Solana Company (HSDT)

Executive Summary / Key Takeaways

• A Radical Transformation: Solana Company has pivoted from a failing neurotech developer into a digital asset treasury holding over $474 million in liquid resources ($124M cash + $350M SOL), creating a unique dual-engine investment vehicle with exposure to both Solana blockchain growth and a potential neurorehabilitation breakthrough.

• The DAT Advantage: Management's active Solana strategy has already delivered measurable outperformance—a roughly 10% improvement in cost basis versus passive buying and 36 basis points of extra staking yield—while institutional backing from Pantera Capital provides credibility in an increasingly consolidated digital treasury market.

• PoNS as a Free Option: The legacy neurotech business, while historically anemic, has achieved critical milestones: FDA 510(k) submission for stroke expansion in September 2025, Medicare reimbursement rates effective early 2025, and approvals from major payers (Anthem, United, Aetna), potentially unlocking a $50 billion fall-related economic burden market.

• Balance Sheet Arbitrage: With $474.2 million in liquid resources against a $118.5 million market capitalization, the stock trades at a significant discount to net asset value, though this discount reflects substantial execution risks and the company's history of recurring losses and going concern qualifications.

• Critical Execution Risks: The thesis hinges on two factors: avoiding classification as an investment company under the 1940 Act (which would impose crippling regulatory constraints) and successfully scaling the DAT strategy while preventing the neurotech segment from draining resources, all while managing extreme SOL concentration risk.

Setting the Scene: From Neurotech Failure to Digital Treasury

Solana Company, formerly Helius Medical Technologies, began as a neurotechnology developer founded to address neurological deficits through its Portable Neuromodulation Stimulator (PoNS). For years, the company struggled with minimal revenue, recurring net losses, and repeated going concern warnings. Its PoNS device, while cleared for multiple sclerosis in the U.S. and multiple indications in Canada, generated only $355,000 in quarterly sales as of September 2025—a testament to the challenges of commercializing high-priced medical devices on a cash-pay basis.

The company's history is marked by desperate capital-raising measures. In 2024 and 2025, Helius faced Nasdaq delisting threats for failing minimum bid price and stockholders' equity requirements, prompting two reverse stock splits (1-for-15 in May 2025 and 1-for-50 in July 2025) and multiple dilutive offerings. These actions, while painful, provided the lifeline needed for a dramatic strategic pivot.

In September 2025, everything changed. The company closed a $500 million private placement, abandoned its pure-play neurotech identity, and transformed into a digital asset treasury (DAT) focused on accumulating Solana tokens. The corporate name change to Solana Company on September 29, 2025, formalized this shift. The strategy is clear: maximize SOL per share through active capital markets participation and on-chain opportunities, positioning the company as what Executive Chairman Joseph Chi calls "the Berkshire Hathaway of the Solana ecosystem."

This transformation creates a dual-business structure. The DAT segment now represents the core value driver, while the legacy neurotech business—reorganized under Revelation Neuro, Inc. in March 2025—functions as an underappreciated option on a potential FDA approval for stroke indication. The company simultaneously holds $350 million in digital assets and a medical device with breakthrough designation, a combination unprecedented in public markets.

Technology, Products, and Strategic Differentiation

The Digital Asset Treasury Engine

The DAT strategy is not passive buy-and-hold speculation. Management actively manages SOL acquisitions, achieving an average cost basis of approximately $220 per SOL—representing a roughly 10% improvement versus a passive approach. This outperformance stems from disciplined capital formation and timing, guided by Pantera Capital as strategic advisor and asset manager.

The company generates yield through staking, earning $342,000 in Q3 2025 with an average gross staking yield of 7.3% APY in October, 36 basis points better than the stake-weighted average of the top 10 validators. This 36-basis-point edge may seem small, but on a $350 million portfolio, it translates to over $1.2 million in annual incremental value—real money that compounds the SOL-per-share accumulation goal.

Management's ambition extends beyond simple staking. The company is "carefully evaluating counterparty, smart contract, and regulatory risks" before deploying into DeFi yield opportunities, indicating a disciplined approach to risk-adjusted returns. The goal is not to chase maximum yield but to grow tokens per share in a sustainable, risk-controlled manner.

Why does this matter? In a digital asset treasury market that has cooled and entered an "execution and consolidation phase" (per Director Cosmo Jiang), operational excellence separates winners from the "uninteresting outcomes" facing most DATs. Solana Company's institutional sponsorship, strong balance sheet, and active management create barriers to entry that smaller, less sophisticated treasuries cannot match.

The PoNS Neurotech Option

While the DAT grabs headlines, the PoNS device represents a potentially valuable call option. This non-invasive tongue stimulator treats gait and balance deficits by promoting neuroplasticity , with clearances for MS in the U.S. and MS, TBI, and stroke in Canada. The device addresses a massive unmet need: over 5 million stroke survivors in the U.S. suffer walking and balance disability, with fall-related costs averaging $64,500 per incident and creating a $50 billion annual economic burden.

The technology's differentiation is stark. Unlike invasive spinal cord or deep brain stimulators from competitors like Medtronic (MDT) and Boston Scientific (BSX), PoNS requires no surgery, reducing patient risk and procedural costs. Clinical data from the stroke registrational program demonstrated "superior effectiveness in improving gait deficit," supporting the FDA 510(k) submission on September 25, 2025. If approved, PoNS would become the first non-invasive device for stroke rehabilitation, capturing a market where routine physical therapy offers only 1-3% fall risk reduction while PoNS showed 28% of patients no longer at fall risk after 14 weeks.

The reimbursement landscape has finally turned favorable. After years of cash-pay constraints, CMS assigned HCPCS codes in April 2024, with final payment rates effective January and April 2025 ($2,963.30 for the mouthpiece, $532.27 for the controller). Major payers followed: Anthem Blue Cross Blue Shield (ELV) in March 2025, United Healthcare (UNH) in May, and Aetna Healthcare (CVS) in June. The VA partnership through Lovell Government Services provides access to an estimated 65,000-70,000 veterans with MS, with approved pricing of $26,228.09 for the device and $8,079.48 for the mouthpiece.

The significance of this lies in how reimbursement transforms PoNS from a $25,700 cash-pay product into a reimbursable therapy, potentially unlocking exponential revenue growth. The neurotech segment generated $355,000 in Q3 2025 revenue, up from $51,000 year-over-year, while its cost of revenue declined to $103,000 from $187,000. This contributed to a total company gross profit of $594,000, a significant improvement from a $136,000 loss in the prior year. This operational leverage suggests that incremental reimbursement-driven revenue could flow directly to the bottom line, funding DAT expansion without dilution.

Financial Performance & Segment Dynamics

Q3 2025 results reveal a company in transition. Total revenue of $697,000 appears trivial, but the composition tells the real story. Staking rewards contributed $342,000—pure profit from the DAT strategy—while PoNS sales generated $355,000, up 596% year-over-year. This growth stemmed from increased VA sales, approved insurance claims, and cash-pay patients, validating the reimbursement pathway.

The gross profit of $594,000 marks a critical inflection, swinging from a $136,000 loss in Q3 2024. This improvement came from both revenue growth and cost discipline, with cost of revenue declining 45% due to reduced inventory reserves and production scrap. The neurotech segment is approaching breakeven at the gross profit level, reducing its drag on corporate resources.

However, the net loss of $352.8 million ($32.89 per share) demands explanation. This staggering figure is not operational but primarily reflects non-cash derivative liability losses ($545.7 million) and financing costs ($194.7 million) from the September PIPE transaction, partially offset by a $423.3 million derivative gain. The operational cash burn is far more modest: $10.3 million used in operating activities for the nine months ended September 2025, up from $8.7 million prior year due to SOL purchase activities.

The balance sheet is the strongest in company history. As of September 30, 2025, unrestricted cash totaled $124.1 million, with working capital of $122.5 million. Combined with $350.2 million in digital assets, total liquid resources reached $474.2 million. Subsequent to quarter-end, the company sold 954,617 shares under its ATM program for $15.4 million and increased SOL holdings to over 2.3 million tokens.

This matters because the company has essentially recapitalized itself into a holding company with minimal operational burn. The $10.3 million nine-month operating cash consumption is easily fundable from staking yields and interest income, creating a self-sustaining entity that can wait for PoNS reimbursement to scale without external capital raises.

Outlook, Management Guidance, and Execution Risk

Management has articulated a clear 12-24 month roadmap focused on scaling SOL holdings through "best-in-class capital markets programming" including ATM sales, share buybacks, and potentially accretive M&A. The stated goal is to become the "Berkshire Hathaway of the Solana ecosystem"—a vehicle that compounds shareholder value through disciplined capital allocation and trades at a premium to net asset value.

The capital markets strategy is sophisticated. When trading above net asset value (NAV), the ATM program issues shares accretively, increasing SOL per share. When trading below NAV, share buybacks (the board approved $100 million in November 2025) reduce share count and increase SOL per share. This two-way flexibility is unique among DATs and demonstrates the "execution phase" mindset that Cosmo Jiang emphasizes will separate winners from the "uninteresting outcomes" facing most competitors.

For the neurotech business, management expects the FDA's decision on the stroke 510(k) submission to drive 2026 revenue acceleration. The breakthrough device designation could enable expedited Medicare coverage through the TCET pathway , potentially replicating the MS reimbursement success across a larger patient population. The company maintains an OEM manufacturing model and telemedicine hub, allowing scalable growth without proportional headcount increases.

The critical execution risk is duality. Can management simultaneously advocate for Solana adoption, manage a complex digital asset portfolio, and advance PoNS commercialization? The $1.5 million discretionary bonus and $0.5 million increase in professional fees in Q3 suggest organizational strain. While Pantera's expertise covers the DAT strategy, the neurotech segment lacks similar institutional depth, creating potential resource competition.

Risks and Asymmetries

SOL Concentration and Volatility

The company's fate is inextricably tied to Solana. Management acknowledges SOL has traded between $140 and $240 over the preceding 12 months, a 71% range that creates mark-to-market volatility. A $30.5 million unrealized loss hit Q3 results, and a prolonged bear market could erode the $350 million digital asset value that underpins the investment thesis. Unlike a diversified portfolio, this concentration offers no risk mitigation.

The implication is clear: if Solana prices decrease or the strategy proves unsuccessful, management explicitly states that "financial condition, results of operations, and the market price of our common stock would be materially adversely impacted." The company's survival depends entirely on SOL's success.

Investment Company Act Risk

Perhaps the most existential threat is regulatory classification as an investment company under the 1940 Act . If SOL is deemed a security, Solana Company could face "significant additional regulatory controls" that would "adversely affect the market price of our common stock." Management is "carefully evaluating" this risk, but the legal framework remains uncertain. The company would need to register, imposing compliance costs and operational restrictions that could cripple the active management strategy.

Counterparty and Custody Risk

The company holds SOL with third-party custodians like BitGo. In bankruptcy or insolvency proceedings, "we could be treated as a general unsecured creditor," potentially resulting in "the loss of the value related to some or all of such Solana." While the company has selected institutional-grade custodians, the legal precedent for digital asset ownership in custodial contexts remains unsettled.

Neurotech Commercialization Risk

Despite reimbursement progress, PoNS faces entrenched competition. Medtronic, Boston Scientific, Abbott (ABT), and Nevro (NVRO) dominate neuromodulation with deeper R&D budgets, established sales forces, and broader product portfolios. PoNS's $25,700 list price remains premium-priced compared to alternative therapies. The stroke indication, if approved, enters a market where competitors can leverage existing relationships and bundle products, limiting PoNS's market share capture.

The neurotech segment still consumes cash, with R&D expenses of $0.9 million in Q3. If reimbursement fails to drive material revenue growth, this segment becomes a value-destroying distraction from the DAT strategy.

Tokenization and Liquidity Fragmentation

Management is exploring tokenizing Class A common stock, which could create "illiquid markets, fragmented liquidity, and regulatory uncertainty." Reduced liquidity in tokenized HSDT could "result in lower trading prices for Tokenized HSDT, and such negative price signaling from the market for Tokenized HSDT could adversely impact the trading price of Traditional HSDT."

Competitive Context and Positioning

In neuromodulation, Solana Company competes as a niche player against giants. Medtronic commands over 30% market share with $9 billion in quarterly revenue and $2.5 billion in R&D spending—resources that dwarf HSDT's entire market capitalization. Boston Scientific's 20% growth rate and 70% gross margins demonstrate the scale advantages HSDT lacks. Abbott's diversified healthcare model and Nevro's specialized focus on spinal cord stimulation both create competitive pressure.

