FORUM MARKETS Inc
For the period ended Dec 31, 2025. Filed Apr 1, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Apr 1, 2026
FRMM$3.040.0%Stored close · as of Nov 6, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001213900-25-026273
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-04-01.
0001213900-26-037888
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 332 previous paragraphs and 110 current paragraphs.
5 unchanged; 11 reworded; 94 added; 315 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 72 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (94)
Current report
Ownership of our securities involves a high degree of risk. You should carefully consider the risks described below, together with all other information contained in or incorporated by reference into this Report, including our consolidated financial statements and the notes thereto, and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The following discussion highlights material risks that could adversely affect our business, financial condition, results of operations, cash flows, liquidity, prospects and the trading price of our common stock. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of the risks actually occur, our business could be materially harmed and the market price of our common stock could decline, and you could lose all or part of your investment.
Current report
Risks Related to Holding Digital Assets and Our Tokenization Strategies
Current report
Our business strategy has a limited operating history and volatility in the price of our tokenized securities could materially and adversely affect our financial results and the market price of our common stock.
Current report
Our business strategy has a limited operating history and may not perform as we expect across different market conditions. If we are unable to execute our RWA tokenization due to limitations of availability of capital, our financial condition, results of operations, and the market price of our common stock could be materially adversely affected. Our ability to pursue this strategy also depends, in significant part, on our ability to raise capital on acceptable terms.
Current report
In addition, our tokenized securities may experience significant price volatility and limited liquidity, particularly because our tokenization activities are at an early stage and secondary-market infrastructure for tokenized securities has limited operating history. We have limited experience developing and commercializing tokenized products, and we may not be able to launch, scale, or generate material revenues from tokenization activities on a timely basis or at all. The trading price of our tokenized securities may be affected by, among other things, market acceptance, liquidity and price discovery, the availability and reliability of relevant market infrastructure and intermediaries, and regulatory developments, and may fluctuate for reasons unrelated to our operating performance. If we are unable to successfully execute our tokenization strategy, our business, financial condition, results of operations, and prospects could be materially adversely affected.
Current report
We face risks relating to the custody of our Digital Assets, including concentration with one or more custodians, limits on insurance coverage, and adverse outcomes in insolvency proceedings.
Current report
We hold our digital assets with regulated custodians that have contractual duties to safeguard our private keys. Our custodial services contracts do not restrict our ability to reallocate our digital assets among our custodians, and our digital asset holdings may be concentrated with a single custodian from time to time. In light of the significant amount of digital assets we hold, we may seek to engage additional custodians to achieve a greater degree of diversification in the custody of our digital assets as the extent of potential risk of loss is dependent, in part, on the degree of diversification. If there is a decrease in the availability of digital asset custodians that we believe can safely custody our digital assets, 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 digital assets, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected.
Current report
Any insurance that we may have or may obtain covering losses of our digital asset holdings may cover none or only a small fraction of the value of the entirety of our digital asset holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our digital assets. Moreover, our use of custodians exposes us to the risk that the digital assets 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 digital assets. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our digital assets. The legal framework governing digital asset ownership and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could result in unexpected losses, protracted recovery processes or adverse treatment in insolvency proceedings.
Current report
If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue our business as currently conducted.
Current report
Under the Investment Company Act, a company generally will be considered an investment company if it primarily invests in securities or if it owns more than 40% of its total assets in securities. Although we do not believe we meet these tests, a substantial portion of our assets are digital assets, including ETH, which currently represent more than 40% of our total assets. In addition, we plan to tokenize RWAs and have acquired minority interests in several other companies. While we do not currently consider these assets to be “investment securities” under the Investment Company Act, there is a risk that the SEC or another regulatory authority could treat some or all of these assets as securities for these purposes.
Current report
If any of these assets were deemed to be investment securities, our ownership could exceed the thresholds for investment company status, which could require us to take actions to dispose of assets, restrict our operations, or otherwise alter our business strategy. Reliance on available exemptions or safe harbors under the Investment Company Act, may not be available when needed and could require us to limit certain business activities, including tokenization projects or holding minority interests.
Current report
Because the rules governing digital assets, tokenized assets, and minority investments are uncertain and evolving, there can be no assurance that we will not be deemed to be an investment company in the future. Being classified as an investment company could materially and adversely affect our business, financial condition, results of operations, and prospects.
Current report
Volatility in the price of our tokenized securities could materially adversely affect our financial results and the market price of our common stock.
Current report
Our business strategy has a limited operating history and may not perform as we expect across different market conditions. If we are unable to execute our RWA tokenization strategy due to limitations of availability of capital, our financial condition, results of operations, and prospects and the market price of our common stock could be materially adversely affected. Our ability to pursue this strategy also depends, in significant part, on our ability to raise capital on acceptable terms.
