USBC, Inc.
For the period ended Dec 31, 2025. Filed Mar 25, 2026.
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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 Mar 25, 2026
USBC$0.37+2.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-09-30; filed 2025-12-19.
0001654954-25-014138
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-25.
0001654954-26-002725
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe 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 73 previous paragraphs and 74 current paragraphs.
26 unchanged; 18 reworded; 28 added; 29 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 6 previous and 5 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 (28)
Current report
Results of the Transition Period are not directly comparable to results for prior annual periods due to our fiscal year end change from September 30 to December 31. Accordingly, the operating results for the Transition Period should not be considered indicative of historical or future full-year operating performance.
Current report
USBC, Inc. continues to focus on the development of its financial‑technology platform and related digital‑asset initiatives, including its pre‑launch tokenized‑deposit program and Bitcoin‑based treasury activities. Our operating results for the Transition Period primarily reflect ongoing investment in these initiatives, the integration of newly established banking and technology partnerships, and certain legacy research and development activities.
Current report
A detailed description of our business, operating strategy and product development initiatives is included in Item 1 — Business, and the discussion below should be read together with that section as well as with the consolidated financial statements and accompanying notes. This MD&A focuses on the specific factors that affected our financial condition, results of operations, liquidity and capital resources during the Transition Period, including the impact of our digital‑asset treasury strategy, pre‑launch development expenditures, public‑company compliance requirements, and our recently implemented capital structure.
Current report
On January 20, 2026, we entered into a Strategic Partnership Agreement with Uphold and Vast Bank, which formalized the parties’ respective roles and responsibilities related to the development and operation of the USBC tokenized deposit program, formalizing the terms of the parties’ preliminary partnership previously announced on October 23, 2025. Under the agreement, Vast Bank will serve as the issuing bank for customer deposit accounts, Uphold will provide platform integration and customer access, and we will operate the tokenized deposit network. The tokenized deposit program has not yet been commercially launched, and we continue to advance technical, operational, and regulatory readiness. The timing, scope, and ultimate commercial impact of the initiative remain subject to uncertainty and will depend on a number of factors, including regulatory considerations, partner alignment, and customer adoption.
Current report
In February 2026, we completed our evaluation of the legacy non-invasive sensor business and we have elected to proceed with a divestiture transaction. Negotiations with the potential buyer are nearing completion; however, there is no assurance that any transaction will be consummated. The financial impact of the potential divestiture transaction is not expected to be material to our financial statements.
Current report
On March 10, 2026, we initiated Phase 1 of our multi-phase delivery strategy for how we will bring the USBC tokenized deposit product to market. Phase 1 is being conducted with a limited group of internal users who have elected to participate in an expanded employee pilot program ahead of the public launch of the branded platform. Phase 1 is not a consumer offering and is not available to the public; it is intended solely to begin technical readiness testing. During this phase, testing activities are conducted exclusively with company-provided funds for internal evaluation purposes. The results of Phase 1 will inform our evaluation of the timing and scope of subsequent phases of the delivery strategy and when the tokenized deposit product offering may become available to retail customers. Any future retail launch will remain subject to the outcome of the pilot program and receipt of any required regulatory, board, and bank partner approvals.
Current report
On March 18, 2026, we entered into a secured borrowing facility with Payward Interactive, Inc. (the “Facility”), providing for aggregate borrowings of up to $25 million during the term of the Facility which matures on March 18, 2027. The Facility is collateralized by a portion of our Bitcoin treasury holdings and bears interest at a rate of 8.5% per annum. The Facility includes customary margin maintenance provisions that may require us to pledge additional Bitcoin collateral or partially repay outstanding borrowings in the event of a decline in the market value of Bitcoin. Proceeds from the Facility will be used primarily to fund further development costs of the tokenized deposit program offering, including costs paid to our affiliate, Vast Holdings, Inc. (“Vast”) under the terms of the Affiliate Services Agreement (the “Agreement”) we simultaneously entered into on March 18, 2026. Pursuant to the terms of the Agreement, we will reimburse Vast for the cost it incurs to perform certain strategic, operational, and administrative services in support of the further development of the tokenized deposit program offering. We believe that it will be more economical and efficient for certain services necessary for these operations to be performed by officers, employees or consultants of Vast, recognizing that cost reimbursements to Vast must be at least on or favorable to market terms. Total reimbursements under the Agreement are capped at $10.5 million during the term of the Agreement, unless mutually agreed upon with Vast and are subject to detailed invoicing, documentation, and approval requirements. The Agreement expires on December 31, 2026.
