NAKA 10-K & 10-Q changes, risk factors and insider trading
Nakamoto Inc. (also NAKAW) · Nasdaq · Finance Services · CIK 1946573 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We are shifting our business strategy from healthcare operations to a Bitcoin company with a Bitcoin treasury, which represents a fundamental change in our risk profile and may not be successful.”
New heading “Our Bitcoin strategy exposes us to various risks, including risks associated with Bitcoin.”
New heading “Bitcoin is a highly volatile asset, and our operating results and market price may significantly fluctuate due to the highly volatile nature of the price of Bitcoin and erratic market movements.”
New heading “We face significant competition from companies with Bitcoin strategies and from spot Bitcoin ETPs.”
New heading “Future developments regarding the treatment of crypto assets for U.S. and foreign tax purposes could adversely impact our business.”
New heading “The tax treatment of Bitcoin network forks, airdrops, and similar events is uncertain and could result in unexpected tax liabilities.”
New heading “Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.”
New heading “The concentration of Bitcoin ownership and market dynamics may create additional risks.”
New heading “The emergence of competing digital assets and negative industry developments may adversely affect Bitcoin and our business.”
New heading “Our Bitcoin holdings may be less liquid than cash and may not serve as an adequate source of liquidity.”
New heading “Environmental, geopolitical, and operational factors may adversely affect our Bitcoin strategy.”
New heading “We may be unable to obtain adequate insurance coverage or attract specialized personnel for our Bitcoin strategy.”
New heading “If we utilize our Bitcoin holdings in DeFi protocols or other blockchain applications, we may be exposed to additional technological risks.”
New heading “If we elect to use derivative instruments to hedge the price risk of holding Bitcoin, such derivatives are highly volatile and subject to market and liquidity risks, which could negatively impact our Bitcoin strategy.”
New heading “The trading strategy we implemented with the Kraken Trading Wallet (as defined below) entails substantial risk, and there can be no assurance that the Kraken Trading Wallet will achieve its investment objectives.”
New heading “Selling covered call options may limit upside participation and expose our Company to losses during periods of increased volatility.”
New heading “Selling cash-secured put options exposes the Kraken Trading Wallet to significant downside risk and potential forced liquidation.”
New heading “We will be exposed to the default risk of our clearing broker if we hedge the price risk of Bitcoin through the purchase of futures contracts.”
New heading “We may be exposed to counterparty, clearing, and concentration risk through exclusive trading with a single platform and affiliated dealer. If such single platform or affiliated dealer is based outside of the U.S. we may be exposed to additional legal and regulatory risks.”
New heading “Qualified Financial Contract Stay rules may restrict our ability to liquidate our positions or exercise default rights in the event that a swap counterparty becomes insolvent.”
New heading “We may face risks relating to the custody of our Bitcoin, including the loss or destruction of private keys required to access our Bitcoin and Security Incidents or other data loss relating to our Bitcoin.”
New heading “Regulatory change determining that Bitcoin is being offered and sold as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940 and could adversely affect the market price of Bitcoin and the market price of our listed securities.”
New heading “We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.”
New heading “Our Bitcoin strategy exposes us to risk of non-performance by counterparties.”
New heading “We may pursue strategies to generate income or liquidity from our Bitcoin holdings, such as lending, staking, or entering into other arrangements, which could significantly increase our exposure to counterparty, credit, and operational risks.”
New heading “Risks Related to Our Financial Condition, Indebtedness, and Capital Requirements”
New heading “We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.”
New heading “If we fail to maintain an effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, our stockholders could lose confidence in our financial results, which could harm our business and the value of our Common Stock.”
New heading “Our Bitcoin operations and digital asset treasury are new for our Company, and our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our Bitcoin operations or holdings.”
New heading “Due to our limited operating history and the concentration of our Bitcoin holdings, it will be difficult to evaluate our business and future prospects, and we may not achieve or maintain profitability.”
New heading “Our level and terms of indebtedness could adversely affect our ability to raise additional capital, fund operations, and take advantage of new business opportunities, and we may be unable to service or refinance our debt.”
New heading “We may be unable to service or refinance our indebtedness, specifically the Loan, which could cause us to default on our debt obligations and could force us into bankruptcy or liquidation.”
New heading “Our subsidiary Nakamoto Holdings may depend on cash contributions from us or sales of Bitcoin to meet its obligations under the Master Loan Agreement if its operations do not result in sufficient operating revenue, and we may be required to contribute additional Bitcoin collateral if the value of Bitcoin declines.”
New heading “We rely on funds from our subsidiaries to meet our cash needs and service our indebtedness, and we may need additional financing in the future.”
New heading “We may need additional financing in the future, which may not be available when needed or may be costly and dilutive.”
New heading “Despite our current level of indebtedness, we may incur substantially more debt, which could further exacerbate these risks.”
New heading “Unrealized fair value gains on our Bitcoin holdings may cause us to become subject to the corporate alternative minimum tax under the Inflation Reduction Act of 2022, and our effective tax rate may fluctuate.”
New heading “Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of amounts accrued on our financial statements.”
New heading “We have incurred significant operating losses and may not achieve or sustain profitability.”
New heading “We maintain our cash at financial institutions, often in balances that exceed federally insured limits, and we could experience losses on these deposits.”
New heading “Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations.”
New heading “Rising interest rates could increase our borrowing costs and adversely affect our financial condition.”
New heading “Our Loan is denominated in USDT, a stablecoin, and we are exposed to risks associated with the stability and regulatory treatment of USDT.”
New heading “Our ability to use net operating loss carryforwards and other tax attributes may be limited.”
New heading “We may be required to record impairment charges related to goodwill and other intangible assets, which could adversely affect our financial results.”
New heading “Inflation could adversely affect our business, financial condition, and results of operations.”
New heading “We do not have, and may not be able to obtain, a credit rating, which could limit our access to certain financing sources and increase our borrowing costs.”
New heading “We may experience working capital deficiencies that could adversely affect our operations and financial condition.”
New heading “Risks Related to Our Securities and being a Public Company”
New heading “If we are unable to regain compliance with Nasdaq’s continued listing standards, our securities may be delisted, which could significantly limit liquidity and adversely affect our business.”
New heading “A prolonged decline in Bitcoin’s market price could cause us to fall below Nasdaq’s continued listing standards.”
New heading “If we effect a reverse stock split to regain compliance with Nasdaq’s minimum bid price requirement, it may not result in a sustained increase in our Common Stock price and could decrease the liquidity of our Common Stock.”
New heading “The price of our Common Stock has fluctuated significantly and may continue to do so, which could result in substantial losses for stockholders.”
New heading “Our quarterly operating results may fluctuate significantly, which could adversely affect our Common Stock price.”
New heading “The value of our Common Stock depends significantly on market demand for our Bitcoin strategy, which could decline.”
New heading “Sales of our Common Stock, including through our ATM Program, or the perception that such sales may occur, could depress our Common Stock price.”
New heading “Our Common Stock repurchase programs may not enhance stockholder value and will diminish our cash reserves.”
New heading “We may need additional capital, and future securities offerings may result in dilution to existing stockholders.”
New heading “We do not expect to pay dividends for the foreseeable future.”
New heading “If securities analysts do not publish research about us or publish negative evaluations, our Common Stock price and trading volume could decline.”
New heading “Outstanding warrants, if exercised, would increase shares of Common Stock eligible for resale and result in dilution.”
New heading “Active trading of options on our Common Stock could increase volatility in our Common Stock price and adversely affect the market for our securities.”
New heading “We may be subject to securities class action litigation, which could result in substantial costs and divert management’s attention.”
New heading “Short selling of our Common Stock could increase the volatility of our Common Stock price and adversely affect its market price.”
New heading “Equity compensation awards may result in dilution to our stockholders and adversely affect the market price of our Common Stock.”
New heading “Sales of substantial amounts of our Common Stock by our directors, officers, or significant stockholders, or the perception that such sales may occur, could adversely affect the market price of our Common Stock.”
New heading “Social media and online forums may contribute to increased volatility in our Common Stock price and create risks of market manipulation.”
New heading “Certain institutional investors may be prohibited or discouraged from investing in companies with significant digital asset exposure, which could limit demand for our Common Stock.”
New heading “Provisions in our amended certificate of incorporation, our amended and restated bylaws, and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders. These provisions may prevent attempts by our stockholders to replace or remove our current management.”
New heading “Our amended certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, executive officers, or employees.”
New heading “As an “emerging growth company” and “smaller reporting company,” we may rely on reduced disclosure requirements, which may make our securities less attractive to investors.”
New heading “We have incurred, and will continue to incur, increased costs as a public company, and our management must devote substantial time to compliance.”
New heading “Risks Related to Our Media and Information Services Operations”
New heading “Our revenues could decline if our trade show offerings through BTC Inc fail to attract attendees, exhibitors, sponsors, or vendors.”
New heading “Intense competition in the media & information, advisory & consulting, and financial services & asset management industries could reduce BTC Inc’s market share and adversely affect our revenues.”
New heading “BTC Inc’s business may be exposed to risks related to accepting digital assets or alternative payment methods.”
New heading “We incur significant up-front costs for live events, and any disruption—technical or physical—could result in substantial losses.”
New heading “Our digital streaming services are subject to intense competition and technical risks that could degrade the value of our media rights.”
New heading “The value of our media rights and sponsorships is highly sensitive to the “Bitcoin Cycle” and consumer tastes.”
New heading “Our financial results are subject to significant fluctuations based on the timing and popularity of our premium live events pipeline.”
New heading “We are dependent on a narrow pool of corporate sponsors whose marketing budgets are highly correlated with Bitcoin’s market cycles.”
New heading “Our digital ticketing and data-driven advertising operations are vulnerable to sophisticated cyber-attacks and network failures.”
New heading “Any perceived centralization or gatekeeping of the Bitcoin media landscape could invite regulatory scrutiny or community backlash.”
New heading “The value of our data-driven lead generation services depends on the quality and permissioned nature of our Bitcoin audience data.”
New heading “BTC Inc’s editorial independence may be compromised, or perceived to be compromised, by our corporate Bitcoin holdings and other business interests, which could damage our credibility and audience trust.”
New heading “Our media operations expose us to potential defamation, libel, and other content-related legal claims that could result in significant costs and reputational harm.”
New heading “We depend on key content creators, journalists, and media personalities whose departure or reputational issues could adversely affect our audience engagement and revenues.”
New heading “We rely on third-party platforms for content distribution, and changes to their policies, algorithms, or terms of service could significantly reduce our audience reach and revenues.”
New heading “Our advertising and promotional activities are subject to extensive and evolving regulations, and failure to comply could result in enforcement actions, fines, and reputational damage.”
New heading “Our publication of news, analysis, and market commentary could expose us to liability if such content is alleged to constitute investment advice or is deemed misleading.”
New heading “If we offer subscription-based content or membership programs, we may experience subscriber churn that adversely affects our recurring revenues and growth.”
New heading “Our media content may be restricted or prohibited in certain jurisdictions, limiting our global audience and exposing us to legal and compliance risks.”
New heading “Our reputation could be harmed by our association with controversial individuals, sponsors, or topics within the Bitcoin community.”
New heading “Risks Related to Our Asset Management Operations”
New heading “Revenue from our investment advisory operations is substantially dependent on the market price of Bitcoin and the amount of AUM, which generally consists of Bitcoin and Bitcoin-related investments in securities, all of which are subject to extreme volatility.”
New heading “Our fiduciary duties may conflict with our obligations as a public company, particularly regarding proprietary Bitcoin products.”
New heading “Our revenue is heavily dependent on management fees based on AUM, and a decline in AUM would directly reduce our profitability.”
New heading “Performance fees (or “carried interest”) are highly volatile and may not be earned in any given period, leading to unpredictable quarterly results.”
New heading “Downward pressure on investment advisory fee rates across the industry could reduce our profit margins.”
New heading “The calculation of our fees involves significant estimates and valuations; any errors could result in overpayments, regulatory penalties, and reputational harm.”
New heading “Our investment advisory subsidiary is subject to extensive regulation under federal and state securities laws, and failure to comply with these regulations could result in enforcement actions, fines, or loss of our ability to operate.”
New heading “Poor investment performance could result in client redemptions, difficulty attracting new clients, and reputational damage that adversely affects our advisory business.”
New heading “Our investment advisory business depends on key investment personnel, and the loss of these individuals could result in client redemptions and harm to our investment performance.”
New heading “Our investment advisory revenues may be concentrated among a small number of clients, and the loss of one or more significant clients could materially reduce our revenues.”
