, 2026: Annual Shareholder Meetings of 2025

Q2 2026

• June 30, 2026: Publication Financial Statements 2025 Advanced Blockchain AG

Q3 2026

• August 27, 2026: Annual General Meeting 2026 of Advanced Blockchain AG

Q4 2026

• October 30, 2026: Publication Half-Year 2026 Financial Statements Advanced Blockchain AG
• November 24, 2026: German Equity Forum (EKF)

Closing Remarks:

The year 2026 will be shaped by further disciplined cost management, the full execution and implementation of our strategic vision and continued improvements in the accounting and auditing processes. With the transformation phase behind us, our focus is firmly on operational excellence, scalable growth, and the consistent delivery of long-term shareholder value. We will concentrate on strengthening our core activities, improving efficiency, and translating strategic priorities into tangible and measurable progress.

We are fully aware that the company’s share performance has not met our own expectations. Management is not satisfied with this development, and we are committed to taking all appropriate and necessary measures within our control to support a sustainable recovery, strengthen confidence, and better reflect the underlying progress of the company over time.

Supported by clear objectives, robust internal processes, and strong collaboration across the organization, we approach the year ahead with confidence, focus, and determination.

For any inquiries, our Investor Relations team remains available to assist you.

Best regards,

Your Advanced Blockchain Team

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