Current report
On March 18, 2026, our Board of Directors approved the repricing of all outstanding stock options, including (i) options originally granted in August 2025 and subsequently repriced in October 2025 to $1.10 per share, (ii) options granted in October 2025 with an exercise price of $1.10 per share, and (iii) options granted in October 2025 with an exercise price of $0.87 per share. The repricing reduced the exercise price of all such awards to $0.37 per share. No changes were made to the vesting schedules or contractual terms of these awards.
Current report
Subsequent to December 31, 2025, 13,137,500 unvested stock options were forfeited pursuant to the terms of the 2021 Plan. Accordingly, such forfeited awards became available for future grant under the 2021 Plan.
Current report
(dollars in thousands)
Current report
Our operating results for the Transition Period, reflect the Company’s strategic transition towards its digital-asset treasury and financial-technology development initiatives following the Goldeneye capital investment completed on August 6, 2025.
Current report
Revenues. We did not generate any operating revenue during the Transition Period or the comparable prior-year period. During the Transition Period, we continued to focus on financial-technology development activities, and we expect future operating revenues to be generated primarily from financial-technology network services, including the planned USBC tokenized deposit program.
Current report
*Research and Development.*R&D expense was $254,000 for the Transition Period, compared to $802,000 for the comparable prior-year period. The change of $548,000 was primarily driven by the Company’s strategic transition away from its legacy non-invasive diagnostics and sensor technology initiatives and toward the development of its tokenized deposit platform and related digital financial infrastructure. During the Transition Period, the Company reduced personnel and external consulting resources dedicated to its Science Division as it wound down certain research activities, resulting in lower expenditures related to the Bio-RFID™ technology.
Current report
Selling, General and Administrative. SG&A expense was $16.9 million for the Transition Period, compared to $2.0 million for the comparable prior-year period, representing an increase of $14.9 million. This increase was primarily attributable to non-cash stock-based compensation expense of $11.9 million, professional fees and other public-company and advisory costs associated with our strategic transition of $3.1 million, salary and benefits of $551,000 and, partially offset by reductions in legacy science-division expenses.
Current report
Other (Expense) Income, Net. Other expenses, net was $26.1 million for the Transition Period, compared to $1.9 million for the comparable prior-year period, representing an increase of $24.2 million. This increase was primarily driven by changes in the fair value of digital assets of $27.2 million, partially offset by derivative income, net of $1.1 million, generated from option premiums collected under our Bitcoin treasury trading strategy, reduced reliance on external financing of $1.2 million, and loss on debt settlements, net of $728,000 in the prior period.
Current report
*Income tax benefit.*Income tax benefit was $15.7 million for the Transition Period; there was no income tax benefit for the comparable prior-year period. This increase of $15.7 million is primarily related to the tax effect of the change in the fair value of digital assets during the Transition Period, driven by elevated volatility in digital asset markets, which caused a significant decline in the fair value of Bitcoin, as well as the netting of deferred tax assets against the deferred tax liability.
Current report
*Net Loss.*We reported a net loss of $27.5 million for the Transition Period, compared with a net loss of $4.7 million for the comparable prior-year period. The increase of $22.8 million primarily reflects the change in fair value of digital assets of $27.2 million related to elevated volatility in digital asset markets, non-cash stock-based compensation expense of $11.9 million, professional fees and other public-company and advisory costs associated with our strategic transition of $3.1 million, partially offset by deferred income tax benefits of $15.7 million associated with the change in fair value of digital assets.
Current report
On March 18, 2026, we entered into a secured borrowing facility with Payward Interactive, Inc., providing for aggregate borrowings of up to $25 million during the term of the Facility, which matures on March 18, 2027. The Facility is collateralized by a portion of our Bitcoin treasury holdings and bears interest at a rate of 8.5% per annum. The Facility includes customary margin maintenance provisions that may require us to pledge additional Bitcoin collateral or partially repay outstanding borrowings in the event of a decline in the market value of Bitcoin. Proceeds from the Facility will be used primarily to fund further development costs of the tokenized deposit program offering, including costs paid to our affiliate, Vast Holdings, Inc., under the terms of the Affiliate Services Agreement we simultaneously entered into on March 18, 2026. Pursuant to the terms of the Agreement, we will reimburse Vast for the cost it incurs to perform certain strategic, operational, and administrative services in support of the further development of the tokenized deposit program offering. We believe that it will be more economical and efficient for certain services necessary for these operations to be performed by officers, employees or consultants of Vast, recognizing that cost reimbursements to Vast must be at least on or favorable to market terms. Total reimbursements under the Agreement are capped at $10.5 million during the term of the Agreement, unless mutually agreed upon with Vast and are subject to detailed invoicing, documentation, and approval requirements. The Agreement expires on December 31, 2026.