New heading “Errors in trade execution, settlement, or recordkeeping could result in client losses, regulatory penalties, and reputational harm.”
New heading “Failure to satisfy our best execution obligations could result in regulatory scrutiny, client claims, and breaches of our fiduciary duties.”
New heading “We face risks related to the custody and safekeeping of client assets, particularly digital assets, including potential loss, theft, or inaccessibility of such assets.”
New heading “Our marketing and advertising activities are subject to SEC rules, and failure to comply with the Marketing Rule and related requirements could result in enforcement actions and reputational harm.”
New heading “Failure to maintain adequate anti-money laundering and know-your-customer programs could result in regulatory penalties and reputational damage.”
New heading “Cybersecurity incidents or Security Incidents affecting our investment advisory operations could result in the loss, unavailability, destruction, alteration, prevention of access to, disclosure, or dissemination of, or damage or unauthorized access to client assets or confidential information, and we could experience material adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, litigation (including class actions and mass arbitration), fines and penalties, disruptions of our business operations, loss of revenue or profits, and reputational harm.”
New heading “We face intense competition from traditional investment advisers and new digital asset-focused competitors, which could reduce our market share and compress our fees.”
New heading “We may use our own capital to seed new investment funds or strategies, which exposes us to investment losses and potential conflicts of interest.”
New heading “We are subject to the risk of litigation and regulatory examinations, which could result in significant costs, management distraction, and reputational harm.”
New heading “Our insurance may not be adequate to cover all claims, and insurance coverage may become more expensive or unavailable.”
New heading “The regulatory framework for digital asset investment advice is evolving and uncertain, and changes in laws or regulations could materially affect our advisory business.”
New heading “Risks Related to Our Healthcare Operations”
New heading “The collectability of patient accounts receivables have harmed and could further deteriorate and further harm the results of our healthcare operations.”
New heading “An incident involving one or more of our patients or the failure by one or more of our clinicians to provide appropriate care could result in increased regulatory burdens, government investigations, litigation, negative publicity and adversely affect our operations and relationships with patients and third-party payors.”
New heading “Risks Related to Cybersecurity, Information Technology, and Intellectual Property”
New heading “Security Incidents or loss of private keys could result in partial or total loss of our Bitcoin or loss, unavailability, destruction, alteration, prevention of access to, disclosure, or dissemination of, or damage or unauthorized access to, our data (including trade secrets or other confidential information, intellectual property, proprietary business information, and personal information) or data that is processed or maintained on our behalf, or other assets, which could result in financial, legal, business, and reputational harm to us.”
New heading “We are subject to HIPAA and other federal, state, and foreign data privacy and security laws, and failure to comply could result in significant liability and reputational harm.”
New heading “If our information technology systems, those of third parties with whom we work or our data are compromised or otherwise rendered unavailable, we could experience material adverse consequences resulting from such compromise.”
New heading “We are subject to stringent and evolving U.S. and foreign data privacy and security laws, and failure to comply could result in regulatory investigations or actions; litigation (including class actions and mass arbitrations); fines and penalties; operational disruptions; reputational harm; loss of revenue or profits; and other significant adverse consequences.”
New heading “We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties.”
New heading “We may be unable to adequately protect our intellectual property rights, and we may be subject to claims that we have infringed the intellectual property rights of others.”
New heading “Certain members of our senior management team have limited public company experience, and we are highly dependent on certain key executives whose loss could adversely affect our business.”
New heading “Social media activity by our directors and officers may pose reputational, regulatory, and Common Stock price risks.”
New heading “Equity compensation awards to executives and directors may dilute existing stockholders.”
New heading “Limitations on directors and officers insurance may affect our ability to attract and retain qualified executives.”
New heading “Risks Related to Future Acquisitions”
New heading “We may not realize the anticipated benefits or synergies from mergers, acquisitions, or other strategic transactions.”
New heading “We have incurred, and may continue to incur, significant transaction and integration costs in connection with acquisitions.”
New heading “Future transactions may cause fluctuations in the market price of our Common Stock.”
New heading “Litigation related to strategic transactions could result in significant costs, delays, or other adverse impacts on our business, financial condition, and results of operations.”
Removed heading “We may be unable to effectively manage future growth.”
Removed heading “We will need additional financing in the future, which may not be available when needed or may be costly and dilutive.”
Removed heading “There may be uncertainty of profitability.”
Removed heading “Our business may suffer if we are unable to attract or retain talented personnel.”
Removed heading “The lack of available and cost-effective directors and officer’s insurance coverage in our industry may cause us to be unable to attract and retain qualified executives, and this may result in our inability to further develop our business.”
Removed heading “Management of growth will be necessary for us to be competitive.”
Removed heading “The failure to enforce and maintain our intellectual property rights could adversely affect the value of the Company.”
Removed heading “If we expand into other states, we will have to ensure compliance with all of the regulations of those states, which may be different from the laws in the State of Utah.”
Removed heading “If we incur substantial liability from litigation, complaints, or enforcement actions, our financial condition could suffer.”
Removed heading “There can be no assurance that our current and future strategic alliances or expansions of scope of existing relationships will have a beneficial impact on our business, financial condition and results of operations.”
Removed heading “We may face unfavorable publicity or consumer perception.”
Removed heading “We are subject to general economic risks.”
Removed heading “Provisions in our governing documents and Utah law may have an anti-takeover effect, and there are substitutional regulatory limitations on changes of control of bank holding companies.”
Removed heading “Our brand is integral to our success. If we fail to effectively maintain, promote, and enhance our brand in a cost-effective manner, our business and competitive advantage may be harmed.”
Removed heading “The market for our model and services is new, rapidly evolving, and increasingly competitive, as the healthcare industry in the United States is undergoing significant structural change and consolidation, which makes it difficult to forecast demand for our data or services.”
Removed heading “Competitive platforms or other technological breakthroughs for the monitoring, management, treatment, or prevention of medical conditions may adversely affect demand for our offerings.”
Removed heading “We operate in highly competitive markets and face competition from large, well-established healthcare providers, traditional retailers, pharmaceutical providers, and technology companies with significant resources, and, as a result, we may not be able to compete effectively.”
Removed heading “Further expansion efforts would likely significantly increase our operational expenses.”
Removed heading “The Company may sustain losses that cannot be recovered through insurance or other preventative measures.”
Removed heading “Risks of Government Action and Regulatory Uncertainty”
Removed heading “Anti-Kickback Statute”
Removed heading “False Claims Act”
Removed heading “Civil Monetary Penalties Law”
Removed heading “Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.”
Removed heading “Risks Associated with Our Industry”
Removed heading “Our business and financial performance may be adversely affected by downturns in the target markets that we serve or reduced demand for the types of services we offer.”
Removed heading “The market for prescription digital therapeutics is new, rapidly evolving, and increasingly competitive, the healthcare industry in the U.S. is undergoing significant structural change, and the demand for prescription digital therapeutics in markets outside of the U.S. is uncertain, which makes it difficult to forecast demand for our products. As a result, all prospective financial information included herein are subject to change.”
Removed heading “Failure in the Company’s information technology systems or delays or failures in the development and implementation of updates or enhancements to those systems could significantly delay billing and otherwise disrupt the Company’s operations or patient relationships.”
Removed heading “The Company’s industry is highly competitive, and we have less capital and resources than many of our competitors which may give them an advantage in marketing services similar to ours or make our services obsolete.”
Removed heading “We may be unable to respond to the rapid technological change in the industry and such change may increase costs and competition that may adversely affect our business.”
Removed heading “Our business and operations would be adversely impacted in the event of a failure or interruption of our information technology infrastructure or as a result of a cybersecurity attack.”
Removed heading “Changes in our effective tax rate may impact our results of operations.”
Removed heading “We may need additional capital that will dilute the ownership interest of investors.”
Removed heading “We will be controlled by our existing majority shareholder.”
Removed heading “We do not expect to pay any dividends on our common stock.”
Removed heading “We are eligible to be treated as an “emerging growth company” as defined in the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the Common Shares less attractive to investors.”
Removed heading “Costs and expenses of being a reporting company under the 1934 Securities Exchange Act may be burdensome and prevent us from achieving profitability.”
Removed heading “Since our shares of Common Stock may be thinly traded it is more susceptible to extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.”
Removed heading “Because we do not expect to pay any dividends on our common stock for the foreseeable future, investors in this offering may never receive a return on their investment.”
Removed heading “We may not be able to satisfy the continued listing requirements of Nasdaq or obtain or maintain a listing of our common stock on Nasdaq.”
Removed heading “The market price of our common stock may fluctuate, and you could lose all or part of your investment.”
Removed heading “If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.”
Removed heading “INFORMATION REGARDING FORWARD-LOOKING STATEMENTS”
Largest changes
“Cybersecurity incidents or Security Incidents affecting our investment advisory operations could result in the loss, unavailability, destruction, alteration, prevention of access to, disclosure, or dissemination of, or damage or unauthorized access to client assets or confidential information, and we could experience material adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, litigation (including class actions and mass arbitration), fines and penalties, disruptions of our business operations, loss of revenue or profits, and …”see in full comparison
“We are subject to stringent and evolving U.S. and foreign data privacy and security laws, and failure to comply could result in regulatory investigations or actions; litigation (including class actions and mass arbitrations); fines and penalties; operational disruptions; reputational harm; loss of revenue or profits; and other significant adverse consequences.”see in full comparison
“During the course of our review and testing, we may identify deficiencies and be unable to remediate them before we must provide the required reports. Furthermore, we have identified material weaknesses, so we may not detect errors on a timely basis and our financial statements may be materially misstated. …”see in full comparison
“If we use a clearing broker to help manage financial transactions — such as buying or selling Bitcoin futures contracts to hedge against Bitcoin price swings — then we will be exposed to the clearing broker’s credit risk. Under the CEA and CFTC regulations, futures contracts must be cleared through a clearing broker known as a registered futures commission merchant (“FCM”). …”see in full comparison
“We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties upon which we rely may fail to comply with such obligations, which could negatively impact our business operations. …”see in full comparison
“We may be unable to service or refinance our indebtedness, specifically the Loan, which could cause us to default on our debt obligations and could force us into bankruptcy or liquidation.”see in full comparison
Full comparison: every changed paragraph (455)
An
investment in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the
risks that are described in this section. You should also read the sections entitled “Cautionary Note Regarding Forward-Looking
Statements” on page 31 of this filing.. Additional risks not presently known or that we currently deem immaterial could also materially
and adversely affect
us. You should consult your own financial and legal advisors as to the risks entailed by an investment in our securities
and the suitability
of investing in our securities in light of your particular circumstances. If any of the risks contained in this filing
develop into actual
events, our assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance,
liquidity, long-term
performance goals, prospects, and/or results of operations could be materially and adversely affected, the trading
price of our Common Stock could decline and you may lose all or part of your investment. Some statements
in this prospectus,Annual Report on Form 10-K, including
such statements in the following risk factors, constitute forward-looking statements.
TheWe
Company operatesoperate in an environment that involves many risks and uncertainties. The risks and uncertainties described in this section
are not the
only risks and uncertainties that we face. Additional risks and uncertainties that presently are not considered material
or are not known
to us, and therefore are not mentioned herein, may impair our business operations. If any of the risks described actually
occur, our
business, operating results, financial position, and value of our securities could be adversely affected.
Risks
Related to Our BusinessBitcoin Strategy and Holdings
We are shifting our business strategy from healthcare operations to a Bitcoin company with a Bitcoin treasury, which represents a fundamental change in our risk profile and may not be successful.
Prior to 2026, our primary business focus was on healthcare operations, in particular patient-centered holistic pain management medical services. In connection with our merger with Nakamoto Holdings, Inc., we added Bitcoin treasury operations to our business strategy, though our healthcare operations remained our core business. Then, in early 2026, we changed our name from Kindly MD, Inc. to Nakamoto Inc. to represent the pivot in our corporate strategy to focus on the acquisition and holding of Bitcoin as our primary treasury reserve asset. Following this pivot, we subsequently completed both the BTC Merger and UTXO Merger to support this shift in business strategy, as those companies are also in the Bitcoin ecosystem. Further, the Company now intends to exit its legacy healthcare business. This transition in business strategy and operations involves several risks:
If we are unable to successfully manage this transition, our financial condition and the market price of our Common Stock could decline significantly, and we may be unable to return to our previous healthcare-focused business model.
Our Bitcoin strategy exposes us to various risks, including risks associated with Bitcoin.