Current report
In addition, our tokenized securities may experience significant price volatility and limited liquidity, particularly because our tokenization activities are at an early stage and secondary-market infrastructure for tokenized securities has limited operating history. We have limited experience developing and commercializing tokenized products, and we may not be able to launch, scale, or generate material revenues from tokenization activities on a timely basis or at all. The trading price of our tokenized securities may be affected by, among other things, market acceptance, liquidity and price discovery, the availability and reliability of relevant market infrastructure and intermediaries, and regulatory developments, and may fluctuate for reasons unrelated to our operating performance. If we are unable to successfully execute our tokenization strategy, our business, financial condition, results of operations, and prospects and the market price of our common stock could be materially adversely affected.
Current report
Regulatory uncertainty regarding ETH, our digital assets treasury strategy and our tokenization activities could subject us to additional regulation, enforcement actions and significant compliance costs, require us to materially change or cease certain operations, and adversely affect the market price of ETH and our securities.
Current report
The regulatory treatment of digital assets generally, ETH specifically, and tokenized instruments representing interests in RWAs is evolving and remains uncertain in the United States and abroad. Regulatory authorities, including the SEC, the CFTC, FINRA and state regulators, have taken differing, and at times inconsistent, positions regarding the classification and regulation of digital assets, digital asset transactions, and tokenized securities. As a result, we cannot predict whether, when, or how new laws, regulations, interpretive guidance, enforcement priorities or judicial decisions will impact ETH, our ETH-related activities, or our tokenization strategy. Any such developments could increase our compliance costs, restrict our operations, limit the availability of service providers and trading venues, reduce liquidity, or otherwise adversely affect our business, financial condition, results of operations and prospects, as well as the market price of ETH and the market price of our securities.
Current report
The Digital Asset Interpretation represents a shift in the SEC’s regulatory posture toward the crypto asset industry, moving from reliance primarily on enforcement actions to affirmative guidance establishing a classification framework and clarifying when crypto-related activities do or do not implicate the federal securities laws. While the Digital Asset Interpretation conveys the SEC’s views on how the definition of “security” applies to crypto assets, it does not have the binding force of a regulation adopted through notice-and-comment rulemaking. Accordingly, courts are not bound by it and may reach different conclusions, and a future SEC could revise or withdraw it.
Current report
Notwithstanding the Digital Asset Interpretation, if ETH were determined to be a digital security, we could become subject to additional regulatory requirements and potential enforcement proceedings, including injunctions, cease-and-desist orders, fines and penalties, and we could be required to alter, suspend or restrict aspects of our digital assets treasury strategy, including our ability to acquire, hold, stake, lend, collateralize or otherwise transact in ETH. In addition, a determination that ETH, or other digital assets or interests we hold, constitutes “investment securities” for purposes of the Investment Company Act could increase the risk that we would be deemed an investment company, which could require us to dispose of assets, restrict our operations, or otherwise materially change our business strategy, and could make it impractical for us to continue our business as currently conducted.
Current report
Even if ETH is not treated as a tokenized security under the Digital Asset Interpretation or otherwise, ETH is treated as a digital commodity under the Digital Asset Interpretation and the CFTC has stated that it intends to administer the CEA consistent with the SEC’s interpretation. The CFTC has in the past asserted regulatory authority over certain ETH-related markets and activities. Legislative or regulatory developments, including new or revised CFTC interpretations or rules, could expand or otherwise change the regulatory obligations applicable to ETH, ETH derivatives, or other ETH-related transactions. To the extent our current or future activities are deemed to require CFTC registration or enhanced compliance, including, depending on the structure of our activities, as a commodity pool operator and or commodity trading advisor and registration of the Company as a commodity pool through the National Futures Association, we could incur substantial, non-recurring and ongoing expenses, face operational constraints, and be required to limit, restructure or cease certain activities, any of which could materially adversely affect our business and results of operations.
Current report
Our tokenization activities also involve significant securities law and related regulatory considerations. Our business model involves the securitization of RWAs and the issuance of digital, tokenized instruments representing interests in such assets that may be offered and sold in primary transactions and traded in secondary markets. Because our tokenized RWA products are digital securities under the Digital Asset Interpretation, our offers and sales are subject to the Securities Act, including the requirement to register each offer and sale or rely on an available exemption, and regulators have stated that tokenization, including on-chain recordkeeping, does not change the application of the federal securities laws. Accordingly, regulators could determine that aspects of our tokenization, distribution, transfer and trading arrangements, including arrangements involving Liquidity.io or other intermediaries or trading venues, require additional registrations or compliance under the Exchange Act, including as an exchange or alternative trading system, broker-dealer, dealer, clearing agency or otherwise, or under the Investment Company Act or the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Any such determination could require us to modify, limit, delay or cease certain token offerings or tokenization-related operations, could result in significant legal and compliance costs, and could expose us to investigations, enforcement actions, civil litigation, rescission claims, reputational harm, and restrictions on our ability to operate in certain jurisdictions.