Current report
There were no financing transactions completed during the Transition Period. The Company’s liquidity position during the period reflects the impact of the private placement completed on August 6, 2025, pursuant to which we issued approximately 357.8 million shares of common stock to Goldeneye 1995 LLC at a purchase price of $0.335 per share, for aggregate consideration consisting of 1,000 Bitcoin and $15 million in cash. The cash proceeds were used primarily to repay or redeem outstanding preferred equity and convertible debt, pay transaction-related costs, and fund working capital. In connection with the transaction, holders of our Series C and Series D Convertible Preferred Stock elected redemption for approximately 8.3 million shares of common stock, certain holders of convertible debt elected conversion for $75,000 in cash and approximately 3.3 million shares of common stock, we issued an aggregate of 7.8 million shares of common stock to financial advisors, the sole holder of Series H Convertible Preferred Stock elected redemption for $654,276 in cash and 2,000,000 shares of common stock, and we repaid in full the Lind Global Fund II LP promissory note for approximately $2.35 million, including prepayment penalties. As a result of these transactions the Company eliminated all outstanding preferred equity and convertible debt and simplified its capital structure. The remaining proceeds continue to support the Company’s ongoing operations and strategic initiatives.
Current report
Net cash used in operating activities during the Transition Period was $4,630,194, which was primarily attributable to the net loss for the Transition Period of $27,455,848, partially offset by non-cash expenses of $22,273,348. Non-cash expenses during the Transition Period were primarily comprised of stock-based compensation expense of $11,868,452, unrealized losses related to the change in the fair value of digital assets of $27,192,987, partially offset by net gains on derivatives of $1,101,011, and the deferred income tax benefit of $15,736,607.
Current report
The net operating cash outflows primarily reflect operating expenses incurred with the Company’s strategic transition following the August 2025 capital investment, including the introduction of digital-asset treasury activities, partially offset by reduced legacy research and development expenditures.
Current report
Net cash used in financing activities during the Transition Period was $99,497, which was primarily attributable to repayments of notes payable during the Transition Period.
Current report
The financing cash flows primarily reflect the timing of debt repayments, the absence of capital-raising activity during the Transition Period, and reduced reliance on external financing following the August 2025 capital investment.
Current report
Management has completed its evaluation of whether a divestiture of the legacy non‑invasive sensor business may enhance strategic focus and longer‑term value. See Item 1 — Business — Science Division for additional background regarding the planned divestiture of the legacy sensor operations.
Current report
Digital assets - receivable, net
Current report
When we pledge collateral to a third-party entity, we first evaluate whether to derecognize such digital assets based on an evaluation of relevant control and asset derecognition considerations. If we conclude derecognition is appropriate, we derecognize the digital asset collateral that we no longer control and recognize a right to receive back in the future such pledged digital assets.
Current report
In accordance with ASU 2023-08, digital asset receivable is recorded at the fair value of the underlying digital assets. Throughout the period that the digital asset receivable is outstanding, the receivable will be measured at fair value of the underlying loaned digital asset with changes recorded in changes in fair value of digital assets in current period earnings.
Current report
We consider and account for the credit risk of the counterparty using the principles in Topic 326 – Financial Instruments - Credit Losses (“Topic 326”) to measure any credit impairment. The digital asset receivable is presented net of any allowance for credit losses if deemed material. We utilize the probability of default (“PD”) loss given default (“LGD”) approach to estimating the allowance for credit loss (“ACL”) at origination and subsequent reporting periods. In order to apply the PD LGD approach, management considers the lifetime of the digital asset receivable, the reasonable and supportable forecast period, and the PD LGD. As of December 31, 2025, the Company did not record an allowance for credit losses as management’s current estimate of expected credit losses was immaterial.
Removed paragraphs (29)
Previous report
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Previous report
The following discussion and analysis should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in or implied by these forward-looking statements due to factors including those described under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” We do not undertake to update forward-looking statements except as required by law.