Our Bitcoin strategy exposes us to various risks, including the following:
Bitcoin is a highly volatile asset. Bitcoin is a highly volatile asset that has traded below $61,000 per Bitcoin and above $125,000 per Bitcoin on the Coinbase exchange (a major U.S.-based crypto exchange) (“Coinbase”) in the 12 months preceding the date of this Annual Report on Form 10-K. The trading price of Bitcoin significantly decreased during prior periods, and such declines may occur again in the future. For example, the price of Bitcoin declined by approximately 77%, from a high of about $69,000 in November 2021 to approximately $16,000 in November 2022, before increasing by more than 300% to over $65,000 in March 2024. As of October 6, 2025, the price of Bitcoin was approximately $125,000, and as of February 5, 2026, the price of Bitcoin was approximately $60,000. These price swings illustrate the substantial fluctuations Bitcoin may experience over short and long time periods, and future performance may differ materially from past results.
Bitcoin is a relatively new asset class with a limited history. Bitcoin is a digital asset that was introduced in 2009 and remains in the early stages of adoption compared to traditional currencies and assets. It lacks a long track record of performance and is subject to rapidly evolving regulatory, technological, and economic conditions. Unlike fiat currencies such as the U.S. Dollar or Euro, Bitcoin is not formally recognized legal tender in most jurisdictions and is not supported by any sovereign authority or central bank. This lack of governmental backing could diminish confidence in Bitcoin’s long-term viability and increase volatility and speculative risk.
Bitcoin is reliant on relatively new computer technology. Bitcoin operates through a decentralized, peer-to-peer network of computers using open-source software to verify and record transactions on a public ledger known as the Bitcoin blockchain. The absence of a central governing authority means that Bitcoin is reliant on the continued operation and integrity of this decentralized network. Bitcoin may be subject to changes in its underlying blockchain protocol, including “hard forks,” which result in divergent versions of the blockchain and potentially new digital assets. There is no assurance that we will be able to claim, access, or benefit from such forks or other developments, and there may be legal, technical, or operational uncertainties associated with them.
Bitcoin does not pay interest or dividends. Bitcoin does not pay interest or other returns and we can only generate cash from our Bitcoin holdings if we sell our Bitcoin or implement strategies to create income streams or otherwise generate cash by using our Bitcoin holdings. Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our Bitcoin holdings, and any such strategies may subject us to additional risks.
Our Bitcoin holdings may significantly impact our financial results and the market price of our listed securities. Our Bitcoin holdings may significantly affect our financial results. If we increase our overall holdings of Bitcoin in the future, our Bitcoin holdings may have an even greater impact on our financial results and the market price of our listed securities.
Our assets are concentrated in Bitcoin. The vast majority of our assets are concentrated in our Bitcoin holdings. The concentration of our assets in Bitcoin may limit our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of treasury assets.
We may purchase Bitcoin using proceeds from equity and debt financings or from operations. Our ability to achieve the objectives of our Bitcoin strategy depends in significant part on the profitability of our operating businesses and our ability to obtain equity and debt financing. If our businesses are not profitable or we are unable to obtain equity or debt financing on favorable terms or at all, we may not be able to successfully execute on our Bitcoin strategy.
We will likely need to purchase Bitcoin from a limited number of exchanges or dealers. Bitcoin markets rely on a limited number of exchanges and dealers for liquidity. If these counterparties suspend withdrawals, become insolvent, or experience technical outages, we may not be able to sell Bitcoin when needed, regardless of market prices.
Our Bitcoin strategy has not been tested over an extended period or under various market conditions. We implemented a Bitcoin strategy following the closing of the merger by and among Nakamoto Holdings Inc., Kindly Holdco Corp., and Kindly MD, Inc. (the “Nakamoto Merger”). We intend to continually examine the risks and rewards of our strategy to acquire and hold Bitcoin. Our strategy has not been tested over an extended period or under various market conditions. For example, we believe Bitcoin, due to its fixed supply, has the potential to serve as a hedge against inflation in the long term. However, if Bitcoin prices were to decrease or our Bitcoin strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our listed securities would be materially adversely impacted.
We are subject to counterparty risks related to exchanges, custodians, and other digital asset industry participants. We intend to purchase Bitcoin through a limited number of exchanges or dealers such as Payward Interactive, Inc., a Florida corporation doing business as Kraken (“Kraken”), Anchorage Digital and Coinbase, which we believe are reputable. If these counterparties suspend withdrawals, become insolvent, or experience technical outages, we may not be able to sell Bitcoin when needed. We have implemented measures designed to mitigate counterparty risks, including purchasing Bitcoin through reputable U.S.-based exchanges, storing substantially all Bitcoin with institutional-grade custodians, and negotiating contractual arrangements to protect our property interests. As part of our process in determining transactions with third-party exchanges, we search for reputable exchanges that have industry standard policies and procedures in place regarding data security and customer diligence related to anti-money laundering, Office of Foreign Assets Control and know-your customer rules and regulations. If any of these third-party exchanges no longer meet our standards or if there is a decrease in reputable third-party exchanges, we may need to find additional counterparties and enter into additional agreements that could be on less favorable terms, which could have a material adverse effect on our business, financial condition or the results of our operations. However, custodial arrangements for digital assets are not as well-established as those for traditional assets, and our ability to enforce claims against custodians in bankruptcy is uncertain. If our custodially-held Bitcoin were considered property of our custodians’ estates in insolvency proceedings, we could be treated as a general unsecured creditor, potentially resulting in loss of value. The broader digital assets industry has experienced high-profile bankruptcies, closures, and regulatory enforcement actions that have negatively impacted adoption rates and created additional counterparty risks.
Changes in the accounting treatment of our Bitcoin holdings could have significant accounting impacts, including increasing the volatility of our results. Accounting Standards Update (“ASU”) 2023-08 requires us to measure our Bitcoin holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of its Bitcoin holdings in net income each reporting period. ASU 2023-08 requires us to provide certain interim and annual disclosures with respect to our Bitcoin holdings. Due in particular to the volatility in the price of Bitcoin, the adoption of ASU 2023-08 could have a material impact on our financial results, increase the volatility of our financial results, and affect the carrying value of our Bitcoin holdings on our balance sheet. ASU 2023-08 could also have adverse tax consequences. These impacts could in turn have a material adverse effect on our financial results and the market price of our listed securities.
Bitcoin is a highly volatile asset, and our operating results and market price may significantly fluctuate due to the highly volatile nature of the price of Bitcoin and erratic market movements.
Bitcoin is a highly volatile asset, and fluctuations in the price of Bitcoin are likely to influence our financial results and the market price of our listed securities, including having the potential to amplify our market price volatility relative to the price of Bitcoin. Our financial results and the market price of our listed securities would be adversely affected, and our business and financial condition would be negatively impacted, if the price of Bitcoin decreased substantially (as it has in the past), including as a result of:
We face significant competition from companies with Bitcoin strategies and from spot Bitcoin ETPs.
We face competition from other public companies with Bitcoin holdings and similar strategies, as well as spot exchange traded products (ETPs) that provide direct Bitcoin exposure. Many competitors have greater financial resources, more established operating histories, and broader access to capital markets. The SEC’s approval of spot Bitcoin ETPs in January 2024 (and spot Ether ETPs in May 2024) provides investors with alternatives that may be perceived as offering “pure play” exposure to Bitcoin without the risks of an operating business or entity-level taxation. Investors may choose ETPs over our Common Stock, potentially affecting demand and creating premium or discount volatility relative to our Bitcoin holdings. Unlike ETPs, we do not seek to track the value of underlying Bitcoin, do not benefit from certain Exchange Act exemptions, and are not required to provide daily transparency. Increased competition may lead to downward pressure on our Common Stock price and impair our ability to achieve strategic objectives.
Future developments regarding the treatment of crypto assets for U.S. and foreign tax purposes could adversely impact our business.
The tax treatment of Bitcoin and other digital assets is subject to significant uncertainty and evolving guidance from U.S. federal, state, and local tax authorities, as well as foreign tax authorities. Changes in tax laws, regulations, or interpretations could have a material impact on our business, including our ability to acquire, hold, or dispose of Bitcoin in a tax-efficient manner. For example, future legislation or regulatory guidance could result in the imposition of new or increased taxes on the acquisition, holding, or transfer of Bitcoin, or could require us to report additional information to tax authorities. In addition, differences in the tax treatment of digital assets across jurisdictions could create compliance challenges and increase our administrative and operational costs. Any adverse developments in the tax treatment of digital assets could reduce the attractiveness of our business model, increase our tax liabilities, and negatively affect our financial results and the value of our stock.
The tax treatment of Bitcoin network forks, airdrops, and similar events is uncertain and could result in unexpected tax liabilities.
The Bitcoin network may undergo “hard forks” that result in the creation of new digital assets, and we may receive “airdrops” of new tokens or digital assets as a result of our Bitcoin holdings. The U.S. federal income tax treatment of forks and airdrops is uncertain and evolving. The IRS has issued limited guidance indicating that receipt of new cryptocurrency from an airdrop generally results in taxable income equal to the fair market value of the new cryptocurrency at the time of receipt. However, significant uncertainty remains regarding the timing of income recognition, the determination of fair market value (particularly for newly created assets with limited trading history), the tax treatment of assets received from contested or contentious forks, and the treatment of forked or airdropped assets that we are unable to access or choose not to claim. We may be required to recognize taxable income from forks or airdrops even if we do not sell the new assets, which could create cash tax liabilities without corresponding liquidity. In addition, tracking the cost basis and holding periods of forked or airdropped assets can be complex, and errors or uncertainties in our tax reporting could result in penalties or additional tax liabilities. Changes in IRS guidance or tax law, or successful challenges by the IRS to our tax positions, could result in material adverse tax consequences.
Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.
Bitcoin and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to Bitcoin and other digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of Bitcoin or the ability of individuals or institutions such as us to own or transfer Bitcoin.
The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of Bitcoin or the ability of individuals or institutions such as us to own or transfer Bitcoin. For example, within the past several years:
Since 2018, the SEC has initiated a number of crypto and digital-asset-related enforcement actions. While the SEC has since requested the dismissal of several of these cases, the SEC or other regulatory agencies may initiate similar actions in the future, which could materially impact the price of Bitcoin and our ability to own or transfer Bitcoin. In January 2025, the SEC launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets. Since then, the task force has sought written input and hosted roundtables with market participants to further task force goals of drawing clear regulatory lines, providing paths to registration, crafting disclosure frameworks, and deploying enforcement resources judiciously. We cannot predict the output of the new crypto task force or whether any recommendations will be adopted by the SEC or maintained under future administrations.
It is not possible to predict whether, or when, new laws will be enacted that change the legal framework governing digital assets or provide additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services to the digital assets industry, or how any new laws or regulations, or changes to existing laws or regulations, might impact the value of digital assets generally and Bitcoin specifically. The consequences of any new law or regulation relating to digital assets and digital asset activities could adversely affect the market price of Bitcoin, as well as our ability to hold or transact in Bitcoin, and in turn adversely affect the market price of our listed securities.
Moreover, the risks of engaging in a Bitcoin treasury strategy are relatively novel and have created, and could continue to create, complications due to the lack of experience that third parties have with companies engaging in such a strategy.
The growth of the digital assets industry in general, and the use and acceptance of Bitcoin in particular, may also impact the price of Bitcoin and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of Bitcoin may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to Bitcoin, institutional demand for Bitcoin as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for Bitcoin as a store of value or means of payment, and the availability and popularity of alternatives to Bitcoin. Even if growth in Bitcoin adoption occurs in the near or medium-term, there is no assurance that Bitcoin usage will continue to grow over the long-term.
The liquidity of Bitcoin may also be reduced and damage to the public perception of Bitcoin may occur if financial institutions were to deny or limit banking services to businesses that hold Bitcoin, provide Bitcoin-related services or accept Bitcoin as payment, which could also decrease the price of Bitcoin. The liquidity of Bitcoin may also be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for Bitcoin and other digital assets.
The concentration of Bitcoin ownership and market dynamics may create additional risks.
A significant portion of Bitcoin supply is held by a small number of holders, making the network more susceptible to manipulation. Malicious actors could potentially structure attacks to gain control of majority processing power, enabling double-spending, blocking transactions, or preventing valid new blocks. Unlike traditional securities markets, Bitcoin lacks a consolidated pricing mechanism, and prices can vary significantly across exchanges, creating opportunities for arbitrage or manipulation. The Bitcoin market may be susceptible to wash trading, spoofing, and other manipulative practices, particularly on unregulated exchanges. Bitcoin trading venues are relatively new and may experience fraud, security failures, or operational problems. Negative perception or instability in Bitcoin markets could result in a decline in confidence and greater price volatility, adversely affecting our Common Stock price.
