RISK FACTORS SUMMARY
Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common stock. These risks are more fully described in the “Risk Factors” section in Part I, Item 1A of this Annual Report on Form 10-K. These risks include, among others, the following:
Risks Related to Our Bitcoin Strategy and Holdings
We are shifting our business strategy from healthcare operations to a Bitcoin company with a Bitcoin treasury, which represents a fundamental change in our risk profile and may not be successful.
Our Bitcoin strategy exposes us to various risks, including risks associated with Bitcoin.
We face significant competition from companies with Bitcoin strategies and from spot Bitcoin exchange traded products (“ETPs”).
Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.
Risks Related to Our Financial Condition, Indebtedness, and Capital Requirements
We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
If we fail to maintain an effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, our stockholders could lose confidence in our financial results, which could harm our business and the value of our Common Stock.
Our Bitcoin operations and digital asset treasury are new for our Company, and our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our Bitcoin operations or holdings.
Our level and terms of indebtedness could adversely affect our ability to raise additional capital, fund operations, and take advantage of new business opportunities, and we may be unable to service or refinance our debt.
We have incurred significant operating losses and may not achieve or sustain profitability.
Risks Related to Our Securities and being a Public Company
If we are unable to regain compliance with Nasdaq’s continued listing standards, our securities may be delisted, which could significantly limit liquidity and adversely affect our business.
The price of our Common Stock has fluctuated significantly and may continue to do so, which could result in substantial losses for stockholders.
A prolonged decline in Bitcoin’s market price could cause us to fall below Nasdaq’s continued listing standards.
We may need additional capital, and future securities offerings may result in dilution to existing stockholders.
Sales of our Common Stock, including through our at-the-market program (“ATM Program”), or the perception that such sales may occur, could depress our Common Stock price.
If we effect a reverse stock split to regain compliance with Nasdaq’s minimum bid price requirement, it may not result in a sustained increase in our Common Stock price and could decrease the liquidity of our Common Stock.
Risks Related to Our Media and Information Services Operations
Our revenues could decline if our trade show offerings through BTC Inc fail to attract attendees, exhibitors, sponsors, or vendors.
BTC Inc’s editorial independence may be compromised, or perceived to be compromised, by our corporate Bitcoin holdings and other business interests, which could damage our credibility and audience trust.
Risks Related to Our Asset Management Operations
Revenue from our investment advisory operations is substantially dependent on the market price of Bitcoin and the volume of assets under management (“AUM”) consisting of Bitcoin or investments in securities dependent on the price of Bitcoin, which are subject to extreme volatility.
Our investment advisory subsidiary is subject to extensive regulation under federal and state securities laws, and failure to comply with these regulations could result in enforcement actions, fines, or loss of our ability to operate .
Risks Related to Our Healthcare Operations
The collectability of patient accounts receivables have harmed and could further deteriorate and further harm the results of our healthcare operations.
Laws and regulations affecting the medical cannabis industry are constantly changing, which could detrimentally affect our operation.
Risks Related to Cybersecurity, Information Technology, and Intellectual Property
Security incidents or loss of private keys could result in partial or total loss of our Bitcoin, materially adversely affecting our financial condition.
We are subject to the Health Insurance Portability and Accountability Act (“HIPAA”) and other federal, state, and foreign data privacy and security laws, and failure to comply could result in significant liability and reputational harm.
Failures or interruptions of our IT infrastructure, or security incidents affecting our systems or those of third parties, could adversely impact our business.
Risks Related to Our Management Team
Certain members of our senior management team have limited public company experience, and we are highly dependent on certain key executives whose loss could adversely affect our business.
Social media activity by our directors and officers may pose reputational, regulatory, and Common Stock price risks.
Equity compensation awards to executives and directors may dilute existing stockholders.
Risks Related to Future Acquisitions
We may not realize the anticipated benefits or synergies from mergers, acquisitions, or other strategic transactions.
We have incurred, and may continue to incur, significant transaction and integration costs in connection with acquisitions.
Future transactions may cause fluctuations in the market price of our Common Stock.
Throughout this Annual Report on Form 10-K, “Company,” “Nakamoto,” “Nakamoto Inc.,” “we,” “us,” and “our,” except where the context requires otherwise, refer to Nakamoto Inc. and its consolidated subsidiaries, and “our Board” refers to the board of directors of Nakamoto Inc.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements other than statements of historical facts contained in this Annual Report on Form 10-K, including statements regarding the financial position, business strategy and the plans and objectives of management for our future operations, are forward-looking statements. These forward-looking statements are based on the beliefs of management, as well as assumptions made by and information currently available to us. When used in this Annual Report on Form 10-K, the words “anticipate,” “believe,” “estimate,” “expect,” “forecasts,” “may,” “will,” “should,” “seek,” “scheduled,” “intend,” “plan,” and “expect” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.
The forward-looking statements in this Annual Report on Form 10-K are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of the Company’s control, that could cause the actual results or outcomes to differ materially from those discussed in the forward-looking statements. These forward-looking statements speak only as of the date of this Annual Report on Form 10-K and are subject to numerous risks, including, but not limited to the following:
Our ability to raise capital is necessary to sustain our anticipated operations and implement our business plan;
Our ability to implement our business plan;
Our ability to generate sufficient cash to survive;
The degree and nature of our competition;
The lack of diversification of our business plan;
The general volatility of the capital markets and the establishment of a market for our shares;
The potential impact of a prolonged government shutdown;
Disruption in the economic and financial conditions primarily from the impact of past terrorist attacks in the United States, threats of future attacks, police, and military activities overseas and other disruptive worldwide political and economic events and environmental weather conditions;
The price and volatility of Bitcoin;
Our ability to implement our Bitcoin treasury strategy and its effects on our business, and;
Other factors detailed in the section entitled “Risk Factors”.
We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable and the information included in this report is accurate, we cannot guarantee that the future results, level of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to confirm these statements to actual results or changes in our expectations. We qualify all of our forward-looking statements by these cautionary statements.
PART I
ITEM 1. BUSINESS
Overview
Nakamoto Inc., a Delaware corporation, is a Bitcoin company building a global portfolio of Bitcoin-native companies. We hold Bitcoin on our balance sheet and, through our ecosystem-wide presence, seek to provide investors with exposure to Bitcoin’s global growth and to leverage our treasury to acquire and develop an ecosystem of Bitcoin companies across finance, media, advisory and more.
We were formed in 2019 as a patient-first healthcare company redefining value-based care and patient-centered medical services. On August 14, 2025, we acquired a privately held Bitcoin treasury company through a reverse merger and began our transformation into a Bitcoin operating company.
On February 20, 2026, we acquired BTC Inc (“BTC Inc”), the leading provider of Bitcoin-related media and events, and UTXO Management GP, LLC (“UTXO”), an investment firm focused on private and public Bitcoin companies, pursuant to separate merger transactions (the “BTC Merger” and “UTXO Merger,” respectively, and, collectively, the “Mergers”). The acquisition represents a significant addition to our portfolio and advances our mission to develop an ecosystem of Bitcoin-native companies.
Through BTC Inc we will operate one of the largest global media platforms for Bitcoin, which is anchored by the globally recognized Bitcoin Conference. UTXO is the first investment in our financial and asset management services division and will bring our shareholders exposure to Bitcoin-native businesses. We also advise Bitcoin-native and adjacent companies on capital formation, transactions and scale.
Business Segments
As of December 31, 2025, we have two principal business segments:
Bitcoin Operations: houses our Bitcoin treasury and is utilized to support investments in other Bitcoin related companies.
Healthcare Operations: provides a patient-focused healthcare experience that provides patients personalized solutions in order to reduce opioid use and improve health outcomes.
Our Businesses
Bitcoin Operations
A core component of our business strategy is the acquisition and holding of Bitcoin as a treasury reserve asset. We believe Bitcoin is an attractive asset because (i) it can serve as a store of value, supported by a robust and public open-source architecture, that is untethered to sovereign monetary policy, (ii) due to its fixed supply, Bitcoin offers the potential to serve as a hedge against inflation in the long-term and, if its adoption increases, the opportunity for appreciation in value, and (iii) the Bitcoin network provides the infrastructure and opportunity for the development of financial and technological innovations. As of December 31, 2025, we held approximately 5,342 Bitcoin that was valued at $467.5 million, based on the $87,519 price of Bitcoin on December 31, 2025.
We expect to continue to accumulate Bitcoin in the future and to pursue strategies to create income streams or otherwise generate funds using our Bitcoin holdings. Our Bitcoin operations strategy also includes making minority investments into other Bitcoin-native companies. In 2026, we established a designated trading wallet for an options-writing strategy on a portion of our Bitcoin, that can include selling covered calls and cash-secured puts.
Our acquisitions of Bitcoin are conducted through U.S.-based, institutional-grade custodians and reputable third-party exchanges. Our process for purchasing Bitcoin involves due diligence on counterparties, execution through regulated exchanges or over-the-counter desks, and careful consideration of transaction costs, including exchange fees, spreads and custody fees.
We hold all of our Bitcoin in custody at U.S.-based, institutional-grade custodians that have demonstrated records of regulatory compliance and information security. The primary counterparty risk we are exposed to with respect to our Bitcoin is performance obligations under the various custody arrangements into which we have entered.
Overview of the Bitcoin Industry and Market
Bitcoin is a digital asset that is issued by and transmitted through an open-source protocol, known as the Bitcoin protocol, collectively maintained by a peer-to-peer network of decentralized user nodes. This network hosts a public transaction ledger, known as the Bitcoin blockchain, on which Bitcoin holdings and all validated transactions that have ever taken place on the Bitcoin network are recorded. Balances of Bitcoin are stored in individual “wallet” functions, which associate network public addresses with one or more “private keys” that control the transfer of Bitcoin. The Bitcoin blockchain can be updated without any single entity owning or operating the network.
The global Bitcoin market has experienced significant expansion in recent years, with the total market capitalization of Bitcoin reaching $1.7 trillion as of December 2025. This growth reflects both the increasing adoption of Bitcoin as a store of value and its emergence as a foundational asset within the broader digital asset ecosystem. We believe the number of people with exposure to Bitcoin continues to rise, and daily transaction volumes regularly exceed billions of dollars, underscoring the asset’s liquidity and global reach.
Creation of New Bitcoin and Limits on Supply
The Bitcoin protocol limits the total number of Bitcoins that can be generated over time to 21 million. As of December 31, 2025, approximately 20 million Bitcoins have been generated, further highlighting the asset’s scarcity and long-term value proposition. New Bitcoins are created and allocated by the Bitcoin protocol through a “mining” process that rewards users that validate transactions in the Bitcoin blockchain. Validated transactions are added in “blocks” approximately every 10 minutes. The mining process serves to validate transactions and secure the Bitcoin network. Mining is a competitive and costly operation that requires a large amount of computational power to solve complex mathematical algorithms. This expenditure of computing power is known as “proof of work.”
To incentivize miners to incur the costs of mining Bitcoin, the Bitcoin protocol rewards miners that successfully validate a block of transactions with newly generated Bitcoin. The current reward for miners that successfully validate a block of transactions is 3.125 Bitcoin per mined block. The mining reward is reduced by half, which is referred to as a Bitcoin halving, after every 210,000 blocks are mined. This has historically occurred approximately every four years. The most recent Bitcoin halving occurred in April 2024, and the next Bitcoin halving is expected to occur sometime in 2028.
Modifications to the Bitcoin Protocol
Bitcoin is an open-source network that has no central authority, so no one person can unilaterally make changes to the software that runs the network. However, there is a core group of developers that maintains the code for the Bitcoin protocol, and they can propose changes to the source code and release periodic updates and other changes. Unlike most software that has a central entity that can push updates to users, Bitcoin is a peer-to-peer network in which individual network participants, called nodes, decide whether to upgrade the software and accept the new changes. As a practical matter, a modification becomes part of the Bitcoin protocol only if the proposed changes are accepted by participants collectively having more than 50% of the processing power, known as hash rate, on the network. If a certain percentage of the nodes reject the changes, then a “fork” takes place, and participants can choose the version of the software they want to run.
Forms of Attack Against the Bitcoin Network and Wallets
Blockchain technology has certain built-in security features that make it difficult for hackers and other malicious actors to corrupt the blockchain or protocol. However, as with any computer network, the Bitcoin network may still be subject to certain attacks. Some forms of attack include unauthorized access to wallets that hold Bitcoin and direct attacks, like “denial-of-service attacks” or “51% attacks” on the Bitcoin network.
Bitcoin is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the Bitcoin is held. Private keys used to access Bitcoin balances are not widely distributed and are typically held on hardware (which can be physically controlled by the holder or by a third party such as a custodian) or via software programs on third-party servers. One form of obtaining unauthorized access to a wallet occurs following a phishing attack where the attacker deceives the victim and manipulates them into sharing their private keys for their digital wallet or other sensitive information. Other similar attacks may also result in the loss of private keys and the inability to access, and effective loss of, the corresponding Bitcoin.
A “denial-of-service attack” occurs when legitimate users are unable to access information systems, devices, or other network resources due to the actions of a malicious actor flooding the network with traffic until the network is unable to respond or crashes. The Bitcoin network has been, and can be in the future, subject to denial-of-service attacks, which can result in temporary delays in block creation and in the transfer of Bitcoin. A “51% attack” may occur when a group of miners attain more than 50% of the Bitcoin network’s mining power, thereby enabling them to control the Bitcoin network and protocol and manipulate the blockchain. See “Risk Factors — Risks Related to Our Bitcoin Strategy and Holdings” for more information on the related risks.
Other Digital Assets
As of the date of this Annual Report on Form 10-K, Bitcoin was the largest digital asset by market capitalization. However, numerous alternative digital assets exist, and many entities, including consortia and financial institutions, are actively researching and investing resources in blockchain platforms and digital assets that utilize consensus mechanisms other than proof-of-work mining, which is employed by the Bitcoin network. For example, in late 2022, the Ethereum network transitioned to a “proof-of-stake” mechanism for validating transactions that requires significantly less computing power than proof-of-work mining. Other alternative digital assets that compete with Bitcoin in certain ways include “stablecoins,” which are designed to maintain a constant price because of their issuers’ promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown rapidly as an alternative to Bitcoin and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms. Additionally, central banks in some countries have started to introduce digital forms of legal tender.
Healthcare Operations
Kindly LLC (“Kindly”), a Utah limited liability company, is a patient-first healthcare company redefining value-based care and patient-centered medical services. Formed in 2019, Kindly leverages focused integration of mental healthcare to deliver evidence-based, personalized solutions in order to help reduce opioid use, improve health outcomes, and provide algorithmic guidance on the use of alternative medicine in healthcare.
We offer both in-person and telemedicine options for patients. Kindly provides management of, but not limited to, pain, functional medicine, cognitive behavioral therapy, addiction, recovery support services, overdose education efforts, peer support, limited urgent care, preventative medicine, medically managed weight loss, and hormone therapy.
In March 2026, the Company announced that it now intends to exit its legacy healthcare business.
Business Revenue Streams
We currently earn revenue through (i) patient care services related to medical evaluation and treatment, (ii) service affiliate agreements, and (iii) product retail sales.
Patient Care Services
Payments are received from patients directly or reimbursed from Medicare, Medicaid, or commercial insurance contracts.
Behavioral Therapy and Guided Therapy Visits
Behavioral health therapy visits are integrated into the Company’s clinical model and are performed either on a fee for service basis or reimbursed through traditional insurance contracts. The clinical model includes targeted behavioral therapy sessions at each visit, plus the Company offers traditional therapy sessions with licensed therapists trained in trauma-based therapy and other modalities as described at kindlymd.com.
Data Collection and Research
Kindly collects data through our services and interactions. Clients provide data directly, as do clinicians and staff by collecting data about interactions such as product and medication use, experiences, and behaviors. The data we collect depends on the context of the interactions with Kindly and the choices people make, including their privacy settings and the products and features they use. We also obtain data about customers, patients, and clients from third parties.
The information gathered resides in our Electronic Health Record, where we have BAAs with each entity accessing this system. A manual review may be conducted by Kindly employees or vendors who are working on Kindly’s behalf.
We share data only with consent or authorization. Data may be shared with Kindly’s affiliates and subsidiaries, vendors acting on our behalf, or as required by law or legal processes. Additionally, we may share data to protect patients and customers, safeguard lives, ensure the security of our products, and uphold the rights and property of Nakamoto’s shareholders, as well as Kindly’s customers, and patients.
Kindly is required to protect the information it collects and maintains. Kindly respects the right to privacy and protects the information it maintains about clients and patients in accordance with all required laws, regulations and standards. All healthcare data is anonymized and governed by HIPAA. Personal identifying information is protected and removed from any research, publication, lease, or sale to any third party.
BTC Inc and UTXO Acquisition
On February 20, 2026, we acquired BTC Inc, the leading provider of Bitcoin-related media and events, and UTXO, an investment firm focused on private and public Bitcoin companies. The acquisition represents a significant addition to our portfolio and advances our mission to develop an ecosystem of Bitcoin-native companies.
BTC Inc
BTC Inc is the parent company of Bitcoin Magazine, The Bitcoin Conference and Bitcoin for Corporations. Since 2013, BTC Inc has created a portfolio of media brands, an unparalleled client and leadership network and a global event series. BTC Inc’s growth has endured Bitcoin market dynamics and provided stable revenue, product growth and market insights. Our seasoned team can rapidly deploy brands and products in-house and through licensing and partnership, that evolve with market demand and provide durable sources of revenue.
BTC Inc’s portfolio spans 27 media brands, reaching approximately 6 million people globally through its aggregated social media followers. BTC Inc is the organizer of The Bitcoin Conference, the largest Bitcoin event series across the United States, Asia, Europe and the Middle East, which hosted approximately 67,000 attendees in 2025.
Core Event Products
Flagship annual Bitcoin Conference with 31,000+ attendees.
Scaled through local licensing and joint ventures, expanding into a global brand.
Conferences active across the U.S., Europe, Middle East and Asia.
Core Media Projects
Anchored by Bitcoin Magazine, one of the longest running Bitcoin media brands.
Global content, advertising and marketing platform.
Reaches millions through digital, print and ecommerce channels.
Scalable source of Bitcoin news and culture.
Bespoke / Seasonal Products
In-house event production and media teams enable rapid launch of bespoke and seasonal products.
Faster speed-to-market with lower production costs compared to companies without an experienced, in-house production team.
Built to respond to client and audience demand in real time.
Particularly effective during election cycles, major market milestones and unique moments in Bitcoin adoption.
Our advisory and consulting services is supplemented by Bitcoin for Corporations, which provides strategy advisory services to Bitcoin-native and adjacent businesses navigating capital formation, strategic transactions, regulatory complexity and scale.
UTXO
UTXO is our first investment in financial and asset management services and brings our shareholders exposure to Bitcoin-native businesses across public and private markets. UTXO earns management fees and performance fees from its management over multiple funds.
The largest fund, 210k Capital, is an event-driven, actively managed Bitcoin hedge fund that captures asymmetric upside across Bitcoin, Bitcoin-related equities, market dislocations, derivatives and yield strategies. The 210k Capital fund actively manages Bitcoin exposure across macro and liquidity regimes, seeking to capture asymmetric upside during bull markets while mitigating downside risk through discretionary hedging and risk management. The investment process is driven by fundamental analysis, opportunistic positioning and disciplined risk controls. Since its inception, 210k Capital fund has outperformed Bitcoin on an annualized basis, increasing AUM and cumulative net return.
Competition
Our Bitcoin strategy generally involves, from time to time, subject to market conditions, (i) issuing debt or equity securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase Bitcoin or Bitcoin related investments and (ii) acquiring Bitcoin with our liquid assets that exceed working capital requirements. When we engage in such capital raising transactions, we compete for capital with, among others, ETPs, bitcoin miners, digital assets exchanges, other digital assets service providers, other companies that hold bitcoin or other digital assets as treasury reserve assets, private funds that invest in bitcoin and other digital assets, and similar vehicles. An increase in the competition for sources of capital could adversely affect the availability and cost of financing for our bitcoin purchases, and thereby could adversely affect the market price of our listed securities.
Following the acquisition of BTC Inc and UTXO on February 20, 2026, the combined company’s business model is fundamentally differentiated from Bitcoin ETFs, mining companies and other digital asset firms through a unique combination of direct Bitcoin holdings, ownership of operating companies, and public market access. This integrated approach provides investors with a multifaceted exposure to the Bitcoin ecosystem that is not available through traditional investment vehicles.
With respect to our healthcare operations, we compete in a highly fragmented market with direct and indirect competitors that offer varying levels of impact to key stakeholders such as patients, clinicians, payor partners and physician partners. Our competition includes, among other things, pain clinics as well as other non-opioid specialty alternative medicine clinics in Utah.
Marketing and Customers
We use and plan to use various marketing techniques to advertise our conferences and services and attract potential new clients, subscribers and patients. Such techniques include events, conferences, digital and print magazine publications, posting videos on YouTube, email marketing, online and social media marketing, print advertising in target markets, publishing research, and participating in speaking engagements.
Our healthcare operations have two specific target markets: patients and businesses. We attempt to target patients suffering from chronic pain and adults on opioids or more than one prescription medication. Further, we target businesses looking for data resources, expanded behavioral clinic operations, and centers dedicated to wellness, research and analysis, market research, and consumer analyses.
The majority of BTC Inc’s revenue comes from its events business and is in the form of shorter-term event sponsorships and ticket sales. From time to time, BTC Inc may enter into multi-year agreements with certain vendors to sponsor events that include fixed-price arrangements. We believe that when we enter into long-term contractual relationships it helps provide revenue visibility and stability, however, they may also limit our ability to adjust pricing in response to market conditions.
Corporate History
On December 2, 2019, the Company filed its original articles of organization with the state of Utah under the name “Utah Therapeutic Health Center, PLLC.”
On April 15, 2020, the Company filed Articles of conversion with the State of Utah converting the entity from a PLLC to an LLC.
On March 11, 2022, the Company filed Articles of Conversion with the State of Utah converting the entity from a limited liability company to a corporation and formally changing the name of the Company to “Kindly MD, Inc.”
On July 5, 2022, the Company filed Amended and Restated Articles of Incorporation with the State of Utah, adding a preferred class of stock to its authorized shares and increasing the number of common shares authorized, among other corporate governance matters.
On June 3, 2024, the company completed an initial public offering (“IPO”), resulting in the issuance of 1,240,910 shares of common stock, par value $0.001 per share (the “Common Stock”) and received gross proceeds of approximately $6.8 million. After deducting offering expenses, the Company received net proceeds of approximately $5.9 million.
On August 14, 2025, the Company consummated its merger with Nakamoto Holdings Inc (“Nakamoto Holdings”).
On December 17, 2025, the Company filed a certificate of conversion with the Delaware Secretary of State and subsequently converted from a Utah corporation to a Delaware corporation.
On January 21, 2026, the Company undertook a rebranding to change its corporate name from “KindlyMD, Inc.” to “Nakamoto Inc.”.
On February 6, 2026, the Company filed a DBA in Utah for the Healthcare Operations to continue operating as KindlyMD, Inc.
On February 20, 2026, the Company completed the transaction contemplated by the Agreement and Plan of Merger (the “UTXO Merger Agreement”) by and among the Company, UTXO GP Merger Sub, LLC, a Tennessee limited liability company and a wholly-owned subsidiary of the Company (“UTXO Merger Sub”), UTXO, David Bailey, in his individual capacity, Tyler Evans, in his individual capacity, and the equityholder representative party thereto, and the Agreement and Plan of Merger (the “BTC Merger Agreement” and, together with the UTXO Merger Agreement, the “Merger Agreements”) with BTC Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, BTC Inc, and the stockholder representative party thereto, as discussed further in Note 16 in our consolidated financial statements and Item 13 included in this Annual Report on Form 10-K.