Previous report
As previously disclosed, on August 6, 2025, we issued approximately 357.8 million shares of our common stock, par value $0.001 per share to Goldeneye 1995 LLC, an affiliate of our Chairman and Chief Executive Officer Greg Kidd, at a per share purchase price of $0.335 in exchange for aggregate purchase price of: (i) 1,000 Bitcoin, and (ii) $15 million in cash. In connection with the issuance of the shares, the board of directors approved the change in the name of the Company to USBC, Inc. from Know Labs, Inc. and the change in trading symbol of the Company to “USBC” from “KNW” on the New York Stock Exchange American LLC (“NYSE”), to align with our strategic transition into a multi-disciplinary enterprise following closing.
Previous report
Our Bitcoin treasury strategy operates in parallel with our continuing non-invasive health monitoring technology research, and the further development of the USBC tokenized deposit offering. We are focused on developing go-to market and sales strategies to acquire customers and drive future revenue while optimizing efficiency and ensuring transparency.
Previous report
We view our Bitcoin holdings as long-term holdings and we intend to strategically utilize Bitcoin as a primary treasury reserve asset to generate yield to help support the current business and future growth and expansion of new business lines. We have developed partnerships with premier Bitcoin financial services platforms and institutional services providers, leveraging their expertise to ensure secure execution, robust governance, and market transparency of our yield generation treasury strategy.
Previous report
On August 6, 2025, we appointed Hyrcanian Asset Management, LLC to provide discretionary investment management services with respect to our Bitcoin treasury trading strategy which resulted in an addition of 2.6 Bitcoin, or approximately $283,000, to our Bitcoin holdings during the three months ended September 30, 2025, based on the price of a Bitcoin as of September 30, 2025. We held approximately 1,003 Bitcoin on our balance sheet with a carrying value of approximately $115.0 million as of September 30, 2025, which value may be materially impacted as the market value of Bitcoin fluctuates. We believe that we are well-positioned to execute on our long-term yield generation trading strategy, coupled with our relative position and liquidity.
Previous report
On September 29, 2025, our stockholders approved the Amended and Restated USBC, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan, among other things, (i) increased the number of shares of common stock authorized for issuance by 65,000,000 shares; (ii) provides flexibility to the Board and/or its compensation committee to expressly permit repricings and other exchanges of awards under the 2021 Plan from time to time; and (iii) amended the evergreen provision so that, beginning January 1, 2026 and each January 1 thereafter through January 1, 2030, the share reserve may automatically increase by up to 15,000,000 shares, 4% of outstanding common stock, or such lower amount as determined by the Board.
Previous report
On October 7, 2025, our Board of Directors approved the repricing of the 48,620,000 option grants awarded in August 2025, lowering the exercise price to $1.10 per share from $2.45 per share. There were no other changes to the vesting schedule or timelines of these awards.
Previous report
On October 23, 2025, we announced a preliminary partnership with Uphold and Vast Bank to launch the USBC tokenized deposit program. Uphold is an infrastructure provider for on-chain finance and Vast Bank is a nationally-chartered bank. The new strategic partnership will introduce the world’s first retail tokenized deposit offering, providing unprecedented global access to U.S. dollar-denominated tokenized deposits and U.S. dollar deposit accounts worldwide for individuals, enterprises and financial institutions.
Previous report
With this new partnership, Uphold’s customers will be able to open U.S. dollar deposit accounts enabling customers to hold and transfer digital representations of their U.S. dollar deposits at Vast Bank on USBC’s privacy-preserving blockchain ledger. Enabled by Vast Bank’s national charter and compliance framework, USBC tokenized deposit offering is being designed to enable the underlying deposit account to be eligible for FDIC insurance (in accordance with applicable limits and requirements) and subject to Reg E protections. Uphold, Vast and USBC have entered into a non-binding Memorandum of Understanding (MOU) to finalize the terms of their strategic partnership in a definitive agreement. While non-binding, the MOU reflects a shared intent to finalize the terms of the partnership during the fourth quarter of 2025, with the final agreement being subject to requisite board and regulatory approvals.
Previous report
Results of Operations
Previous report
Our operating results for the year ended September 30, 2025 include the results of operations of our Bitcoin treasury trading strategy and the shift to our financial-technology development initiative following the Goldeneye capital investment on August 6, 2025.