The emergence of competing digital assets and negative industry developments may adversely affect Bitcoin and our business.
Various digital assets compete with Bitcoin, including alternative cryptocurrencies using different validation mechanisms (such as Ethereum’s proof-of-stake), stablecoins backed by fiat currencies, and central bank digital currencies (CBDCs) being developed by governments including China, the United States, the United Kingdom, and the European Union. If these alternatives are perceived as superior to Bitcoin, they could gain market share and decrease Bitcoin’s price. Additionally, the cryptocurrency industry has experienced high-profile negative developments including fraud, theft, Security Incidents, and platform failures. Negative publicity and heightened scrutiny of the industry could adversely impact investor sentiment toward us, even if we are not directly involved, potentially resulting in reduced stock demand, increased volatility, and difficulty raising capital.
Our Bitcoin holdings may be less liquid than cash and may not serve as an adequate source of liquidity.
The Bitcoin market has been characterized by significant volatility, limited liquidity and trading volumes compared to sovereign currency markets, and potential susceptibility to market abuse. During market instability, we may not be able to sell Bitcoin at favorable prices or at all. Bitcoin we hold with custodians will not enjoy the same protections as cash or securities deposited with Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation (“SIPC”) regulated institutions. We may be unable to enter into financing transactions collateralized by our Bitcoin or otherwise generate funds from holdings during market instability. The concentration of our assets in Bitcoin limits risk mitigation and any significant price declines could have a more pronounced impact than a diversified portfolio. Our direct Bitcoin holdings combined with investments in other companies maintaining Bitcoin as a treasury asset heighten our concentration in Bitcoin-related price risk, potentially magnifying losses and increasing result volatility.
Environmental, geopolitical, and operational factors may adversely affect our Bitcoin strategy.
Bitcoin mining requires substantial electricity, and environmental concerns regarding Bitcoin’s carbon footprint have attracted regulatory and investor attention. ESG-mandated institutional investors may be restricted from investing in companies with significant Bitcoin holdings, reducing demand for our stock. The SEC has adopted climate-related disclosure requirements that may require reporting on environmental impacts of our Bitcoin holdings. Geopolitical developments and government actions could restrict our ability to hold, transfer, or transact in Bitcoin, or result in seizure or forfeiture of holdings. Law enforcement agencies have authority to seize Bitcoin associated with criminal activity, and although we implement compliance policies, there can be no assurance our Bitcoin will never be associated with illicit activity. Policy discussions regarding a U.S. Strategic Bitcoin Reserve could significantly affect Bitcoin markets and increase price volatility.
We may be unable to obtain adequate insurance coverage or attract specialized personnel for our Bitcoin strategy.
Insurance coverage for digital assets is limited and may not be available on commercially reasonable terms. The insurance market for digital asset risks is undeveloped, and insurers may be unwilling to provide coverage for theft, hacking, or fraud. Our Bitcoin strategy may increase costs or limit availability of directors and officers (“D&O”) insurance, errors and omissions (“E&O”) insurance, and cyber liability insurance. If we are unable to obtain adequate coverage, we could be exposed to significant uninsured losses. Additionally, successful execution of our strategy depends on attracting and retaining personnel with specialized expertise in digital assets, blockchain technology, and cryptocurrency custody. The market for such expertise is highly competitive, and if we are unable to attract, retain, or develop qualified personnel, our ability to manage holdings and respond to security threats could be materially impaired.
If we utilize our Bitcoin holdings in DeFi protocols or other blockchain applications, we may be exposed to additional technological risks.
We may utilize Bitcoin holdings in decentralized finance (“DeFi”) protocols, wrapped Bitcoin products, or other blockchain-based applications to generate yield or enhance liquidity. These activities would expose us to additional risks including smart contract vulnerabilities that could result in loss of Bitcoin. Smart contracts may contain bugs or design flaws exploitable by malicious actors. Wrapped Bitcoin and cross-chain bridge protocols have been targets of significant hacks resulting in billions of dollars in industry-wide losses. The DeFi ecosystem is largely unregulated and operates without traditional consumer protections. If we participate in DeFi protocols and experience losses due to smart contract failures, hacks, or protocol insolvency, we may have limited or no recourse to recover assets.
If we elect to use derivative instruments to hedge the price risk of holding Bitcoin, such derivatives are highly volatile and subject to market and liquidity risks, which could negatively impact our Bitcoin strategy.
We have and may continue to invest and trade in a variety of derivative instruments to hedge the price risk associated with Bitcoin. Derivatives, such as futures and swaps, are financial instruments or arrangements in which the risk and return are related to changes in the value of other assets, reference rates or indices. These instruments are highly volatile and expose investors to a high risk of loss. The low initial margin deposits normally required to establish a position in such instruments permit a high degree of leverage. As a result, depending on the type of instrument, a relatively small movement in the price of a contract may result in a profit or a loss which is high in proportion to the amount of funds actually placed as initial margin and may result in unquantifiable further loss exceeding any margin deposited. Our ability to profit or avoid risk through investment or trading in derivatives will depend on our ability to anticipate changes in the underlying assets, reference rates or indices. Engaging in hedging may result in poorer overall performance for us than we could have achieved had we not engaged in such hedging transactions. In addition, although we may utilize a variety of instruments, including options and other derivatives, for hedging and risk management purposes, we are not obligated to, and may not, hedge against certain risks. Furthermore, our portfolio may be exposed to risks that cannot be hedged. Use of hedging and risk management products may also increase our regulatory burden and costs of compliance.
The trading strategy we implemented with the Kraken Trading Wallet (as defined below) entails substantial risk, and there can be no assurance that the Kraken Trading Wallet will achieve its investment objectives.
On January 30, 2026, we entered into that certain First Amendment to the Master Loan Agreement, which amends that certain Master Loan Agreement, dated as of December 3, 2025 (the “Master Loan Agreement”), by and between Nakamoto Holdings, Inc. and Kraken to establish a designated trading wallet for an options-writing strategy on Bitcoin, including selling covered calls and cash-secured puts (the “Kraken Trading Wallet”). Options are complex instruments and can behave like leveraged instruments. There can be no assurance that the Kraken Trading Wallet will achieve its investment objectives, and substantial investment losses are possible. Losses may exceed the Kraken Trading Wallet’s assets. As a result, losses may occur rapidly and may be magnified by volatility, liquidity constraints, and margin requirements. The strategy may not perform as expected in stressed markets or when market conditions differ from those historically observed. In particular, volatility and changes in the price of Bitcoin (including outside of U.S. trading hours) may overwhelm financial risk mitigation models, and sudden changes in implied volatility, skew, or correlations may produce losses that materially exceed recent historical experience. Offshore derivatives venues may implement automatic deleveraging, forced close-outs, collateral haircuts, or sudden changes to risk parameters during market stress, any of which could accelerate losses or impair our ability to post margin in time to avoid liquidation.
Selling covered call options may limit upside participation and expose our Company to losses during periods of increased volatility.
Selling covered call options limits upside participation and may result in the Kraken Trading Wallet being “called away” above the strike price, thereby foregoing gains during sharp Bitcoin rallies. Short call exposure entails negative gamma and vega, and rising volatility or rapid price movements may increase losses or the cost to close or roll positions. Position limits, exchange or dealer risk controls, and reduced liquidity near option expirations may further impede the ability to adjust positions. In addition, settlement frictions, pin risk, and hard-to-borrow dynamics around expirations may cause unexpected assignments, partial fills, or inability to source or deliver reference assets at reasonable prices, resulting in realized losses or elevated transaction costs.
Selling cash-secured put options exposes the Kraken Trading Wallet to significant downside risk and potential forced liquidation.
Selling cash-secured put options exposes the Kraken Trading Wallet to the downside risk of Bitcoin. Large or rapid downward price movements may result in assignment or realized losses that exceed the premiums received, increase margin requirements, and trigger forced liquidations if collateral is insufficient. Rolling positions down or out may be costly or unavailable during periods of market stress. Certain venues may also apply dynamic collateral haircuts or widen margin add-ons on short notice, which could lead to forced de-risking or liquidations at unfavorable prices even when the account remains economically solvent on a mark-to-market basis.
We will be exposed to the default risk of our clearing broker if we hedge the price risk of Bitcoin through the purchase of futures contracts.
If we use a clearing broker to help manage financial transactions — such as buying or selling Bitcoin futures contracts to hedge against Bitcoin price swings — then we will be exposed to the clearing broker’s credit risk. Under the CEA and CFTC regulations, futures contracts must be cleared through a clearing broker known as a registered futures commission merchant (“FCM”). FCMs hold a certain amount of the customer collateral that customers deposit in connection with their futures trading, and are responsible for posting that collateral to the clearinghouse on the customer’s behalf when the clearinghouse issues a margin call. FCMs are required to maintain such collateral and all customer assets in a segregated account. If the FCM fails to do so, or is unable to satisfy a substantial deficit in a customer account, its customers (including us) may be subject to risk of loss of their funds in the event of the FCM’s insolvency. In such event, under the current U.S. Bankruptcy Code, the FCM’s customers (including us) are entitled to recover only a proportional share of all property available for distribution to all of that FCM’s customers. We may therefore be exposed to material losses in the event of an FCM’s or fellow FCM customer’s default or insolvency.
We may be exposed to counterparty, clearing, and concentration risk through exclusive trading with a single platform and affiliated dealer. If such single platform or affiliated dealer is based outside of the U.S. we may be exposed to additional legal and regulatory risks.
The Kraken Trading Wallet serves as collateral for our loan with Kraken, and transactions are executed exclusively with Kraken’s affiliated offshore swap dealer pursuant to the trading documentation, resulting in a concentration of counterparty risk. The financial condition, risk management practices, or rehypothecation practices of Kraken and our trading wallet advisor may adversely affect recoveries. Netting and close-out rights may be stayed or limited by insolvency or resolution regimes. Customer assets held at trading or custody platforms may not benefit from insurance protections (such as FDIC or SIPC coverage) and, in an insolvency, customer recoveries may be limited, delayed, or based on fiat currency claims rather than in-kind digital asset returns, which could lead to further losses and the forgoing of subsequent price appreciation.
In addition, offshore venues and dealers, like Kraken’s offshore swap dealer for the Kraken Trading Wallet, may be subject to non-U.S. legal regimes with different customer protections, segregation requirements, and insolvency outcomes. Enforcement of contractual rights and recovery of assets may be uncertain, delayed, or unavailable. Legal or regulatory actions in one or more jurisdictions could impair our ability to acquire, own, hold, sell, or use certain digital assets or to exchange them for fiat currency, and could restrict or prohibit the operation of particular venues or products on which the we rely.
Management's Discussion & Analysis (MD&A)
New heading “Presentation of non-GAAP Information”
New heading “Company Overview”
New heading “Segment Results”
New heading “Bitcoin Operations”
New heading “Healthcare Operations”
New heading “Non-operating income (expense)”
New heading “Provision for income taxes”
New heading “Fair Value of Financial Instruments”
New heading “Off Balance Sheet Arrangements”
New heading “Emerging Growth Company Status”
Removed heading “Revenue Recognition”
Removed heading “Stock-Based Compensation”
Removed heading “Operating Expenses”
Removed heading “Other Income (Expense)”
Removed heading “Plan of Operation”
Removed heading “Enterprise Data Management”
Removed heading “Outpatient Medicine”
Removed heading “Service Affiliate Agreements”
Largest changes
“Certain information contained in this discussion and elsewhere in this report may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and is subject to the safe harbor created by that act. …”see in full comparison
“These forward-looking statements, which reflect our management’s beliefs, objectives, and expectations as of the date hereof, are based on the best judgement of our management. All forward-looking statements speak only as of the date on which they are made. …”see in full comparison
“Deferred income tax assets and liabilities are recorded with respect to temporary differences in the accounting treatment of items for financial reporting purposes and for income tax purposes. Where, based on the weight of available evidence, it is more likely than not that some amount of recorded deferred tax assets will not be realized, a valuation allowance is established for the amount that, in management’s judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized. …”see in full comparison
“Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). the preparation of these financial statements requires management to make assumptions, judgments and estimates that can have a significant impact on the reported amounts of assets, liabilities, revenues and expenses. …”see in full comparison
“As of December 31, 2025 we held approximately 1,625 unencumbered Bitcoin worth approximately $142.2 million, based on the $87,519 price of Bitcoin on December 31, 2025, had cash and cash equivalents of $22.6 million and held an investment in a publicly traded stock of $20.7 million. Based on the foregoing, we have determined that our sources of liquidity will be sufficient to meet our cash needs for the one-year period from the issuance of the Audited Financial Statements. …”see in full comparison
“We are an emerging growth company (“EGC”), as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as to those standards apply to private companies. …”see in full comparison
Full comparison: every changed paragraph (116)
The following discussion and analysis provide information which we believe relevant to an assessment and understanding of our financial condition and results of operations. This discussion should be read together with our consolidated financial statements and related notes that are included elsewhere in this Annual Report on Form 10-K. All statements other than statements of historical facts contained in this Annual Report on Form 10-K, including statements regarding the financial position, business strategy and the plans and objectives of management for our future operations, are forward-looking statements. See the section of this Annual Report on Form 10-K entitled “Cautionary Note Regarding Forward-Looking Statements” for further information.