Intellectual Property
We believe our intellectual property drives growth in our revenues, particularly with respect to partnerships, licensing rights, and media creation and distribution. Our intellectual property includes the “NAKAMOTO,” “BTC INC,” “BITCOIN CONFERENCE,” “BITCOIN2026,” “BITCOIN HONG KONG,” “BITCOIN AMSTERDAM,” “BITCOIN MENA,” “BITCOIN MAGAZINE,” “BITCOIN FOR CORPORATIONS,” “WHALE PASS” AND “UTXO” brands, tradenames, and logos, the nakamoto.com, b.tc, bitcoinmagazine.com, bitcoinforcorporations.com and utxo.management domain names, other trademarks and copyrights associated with us and our media properties and events, and the rights to use the intellectual property of our commercial partners through strategic licensing rights. Substantially all our intellectual property and owned assets that we create or acquire associated with our content and events are protected by trademarks and copyrights, whether registered or unregistered.
Seasonality
BTC Inc’s largest revenue source is through its events and conference business. Revenue and operating income for BTC Inc will be impacted by when certain event conferences occur and in particular the flagship Bitcoin conference held in the United States. The flagship Bitcoin conference this year is scheduled to be held in April 2026.
Employees and Human Capital
As of December 31, 2025, we had a total of 65 employees, consisting of 33 full-time employees and 32 part-time employees across all of subsidiaries. In our Healthcare operations business, we employ 23 full-time employees and 32 part-time employees. We also utilize independent contractors, including certain of our senior management, to supplement our workforce.
Government Regulation
Bitcoin Operations
The laws and regulations applicable to Bitcoin and digital assets are evolving and subject to interpretation and change.
Governments around the world have reacted differently to digital assets; certain governments have deemed them illegal, and others have adopted regulatory frameworks permitting their use and trade with varying degrees of restriction, while in some jurisdictions, such as the U.S., digital assets are subject to overlapping, uncertain and evolving regulatory requirements.
As digital assets have grown in both popularity and market size, the U.S. Executive Branch, Congress and a number of U.S. federal and state agencies, including the Financial Crimes Enforcement Network, the Commodity Futures Trading Commission (“CFTC”), the United States Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority, the Consumer Financial Protection Bureau, the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the Internal Revenue Service (“IRS”) and state financial regulators, have been examining the operations of digital asset networks, digital asset users and digital asset exchanges, with particular focus on the extent to which digital assets can be used to violate state or federal laws, including to facilitate the laundering of proceeds of illegal activities or the funding of criminal or terrorist enterprises, and the safety and soundness and consumer-protective safeguards of exchanges or other service-providers that hold, transfer, trade or exchange digital assets for users. Many of these state and federal agencies have issued consumer advisories regarding the risks posed by digital assets to investors. In addition, federal and state agencies, and other countries have issued rules or guidance regarding the treatment of digital asset transactions and requirements for businesses engaged in activities related to digital assets.
Depending on the regulatory characterization of Bitcoin, the markets for Bitcoin in general, and Nakamoto’s activities in particular, Nakamoto’s business and Bitcoin strategy, including the “treasury” approach, may be subject to regulation by one or more regulators in the United States and globally. Ongoing and future regulatory actions may alter, to a materially adverse extent, the nature of digital assets markets, the participation of industry participants, including service providers and financial institutions in these markets, and our ability to pursue our Bitcoin strategies. Additionally, U.S. state and federal and foreign regulators and legislatures have taken action against industry participants, including digital assets businesses, and enacted restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity stemming from digital assets activity. U.S. federal and state energy regulatory have expressed concern regarding the total electricity consumption of cryptocurrency mining, and the potential impacts of cryptocurrency mining to the supply and dispatch functionality of the wholesale grid and retail distribution systems. Some state legislative bodies have passed, or are actively considering, legislation to address the impact of cryptocurrency mining in their respective states. For risks associated with the regulations to which we may be subject to, please see “ Risk Factors — Risks Related to Our Bitcoin Strategy and Holdings ” of this Annual Report on Form 10-K.
Under the Commodity Exchange Act (the “CEA”), the CFTC has broad enforcement authority to police market manipulation and fraud in spot digital asset markets in which we may transact. Beyond instances of fraud or manipulation, the CFTC generally does not currently regulate cash or spot market transactions involving digital assets (such as the Bitcoin treasury strategy) or exchanges that facilitate such transactions, provided that such transactions do not utilize margin, leverage, or financing. Rather, the CFTC’s regulatory authority generally applies to futures, swaps, other derivative products and certain retail leveraged commodity transactions involving digital asset commodities, including the markets on which these products trade.
In March 2026, the SEC and CFTC released joint agency guidance taking the position that Bitcoin and other digital assets such as ETH, SOL, XRP, and ADA are not securities, but that they are “digital commodities.” This distinction is because they are linked to, and derive their value from, their functionality and market dynamics, rather than the expectation of profits based on the managerial efforts of others. The guidance explained that certain digital assets will continue to be classified as securities, such as “tokenized” securities that represent regulated securities. Additionally, other kinds of investments that are advertised in such a way that promises that the issuer will take efforts to generate profits for investors will be considered securities under SEC jurisdiction.
The joint agency guidance also clarifies that certain crypto assets that are not themselves securities (e.g., Bitcoin) may be subject to SEC regulation as an investment contract. More specifically, the sale of these assets will be subject to SEC regulations (i.e., as investment contracts) if the issuer makes representations that encourage people to invest in a shared enterprise with promises that the issuer will engage in managerial efforts or take action to generate profits. All advertising regarding these products should be reviewed to ensure the representations do not affect the commodity classification.
As a result of the above, Bitcoin is not currently considered to be a security and is not subject to the CFTC’s regulatory jurisdiction. However, derivatives such as options on Bitcoin may be within the CFTC’s jurisdiction, and sales of Bitcoin that involve representations regarding the managerial efforts of an issuer that will generate profits for purchases may qualify as investment contracts subject to the SEC’s jurisdiction. Future regulatory developments with respect to Bitcoin from the CFTC, SEC, or any other federal or state regulator, are difficult to predict.
In addition, since Bitcoin network transactions are pseudonymous, they may be susceptible to misuse for criminal activities, such as money laundering. Such transactions are recorded on a public ledger, allowing for forensic analysis that can link transactions to individuals or entities under certain circumstances. Nevertheless, this misuse, or the perception of such misuse, could lead to greater regulatory oversight of Bitcoin and Bitcoin platforms, and there is the possibility that law enforcement agencies may seize or shut down digital asset exchanges or service providers, which could prevent users from accessing custodial-held assets. Users who self-custody Bitcoin in private wallets remain outside the direct reach of such actions. For example, the U.S. Treasury Department’s Office of Foreign Assets Control has issued updated advisories regarding the use of virtual currencies, added a number of digital asset exchanges and service providers to the Specially Designated Nationals and Blocked Persons list and engaged in several enforcement actions, including a series of enforcement actions that have either shut down or significantly curtailed the operations of several smaller digital asset exchanges associated with Russian and/or North Korean nationals.
As noted above, activities involving Bitcoin and other digital assets may fall within the jurisdiction of more than one financial regulator and various courts and such laws and regulations are rapidly evolving and increasing in scope. On January 23, 2025, President Trump issued an executive order titled, Strengthening American Leadership in Digital Financial Technology. While the executive order did not mandate the adoption of any specific regulations, the executive order identifies certain key objectives to guide agencies involved in cryptocurrency regulation, including (i) protecting the sovereignty of the United States dollar by promoting the development of United States dollar-backed stablecoins, (ii) providing regulatory clarity and certainty built on technology-neutral regulations for individuals and firms involved in digital assets, including through well-defined jurisdictional regulatory boundaries, and (iii) taking measures to protect Americans from the risks of Central Bank Digital Currencies (“CBDC”). To achieve these objectives, the executive order established a working group on digital asset markets within the National Economic Council, comprised of representatives from key federal agencies, with a tight timeline for examining existing regulations and proposing a new regulatory framework. There have also been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset markets.
Legislation is currently pending in the U.S. Congress which, if passed and signed into law, could significantly affect the digital currency and digital asset markets. One such piece of legislation is the Digital Asset Market Clarity Act of 2025 (the “ CLARITY Act ”), which would clarify which digital currencies and digital assets are commodities, as opposed to securities. Additionally, the CLARITY Act would subject certain spot-market digital commodities to a comprehensive regulatory regime for the first time. For example, the legislation would require several different types of entities to register with the CFTC and/or SEC and comply with various regulatory requirements that would be promulgated by the CFTC and SEC. Further, the legislation would require issuers of new and “non-mature” digital commodities to make a mandatory filing with the SEC containing information regarding the issuer, planned use of proceeds, economics, governance and development roadmap. The CLARITY Act was passed in the U.S. House of Representatives, and the U.S. Senate is currently considering a companion bill, which will likely differ from the U.S. House of Representatives version in a number of ways. The details of the legislation are likely to change from its current form as it is reviewed and revised by the U.S. House of Representatives and the Senate, and it is unknown at this time whether it will be approved.
We are subject to applicable environmental laws, but given the nature of our business and that we have no owned real property the costs of such compliance are not material to the business.
Healthcare Operations
Companies operating in the healthcare industry in the U.S. are required to comply with extensive and complex laws and regulations at the federal, state and local government levels. We are subject to local, state, federal and international laws, statutes, rules, policies, and regulations (collectively “Regulations”) that relate directly or indirectly to our operations. These include, among other things, Regulations relating to: the provision and reimbursement of health care services; licensure and standards of professional practice for clinicians and alternative medicine providers; handling of controlled substances; relationships with physicians and other referral sources; privacy and data protection requirements; activities regarding competitors; land use and zoning requirements. Our business operations involve the collection, transfer, use, disclosure, security, and disposal of personal or sensitive information. As a result, our business is subject to complex and evolving U.S. and international laws and regulations regarding privacy and data protection. We are also subject to common business and tax rules and regulations pertaining to the operation of our business. Below is a discussion of the federal and state-level regulatory regimes in those jurisdictions where we are currently directly involved.
We are subject to the Controlled Substances Act (“CSA”) as enforced by the Drug Enforcement Administration (“DEA”). The CSA is the federal U.S. drug policy under which the manufacture, importation, possession, use, and distribution of certain narcotics, stimulants, depressants, hallucinogens, anabolic steroids, and other chemicals are regulated. The DEA is the federal agency responsible for enforcing the CSA. A pain clinic that prescribes opioids must register with the DEA and follow strict record-keeping, reporting, and security measures to ensure that these substances are not misused. Non-compliance can result in substantial penalties and criminal charges.
Food and Drug Administration (the “FDA”): The FDA is responsible for protecting the public health by ensuring the safety, efficacy, and security of drugs, biological products, and medical devices. Our clinic must only use FDA-approved medications and devices and follow FDA guidelines in their use.
Utah State Medical and Professional Licensing Boards: Each state has its own medical board and other agencies that license and regulate physicians and other healthcare professionals. They also establish rules for clinics and the prescribing of controlled substances. We are subject to licensing and other requirements set forth by the Utah Department of Professional Licensing with regard to any Nurse Practitioners, Physician Assistants, Medical Doctors, Psychologists, and Licensed Clinical Social Workers who we engage or employ to act on our behalf.
HIPAA and State Privacy Laws: HIPAA as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations sets national standards for the security of electronic health care transactions, the privacy of protected health information (“PHI”), and the conduct of healthcare providers. HIPAA requires the implementation of administrative, physical, and technical safeguards to ensure the privacy, integrity, security, and availability of PHI. HIPAA’s requirements are also applicable to the contractors, agents, and other business associates of covered entities that create, receive, maintain, or transmit PHI in connection with their provision of services to covered entities. In addition to HIPAA, depending on the scope and nature of our operations, we could be subject to other privacy-related requirements under federal law, such as the Federal Substance Abuse Confidentiality Regulations (42 C.F.R. Part 2), which serves to protect patient records created by federally assisted programs for the treatment of substance use disorders. Further, states may have their own laws protecting the privacy and security of personal information, including health information. We must comply with such laws in the states where we do business in addition to our obligations under HIPAA. State data privacy and security laws are subject to change and require us to modify our operations to comply with more stringent state laws in jurisdictions where we operate. We could be subject to financial penalties and sanctions if we fail to comply with these laws.
Anti-Kickback Statute, the Stark Law, and the False Claims Act and Similar State Laws: Regulations applicable to our operations also include the federal Anti-Kickback Statute, the Stark Law, the federal False Claims Act (“FCA”), the Eliminating Kickbacks in Recovery Act (“EKRA”), and similar state laws. In general, these laws impact the relationships that we may have with physicians and other potential referral sources. The Company has and, in the future, may have additional financial relationships with physicians, medical professionals, and other health care facilities who refer patients to our clinics, including employment contracts, leases and professional service agreements. The U.S. Department of Health and Human Services, Office of the Inspector General has issued certain safe harbor regulations that enumerate the practices deemed acceptable under the Anti-Kickback Statute, and similar exceptions have been promulgated by CMS under the Stark Law. While we strive to ensure that any arrangements with referral sources comply with any applicable safe harbor under the Anti-Kickback Statute and Stark Law, it is possible that certain arrangements may not fall squarely within the scope of any such safe harbors or similar exemptions under applicable state laws. Failure to meet a safe harbor does not mean that an arrangement automatically violates the Anti-Kickback Statute, however, it may subject the arrangement to greater legal and regulatory scrutiny. Even if our arrangements are compliant with Anti-Kickback Statute, they may still face scrutiny under EKRA. Moreover, while we believe that our arrangements with physicians and other referral (and potential referral) sources comply with applicable Stark Law exceptions, the Stark Law is a strict liability statute for which no intent to violate the law is required. Moreover, the FCA prohibits, among other things, knowingly presenting, or causing to be presented, false claims to government programs, such as Medicare or Medicaid. Some states have adopted similar fraud and false claims laws, including laws that are not limited to government healthcare programs. Governmental entities routinely engage in significant civil and criminal enforcement efforts against healthcare companies under the FCA and other civil and criminal statutes. Further, FCA investigations can be initiated by private parties through qui tam (or whistleblower) lawsuits, which is a generally growing trend in recent years. Penalties for FCA violations include fines per false claim or statement, plus up to three times the amount of damages sustained by the federal government. Violations of the FCA can also result in exclusion from participation in government healthcare programs.
Centers for Medicare & Medicaid Services (“CMS”): If or when Nakamoto treats Medicare or Medicaid patients, CMS rules generally supply additional requirements regarding billing, reporting, and patient care guidelines.
Billing and Pricing Transparency Laws: Protections against surprise billing have also been promulgated in connection with the Consolidated Appropriations Act of 2021, which introduced the “No Surprises Act.” Effective on January 1, 2022, this rule created new protections against surprise billing and excessive cost sharing for healthcare consumers and creates a dispute resolution process to resolve cost disparities. As a result of this law, we could face disruptions in the ability for us to receive timely payment or be subject to penalties for noncompliance, which, in turn, could have a material adverse effect on our business. In addition, multiple states have enacted or are considering similar laws that would apply to patients having state-regulated insurance. If jurisdictions where we provide services enact similar laws, these measures could limit the amount we can charge and recover for services we provide where we have not contracted with the patient’s insurer and thus could have an adverse effect on our business. There is also risk that additional legislation at the federal and state level will give rise to major third-party payors leveraging this legislation or related changes as an opportunity to terminate and renegotiate existing reimbursement rates.
Other State Healthcare and Related Laws: In addition, many states have laws, regulations, guidance, or case law that prohibit the corporate practice of medicine prohibition, which generally prohibit the practice of medicine (and potentially other professional services) by lay-persons or entities and are intended to prevent unlicensed persons or entities from interfering with or inappropriately influencing providers’ professional judgment. Utah has codified certain corporate practice of medicine restrictions preventing unlicensed persons from interfering with the judgment of licensed medical professionals. Moreover, as the use of AI in health care and other industries continues to grow, it is likely that new laws regulating the development and use of AI will be proposed and enacted at the federal, state or local level. Notably, Utah recently enacted the Artificial Intelligence Policy Act into law, which amends the Utah consumer protection and privacy laws to require disclosure, in certain circumstances, of AI use to consumers. This law went into effect on May 1, 2024 and was subsequently amended in March 2025, which, among other things, narrowed the scope of disclosure obligations under the law. Accordingly, we must monitor our compliance with and stay abreast of any changes to laws related to AI in every jurisdiction in which we operate on an ongoing basis as this is a rapidly evolving and developing area of law.
Hemp and Cannabis
Kindly does not (and Nakamoto and all of its other subsidiaries do not) grow, process, or sell cannabis in any form .
Federal Regulation of Hemp and Cannabis
The U.S. federal government regulates drugs through the Controlled Substances Act, which places controlled substances, including cannabis, in a schedule. Throughout its history, cannabis has been classified on Schedule I, the highest tier of restriction reserved for substances with no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse. However, cannabis is currently going through the process of being re-designated on Schedule III, a far less restrictive schedule that it would share with drugs such as ketamine and Tylenol with codeine.
In May of 2024, the DEA published a Proposed Rule facilitating cannabis’s rescheduling, and in December of 2025, President Trump signed an executive order directing the Attorney General to expedite the process. This regulatory shift, if completed, will open up pathways to clinical research and drug trials for cannabis-based medicine. But at the present, the Food and Drug Administration has only approved a few cannabis-based products. This includes, Epidiolex, which uses non-psychoactive CBD from cannabis for the treatment of seizures associated with two epilepsy conditions. The FDA has also approved several other products that are derived from or synthetically related to cannabis, which includes Marinol, Syndros and Cesamet. The FDA has not approved cannabis or cannabis compounds as a safe and effective drug for any other condition.
Hemp, meanwhile, is a blanket legal designation for specific cultivars of cannabis plants and their corresponding plant material that meet the requirements outlined in the 2018 Farm Bill, aka, the Agriculture Improvement Act of 2018 – chiefly, having a concentration of THC (tetrahydrocannabinol, the main psychoactive compound in cannabis) of less than .3% on a dry weight basis. The federal rules governing hemp production, sale, and the creation of hemp-based products have undergone numerous revisions since 2018, both at the Congressional and agency levels, most recently in November of 2025 when Congress amended the definition of hemp to include limits on the permissible federal threshold for all THC, rather than only delta-9 THC as before. This amended definition of “hemp” will take effect on November 12, 2026 and is not expected to impact healthcare operations or patient care.
FDA Regulation of Cannabis and Hemp Products
Cannabis’ longstanding Schedule I designation has served to effectively block the FDA from even considering approval of any cannabis-based medicine (with the aforementioned exception of Epidiolex, which, though preceding passage of the Farm Bill, used only non-psychoactive CBD and would likely now be considered hemp-based, rather than cannabis-based). The FDA regulates products containing hemp, cannabis or derived compounds under the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”). The FDA currently prohibits THC or CBD products from being sold as medicine or dietary supplements or from impersonating the brands of non-cannabis products, especially when the brand in question sells products targeted at children, like candy or soda.
Kindly does not (and Nakamoto and all of its other subsidiaries do not) market or sell hemp products as dietary supplements or medicine, nor does it make any health claims related to said products. Accordingly, neither Nakamoto nor Kindly been the subject of any warning letters or enforcement actions taken by the FDA.
State Regulation of Hemp and Cannabis
State laws that permit and regulate the production, distribution and use of cannabis for adult use or medical purposes are in direct conflict with the Controlled Substances Act, which makes cannabis use and possession federally illegal. Although certain states and territories of the U.S. authorize medical and/or adult use cannabis production and distribution by licensed or registered entities, under U.S. federal law, the possession, use, cultivation and transfer of cannabis and any related drug paraphernalia are illegal and any such acts are criminal acts under federal law. Though Nakamoto does not engage in any activities prohibited by the CSA, it could conceivably be seen as “aiding and abetting” the commission of CSA violations through the prescription of medical cannabis.
The Utah Medical Cannabis Act (H.B. 3001 Utah Medical Cannabis Act) directs the Utah Department of Health (“UDOH”) to issue medical cannabis cards to patients, register medical providers who wish to recommend medical cannabis treatment for their patients, and license medical cannabis pharmacies. Physicians, Advanced Practice Registered Nurses, and Physician Associates who are licensed to prescribe a controlled substance are allowed to recommend medical cannabis treatment for their patients. Providers must register through an electronic verification system established by the UDOH. Registered providers may only recommend medical cannabis treatment to a patient in the course of the physician-patient relationship after completing and documenting in the patient’s record a thorough assessment of the patient’s condition and medical history.
Hemp products are approved for sale in Utah and registered by the Utah Department of Agriculture and Food (“UDAF”). This process requires a complete product registration application, a full panel certificate of analysis (“COA”), a product label design that complies with administrative rule R68-26-5, and a fee for each cannabinoid product registered. Each registration is effective for 12 months and must reapply for registration each year. Hemp is only allowed for sale in registered establishments through UDAF.
The Utah Department of Agriculture and Food oversees the market for industrial hemp and medical cannabis in Utah and is governed, in part, by H.B. 227 Hemp Amendments. This bill outlines the hemp producer registration process, establishes the age of 21 as the legal age in which a person in Utah may purchase a hemp product and generally governs the rules surrounding legal limits of THC and THC analogs in hemp products to 5mg per serving and 150mg total per package. UDAF also regulates compliance by monitoring processors and retail establishments. All products labeled and sold in Utah must be approved by UDAF.
Product registration application and COA requirements are subject to Utah administrative rule R68-26-4 and R68-37 for testing standards. Label requirements are found in Utah administrative rule R68-26-5.
Although our activities are believed to be compliant with applicable state and local laws, strict compliance with state and local laws with respect to cannabis may neither absolve us of liability under U.S. federal law, nor may it provide a defense to any federal proceeding which may be brought.
The risk of federal enforcement and other risks associated with our business are described in the section entitled “Risk Factors.”
Telemedicine
The Utah Medical Practice Act allows healthcare providers to establish a provider-patient relationship via telemedicine, as long as the standard of care is the same as in-person visits. Healthcare providers providing telehealth and telepsychology telemedicine services to patients in Utah must be licensed to practice in the state. Utah allows for telemedicine prescribing as long as the standard of care is the same as in-person visits. Controlled substances have additional regulations that often require an in-person exam. Locations that handle and dispense controlled substances must comply with strict federal and applicable state regulations regarding the purchase, storage, distribution and disposal of such controlled substances. All interactions between the treating provider and patient are considered healthcare interactions and therefore are governed by applicable HIPAA requirements.
The Ryan Haight Online Pharmacy Consumer Protection Act of 2008 (the “Ryan Haight Act”): This is a federal law that regulates the distribution of controlled substances online. When Kindly uses telemedicine services to prescribe opioids, we must comply with the Ryan Haight Act. The Ryan Haight Act requires a valid prescription for controlled substances, which generally entails a prior in-person medical evaluation.
Telepsychology services in Utah also require provider licensing, which is governed by the Utah Psychology Licensing Board. Providers need to meet stringent educational, internship, and examination requirements, aligning with the American Psychological Association’s guidelines.
Corporate practice of medicine laws aim to preserve the physician-patient relationship from potential commercial intrusions. In Utah, these laws apply to telemedicine. We enter into contractual agreements with physicians and Advanced Practice Clinicians to preserve the provider-patient relationship from commercial intrusions.
Fee-splitting, the sharing of professional fees between medical practitioners and non-medical practitioners, is illegal in Utah. Cybersecurity is governed by the Utah health Information Network standards, which provide a framework for data security and protection in healthcare, which we adhere to. We utilize encryption for all healthcare related communication channels and data storage, inclusive of telemedicine. Insurance regulation also influences telemedicine practice in Utah. Utah law mandates private payer parity for telemedicine services, meaning private insurance companies must cover telemedicine services at the same rate as in-person services. However, specifics of billing and reimbursement vary among insurers.