Previous report
Revenues. We did not generate any operating revenue during either period presented. The legacy Know Labs business is a pre-commercial research enterprise without product sales. Following the shift in our business plan on August 6, 2025 to include the management of digital assets and financial-technology development opportunities, we expect future operating revenues to primarily be generated from financial technology network services such as the recent partnership with Uphold and Vast Bank that is expected to bring the first retail U.S. dollar-denominated tokenized deposits designed to provide worldwide access to U.S. dollar deposit accounts.
Previous report
*Research and Development.*R&D expense decreased by $4,361,000 to $1,753,000 for the year ended September 30, 2025 as compared to $6,114,000 for the year ended September 30, 2024, primarily due to reduced personnel, use of consultants, and lower expenditures related to the development of our radio frequency spectroscopy Bio-RFID™ technology. During the year ended September 30, 2025, we reduced headcount and the use of external consultants, reducing the cost of development of our radio frequency spectroscopy Bio-RFID™ technology. During the year ended September 30, 2024, we developed Generation 3 and launched the Generation 2 working prototype device.
Previous report
Selling, General and Administrative. SG&A expense increased by $7,185,000 to $16,294,000 for the year ended September 30, 2025 as compared to $9,109,000 for the year ended September 30, 2024, primarily due to an increase in non-cash stock -based compensation expense of $4,450,000, severance of $530,000, and legal and advisory fees of $2,323,000, partially offset by other science division expense reductions.
Previous report
Other (Expense) Income, Net. Other expense, net increased by $2,891,000 to $4,250,000 for the year ended September 30, 2025 as compared to $1,359,000 for the year ended September 30, 2024, which was primarily driven by a combination of increases in interest expense of $1,320,000, loss on debt settlements, net of $942,000 and a decrease of $823,000 in fair value of digital assets. These increases reflect the impact of non-cash interest expense and amortization of debt discount related to legacy convertible instruments, partially offset by other derivative income, net from the yield generated by option premiums collected on our Bitcoin treasury trading strategy of $283,000.
Previous report
In connection with the private placement of shares of our common stock with Goldeneye 1995 LLC, the following financing transactions closed on August 6, 2025:
Previous report
The net effect of these transactions was the elimination of all outstanding preferred equity and convertible debt, a significant increase in authorized capital (from 7.5 million shares to 750 million shares), and the creation of net equity.
Previous report
The $15 million cash component of the purchase price was partially used to satisfy these redemptions, repayments, and transaction costs, with the remainder allocated to working capital.
Previous report
Net cash used in operating activities for the fiscal years ended September 30, 2025 and 2024 was $7,596,000 and $12,829,000, respectively.
Previous report
Net cash used in operating activities for fiscal year 2025 was primarily related to a net loss of $22,123,000, partially offset by working capital changes of $1,883,000 and non-cash expenses of $12,644,000. The non-cash items primarily include (i) stock-based compensation of $7,407,000; (ii) amortization of debt issuance costs of $1,186,000; (iii) issuance of common stock for services of $1,096,000; (iv) loss on debt extinguishment of $942,000; (v) change in fair value of digital assets of $823,000; (vi) interest expense for default of convertible notes of $749,000; (vii) extension of notes and warrants of $513,000; and (viii) offset by other non-cash items of $72,000.
Previous report
Net cash used in operating activities for fiscal year 2024 was primarily related to (i) a net loss of $16,582,000; (ii) working capital changes of $1,177,000; and partially offset by (iii) non-cash expenses of $4,930,000. The non-cash items include (i) depreciation and amortization of $81,000; (ii) stock based compensation-stock options of $2,958,000; (iii) issuance of common stock for services of $277,000; (iv) amortization of operating lease right-of-use asset of $189,000; amortization of debt issuance costs of $831,000; and (v) interest expense for extension of notes and warrants of $594,000.
Previous report
Investing Activities
Previous report
Net cash used in investing activities for fiscal year 2024 was $66,000, primarily related to investments in equipment for research and development. No net cash was used in investing activities during fiscal year 2025.
Previous report
Net cash provided by financing activities for the fiscal years ended 2025 and 2024 was $13,307,000 and $7,983,000, respectively.
Previous report
Net cash provided by financing activities for fiscal year 2025 was primarily related to (i) proceeds from issuance of common stock-Goldeneye 1995 LLC capital investment of $15,000,000: (ii) proceeds from a debt offering of $200,000; (iii) proceeds from Original Issuance Discount Notes of $246,000; (iv) proceeds from the issuance of common stock, net of $300,000; (v) proceeds from the At The Market common stock offering of $1,284,000; (vi) proceeds from convertible notes payable of $656,000 offset by (vii) repayment of notes payable of $3,419,000; and (viii) redemption of Series H preferred stock of $514,000.