Current report
These risks may be compounded by regulatory changes or enforcement actions affecting the broader digital asset ecosystem and the service providers on which we rely, including custodians, trading venues, staking providers, broker-dealers, identity verification and AML providers, and other counterparties. In addition, evolving requirements under AML, sanctions, money services and money transmission regimes, as well as foreign regulatory frameworks, could further increase our costs, impose new operational constraints, limit market access, or reduce liquidity.
Current report
Any of the foregoing could materially and adversely affect our business, financial condition, results of operations and prospects, and could cause the market price of ETH and the market price of our securities to decline.
Current report
We are dependent on third parties and third-party platforms to execute and support the trading and transfer of our tokenized securities
Current report
Secondary trading of our Aero Token occurs on Liquidity.io and we expect that any secondary trading of our tokenized securities would occur on one or more registered alternative trading systems, including Liquidity.io. These platforms and the related technology and market infrastructure for secondary trading of tokenized securities are relatively new and have limited operating history with respect to securities such as ours. As a result, the initial distribution, listing, or secondary trading of our tokenized securities may experience technical difficulties, limited liquidity, limited price transparency, market fragmentation, operational disruptions, or other challenges that could impair trading activity, hinder price discovery, or adversely affect the perceived value of our tokenized securities.
Current report
If we are unable to obtain or maintain access to one or more suitable staking providers, custodians, or trading venues, or if staking or trading on such platforms is delayed, limited, disrupted, or terminated, our ability to execute our tokenization strategy, attract participants, and generate revenues from tokenization-related activities could be materially and adversely affected.
Current report
We rely on third-party service providers to support “know-your-customer” and AML investor verification for our tokenized securities, and any failure or interruption of those services could disrupt our tokenization activities.
Current report
We expect to rely on one or more third-party compliance and identity verification providers to perform “know-your-customer,” AML, sanctions screening and related investor verification processes in connection with the offer, sale, issuance and transfer of our tokenized securities, including to support gating functionality and maintaining records of verified participants.
Current report
If any such provider experiences service interruptions, cybersecurity incidents, data integrity issues, regulatory actions, technology failures, or ceases operations, we may be unable to onboard new participants, process subscriptions, complete issuances, or permit transfers of our tokenized securities. Any failure or compromise of these systems could also impair the accuracy or integrity of our verification and compliance records, expose us to regulatory scrutiny or enforcement risk, and lead to customer disputes, reputational harm, and additional legal and compliance costs. In addition, migrating to an alternative provider may be time-consuming, costly, and operationally complex, and could require changes to our processes, technology integrations, or contractual arrangements. Any of the foregoing could reduce liquidity, delay or limit our tokenization initiatives, and materially and adversely affect our business, results of operations and prospects.
Current report
We may rely on smart contracts that are upgradeable, which could introduce operational, security, and governance risks and could adversely affect our tokenization activities.
Current report
Our tokenization activities may rely on smart contracts and related blockchain-based infrastructure that are implemented using upgradeable proxy patterns or other mechanisms that permit changes to contract logic after deployment. While upgradeability can allow us or our service providers to address bugs, add features, respond to regulatory developments, or modify functionality, it also introduces risks.
Current report
Contract upgrades may be implemented incorrectly, may introduce new vulnerabilities, may create unexpected interactions with other protocols or infrastructure, or may otherwise impair the functionality, security, or reliability of the smart contracts. In addition, upgrade authority may create governance and control risks, including the risk of misuse, key compromise, or actions that are perceived as unfavorable by users, counterparties, regulators, or other market participants.
Current report
Any failure, exploit, or disruption relating to our smart contracts, or any perception that our tokenized instruments are subject to uncertain or changeable rules, could lead to financial losses, trading or transfer disruptions, customer disputes, regulatory scrutiny, reputational harm, and could materially and adversely affect our business, results of operations, and prospects.
Current report
If the Company fails to commercialize its plans to securitize RWAs and allow such RWAs to be monetized through tokenized tradable instruments with both primary and secondary market liquidity, in the future, the Company could once again be deemed to be a “shell company.”
Current report
Prior to the completion of our November 2020 initial business combination, we were a “shell company,” which is a company that (i) has no or nominal operations; and (ii) either: (A) no or nominal assets; (B) assets consisting solely of cash and cash equivalents; or (C) assets consisting of any amount of cash and cash equivalents and nominal other assets. In the future we could again be deemed a “shell company,” including if we fail to take significant steps to expand and commercialize our plans to securitize RWAs, and allow such RWAs to be monetized through tokenized tradable instruments with both primary and secondary market liquidity, in the future, or if we fail to undertake alternative business operations and/or if our expected ETH holdings are deemed cash equivalents. Rule 144 as promulgated under the Securities Act is not available for the resale of securities initially issued by a shell company (reporting or non-reporting) or a former shell company, unless certain conditions are satisfied. Because we are a former shell company, our securities cannot be resold under Rule 144 unless certain conditions are met. If in the future we become a “shell company” again, Rule 144 will not be available for the sale of our common stock or other securities until we cease to be “shell company” and at least one year has elapsed since we file Form 10 information with the SEC, subject to the other requirements of Rule 144.
Current report
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 ETH holdings, the manner in which our ETH 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. The board of directors of the Company (the “Board of Directors”) has broad discretion over the investment, leverage and cash management policies it authorizes, whether in respect of our ETH holdings or other activities we may pursue, and has the power to change our current policies, including our strategy of acquiring, holding and selling ETH.
Current report
As of December 31, 2025, approximately 79% of our assets were concentrated in our ETH holdings or resulted from funds received from the liquid staking of ETH. The concentration of our assets in ETH limits our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of balance sheet assets. If there is a significant decrease in the price of ETH, we may experience a more pronounced impact on our financial condition than if we invested our cash in a more diverse portfolio of balance sheet assets.
Current report
Our digital asset holdings expose us to risk of non-performance by providers and counterparties.
Current report
Our digital asset holdings expose us to the risk of non-performance by providers and counterparties, whether contractual or otherwise. Risk of non-performance includes inability or refusal of a provider or 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 our digital assets, a loss of the opportunity to generate funds, or other losses. Because many digital asset trading venues are relatively new and may provide limited transparency regarding their operations, controls and regulatory compliance, we may face heightened risk of fraud, security failures or operational disruptions at such venues and counterparties.
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Removed paragraphs (315)
Previous report
Risks Relating to Successfully Monetizing Existing Biotech IP
Previous report
As we are no longer developing or conducting studies regarding our SCA asset and ATNF IP, we may not be able to successfully monetize such assets or intellectual property.
Previous report
Risks Relating to Our Need For Additional Funding
Previous report
Risks Relating to Our Planned Online Casino Operations
Previous report
Risks Relating to Our Plans to Allow Players to Deposit and Withdraw Cryptocurrency
Previous report
Risks Relating to Our Ineffective Disclosure Controls and Procedures
Previous report
You should be aware that there are substantial risks for an investment in our common stock. You should carefully consider these risk factors before you decide to invest in our common stock.
Previous report
If any of the following risks were to occur, our business, financial condition, results of operations or other prospects, could be materially adversely affected, and the occurrence of any of these risks could materially affect our likelihood of success. If that happens, the market price of our common stock, if any, could decline, and prospective investors would lose all or part of their investment in our common stock.
Previous report
Our business, financial condition and results of operations are subject to various risks and uncertainties, including those described below. This section discusses factors that, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. It is not possible to predict or identify all such factors. Consequently, the following description of Risk Factors is not a complete discussion of all potential risks or uncertainties applicable to our business.
Previous report
Risks Relating to Our Need For Additional Funding
Previous report
Our current cash balance is only expected to be sufficient to fund our planned business operations until approximately December 2025. If additional capital is not available, we may not be able to pursue our planned business operations, may be forced to change our planned business operations, or may take other actions that could adversely impact our stockholders, including seeking bankruptcy protection.
Previous report
We are a clinical stage biotechnology company that is transitioning into the iGaming industry via the acquisition of the Gaming Technology Platform, which platform currently has no revenue. Thus, our business does not generate the cash necessary to finance our planned business operations. We will require significant additional capital to: (i) protect our intellectual property; (ii) attract and retain highly-qualified personnel; (iii) respond effectively to competitive pressures; and (iv) acquire complementary businesses or technologies.
Previous report
Our future capital needs depend on many factors, including: (i) the scope, duration and expenditures associated with our research, development and commercialization efforts as they relate to iGaming; (ii) the outcome of potential partnering or licensing transactions, if any; (iii) competing technological developments with regards to our iGaming platform; and (iv) protecting and supporting our proprietary patent positions.
Previous report
We will need to raise substantial additional funds through public or private equity offerings, debt financings or strategic alliances and licensing arrangements to finance our planned business operations. We may not be able to obtain additional financing on terms favorable to us, if at all. General market conditions, rising interest rates and inflation, as well as global conflicts such as the ongoing conflict between Ukraine and Russia, and Israel and Hamas, may make it difficult for us to seek financing from the capital markets, and the terms of any financing may adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities, further dilution to our stockholders will result, which may substantially dilute the value of their investment. Any equity financing may also have the effect of reducing the conversion or exercise price of our outstanding convertible or exercisable securities, which could result in the issuance (or potential issuance) of a significant number of additional shares of our common stock. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. Debt financing, if available, may involve restrictive covenants that could limit our flexibility to conduct future business activities and, in the event of insolvency, could be paid before holders of equity securities received any distribution of our assets. We may be required to relinquish rights to our technologies or product candidates, or grant licenses through alliance, joint venture or agreements on terms that are not favorable to us, in order to raise additional funds. Our current cash balance is only expected to be sufficient to fund our planned business operations until approximately December 2025. If adequate funds are not available, we may have to delay, reduce or eliminate one or more of our planned activities with respect to our business, or terminate our operations, or may be forced to seek bankruptcy protection. These actions would likely reduce the market price of our common stock.
Previous report
We will need additional capital which may not be available on commercially acceptable terms, if at all, which raises questions about our ability to continue as a going concern.
Previous report
As of December 31, 2024, we had an accumulated deficit of $141,523,344 and a working capital deficit of $1,636,486, and for the year ended December 31, 2024, a net loss of $6,168,177 and cash used in operating activities for the year ended December 31, 2024, of $1,480,567. As of March 24, 2025, we had cash on hand of approximately $3.8 million. The Company expects to invest a significant amount of capital to commercialize its iGaming assets and fund research and development. On September 29, 2024, the Company acquired certain source code and intellectual property relating to an online blockchain casino and plans to build and launch a fully operational casino operation as part of its future operations. The Company expects to invest a significant amount of capital to fund the development and operation of this business. As a result, the Company expects that its operating expenses will increase significantly, and consequently will require significant revenues to become profitable. Even if the Company does become profitable, it may not be able to sustain or increase profitability on a quarterly or annual basis. The Company cannot predict when, if ever, it will be profitable. As of March 24, 2025, we had cash on hand of approximately $3.8 million, including certain funds with certain restrictions on use (including, restrictions on repaying existing indebtedness) which we expect will last us until December 2025. Our Consolidated Financial Statements included herein have been prepared assuming we will continue as a going concern. As we are not generating revenues, we need to raise a significant amount of capital in order to pay our debts and cover our operating costs. While we have raised funds in the past through debt and the sale of equity, there is no assurance that we will be able to raise additional needed capital or that such capital will be available under favorable terms.
Previous report
We are subject to all the substantial risks inherent in the development of a new business enterprise within an extremely competitive industry. Due to the absence of a long-standing operating history and the emerging nature of the markets in which we compete, we anticipate operating losses until we can successfully implement our business strategy, which includes all associated revenue streams. We may never achieve profitable operations or generate significant revenues.
Previous report
We currently have a monthly cash requirement of approximately $252,000. We believe that in the aggregate, we will require significant additional capital funding to support and expand our iGaming assets, the research and development and marketing of our products, fund future clinical trials, repay debt obligations, provide capital expenditures for additional equipment and development costs, payment obligations, office space and systems for managing the business, and cover other operating costs until our planned revenue streams from products are fully-implemented and begin to offset our operating costs, if ever.
Previous report
Since our inception, we have funded our operations with the proceeds from equity and debt financing. We have experienced liquidity issues due to, among other reasons, our limited ability to raise adequate capital on acceptable terms. We have historically relied upon the sale of equity and debt funding that is convertible into shares of our common stock to fund our operations and have devoted significant efforts to reduce that exposure. We anticipate that we will need to issue equity to fund our operations and fund our operating expenses for the foreseeable future. If we are unable to achieve operational profitability or we are not successful in securing other forms of financing, we will have to evaluate alternative actions to reduce our operating expenses and conserve cash.
Previous report
These conditions raise substantial doubt about our ability to continue as a going concern. The Consolidated Financial Statements included herein have been prepared in accordance with accounting principles generally accepted in the United States on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the Consolidated Financial Statements included herein do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable to continue as a going concern. The Consolidated Financial Statements included herein also include a going concern footnote.
Previous report
We may not receive any additional amounts under our pre-merger directors’ and officers’ insurance policy in connection with certain litigation matters and may be forced to repay $2.57 million previously received.
Previous report
On June 29, 2022, AmTrust International Underwriters DAC (“AmTrust”), which was the premerger directors’ and officers’ insurance policy underwriter for KBL, filed a declaratory relief action against the Company in the U.S. District Court for the Northern District of California (the “Declaratory Relief Action”) seeking a declaration that AmTrust is not obligated to reimburse the Company for fees advanced by the Company to Dr. Marlene Krauss and George Hornig, former officer and directors of the Company, under the directors’ and officers’ insurance policy.
Previous report
On September 20, 2022, the Company filed its Answer and Counterclaims against AmTrust for bad faith breach of AmTrust’s insurance coverage obligations to the Company under the subject insurance policy, seeking at least $2 million in compensatory damages, and punitive damages. In addition, the Company brought a Third-Party Complaint against its excess insurance carrier, Freedom Specialty Insurance Company (“Freedom”) seeking declaratory relief that Freedom will also be required to honor its policy coverage as soon as the amount of AmTrust’s insurance coverage obligations to the Company has been exhausted. On October 25, 2022, AmTrust filed its Answer to the Company’s Counterclaims and, on October 27, 2022, Freedom filed its Answer to the Third-Party Complaint.
Previous report
On November 22, 2022, the Company filed a Motion for Summary Adjudication against both AmTrust and Freedom. The Motion was fully briefed and a hearing was held on March 9, 2023. The standard to prevail on a Motion for Summary Adjudication in the Court is high to prevail and requires a judge to find that there are no disputed issues of fact so that they can rule on the issues as a matter of law. In this instance the judge found three major issues could be decided as a matter of law in the Company’s favor and that one issue, the Change in Control exclusion, requires further discovery.
Previous report
On April 21, 2023, the Court issued an Order Granting in Part and Denying in Part the Company’s Motion for Partial Summary Judgment.
Previous report
Specifically, the Court granted summary adjudication in favor of the Company on the following issues: (a) that the Company is, in fact, an insured under both the AmTrust and Freedom insurance policies; (b) that certain SEC subpoena related expenses for defendants Dr. Marlene Krauss, the Company’s former Chief Executive Officer and Director, and George Hornig, the former Chairman of the Board, are within the basic scope of coverage under both the AmTrust and Freedom insurance policies; and (c) that the Insured vs. Insured exclusion relied upon by AmTrust and Freedom is not applicable to bar any such coverage.
Previous report
The Court also found that there were issues of disputed facts as to the Change in Control exclusion contained within the policies, which therefore precluded the Court from granting the remainder of the Company’s requests for summary adjudication as a matter of law. Accordingly, the Court, at that time, denied the Company’s further requests for summary adjudication and deemed that for the time being, the Change in Control issue is to be determined at the time of trial, in order to find that the policies (i) provide coverage for the fees which the Company has advanced and will advance to Dr. Marlene Krauss and George Hornig; (ii) that AmTrust has breached the policy; (iii) that AmTrust must pay such expenses of the Company; and that, once the AmTrust policy has been exhausted, (iv) Freedom will be obligated to pay such expenses of the Company pursuant to its policy.
Previous report
On August 4, 2023, the Court granted the Company’s request to file a second motion for partial summary judgment in the case, this one being on the issue of whether AmTrust should be required to advance to the Company the defense costs being incurred by Dr. Marlene Krauss and George Hornig during the pendency of the case. The Motion for Partial Summary Judgment was fully briefed by the parties, and a hearing for such Motion was held on January 11, 2024. After the matter was taken under submission, on February 12, 2024, the Court granted the Company’s Motion for Partial Summary Judgment against both AmTrust and Freedom, and ordered as follows: (a) AmTrust is obligated under its insurance policy with the Company to advance to the Company all defense costs in excess of the deductible that the Company has advanced, or will advance, to Dr. Krauss and Mr. Hornig in connection with certain SEC Subpoenas, and (b) upon exhaustion of the AmTrust insurance policy, Freedom is obligated to do the same pursuant to its excess liability insurance policy with the Company. This Order applies throughout the interim of the case, but does not constitute a final judgment, and both the Company and the two insurers retain their rights to contest all applicable issues at trial.
Previous report
On April 16, 2024, AmTrust paid the Company $2.27 million in reimbursement of fees which the Company has advanced to Dr. Marlene Krauss and George Hornig, of which the Company received $1.5 million after the payment of attorney’s fees. On May 9, 2024, AmTrust paid the Company $300,140 in reimbursement of fees which the Company had advanced to Dr. Marlene Krauss and George Hornig, and the Company received $200,093 after the payment of attorney’s fees.
Previous report
The Company, Freedom and Amtrust held a mediation conference on August 21, 2024, during which, the Company agreed to the terms of a settlement with Freedom, pursuant to which Freedom agreed to pay $125,000 to the Company, of which the Company received approximately $83,333 after the payment of legal fees. On September 23, 2024, Freedom paid the Company a further $125,000 in reimbursement of fees advanced by the Company, of which the Company received $76,639 after the payment of attorney’s fees. On September 5, 2024, the Company and Freedom executed a mutual release agreement. The total of $1,789,443 is included in other income on the Company’s unaudited consolidated statements of operations and comprehensive income.
Previous report
A trial on these matters is currently scheduled for May 12, 2025 and the Company and AmTrust are scheduling mediation on February 27, 2025. A final judgment following trial could potentially confirm these obligations of the insurers or, alternatively, reverse and require the Company to repay all or portions of such advance payments, including up to and including the $2.57 million advanced by AmTrust. There is no assurance at this time as to what the final judgment may entail, or whether settlement efforts will lead to a final conclusion which is acceptable to the Company or AmTrust.
Previous report
While the Company continues to believe it has a strong case against AmTrust, there can be no assurance that the Company will prevail in this action. The final outcome of the litigation is unknown at this time and such final outcome could be materially adverse to the Company. In the event the Company were required to repay the $2.57 million advanced by AmTrust, it could materially adversely effect the Company’s ability to pay its expenses and its cash flows, significantly decrease the amount of funding available to support the Company’s business operations, force us to raise additional capital, which may be dilutive to existing stockholders, or force us to seek bankruptcy protection.
Previous report
Additional funding may not be available on favorable terms, if at all, causing dilution to our stockholders, restricting our operations or adversely affecting our ability to operate our business.
Previous report
We may not be able to obtain additional financing on terms favorable to us, if at all, including as a result of macroeconomic conditions such as a severe or prolonged economic downturn. Disruption, uncertainty or volatility in the capital markets could increase our cost of capital or limit our ability to raise funds needed to operate our business. Disruptions could be caused by Federal Reserve policies and actions, currency concerns, inflation, economic downturn or uncertainty, monetary policies, failures of financial institutions, U.S. debt management concerns, tariffs, interest rates, and U.S. debt limit and budget disputes, including government shutdowns, European and worldwide sovereign debt concerns, other global or geopolitical events, or other factors. Current macroeconomic conditions have negatively impacted the U.S. banking sector, including for example, the recent closures and FDIC receiverships of Silicon Valley Bank and Signature Bank. Although we do not have any accounts at or business relationships with these banks, we may be negatively impacted by other disruptions to the U.S. banking system caused by these or similar developments.
Showing the first 40 of 315 passages. Open the source sections for the rest.
Reworded paragraphs (11)
Previous wording
In the event we hold digital assets, such holdings are expected to be less liquid and more volatile than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
Current wording
Our ETH holdings are concentrated and less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
Previous wording
Historically, the crypto currency markets have been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our bitcoin or other digital assets at favorable prices or at all. For example, a number of bitcoin trading venues temporarily halted deposits and withdrawals in 2022. As a result, our bitcoin holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, bitcoin and other digital assets we hold with our custodians and transact with our trade execution partners do not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered bitcoin and other digital assets or otherwise generate funds using our bitcoin and other digital holdings, including in particular during times of market instability or when the price of bitcoin (or certain other digital assets) has declined significantly. If we are unable to sell our bitcoin and other digital assets, enter into additional capital raising transactions using bitcoin or our other digital holdings as collateral, or otherwise generate funds using our digital asset holdings, or if we are forced to sell our digital assets at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
Current wording
Historically, the ETH market has been characterized by significant price volatility, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our ETH at favorable prices or at all. In addition, trading venues may impose transaction or withdrawal limits or suspend withdrawals entirely, which could make it difficult or impossible for us to convert ETH to fiat currency when needed. For example, a number of ETH trading venues temporarily halted deposits and withdrawals in 2022. As a result, our ETH holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, ETH we hold with our custodians and transact with our trade execution partners does not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered ETH or otherwise generate funds using our ETH holdings, including in particular during times of market instability or when the price of ETH has declined significantly. If we are unable to sell our ETH, enter into additional capital raising transactions, including capital raising transactions, using ETH as collateral, or otherwise generate funds using our ETH holdings, or if we are forced to sell our ETH at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
Previous wording
Resales of our common stock in the public market may cause the market price of our common stock to fall.
Current wording
Resales of our common stock in the public market by our stockholders, or the perception that such sales may occur, may cause the market price of our shares of common stock to fall.
Previous wording
Sales of a substantial number of shares of our common stock could occur at any time. The issuance of new shares of our common stock could result in resales of our common stock by our current stockholders concerned about the potential ownership dilution of their holdings. In turn, these resales could have the effect of depressing the market price for our common stock.