Presentation of non-GAAP Information
We use non-GAAP financial performance measures, such as Adjusted operating loss, to supplement the financial information presented on a GAAP basis. Non-GAAP financial measures are financial measures that are derived from consolidated financial statements, but that are not presented in accordance with GAAP. Non-GAAP financial measures are subject to material limitations as they are not measurements prepared in accordance with GAAP, and are not a substitute for such measurements. We use these non-GAAP financial measures and other key metrics internally to facilitate analysis of our financial and business trends and for internal planning and forecasting purposes. We believe these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past and future financial performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial measures have limitations as an analytical tool and are presented for supplemental information purposes only. They should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Company Overview
We hold Bitcoin on our balance sheet and, through our ecosystem-wide presence, seek to provide investors with exposure to Bitcoin’s global growth and to leverage our treasury to acquire and develop an ecosystem of Bitcoin companies across finance, media and advisory. Additionally, we operate a healthcare and healthcare data company, focused on holistic pain management.
In 2025, we began our transformation from a healthcare company to a Bitcoin operating company and that transformation continues into 2026. On August 14, 2025, we acquired Nakamoto Holdings, a privately held Bitcoin treasury company through a reverse merger, established a Bitcoin treasury and obtained a call option to purchase BTC Inc, the leading provider of Bitcoin-related media and events. BTC Inc had a call option to purchase UTXO, an investment firm focused on private and public Bitcoin companies.
On February 20, 2026, we acquired BTC Inc and UTXO. The acquisition represents a significant addition to our portfolio and advances our mission to develop an ecosystem of Bitcoin-native companies. The consideration for these acquisitions consisted solely of shares of our Common Stock and assumed options to purchase shares of our Common Stock. BTC Inc and UTXO securityholders received, on a fully diluted basis, 364,795,104 shares of our Common Stock at a combined value of $81.6 million, net of aggregate strike prices for assumed options, based on our closing price on February 19, 2026.
The results of operations for the year ended December 31, 2025, reflect a full year of our legacy healthcare business combined with costs associated with the Nakamoto Merger, changes in the fair value of our newly established Bitcoin treasury, as well as a significant increase in the value of our call option to purchase BTC Inc.
The following tables set forth our summary consolidated results of operations in dollars for the periods presented. The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future. The results of operations data for the years ended December 31, 2025 and December 31, 2024 have been derived from the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Amounts may not foot due to rounding.
Loss before income taxes was $52.2 million for the year ended December 31, 2025, compared to a loss before income taxes of $3.6 million for the year ended December 31, 2024. The loss in the year ended December 31, 2025 is impacted by the following significant items:
Segment Results
A discussion of our operating results for our Bitcoin Operations, Healthcare Operations and Other segments is below. Prior to the Nakamoto Merger, we operated a single segment consisting of Healthcare Operations. All operating expenses prior to the Nakamoto Merger are reflected in Healthcare Operations. Beginning in 2025 after the Nakamoto Merger, we established our Bitcoin Operations segment and began separately tracking other corporate expenses, which are included in Other segment results.
A summary of operating results for the year ended December 31, 2025 follows and includes a reconciliation of our Operating loss (GAAP) to Adjusted operating loss (non-GAAP). Our Adjusted operating loss removes the change in fair value of digital assets, loss on investments, transaction-related compensation and transaction-related general and administrative expenses from our operating loss.
A summary of operating results for the year ended December 31, 2024 is as follows:
Bitcoin Operations
We launched our Bitcoin Operations strategy with the closing of the Nakamoto Merger on August 14, 2025. For the year ended December 31, 2025, we had a loss on the change in fair value of our digital assets of $166.2 million as the price of Bitcoin declined in 2025 from our weighted average purchase price of $118,171 per Bitcoin to $87,519 per Bitcoin at December 31, 2025.
Our loss on investments for the year ended December 31, 2025, was $9.9 million. The loss primarily consisted of a decline in the fair value of our Metaplanet common stock investment of $9.3 million in 2025.
Healthcare Operations
Our revenues were $1.8 million in the year ended December 31, 2025, compared to $2.7 million in the year ended December 31, 2024. The $0.9 million decline in revenues, representing a 33% decrease, was primarily attributable to a decrease in cash-pay patient care services and the closing of our Bountiful, Utah location.
Our operating expenses for the year ended December 31, 2025 were $8.8 million as compared to $6.1 million for the year ended December 31, 2024, representing a change of 46%. The $2.8 million increase in 2025 was primarily attributable to $2.4 million expense associated with the Nakamoto Merger. The transaction-related expenses were primarily incurred by us prior to the merger with Nakamoto Holdings and included legal, investment banking and other merger related expenses.
General and administrative expenses were $4.2 million for the year ended December 31, 2025, compared to $1.9 million for the year ended December 31, 2024. The increase was primarily due to $2.1 million of legal, investment banking and other expenses related to the Nakamoto merger. Compensation expenses were $4.7 million for the year ended December 31, 2025, compared to $3.6 million for the year ended December 31, 2024. The increase was primarily due to higher stock-based compensation and additional contract labor in support of our operations in medical services, additional support as a public company and transaction-related costs associated with the Nakamoto Merger.
In March 2026, the Company announced that it now intends to exit its legacy healthcare business.
Other
Our other segment consists of our corporate overhead. We began separately tracking our corporate overhead upon the Nakamoto Merger on August 14, 2025. Compensation for the year ended December 31, 2025, totaled $6.0 million, of which approximately $2.8 million related to the Nakamoto Merger. General and administrative expenses for the year ended December 31, 2025, totaled $6.9 million, of which approximately $2.2 million was related to one-time transaction related expenses. The one-time transaction expenses primarily related to the Nakamoto Merger and diligence on our acquisitions of BTC Inc and UTXO that closed February 20, 2026.
Non-operating income (expense)
Non-operating income for the year ended December 31, 2025, was $144.9 million compared to $0.3 million of non-operating expense for the year ended December 31, 2024. We had the following significant items impacting our non-operating income:
Provision for income taxes
Our benefit from income taxes was $12.8 million for the year ended December 31, 2025, and $0.8 million for the year ended December 31, 2024. The benefit from income taxes was fully offset in both 2025 and 2024 by valuation allowances.
Liquidity
Our assets primarily consist of Bitcoin held on our balance sheet, cash and cash equivalents and investments in unconsolidated investees. Our operations have been primarily funded through net proceeds from sales of equity securities as well as through debt we have incurred. Our cash requirements consist primarily of the payment of principal and interest on our debt and cash overhead expenses.
In December 2025, we entered into the Master Loan Agreement with Kraken for a 210.0 million USDT, 8.0% per annum fixed rate fee loan that matures on December 4, 2026. The Master Loan Agreement includes certain collateral requirements, collateral maintenance and liquidation mechanics. The obligations under the Master Loan Agreement are prepayable at our option, provided that prepayments made prior to the six-month anniversary of the initial funding date shall be subject to a make-whole payment for such six-month period. As of December 31, 2025, approximately 3,717 of our 5,342 Bitcoin are held as collateral for the Master Loan Agreement.
As of December 31, 2025 we held approximately 1,625 unencumbered Bitcoin worth approximately $142.2 million, based on the $87,519 price of Bitcoin on December 31, 2025, had cash and cash equivalents of $22.6 million and held an investment in a publicly traded stock of $20.7 million. Based on the foregoing, we have determined that our sources of liquidity will be sufficient to meet our cash needs for the one-year period from the issuance of the Audited Financial Statements. However, our liquidity position may be materially impacted by volatility in the market price of Bitcoin and other market conditions. In March 2026, we sold approximately 284 Bitcoin for $20 million. We plan to use the proceeds to invest further in our businesses as well replenish our working capital for costs associated with the recent Mergers.
On August 14, 2025, and in connection with the Nakamoto Merger, we issued (i) 343,192,232 shares of Common Stock to certain accredited investors (the “PIPE Subscribers”), including (a) 322,979,583 shares of Common Stock at a price per share of $1.12, and (b) 5,682,586 shares of Common Stock at a price per share of $5.00, and (ii) 133,800,773 pre-funded warrants to purchase shares of Common Stock (the “Acquired Securities”) at a price per pre-funded warrant of $1.12. We received net cash of $518 million related to these issuances (“PIPE Financings”). In addition, we issued 14,530,063 shares of Common Stock as compensation to certain advisors for their services in connection with the Nakamoto Merger.
On August 26, 2025, we entered into the ATM Program under which we may offer and sell Common Stock from time to time up to $5,000,000,000. For the year ended December 31, 2025, we sold 1,362,340 shares of Common Stock, for aggregate cash proceeds of $5.7 million, net of issuance costs.
In December 2025, the Board approved the 2025 Repurchase Program through which the Company may purchase up to $10 million worth of shares of its Common Stock from time to time, as market conditions warrant. As of December 31, 2025, the Company had repurchased approximately $0.7 million worth of shares under the 2025 Repurchase Program. The 2025 Repurchase Program ended on January 31, 2026, with share repurchases totalling approximately $0.9 million.
As of December 31, 2025, we did not have any material commitments for capital expenditures.
Cash Flows
During the year ended December 31, 2025, our net cash used in operating activities was $23.5 million as compared to $3.1 million during the year ended December 31, 2024. The increase in net cash used in operating activities is primarily due to an increase in net loss during the year ended December 31, 2025, as discussed above.
During the year ended December 31, 2025, our net cash used in investing activities was $680.0 million as compared to $0.4 million during the year ended December 31, 2024. The significant increase in cash used in investing activities was due to the net purchase of 5,342 Bitcoin made throughout the year ended December 31, 2025.
During the year ended December 31, 2025, our net cash provided by financing activities was $723.8 million as compared to $5.2 million during the year ended December 31, 2024. The significant increase in cash provided by financing activities was due primarily to the PIPE Financings and proceeds from debt received during the year ended December 31, 2025.
The
statements contained in the following MD&A and elsewhere throughout this Annual Report on Form 10-K, including any documents incorporated
by reference, that are not historical facts, including statements about our beliefs and expectations, are “forward-looking statements”
within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements preceded
by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,”
“expect,” “anticipate,” “plan,” “estimate,” “target,” “project,”
“intend” and similar words or expressions. In addition, any statements that refer to expectations, projections, or other
characterizations of future events or circumstances are forward-looking statements.
These
forward-looking statements, which reflect our management’s beliefs, objectives, and expectations as of the date hereof, are based
on the best judgement of our management. All forward-looking statements speak only as of the date on which they are made. Such forward-looking
statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ
materially from those anticipated in such statements, including, without limitation, the following: economic, social and political conditions,
global economic downturns resulting from extraordinary events such as the COVID-19 pandemic and other securities industry risks; interest
rate risks; liquidity risks; credit risk with clients and counterparties; risk of liability for errors in clearing functions; systemic
risk; systems failures, delays and capacity constraints; network security risks; competition; reliance on external service providers;
new laws and regulations affecting our business; net capital requirements; extensive regulation, regulatory uncertainties and legal matters;
failure to maintain relationships with employees, customers, business partners or governmental entities; the inability to achieve synergies
or to implement integration plans and other consequences associated with risks and uncertainties detailed in our filings with the SEC,
including our most recent filings on Forms 10-K and 10-Q.
We
caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur,
that could impact our business. We undertake no obligation to publicly update or revise these statements, whether as a result of new
information, future events or otherwise, except to the extent required by the federal securities laws.
Certain
information contained in this discussion and elsewhere in this report may include “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995 and is subject to the safe harbor created by that act. The safe harbor
created by the Private Securities Litigation Reform Act will not apply to certain “forward looking statements” because we
issued “penny stock” (as defined in Section 3(a)(51) of the Securities Exchange Act of 1934 and Rule 3(a)(51-1) under the
Exchange Act) during the three year period preceding the date(s) on which those forward looking statements were first made, except to
the extent otherwise specifically provided by rule, regulation or order of the Securities and Exchange Commission. We caution readers
that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking
statements which may be deemed to have been made in this Report or which are otherwise made by or on our behalf. For this purpose, any
statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without
limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,”
“explore,” “consider,” “anticipate,” “intend,” “could,” “estimate,”
“plan,” or “propose” or the negative variations of those words or comparable terminology are intended to identify
forward-looking statements. Factors that may affect our results include, but are not limited to, the risks and uncertainties associated
with:
We
are also subject to other risks detailed from time to time in our other filings with Securities and Exchange Commission and elsewhere
in this report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations
and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could
differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update
or revise any forward-looking statements, whether from new information, future events or otherwise.
Our consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and related notes. Actual results can and may differ from estimates. These differences could be material to our consolidated financial statements.
We believe our application of U.S. GAAP and the associated estimates are reasonable. Our accounting estimates are reevaluated, and adjustments are made when facts and circumstances dictate a change.
For further discussions of the following significant accounting policies and other significant accounting policies, refer to Note 2 – Summary of Significant Accounting Policies in our consolidated financial statements included in this Annual Report on Form 10-K.
Fair Value of Financial Instruments
Our digital assets, one of our equity investments and the call option asset are all recorded at fair value. The fair value of a financial instrument is the amount the Company would receive to sell an asset, or pay to transfer a liability, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Changes in the fair value of these instruments are recorded within Operating expenses in our consolidated financial statements.
In determining fair value, we maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect our assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. We apply a hierarchy to categorize our fair value measurements broken down into three levels based on the transparency of inputs, where Level 1 uses observable prices in active markets and Level 3 uses valuation techniques that generally incorporate significant unobservable inputs. Greater use of management judgment is required in determining fair value when inputs are less observable or unobservable in the marketplace.
Refer to Note 3 – Asset Acquisition, Note 5 – Digital Assets and Note 12 – Fair Value Measurements to the consolidated financial statements included in this Annual Report on Form 10-K for further information on our call option asset, digital assets and fair value measurements.
Our
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and
pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). the preparation of these financial
statements requires management to make assumptions, judgments and estimates that can have a significant impact on the reported amounts
of assets, liabilities, revenues and expenses. We base our estimates on historical experiences and on various other assumptions believed
to be applicable and reasonable under the circumstances accordingly. We also discuss our critical accounting estimates with the Audit
Committee of the Board of Directors. Note 2, Summary of Significant Accounting Policies, in Notes to Financial Statements in Item
8 of Part II of this Annual Report on Form 10-K describes the significant accounting policies used in the preparation of the financial
statements.
We
have listed below our critical accounting estimates that we believe have the greatest potential impact on our financial statements. historically,
our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results.
We do not expect the estimates and assumptions to change materially.
Revenue
Recognition
The
Company records revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 606, “Revenue from Contracts with Customers.” Revenue is recognized to depict the transfer
of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. To achieve this core principle, the Company applies the following five-step approach: (1) identify the contract
with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction
price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.
The
Company primarily recognizes revenue from: (i) patient care services related to medical evaluation and treatment and (ii) product retail
sales, (iii) service affiliate agreements.
Revenue
from patient care services, which relates to medical evaluation and treatment, is reported at the amount reflecting the consideration
to which the Company expects to be entitled in exchange for providing these services. These amounts are due from patients, third-party
payors (including Medicare, Medicaid, and commercial insurance payers), and others. The patient is considered the Company’s customer,
and a signed patient treatment consent typically constitutes a written contract between the Company and the patient. Patient care services
are considered discrete and are initiated and concluded at the patient’s discretion, which occurs each individual appointment.
Generally, the Company satisfies its performance obligations at a point in time, specifically when it has the right to invoice the customer
for the work completed, which usually occurs on an interaction basis for the work performed during any given billable interaction. The
Company has determined that the underlying nature of the services provided remains consistent across different payor types. Consequently,
the Company utilizes a portfolio approach to assess price concessions in its contracts with patients. The Company recognizes revenue
for patient care services net of price concessions, which include contractual adjustments provided to third-party payors, discounts offered
to uninsured patients in accordance with the Company’s policy, and/or implicit price concessions extended to patients. Implicit
price concessions, representing differences between the amount the Company expects to receive from patients and standard billing rates,
are accounted for as contractual adjustments or discounts, deducted from gross revenue to calculate net revenues. The Company bases its
estimates of contractual adjustments and discounts on contractual agreements, its discount policies, and historical experience.
Revenue
from retail sales is recognized when control of the goods is transferred to the customer. This occurs when the customer can direct the
use of, and obtain substantially all benefits from, the Company’s products, generally at the time of shipment or customer pickup.
Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns, rebates, discounts,
and other adjustments. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded
from revenues.
Revenue
from service affiliate agreements is recognized when control of the promised goods or services is transferred to our customers, or when
services are rendered to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those
goods or services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified,
payment terms are identified, the contract has commercial substance, and the collectability of consideration is probable. The company
recognizes revenue after the service price has been allocated and when it satisfies the performance obligation. Usually, there is only
a single performance obligation in the sale and service, and therefore the entire transaction price is allocated to the single performance
obligation. This typically occurs at a point in time when products and or services are rendered, delivered, or shipped. The transaction
price for contracts is set per the contract language. The transaction price for services is set by the company for the various service
options, less current discounts or coupons offered, where those discounts are set and approved by management from time to time.
What changed in the latest 10-Q
Risk Factors
New heading “Our Common Stock repurchase program may not enhance stockholder value, and any repurchases will diminish our cash reserves.”
New heading “If we fail to maintain compliance with Nasdaq’s continued listing requirements, our Common Stock could be delisted.”
Largest changes
“If we are unable to maintain or regain compliance, obtain relief from Nasdaq, or successfully appeal a delisting determination, our Common Stock could be suspended or delisted. …”see in full comparison
“If we fail to maintain compliance with Nasdaq’s continued listing requirements, our Common Stock could be delisted.”see in full comparison
“If our Common Stock again fails to satisfy the minimum bid price requirement at a time when the May 22, 2026 reverse stock split falls within the one-year period preceding that failure, we will not be eligible for any compliance period otherwise available under Nasdaq’s rules, and under Nasdaq Listing Rule 5810(c)(3)(A)(iv), Nasdaq’s Listing Qualifications Department will be required to issue a Staff Delisting Determination, subject to our right to appeal to a Nasdaq Hearings Panel.”see in full comparison
“Our Common Stock repurchase program may not enhance stockholder value, and any repurchases will diminish our cash reserves.”see in full comparison
“On June 10, 2026, our Board approved the adoption of the 2026 Repurchase Program, providing for the repurchase of up to $25.0 million of our outstanding shares of Common Stock. The 2026 Repurchase Program expires on December 31, 2026, does not obligate us to repurchase any dollar amount or number of shares, and may be modified, suspended, or discontinued by our Board at any time. As of June 30, 2026, we had not repurchased any shares under the 2026 Repurchase Program, and the full $25.0 million remained available. …”see in full comparison
“The same rule also makes us ineligible for a compliance period if, during the two-year period preceding a failure to meet the minimum bid price requirement, we effected one or more reverse stock splits with a cumulative ratio of 250-to-1 or more. Because we effected a 1-for-40 reverse stock split on May 22, 2026, an additional reverse stock split with a ratio of 1-for-6.25 or greater, effected while the May 2026 split remains within that two-year look-back period, would cause the cumulative ratio to reach or exceed 250-to-1. …”see in full comparison
Full comparison: every changed paragraph (8)
Information
regarding our risk factors appears
in Item 1A.1A of our Annual Report on Form 10-K for the year ended December 31, 2025.10-K. The risks described
in our Annual Report on Form 10-K, as well as additional risks and uncertainties not presently known
to us or that we currently deem
immaterial, could materially and adversely affect our business, results of operations, and financial condition,
which in turn could materially
and adversely affect the trading price of shares of our Common Stock. As of the date of this Quarterly
Report on Form 10-Q, there have
been no material updates or changes with respect to the risk factors previously disclosed
in our Annual Report on Form 10-K.10-K, other than as set forth below.
Our Common Stock repurchase program may not enhance stockholder value, and any repurchases will diminish our cash reserves.
On June 10, 2026, our Board approved the adoption of the 2026 Repurchase Program, providing for the repurchase of up to $25.0 million of our outstanding shares of Common Stock. The 2026 Repurchase Program expires on December 31, 2026, does not obligate us to repurchase any dollar amount or number of shares, and may be modified, suspended, or discontinued by our Board at any time. As of June 30, 2026, we had not repurchased any shares under the 2026 Repurchase Program, and the full $25.0 million remained available. There can be no assurance that we will repurchase any shares under the 2026 Repurchase Program, that we will adopt any future repurchase program, or that any repurchases will enhance stockholder value. The market price of our Common Stock may decline if we modify, suspend, or discontinue the 2026 Repurchase Program, or if we do not repurchase shares at levels anticipated by investors. In addition, any repurchases may diminish our cash reserves, may reduce the resources available to satisfy our collateral obligations under the June Loan, and may not be made at optimal prices.
If we fail to maintain compliance with Nasdaq’s continued listing requirements, our Common Stock could be delisted.
Our Common Stock must satisfy Nasdaq’s continued listing requirements, including the requirement that its closing bid price be at least $1.00 per share. We are currently in compliance with Nasdaq’s other continued listing requirements, but there is no assurance we will remain so in the future. On December 10, 2025, Nasdaq notified us that we were not in compliance with the minimum bid price requirement. After we effected a 1-for-40 reverse stock split on May 22, 2026, Nasdaq notified us on June 9, 2026, that we had regained compliance and that the matter was closed. As of August 10, 2026, the closing bid price of our Common Stock was $5.04 per share.
If our Common Stock again fails to satisfy the minimum bid price requirement at a time when the May 22, 2026 reverse stock split falls within the one-year period preceding that failure, we will not be eligible for any compliance period otherwise available under Nasdaq’s rules, and under Nasdaq Listing Rule 5810(c)(3)(A)(iv), Nasdaq’s Listing Qualifications Department will be required to issue a Staff Delisting Determination, subject to our right to appeal to a Nasdaq Hearings Panel.
The same rule also makes us ineligible for a compliance period if, during the two-year period preceding a failure to meet the minimum bid price requirement, we effected one or more reverse stock splits with a cumulative ratio of 250-to-1 or more. Because we effected a 1-for-40 reverse stock split on May 22, 2026, an additional reverse stock split with a ratio of 1-for-6.25 or greater, effected while the May 2026 split remains within that two-year look-back period, would cause the cumulative ratio to reach or exceed 250-to-1. These restrictions may limit our ability to use a further reverse stock split to regain compliance if we become noncompliant again.
If we are unable to maintain or regain compliance, obtain relief from Nasdaq, or successfully appeal a delisting determination, our Common Stock could be suspended or delisted. A suspension or delisting could adversely affect the liquidity and market price of our Common Stock, could cause our Common Stock to become subject to the SEC’s penny stock rules, and could impair our ability to raise capital, including under our currently effective shelf registration statement and at-the-market offering program, both of which require continued listing on a national securities exchange to remain available to us. In addition, such suspension or delisting could require us to comply with additional covenants under the Master Loan Agreement.
Management's Discussion & Analysis (MD&A)
New heading “Goodwill Impairment”
New heading “Goodwill Impairment”
New heading “Assets Under Management”
New heading “Discontinued Operations”
New heading “Reverse Stock Split”
Removed heading “Healthcare Operations”
Removed heading “Recent Developments”
Largest changes
“Within our Media & Information Services reporting unit, we recorded a goodwill impairment of $80.6 million on June 30, 2026. The reduction in value was primarily due to lower forecasted operating results as a result of the decline in Bitcoin price and a higher discount rate. The fair value of the Media & Information Services reporting unit was determined based on both income and market approaches. Significant assumptions used in the determination of the fair value include revenue growth, EBITDA margin, discount rate, terminal growth rate, and revenue and earnings multiples. …”see in full comparison
“Within our Asset Management reporting unit, we recorded a goodwill impairment of $24.6 million on June 30, 2026. The reduction in value was primarily due to lower forecasted operating results as a result of the decline in Bitcoin price and a higher discount rate. The fair value of the Asset Management reporting unit was determined based on both income and market approaches. Significant assumptions used in the determination of the fair value include revenue growth, EBITDA margin, discount rate, terminal growth rate, and revenue multiples. …”see in full comparison
“As a result of a sustained decline in our stock price and market capitalization in the second quarter, we tested goodwill for impairment as of June 30, 2026. We recorded a goodwill impairment of $80.6 million in the three months ended June 30, 2026, as the fair value of our Media & Information Services reporting unit was lower than our carrying value. The reduction in value was primarily due to lower forecasted operating results and a higher discount rate for our Media & Information Services business.”see in full comparison
“As a result of a sustained decline in our stock price and market capitalization in the second quarter, we tested goodwill for impairment as of June 30, 2026. We recorded a goodwill impairment of $24.6 million in the three months ended June 30, 2026, as the fair value of our Asset Management reporting unit was lower than our carrying value. The reduction in value was primarily due to lower forecasted operating results and a higher discount rate for our Asset Management business.”see in full comparison
Full comparison: every changed paragraph (84)
The
following discussion and analysis
provide information whichthat we believe is relevant to an assessment and understanding of our financial condition
and results of
operations. The following discussion and analysis of our financial condition and results of operations is derived from and should be
be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Form 10-Q
10-Q (the “Financial Statements”), and also with our audited consolidated financial statements and notes thereto included in
in our Form 10-K.
Cautionary
Note Regarding Forward LookingForward-Looking Statements
This
Quarterly Report on Form 10-Q for the
three threeand six months ended MarchJune 31,30, 2026 (“Form 10-Q”) contains certain “forward-looking
statements” within
the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section
21E of the
Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements other than statements of historical facts
facts contained in this Form 10-Q, including statements regarding the financial position, business strategy and the plans and objectives
of management for our future operations, are forward-looking statements. These forward-looking statements are based on the beliefs
of of
management, as well as assumptions made by and information currently available to us. When used in this Form 10-Q, the words
“anticipate,”
“believe,” “estimate,” “expect,” “forecasts,”
“may,” “will,”
“should,” “seek,” “scheduled,” “intend,”
“plan,” and “expect”
and variations of these words or similar expressions (or the negative versions of such words or expressions) are
intended to identify
forward-looking statements.
These
forward lookingforward-looking statements are subject to
a number of risks, uncertainties and assumptions, including those described in “Risk
Factors” included in our Annual Report
on Form 10-K for the year ended December 31, 2025, as filed with the U.S. Securities and
Exchange Commission (“SEC”) on March
30, 2026 (the “Form 10-K”). Moreover, we operate in a very competitive and
rapidly changing environment. New risks emerge
from time to time. It is not possible for our management to predict all risks, nor can
we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any
forward-looking statements we may make. In light of these risks, uncertainties and assumptions,
the forward-looking events and circumstances
discussed in this report may not occur and actual results could differ materially and adversely
from those anticipated or implied in the
forward-looking statements.
Although
we believe that the expectations reflected
in the forward-looking statements are reasonable and the information included in this report
is accurate, we cannot guarantee that the
future results, level of activity, performance or events and circumstances reflected in the
forward-looking statements will be achieved
or occur. We undertake no obligation to update publicly any forward-looking statements for
any reason after the date of this report to confirm these statements to
reflect actual results or changes in our expectations.expectations, except as required by law. We qualify all
of our forward-looking statements by these cautionary
statements.
References to “Nakamoto,” “the Company,” “we,” or “us” in this section are intended to mean the business and operations of Nakamoto Inc. formerly known as KindlyMD, Inc., together with its subsidiaries.
We
hold Bitcoin on our balance sheet and, through
our ecosystem-wide presence, seek to provide investors with exposure to Bitcoin’s
global growth and to leverage our treasury to
acquire and develop an ecosystem of Bitcoin companies across media, asset management and advisory.
Additionally, we operate a healthcare and healthcare data company, focused on holistic pain management, but in March 2026 we announced
our intention to exit this legacy business.
On
February 20, 2026, we completed the acquisitions
of both (i) BTC Inc, a Delaware corporation founded in 2012 and headquartered in
Nashville, Tennessee, which operates a Bitcoin-focused
media and events company that publishes Bitcoin Magazine and produces the
Bitcoin Conference (the “BTC Merger”), and (ii)
UTXO, a Tennessee limited liability company formed in 2019, which serves
as the general partner and investment manager of multiple digital asset focuseddigital-asset-focused funds (the “UTXO Acquisition” and
together with the BTC Merger, the “Acquisitions”). BTC Inc and
UTXO each became wholly-ownedwholly owned subsidiaries of the Company
on February 20, 2026. The Acquisitions represent a significant addition to our
portfolio and advancesadvance our mission to develop an
ecosystem of Bitcoin-native companies. The consideration for the Acquisitions consisted
solely of shares of our common stock, par
value $0.001 per share (our “Common Stock”) and assumed options to purchase shares
of our Common Stock. In connection
with the BTC Merger, holders of BTC Inc common and preferred stock received the right to receive 259,886,237 6,497,156
shares of our Common
Stock, and we reserved 78,427,0121,960,675 shares of our Common Stock for issuance upon the exercise of assumed BTC stock options,
which were
accelerated and converted into options to acquire shares of our Common Stock. In connection with the UTXO Acquisition, UTXO
securityholders received the right to receive 26,481,860662,047 shares of our Common Stock. BTC Inc and UTXO securityholders received or
were entitled
to receive, on a fully-diluted basis, 364,795,1099,119,878 shares of our Common Stock.
In March 2026, we announced our intention to exit our legacy healthcare business, and we closed our last healthcare clinic on June 19, 2026. Results of our legacy healthcare are now reported as discontinued operations.
The transformation from a healthcare company to a Bitcoin operating company affects the comparison of our results in 2026 to 2025. Throughout the first half of 2025, we operated solely as a healthcare company. We did not begin our transformation into a Bitcoin operating company until the Nakamoto Merger in August 2025, and we did not acquire our Media & Information Services and Asset Management businesses until February 2026. Following the shutdown of our healthcare operations in the second quarter of 2026, the results of those operations have been reclassified to discontinued operations for all periods presented, and all of our operating results for the three and six months ended June 30, 2025 are reported within discontinued operations. Accordingly, our results of continuing operations for the 2026 periods are not comparable to the corresponding periods in 2025. See Note 11 — Discontinued Operations. The table below shows the segments included in the three and six months ended June 30, 2026:
The transformation from a healthcare company to a
Bitcoin operating company affects the comparison of our results in 2026 to 2025. The table below shows the segments included in each period:
The
following tables set forth our summary consolidated
results of operations in dollars for the periods presented. The period-to-period
comparisons of our historical results are not necessarily
indicative of the results that may be expected in the future. The results of
operations for the three and six months ended MarchJune 31,30, 2026,
and MarchJune 31,30, 2025, have been derived from the Financial Statements included elsewhere
in this Quarterly Report on Form 10-Q. Amounts may not foot due to rounding.
Loss
beforeNet incomeloss taxesfrom continuing operations was $238.8 $131.2
million for the three months ended MarchJune 31,30, 2026, compared to a loss before income taxes of $1.0 million
for the three months ended March 31, 2025. The loss for the three months ended March 31, 2026,and is impacted by the following significant
items:
Net loss from continuing operations was $368.9 million for the six months ended June 30, 2026, and is impacted by the following significant items:
A
discussion of our operating results for
our Media & Information Services, Asset Management, Bitcoin Operations,Operations Healthcare Operations
and Other segments is below. Prior to the Nakamoto Merger in August 2025, we operated a single segment consisting of Healthcare Operations.
All operating expenses prior to the Nakamoto Merger are reflected in Healthcare Operations. Beginning in 2025 after the
Nakamoto Merger,
we established our Bitcoin Operations segment and began separately tracking other corporate expenses, which are
included in Other segment
results. Following the Acquisitions in the first quarter of 2026, we began operating additional segments
consisting of Media & Information
Segments Services and Asset Management.
Prior to the Nakamoto Merger in August 2025, we operated a single segment consisting of Healthcare Operations. All operating expenses prior to the Nakamoto Merger were reported in our Healthcare Operations segment. Beginning in the second quarter of 2026, all of our Healthcare Operations are now reflected in discontinued operations. General corporate overhead incurred during the three and six months ended June 30, 2025, that was not directly attributable to healthcare operations was not material. Accordingly, there are no revenues, operating expenses or net loss from continuing operations for the three and six months ended June 30, 2025.
A
summary of operating results for the three months
ended MarchJune 31,30, 2026, follows and includes a reconciliation of our Operating income
(loss) (GAAP) to Adjusted operating income (loss) (non-GAAP).
Our Adjusted operating income (loss) removes the change in fair value of
digital assets, impairment of goodwill, (gain) loss on investments,
depreciation and amortization,amortization and transaction-related compensation andexpenses, transaction-relatedin general
andeach administrativecase expensesas applicable, from our operating loss.
A
summary of operating results for the three six
months ended MarchJune 31,30, 2025,2026, follows and includes a reconciliation of our Operating income (loss) (GAAP)
to Adjusted operating income
(loss) (non-GAAP). Our Adjusted operating income (loss) removes the change in fair value of digital assets, impairment of goodwill,
(gain) loss on investments, transaction-related general and administrative expenses, depreciation and amortization and
transaction-related compensation expenses, in each case as applicable, from our operating
loss.
Our
revenue is seasonal and concentrated around
the timing of our conferences or events. In an average year, we hostproduce four conferences
globally. In the three months and six months
ended MarchJune 31,30, 2026, therewe werehosted no conferences and events. Ourour flagship annual Bitcoin Conference
tookConference. place in April 2026; allAll revenue earned by this conference will beis reflected during the three
months ended June 30, 2026. We
recorded $0.5 million of media revenue since the BTC Merger in the three months ended March 31, 2026, which primarily consisted of
digital revenue. We also recorded $0.4 million of advisory revenue in the three months ended March 31, 2026, which primarily relates
to subscription revenue for our Bitcoin for Corporations membership program.
In the three months ended June 30, 2026, we recorded $25.1 million of revenue, of which $22.6 million relates to the flagship Bitcoin Conference. We also earned $0.7 million of advisory revenue, which primarily relates to subscription revenue for our Bitcoin for Corporations membership program.
Total
operating expenses forIn the three months ended MarchJune 31,30, 20262026, werewe $3.6incurred
$100.9 million,million of operating expenses, of which $0.8$80.6 million related to amortizationgoodwill impairment charges. Our cost of revenue was $14.6 million,
which almost all related to costs associated with intangiblethe assetsBitcoin fromConference. Compensation expense was $5.7 million and includes commissions
associated with the BTCBitcoin Merger.Conference.
In the six months ended June 30, 2026, we recorded $26.0 million of revenue, of which $22.6 million relates to the flagship Bitcoin Conference. We also earned $1.1 million of advisory revenue, which primarily relates to subscription revenue for our Bitcoin for Corporations membership program.
In the six months ended June 30, 2026, we incurred $104.5 million of operating expenses, of which $80.6 million related to goodwill impairment charges. Our cost of revenue was $14.7 million, which almost all related to costs associated with the Bitcoin Conference. Compensation expense was $7.8 million and includes commissions associated with the April event.
Goodwill Impairment
As a result of a sustained decline in our stock price and market capitalization in the second quarter, we tested goodwill for impairment as of June 30, 2026. We recorded a goodwill impairment of $80.6 million in the three months ended June 30, 2026, as the fair value of our Media & Information Services reporting unit was lower than our carrying value. The reduction in value was primarily due to lower forecasted operating results and a higher discount rate for our Media & Information Services business.
Our
Asset Management business began on February
20, 2026, when we acquired UTXO. UTXO is a fund manager focused generally on investments
in the broader Bitcoin ecosystem. We generate
revenue from management and performance fees associated with 210k Capital, LP fund (“210k
Capital”) and the UTXO Bitcoin Ecosystem
Master Fund 1 LP fund (“Bitcoin Ecosystem”). Revenues are generally tied to
the assets under management and the performance
of those assets. Our total assets under management aton MarchJune 31,30, 2026, waswere approximately
$109.5 $103.0 million.
Management
fees for 210k Capital are betweenup 1.5% andto 2.0%
annually of the net asset value of a limited partner’s capital account and are
paid monthly. Management fees for Bitcoin Ecosystem
are generally 2.0% annually of the capital contributions of a limited
partner’s capital account and are paid quarterly. Performance
fees are earned when returns exceed specified benchmarks and are
recognized once they become
fixed and determinable and not subject to
reversal.
We recorded $0.2$0.5 million of operating revenue since the UTXO Acquisition in the three
months ended MarchJune 31,30, 2026,
which primarily consisted of management fees. Our operating expenses for the three months ended MarchJune 31,30, 2026,
were was $0.7$26.1 million, of which $0.3$24.6 million related to goodwill impairment charges. We also recorded $0.8 million related to amortization
amortization costs associated with intangible assets from the UTXO Acquisition.
We recorded $0.7 million of revenue in the six months ended June 30, 2026, which primarily consisted of management fees. Our operating expenses for the six months ended June 30, 2026, were $26.8 million, of which $24.6 million related to goodwill impairment charges. We also recorded $1.1 million related to amortization costs associated with intangible assets from the UTXO Acquisition.
Goodwill Impairment
As a result of a sustained decline in our stock price and market capitalization in the second quarter, we tested goodwill for impairment as of June 30, 2026. We recorded a goodwill impairment of $24.6 million in the three months ended June 30, 2026, as the fair value of our Asset Management reporting unit was lower than our carrying value. The reduction in value was primarily due to lower forecasted operating results and a higher discount rate for our Asset Management business.
Assets Under Management
A roll forward of UTXO’s assets under management is as follows:
(1) The six-month period is from December 31, 2025 through June 30, 2026 and includes activity prior to our acquisition of UTXO.
(2) Includes any management and performance fee expenses of the funds.
We
launched our Bitcoin Operations strategy
with the closing of the Nakamoto Merger on August 14, 2025. In February 2026, we began an actively
managed Bitcoin derivatives
program that is designed to (i) generate recurring volatility income from a portion of our Bitcoin and (ii)
hedge mitigate a portion of our downside
exposure to Bitcoin price risk. InRefer to Note 2 — Summary of Significant Accounting Policies , Note 8 — Derivative
Instruments, and Note 9 — Fair Value Measurements to the threeFinancial monthsStatements endedincluded Marchin 31,this 2026,Quarterly Report on Form 10-Q
for further information on our revenues from this strategy
totaled $1.1 million.derivatives.
In the three months ended June 30, 2026, our net revenues from the Bitcoin derivative program totaled $10.4 million. Approximately $9.3 million of this revenue related to mitigating a portion of our downside exposure to Bitcoin and $1.2 million related to our ongoing strategy of capturing income from the volatility of Bitcoin.
For
the three months ended MarchJune 31,30, 2026, we had
total operating expenses of $111.0$51.5 million, which primarily were driven by a loss on the
change in fair value of digital assets and a loss
on our investments. The loss on the change in fair value of our digital assets was
$102.5 $48.6 million as the price of Bitcoin declined from $87,519
$68,220 on DecemberMarch 31, 2025,2026, to $68,220$58,532 per Bitcoin on MarchJune 31,30, 2026. Our loss
on investments was $7.9$2.2 million, which primarily consisted
of losses of $3.9 million from our investment in Metaplanet and a $4.0$1.8 million loss
from our share of Treasury B.V.’s results.
In the six months ended June 30, 2026, our net revenues from the Bitcoin derivative program totaled $11.5 million. Approximately $9.3 million of this revenue related to mitigating a portion of our downside exposure to Bitcoin and $2.2 million related to our ongoing strategy of capturing income from the volatility of Bitcoin.
For the six months ended June 30, 2026, we had total operating expenses of $162.5 million, which primarily were driven by a loss on the change in fair value of digital assets and a loss on our investments. The loss on the change in fair value of our digital assets was $151.1 million as the price of Bitcoin declined from $87,519 on December 31, 2025, to $58,532 per Bitcoin on June 30, 2026. Our loss on investments was $10.0 million, which primarily consisted of a $5.8 million loss from our share of Treasury B.V.’s results and a $3.9 million loss from our investment in Metaplanet.
Healthcare
Operations
Our
revenues were $0.5 million in the three months ended March 31, 2026, compared to $0.6 million in the three months ended March 31, 2025.
The $0.1 million decline in revenues, representing a 17% decrease, was primarily attributable to a decrease in cash-pay patient care
services and the closing of our Bountiful, Utah location in April 2025.
Our
operating expenses for the three months ended March 31, 2026, were $1.1 million as compared to $1.6 million for the three months ended
March 31, 2025, representing a change of 33%. The $0.5 million decrease in 2026 was primarily attributable to $0.4 million lower general
and administrative expense and $0.2 million lower compensation expense. The general and administrative decrease for the first quarter
of 2026 was due to reduced marketing, insurance and other overhead costs. The reduction in compensation expense in 2026 was primarily
due to lower headcount.
In
March 2026, we announced that we intend to exit our legacy healthcare business and expect to be substantially complete with the shutdown by the end of our second quarter of 2026.
Our other results consist primarily of our corporate overhead. We began separately tracking our corporate overhead upon the Nakamoto Merger on August 14, 2025.
Our
other results consist primarily of our corporate overhead. We began separately tracking our corporate overhead upon the Nakamoto Merger
on August 14, 2025. In the three months ended MarchJune 31,30, 2026, other
revenues totaled $0.2 million that related to Bitcoin advisory and
consulting services. Compensation for the three months ended March 31, 2026, totaled $3.9$3.3 million, of which approximately
$0.8 million
related to the prior Nakamoto Merger. General and administrative expenses for the three months ended MarchJune 31,30, 2026,2026 totaled $8.7
$3.4 million,
of which approximately $6.1 million wasprimarily related to one-timelegal, transactioninsurance, relatedmarketing expensesand associatedprofessional withservices the Acquisitions.expenses.
In the six months ended June 30, 2026, other revenues totaled $0.4 million that related to Bitcoin advisory and consulting services. Compensation totaled $7.2 million, of which approximately $1.7 million related to the prior Nakamoto Merger. General and administrative expenses for the six months ended June 30, 2026, totaled $12.1 million, of which approximately $6.1 million was specifically transaction-related expenses associated with the Acquisitions.
Non-operating
expense was $3.5 million for
the three months ended MarchJune 31,30, 2026, wasand $112.6 million compared to $0.0$115.7 million for the threesix months ended MarchJune 31,30, 2025.
2026. We had the following significant
items impactingimpact our non-operating income (expense):
Provision
forBenefit from income taxes
Our benefit from income taxes was $21.4 million in both the three and six months ended June 30, 2026, which represents an effective income tax rate of 14.0% and 5.5%, respectively. The effective tax rate is impacted by the nondeductible loss on the goodwill impairment in the three and six months ended June 30, 2026.
Discontinued Operations
During the second quarter of 2026, we shut down our healthcare operations, which historically generated revenue from providing outpatient services through clinics and telemedicine platforms. On June 19, 2026, we closed our last healthcare clinic and ceased operations. The results of operations for our healthcare operations have been retrospectively reclassified as discontinued operations for all periods presented on the condensed consolidated statement of comprehensive loss.
A summary of results of discontinued operations for healthcare operations is as follows:
Included in the net loss from discontinued operations for the three months and six months ended June 30, 2026, we recorded expenses related to the shutdown of $1.2 million and $1.7 million, respectively. These expenses included severance and employee termination costs, impairment of right-of-use assets associated with abandoned leases and other disposal related costs.
Our
provision for income taxes was $0.0 million in both the three months ended March 31, 2026, and the three months ended March 31, 2025, as
the benefit from income taxes was fully offset in both periods by valuation allowances.
Our assets primarily consist of Bitcoin held on our balance sheet, cash and cash equivalents, goodwill and intangibles, and investments in unconsolidated investees. Our operations have been primarily funded through net proceeds from sales of equity securities and Bitcoin as well as through debt we have incurred. Our cash requirements consist primarily of the payment of principal and interest on our debt and cash overhead expenses.
On December 3, 2025, Nakamoto Holdings entered into the Master Loan Agreement with Payward Interactive, Inc. (“Kraken”), under which loans are made pursuant to separate term sheets. The initial loans were made under a term sheet dated December 9, 2025 in an aggregate principal amount of 210.0 million USDT, 8.0% per annum fixed-rate fee loan that matures on December 4, 2026 (the “Master Loan Agreement”).
On June 5, 2026, Nakamoto Holdings and Kraken, executed a loan term sheet (the “Restructured Loan Term Sheet”) under that certain Master Loan Agreement. The Restructured Loan Term Sheet supersedes in its entirety the loan term sheet, dated as of December 9, 2025, by and between Nakamoto Holdings and Kraken (the “December Term Sheet”), and the loans issued under the December Term Sheet were deemed repaid and the outstanding principal balance thereunder was deemed to be transferred to Nakamoto Holdings, without the need for any notice or actual transfer of loaned digital currency. Pursuant to the Restructured Loan Term Sheet, Nakamoto Holdings borrowed a fixed-term loan in a principal amount of 210.0 million USDT (the “Restructured Loan”). The Restructured Loan was scheduled to mature in two tranches: 105.0 million USDT of the outstanding principal amount was to mature on December 4, 2026, and the remaining 105.0 million USDT was to mature on June 30, 2027.
On June 5, 2026, Nakamoto Holdings repaid 45.0 million USDT to reduce the outstanding principal amount of the Restructured Loan from 210.0 million USDT to 165.0 million USDT (the “Partial Repayment”).
To fund the Partial Repayment, we sold approximately 600 Bitcoin and certain Bitcoin derivative contracts, generating approximately $48.0 million in net proceeds, and applied $45.0 million of those proceeds to the Partial Repayment.
NAKA insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 4 Form 4 filings (1 insider, 6 trade dates, 233,352 shares, about $1.2M) and open-market sales in 1 filing (1 insider, 1 trade date, 982 shares, about $7.5K). Net open-market shares: 232,370 (purchases minus sales); net value about $1.2M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-15 | Evans Tyler Matthew |
Open-market sale | 982 | $7.63 | $7.5K |
| 2026-08-27 | Gendron Teresa S |
Grant/award | 70,821 | — | — |
| 2026-08-27 | Dalton John Merritt |
Grant/award | 42,492 | — | — |
| 2026-08-25 | Bailey Calli Sullivan |
Other | 3,844 | — | — |
| 2026-08-21 | Yusko Mark W |
Grant/award | 10,623 | — | — |
| 2026-08-21 | Xethalis Gregory Elias |
Grant/award | 10,623 | — | — |
| 2026-08-21 | Mcnulty Perianne Boring |
Grant/award | 10,623 | — | — |
| 2026-08-21 | Blackburn Charles Phillip |
Grant/award | 10,623 | — | — |
| 2026-08-21 | Evans Tyler Matthew |
Other | 230 | — | — |
| 2026-08-21 | Evans Tyler Matthew |
Other | 3 | — | — |
| 2026-08-21 | Evans Tyler Matthew |
Grant/award | 56,657 | — | — |
| 2026-08-21 | Fabiano Amanda |
Grant/award | 70,821 | — | — |
| 2026-08-21 | Bailey David F |
Other | 3 | — | — |
| 2026-08-21 | Bailey David F |
Other | 3,744 | — | — |
| 2026-08-21 | Bailey David F |
Grant/award | 70,821 | — | — |
| 2026-08-20 | Bailey David F |
Open-market purchase | 4,852 | $6.27 | $30.4K |
| 2026-08-19 | Bailey David F |
Open-market purchase | 32,134 | $5.59 | $179.6K |
| 2026-08-18 | Bailey David F |
Open-market purchase | 1,000 | $5.10 | $5.1K |
| 2026-08-18 | Bailey David F |
Open-market purchase | 1,000 | $5.11 | $5.1K |
| 2026-08-18 | Bailey David F |
Open-market purchase | 918 | $5.08 | $4.7K |
| 2026-08-18 | Bailey David F |
Open-market purchase | 1,000 | $5.15 | $5.2K |
| 2026-08-18 | Bailey David F |
Open-market purchase | 1,000 | $5.14 | $5.1K |
| 2026-05-28 | Bailey David F |
Open-market purchase | 48,000 | $5.59 | $268.3K |
| 2026-05-28 | Bailey David F |
Open-market purchase | 7,115 | $5.79 | $41.2K |
| 2026-05-27 | Bailey David F |
Open-market purchase | 25,729 | $5.33 | $137.1K |
| 2026-05-27 | Bailey David F |
Open-market purchase | 79,104 | $4.68 | $370.2K |
| 2026-05-26 | Bailey David F |
Open-market purchase | 31,500 | $5.58 | $175.8K |
Well-known investors holding NAKA (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 6,757,194 | $1.5M | — | Sold out |
| Millennium Management (Israel Englander) | 2026-06-30 | 169,109 | $668.0K | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 123,420 | $27.3K | — | Sold out |