Previous report
Net cash provided by financing activities for the fiscal year ended 2024 was primarily related to (i) the proceeds from debt offering, net of expenses, of $3,764,000; (ii) proceeds from common stock offering, net of expenses of $5,193,000; (iii) proceeds from the issuance of common stock from the exercise of warrants of $8,000; partially offset by (iv) repayment of note payable of $720,000; and (v) payments of debt offering of $262,000.
Previous report
Management is actively evaluating whether a divestiture of the legacy non-invasive sensor business could enhance our strategic focus, margin profile and longer-term shareholder value. If we elect to proceed with a divestiture, we may redeploy capital to help fund the tokenized deposit program instead of the sensor business. Because discussions are preliminary, there is no assurance that any transactions will be consummated, nor can we estimate the timing, terms or financial impact of any potential sale.
Previous report
(1) We may incur capital expenditures related to the development of the “Bio-RFID™” and “ChromaID” technologies. None of the expenditures are contractual obligations as of September 30, 2025.
Reworded paragraphs (18)
Previous wording
During October 2025, our Board of Directors approved the issuance of stock option grants for 62,530,000 shares at a weighted average exercise price of $1.07 per share. The stock option grants expire in ten years and vest over four years.
Current wording
On March 18, 2026, our Board of Directors approved the issuance of stock option grants for 10,470,000 shares at an exercise price of $0.37 per share. The stock option grants expire in ten years and vest over four years.
Previous wording
The following table sets forth key components of our results of operations for the years ended September 30, 2025 and 2024.
Current wording
The following table sets forth key components of our results of operations for the three months ended December 31, 2025 (the “Transition Period”) and the comparable prior-year period.
Previous wording
*Net Loss.*We reported a net loss of $22,123,000 for the year ended September 30, 2025 compared with a net loss of $16,582,000 for the year ended September 30, 2024. The higher net loss of $5,541,000 primarily reflects increases in operating expenses, including $7,407,000 of non-cash stock-based compensation expense recognized, partially offset by the decrease in research and development expenses and the other derivative income, net generated from derivative trading activities beginning in the year ended September 30, 2025. Although we expect our operating losses to continue in the near term, we believe our potential revenue opportunities and strengthened capital structure have the potential to provide us with the flexibility to pursue our digital-asset and financial-technology initiatives.
Current wording
Although we expect our operating losses to continue in the near term, we believe our potential revenue opportunities and strong capital structure provide us with flexibility to pursue our digital-asset treasury and financial-technology initiatives.
Previous wording
As of September 30, 2025, we had cash and cash equivalents of $8,822,000 and working capital of $6,018,000. We have historically incurred recurring losses and we had an accumulated deficit of $163,090,000 as of September 30, 2025. We recorded net losses of $22,123,000 and $16,582,000 during the years ended September 30, 2025 and 2024, respectively.
Current wording
As of December 31, 2025, we had cash and cash equivalents of $4.1 million and working capital of $3.1 million. We have historically incurred recurring losses and had an accumulated deficit of $190.5 million as of December 31, 2025. We recorded a net loss of $27.5 million for the Transition Period and a net loss of $4.7 million for the comparable prior-year period.
Previous wording
Our liquidity primarily reflects the net proceeds of the equity issuance from the private placement completed on August 6, 2025 in which we issued approximately 357.8 million shares of common stock at $0.335 per share, for an aggregate purchase price consisting of 1,000 Bitcoin and $15 million in cash. As such, a substantial portion of our assets consist of Bitcoin. We view our Bitcoin holdings as long-term strategic reserves rather than trading assets although we may convert Bitcoin to cash periodically to fund operations. Management believes existing liquidity is sufficient for at least 12 months after issuance of these financial statements.
