On January 16, 2026, a small eye-care company called NovaBay Pharmaceuticals sold pre-funded warrants for 167,539,227 shares of its own stock. The headline number was $134 million. The cash portion was $25 million.

The other $109 million showed up as 35 million USDT, 16 million USDS and 943,599,689 SKY tokens. The company is now called Stablecoin Development Corporation, it trades on NYSE American under SDEV, and the asset it exists to accumulate is SKY.

Read the consideration line, not the headline

Digital asset treasury companies are usually described the way any financing gets described: a firm raised X million to buy a token. The second quarter filing SDEV submitted on July 30 spells out what actually changed hands. Gross proceeds of approximately $134.0 million, "consisting of approximately $25.0 million in cash, 35.0 million USDT and 16.0 million USDS stablecoins (with an aggregate value of approximately $51.0 million at the time of the placement), and 943,599,689 SKY tokens (with an aggregate value of approximately $58.0 million at the time of the placement)."

What the $134 million private placement was paid in

Source: Stablecoin Development Corporation Form 10-Q for the quarter ended June 30, 2026, Note 8.

The SKY arrived at $0.0615 a token. The stablecoins were redeemed for dollars during the first quarter, and part of that money went straight back into buying more SKY. By June 30 the company had spent another $84.5 million on exchanges for 1,275,778,785 additional tokens.

Who bought, and what they got

Four buyers signed the securities purchase agreement: R01 Fund LP, Framework Ventures IV L.P., Tether Investments, S.A. de C.V. and Sky Frontier Foundation. Tether issues USDT. Sky Frontier Foundation supports the Sky Protocol, the system that issues USDS and SKY. Two of the four buyers, in other words, are connected to the assets that made up most of the payment.

R01 is closer still. The January disclosure names Michael Kazley, the company's chief executive and chairman, as the manager member of R01 Capital Manager, which manages the fund that bought 268,399,868 pre-split warrant shares. The company said at the time that once the warrants become fully exercisable, it expects R01 to control roughly 34% of the outstanding common stock and Framework roughly 32%. The audit committee reviewed the transaction and concluded the terms were no worse than an unaffiliated party would have offered.

Shareholders voted on it at a special meeting on March 12, 2026. The proposal to issue the underlying shares passed with 123,352,588 votes for and 1,476,035 against.

Erasing seven years of preferred stock

The filing that prompted this piece landed on September 8. On September 2 the board appointed David Garcia Rios, a director and consultant to Sky Frontier Foundation since June 2025, as a Class II director under the nomination right the foundation negotiated in January. The foundation put in about $16 million and holds roughly 9.99% of the shares. Garcia Rios gets $40,000 a year in cash and no initial equity award.

The same filing does something quieter. On September 2 the company filed six certificates of withdrawal in Delaware, eliminating the designations for Series A, B, C, D, E and F preferred stock. Series A dated to August 2019. Series D, E and F were created in August and October 2025, months before the pivot. None had any shares outstanding, and all 5,000,000 authorized preferred shares went back to being undesignated. That is the paperwork of a company closing the books on years of small dilutive financings, and it is the most straightforwardly good news in the filing.

What SDEV owns now

As of June 30, 2026 the company held 2,286,511,374 SKY tokens, about 10% of the total supply. Cost basis was $147.2 million. Fair value was $119.2 million. The gap is a $28.0 million cumulative unrealized loss, and the second quarter alone produced a $50.6 million unrealized loss as SKY fell.

Against that, staking revenue: 67,132,900 SKY earned in the first half, worth $4.7 million when received. The tokens are locked into the Sky Protocol staking contract, which pays out per Ethereum block, roughly every twelve seconds. It is real revenue from a real protocol, and it is small next to the mark on the position.

The concentration line worth reading twice. The 10-Q discloses that SKY was about 94% of total assets, that substantially all of it was staked, and that staking cannot be done from a custodial account — so those tokens sit in self-custody with a single third-party key management provider. One vendor, 94% of the balance sheet.

The share count that matters to a buyer

Here is where retail investors get tripped up. SDEV reported 50,590,723 shares outstanding on June 30. At the current price near $0.86 that looks like a $44 million company sitting on $147 million of tokens, which would be an obvious bargain.

It is not, because the 167,539,227 warrant shares are not in that count. The warrants were pre-funded at $0.80 apiece with a $0.05 exercise price, so the money is already in the company and the shares appear as the holders convert. Add them and the real figure is about 218 million shares. The tokens disclosed at June 30, marked at SKY's price of roughly $0.064 on September 9, plus the $7.0 million of cash the company held, work out to about 70 cents per fully diluted share. The stock trades about 22% above that.

Conversion is deliberately slow. The warrants vest 20% at six months, 30% at nine and the last half at twelve, and each holder is capped at 4.99% or 9.99% beneficial ownership, so nobody can convert a whole block at once. The first tranche came due on July 16, 2026.

Four checks before you buy a token treasury stock

  • Find the consideration paragraph. A raise paid in the same token the company plans to buy is not the same as a cash raise. Look for the split in the financing note.
  • Use fully diluted share count. Pre-funded warrants and ATM capacity sit outside the reported share number. SDEV's gap is 50.6 million versus about 218 million.
  • Check who sits on the other side. Nomination rights and consent rights over strategy change who decides what the treasury does.
  • Read the custody sentence. Staked tokens usually cannot live at a qualified custodian, which moves the risk to whoever holds the keys.

The part that is genuinely interesting

SDEV owns a tenth of the governance token of the protocol behind USDS. Almost all of it is staked, and the company votes with it. Its own filing warns that a small number of SKY holders can steer collateral types and interest rates. The company is now one of those holders, and one of its directors comes from a foundation that holds SKY separately and votes it separately. The 10-Q says plainly that this "could be deemed to create potential conflicts of interest."

A listed company with a permanent 10% governance stake in a major DeFi protocol is a new kind of animal, and it deserves more attention than the price of the stock. Sky governance decisions that used to be settled among anonymous wallets now have a shareholder-facing entity in the room.

What I would watch from here

The company still has about $84.5 million of at-the-market capacity to sell stock, and it has said it may monetize tokens if it needs to. Selling shares at 1.2 times token value adds tokens per share; selling tokens to pay bills subtracts them. The direction of that trade over the next two quarters tells you more about management than any press release will.

The other number is the token count itself. It went from 943,599,689 at closing to 2,286,511,374 by June 30, and the buying was funded by a pile of cash that has now been spent. From here the count grows by staking rewards of roughly 32 million tokens a quarter, or by issuing more shares. Anyone holding SDEV is holding SKY with a corporate wrapper, a 22% markup and one key management vendor between them and the tokens. The wrapper is the product, so price the wrapper.

Both filings are public: the September 8 Form 8-K covers the board seat and the preferred stock withdrawals, and the second quarter Form 10-Q carries the holdings and custody disclosures quoted here.