PoNS's non-invasive approach is genuinely differentiated, avoiding surgical risks and reducing procedural costs. However, this advantage is offset by limited clinical evidence breadth and minimal commercial scale. While competitors can fund large-scale trials and global distribution, HSDT's neurotech segment generated just $355,000 in quarterly revenue. The company's "leverageable areas"—OEM manufacturing, telemedicine hub, online therapist training—are necessary but insufficient to compete with Medtronic's global sales force or Boston Scientific's acquisition-driven expansion.

In the DAT market, Solana Company faces a different competitive dynamic. As Cosmo Jiang notes, "the digital asset treasury market has cooled after a period of rapid expansion," entering an "execution and consolidation phase" where "most DATs will be outcompeted." HSDT's advantages include Pantera's strategic guidance, a $500 million capital base, and active management discipline. However, the company competes with MicroStrategy (MSTR)'s $20+ billion Bitcoin treasury and other well-capitalized corporate holders. The key differentiator is focus: HSDT is the only public company dedicated exclusively to Solana, offering pure-play exposure that Bitcoin-focused treasuries cannot replicate.

Valuation Context

Trading at $2.87 per share, Solana Company presents a complex valuation puzzle. Traditional metrics are misleading: negative book value of -$3.78 per share, negative enterprise value of -$5.52 million, and a price-to-sales ratio of 125.97 reflect the legacy neurotech business's minimal revenue, not the DAT strategy's asset value.

The relevant valuation framework is net asset value versus market capitalization. With $474.2 million in liquid resources (cash + SOL) and a $118.5 million market cap, the stock trades at a 75% discount to liquid assets. This discount reflects three factors: (1) execution risk in the dual strategy, (2) regulatory uncertainty around the 1940 Act, and (3) the neurotech segment's cash consumption.

Comparing to neuromodulation peers is less relevant given the strategic pivot, but the contrast is stark. Medtronic trades at 4.23x enterprise value to revenue with 20.3% operating margins. Boston Scientific commands 7.79x EV/revenue with 20.7% margins. HSDT's neurotech segment would need to generate $60+ million annually to justify similar multiples—an unlikely near-term scenario.

For the DAT strategy, no direct public comparables exist. The value proposition is simple: each share represents a claim on 2.3 million SOL (and growing) minus corporate expenses. At SOL's market price, the per-share asset value exceeds the trading price, but this arbitrage is trapped by regulatory uncertainty and execution risk.

The balance sheet strength provides downside protection. With $124 million in cash and minimal operational burn, the company can sustain itself for years without selling SOL. The $100 million share repurchase authorization, if executed below NAV, would be immediately accretive to SOL per share.

Conclusion

Solana Company represents a binary bet on execution. The transformation from a failing neurotech to a Solana-focused treasury has created a unique asset: a discounted SOL proxy with a free option on a breakthrough medical device. The $474 million in liquid resources provides a hard floor, while the active management strategy—already delivering 10% cost basis improvement and 36 basis points of staking alpha—suggests genuine skill.

The investment thesis hinges on two variables. First, can management avoid 1940 Act classification while scaling the DAT strategy? Success means the discount to NAV closes, creating multi-bagger potential as SOL appreciates. Failure means regulatory strangulation and forced liquidation. Second, will PoNS stroke approval and reimbursement generate material revenue, or will the neurotech segment remain a cash-burning distraction?

Competitive positioning reinforces the challenge. In neuromodulation, HSDT is a minnow among whales, lacking the scale to compete head-on. In digital treasuries, it's a specialist in a consolidating market, requiring operational excellence to survive. The "Berkshire Hathaway" ambition is credible only if management proves it can compound SOL per share while eliminating the neurotech cash drain.

For investors, the risk/reward is asymmetric. At current prices, the market assigns minimal value to the DAT strategy and zero to PoNS. If either engine ignites—through SOL appreciation or stroke approval—the upside is substantial. But the concentration risk, regulatory overhang, and execution complexity demand position sizing discipline. This is not a buy-and-hold forever story; it's a watch-closely, verify-execution, and be prepared to exit if the dual-strategy thesis breaks.