Current wording
Our liquidity during the Transition Period primarily reflects the net proceeds of the equity issuance from the private placement completed on August 6, 2025 in which we issued approximately 357.8 million shares of common stock at $0.335 per share, for an aggregate purchase price consisting of 1,000 Bitcoin and $15 million in cash. As such, a substantial portion of our assets consist of Bitcoin. We view our Bitcoin holdings as long-term strategic reserves rather than trading assets although we may convert Bitcoin to cash periodically to fund operations. During the Transition Period, liquidity was primarily utilized to fund operating expenses and working capital requirements. Management believes that existing liquidity and digital asset holdings are sufficient to fund operations for at least 12 months after issuance of these consolidated financial statements. Management expects that the Company may supplement its cash resources with additional liquidity sources as it executes its business plan. These sources may include sales of Bitcoin, potential Bitcoin-collateralized financing arrangements, related-party or other investor financing, and other debt or equity financings.
Previous wording
The following table reconciles Adjusted EBITDA to net loss, the most closely comparable GAAP financial measure, for the periods indicated:
Current wording
The following table reconciles Adjusted EBITDA to net loss, the most closely comparable GAAP financial measure, for the Transition Period and the comparable prior-year period:
Previous wording
Financing Transactions Related to the Private Placement
Current wording
Financing Transactions Related to the August 2025 Private Placement
Previous wording
We expect to continue incurring operating losses as we fund the further development of our tokenized deposit program. Our ability to sustain operations and execute our strategy depends on our capacity to raise additional capital through equity or debt financings.
Current wording
We expect to continue incurring operating losses as we fund the further development of our tokenized deposit program. Our ability to sustain operations and execute our strategy depends on our capacity to raise additional capital through equity or debt financings, monetize Bitcoin holdings, including through potential sales, or obtain other sources of liquidity, including potential Bitcoin-collateralized financing arrangements, or related-party or other investor financing.
Previous wording
Based on our current projections, management believes we have adequate resources to meet our obligations for the next twelve months; however, continuation of operations beyond that period will depend on market conditions for additional capital and the financial performance of our tokenized deposit program.
Current wording
Based on our current projections, management believes we have adequate resources to meet our obligations for the next twelve months. As we continue to execute our business strategy, management may supplement cash on hand with additional liquidity sources, which could include digital asset sales, financing arrangements, or other debt or equity financings. Continuation of operations beyond that period will depend on market conditions for additional capital and the financial performance of our tokenized deposit program.
Previous wording
As of September 30, 2025, digital assets totaling approximately $34.5 million were pledged as collateral under agreements that permit the secured party to exercise control and liquidate such assets under certain conditions, including events of default or margin deficiencies related to our derivative trading strategy. As of September 30, 2025, we had experienced no such events of default or margin deficiencies.
Current wording
As of December 31, 2025, digital assets totaling approximately $25,447,882 were pledged as collateral under agreements that permit the secured party to exercise control and liquidate such assets under certain conditions, including events of default or margin deficiencies related to our derivative trading strategy. As of December 31, 2025, we had experienced no such events of default or margin deficiencies.
Previous wording
The following discussion relates to critical accounting policies for our company which involve significant estimates. The preparation of financial statements in conformity with United States generally accepted accounting principles, or GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.
Current wording
The following discussion relates to critical accounting policies for our company which involve significant estimates. The preparation of financial statements in conformity with United States generally accepted accounting principles, or GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation.
Previous wording
We hold Bitcoin as the principal component of our balance sheet. Digital assets such as Bitcoin are initially recorded at cost and subsequently measured at fair value, with changes in fair value recognized in the line item,change in fair value of digital assets.
Current wording
We hold Bitcoin as the principal component of our consolidated balance sheet. Digital assets such as Bitcoin are initially recorded at cost and subsequently measured at fair value, with changes in fair value recognized in the line item,change in fair value of digital assets.
Previous wording
Our Bitcoin holdings are custodied by a third-party institutional custodian under multi-signature cold-storage arrangements designed to mitigate security risk. Management continues to monitor FASB’s evolving guidance on fair-value accounting for digital assets. Future adoption of new standards could significantly affect our results of operations and balance-sheet presentation.
Current wording
The large majority of our Bitcoin holdings are custodied by a third-party institutional custodian under multi-signature cold-storage arrangements designed to mitigate security risk.
Previous wording
As part of our Bitcoin yield generation strategy trading activities, we enter into option derivative contracts on our Bitcoin holdings. We enter into short-term arrangements that result in obtaining the right to receive or obligation to deliver a fixed amount of Bitcoin crypto assets in the future. Derivatives are instruments that derive their value from changes in an underlying reference outside of our control. Derivatives may be traded on an exchange (exchange-traded) or they may be privately negotiated contracts, which are usually referred to as over the counter (“OTC”) derivatives. We settle the options in physical delivery. We account for these derivatives in accordance with ASC 815,Derivatives and Hedging.