Expansion of Healthcare Operations Outside of Utah
At present, our healthcare operations are solely based in Utah, and we have not currently targeted or planned specific expansion into other states. Given the complex, state-specific regulatory landscape of the healthcare industry, expanding our operations will necessitate extensive preparation and understanding of the relevant regulations, licensure, and registration requirements in any such states.
Each state has a unique set of rules and regulations pertaining to the use, possession, production, and distribution of scheduled medications. Consequently, any potential expansion will involve a careful evaluation of the state-specific regulatory environment, ensuring full compliance with all requisite laws and regulations to prevent legal ramifications.
Available Information
Our internet address is nakamoto.com. At our investor relations website, investors.nakamoto.com, we make available free of charge a variety of information for investors, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such reports with, or furnish those reports to, the SEC at www.sec.gov. Further, corporate governance information, including our board committee charters, code of conduct and whistleblower policies, are also available on our investor relations website at investors.nakamoto.com.
The information contained on or made available through our website or any of the websites referred to above are not incorporated by reference into, and does not form a part of, this Annual Report on Form 10-K or in any other report or document we file with or furnish to the SEC. Further, references to the URLs for these websites are intended to be inactive textual references only.
ITEM 1A. RISK FACTORS
An investment in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks that are described in this section. You should also read the sections entitled “Cautionary Note Regarding Forward-Looking Statements”. Additional risks not presently known or that we currently deem immaterial could also materially and adversely affect us. You should consult your own financial and legal advisors as to the risks entailed by an investment in our securities and the suitability of investing in our securities in light of your particular circumstances. If any of the risks contained in this filing develop into actual events, our assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance, liquidity, long-term performance goals, prospects, and/or results of operations could be materially and adversely affected, the trading price of our Common Stock could decline and you may lose all or part of your investment. Some statements in this Annual Report on Form 10-K, including such statements in the following risk factors, constitute forward-looking statements.
We operate in an environment that involves many risks and uncertainties. The risks and uncertainties described in this section are not the only risks and uncertainties that we face. Additional risks and uncertainties that presently are not considered material or are not known to us, and therefore are not mentioned herein, may impair our business operations. If any of the risks described actually occur, our business, operating results, financial position, and value of our securities could be adversely affected.
Risks Related to Our Bitcoin Strategy and Holdings
We are shifting our business strategy from healthcare operations to a Bitcoin company with a Bitcoin treasury, which represents a fundamental change in our risk profile and may not be successful.
Prior to 2026, our primary business focus was on healthcare operations, in particular patient-centered holistic pain management medical services. In connection with our merger with Nakamoto Holdings, Inc., we added Bitcoin treasury operations to our business strategy, though our healthcare operations remained our core business. Then, in early 2026, we changed our name from Kindly MD, Inc. to Nakamoto Inc. to represent the pivot in our corporate strategy to focus on the acquisition and holding of Bitcoin as our primary treasury reserve asset. Following this pivot, we subsequently completed both the BTC Merger and UTXO Merger to support this shift in business strategy, as those companies are also in the Bitcoin ecosystem. Further, the Company now intends to exit its legacy healthcare business. This transition in business strategy and operations involves several risks:
Abandonment of Established Revenue Streams: By exiting our healthcare business, we are moving away from industry-specific revenue streams that provided a degree of predictability. Our future financial performance will now be primarily driven by the market price of Bitcoin, which is notoriously volatile and subject to factors entirely outside our control, and the performance of our Bitcoin-related operations, which may also be positively or negatively impacted by the price of Bitcoin.
Legacy Liabilities: Despite our pivot, we may be subject to potential “tail” liabilities related to our former healthcare operations, including potential medical malpractice claims, HIPAA data breach liabilities, or clinical trial disputes. The costs associated with defending or settling these legacy claims could diminish the cash reserves we intend to allocate toward our Bitcoin strategy.
Investor Base Misalignment: Investors who purchased our stock for exposure to the healthcare sector may sell their shares as a result of this strategy shift, leading to increased downward pressure on our Common Stock price and heightened volatility during the transition period.
Execution Risk: We may be unable to successfully divest or liquidate our remaining healthcare assets at favorable valuations, which could limit our ability to execute our Bitcoin acquisition targets on our planned timeline.
If we are unable to successfully manage this transition, our financial condition and the market price of our Common Stock could decline significantly, and we may be unable to return to our previous healthcare-focused business model.
Our Bitcoin strategy exposes us to various risks, including risks associated with Bitcoin.
Our Bitcoin strategy exposes us to various risks, including the following:
Bitcoin is a highly volatile asset. Bitcoin is a highly volatile asset that has traded below $61,000 per Bitcoin and above $125,000 per Bitcoin on the Coinbase exchange (a major U.S.-based crypto exchange) (“Coinbase”) in the 12 months preceding the date of this Annual Report on Form 10-K. The trading price of Bitcoin significantly decreased during prior periods, and such declines may occur again in the future. For example, the price of Bitcoin declined by approximately 77%, from a high of about $69,000 in November 2021 to approximately $16,000 in November 2022, before increasing by more than 300% to over $65,000 in March 2024. As of October 6, 2025, the price of Bitcoin was approximately $125,000, and as of February 5, 2026, the price of Bitcoin was approximately $60,000. These price swings illustrate the substantial fluctuations Bitcoin may experience over short and long time periods, and future performance may differ materially from past results.
Bitcoin is a relatively new asset class with a limited history. Bitcoin is a digital asset that was introduced in 2009 and remains in the early stages of adoption compared to traditional currencies and assets. It lacks a long track record of performance and is subject to rapidly evolving regulatory, technological, and economic conditions. Unlike fiat currencies such as the U.S. Dollar or Euro, Bitcoin is not formally recognized legal tender in most jurisdictions and is not supported by any sovereign authority or central bank. This lack of governmental backing could diminish confidence in Bitcoin’s long-term viability and increase volatility and speculative risk.
Bitcoin is reliant on relatively new computer technology. Bitcoin operates through a decentralized, peer-to-peer network of computers using open-source software to verify and record transactions on a public ledger known as the Bitcoin blockchain. The absence of a central governing authority means that Bitcoin is reliant on the continued operation and integrity of this decentralized network. Bitcoin may be subject to changes in its underlying blockchain protocol, including “hard forks,” which result in divergent versions of the blockchain and potentially new digital assets. There is no assurance that we will be able to claim, access, or benefit from such forks or other developments, and there may be legal, technical, or operational uncertainties associated with them.
Bitcoin does not pay interest or dividends. Bitcoin does not pay interest or other returns and we can only generate cash from our Bitcoin holdings if we sell our Bitcoin or implement strategies to create income streams or otherwise generate cash by using our Bitcoin holdings. Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our Bitcoin holdings, and any such strategies may subject us to additional risks.
Our Bitcoin holdings may significantly impact our financial results and the market price of our listed securities. Our Bitcoin holdings may significantly affect our financial results. If we increase our overall holdings of Bitcoin in the future, our Bitcoin holdings may have an even greater impact on our financial results and the market price of our listed securities.
Our assets are concentrated in Bitcoin. The vast majority of our assets are concentrated in our Bitcoin holdings. The concentration of our assets in Bitcoin may limit our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of treasury assets.
We may purchase Bitcoin using proceeds from equity and debt financings or from operations. Our ability to achieve the objectives of our Bitcoin strategy depends in significant part on the profitability of our operating businesses and our ability to obtain equity and debt financing. If our businesses are not profitable or we are unable to obtain equity or debt financing on favorable terms or at all, we may not be able to successfully execute on our Bitcoin strategy.
We will likely need to purchase Bitcoin from a limited number of exchanges or dealers . Bitcoin markets rely on a limited number of exchanges and dealers for liquidity. If these counterparties suspend withdrawals, become insolvent, or experience technical outages, we may not be able to sell Bitcoin when needed, regardless of market prices.
Our Bitcoin strategy has not been tested over an extended period or under various market conditions. We implemented a Bitcoin strategy following the closing of the merger by and among Nakamoto Holdings Inc., Kindly Holdco Corp., and Kindly MD, Inc. (the “Nakamoto Merger”). We intend to continually examine the risks and rewards of our strategy to acquire and hold Bitcoin. Our strategy has not been tested over an extended period or under various market conditions. For example, we believe Bitcoin, due to its fixed supply, has the potential to serve as a hedge against inflation in the long term. However, if Bitcoin prices were to decrease or our Bitcoin strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our listed securities would be materially adversely impacted.
We are subject to counterparty risks related to exchanges, custodians, and other digital asset industry participants. We intend to purchase Bitcoin through a limited number of exchanges or dealers such as Payward Interactive, Inc., a Florida corporation doing business as Kraken (“Kraken”), Anchorage Digital and Coinbase, which we believe are reputable. If these counterparties suspend withdrawals, become insolvent, or experience technical outages, we may not be able to sell Bitcoin when needed. We have implemented measures designed to mitigate counterparty risks, including purchasing Bitcoin through reputable U.S.-based exchanges, storing substantially all Bitcoin with institutional-grade custodians, and negotiating contractual arrangements to protect our property interests. As part of our process in determining transactions with third-party exchanges, we search for reputable exchanges that have industry standard policies and procedures in place regarding data security and customer diligence related to anti-money laundering, Office of Foreign Assets Control and know-your customer rules and regulations. If any of these third-party exchanges no longer meet our standards or if there is a decrease in reputable third-party exchanges, we may need to find additional counterparties and enter into additional agreements that could be on less favorable terms, which could have a material adverse effect on our business, financial condition or the results of our operations. However, custodial arrangements for digital assets are not as well-established as those for traditional assets, and our ability to enforce claims against custodians in bankruptcy is uncertain. If our custodially-held Bitcoin were considered property of our custodians’ estates in insolvency proceedings, we could be treated as a general unsecured creditor, potentially resulting in loss of value. The broader digital assets industry has experienced high-profile bankruptcies, closures, and regulatory enforcement actions that have negatively impacted adoption rates and created additional counterparty risks.
Changes in the accounting treatment of our Bitcoin holdings could have significant accounting impacts, including increasing the volatility of our results. Accounting Standards Update (“ASU”) 2023-08 requires us to measure our Bitcoin holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of its Bitcoin holdings in net income each reporting period. ASU 2023-08 requires us to provide certain interim and annual disclosures with respect to our Bitcoin holdings. Due in particular to the volatility in the price of Bitcoin, the adoption of ASU 2023-08 could have a material impact on our financial results, increase the volatility of our financial results, and affect the carrying value of our Bitcoin holdings on our balance sheet. ASU 2023-08 could also have adverse tax consequences. These impacts could in turn have a material adverse effect on our financial results and the market price of our listed securities.
Bitcoin is a highly volatile asset, and our operating results and market price may significantly fluctuate due to the highly volatile nature of the price of Bitcoin and erratic market movements.
Bitcoin is a highly volatile asset, and fluctuations in the price of Bitcoin are likely to influence our financial results and the market price of our listed securities, including having the potential to amplify our market price volatility relative to the price of Bitcoin. Our financial results and the market price of our listed securities would be adversely affected, and our business and financial condition would be negatively impacted, if the price of Bitcoin decreased substantially (as it has in the past), including as a result of:
decreased user and investor confidence in Bitcoin, including due to the various factors described herein;
investment and trading activities, such as (i) trading activities of highly active retail and institutional users, speculators, miners and investors; (ii) actual or expected significant dispositions of Bitcoin by large holders, including the expected liquidation of digital assets associated with entities that have filed for bankruptcy protection and the transfer and sale of Bitcoins associated with significant hacks, seizures, or forfeitures; and (iii) actual or perceived manipulation of the spot or derivative markets for Bitcoin or spot Bitcoin ETPs;
negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, Bitcoin or the broader digital assets industry, for example, (i) public perception that Bitcoin can be used as a vehicle to circumvent sanctions, including sanctions imposed on Russia or certain regions related to the ongoing conflict between Russia and Ukraine, or to fund criminal or terrorist activities; (ii) expected or pending civil, criminal, regulatory enforcement or other high profile actions against major participants in the Bitcoin ecosystem; (iii) additional filings for bankruptcy protection or bankruptcy proceedings of major digital asset industry participants, such as the bankruptcy proceeding of FTX Trading Ltd. (“FTX Trading”) and its affiliates; and (iv) the actual or perceived environmental impact of Bitcoin and related activities, including environmental concerns raised by private individuals, governmental and non-governmental organizations, and other actors related to the energy resources consumed in the Bitcoin mining process;
changes in consumer preferences and the perceived value or prospects of Bitcoin;
competition from other digital assets that exhibit better speed, security, scalability, or energy efficiency, that feature other more favored characteristics, that are backed by governments, including the U.S. government, or reserves of fiat currencies, or that represent ownership or security interests in physical assets;
since stablecoins are often used as a medium of exchange for Bitcoin purchases, a stablecoin’s substantial deviation from its intended peg or an unavailability of stablecoins may cause a decrease in the price of Bitcoin or adversely affect investor confidence in digital assets generally;
developments relating to the Bitcoin protocol, including (i) changes to the Bitcoin protocol that impact its security, speed, scalability, usability, or value, such as changes to the cryptographic security protocol underpinning the Bitcoin blockchain, changes to the maximum number of Bitcoin outstanding, changes to the mutability of transactions, changes relating to the size of blockchain blocks, and similar changes, (ii) failures to make upgrades to the Bitcoin protocol to adapt to security, technological, legal or other challenges, and (iii) changes to the Bitcoin protocol that introduce software bugs, security risks or other elements that adversely affect Bitcoin;
disruptions, failures, unavailability, or interruptions in service of trading venues for Bitcoin, such as, for example, the announcement by the digital asset exchange FTX Trading that it would freeze withdrawals and transfers from its accounts and subsequent filing for bankruptcy protection and the SEC enforcement action brought against Binance Holdings Ltd. (“Binance”), which was subsequently dismissed by the district court judge upon a joint request filed by the SEC and Binance on May 29, 2025;
the filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of digital asset custodians, exchanges, trading venues, lending platforms, investment funds, or other digital asset industry participants, such as the filing for bankruptcy protection by digital asset trading venues FTX Trading and BlockFi and digital asset lending platforms Celsius Network and Voyager Digital Holdings in prior years, and the prior exit of Binance from the U.S. market as part of its settlement with the Department of Justice and other federal regulatory agencies;
regulatory, legislative, enforcement and judicial actions that adversely affect the price, ownership, transferability, trading volumes, legality or public perception of Bitcoin, or that adversely affect the operations of or otherwise prevent digital asset custodians, exchanges, trading venues, lending platforms or other digital assets industry participants from operating in a manner that allows them to continue to deliver services to the digital assets industry;
further reductions in mining rewards of Bitcoin, including reductions due to block reward halving events, which are events that occur after a specific period of time that reduce the block reward earned by “miners” who validate Bitcoin transactions (the most recent reduction in mining rewards occurred in April 2024), which may cause a decline in support for the Bitcoin network;
increases in the costs associated with Bitcoin mining, including increases in electricity costs and hardware and software used in mining, or new or enhanced regulation or taxation of Bitcoin mining, which could further increase the costs associated with Bitcoin mining, any of which may cause a decline in support for the Bitcoin network;
transaction congestion and fees associated with processing transactions on the Bitcoin network;
macroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions, and fiat currency devaluations;
developments in mathematics or technology, including in digital computing, algebraic geometry and quantum computing, that could result in the cryptography used by the Bitcoin blockchain becoming insecure or ineffective; and
changes in national and international economic and political conditions, including, without limitation, federal government policies, trade tariffs and trade disputes, the adverse impacts attributable to the current conflict between Russia and Ukraine and the economic sanctions adopted in response to the conflict, and the broadening of the Israel-Hamas conflict to other countries in the Middle East.
We face significant competition from companies with Bitcoin strategies and from spot Bitcoin ETPs.
We face competition from other public companies with Bitcoin holdings and similar strategies, as well as spot exchange traded products (ETPs) that provide direct Bitcoin exposure. Many competitors have greater financial resources, more established operating histories, and broader access to capital markets. The SEC’s approval of spot Bitcoin ETPs in January 2024 (and spot Ether ETPs in May 2024) provides investors with alternatives that may be perceived as offering “pure play” exposure to Bitcoin without the risks of an operating business or entity-level taxation. Investors may choose ETPs over our Common Stock, potentially affecting demand and creating premium or discount volatility relative to our Bitcoin holdings. Unlike ETPs, we do not seek to track the value of underlying Bitcoin, do not benefit from certain Exchange Act exemptions, and are not required to provide daily transparency. Increased competition may lead to downward pressure on our Common Stock price and impair our ability to achieve strategic objectives.
Future developments regarding the treatment of crypto assets for U.S. and foreign tax purposes could adversely impact our business.
The tax treatment of Bitcoin and other digital assets is subject to significant uncertainty and evolving guidance from U.S. federal, state, and local tax authorities, as well as foreign tax authorities. Changes in tax laws, regulations, or interpretations could have a material impact on our business, including our ability to acquire, hold, or dispose of Bitcoin in a tax-efficient manner. For example, future legislation or regulatory guidance could result in the imposition of new or increased taxes on the acquisition, holding, or transfer of Bitcoin, or could require us to report additional information to tax authorities. In addition, differences in the tax treatment of digital assets across jurisdictions could create compliance challenges and increase our administrative and operational costs. Any adverse developments in the tax treatment of digital assets could reduce the attractiveness of our business model, increase our tax liabilities, and negatively affect our financial results and the value of our stock.
The tax treatment of Bitcoin network forks, airdrops, and similar events is uncertain and could result in unexpected tax liabilities.
The Bitcoin network may undergo “hard forks” that result in the creation of new digital assets, and we may receive “airdrops” of new tokens or digital assets as a result of our Bitcoin holdings. The U.S. federal income tax treatment of forks and airdrops is uncertain and evolving. The IRS has issued limited guidance indicating that receipt of new cryptocurrency from an airdrop generally results in taxable income equal to the fair market value of the new cryptocurrency at the time of receipt. However, significant uncertainty remains regarding the timing of income recognition, the determination of fair market value (particularly for newly created assets with limited trading history), the tax treatment of assets received from contested or contentious forks, and the treatment of forked or airdropped assets that we are unable to access or choose not to claim. We may be required to recognize taxable income from forks or airdrops even if we do not sell the new assets, which could create cash tax liabilities without corresponding liquidity. In addition, tracking the cost basis and holding periods of forked or airdropped assets can be complex, and errors or uncertainties in our tax reporting could result in penalties or additional tax liabilities. Changes in IRS guidance or tax law, or successful challenges by the IRS to our tax positions, could result in material adverse tax consequences.
Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.
Bitcoin and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to Bitcoin and other digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of Bitcoin or the ability of individuals or institutions such as us to own or transfer Bitcoin.
The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of Bitcoin or the ability of individuals or institutions such as us to own or transfer Bitcoin. For example, within the past several years:
President Trump signed an executive order instructing a working group comprised of representatives from key federal agencies to evaluate measures that can be taken to provide regulatory clarity and certainty built on technology-neutral regulations for individuals and firms involved in digital assets, including through well-defined jurisdictional regulatory boundaries;
the SEC’s Staff Accounting Bulletin No. 122, which rescinded Staff Accounting Bulletin No. 121, directs certain entities to evaluate and account for potential losses from safeguarding crypto assets using existing generally accepted accounting principles in the United States (“GAAP”) or IFRS guidance. It also emphasizes the importance of continued disclosures related to these obligations;
the SEC has proposed changes to the SEC Custody Rule, which may require, if adopted, that public companies store their Bitcoin with a “qualified custodian,” which are typically banks, trust companies, or regulated broker-dealers that meet strict asset segregation and safeguarding standards;
the European Union adopted Markets in Crypto Assets Regulation, a comprehensive digital asset regulatory framework for the issuance and use of digital assets, like Bitcoin;
in June 2023, the United Kingdom adopted and implemented the Financial Services and Markets Act 2023, which regulates market activities in “cryptoassets”;
in China, the People’s Bank of China and the National Development and Reform Commission have outlawed cryptocurrency mining and declared all cryptocurrency transactions illegal within the country. Other jurisdictions, including Egypt, Morocco and the Dominican Republic, have also made the use of Bitcoin illegal. If the use of Bitcoin is made illegal in other jurisdictions, particularly where Bitcoin is currently traded in heavy volumes, the available market for Bitcoin may contract. Additionally, if another government with considerable economic power were to ban digital assets or related activities, this could have further impact on the price of Bitcoin. As a result, the markets and opportunities discussed herein may not reflect the markets and opportunities available to us in the future.
Since 2018, the SEC has initiated a number of crypto and digital-asset-related enforcement actions. While the SEC has since requested the dismissal of several of these cases, the SEC or other regulatory agencies may initiate similar actions in the future, which could materially impact the price of Bitcoin and our ability to own or transfer Bitcoin. In January 2025, the SEC launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets. Since then, the task force has sought written input and hosted roundtables with market participants to further task force goals of drawing clear regulatory lines, providing paths to registration, crafting disclosure frameworks, and deploying enforcement resources judiciously. We cannot predict the output of the new crypto task force or whether any recommendations will be adopted by the SEC or maintained under future administrations.
It is not possible to predict whether, or when, new laws will be enacted that change the legal framework governing digital assets or provide additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services to the digital assets industry, or how any new laws or regulations, or changes to existing laws or regulations, might impact the value of digital assets generally and Bitcoin specifically. The consequences of any new law or regulation relating to digital assets and digital asset activities could adversely affect the market price of Bitcoin, as well as our ability to hold or transact in Bitcoin, and in turn adversely affect the market price of our listed securities.
Moreover, the risks of engaging in a Bitcoin treasury strategy are relatively novel and have created, and could continue to create, complications due to the lack of experience that third parties have with companies engaging in such a strategy.
The growth of the digital assets industry in general, and the use and acceptance of Bitcoin in particular, may also impact the price of Bitcoin and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of Bitcoin may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to Bitcoin, institutional demand for Bitcoin as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for Bitcoin as a store of value or means of payment, and the availability and popularity of alternatives to Bitcoin. Even if growth in Bitcoin adoption occurs in the near or medium-term, there is no assurance that Bitcoin usage will continue to grow over the long-term.
The liquidity of Bitcoin may also be reduced and damage to the public perception of Bitcoin may occur if financial institutions were to deny or limit banking services to businesses that hold Bitcoin, provide Bitcoin-related services or accept Bitcoin as payment, which could also decrease the price of Bitcoin. The liquidity of Bitcoin may also be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for Bitcoin and other digital assets.
The concentration of Bitcoin ownership and market dynamics may create additional risks.
A significant portion of Bitcoin supply is held by a small number of holders, making the network more susceptible to manipulation. Malicious actors could potentially structure attacks to gain control of majority processing power, enabling double-spending, blocking transactions, or preventing valid new blocks. Unlike traditional securities markets, Bitcoin lacks a consolidated pricing mechanism, and prices can vary significantly across exchanges, creating opportunities for arbitrage or manipulation. The Bitcoin market may be susceptible to wash trading, spoofing, and other manipulative practices, particularly on unregulated exchanges. Bitcoin trading venues are relatively new and may experience fraud, security failures, or operational problems. Negative perception or instability in Bitcoin markets could result in a decline in confidence and greater price volatility, adversely affecting our Common Stock price.
The emergence of competing digital assets and negative industry developments may adversely affect Bitcoin and our business.
Various digital assets compete with Bitcoin, including alternative cryptocurrencies using different validation mechanisms (such as Ethereum’s proof-of-stake), stablecoins backed by fiat currencies, and central bank digital currencies (CBDCs) being developed by governments including China, the United States, the United Kingdom, and the European Union. If these alternatives are perceived as superior to Bitcoin, they could gain market share and decrease Bitcoin’s price. Additionally, the cryptocurrency industry has experienced high-profile negative developments including fraud, theft, Security Incidents, and platform failures. Negative publicity and heightened scrutiny of the industry could adversely impact investor sentiment toward us, even if we are not directly involved, potentially resulting in reduced stock demand, increased volatility, and difficulty raising capital.
Our Bitcoin holdings may be less liquid than cash and may not serve as an adequate source of liquidity.
The Bitcoin market has been characterized by significant volatility, limited liquidity and trading volumes compared to sovereign currency markets, and potential susceptibility to market abuse. During market instability, we may not be able to sell Bitcoin at favorable prices or at all. Bitcoin we hold with custodians will not enjoy the same protections as cash or securities deposited with Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation (“SIPC”) regulated institutions. We may be unable to enter into financing transactions collateralized by our Bitcoin or otherwise generate funds from holdings during market instability. The concentration of our assets in Bitcoin limits risk mitigation and any significant price declines could have a more pronounced impact than a diversified portfolio. Our direct Bitcoin holdings combined with investments in other companies maintaining Bitcoin as a treasury asset heighten our concentration in Bitcoin-related price risk, potentially magnifying losses and increasing result volatility.
Environmental, geopolitical, and operational factors may adversely affect our Bitcoin strategy.
Bitcoin mining requires substantial electricity, and environmental concerns regarding Bitcoin’s carbon footprint have attracted regulatory and investor attention. ESG-mandated institutional investors may be restricted from investing in companies with significant Bitcoin holdings, reducing demand for our stock. The SEC has adopted climate-related disclosure requirements that may require reporting on environmental impacts of our Bitcoin holdings. Geopolitical developments and government actions could restrict our ability to hold, transfer, or transact in Bitcoin, or result in seizure or forfeiture of holdings. Law enforcement agencies have authority to seize Bitcoin associated with criminal activity, and although we implement compliance policies, there can be no assurance our Bitcoin will never be associated with illicit activity. Policy discussions regarding a U.S. Strategic Bitcoin Reserve could significantly affect Bitcoin markets and increase price volatility.
We may be unable to obtain adequate insurance coverage or attract specialized personnel for our Bitcoin strategy.
Insurance coverage for digital assets is limited and may not be available on commercially reasonable terms. The insurance market for digital asset risks is undeveloped, and insurers may be unwilling to provide coverage for theft, hacking, or fraud. Our Bitcoin strategy may increase costs or limit availability of directors and officers (“D&O”) insurance, errors and omissions (“E&O”) insurance, and cyber liability insurance. If we are unable to obtain adequate coverage, we could be exposed to significant uninsured losses. Additionally, successful execution of our strategy depends on attracting and retaining personnel with specialized expertise in digital assets, blockchain technology, and cryptocurrency custody. The market for such expertise is highly competitive, and if we are unable to attract, retain, or develop qualified personnel, our ability to manage holdings and respond to security threats could be materially impaired.
If we utilize our Bitcoin holdings in DeFi protocols or other blockchain applications, we may be exposed to additional technological risks.
We may utilize Bitcoin holdings in decentralized finance (“DeFi”) protocols, wrapped Bitcoin products, or other blockchain-based applications to generate yield or enhance liquidity. These activities would expose us to additional risks including smart contract vulnerabilities that could result in loss of Bitcoin. Smart contracts may contain bugs or design flaws exploitable by malicious actors. Wrapped Bitcoin and cross-chain bridge protocols have been targets of significant hacks resulting in billions of dollars in industry-wide losses. The DeFi ecosystem is largely unregulated and operates without traditional consumer protections. If we participate in DeFi protocols and experience losses due to smart contract failures, hacks, or protocol insolvency, we may have limited or no recourse to recover assets.
If we elect to use derivative instruments to hedge the price risk of holding Bitcoin, such derivatives are highly volatile and subject to market and liquidity risks, which could negatively impact our Bitcoin strategy.
We have and may continue to invest and trade in a variety of derivative instruments to hedge the price risk associated with Bitcoin. Derivatives, such as futures and swaps, are financial instruments or arrangements in which the risk and return are related to changes in the value of other assets, reference rates or indices. These instruments are highly volatile and expose investors to a high risk of loss. The low initial margin deposits normally required to establish a position in such instruments permit a high degree of leverage. As a result, depending on the type of instrument, a relatively small movement in the price of a contract may result in a profit or a loss which is high in proportion to the amount of funds actually placed as initial margin and may result in unquantifiable further loss exceeding any margin deposited. Our ability to profit or avoid risk through investment or trading in derivatives will depend on our ability to anticipate changes in the underlying assets, reference rates or indices. Engaging in hedging may result in poorer overall performance for us than we could have achieved had we not engaged in such hedging transactions. In addition, although we may utilize a variety of instruments, including options and other derivatives, for hedging and risk management purposes, we are not obligated to, and may not, hedge against certain risks. Furthermore, our portfolio may be exposed to risks that cannot be hedged. Use of hedging and risk management products may also increase our regulatory burden and costs of compliance.
The trading strategy we implemented with the Kraken Trading Wallet (as defined below) entails substantial risk, and there can be no assurance that the Kraken Trading Wallet will achieve its investment objectives.
On January 30, 2026, we entered into that certain First Amendment to the Master Loan Agreement, which amends that certain Master Loan Agreement, dated as of December 3, 2025 (the “Master Loan Agreement”), by and between Nakamoto Holdings, Inc. and Kraken to establish a designated trading wallet for an options-writing strategy on Bitcoin, including selling covered calls and cash-secured puts (the “Kraken Trading Wallet”). Options are complex instruments and can behave like leveraged instruments. There can be no assurance that the Kraken Trading Wallet will achieve its investment objectives, and substantial investment losses are possible. Losses may exceed the Kraken Trading Wallet’s assets. As a result, losses may occur rapidly and may be magnified by volatility, liquidity constraints, and margin requirements. The strategy may not perform as expected in stressed markets or when market conditions differ from those historically observed. In particular, volatility and changes in the price of Bitcoin (including outside of U.S. trading hours) may overwhelm financial risk mitigation models, and sudden changes in implied volatility, skew, or correlations may produce losses that materially exceed recent historical experience. Offshore derivatives venues may implement automatic deleveraging, forced close-outs, collateral haircuts, or sudden changes to risk parameters during market stress, any of which could accelerate losses or impair our ability to post margin in time to avoid liquidation.
Selling covered call options may limit upside participation and expose our Company to losses during periods of increased volatility.
Selling covered call options limits upside participation and may result in the Kraken Trading Wallet being “called away” above the strike price, thereby foregoing gains during sharp Bitcoin rallies. Short call exposure entails negative gamma and vega, and rising volatility or rapid price movements may increase losses or the cost to close or roll positions. Position limits, exchange or dealer risk controls, and reduced liquidity near option expirations may further impede the ability to adjust positions. In addition, settlement frictions, pin risk, and hard-to-borrow dynamics around expirations may cause unexpected assignments, partial fills, or inability to source or deliver reference assets at reasonable prices, resulting in realized losses or elevated transaction costs.
Selling cash-secured put options exposes the Kraken Trading Wallet to significant downside risk and potential forced liquidation.
Selling cash-secured put options exposes the Kraken Trading Wallet to the downside risk of Bitcoin. Large or rapid downward price movements may result in assignment or realized losses that exceed the premiums received, increase margin requirements, and trigger forced liquidations if collateral is insufficient. Rolling positions down or out may be costly or unavailable during periods of market stress. Certain venues may also apply dynamic collateral haircuts or widen margin add-ons on short notice, which could lead to forced de-risking or liquidations at unfavorable prices even when the account remains economically solvent on a mark-to-market basis.
We will be exposed to the default risk of our clearing broker if we hedge the price risk of Bitcoin through the purchase of futures contracts.
If we use a clearing broker to help manage financial transactions — such as buying or selling Bitcoin futures contracts to hedge against Bitcoin price swings — then we will be exposed to the clearing broker’s credit risk. Under the CEA and CFTC regulations, futures contracts must be cleared through a clearing broker known as a registered futures commission merchant (“FCM”). FCMs hold a certain amount of the customer collateral that customers deposit in connection with their futures trading, and are responsible for posting that collateral to the clearinghouse on the customer’s behalf when the clearinghouse issues a margin call. FCMs are required to maintain such collateral and all customer assets in a segregated account. If the FCM fails to do so, or is unable to satisfy a substantial deficit in a customer account, its customers (including us) may be subject to risk of loss of their funds in the event of the FCM’s insolvency. In such event, under the current U.S. Bankruptcy Code, the FCM’s customers (including us) are entitled to recover only a proportional share of all property available for distribution to all of that FCM’s customers. We may therefore be exposed to material losses in the event of an FCM’s or fellow FCM customer’s default or insolvency.
We may be exposed to counterparty, clearing, and concentration risk through exclusive trading with a single platform and affiliated dealer. If such single platform or affiliated dealer is based outside of the U.S. we may be exposed to additional legal and regulatory risks.
The Kraken Trading Wallet serves as collateral for our loan with Kraken, and transactions are executed exclusively with Kraken’s affiliated offshore swap dealer pursuant to the trading documentation, resulting in a concentration of counterparty risk. The financial condition, risk management practices, or rehypothecation practices of Kraken and our trading wallet advisor may adversely affect recoveries. Netting and close-out rights may be stayed or limited by insolvency or resolution regimes. Customer assets held at trading or custody platforms may not benefit from insurance protections (such as FDIC or SIPC coverage) and, in an insolvency, customer recoveries may be limited, delayed, or based on fiat currency claims rather than in-kind digital asset returns, which could lead to further losses and the forgoing of subsequent price appreciation.
In addition, offshore venues and dealers, like Kraken’s offshore swap dealer for the Kraken Trading Wallet, may be subject to non-U.S. legal regimes with different customer protections, segregation requirements, and insolvency outcomes. Enforcement of contractual rights and recovery of assets may be uncertain, delayed, or unavailable. Legal or regulatory actions in one or more jurisdictions could impair our ability to acquire, own, hold, sell, or use certain digital assets or to exchange them for fiat currency, and could restrict or prohibit the operation of particular venues or products on which the we rely.
Qualified Financial Contract Stay rules may restrict our ability to liquidate our positions or exercise default rights in the event that a swap counterparty becomes insolvent.
Under regulations issued by certain U.S. banking regulators that are currently in effect, certain large U.S. financial institutions and their subsidiaries, as well as the U.S. branches or subsidiaries of certain large non-US financial institutions, are required to amend the default and transfer provisions of their “Qualified Financial Contracts” (“QFCs”), and to ensure that future QFCs comply with the relevant regulations.
QFCs include swaps and repurchase agreements (among other types of contracts) and guarantees and other forms of credit enhancement for such contracts, that receive certain favorable treatment under the U.S. Bankruptcy Code by permitting market participants (like us) to avoid the otherwise-applicable “automatic stay” provisions of the Bankruptcy Code, and terminate the contracts in the event of the financial institution’s or its guarantor’s bankruptcy. The purpose of these requirements is to ensure that, in the event of a large financial institution’s bankruptcy, or the bankruptcy of a guarantor or covered affiliate, QFC counterparties do not simultaneously terminate their positions and cause a liquidity shortfall before the financial institution’s affiliates and/or federal regulators are able to resolve the defaulting entity in an orderly fashion.
As a result of these regulations, if we enter into QFCs with a covered financial institution, and that financial institution, its guarantor or a covered affiliate becomes bankrupt (i.e., it becomes subject to a receivership, insolvency, liquidation, resolution or similar proceeding), we may be restricted from immediately terminating that agreement, which could lead to losses on our positions.
In addition, various foreign jurisdictions have adopted comparable rules, including France, Germany, Japan, Switzerland and the United Kingdom. If we enter into QFCs with a covered financial institution in any of those foreign jurisdictions, the restrictions on immediately terminating QFCs could lead to a negative effect on our business.
We may face risks relating to the custody of our Bitcoin, including the loss or destruction of private keys required to access our Bitcoin and Security Incidents or other data loss relating to our Bitcoin.
We intend to hold our Bitcoin with regulated custodians at U.S.-based, institutional-grade custodians that have demonstrated records of regulatory compliance and information security. We do not anticipate that our custodial services contracts will restrict our ability to reallocate our Bitcoin among our custodians, and our Bitcoin holdings may be concentrated with a single custodian from time to time. If there is a decrease in the availability of digital asset custodians that we believe can safely custody our Bitcoin, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our Bitcoin, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected.
Our insurance may only cover losses of a small fraction of the value of the entirety of our Bitcoin holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we will have or that such coverage will cover any losses with respect to our Bitcoin. Moreover, our use of custodians exposes us to the risk that the Bitcoin our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Bitcoin. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Bitcoin.
Bitcoin is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the Bitcoin is held. While the Bitcoin blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the Bitcoin held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the Bitcoin held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a Security Incident. The Bitcoin and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to Security Incidents, or other malicious activities.
We may sustain losses that cannot be recovered through insurance or other preventative measures.
There is no assurance that we will not incur uninsured liabilities and losses as a result of the conduct of its business. While we currently have some liability insurance coverage, it does not have broad coverage at high levels. For example, our insurance may only cover losses of a small fraction of the value of the entirety of our Bitcoin holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we will have or that such coverage will cover losses with respect to our Bitcoin. We plan to continue to review our liability coverage in order to insure against potential major insurable liabilities. Should uninsured losses occur, stockholders could lose their invested capital.
Regulatory change determining that Bitcoin is being offered and sold as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940 and could adversely affect the market price of Bitcoin and the market price of our listed securities.
A significant portion of our assets will be concentrated in our Bitcoin holdings. While senior SEC officials have stated their view that Bitcoin is not a “security” for purposes of the federal securities laws, a contrary determination by the SEC, or a determination that our Bitcoin is being offered and sold as a security, could lead to our classification as an “investment company” under the Investment Company Act of 1940. In addition, in certain circumstances the acquisition of minority interests in other entities without the application of exceptions under the Investment Company Act of 1940 could lead to our classification as an “investment company”. Any classification of the Company or its subsidiaries as an investment company could subject us to significant additional regulatory controls that could have a material adverse effect on our business, operations, and ability to execute on our Bitcoin strategy, and may also require us to substantially change the manner in which we conduct our business.
In addition, any additional regulatory restrictions imposed by such determinations could adversely affect the market price of Bitcoin and in turn adversely affect the market price of our listed securities.
We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.
Mutual funds, ETFs and their directors and management are subject to extensive regulation as “investment companies” and “investment advisers” under U.S. federal and state law; this regulation is intended for the benefit and protection of investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of or changes to our Bitcoin strategy, our use of leverage, the manner in which our Bitcoin is custodied, our ability to engage in transactions with affiliated parties and our operating and investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies and investment advisers. Our Board has broad discretion over the investment, leverage and cash management policies it authorizes, whether in respect of our Bitcoin holdings or other activities we may pursue, and has the power to change our current policies, including our strategy of acquiring and holding Bitcoin.
Our Bitcoin strategy exposes us to risk of non-performance by counterparties.
Our Bitcoin strategy exposes us to the risk of non-performance by counterparties, whether contractual or otherwise. Risk of non-performance includes inability or refusal of a counterparty to perform because of a deterioration in the counterparty’s financial condition and liquidity or for any other reason. For example, our execution partners, custodians, or other counterparties might fail to perform in accordance with the terms of our agreements with them, which could result in a loss of Bitcoin, a loss of the opportunity to generate funds, or other losses.
Our primary counterparty risk with respect to our Bitcoin is custodian performance obligations under the custody arrangements we have entered into. A series of relatively recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry, including the filings for bankruptcy protection by Three Arrows Capital, Celsius Network, Voyager Digital, FTX Trading and Genesis Global Capital, among others, and the filing and subsequent settlement of a civil fraud lawsuit by the New York Attorney General against Genesis Global Capital, its parent company Digital Currency Group, Inc., and former partner Gemini Trust Company have highlighted the perceived and actual counterparty risk applicable to digital asset ownership and trading. Although these bankruptcies, closures and liquidations have not resulted in any loss or misappropriation of our Bitcoin, nor have such events adversely impacted our access to our Bitcoin, legal precedent created in these bankruptcy and other proceedings may increase the risk of future rulings adverse to our interests in the event one or more of our custodians becomes a debtor in a bankruptcy case or is the subject of other liquidation, insolvency or similar proceedings.
While our custodians are subject to regulatory regimes intended to protect customers in the event of a custodial bankruptcy, receivership or similar insolvency proceeding, no assurance can be provided that our custodially-held Bitcoin will not become part of the custodian’s insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings. Additionally, if we pursue any strategies to create income streams or otherwise generate funds using our Bitcoin holdings, we would become subject to additional counterparty risks. Any significant non-performance by counterparties, including in particular the custodians with which we custody substantially all of our Bitcoin, could have a material adverse effect on our business, prospects, financial condition, and operating results.
We may pursue strategies to generate income or liquidity from our Bitcoin holdings, such as lending, staking, or entering into other arrangements, which could significantly increase our exposure to counterparty, credit, and operational risks.
In addition to the risks associated with the custody of its Bitcoin, we may from time to time pursue strategies to generate income or liquidity from our Bitcoin holdings, including lending Bitcoin to third parties, entering into repurchase or derivative arrangements, staking assets (including other cryptocurrency assets, although Bitcoin itself does not natively support staking), or using its holdings in other ways that may involve the transfer or encumbrance of digital assets. These strategies inherently involve heightened counterparty risk, particularly where our Bitcoin is transferred to or held by third parties for purposes of collateralization, lending, or income generation. Any such arrangements could expose us to the risk of loss in the event of the counterparty’s default, insolvency, fraud, or mismanagement. In addition, these activities may subject us to complex legal, regulatory, and tax regimes that continue to evolve and remain uncertain. If a counterparty fails to return our Bitcoin as expected, or if our rights in such arrangements are not enforceable in the event of insolvency or other adverse proceedings, we could suffer substantial losses. These risks could have a material adverse effect on our business, financial condition, and results of operations.
Risks Related to Our Financial Condition, Indebtedness, and Capital Requirements
We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. In connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2025, we identified a material weakness in our internal controls over financial reporting. Specifically, the material weakness identified related to (a) general segregation of duties, including adequate segregation of duties within certain finance and accounting processes, including with respect to the preparation, review, and approval of journal entries, (b) a lack of formalized and documented policies and procedures for certain key financial reporting processes, including a formal risk assessment process and sufficient documentation evidencing the performance and review of certain recurring controls, including the completeness and accuracy of information used in the operation of such controls, and (c) lack of sufficient in-house finance and accounting personal with appropriate experience in designing, implementing, operating and documenting effective internal controls over financial reporting commensurate with the Company’s financial reporting requirements. Although these material weaknesses identified did not result in any material misstatements in our condensed consolidated financial statements for the periods presented in this Annual Report on Form 10-K and there were otherwise no changes to our previously issued financial statements, our management concluded that as a result of the material weakness in our internal control over financial reporting that existed as of December 31, 2025, our disclosure controls and procedures were not effective as of December 31, 2025.
We have begun the process of, and we are focused on, designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate the material weaknesses. However, we cannot assure you that the plans we are making will be sufficient to remediate the material weakness or avoid the identification of additional material weaknesses in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our consolidated financial statements that could result in a restatement of our previously issued financial statements and could cause us to fail to meet our periodic reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our Common Stock.
If we fail to maintain an effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, our stockholders could lose confidence in our financial results, which could harm our business and the value of our Common Stock.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) requires us to establish and maintain an adequate internal control structure and procedures for financial reporting and to evaluate and report on such controls.
Our internal controls and financial reporting are not subject to attestation by our independent registered public accounting firm pursuant to the exemption provided to issuers that are not “large accelerated filers” or “accelerated filers” under the Dodd-Frank Act of 2010. However, our Annual Reports on Form 10-K must contain an annual assessment by management of the effectiveness of our internal control over financial reporting and must include disclosure of any material weaknesses in internal control over financial reporting that we have identified. As discussed above, in connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2025, we identified a material weakness in our internal controls over financial reporting, and have begun the process of designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate the material weaknesses.
We cannot be certain that we will be successful maintaining adequate internal controls over our financial reporting and financial processes in the future or remediating any material weaknesses that we identify. We may in the future discover areas of our internal controls that need improvement. Additionally, the existence of any material weakness or significant deficiency requires management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. Furthermore, to the extent our business grows, our internal controls may become more complex, and we would require significantly more resources to ensure our internal controls remain effective.
Therefore, we cannot assure you that material weaknesses or significant deficiencies will not exist or otherwise be discovered in the future. If material weaknesses or other significant deficiencies continue to occur, such weaknesses or deficiencies could result in misstatements of our results of operations, restatements of our financial statements, a decline in the market value of our Common Stock, or other material adverse effects on our business, reputation, results of operations, financial condition or liquidity.
Our Bitcoin operations and digital asset treasury are new for our Company, and our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our Bitcoin operations or holdings.
We implemented our Bitcoin treasury strategy shortly after the closing of the Nakamoto Merger and substantially expanded our Bitcoin related operations upon closing the Mergers, and our historical financial statements do not reflect the potential variability in earnings we may experience from holding or selling significant amounts of Bitcoin or having business operations that may be impacted by the price of Bitcoin. The price of Bitcoin has historically been subject to dramatic fluctuations and is highly volatile. Additionally, we may expand our operations to include other income streams and otherwise generate funds using our Bitcoin holdings. If we expand such operations, additional risks related to such strategies, including counterparty risks, could arise.
Due to our limited operating history and the concentration of our Bitcoin holdings, it will be difficult to evaluate our business and future prospects, and we may not achieve or maintain profitability.
We have a limited operating history, particularly with respect to our current business model, which is highly concentrated in the acquisition and holding of Bitcoin. As a result, there is limited historical information available to evaluate our business, our management’s ability to execute our strategy, or our prospects for growth and profitability. The lack of a diversified operating history increases the difficulty for investors and analysts to assess our performance, business model viability, and the likelihood of achieving or maintaining profitability. Our financial results and prospects are highly dependent on the value and performance of our Bitcoin holdings, which are subject to significant volatility and risk. If we are unable to effectively manage our Bitcoin portfolio, respond to market changes, or adapt our business strategy, we may not achieve or sustain profitability, which could adversely affect our Common Stock price and investment value.
Our level and terms of indebtedness could adversely affect our ability to raise additional capital, fund operations, and take advantage of new business opportunities, and we may be unable to service or refinance our debt.
On December 3, 2025, Nakamoto Holdings, entered into a Master Loan Agreement with Kraken pursuant to which Kraken may, from time to time, extend loans of fiat or digital currency to Nakamoto Holdings on the terms set forth in the Master Loan Agreement and one or more loan term sheets executed thereunder (each, a “Loan Term Sheet”). Pursuant to the Loan Term Sheets dated December 4, 2025 and December 9, 2025, Kraken extended a fixed-term loan in an aggregate principal amount of 210,000,000 USDT (the “Loan”), bearing interest at a rate of 8.0% per annum, payable in USDT. The Loan matures on December 4, 2026, subject to earlier prepayment or acceleration in accordance with the Master Loan Agreement and applicable Loan Term Sheets. To secure the Loan, we were required to grant Kraken a security interest in Bitcoin owned by Nakamoto Holdings (the “Bitcoin Collateral”) and held pursuant to a custody and account control agreement in favor of Kraken. The Loan is subject to ongoing margin maintenance requirements, collateral call thresholds, and liquidation triggers, each calculated by reference to the market value of the Bitcoin collateral relative to the outstanding balance of the Loan.
The Loan, future indebtedness and associated interest expense could have important consequences to us, including:
limiting our ability to use a substantial portion of our cash flow from operations in other areas of our business, including for acquisition of additional Bitcoin, working capital, research and development, expanding our infrastructure, capital expenditures, and other general business activities and investment opportunities in us, because we must dedicate a substantial portion of these funds to pay interest on and/or service our debt;
limiting our ability to obtain additional financing in the future for acquisition of additional Bitcoin, working capital, capital expenditures, debt service, acquisitions, execution of our strategy, and other expenses or investments planned by us;
limiting our flexibility and our ability to capitalize on business opportunities and to react to competitive pressures and adverse changes in government regulation, our business, and our industry;
increasing our vulnerability to a downturn in our business and to adverse economic and industry conditions generally;
placing us at a competitive disadvantage as compared to our competitors that are less leveraged; and
limiting our ability, or increasing the costs, to refinance indebtedness.
We may be unable to service or refinance our indebtedness, specifically the Loan, which could cause us to default on our debt obligations and could force us into bankruptcy or liquidation.
Our ability to make scheduled payments on and refinance our indebtedness depends on our financial and operating performance, which is influenced by general economic, financial, competitive, legislative, regulatory, and other risks beyond our control, including the availability of financing in U.S. banking and capital markets. If our cash flows and capital resources are insufficient to fund our debt service obligations or to secure acceptable refinancing of the Loan, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital, or restructure our indebtedness. We cannot assure you that future borrowings will be available to us in an amount sufficient to enable us to service our indebtedness, including the Loan, to refinance our indebtedness, or to fund our other liquidity needs. Any refinancing could be at higher interest rates and may require more onerous covenants. In addition, our Bitcoin acquisition strategy anticipates that we may issue additional debt in future periods to finance additional purchases of Bitcoin, but if we are unable to generate sufficient cash flow to service our debt and make necessary capital expenditures, we may be required to sell Bitcoin. Whether we will be able to successfully repay or refinance the Loan will depend on market conditions, our financial performance, and other factors. Failure to make payments of interest and principal on outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness.
Upon an event of default under any of our indebtedness, holders of the defaulted indebtedness could elect to declare all funds borrowed to be due and payable and enforce their security interests on substantially all of our assets and the assets of our subsidiary guarantors. Similarly, upon an event of default under the Master Loan Agreement, Kraken could declare all outstanding principal, together with accrued and unpaid interest, due and payable under the Loan and enforce its security interest on the Bitcoin Collateral. Any of these events could in turn result in cross defaults under any future indebtedness we may incur. We may not have sufficient funds available to pay amounts due upon any such event of default, particularly if there has been a decrease in the market value of our Bitcoin holdings. Any financing we undertake under such circumstances could result in substantial dilution of existing stockholders, and if we are unable to obtain such financing, we could be forced into bankruptcy or liquidation.
Our subsidiary Nakamoto Holdings may depend on cash contributions from us or sales of Bitcoin to meet its obligations under the Master Loan Agreement if its operations do not result in sufficient operating revenue, and we may be required to contribute additional Bitcoin collateral if the value of Bitcoin declines.
Nakamoto Holdings primarily holds Bitcoin and certain USDT proceeds retained from the Loan. As of December 31, 2025, Nakamoto Holdings had no operations other than purchasing and holding Bitcoin, administering the Loan and making minority investments in Bitcoin companies. Following the shift in our business strategy from healthcare to Bitcoin related business, Kraken permitted Nakamoto Holdings to work with a vendor to use collateralized Bitcoin to execute on a covered call strategy to generate yield on collateralized Bitcoin. Our principal sources of funds to make payments under the Master Loan Agreement are proceeds from the yield strategy, capital contributions, loans, or other cash payments from us, and sales of Bitcoin, which may be constrained by the collateral maintenance requirements under the Master Loan Agreement. The Master Loan Agreement has a stated maturity date of December 4, 2026 but includes margin-based collateral maintenance requirements that require us to maintain a minimum level of Bitcoin collateral relative to the outstanding Loan amount. We are required to maintain a loan-to-value ratio on an ongoing basis. If the market value of Bitcoin declines below certain loan-to-value ratios, Kraken may require us to deposit additional Bitcoin as collateral, repay a portion of the Loan, or declare Nakamoto Holdings in default and liquidate some or all of the Bitcoin Collateral without prior notice to us. As of March 23, 2026, approximately 4,405 Bitcoins were held in the Bitcoin Collateral account and approximately 653 of our aggregate Bitcoins remained unencumbered. We may not have sufficient funds available to pay amounts owed under the Master Loan Agreement when due, and we may not be able to raise additional funds on acceptable terms or at all.
We rely on funds from our subsidiaries to meet our cash needs and service our indebtedness, and we may need additional financing in the future.
We depend on dividends, distributions, and other payments from our subsidiaries to fund our obligations, including those arising under the Master Loan Agreement, and to meet our cash needs. The operating results of our subsidiaries at any given time may not be sufficient to make such payments to us to allow us to make payments on our indebtedness. Nakamoto Holdings, which holds the Bitcoin pledged as collateral to secure the Loan, may be prohibited from providing dividends, distributions, or other payments to us. As of March 23, 2026, approximately 4,405 Bitcoins held by Nakamoto Holdings are pledged as collateral under the Master Loan Agreement that secures our obligations under the Master Loan Agreement. In addition, transfers of assets between our subsidiaries and from our subsidiaries to us may be subject to legal, regulatory, or contractual restrictions.
We may need additional financing in the future, which may not be available when needed or may be costly and dilutive.
We may require additional financing to support our working capital needs in the future. The amount of additional capital we may require, the timing of our capital needs and the availability of financing to fund those needs will depend on a number of factors, including our strategic initiatives and operating plans, the performance of our business and the market conditions for debt or equity financing. Additionally, the amount of capital required will depend on our ability to meet our sales goals and otherwise successfully execute our operating plan. We believe it is imperative that we meet these sales objectives in order to lessen our reliance on external financing in the future. We intend to continually monitor and adjust our operating plan as necessary to respond to developments in our business, our markets and the broader economy. Although we believe various debt and equity financing alternatives will be available to us to support our working capital needs, financing arrangements on acceptable terms may not be available to us when needed.
Additionally, these alternatives may require significant cash payments for interest and other costs or could be highly dilutive to our existing stockholders. Any such financing alternatives may not provide us with sufficient funds to meet our long-term capital requirements. If necessary, we may explore strategic transactions that we consider to be in the best interest of our Company and our stockholders, which may include, without limitation, public or private offerings of debt or equity securities, a rights offering, and other strategic alternatives; however, these options may not ultimately be available or feasible when needed.
Despite our current level of indebtedness, we may incur substantially more debt, which could further exacerbate these risks.
Future debt instruments may contain restrictions on incurrence of additional indebtedness and certain other transactions, but these restrictions are subject to qualifications and exceptions and we may be able to incur significant additional indebtedness. These restrictions do not prevent us from incurring obligations, such as certain trade payables and operating leases, which do not constitute indebtedness as defined under our debt instruments. To the extent we incur additional indebtedness or other obligations, the risks described herein may increase significantly.
Unrealized fair value gains on our Bitcoin holdings may cause us to become subject to the corporate alternative minimum tax under the Inflation Reduction Act of 2022, and our effective tax rate may fluctuate.
The Inflation Reduction Act of 2022 (“IRA”) imposes a 15% corporate alternative minimum tax (“CAMT”) on corporations with average annual adjusted financial statement income exceeding $1 billion for any consecutive three-tax-year period, unless an exemption applies. We may be required to adopt ASU 2023-08, under which our Bitcoin holdings must be measured at fair value with gains and losses recognized in net income each reporting period. When determining CAMT applicability and liability, adjusted financial statement income must include any unrealized gains or losses. As a result, we may be subject to CAMT in 2026 and beyond, which could result in a material tax obligation that would need to be satisfied in cash, materially affecting our financial results, including earnings and cash flow.
Accordingly, as a result of the enactment of the IRA and our potential adoption of ASU 2023-08, we may be subject to CAMT in the 2026 taxable year and beyond. If we become subject to CAMT, it could result in a material tax obligation that we would need to satisfy in cash, which could materially affect our financial results, including its earnings and cash flow, and its financial condition.
Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of amounts accrued on our financial statements.
In addition to federal income tax, we are subject to taxation in various state, local tax and non-US tax jurisdictions. As a result, our effective tax rate is derived from a combination of applicable tax rates in the locations in which we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each jurisdiction using enacted tax rates as of the balance sheet date. Nevertheless, our effective tax rate may change from year to year due to numerous factors, including changes in the mix of our profitability, if any, from jurisdiction to jurisdiction, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities, and changes in tax laws. Any of these factors could result in an effective tax rate significantly different from previous periods and may result in tax obligations in excess of amounts accrued in our financial statements.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.
The United States generally accepted accounting principles and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of matters that are relevant to our business, such as, but not limited to, stock-based compensation, inventory, revenue recognition, trade spend and promotions, and income taxes are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes to these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could adversely affect our reported financial results.
We have incurred significant operating losses and may not achieve or sustain profitability.
We have incurred significant operating losses since our inception and anticipate that we will incur continued operating losses for the foreseeable future. Our ability to achieve profitability depends on numerous factors, including the market price of Bitcoin, our ability to successfully execute our Bitcoin treasury strategy, and our ability to manage our operating expenses. Even if we achieve profitability in one or more periods, we may not be able to sustain profitability on a quarterly or annual basis. Our historical losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. If we are unable to achieve sustained profitability, the value of our Company and our Common Stock could decline significantly, and you could lose all or a portion of your investment.
We maintain our cash at financial institutions, often in balances that exceed federally insured limits, and we could experience losses on these deposits.
We maintain our cash and cash equivalents in accounts with major financial institutions in the United States. Cash balances in these accounts often exceed the FDIC insurance limits. In the event of the failure of any of the financial institutions where we maintain our cash and cash equivalents, we may incur a loss to the extent such loss exceeds FDIC insurance limits, which could have a material adverse effect on our liquidity and financial condition. Recent bank failures have heightened concerns about the stability of certain financial institutions and the banking system more broadly. While we monitor the financial stability of the institutions where we maintain our deposits, there can be no assurance that we will not experience losses on our deposits in excess of insured limits.
Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations.
Our business and financial performance may be adversely affected by unfavorable global economic conditions, including recession, inflation, deflation, rising interest rates, changes in fiscal or monetary policy, tightening of credit markets, geopolitical instability, and other macroeconomic factors. Economic downturns could negatively affect investor sentiment toward risk assets, including Bitcoin, potentially reducing the market price of our Bitcoin holdings and adversely affecting our financial condition. Additionally, adverse economic conditions could make it more difficult or expensive for us to obtain debt or equity financing, increase our borrowing costs, reduce the availability of credit, and limit our ability to execute our Bitcoin acquisition strategy. Unfavorable economic conditions could also affect the financial stability of our counterparties, including our custodians, trading partners, and lenders, increasing our exposure to counterparty risk. Any of these factors could have a material adverse effect on our business, financial condition, and results of operations.
Rising interest rates could increase our borrowing costs and adversely affect our financial condition.
Changes in interest rates could have a material impact on our business and financial condition. Rising interest rates could increase our borrowing costs on any variable-rate debt we incur, as well as the cost of refinancing our existing indebtedness when it matures. Higher interest rates could also make it more expensive for us to raise capital through debt financing to execute our Bitcoin acquisition strategy. Additionally, rising interest rates may reduce the attractiveness of Bitcoin as an investment relative to interest-bearing assets, which could negatively affect the market price of Bitcoin and, consequently, the value of our Bitcoin holdings. Conversely, falling interest rates, while potentially reducing borrowing costs, could indicate broader economic weakness that may adversely affect our business. We do not currently hedge against interest rate risk, and any significant changes in interest rates could have a material adverse effect on our financial condition and results of operations.
Our Loan is denominated in USDT, a stablecoin, and we are exposed to risks associated with the stability and regulatory treatment of USDT.
Our Loan with Kraken is denominated in USDT (Tether), a stablecoin that is designed to maintain a 1:1 peg with the U.S. dollar. If USDT were to depeg from the U.S. dollar, whether due to a loss of confidence in the issuer, regulatory action, liquidity constraints, or other factors, the value of our obligations under the Loan could become uncertain and we could experience losses. Stablecoins, including USDT, have faced regulatory scrutiny regarding the adequacy of their reserves, the transparency of their operations, and their potential systemic risks to the broader financial system. If regulators were to restrict the use of USDT or impose requirements that impair its functionality, we could face difficulties in servicing or refinancing the Loan. Additionally, if USDT were to experience significant redemption pressure or a bank run, the stablecoin could trade below its intended peg, creating uncertainty in our debt obligations. Any of these events could have a material adverse effect on our financial condition and our ability to meet our obligations under the Master Loan Agreement.
Our ability to use net operating loss carryforwards and other tax attributes may be limited.
We have incurred net operating losses (“NOLs”) that may be available to offset future taxable income, thereby reducing our future income tax liability. However, our ability to utilize these NOLs may be limited under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), which generally imposes an annual limitation on the use of NOLs, credits, and certain other tax attributes following an “ownership change.” An ownership change generally occurs if one or more stockholders (or groups of stockholders) who are each deemed to own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Our merger with Nakamoto Holdings, Inc., our prior equity issuances, and other transactions may have caused, or may cause in the future, an ownership change that could limit our ability to use our NOLs and other tax attributes. Additionally, changes in tax laws, including those enacted as part of recent tax reform, may further limit our ability to use NOLs to offset future taxable income. If our ability to use our NOLs is limited, we may be required to pay income taxes earlier than would be the case if the full amount of our NOLs were available, which could adversely affect our cash flows and financial condition.
We may be required to record impairment charges related to goodwill and other intangible assets, which could adversely affect our financial results.
We have recorded goodwill and other intangible assets on our balance sheet in connection with our acquisitions. We are required to test goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could lead to impairment of goodwill and other intangible assets include significant adverse changes in the business climate, declines in our financial condition or results of operations, an adverse action or assessment by a regulator, unanticipated competition, or a sustained decline in our Common Stock price or market capitalization. If we determine that our goodwill or other intangible assets are impaired, we would be required to record non-cash impairment charges, which could be material to our financial results. Any such impairment charge would reduce our reported earnings and could have a material adverse effect on our Common Stock price.
Inflation could adversely affect our business, financial condition, and results of operations.
Inflation has recently increased in the United States and globally, and may continue to increase in the future. Inflationary pressures could increase our operating costs, including compensation, professional services, and other expenses, and may not be fully offset by price increases or other measures. Inflation could also affect the broader economy, leading to reduced consumer and investor confidence, tighter monetary policy, and higher interest rates, any of which could adversely affect our business and the market price of Bitcoin. While Bitcoin has been characterized by some as a potential hedge against inflation, there is no assurance that Bitcoin will perform as expected in an inflationary environment, and the price of Bitcoin could decline during periods of high inflation. If we are unable to effectively manage the impact of inflation on our business, our financial condition and results of operations could be materially adversely affected.
We do not have, and may not be able to obtain, a credit rating, which could limit our access to certain financing sources and increase our borrowing costs.
We do not currently have a credit rating from any nationally recognized statistical rating organization. The absence of a credit rating may limit our ability to access certain capital markets, reduce the pool of potential lenders and investors, and result in higher borrowing costs compared to companies with investment-grade credit ratings. If we seek to obtain a credit rating in the future, there can be no assurance that we will receive a favorable rating. A non-investment grade credit rating, commonly referred to as a “junk” rating, could limit our access to the capital markets, increase our cost of borrowing, and require us to offer more onerous terms to lenders and investors. In addition, any downgrade of a credit rating we may obtain in the future could have similar adverse effects. Our inability to access the capital markets on favorable terms could have a material adverse effect on our business, financial condition, and results of operations.
We may experience working capital deficiencies that could adversely affect our operations and financial condition.
We may from time to time experience working capital deficiencies, where our current liabilities exceed our current assets. A working capital deficiency could limit our ability to fund our day-to-day operations, meet our short-term obligations, and pursue our Bitcoin acquisition strategy. While we may be able to address working capital deficiencies through equity or debt financing, asset sales, or other means, there can be no assurance that such financing or other sources of liquidity will be available on acceptable terms or at all. If we are unable to maintain adequate working capital, we may be forced to reduce or delay planned expenditures, sell assets at unfavorable prices, or take other actions that could adversely affect our business. A sustained working capital deficiency could raise substantial doubt about our ability to continue as a going concern, which would adversely affect investor confidence and could materially impact our access to capital and the trading price of our Common Stock.
Risks Related to Our Securities and being a Public Company
If we are unable to regain compliance with Nasdaq’s continued listing standards, our securities may be delisted, which could significantly limit liquidity and adversely affect our business.
Our Common Stock is traded on Nasdaq, but we must maintain certain financial, distribution, and stock price levels, including a minimum bid price of $1.00 per share. On December 10, 2025, we received notice from Nasdaq that our Common Stock was not in compliance with the minimum bid price requirement. We have until June 8, 2026, to regain compliance by maintaining a closing bid price of $1.00 or more for at least 10 consecutive business days. If we do not regain compliance, we may be eligible for additional time by transferring to the Nasdaq Capital Market, subject to meeting certain requirements and demonstrating our ability to cure the deficiency. If Nasdaq delists our securities and we are unable to list on another national securities exchange, our securities could be quoted on an over-the-counter market, which could result in reduced liquidity, classification as a “penny stock,” impaired ability to obtain financing, fewer investors and market makers, and reduced availability of trading information.
A prolonged decline in Bitcoin’s market price could cause us to fall below Nasdaq’s continued listing standards.
A significant portion of our total assets consists of Bitcoin, making the value of our assets highly sensitive to Bitcoin price fluctuations. If the market price of Bitcoin experiences a prolonged or severe decline, our total assets and stockholders’ equity could decrease substantially, potentially causing us to stay or fall below Nasdaq’s minimum requirements for continued listing. This could result in delisting proceedings, which would likely have a material adverse effect on liquidity, market price, ability to access capital markets, and ability to execute our business strategy.
If we effect a reverse stock split to regain compliance with Nasdaq’s minimum bid price requirement, it may not result in a sustained increase in our Common Stock price and could decrease the liquidity of our Common Stock.
In connection with our efforts to regain compliance with Nasdaq’s minimum bid price requirement, we may effect a reverse stock split of our Common Stock. Even if a reverse stock split is implemented, there can be no assurance that our Common Stock price will increase proportionally to the reverse split ratio or that any increase in our Common Stock price will be sustained. A reverse stock split may decrease the liquidity of our Common Stock by reducing the number of shares outstanding, which could result in a less active trading market. Additionally, the reverse stock split may be perceived negatively by the market, and investors may view it as an indication of financial distress, which could further depress our Common Stock price. The reduction in the number of shares outstanding may also leave our stockholders with “odd lots” of shares, which may be more difficult to sell and may result in greater brokerage costs. A reverse stock split will also increase the number of stockholders who own “odd lots” of fewer than 100 shares of Common Stock, which may be more difficult to sell and may increase transaction costs. There can be no assurance that a reverse stock split, if effected, will result in the intended benefits.
The price of our Common Stock has fluctuated significantly and may continue to do so, which could result in substantial losses for stockholders.
The trading price of our Common Stock has fluctuated widely and may continue to fluctuate due to factors largely outside our control, including: variations in operating results; changes in market interest rates, earnings estimates, or market valuations; actions by competitors; market reaction to indebtedness; changes in key personnel; stockholder actions; speculation in media or investment communities; and our ability to maintain Nasdaq listing. This volatility may affect the price at which you could sell shares, and you may not be able to sell at or above your purchase price. The stock market, and particularly digital asset and blockchain technology companies, have experienced extreme price and volume fluctuations often unrelated to operating performance. Such volatility could also subject us to securities class action litigation, resulting in substantial costs and diversion of management attention.
Our quarterly operating results may fluctuate significantly, which could adversely affect our Common Stock price.
We expect our operating results, revenues, and expenses to vary significantly from quarter to quarter due to a variety of factors, many of which are outside of our control. These factors include, but are not limited to, fluctuations in Bitcoin’s market price, changes in the fair value of our Bitcoin holdings, timing and size of Bitcoin purchases or sales, changes in accounting standards, and regulatory developments. Our expenses may increase as we invest in infrastructure, personnel, and compliance. We may experience periods of losses or lower-than-expected profitability, which could cause our Common Stock price to decline and make it difficult for investors to forecast future results, increasing the risk associated with an investment in us.
The value of our Common Stock depends significantly on market demand for our Bitcoin strategy, which could decline.
The market value of our Common Stock is closely tied to investor perceptions of the attractiveness and viability of our Bitcoin-focused strategy. In recent years, corporate adoption of Bitcoin has been influenced by trends and market sentiment, with some companies acquiring Bitcoin to enhance their public profiles, attract investor attention, or pursue speculative strategies unrelated to their core businesses. If market enthusiasm for corporate Bitcoin adoption wanes, or if investors view our strategy as less compelling or sustainable, demand for our stock could decline significantly. Negative publicity, regulatory scrutiny, or adverse developments affecting other companies with similar strategies could further reduce investor interest and result in a significant decline in our Common Stock value, regardless of the underlying performance of our Bitcoin holdings.
Sales of our Common Stock, including through our ATM Program, or the perception that such sales may occur, could depress our Common Stock price.
On August 26, 2025, we entered into a sales agreement pursuant to which we may offer and sell Common Stock from time to time through our ATM Program. We have discretion to vary the timing, prices, and numbers of shares sold, and investors who purchase at different times will likely pay different prices. Future sales pursuant to the ATM Program are not guaranteed and will depend on market conditions. The issuance of new shares of Common Stock, or the perception that such sales may occur, could depress the market price of our Common Stock. Additionally, sales of a substantial number of shares of Common Stock in the public market by our stockholders could adversely affect the market price and impair our ability to raise capital through future equity offerings.
Our Common Stock repurchase programs may not enhance stockholder value and will diminish our cash reserves.
On December 18, 2025, our Board approved a Common Stock repurchase program providing for repurchases of up to $10 million in shares of Common Stock, which terminated on January 31, 2026. There can be no assurance that we will adopt future share repurchase programs or that any repurchases will enhance stockholder value. Future repurchases could diminish cash reserves, impact our ability to finance growth or pursue strategic opportunities, require us to incur debt, affect trading price or volatility, reduce market liquidity, not be made at optimal prices, and cause non-compliance with financing agreement covenants.
We may need additional capital, and future securities offerings may result in dilution to existing stockholders.
To raise additional capital, we may offer shares of Common Stock or other securities through our ATM Program or other means. Securities we issue may have rights, preferences, or privileges senior to those of existing stockholders. The price per share in future transactions may be higher or lower than existing stockholders paid. Exercise or conversion of options, warrants, or convertible securities will result in additional dilution.
We do not expect to pay dividends for the foreseeable future.
We do not anticipate paying cash dividends to holders of Common Stock in the foreseeable future. We plan to retain any earnings to maintain and expand our operations. Investors must rely on sales of their Common Stock after price appreciation, which may never occur, as the only way to realize any return on their investment.
If securities analysts do not publish research about us or publish negative evaluations, our Common Stock price and trading volume could decline.
The trading market for our Common Stock may be impacted by research and reports that analysts publish about us. There is no assurance that analysts will cover us or provide favorable coverage. If analysts downgrade our stock, change their opinion, or cease coverage, we could lose visibility in the financial markets and our Common Stock price or trading volume could decline.
Outstanding warrants, if exercised, would increase shares of Common Stock eligible for resale and result in dilution.
As of March 23, 2026, we had (i) 61,704,975 prefunded warrants outstanding, (ii) 384,936 tradeable warrants outstanding, and (iii) 203,565 non-tradable warrants outstanding (collectively, the “Warrants”). Each of these securities are exercisable for shares of Common Stock at various prices. If exercised, these warrants will dilute existing stockholders and increase shares eligible for resale, which could adversely affect our Common Stock price. Our tradeable warrants are quoted on the OTC Pink Market, which is significantly more limited than Nasdaq or NYSE and may result in reduced liquidity and depressed trading prices for our warrants.
Active trading of options on our Common Stock could increase volatility in our Common Stock price and adversely affect the market for our securities.
Options on our Common Stock are traded on securities exchanges and over-the-counter markets. Activity in these markets, including hedging, arbitrage, and speculative strategies, can lead to significant buying or selling pressure and contribute to price volatility. Option expirations, changes in implied volatility, and variations in options market liquidity can exacerbate volatility in our Common Stock price. Increased volatility related to options trading could negatively affect investor confidence, impair liquidity, and adversely affect our Common Stock price regardless of operating performance.
We may be subject to securities class action litigation, which could result in substantial costs and divert management’s attention.
In the past, securities class action litigation has often been brought against companies following periods of volatility in the market prices of their securities or following announcements of significant business developments. Our Common Stock price has experienced significant volatility, and we have announced a fundamental shift in our business strategy from healthcare operations to a Bitcoin operations and treasury strategy. These factors may increase the likelihood that we will become the target of securities class action litigation. Such litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources, which could harm our business, financial condition, and results of operations. Even if we prevail in any such litigation, we may incur significant legal fees and other expenses, and such litigation could damage our reputation and negatively impact the trading price of our Common Stock.
Short selling of our Common Stock could increase the volatility of our Common Stock price and adversely affect its market price.
Short selling occurs when an investor borrows shares and immediately sells them, hoping that the share price will decline and the investor can repurchase the shares at a lower price for return to the lender. Short selling has been prevalent in securities of companies with significant exposure to digital assets, including Bitcoin. The significant short selling of our Common Stock, or the perception that such short selling may occur, may create downward pressure on the price of our Common Stock and may amplify the effect of any negative developments. Additionally, so-called “short and distort” campaigns could target our Company, where short sellers spread negative information about a company to drive down its stock price and profit from their short positions. Any such campaign could damage our reputation and adversely affect the market price of our Common Stock, regardless of the accuracy of the information disseminated. Conversely, if our Common Stock price increases rapidly, short sellers may be forced to cover their positions quickly, leading to a “short squeeze” that could result in extreme price volatility.
Equity compensation awards may result in dilution to our stockholders and adversely affect the market price of our Common Stock.
We maintain equity compensation plans under which we grant stock options, restricted stock units, and other equity-based awards to our directors, officers, and employees. We have previously and may also in the future assume equity compensation plans in connection with acquisitions we complete. The issuance of shares pursuant to these equity awards will dilute existing stockholders’ ownership interests and may adversely affect the market price of our Common Stock. In addition, the exercise of stock options and the vesting of restricted stock units will increase the number of shares of Common Stock outstanding, which may put downward pressure on our Common Stock price. The dilutive effect of equity compensation may also reduce our earnings per share. Furthermore, we may need to increase the number of shares available for issuance under our equity compensation plans to attract and retain talented employees, which could result in additional dilution to our stockholders.
Sales of substantial amounts of our Common Stock by our directors, officers, or significant stockholders, or the perception that such sales may occur, could adversely affect the market price of our Common Stock.
Sales of substantial amounts of our Common Stock by our directors, officers, or significant stockholders in the public market, or the perception that such sales may occur, could adversely affect the market price of our Common Stock. In addition, the existence, or even the potential of, a significant sale by any of our large stockholders could cause the market price of our Common Stock to decline. Moreover, our directors and officers may establish pre-arranged trading plans under Rule 10b5-1 of the Exchange Act, and sales under these plans could be perceived negatively by the market, whether or not there is any actual adverse information about us. We cannot predict the effect, if any, that sales of shares by our insiders or the availability of shares for future sale will have on the market price of our Common Stock.
Social media and online forums may contribute to increased volatility in our Common Stock price and create risks of market manipulation.
In recent years, securities of certain companies have experienced extreme price volatility driven in part by activity on social media platforms and online forums, sometimes referred to as “meme stock” dynamics. This volatility is often unrelated to the underlying performance or fundamentals of the companies involved and can be driven by retail investor sentiment, coordinated trading activity, or viral attention. Our Common Stock could be subject to similar dynamics, which could result in rapid and significant price increases or decreases that may be disconnected from our financial performance or the value of our Bitcoin holdings. Such volatility could expose us to securities class action litigation or regulatory scrutiny. Additionally, false or misleading information about us could be spread on social media or online forums, which could adversely affect our reputation and the market price of our Common Stock, regardless of the accuracy of such information.
Certain institutional investors may be prohibited or discouraged from investing in companies with significant digital asset exposure, which could limit demand for our Common Stock.
Some institutional investors, including certain mutual funds, pension funds, and insurance companies, may be prohibited or discouraged by their investment policies, guidelines, or mandates from investing in companies with significant exposure to digital assets, including Bitcoin. Other institutional investors may choose not to invest in our Common Stock due to concerns about the regulatory uncertainty, volatility, or perceived risks associated with digital assets. As a result, the pool of potential investors in our Common Stock may be more limited than for companies without significant digital asset exposure. This reduced demand could adversely affect the market price of our Common Stock and may limit our ability to raise capital through equity offerings in the future. Additionally, if regulatory developments or changes in market perception cause more institutional investors to avoid companies with digital asset exposure, the market price of our Common Stock could decline.
Provisions in our amended certificate of incorporation, our amended and restated bylaws, and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders. These provisions may prevent attempts by our stockholders to replace or remove our current management.
Our amended certificate of incorporation, amended and restated bylaws, and Delaware law contain provisions that may have the effect of discouraging, delaying, or preventing a change in control of us or changes in our management that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of Common Stock. Our amended certificate of incorporation and amended and restated bylaws include provisions that:
authorize “blank check” preferred stock, which could be issued by our Board without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our Common Stock;
established a classified Board whose members serve staggered three-year terms;
specify that special meetings of our stockholders can be called only by our Board or the secretary upon receipt of written demand of stockholders holding at least 25% of the voting power continuously for at least one year prior to the request;
prohibit stockholder action by written consent except for approval of an amendment to the certificate of incorporation to effect a forward or reverse stock split;
establish an advance notice procedure for stockholder matters to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board;
provide that vacancies on our Board may be filled only by a majority of directors then in office, even though less than a quorum;
provide that our directors may be removed only for cause; and
expressly authorized our Board to make, alter, amend, or repeal our amended and restated bylaws.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. These provisions could also limit the price that investors might be willing to pay in the future for shares of our Common Stock, thereby depressing the market price of our Common Stock. Any provision of our amended certificate of incorporation, amended and restated bylaws, or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock, and could also affect the price that some investors are willing to pay for our Common Stock.
Our amended certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, executive officers, or employees.
Our amended certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
any derivative claim or action or proceeding brought on our behalf;
any action asserting a breach of fiduciary duty owed by any current or former director, officer, other employee or stockholder of our Company to us or our stockholders;
any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”), our amended certificate of incorporation, or amended and restated bylaws (as either may be further amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware;
any action asserting a claim governed by the internal affairs doctrine.
This provision would not apply to suits brought to enforce a duty or liability created by the Securities Act or the Exchange Act. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended certificate of incorporation further provides that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. This exclusive federal forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, executive officers, or other employees, which may discourage lawsuits against us and our directors, executive officers, and other employees.
Although the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive federal forum provisions. Although we will vigorously assert the validity and enforceability of our exclusive federal forum provision in any future litigation in other jurisdictions, this may require significant additional costs associated with resolving the action and there can be no assurance that the federal forum provision will be enforced by a court in the future or in other jurisdictions.
As an “emerging growth company” and “smaller reporting company,” we may rely on reduced disclosure requirements, which may make our securities less attractive to investors.
We are an “emerging growth company” under the JOBS Act and a “smaller reporting company” under SEC rules. As such, we may rely on exemptions from certain disclosure requirements, including not being required to comply with auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, reduced executive compensation disclosures, exemptions from nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the information we provide stockholders will be different than the information that is available with respect to some other public companies.
We have also elected to use the extended transition period for complying with new or revised accounting standards, which means our financial statements may not be comparable to companies that comply as of public company effective dates. We cannot predict if investors will find our stock less attractive as a result. If some investors do, there may be a less active trading market for and more volatile price of our Common Stock.
We cannot predict if investors will find our common stock less attractive if we rely on emerging growth company or smaller reporting company exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our Common Stock and our Common Stock price may be more volatile.
We have incurred, and will continue to incur, increased costs as a public company, and our management must devote substantial time to compliance.
As a public company, we incur legal, accounting, and other expenses not incurred as a private company. The Dodd-Frank Act, Sarbanes-Oxley Act, Nasdaq listing requirements, and other regulations require establishment and maintenance of effective disclosure and financial controls and corporate governance practices. We have hired additional accounting, finance, legal, and other personnel in our efforts to comply with these requirements. Management devotes substantial time to compliance, which has increased our costs and made some activities more time-consuming. Operating as a public company also makes it more difficult and expensive to obtain director and officer liability insurance, which may make it harder to attract and retain qualified board members and executive officers.
As a public company, we are subject to Section 404 of the Sarbanes-Oxley Act and the related rules of the SEC, which generally require our management and independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting. However, for so long as we remain an emerging growth company as defined in the JOBS Act or a smaller reporting company, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies or smaller reporting companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404. Once we are no longer either an emerging growth company or a smaller reporting company or, if prior to such date, we opt to no longer take advantage of the applicable exemption, we will be required to include an opinion from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting.
During the course of our review and testing, we may identify deficiencies and be unable to remediate them before we must provide the required reports. Furthermore, we have identified material weaknesses, so we may not detect errors on a timely basis and our financial statements may be materially misstated. We or our independent registered public accounting firm may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting, which could materially and adversely affect our business, financial condition, results of operations, and prospects; cause investors to lose confidence in our reported financial information; and cause the trading price of our stock to fall. In addition, as a public company we are required to file accurate and timely quarterly and annual reports with the SEC under the Exchange Act. In order to report our results of operations and financial statements on an accurate and timely basis, we depend in part on third parties to provide timely and accurate notice of their costs to us. Any failure to report our financial results on an accurate and timely basis could result in sanctions, lawsuits, delisting of our Common Stock from Nasdaq, or other adverse consequences that would materially and adversely affect our business, financial condition, results of operations, and prospects.
Risks Related to Our Media and Information Services Operations
Our revenues could decline if our trade show offerings through BTC Inc fail to attract attendees, exhibitors, sponsors, or vendors.
The success of our trade show business depends on our ability to attract attendees, exhibitors, sponsors, and vendors. There is significant competition for audience attention and exhibitor participation, and we must produce trade shows that are timely, relevant, and attractive to participants and their target audiences. If we fail to organize compelling programming, attract sufficient numbers of attendees, exhibitors, or sponsors, or generate adequate interest in our trade shows, revenues from this line of business could decline or fail to grow, which could adversely affect our business, results of operations, and financial condition.
Intense competition in the media & information, advisory & consulting, and financial services & asset management industries could reduce BTC Inc’s market share and adversely affect our revenues.
Our trade shows compete with numerous providers of in-person, virtual, and hybrid conferences, trade shows, and events, including those focused on digital assets and related technologies. Many competitors may have longer operating histories, larger customer bases, greater brand recognition, and significantly greater financial, marketing, or operational resources than we have. Competitors may also be better positioned to respond to changes in technology, attendee preferences, or exhibitor demands. As a result, we may lose attendees, exhibitors, or sponsors to competitors, which could reduce our market share and negatively impact revenues from our trade show business.
BTC Inc’s business may be exposed to risks related to accepting digital assets or alternative payment methods.
In connection with our trade show operations, we may accept, or may in the future accept, digital assets or other alternative payment methods for registration fees, exhibition space, or sponsorships. These payment methods may be subject to price volatility, technological risks, operational complexities, and evolving accounting, tax, legal, and regulatory requirements. We may rely on third-party service providers to process or hold such payments, and the failure, insolvency, or misconduct of those providers could expose us to financial loss or operational disruption. Regulatory or tax developments relating to digital assets or alternative payment methods could also impose additional compliance obligations or adversely affect our trade show operations.
We incur significant up-front costs for live events, and any disruption—technical or physical—could result in substantial losses.
Consistent with industry leaders, we book venues years in advance and secure talent and vendors many months in advance. However, as a Bitcoin media company, our events are also technical milestones. We often guarantee fixed payments to venues and vendors before receiving ticket or sponsorship revenue. If an event is cancelled or limited due to travel restrictions, health codes, or low interest, we may not recover these costs.
Our digital streaming services are subject to intense competition and technical risks that could degrade the value of our media rights.
We rely on third-party content delivery networks and decentralized streaming protocols. Any disruption in our ability to live-stream our premium content, whether due to a Security Incident, hardware failure or otherwise, could result in the loss of subscribers and a breach of contract with our media partners. High-quality video of live Bitcoin market analysis or conference keynotes requires significant bandwidth. If streaming platforms prioritize other content or face outages, our real-time value proposition is neutralized.
The value of our media rights and sponsorships is highly sensitive to the “Bitcoin Cycle” and consumer tastes.
A portion of our revenue comes from long-term media rights, which are often tied to the “Halving” cycles and market sentiment. Our sponsors are primarily from the Bitcoin and financial technology sectors. During bear markets, these companies frequently reduce discretionary spending on sponsorships and advertising, which could lead to a material decline in our revenue. Our premium live events (e.g., exclusive developer summits or high-tier educational workshops) are subject to digital piracy. If our content is rebroadcast on social media without authorization, the value we can command from streaming partners will be significantly diminished.
Our financial results are subject to significant fluctuations based on the timing and popularity of our premium live events pipeline.
Our revenue is concentrated in marquee events (e.g., annual Bitcoin conferences or regional summits), and we face the risk that our flagship events could lose their status as venues for industry deal-making.
Operational Leverage: We incur high fixed costs—including venue rentals and security—long before revenue is recognized. If a major event underperforms in ticket sales or is canceled due to force majeure events (e.g., regulatory shifts or health crises), our operating results would be disproportionately harmed.
Talent Dependency: Our events rely on high-profile Bitcoin developers, CEOs, and influencers. If these high-profile individuals fail to appear or lose their industry standing, it could lead to significant ticket refunds and the loss of future sponsorship interest.
Fragmentation of Knowledge: If the Bitcoin industry decentralizes its knowledge-sharing to a degree where physical B2B gatherings are no longer required for business-to-business transactions, revenue from our events could decline.
Geopolitical and Travel Restrictions: Our events draw an international audience of developers and miners. Changes in visa policies or “Proof-of-Work” bans in specific jurisdictions could prevent key exhibitors and attendees from participating, diminishing the event’s attendance and revenue.
We are dependent on a narrow pool of corporate sponsors whose marketing budgets are highly correlated with Bitcoin’s market cycles.
A substantial portion of our margin is derived from sponsorship and advertising. Our advertisers are primarily Bitcoin exchanges, mining firms, and financial technology companies. During periods of high volatility, our sponsors may experience liquidity constraints or sharp reductions in discretionary marketing spend. A sustained bear market could lead to the non-renewal of multi-year sponsorship agreements or the transition of mining firm sponsors to AI focused firms, materially impacting our long-term revenue visibility. Given the nascent nature of the industry, some sponsors may face financial instability or regulatory freezes. Any inability of a major partner to fulfill their payment obligations could lead to immediate bad debt write-offs.
Our digital ticketing and data-driven advertising operations are vulnerable to sophisticated cyber-attacks and network failures.
Our ticketing platforms handle sensitive financial data and Bitcoin transaction hashes. Sophisticated bad actors may use bots to disrupt ticket on-sales or manipulate secondary markets. This could frustrate our core community and damage our brand reputation. If our events rely on Bitcoin-native technologies, any technical failure or network congestion during a live broadcast would disrupt the fan experience and result in the loss of “on-site” per-capita spending revenue.
Any perceived centralization or gatekeeping of the Bitcoin media landscape could invite regulatory scrutiny or community backlash.
As a leading Bitcoin media entity:
Community Backlash: The Bitcoin community values decentralization. If we are perceived as a gatekeeper that suppresses certain voices or monopolizes event access, we may face organized boycotts or the emergence of competing, grassroots events that siphon away our audience.
Regulatory Risk: We may be subject to evolving SEC or FTC guidelines regarding the promotion of digital assets. Failure to clearly distinguish between editorial content and paid “shilling” by sponsors could lead to investigations, fines, and a loss of institutional credibility.
The value of our data-driven lead generation services depends on the quality and permissioned nature of our Bitcoin audience data.
We provide sponsors with data that identifies which institutional players are researching Bitcoin infrastructure. Stricter enforcement of GDPR or the UK Data Protection Act specifically regarding financial/crypto interest data could limit our ability to monetize our audience. If generative AI models can effectively aggregate and synthesize specialist Bitcoin technical knowledge, the scarcity value of our intellectual property may be impaired.
BTC Inc’s editorial independence may be compromised, or perceived to be compromised, by our corporate Bitcoin holdings and other business interests, which could damage our credibility and audience trust.
As a media company that produces news, analysis, and commentary about Bitcoin and the broader digital asset ecosystem, our credibility and reputation depend on the editorial independence and integrity of our content. However, we also hold Bitcoin as a treasury asset and have financial interests in the success of the Bitcoin ecosystem. This may create a conflict of interest, or the perception of such a conflict, that could undermine audience trust in our editorial content. Readers, viewers, and industry participants may question whether our coverage is objective or is instead designed to promote Bitcoin and thereby benefit our balance sheet. If our editorial content is perceived as biased, promotional, or lacking independence, we could experience a decline in audience engagement, loss of credibility among industry participants, reduced advertiser and sponsor interest, and damage to our brand reputation. Additionally, our relationships with sponsors, exhibitors, and advertisers may create pressure—actual or perceived—to provide favorable coverage or avoid critical reporting. Any failure to maintain clear boundaries between editorial and commercial interests could result in regulatory scrutiny, reputational harm, and a material adverse effect on our media business.
Our media operations expose us to potential defamation, libel, and other content-related legal claims that could result in significant costs and reputational harm.
BTC Inc publishes news, opinions, analysis, and commentary about individuals, companies, projects, and developments in the Bitcoin and digital asset industry. This industry is characterized by intense competition, disputed claims, controversial personalities, and significant financial stakes, which increases the likelihood that subjects of our coverage may take issue with our reporting. We may face claims of defamation, libel, invasion of privacy, misappropriation, or other content-related torts from individuals or entities who believe they have been harmed by our coverage. Even if such claims are without merit, defending against them can be expensive, time-consuming, and distracting to management. Adverse judgments or settlements could result in significant monetary damages and injunctive relief that restricts our ability to report on certain topics or individuals. Additionally, the threat of litigation may cause us to exercise excessive caution in our reporting, which could diminish the value and relevance of our editorial content. Our media liability insurance may not cover all claims or may be insufficient to cover the full extent of any damages awarded. Any of these outcomes could have a material adverse effect on our business, financial condition, and reputation.
We depend on key content creators, journalists, and media personalities whose departure or reputational issues could adversely affect our audience engagement and revenues.
The success of our media business depends in part on the talents, reputation, and continued services of certain journalists, podcasters, video hosts, and other content creators who have developed personal followings and brand recognition within the Bitcoin community. These individuals may be difficult to replace, and their departure—whether voluntary or involuntary—could result in the loss of audience members who followed our platforms primarily because of these personalities. Additionally, if any of our key content creators becomes involved in controversy, engages in conduct that damages their reputation, or expresses views that alienate segments of our audience, it could harm our brand and reduce audience engagement. We may not have long-term contractual arrangements with all key content creators, and competitors may seek to recruit our talent by offering more attractive compensation or creative opportunities. The loss of one or more key content creators, or damage to their reputations, could result in decreased viewership, listenership, or readership, reduced advertising and sponsorship revenues, and a material adverse effect on our media business.
We rely on third-party platforms for content distribution, and changes to their policies, algorithms, or terms of service could significantly reduce our audience reach and revenues.
A significant portion of our audience reach and engagement depends on third-party platforms, including social media networks (such as X, formerly Twitter, YouTube, Instagram, TikTok, and Facebook), podcast distribution services (such as Spotify and Apple Podcasts), and other digital distribution channels. These platforms have broad discretion to modify their algorithms, user interfaces, content policies, monetization programs, and terms of service, often with little or no advance notice. Changes to algorithms or platform disruptions could reduce the visibility of our content, while policy changes could result in the demonetization, restriction, or removal of our content or accounts. Some platforms have taken actions against cryptocurrency-related content or accounts in the past, and there can be no assurance that they will not do so in the future. If one or more major platforms restricts, demonetizes, or bans our content or accounts, we could experience a significant and sudden decline in audience reach, engagement, and revenues. Additionally, our reliance on these platforms means we have limited control over the user experience, data collection, and direct relationships with our audience. Any adverse changes to our relationship with key distribution platforms could have a material adverse effect on our media business, results of operations, and growth prospects.
Our advertising and promotional activities are subject to extensive and evolving regulations, and failure to comply could result in enforcement actions, fines, and reputational damage.
Our media business generates revenue from advertising, sponsorships, and promotional content. These activities are subject to a complex and evolving regulatory framework, including rules enforced by the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), state attorneys general, and other regulatory bodies. The FTC requires clear and conspicuous disclosure of material connections between advertisers and publishers, including sponsored content, paid endorsements, and affiliate relationships. The SEC regulates the promotion of securities and investment products, and certain digital assets may be deemed securities under applicable law. Several states have enacted or proposed laws specifically regulating cryptocurrency advertising. Failure to comply with these regulations could result in enforcement actions, civil penalties, injunctive relief, and reputational harm. Additionally, as regulatory scrutiny of the digital asset industry intensifies, we may face increased compliance costs, restrictions on the types of advertising we can accept, and greater risk of enforcement actions. If we are found to have violated advertising regulations, or if regulatory changes limit our ability to monetize our content through advertising, it could have a material adverse effect on our revenues and business operations.
Our publication of news, analysis, and market commentary could expose us to liability if such content is alleged to constitute investment advice or is deemed misleading.
We publish news, analysis, market commentary, and educational content about Bitcoin and the digital asset industry. While we do not intend for this content to constitute investment advice, readers or viewers may rely on our content when making investment decisions. If our content contains errors, omissions, or statements that are later deemed to be misleading or inaccurate, we could face claims from individuals who allege they suffered financial losses as a result of relying on our content. Additionally, regulatory authorities may take the position that certain types of content—such as price predictions, investment theses, or recommendations—constitute investment advice that requires registration or compliance with securities laws. The proliferation of misinformation in the digital asset space has drawn increased regulatory attention, and we may face scrutiny regarding the accuracy and completeness of our content. We cannot guarantee that all content published on our platforms will be accurate, complete, or free from error, particularly with respect to fast-moving market developments or complex technical subjects. Any claims, enforcement actions, or reputational damage arising from our content could have a material adverse effect on our business, financial condition, and results of operations.
If we offer subscription-based content or membership programs, we may experience subscriber churn that adversely affects our recurring revenues and growth.
To the extent our media business includes subscription-based content offerings, membership programs, or other recurring revenue models, our financial performance will depend on our ability to attract new subscribers and retain existing ones. Subscriber churn—the rate at which subscribers cancel or fail to renew—is influenced by many factors, including the quality and relevance of our content, competitive offerings, general economic conditions, and changes in consumer preferences. During periods of declining Bitcoin prices or reduced interest in digital assets, subscribers may be more likely to cancel discretionary media subscriptions. We may also face increased competition from free or lower-cost alternatives, including social media, podcasts, newsletters, and other content providers. High subscriber churn could result in declining revenues, reduced customer lifetime value, and increased customer acquisition costs as we seek to replace lost subscribers. If we are unable to maintain acceptable subscriber retention rates, it could have a material adverse effect on our recurring revenues, financial condition, and growth prospects.
Our media content may be restricted or prohibited in certain jurisdictions, limiting our global audience and exposing us to legal and compliance risks.
We produce and distribute media content about Bitcoin and the digital asset industry to a global audience. However, certain jurisdictions have enacted laws or regulations that restrict, prohibit, or heavily regulate content related to cryptocurrencies, digital assets, or financial topics. For example, China has banned cryptocurrency-related activities, and other countries have imposed restrictions on cryptocurrency advertising or promotion. Our content may be blocked, restricted, or subject to legal action in jurisdictions with restrictive policies. Additionally, we may be required to comply with local content regulations, data protection laws, and other requirements in jurisdictions where our content is accessible, which may be difficult or impractical given the global nature of internet distribution. We may face legal liability, fines, or other penalties if our content is deemed to violate local laws, even if such content is lawful in the United States. These restrictions could limit our ability to grow our global audience, reduce our international advertising revenues, and expose us to legal and compliance risks. Changes in laws or enforcement practices in key markets could have a material adverse effect on our international operations and growth prospects.
Our reputation could be harmed by our association with controversial individuals, sponsors, or topics within the Bitcoin community.
The Bitcoin and digital asset community includes a diverse range of individuals, organizations, and viewpoints, some of which are controversial or polarizing. Our media business involves interviewing, featuring, or hosting speakers and guests at events who may hold or express views that are controversial, offensive, or inconsistent with mainstream values. We may also accept sponsorships or advertising from companies or individuals who later become involved in controversy, fraud, regulatory enforcement, or other reputational issues. If we are perceived as providing a platform for, or being associated with, controversial figures, fraudulent projects, or objectionable viewpoints, it could result in advertiser pullback, audience alienation, negative media coverage, and damage to our brand reputation. The decentralized and often anonymous nature of the Bitcoin community makes it difficult to fully vet all participants, sponsors, and guests. Social media amplification can rapidly escalate reputational issues, and we may have limited ability to control the narrative or respond effectively to criticism. Any significant reputational harm arising from our associations within the Bitcoin community could have a material adverse effect on our business, advertiser relationships, and audience engagement.
Risks Related to Our Asset Management Operations
Revenue from our investment advisory operations is substantially dependent on the market price of Bitcoin and the amount of AUM, which generally consists of Bitcoin and Bitcoin-related investments in securities, all of which are subject to extreme volatility.
The investment advisory fees earned by our subsidiary are typically calculated as a percentage of AUM. Bitcoin has historically experienced significant price volatility, including frequent drawdowns exceeding 30% to 50% within short periods. If the market price of Bitcoin declines, our AUM and the resulting management fees will likely decrease as well. Furthermore, extreme volatility may discourage new client inflows or trigger significant redemptions, materially and adversely affecting the amount of investment advisory fee revenue and, as a result, our results of operations and financial condition.
Our fiduciary duties may conflict with our obligations as a public company, particularly regarding proprietary Bitcoin products.
As a fiduciary, our advisor subsidiary must act in the best interests of its clients. However, as a public company, we are also focused on maximizing stockholder value. Conflicts may arise if our advisor recommends Bitcoin-related products in which we have a financial interest or if we hold Bitcoin on our own corporate balance sheet. Any perception that our advisory recommendations are influenced by our corporate Bitcoin holdings could lead to “self-dealing” allegations and regulatory scrutiny.
Our revenue is heavily dependent on management fees based on AUM, and a decline in AUM would directly reduce our profitability.
A substantial majority of our investment advisor’s revenue is derived from management fees, which are typically calculated as a percentage of the market value of AUM. These fees are subject to fluctuations based on:
Market Volatility: Declines in equity, fixed income, or digital asset markets directly reduce the value of our AUM.
Client Redemptions: Investors may withdraw capital due to poor relative performance, changes in their own liquidity needs, or general economic downturns. Because our operating expenses—such as compensation, technology, and regulatory compliance—are relatively fixed in the short term, a rapid decline in AUM could lead to a disproportionate decrease in our net income and cash flows.
Performance fees (or “carried interest”) are highly volatile and may not be earned in any given period, leading to unpredictable quarterly results.
We may earn performance fees when the investment returns in certain client accounts exceed specified “hurdle rates” or “high-water marks.” These fees are significantly more volatile than standard management fees. In certain structures, we may be required to return previously distributed performance fees (a “clawback”) if the fund’s performance subsequently declines. A significant portion of our annual performance fees may be generated by a small number of funds or accounts. The unpredictable timing and amount of these fees can cause our Common Stock price to be volatile, as investors may find it difficult to forecast our long-term earnings based on historical performance-fee realizations.
Downward pressure on investment advisory fee rates across the industry could reduce our profit margins.
The investment management industry is experiencing intense competition from low-cost passive products, such as index funds and ETFs. This environment has led to a general trend of fee compression where advisors must lower their fee schedules to attract or retain AUM. If we are forced to reduce our fee rates to remain competitive, and we are unable to offset these reductions by increasing our total AUM or reducing our operating costs, our profit margins and overall financial results will be materially and adversely affected.
The calculation of our fees involves significant estimates and valuations; any errors could result in overpayments, regulatory penalties, and reputational harm.
In some cases, our fees are based on the valuation of assets that do not have readily available market prices. We rely on internal valuation models and third-party pricing services to determine the values of such assets. If our valuations are later found to be overstated:
We may be required to refund overcharged fees to clients;
We could face SEC enforcement actions for inaccurate financial reporting or breach of fiduciary duty; or
Such errors could trigger a “material weakness” in our internal controls over financial reporting, damaging investor confidence in our public disclosures.
Our investment advisory subsidiary is subject to extensive regulation under federal and state securities laws, and failure to comply with these regulations could result in enforcement actions, fines, or loss of our ability to operate.
UTXO Management GP, LLC and its subsidiary UTXO Ventures, LLC operate as investment advisers and are subject to extensive regulation under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and applicable state securities laws. While each of UTXO Management GP, LLC and UTXO Ventures, LLC are not required to be a registered investment adviser at this time, it may be required to register in the future. If required to be a registered investment advisor, our advisory subsidiaries would be required to comply with extensive additional requirements regarding fiduciary duties, custody of client assets, recordkeeping, reporting, advertising, and disclosure. The SEC and state securities regulators have broad authority to conduct examinations, bring enforcement actions, and impose sanctions for violations of applicable laws and regulations. Any failure to comply with these regulatory requirements could result in SEC or state enforcement actions, civil or criminal penalties, censure, suspension or revocation of registration, disgorgement of fees, and reputational damage. Additionally, regulatory requirements are subject to change, and new rules or interpretations could impose additional compliance burdens and costs on our advisory business. If our advisory subsidiaries were to lose their registration, if required, or ability to operate as an investment adviser, it would have a material adverse effect on our business, financial condition, and results of operations.
Poor investment performance could result in client redemptions, difficulty attracting new clients, and reputational damage that adversely affects our advisory business.
Our ability to retain existing advisory clients and attract new clients depends significantly on our investment performance. Clients evaluate our performance relative to market benchmarks, peer advisers, and their own investment objectives. If our investment strategies underperform relevant benchmarks or competitors over sustained periods, clients may redeem their assets, decline to make additional investments, or terminate their advisory relationships with us. Poor investment performance, whether absolute or relative, could also make it more difficult to attract new clients and may result in negative publicity and reputational damage. The factors that affect investment performance are numerous and complex, including market conditions, asset allocation decisions, security selection, timing of investments, and macroeconomic factors, many of which are beyond our control. Additionally, past performance is not indicative of future results, and investment strategies that have performed well historically may not continue to do so. Any sustained period of poor investment performance could result in significant declines in our AUM, management fee revenues, and performance fee revenues, and could have a material adverse effect on our business, financial condition, and results of operations.
Our investment advisory business depends on key investment personnel, and the loss of these individuals could result in client redemptions and harm to our investment performance.
The success of our investment advisory business depends on the skills, experience, and reputation of our key investment personnel, including portfolio managers, analysts, and other investment professionals. These individuals are responsible for developing and executing our investment strategies, maintaining client relationships, and generating investment returns. The departure of one or more key investment personnel could disrupt our investment operations, result in the loss of institutional knowledge, and trigger client redemptions if clients followed our personnel because of their individual track records or relationships. Competition for qualified investment professionals is intense, and we may not be able to retain our key personnel or attract suitable replacements on favorable terms or at all. Employment agreements, non-compete provisions, and other retention mechanisms may not be enforceable or effective in preventing departures. Any significant loss of key investment personnel could adversely affect our investment performance, client retention, ability to attract new clients, and overall reputation, which could have a material adverse effect on our advisory business and results of operations.
Our investment advisory revenues may be concentrated among a small number of clients, and the loss of one or more significant clients could materially reduce our revenues.
A significant portion of our investment advisory subsidiaries’ AUM and revenues may be attributable to a limited number of large institutional or high-net-worth clients. Dependence on a concentrated client base exposes us to heightened risks if one or more of these significant clients reduces their investment, redeems their assets, or terminates their advisory relationship with us. Clients may withdraw assets for various reasons, including dissatisfaction with investment performance, changes in their own investment objectives or liquidity needs, personnel changes at the client organization, competitive offerings from other advisers, or general market conditions. We generally do not have long-term contractual commitments from our clients, and many advisory agreements may be terminated by the client on relatively short notice. The loss of one or more significant clients, without replacement by new clients of similar size, could result in a substantial decline in our AUM and revenues, and could have a material adverse effect on our business, financial condition, and results of operations.
Errors in trade execution, settlement, or recordkeeping could result in client losses, regulatory penalties, and reputational harm.
Our investment advisory operations involve complex trading, settlement, and recordkeeping processes that are subject to operational risks. Errors in trade execution, such as incorrect order entry, failure to execute trades in a timely manner, or execution at unfavorable prices, could result in financial losses for clients and potential liability for our advisory subsidiary. Settlement failures, reconciliation errors, and inaccurate recordkeeping could lead to regulatory violations, client disputes, and financial losses. We rely on various systems, technologies, and third-party service providers to support our trading and operational functions, and any failures, disruptions, or errors in these systems could impair our ability to execute trades accurately and efficiently. Additionally, the trading of digital assets involves unique operational risks, including risks related to blockchain network congestion, transaction confirmation times, and the irreversibility of blockchain transactions. Any significant operational failures could result in client losses, regulatory scrutiny, litigation, and reputational damage, which could have a material adverse effect on our advisory business.
Failure to satisfy our best execution obligations could result in regulatory scrutiny, client claims, and breaches of our fiduciary duties.
As a fiduciary, our investment advisory subsidiary has an obligation to seek best execution when effecting transactions for client accounts. Best execution requires us to execute client transactions in a manner that maximizes value for the client under the circumstances, taking into account factors such as price, cost, speed, likelihood of execution, and other relevant considerations. The determination of best execution is complex and involves the exercise of judgment. The SEC and other regulators actively examine advisers’ best execution practices and have brought enforcement actions against advisers for best execution failures. If we fail to satisfy our best execution obligations, we could face regulatory enforcement actions, civil penalties, client claims for damages, and reputational harm. Additionally, the markets for digital assets may have limited liquidity, fewer execution venues, and wider bid-ask spreads compared to traditional securities markets, which may make it more difficult to achieve best execution for digital asset transactions. Any findings that we failed to achieve best execution could result in regulatory sanctions, client losses, and damage to our reputation, which could have a material adverse effect on our advisory business.
We face risks related to the custody and safekeeping of client assets, particularly digital assets, including potential loss, theft, or inaccessibility of such assets.
Our investment advisory subsidiaries may have custody of, or be deemed to have custody of, client assets, including digital assets such as Bitcoin. The custody of client assets subjects us to specific regulatory requirements under the Advisers Act and related SEC rules, including requirements for qualified custodians, safekeeping procedures, and periodic audits or examinations. Digital assets present unique custody challenges because they are controlled by cryptographic private keys, and the loss, theft, or destruction of these keys could result in the permanent loss of the associated digital assets. We rely on third-party custodians to hold client digital assets, and the failure, insolvency, or misconduct of these custodians could result in client losses and liability for our advisory subsidiary. The regulatory framework for digital asset custody is evolving, and changes in custody rules or requirements could impose additional compliance burdens or restrict our ability to custody certain assets. Additionally, client assets held in custody may not be protected by SIPC or FDIC insurance, and clients may have limited recourse in the event of custodian failure. Any loss, theft, or inaccessibility of client assets in our custody could result in significant client losses, regulatory enforcement actions, litigation, and reputational damage, which could have a material adverse effect on our advisory business.
Our marketing and advertising activities are subject to SEC rules, and failure to comply with the Marketing Rule and related requirements could result in enforcement actions and reputational harm.
The SEC’s Marketing Rule (Rule 206(4)-1 under the Advisers Act) imposes comprehensive requirements on registered investment adviser advertising and marketing activities, including requirements related to performance advertising, testimonials, endorsements, and third-party ratings. The Marketing Rule prohibits certain practices, such as making untrue statements of material fact, making material claims that cannot be substantiated, and presenting performance in a manner that is not fair and balanced. Compliance with the Marketing Rule requires robust policies and procedures, substantiation of claims, required disclosures, and ongoing monitoring of marketing materials. Violations of the Marketing Rule can result in SEC enforcement actions, civil penalties, and reputational damage. Additionally, the use of testimonials and endorsements, including from satisfied clients or third-party influencers, is subject to specific disclosure and oversight requirements. If we fail to comply with any applicable provision of the Marketing Rule or make misleading claims in our marketing materials, we could face regulatory sanctions, client claims, and damage to our reputation, which could adversely affect our ability to attract and retain clients.
Failure to maintain adequate anti-money laundering and know-your-customer programs could result in regulatory penalties and reputational damage.
Our investment advisory subsidiaries are subject to anti-money laundering (“AML”) laws and regulations, including the Bank Secrecy Act and its implementing regulations, and may be subject to additional AML requirements applicable to investment advisers if proposed regulations are adopted. We are also subject to economic sanctions programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). These requirements obligate us to implement and maintain AML and know-your-customer (“KYC”) programs, conduct customer due diligence, monitor transactions for suspicious activity, and file reports with regulatory authorities. The digital asset industry has been subject to heightened AML scrutiny due to concerns about the use of digital assets for money laundering, terrorist financing, sanctions evasion, and other illicit purposes. Failure to maintain adequate AML and KYC programs, or to detect and report suspicious activity, could result in significant regulatory penalties, criminal liability, and reputational damage. Additionally, if we inadvertently facilitate transactions involving sanctioned persons or jurisdictions, we could face OFAC enforcement actions and penalties. Any AML or sanctions compliance failures could have a material adverse effect on our advisory business, financial condition, and reputation.
Cybersecurity incidents or Security Incidents affecting our investment advisory operations could result in the loss, unavailability, destruction, alteration, prevention of access to, disclosure, or dissemination of, or damage or unauthorized access to client assets or confidential information, and we could experience material adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, litigation (including class actions and mass arbitration), fines and penalties, disruptions of our business operations, loss of revenue or profits, and reputational harm.
Our investment advisory operations depend on our and our third-party service providers’ information technology systems to manage client accounts, execute trades, maintain records, and communicate with clients and counterparties. These systems contain sensitive client information, including personal financial data, investment holdings, and transaction histories. Cybersecurity incidents, including hacking, phishing, ransomware, and other attacks, could compromise the confidentiality, integrity, or availability of our systems and data. A successful cybersecurity incident or other Security Incident could result in unauthorized access to client accounts, theft of client assets (including digital assets), disclosure of confidential client information, and disruption of our advisory operations. The SEC has issued guidance emphasizing investment advisers’ obligations to adopt cybersecurity policies and procedures, and has brought enforcement actions against advisers for cybersecurity failures. Additionally, we may be subject to state data breach notification laws and other data protection requirements. Any significant cybersecurity or other Security Incident could result in client losses, regulatory enforcement actions, litigation, notification costs, remediation expenses, and severe reputational damage, which could have a material adverse effect on our advisory business and client relationships.
We face intense competition from traditional investment advisers and new digital asset-focused competitors, which could reduce our market share and compress our fees.
The investment advisory industry is highly competitive, and we compete with a wide range of firms for clients and investment opportunities. Our competitors include large, well-established investment advisers with significantly greater financial resources, broader product offerings, longer track records, and more extensive client relationships than we have. We also compete with banks, broker-dealers, family offices, and other financial institutions that offer investment advisory or wealth management services. In the digital asset space, we face competition from specialized digital asset investment managers, crypto-native funds, and technology platforms that offer automated or algorithm-based investment services. Many of our competitors may be able to offer lower fees, superior investment performance, broader investment capabilities, or more comprehensive services than we can. Increased competition may result in fee compression, loss of clients to competitors, and difficulty attracting new clients. Additionally, low-cost passive investment products, such as index funds and ETFs (including Bitcoin ETFs), provide investors with alternative means of gaining investment exposure that may reduce demand for active advisory services. If we are unable to compete effectively, our market share, revenues, and profitability could be materially and adversely affected.
We may use our own capital to seed new investment funds or strategies, which exposes us to investment losses and potential conflicts of interest.
From time to time, we may commit our own capital to seed new investment funds, strategies, or products offered by our advisory subsidiaries. Seed capital investments are intended to establish a track record, attract third-party investors, and demonstrate alignment of interests between our advisory subsidiary and its clients. However, seed capital investments expose us to the risk of investment losses if the seeded fund or strategy underperforms. These investments may also be illiquid, as we may be required to maintain our seed investment for a specified period or until the fund reaches a certain size. Additionally, seed capital arrangements may create actual or perceived conflicts of interest, as our advisory subsidiary may have incentives to favor the performance of seeded funds in which we have a proprietary interest. If our seed capital investments result in significant losses, or if conflicts of interest arising from seed capital arrangements harm our reputation or client relationships, it could have a material adverse effect on our business, financial condition, and results of operations.
We are subject to the risk of litigation and regulatory examinations, which could result in significant costs, management distraction, and reputational harm.
Our investment advisory business is subject to the risk of litigation from clients, former clients, counterparties, and other parties, as well as regulatory examinations and enforcement actions by the SEC, state securities regulators, and other governmental authorities. Litigation and regulatory matters may arise from a variety of claims, including breach of fiduciary duty, negligence, fraud, misrepresentation, breach of contract, violations of securities laws, and other matters. Even if claims are without merit, defending against litigation and regulatory inquiries can be expensive, time-consuming, and distracting to management. Adverse outcomes in litigation or regulatory proceedings could result in significant monetary damages, disgorgement of fees, civil or criminal penalties, injunctive relief, and reputational harm. The SEC conducts periodic examinations of registered investment advisers, and examination findings or deficiency letters could result in required changes to our business practices, compliance enhancements, or enforcement referrals. Additionally, regulatory enforcement trends in the digital asset space have been active and evolving, and we may face heightened scrutiny due to our focus on Bitcoin-related investments. Any significant litigation or regulatory matters could have a material adverse effect on our business, financial condition, and reputation.
Our insurance may not be adequate to cover all claims, and insurance coverage may become more expensive or unavailable.
We maintain insurance to cover claims arising from our investment advisory activities. However, our insurance coverage is subject to deductibles, coverage limits, and exclusions, and may not be adequate to cover all claims or losses that we may incur. Certain types of claims, such as those arising from fraud, willful misconduct, or regulatory penalties, may be excluded from coverage. Additionally, insurance coverage for digital asset-related advisory activities may be limited, more expensive, or subject to additional exclusions compared to coverage for traditional advisory services. The cost of insurance has increased in recent years, and we may face further premium increases, higher deductibles, or reduced coverage in the future. If we are unable to obtain adequate insurance coverage on commercially reasonable terms, or if our insurance is insufficient to cover a significant claim, we could be required to pay substantial amounts out of our own resources, which could have a material adverse effect on our financial condition and results of operations.
The regulatory framework for digital asset investment advice is evolving and uncertain, and changes in laws or regulations could materially affect our advisory business.
The regulatory framework governing investment advice related to digital assets, including Bitcoin, is evolving and subject to significant uncertainty. The SEC, CFTC, state securities regulators, and other governmental authorities continue to develop and refine their approaches to regulating digital asset investment activities. Regulatory developments could include new registration requirements, enhanced disclosure obligations, restrictions on the types of digital assets that may be included in advisory portfolios, custody requirements specific to digital assets, and other compliance obligations. The classification of certain digital assets as securities, commodities, or other regulated instruments remains unclear and subject to ongoing regulatory interpretation and litigation. Changes in laws, regulations, or regulatory interpretations could impose significant compliance burdens on our advisory business, restrict our ability to offer certain services or products, or require us to modify our business model. Additionally, regulatory enforcement actions against other participants in the digital asset industry could create adverse precedents or result in regulations that affect our operations. Any significant adverse regulatory developments could have a material adverse effect on our advisory business, financial condition, and ability to serve our clients.
Risks Related to Our Healthcare Operations
The collectability of patient accounts receivables have harmed and could further deteriorate and further harm the results of our healthcare operations.
Private insurers, managed care organizations and, to a lesser extent, Medicaid and Medicare, are beginning to carve-out specific services, including mental health and substance abuse services, in favor of using smaller, specialized networks of providers for such services at fixed reimbursement rates. Continued growth in the use of carve-out arrangements could have a material adverse impact on our business to the extent we are not chosen to participate in such networks or if the reimbursement rate in such networks is insufficient to cover the cost of providing services to our patients. Further, collection of receivables from third-party payors and patients is critical to our operating performance. If a payor were to lose applicable licenses, go bankrupt, become insolvent, file for bankruptcy or become excluded, suspended or debarred by state or federal government authorities, our contract with such payor could be terminated. The loss, termination or renegotiation of any contract could negatively impact our results. Other changes that impact our ability to collect payment from patients or receive reimbursement from third-party payors, such as changes to reimbursement amounts or coverage requirements for the services we provide could have a negative impact on our operations.
Laws and regulations affecting the medical cannabis industry are constantly changing, which could detrimentally affect our operation.
Local, state, and federal medical cannabis laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter certain aspects of our business plan. In addition, violations of these laws, or allegations of such violations, could disrupt certain aspects of our business plan and result in a material adverse effect on certain aspects of our planned operations. In addition, it is possible that regulations may be enacted in the future that will be directly applicable to certain aspects of our businesses. We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.
Our operations, although compliant with Utah state law, are still subject to U.S. federal law which currently still classifies cannabis as a Schedule I controlled substance. There is always a risk of federal enforcement action, and non-compliance could lead to significant legal penalties, including but not limited to fines, imprisonment, seizure of assets, and prohibition of business operations. Although we stopped selling CBD products, to the extent we sell CBD products in the future, such products could be subject to enforcement actions by the FDA. For example, CBD products could be subject to FDA enforcement if they are viewed as unapproved or misbranded drugs under the FD&C Act or if they are perceived as impersonating the brands of products targeted toward children in a manner likely to confuse consumers.
Our business operations in the medical cannabis industry expose us to specific risks. The conflict between federal and state laws regarding cannabis creates a complex legal environment, where compliance with state law does not exempt us from federal prosecution. Federal enforcement could disrupt our operations and expose us to substantial legal risk.
Similarly, the ongoing evolution of hemp regulations and their enforcement adds a layer of uncertainty to our business. The FDA has yet to establish a clear regulatory pathway for the commercialization of CBD products and has previously concluded that existing frameworks for human and animal food and dietary supplements are not appropriate for CBD products. Changes in how the FDA regulates the approval, sale and marketing of hemp and CBD products can create new risks with respect to any future sale of such products, as could any parallel changes in Utah’s state-level hemp laws or regulations.
Our failure to comply with federal and state laws and regulations regarding the handling, dispensing, prescribing and administration of controlled substances could result in significant liability or reputational harm and, in turn, a material adverse effect on our client base, customer base and revenue.
Our clinics and clinicians that handle and dispense controlled substances must comply with strict federal and state regulations regarding the purchase, storage, distribution and disposal of such controlled substances. The potential for theft or diversion of such controlled substances for illegal use has led the federal government and numerous states and localities to adopt stringent regulations not applicable to many other types of health care providers. Compliance with these regulations is costly and these costs may increase in the future. Failure to comply with these laws and regulations could lead to adverse action against our clinicians or business, including enforcement actions by federal or state governmental agencies, which could harm our business model and/or clinicians’ relationships and have a negative impact on our business.
We may become subject to federal and state healthcare fraud and abuse laws, including the Anti-Kickback Statute, Stark Law, False Claims Act, and Civil Monetary Penalties Law, the No Surprises Act, and could face substantial penalties for non-compliance.
Our healthcare operations may be subject to extensive federal and state healthcare fraud and abuse laws and billing transparency, including the Anti-Kickback Statute (which prohibits remuneration for patient referrals), the Stark Law (which prohibits physician self-referrals for designated health services), the False Claims Act (which prohibits submitting false claims for government healthcare program reimbursement), and the Civil Monetary Penalties Law (which prohibits offering inducements to Medicare or Medicaid beneficiaries). We are also subject to the No Surprises Act, which created protections against surprise billing and excessive cost sharing for healthcare consumers and requires compliance with provider directory accuracy requirements. Violations of these laws can result in exclusion from government healthcare programs, civil and criminal penalties, treble damages, disruptions in our ability to receive timely payment, limitations on amounts we can charge for services, and reputational harm. We are also subject to analogous state laws, and additional state or federal legislation could further restrict our operations or provide payors with opportunities to renegotiate reimbursement rates. If these laws are interpreted in a manner contrary to our interpretation, or if new legislation is enacted, we may be required to restructure our operations, which could have a material adverse effect on our business, financial condition, and results of operations.
Changes within the alternative medicine industry or the healthcare industry, including health care reform legislation, the political landscape or health care spending, may adversely affect our financial performance.
Pain clinics operate in a highly regulated industry. Changes in federal, state, or local laws and regulations can significantly affect our operations and profitability. In particular, changes in healthcare laws, policies, and regulations, including those related to insurance and Medicare/Medicaid reimbursements, may impact our revenue. Our financial health is linked to coverage of Medicare/Medicaid and private insurers to cover outpatient management services, including pain management services. We are unable to predict the effect of recent and future policy changes on our operations. Federal reimbursement rates are generally adjusted annually for inflation, but such adjustments may not reflect actual increases of the cost of providing health care services that we furnish to patients. In addition, the uncertainty and financial pressures placed upon federal and state governments due to, among other things, a decline in general economic conditions and funding requirements from federal healthcare legislation, could affect the availability of taxpayer funds for Medicare and Medicaid programs. Changes in government healthcare programs or future government shutdowns may reduce or delay the reimbursement we receive from such programs or private payors and could adversely impact our business and operations. Reimbursement rates, or a decision by a significant number of insurers to terminate their agreements with us could adversely affect our business.
In addition, the Trump administration or U.S. Congress may propose new health care policy goals and objectives or reverse existing health care policy goals, through statute, regulation and executive order. For example, the premium subsidies under the PPACA recently expired at the end of 2025, which will cause premium increases for many PPACA enrollees in 2026 and could result in an increase in the number of uninsured. Moreover, the control of the U.S. House of Representatives and Senate by a single party, may enable broad policy changes in the health care industry, potentially affecting our business in an adverse fashion on a going forward basis. Uncertainty regarding future amendments to the PPACA as well as new legislative proposals to reform health care and government insurance programs, could result in reduced demand and prices for our services. We expect that additional state and federal health care reform measures may be adopted in the future, any of which could limit the amounts that federal and state governments and other third-party payors will pay for health care products and services that we offer, which could adversely affect our business, financial condition and results of operations.
Further, the ongoing opioid crisis has led to an increased scrutiny of pain management clinics, including ours. Any perceived mismanagement of opioid prescriptions could lead to severe legal and reputational ramifications.
Like pain clinics, the cannabis industry is highly regulated, and laws can vary greatly between jurisdictions. A change in federal laws, state laws, or local ordinances could significantly impact our operations. Negative perceptions or stigmatization could affect the demand for our services and impact our reputation. Supply chain regulation and changes could impact our ability to provide consistent products and services to our clients.
Further, changes in research findings, particularly those that reflect negatively on cannabis, could impact consumer demand for our products and services.
Medical malpractice lawsuits and other medical liability claims can be costly and damaging to our practice and reputation.
The risk of malpractice suits or medical liability claims is significant in the medical profession and industry in which we operate. A rise in malpractice suits or medical liability claims, or changes in laws related to malpractice or medical liability, can increase our insurance costs and potentially lead to significant financial payouts. Further, any malpractice or medical liability claims that are not fully covered by insurance could be costly to defend against, result in substantial damage awards against us and divert the attention of our management and clinicians from operations, which could have a material adverse effect on our business, financial condition and operations. In addition, any such claims may adversely affect our business or reputation.
An incident involving one or more of our patients or the failure by one or more of our clinicians to provide appropriate care could result in increased regulatory burdens, government investigations, litigation, negative publicity and adversely affect our operations and relationships with patients and third-party payors.
Many of the patients we treat may suffer from severe mental health and chemical dependency disorders. If one or more of our clinics experiences an adverse patient incident in the future or is found to have failed to provide appropriate patient care, an admissions hold, adverse regulatory or other adverse action could be taken against us. Any such patient incident or adverse regulatory action could result in governmental investigations, judgments or fines and have a materially negative impact on our operations and business. Moreover, we could become the subject of negative publicity or media attention that could have a significant, adverse effect on the trading price of our Common Stock or adversely impact our reputation and how our patients and payors view us.
Risks Related to Cybersecurity, Information Technology, and Intellectual Property
Security Incidents or loss of private keys could result in partial or total loss of our Bitcoin or loss, unavailability, destruction, alteration, prevention of access to, disclosure, or dissemination of, or damage or unauthorized access to, our data (including trade secrets or other confidential information, intellectual property, proprietary business information, and personal information) or data that is processed or maintained on our behalf, or other assets, which could result in financial, legal, business, and reputational harm to us.
Substantially all of our Bitcoin is held in custody accounts at institutional-grade digital asset custodians. Bitcoin and blockchain-based cryptocurrencies have been, and may continue to be, subject to Security Incidents and other malicious activities. While we have implemented security measures designed to protect against actual or reasonably suspected unauthorized access to, or use, acquisition, exfiltration, disclosure, alteration, loss, destruction, encryption, or other compromise of personal data, confidential information, or the confidentiality, integrity, or availability of our information technology systems, whether by external actors, insiders, or accidental events (collectively, “Security Incident(s)”), there can be no assurance that these measures will be effective in all circumstances. A successful Security Incident could result in: partial or total loss of our Bitcoin that may not be covered by insurance or custodial liability provisions; harm to our reputation and brand; improper disclosure of our and our customers’ data and violations of applicable data privacy laws; and significant regulatory scrutiny, investigations, fines, penalties, and other legal and financial exposure.
Security Incidents, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our and our customers’ data and information technology systems, and those of the third parties with whom we work. Security Incidents are increasing in frequency, persistence, and sophistication, conducted by criminal hackers, hacktivists, state-sponsored actors, and insiders using techniques such as hacking, social engineering, phishing, ransomware, and advanced persistent threats. These incidents may target our systems, our third-party service providers, or partners and can affect our ability to operate effectively and the integrity and continued availability of our information systems, data, and services. We may experience Security Incidents due to human error, malfeasance, insider threats, or system vulnerabilities. The risk of Security Incidents has been heightened by remote and hybrid working arrangements, as more of our employees utilize network connections, computers, and devices outside our premises or network, including while working at home, while in transit, or in public locations. Any breach of our operations or those of others in the Bitcoin industry could materially and adversely affect our business.
We and the third parties with whom we work are subject to a variety of evolving Security Incident threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, or hardware failures, loss of data or other information technology assets, adware, attacks enhanced or facilitated by artificial intelligence (“AI”), including through increased speed, scale, or sophistication, telecommunications failures, earthquakes, fire, flood, power loss, system failures, computer viruses, software errors, physical or electronic break-ins or malicious hacks or attacks on our systems (such as denial of service attacks), and other similar threats. Additionally, our confidential and sensitive data of the Company and our clients may be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s, or vendors’ use of AI technology.
It may be difficult and/or costly to detect, investigate, mitigate, contain, and remediate a Security Incident. Our efforts to do so may not be successful. Actions taken by us or the third parties with whom we work to detect, investigate, mitigate, contain, and remediate a Security Incident could result in outages, data losses, and disruptions of our business. Threat actors may also gain access to other networks and systems after a compromise of our networks and systems. Such disruptions may impair our ability to maintain business continuity or deliver services in a timely manner.
We are subject to HIPAA and other federal, state, and foreign data privacy and security laws, and failure to comply could result in significant liability and reputational harm.
We collect substantial amounts of personal health information subject to HIPAA and numerous other federal, state, and foreign data privacy and security laws. HIPAA establishes national privacy and security standards for the protection of protected health information (PHI) by covered entities and business associates. As a business associate under HIPAA, we are required to develop and maintain policies and procedures with respect to PHI, including administrative, physical, and technical safeguards. Violations of HIPAA may result in significant civil and criminal penalties, and state attorneys general may file suit on behalf of their residents. We are also subject to breach notification requirements under HIPAA, which require notification to affected individuals, HHS, and potentially the media depending on the scope of the breach.
There is also a risk that the third-party vendors that provide our data sets may fail to properly de-identify PHI under HIPAA or applicable state laws, some of which impose different standards for de-identification than those imposed by HIPAA. There is also a risk that clients and third-party vendors who are subject to HIPAA and interface with us may misunderstand the limits of our ability to conform to HIPAA, given our posture that we remain outside of the HIPAA regulation by virtue of de-identifying our data, and may inadvertently expose us to PHI that we need to then make efforts to excise from our systems. We are also required to ensure that such information remains de-identified, and our failure to do so could result in non-compliance with privacy laws and contractual obligations.
In addition to HIPAA, we are subject to the Federal Substance Abuse Confidentiality Regulations (42 C.F.R. Part 2), which impose confidentiality requirements on substance use disorder treatment records. Numerous other federal, state, and foreign laws protect the privacy, security, and integrity of health-related and personal information, many of which are more restrictive than HIPAA. These laws are subject to evolving interpretations and new regulations, and failure to comply could result in significant liabilities, government enforcement actions, and reputational harm. State attorneys general and the FTC actively enforce privacy requirements, and healthcare providers are also subject to information blocking prohibitions under the 21st Century Cures Act, with penalties up to $1,000,000 per violation.
If our information technology systems, those of third parties with whom we work or our data are compromised or otherwise rendered unavailable, we could experience material adverse consequences resulting from such compromise.
The proper functioning of our information technology infrastructure is critical to the efficient operation of our business. Our IT systems are vulnerable to Security Incidents, viruses, malware, ransomware, physical and electronic break-ins, and similar disruptions. We also outsource certain IT infrastructure to third parties, including cloud-based services, encryption and authentication technology, employee email, content delivery to clients, and other functions, which introduces additional cybersecurity risks. In some cases, our operations may depend on the continued availability and performance of these third-party services. We may not have the financial resources to update and maintain our IT infrastructure, and any failure could adversely impact operations. In addition, our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. Unauthorized acquisition, access, use or disclosure involving unsecured PHI could result in significant notification and remediation costs, as well as HIPAA violations and significant fines. Failure of IT systems could delay billing, disrupt operations, compromise confidential information, and result in financial losses, litigation, regulatory enforcement, and reputational harm.
We depend on third parties for critical aspects of our operations, including cloud hosting, software, data processing, and content delivery. If these third parties fail to meet contractual or legal requirements; experience a Security Incident; or otherwise act in a manner inconsistent with our expectations, we may face additional exposure and costs. Our ability to monitor and influence third-party practices is limited, and available contractual indemnities or insurance may be insufficient to cover our losses. In some cases, we may have limited ability to quickly replace key technology providers or transition to alternative solutions without significant cost, delay, or operational disruption. Our systems may also incorporate open-source or other third-party software, which may present security vulnerabilities, licensing obligations, or other compliance risks that could expose us to liability or operational disruption.
While we have implemented security measures designed to protect against Security Incidents, there can be no assurance that these measures will be effective in all circumstances. We take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties upon which we rely). We have not, and may not in the future, however, detect and remediate all such vulnerabilities including on a timely basis. Further, we have experienced, and may in the future experience, delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities.
We are subject to stringent and evolving U.S. and foreign data privacy and security laws, and failure to comply could result in regulatory investigations or actions; litigation (including class actions and mass arbitrations); fines and penalties; operational disruptions; reputational harm; loss of revenue or profits; and other significant adverse consequences.
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, and otherwise handle personal data and other sensitive information, including PHI in connection with aspects of our healthcare operations. Our privacy and data security obligations include numerous federal, state, and foreign data privacy and security laws, including data breach notification laws, consumer protection laws, and comprehensive state privacy laws. These laws impose obligations including specific privacy notice disclosures, data subject rights (such as access, correction, and deletion rights), opt-out mechanisms for targeted advertising and profiling, and requirements for data privacy impact assessments. Complying with these obligations requires us to devote significant resources, which may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process sensitive data on our behalf.
The regulatory landscape is constantly evolving and may be interpreted or applied in ways that harm our business. New or emerging regulatory frameworks addressing technologies such as AI, biometric data, or advanced analytics may further increase compliance complexity or restrict certain business practices. In addition, these laws, regulations, and other obligations may also be interpreted and applied inconsistently from jurisdiction to jurisdiction. Evolving enforcement priorities increase our risk profile. Federal and state regulators, including the FTC and state attorneys general, have pursued enforcement actions related to privacy disclosures, tracking technologies, sensitive data uses, security practices, breach response, and health-related data handled outside traditional HIPAA contexts. Adverse enforcement or private litigation outcomes could be material.
Certain of our websites and digital properties use advertising and analytics technologies (for example, cookies, pixels, tags, software development kits, and similar tools) that enable interest-based advertising and measurement. The deployment of these technologies has been the subject of increasing private litigation, including putative class actions and mass arbitrations alleging unauthorized disclosures or interception of communications, as well as claims under common-law privacy, wiretap, video privacy, and private nuisance theories. If our use of such technologies, or that of our service providers or partners, is found to be inconsistent with applicable laws, consents, or public statements, we could face injunctive relief, statutory damages, significant defense costs, and requirements to modify or discontinue certain practices.
Despite the security measures we implement, we have experienced, and expect to continue to experience, attempts to compromise our systems and those of our third parties. A Security Incident could result in unauthorized access to or loss of personal data, PHI, confidential information, or digital assets; service interruptions; theft or fraud; and other harm. We could incur substantial investigation, notification, remediation, and litigation costs; face regulatory inquiries and enforcement; suffer reputational damage; and experience revenue or client losses. The occurrence, frequency, and impact of these incidents are difficult to predict, and our insurance coverage may be inadequate to compensate for all losses.
We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties upon which we rely may fail to comply with such obligations, which could negatively impact our business operations. If we or the third parties with whom we work fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines (including regulatory fines and sanctions), penalties, audits, inspections, and similar); litigation (including class-action claims and mass arbitration demands); additional reporting requirements and/or oversight; bans on processing personal data; and orders to destroy or not use personal data. Any of these events could have a material adverse effect on our reputation, business, or financial condition.
We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties.
We employ individuals who were previously employed at other companies. Although we try to ensure that our employees, consultants and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants, or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties. Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these claims, and even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees. Even if we are successful in defending against these types of claims, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. Uncertainties resulting from the initiation and continuation of intellectual property litigation or other intellectual property related proceedings could adversely affect our ability to compete in the marketplace.
We may be unable to adequately protect our intellectual property rights, and we may be subject to claims that we have infringed the intellectual property rights of others.
Our business depends on our ability to create, protect, and monetize intellectual property, including trademarks, copyrights, trade secrets, and proprietary content. We rely on a combination of intellectual property laws, contractual provisions, and technical measures to protect our rights, but these measures may not be sufficient to prevent unauthorized use, copying, or distribution of our content. Digital piracy and unauthorized redistribution of our premium content, conference recordings, and other materials could diminish their value and reduce our revenues. Additionally, we may be subject to claims that our content, branding, or operations infringe the intellectual property rights of third parties. Our live events and media productions may incorporate music, video, images, or other content that requires licenses from third parties, and we may face claims if we fail to obtain or maintain appropriate licenses. The costs of defending against intellectual property claims, even if ultimately unsuccessful, can be substantial and divert management attention. Adverse judgments could result in significant damages, require us to cease using certain content or branding, or require us to enter into costly licensing arrangements. Any of these outcomes could have a material adverse effect on our business, financial condition, and results of operations.
Risks Related to Our Management Team
Certain members of our senior management team have limited public company experience, and we are highly dependent on certain key executives whose loss could adversely affect our business.
Certain members of our management team have limited experience managing and operating a U.S. publicly traded company and complying with the increasingly complex laws pertaining to public companies. These obligations require significant attention from senior management and could divert attention from day-to-day operations. We may not have adequate personnel with appropriate knowledge, experience, and training in accounting policies, practices, or internal controls required of public companies, and the development of necessary standards and controls may require greater costs than expected. We plan to recruit additional qualified employees or external consultants, which will increase operating costs.
We are highly dependent on David Bailey, our Chairman and CEO, and other members of our senior management team. The loss of any key personnel could impact our ability to maintain relationships with customers, partners, and investors, execute our business strategy, and meet business objectives. The unanticipated departure of key executives could cause uncertainty among investors and employees, leading to Common Stock price volatility or operational challenges.
Social media activity by our directors and officers may pose reputational, regulatory, and Common Stock price risks.
Certain directors and executive officers maintain active social media accounts on platforms such as X (formerly Twitter), LinkedIn, and Instagram. Statements made on social media-whether related to Company business or personal views-may be attributed to us, resulting in reputational harm, regulatory scrutiny, or adverse reactions from investors, customers, or stakeholders. If such communications are incorrect, include material nonpublic information, or are inconsistent with public disclosures, we could face legal, regulatory, or investor relations challenges. Negative or inaccurate posts about our Company could damage our reputation and brand, and we may be unable to timely respond to or correct such content. While we maintain disclosure controls and guidelines, we cannot guarantee compliance at all times or prevent dissemination of information that may adversely affect our business.
Equity compensation awards to executives and directors may dilute existing stockholders.
We use equity-based compensation, including restricted stock units and performance-based awards, as a key component of our compensation programs. The grant and vesting of equity awards increase the number of shares of Common Stock outstanding, which may dilute existing stockholders’ ownership interests and reduce earnings per share. We may amend or expand equity compensation plans, increase share reserve authorizations, or accelerate vesting, any of which could result in additional dilution. While we may engage in share repurchase programs or utilize net-share settlement to offset dilutive effects, there is no assurance these actions will fully mitigate dilution from equity compensation.
Limitations on directors and officers insurance may affect our ability to attract and retain qualified executives .
Our business depends on attracting independent directors, executives, and senior management to advance our Bitcoin operations. We currently have D&O insurance; however, our Company and our directors and officers remain susceptible to third-party liability claims. Due to our Bitcoin operations and the underdeveloped insurance market related to digital assets, the cost of D&O insurance may increase significantly, and such coverage may be limited or eliminated completely. If adequate and cost-effective D&O insurance is not available, we may be unable to attract and retain qualified independent directors and executive management, which could impede the development of our business plans.
Risks Related to Future Acquisitions
We may not realize the anticipated benefits or synergies from mergers, acquisitions, or other strategic transactions.
We may fail to realize the anticipated benefits and synergies from acquisitions, including the BTC Merger and UTXO Merger, which could adversely affect our business, financial condition, and operating results. The success of these acquisitions depends on our ability to successfully integrate the acquired businesses, grow revenue, realize targeted synergies, and achieve anticipated strategic benefits. We expect to continue to evaluate and pursue potential mergers, acquisitions, investments, joint ventures, and other strategic transactions intended to acquire more Bitcoin, expand services and products, enhance technology capabilities, acquire talent, increase scale, and enter new markets. These transactions involve numerous risks and uncertainties that could prevent us from realizing anticipated benefits and could adversely affect our business, results of operations, financial condition, and cash flows.
The success of strategic transactions depends on our ability to effectively identify opportunities, obtain regulatory approvals, and integrate operations, technologies, systems, and personnel. Integration efforts may divert management attention, result in loss of key employees or customers, and require substantial investment. We may face unanticipated liabilities and compliance obligations relating to intellectual property, data protection, tax, labor, anti-corruption, sanctions, and other legal commitments. We may not achieve commercial, strategic, or financial objectives due to overestimation of opportunities, underestimation of costs, competitive responses, or changes in laws affecting the acquired business. Anticipated synergies and cost savings may take longer than expected, be less than expected, or not occur. These risks could lead to operating difficulties, missed financial targets, and increased costs, and we may be required to record impairments of goodwill or other assets if performance is below expectations.
We have incurred, and may continue to incur, significant transaction and integration costs in connection with acquisitions.
We have incurred, and may continue to incur, substantial non-recurring costs associated with negotiating and completing acquisitions, including fees paid to financial, legal, accounting, and other advisors, employee retention and severance costs, and filing fees. We may also incur costs related to integration plans, including facilities and systems consolidation and employment-related costs. Additional unanticipated costs may be incurred, and there are many factors beyond our control that could affect the total amount or timing of expenses. The elimination of duplicative costs and realization of efficiencies may not offset integration-related costs and achieve a net benefit in the near term or at all.
Future transactions may cause fluctuations in the market price of our Common Stock.
The announcement, pendency, or completion of future transactions-including mergers, acquisitions, divestitures, joint ventures, or other strategic initiatives-may result in significant fluctuations in the market price of our Common Stock, regardless of actual operating performance. In addition, following an acquisition such as the BTC Merger and UTXO Merger, the market price of our Common Stock may be influenced by factors that differ from those that historically impacted our stock. Our business operations, financial condition, and prospects may differ significantly from those prior to any such acquisition. Market participants may react to transactions based on expectations regarding potential benefits, risks, integration challenges, or exposure to new markets or regulatory environments. The terms of future transactions, such as issuance of additional shares as consideration, could result in dilution to existing stockholders. Announced transactions may be delayed, challenged by regulators, or not completed at all, and there can be no assurance that anticipated benefits will be realized.
Litigation related to strategic transactions could result in significant costs, delays, or other adverse impacts on our business, financial condition, and results of operations.
Companies undertaking mergers, acquisitions, divestitures, joint ventures, financings, restructurings or other strategic transactions frequently face litigation and regulatory challenges, including securities class actions, stockholder derivative actions, fiduciary duty claims, appraisal proceedings, books-and-records demands, and antitrust or other governmental inquiries. Such claims may be brought before or after announcement or completion of a transaction and may be filed in multiple jurisdictions. Even if these matters lack merit, they can be costly and time-consuming to defend, may divert the attention of management and employees from the operation of the business, and may disrupt relationships with customers, suppliers and other counterparties.
Adverse outcomes in these matters could result in monetary damages, attorneys’ fees, settlements, indemnification obligations, changes to or termination of transaction terms, or injunctive or other equitable relief that delays, limits or prevents the consummation or integration of a transaction. Insurance coverage, including directors’ and officers’ insurance, may be insufficient to cover all costs or judgments, may be subject to significant retentions, or may not be available on commercially reasonable terms. There can be no assurance regarding the outcome of any pending or future litigation or regulatory proceedings, and any related costs, liabilities or delays could adversely affect our liquidity, financial condition, results of operations and cash flows.
There may be unforeseen liabilities in connection with the future acquisitions.
We may be subject to undisclosed or otherwise unforeseen tax, pension, litigation or other liabilities which are not currently known or which have been underestimated in connection with future acquisitions. If unforeseen liabilities materialize or known liabilities are greater than are currently estimated, they could have a material adverse effect on our business, financial condition and results of operations and, going forward, could adversely affect the results of the combined company.
The risk factors referred to above, as well as other risks not mentioned above, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us. Further, any forward-looking statement speaks only as of the date on which it is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which ones will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