Current wording
Sales of a substantial number of shares of our common stock could occur at any time. We have previously registered the resale of a significant number of shares of our common stock, and if sold in the market all at once or at about the same time, or if there is a perception that such sales could occur, it could significantly depress the market price of our common stock and could also affect our ability to raise equity capital in the future at a time and price that we deem reasonable or appropriate. The issuance of new shares of common stock could result in resales of our shares of common stock by our current stockholders concerned about the potential ownership dilution of their holdings. In turn, these resales could have the effect of depressing the market price for shares of our common stock.
Previous wording
Wherever possible, our Board will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock or where shares are to be issued to our officers, directors and applicable consultants. Our Board of Directors has authority, without action or vote of the stockholders, but subject to Nasdaq rules and regulations (which generally require stockholder approval for any transactions which would result in the issuance of more than 20% of our then outstanding shares of common stock or voting rights representing over 20% of our then outstanding shares of stock, subject to certain exceptions), to issue all or part of the authorized but unissued shares of common stock. In addition, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing stockholders, which may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.
Current wording
Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock or where shares are to be issued to our officers, directors and applicable consultants. Our Board of Directors has authority, without action or vote of the stockholders, but subject to Nasdaq rules and regulations (which generally require stockholder approval for any transaction that would result in the issuance of more than 20% of our then outstanding shares of common stock or voting rights representing over 20% of our then outstanding shares of stock, subject to certain exceptions), to issue all or part of the authorized but unissued shares of common stock. These actions will result in dilution of the ownership interests of existing stockholders, which may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.
Previous wording
We have never paid or declared any dividends on our common stock.
Current wording
We have never paid dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.
Previous wording
If we make any acquisitions, they may disrupt or have a negative impact on our business.
Current wording
If we make acquisitions, they may disrupt or have a negative impact on our business.
Previous wording
We have in the past, and may in the future, identify material weaknesses in our disclosure controls and procedures and internal control over financial reporting. If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our securities.
Current wording
We have in the past, and may in the future, identify material weaknesses in our disclosure controls and procedures and internal control over financial reporting. If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.
Previous wording
The Company’s management evaluated, with the participation of our principal executive officer and principal financial and accounting officer, the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of March 31, 2024, June 30, 2024 and September 30, 2024. Based on their evaluation, our principal executive officer and principal financial and accounting officer concluded that, as of March 31, 2024, June 30, 2024 and September 30, 2024, our disclosure controls and procedures were not effective to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions.
Current wording
The Company’s management evaluated, with the participation of our principal executive officer and principal financial and accounting officer, the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of December 31, 2025. Based on their evaluation, our principal executive officer and principal financial and accounting officer concluded that, as of December 31, 2025, our disclosure controls and procedures were not effective to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions.
Previous wording
Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements and we are committed to remediating our material weaknesses in such controls as promptly as possible. However, there can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future. Any failure to remediate the material weaknesses, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations or may lose confidence in our reported financial information. Likewise, if our financial statements are not filed on a timely basis as required by the SEC and Nasdaq, we could face severe consequences from those authorities. Any of these cases could result in a material adverse effect on our business, on our financial condition or have a negative effect on the trading price of our common stock and warrants. Further, if we fail to remedy any future deficiencies or maintain the adequacy of our disclosure controls and procedures and our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or stockholder litigation against us or our management.
Current wording
Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements and we are committed to remediating our material weakness in such controls as promptly as possible. However, there can be no assurance as to when this material weakness will be remediated or that additional material weaknesses will not arise in the future. Any failure to remediate the currently identified material weakness, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations or may lose confidence in our reported financial information. Likewise, if our financial statements are not filed on a timely basis as required by the SEC and Nasdaq, we could face severe consequences from those authorities. Any of these cases could result in a material adverse effect on our business, on our financial condition or have a negative effect on the trading price of our common stock. Further, if we fail to remedy any future deficiencies or maintain the adequacy of our disclosure controls and procedures and our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or stockholder litigation against us or our management.
Previous wording
We can give no assurance that the measures we take in the future will remediate any additional material weaknesses which could be identified, or restatements of our financial statements will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of those controls.
Current wording
We can give no assurance that the measures we take in the future will remediate any additional material weaknesses which could be identified, or that restatements of our financial statements will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of those controls.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Additionally, wherever possible, the Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock, preferred stock or warrants to purchase shares of our common stock. The Board of Directors has authority, without action or vote of the stockholders, but subject to Nasdaq rules and regulations (which generally require stockholder approval for any transactions which would result in the issuance of more than 20% of our then outstanding shares of common stock or voting rights representing over 20% of our then outstanding shares of stock, subject to certain exceptions), to issue all or part of the authorized but unissued shares of common stock, preferred stock or warrants to purchase such shares of common stock. In addition, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market in the future. These actions will result in dilution of the ownership interests of existing stockholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of us, because the shares may be issued to parties or entities committed to supporting existing management.