Current wording
As part of our Bitcoin yield generation strategy trading activities, we enter into option derivative contracts on our Bitcoin holdings. We enter into short-term arrangements that result in obtaining the right to receive or obligation to deliver a fixed amount of Bitcoin crypto assets in the future. Derivatives are instruments that derive their value from changes in an underlying reference outside of our control. Derivatives may be traded on an exchange (exchange-traded) or they may be privately negotiated contracts, which are usually referred to as over the counter (“OTC”) derivatives. We account for these derivatives in accordance with ASC 815,Derivatives and Hedging.
Previous wording
We account for stock-based awards under ASC 718,Compensation – Stock Compensation. The fair value of stock options and warrants is estimated using the Black-Scholes-Merton option-pricing model, which requires assumptions regarding expected volatility, risk-free interest rates, expected term, and dividend yield. For restricted stock awards, fair value is based on the closing market price of our common stock on the grant date.
Current wording
Estimating the fair value of stock‑based awards requires significant judgment, including assumptions regarding expected volatility, risk‑free interest rates and expected term. Changes in these inputs may materially affect compensation expense. See Note 10 — Equity Incentive Plans for additional information regarding our stock‑based compensation accounting. We account for stock-based awards under ASC 718,Compensation – Stock Compensation. The fair value of stock options and warrants is estimated using the Black-Scholes-Merton option-pricing model, which requires assumptions regarding expected volatility, risk-free interest rates, expected term, and dividend yield. For restricted stock awards, fair value is based on the closing market price of our common stock on the grant date.
Previous wording
Because volatility and expected-term assumptions involve significant judgment, changes in these inputs could materially affect compensation expense recognized under the Amended and Restated 2021 Equity Incentive Plan (see Item 11 - Executive Compensation).
Current wording
Because volatility and expected-term assumptions involve significant judgment, changes in these inputs could materially affect compensation expense recognized under the Amended and Restated 2021 Equity Incentive Plan (see “Executive Compensation” in Part III of this report, which is incorporated by reference from our definitive proxy statement for the 2026 Annual Meeting of Stockholders).
Previous wording
When we issue convertible debt or equity instruments that may contain embedded conversion or redemption features, we evaluate whether those features require bifurcation and separate accounting as derivatives under ASC 815. Determining the fair value of embedded derivatives involves the use of valuation models incorporating market-based assumptions, such as the volatility of our stock price, expected term, and discount rates. Future volatility or interest-rate changes could result in material non-cash gains or losses each period.
Current wording
Evaluating embedded conversion and redemption features requires judgment, including volatility estimates and discount‑rate assumptions that may result in non‑cash gains or losses. See Notes 3 and 5 for additional information on our accounting for convertible instruments and embedded derivatives prior to the Transition Period. When we issued convertible debt or equity instruments that may have contained embedded conversion or redemption features, we evaluated whether those features required bifurcation and separate accounting as derivatives under ASC 815. Determining the fair value of embedded derivatives involves the use of valuation models incorporating market-based assumptions, such as the volatility of our stock price, expected term, and discount rates. Future volatility or interest-rate changes could result in material non-cash gains or losses each period.
Previous wording
In accordance with ASC 205-40, management evaluates our ability to continue as a going concern for a period of one year after the date the financial statements are issued. Our assessment considers current cash on hand, expected cash flows from operations, and our ability to raise additional capital. In December 2025, the Company analyzed its cash requirements and operations at least through December 2026 and has determined that, based upon the Company’s current available cash, the value of its assets and operations, the Company has no substantial doubt about its ability to continue as a going concern. While the capital investment significantly improved our liquidity, our business model remains dependent on external financing and the value of digital assets, both of which are subject to market volatility and investor sentiment.
Current wording
In accordance with ASC 205-40, management evaluates our ability to continue as a going concern for a period of one year after the date the financial statements are issued. Our assessment considers current cash on hand, expected cash flows from operations, and our ability to raise additional capital. In March 2026, the Company analyzed its cash requirements and operations at least through March 2027 and determined that, based upon the Company’s current available cash, digital asset holdings, and expected operations, the Company has no substantial doubt about its ability to continue as a going concern. While the capital investment significantly improved our liquidity, our business model remains dependent on external financing and the value of digital assets, both of which are subject to market volatility and investor sentiment.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.
Current report — wording carried from elsewhere
We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements: