UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal quarter ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File Number: 001-42103

NAKAMOTO INC.

(Exact name of Registrant as specified in its charter)

Delaware

84-3829824

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

300 10^th Ave South, Nashville, TN 37203

(Address of Principal Executive Office and Zip Code)

(615) 676-8668

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	NAKA	The Nasdaq Stock Market LLC

Tradeable Warrants to purchase shares of Common Stock, par value $0.001 per share	NAKAW	OTC Pink Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☒

As of May 11, 2026, there were 696,085,586 shares of common stock, par value $0.001 issued and outstanding.

NAKAMOTO INC.

2026 QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

Part I – Financial Information

Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures about Market Risk	29
Item 4. Controls and Procedures	29

Part II – Other Information

Item 1. Legal Proceedings	29
Item 1A. Risk Factors	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3. Defaults Upon Senior Securities	30
Item 4. Mine Safety Disclosures	30
Item 5. Other Information	30
Item 6. Exhibits	31

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NAKAMOTO INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page
Condensed Consolidated Balance Sheets (Unaudited)		2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)		3
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)		4
Condensed Consolidated Statements of Cash Flows (Unaudited)		5
Notes to Condensed Consolidated Financial Statements (Unaudited)		6

NAKAMOTO INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31,			December 31,
(Dollars in thousands)	2026			2025

ASSETS

Current Assets:
Cash and cash equivalents	$	35,300		$	22,583
Prepaid expenses		14,056			2,171
Derivative assets		8,182			-
Call option asset - related party		-			199,060
Other current assets		5,881			3
Total Current Assets		63,419			223,817

Digital assets		345,587			467,550
Investments		16,888			35,697
Intangible assets		101,175			3,009
Goodwill		93,506			-
Other non-current assets		186			535

Total Assets	$	620,761		$	730,608

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable and accrued expenses	$	13,093		$	5,859
Contract liabilities		23,118			-
Notes payable, net		209,740			209,558
Derivative liabilities		5,624			-
Other current liabilities		124			568
Total Current Liabilities		251,699			215,985

Non-current Liabilities:
Contract liabilities		1,622		$	-
Other non-current liabilities		366			366

Total Liabilities		253,687			216,351

Commitments and Contingencies		-			-

Stockholders’ Equity:
Preferred Stock, $0.001 par value per share; authorized - 10,000,000 shares; none issued and outstanding as of March 31, 2026 and December 31, 2025, respectively.		-			-
Common stock, $0.001 par value, 10 billion shares authorized; 690,018,254 shares issued and outstanding as of March 31, 2026 and 439,950,632 shares issued and 437,946,327 outstanding as of December 31, 2025		690			440
Treasury stock at cost, 0 and 2,004,305 shares as of March 31, 2026 and December 31, 2025, respectively		-			(749	)
Additional paid-in capital		665,296			574,571
Accumulated other comprehensive loss		(131	)		-
Accumulated deficit		(298,781	)		(60,005	)
Total Stockholders’ Equity		367,074			514,257

Total Liabilities and Stockholders’ Equity	$	620,761		$	730,608

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NAKAMOTO INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

	For the			For the
	Three Months			Three Months
(Dollars in thousands, except per share data)	March 31, 2026			March 31, 2025

Operating revenues:
Media	$	409		$	-
Advisory		510			-
Asset management		209			-
Derivative		1,071			-
Healthcare		479			580
Total operating revenues		2,678			580

Operating expenses:
Cost of revenue		232			8
Compensation		7,347			1,003
General and administrative		9,784			593
Depreciation and amortization		1,115			18
Loss on change in fair value of digital assets		102,485			-
Loss on investments		7,885			-
Total operating expenses		128,848			1,622

Operating loss		(126,170	)		(1,042	)

Non-operating income (expense)
Other income (expense), net		(642	)		10
Interest expense		(4,220	)		(6	)
Change in fair value of call option asset-related party		(107,744	)		-
Total non-operating income (expense)		(112,606	)		4

Net loss before provision for income taxes		(238,776	)		(1,038	)

Provision for income taxes		-			-
Net loss	$	(238,776	)	$	(1,038	)

Net loss per share of common stock - basic and diluted	$	(0.38	)	$	(0.17	)

Weighted average shares outstanding - basic and diluted		636,472			6,025

Net loss from above	$	(238,776	)	$	(1,038	)
Other comprehensive loss:
Foreign currency translation adjustments		(131	)		-
Total other comprehensive loss		(131	)		-
Comprehensive loss	$	(238,907	)	$	(1,038	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NAKAMOTO INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


	Common Stock						Treasury Stock			Additional Paid-in			Other Comprehensive			Accumulated
(Dollars in thousands)	Shares			Amount			Amount			Capital			Loss			Deficit			Total

Balance at December 31, 2024		6,029,648		$	6		$	(22	)	$	10,360		$	-		$	(7,776	)	$	2,568

Stock-based compensation		-			-			-			9			-			-			9
Treasury stock repurchase		(7,500	)		-			(10	)		-			-			-			(10	)
Net loss		-			-			-			-			-			(1,038	)		(1,038	)
Balance as of March 31, 2025		6,022,148		$	6		$	(32	)	$	10,369		$	-		$	(8,814	)	$	1,529

Balance at December 31, 2025		437,946,327		$	440		$	(749	)	$	574,571		$	-		$	(60,005	)	$	514,257
Balance		437,946,327		$	440		$	(749	)	$	574,571		$	-		$	(60,005	)	$	514,257
Issuance of common stock in acquisition of BTC Inc		218,372,167			218			-			83,294			-			-			83,512
Issuance of common stock in acquisition of UTXO		23,833,674			24			-			6,549			-			-			6,573
Issuance of common stock upon cashless exercise of warrants		10,000,000			10			-			(10	)		-			-			-
Issuance of common stock upon vesting of RSAs		600,000			1			-			154			-			-			155
Stock-based compensation		-			-			-			1,607			-			-			1,607
Common stock cancellation		(406,013	)		-			-			-			-			-			-
Treasury stock repurchase and retirement		(327,901	)		(3	)		749			(869	)		-			-			(123	)
Change in cumulative foreign currency translation adjustment		-			-			-			-			(131	)		-			(131	)
Net loss		-			-			-			-			-			(238,776	)		(238,776	)
Balance as of March 31, 2026		690,018,254		$	690		$	-		$	665,296		$	(131	)	$	(298,781	)	$	367,074
Balance		690,018,254		$	690		$	-		$	665,296		$	(131	)	$	(298,781	)	$	367,074

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NAKAMOTO INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the			For the
	Three Months Ended			Three Months Ended
(Dollars in thousands)	March 31, 2026			March 31, 2025

Cash flows from operating activities:
Net loss	$	(238,776	)	$	(1,038	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,607			9
Depreciation and amortization		1,115			18
Interest paid in digital assets		3,928			-
Loss on derivative assets		3,013			-
Gain on derivative liabilities		(4,084	)		-
Change in fair value of digital assets		102,485			-
Loss on investments		7,885			-
Change in fair value of call option asset - related party		107,744			-
Other		629			70
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(4,333	)		67
Digital assets		(487	)		-
Purchases of Bitcoin put options		(8,833	)		-
Accounts payable and accrued expenses		(6,234	)		48
Contract liabilities		4,332			-
Proceeds from sale of Bitcoin call options		6,730			-
Non-current liabilities		(6	)		(39	)
Net cash used in operating activities		(23,285	)		(865	)

Cash flows from investing activities:
Proceeds from sale of digital assets		20,656			-
Proceeds from investments		11,140			-
Purchase of digital assets		(3,963	)		-
Capitalized software		-			(173	)
Cash acquired in business combinations		8,730			-
Net cash provided by (used in) investing activities		36,563			(173	)

Cash flows from financing activities:
Repurchase of treasury stock		(561	)		(10	)
Repayments of notes payable		-			(84	)
Repayments of finance lease liabilities		-			(1	)
Net cash used in financing activities		(561	)		(95	)

Net change in cash and cash equivalents		12,717			(1,133	)

Cash and cash equivalents - beginning of period		22,583			2,274

Cash and cash equivalents - end of period	$	35,300		$	1,141

Supplemental cash flow information:
Cash paid for:
Interest	$	-		$	-
Income taxes		-			-
Non-cash investing and financing activities:
Issuance of common stock for BTC Inc acquisition	$	83,512		$	-
Issuance of common stock for UTXO acquisition		6,573			-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NAKAMOTO INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2026 (UNAUDITED)

NOTE 1—ORGANIZATION AND NATURE OF OPERATIONS

Nakamoto Inc., formerly known as KindlyMD, Inc., is, with its subsidiaries, a Bitcoin operating company with media, asset management, and advisory capabilities, together with a bitcoin treasury (“Nakamoto,” “the Company,” “we,” “our,” or “us”). Through its ecosystem-wide presence, Nakamoto seeks to provide investors with exposure to Bitcoin’s global growth.

Nakamoto was formed in 2019 as a healthcare company and began its transformation into a Bitcoin operating company in August of 2025, with the merger between Nakamoto Holdings, Inc. and Kindly MD, Inc. On December 27, 2025, the Company converted from a Utah corporation to a Delaware corporation, and on January 21, 2026, the Company changed its name to Nakamoto Inc.

During the three months ended March 31, 2026, the Company completed the acquisitions of both (i) BTC Inc. (“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, and (ii) UTXO Management GP, LLC (“UTXO”), a Tennessee limited liability company formed in 2019, which serves as the general partner and investment manager of multiple digital asset focused funds. See Note 3 - Business Combinations for a full description of these transactions and the related accounting.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are described in Note 2 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The following policies are either new to the Company as a result of the BTC Inc and UTXO acquisitions completed during the three months ended March 31, 2026, or have been updated to reflect changes in the current period.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed financial statements of Nakamoto have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with Article 8 of Regulation S-X and the related rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). These interim unaudited condensed financial statements should be read in conjunction with those audited consolidated financial statements included in the Form 10-K, as filed with the SEC on March 30, 2026 (“Form 10-K”). In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting of normal recurring accruals, have been made. Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for the entire year.

Reclassifications

Certain reclassifications within the balance sheets and operating expenses have been made to the prior period’s financial statements to conform to the current period financial statement presentation. There is no impact in total on the results of operations and cash flows in all periods presented.

Derivative Contracts

We write covered calls and call spreads to convert the implied volatility embedded in Bitcoin options markets into recurring premium income. We also purchase protective puts and put spreads to reduce our mark-to-market exposure to adverse Bitcoin price movements over defined time horizons. These freestanding option contracts meet the definition of derivative instruments under ASC 815-10, as each contract has an underlying (the price of Bitcoin) and notional amount, an initial net investment smaller than the full notional exposure, and a net settlement mechanism. In accordance with ASC 815-10, purchased options are recognized as derivative assets and written options are recognized as derivative liabilities on the unaudited condensed consolidated balance sheets at trade date. All Bitcoin option contracts are measured initially and subsequently at fair value using Level 1 inputs for exchange-traded contracts.

Consistent with our Bitcoin focused business strategy, in which the active management of our Bitcoin treasury through option contracts constitutes an ongoing component of our operations, realized and unrealized gains and losses on Bitcoin derivative instruments are presented net within the unaudited condensed consolidated statements of comprehensive loss under derivative revenue.

Contract Liabilities

Contract liabilities represent our obligation to transfer goods or services to customers from whom we have received consideration.

Segments

We identify reporting segments based on how the chief operating decision maker (“CODM”) regularly reviews financial information to allocate resources and assess performance. Our CODM, who is our Chief Executive Officer, reviews financial information presented on a consolidated basis accompanied by disaggregated information about revenues and operating income by our four reportable segments: Media & Information Services, Asset Management, Bitcoin Operations and Healthcare Operations. Corporate overhead is reported separately as Other. See Note 12—Segment Information for additional information.

Revenue Recognition

We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. To achieve this core principle, we apply 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. We apply ASC 606 to the following revenue streams: media, advisory, asset management, and healthcare.

Media Revenue

Media revenue consists of revenue generated from events, digital, and print revenue streams.

Events Revenue: We host conferences and industry gatherings and generate revenue through ticket sales, sponsorships, exhibitor fees, and ancillary services related to our produced events. Revenue from our produced events is recognized when the event occurs, and performance obligations are satisfied. Amounts invoiced or collected in advance of the event are recorded as contract liabilities until the event is completed.

Event sponsorship contracts generally include a bundle of highly interrelated services, such as branding, marketing exposure, booth access, and attendee benefits. We have determined that these promised goods and services are not distinct within the context of the contract, as they are not separately identifiable and do not provide standalone value to the customer. Accordingly, each event sponsorship arrangement is accounted for as a single performance obligation. The transaction price is typically fixed and stated in the contract, and because the contracts include a single performance obligation, no allocation of consideration to individual activities is performed.

In addition to our produced events, we participate in certain international conferences through cooperation or joint venture arrangements with local co-organizers. These arrangements are evaluated under ASC 808, Collaborative Arrangements, as we and our partners are active participants that share risks and rewards. To the extent we provide services to these arrangements that are within the scope of ASC 606, such services are evaluated separately, including an assessment of whether we act as a principal or agent. For these international events, we generally do not control the underlying event operations or locally provided services prior to transfer to customers and therefore act as an agent. Accordingly, revenue is recognized on a net basis for services we provide, such as brand licensing, programming, and agreed-upon sales and marketing services. Revenue is recognized as the related services are performed or, for event-based services, at the time the event occurs, consistent with ASC 606-10-25.

Digital Revenue: We generate revenue through advertising, content syndication, and other services delivered through our online platforms. Digital revenue contracts may include multiple promised services, such as online advertising, newsletter placements, or other sponsored content. Revenue is recognized over the period in which the related digital content is delivered, or as advertising impressions occur, reflecting when the customer receives the benefit. Specifically, website and sponsored content revenue is recognized when the content is published or delivered, and advertising revenue is recognized over the period in which the public outreach is distributed and impressions are delivered. Amounts invoiced or collected in advance of delivery are recorded as contract liabilities and recognized as revenue as the related advertising services are performed.

Print Revenue: We derive print revenue from the sale of physical publications and print advertising. Revenue from the sale of physical publications is recognized upon delivery, when control of the publication transfers to the customer. Print advertising revenue is recognized over the advertising period. Amounts billed or collected in advance of publication or delivery are recorded as contract liabilities and recognized as revenue when the applicable publication is distributed.

Advisory Revenue

We generate advisory revenue through corporate subscription services, consulting engagements, and symposium sponsorships. Corporate subscription contracts provide customers with access to curated Bitcoin research, policy intelligence, and executive education content over a defined contract term, typically ranging from twelve to twenty-four months. These contracts represent a single stand-ready performance obligation satisfied ratably over the subscription period, and revenue is recognized on a straight-line basis over the contract terms in accordance with ASC 606-10-25. Amounts invoiced or collected in advance of the subscription period are recorded as contract liabilities and recognized as revenue as the performance obligation is satisfied.

Consulting revenue is derived from bespoke advisory engagements with corporate clients pursuing Bitcoin treasury and strategy initiatives. Each consulting engagement is evaluated to identify the distinct performance obligations within the contract. Where an engagement comprises a single deliverable or a series of related services that are substantially the same and have the same pattern of transfer, the arrangement is treated as a single performance obligation recognized at the point in time the service is delivered or, where services are rendered over a defined period, ratably over that period. Variable consideration, if any, is estimated using the most likely amount method and included in the transaction price to the extent it is probable that a significant reversal will not occur.

Symposium sponsorship revenue relates to exclusive, invitation-only leadership forums hosted by us, generally for the benefit of the Bitcoin for Corporations members. Symposium sponsorship contracts typically include a single performance obligation representing the sponsorship package delivered in connection with the event. Revenue is recognized at the point in time the symposium occurs, consistent with the recognition pattern applied to our other event-based revenue streams. Amounts received in advance of the symposium date are recorded as contract liabilities until the performance obligation is satisfied.

Asset Management Revenue

We provide continuous investment management services to both 210k Capital, LP (“210k Capital”) and UTXO Bitcoin Ecosystem Master Fund 1 LP (“Bitcoin Ecosystem”) (together, the “Funds”), which include portfolio management, risk monitoring, and consulting. These services represent a single performance obligation that is satisfied over time, consisting of a series of distinct services that are substantially the same and follow the same pattern of transfer. Although we receive two forms of compensation (i.e., management fees and performance fees, as described in more detail below), both relate to the same underlying service of managing the funds and are considered part of the same performance obligation.

Management Fee Income: We earn a management fee for acting as the investment manager for the Funds. The performance obligation is the management of the Funds. While the individual activities that comprise the performance obligation can vary day to day, the nature of the overall performance obligation to provide management services is the same and considered by us to be a series of services that have the same pattern of transfer to the customer and the same method to measure progress toward satisfaction of the performance obligation. The series of distinct services represents a single performance obligation that is satisfied over time. We recognize revenue ratably as the Funds receive and consume the benefits as they are provided by us.

We receive a management fee for our services of between 1.5% and 2.0% annually of the Net Asset Value (“NAV”) of a limited partner’s capital account for 210k Capital and receive a management fee for our services of generally 2.0% annually of the capital contributions of a limited partner’s capital account for Bitcoin Ecosystem.

Performance Fee Income: We recognize performance fee income based on each of the Funds investment performance. The performance-based income arises from our role as investment manager and General Partner of each of the Funds. The performance obligation is satisfied over time as we achieve specific benchmarks and thresholds through each of the Funds as detailed below.

For 210k Capital, performance fees are recognized only when the NAV of a limited partner’s capital account exceeds the highest NAV previously allocated to that account during any of the immediately preceding eight fiscal periods (the “High Water Mark”). If a limited partner experiences a net decrease in the NAV of its respective capital account as of the end of any fiscal year, the amount of the decrease after deduction of management fees, will be carried forward (the “Loss Carryforward”). This Loss Carryforward must be recovered in future periods before a performance allocation is earned.

Subject to the resolution of any Loss Carryforward and the application of the High Water Mark, we are entitled to receive from 210k Capital (i) 20% of the increase in NAV of any Class A limited partner’s capital account and (ii) 15% of the increase in NAV of any Class B limited partner’s capital account, calculated on an annual basis.

Performance fee income from 210k Capital is classified as variable consideration due to its dependency on the limited partner’s NAV. Given the constraint of the High Water Mark and any Loss Carryforward, variable consideration is not recognized until uncertainty is resolved. Once the thresholds are met, we recognize performance fee income.

For Bitcoin Ecosystem, performance fee income (“Carried Interest”) is determined under a distribution waterfall whereby: (i) limited partners first receive distributions equal to their capital contributions; (ii) thereafter, remaining returns are allocated 80% to limited partners and 20% to us until a 3.0x return threshold is reached; (iii) then 75%/25% until a 5.0x return threshold; and (iv) thereafter 70%/30% between limited partners and us.

Carried interest is earned based on Bitcoin Ecosystem distribution waterfall and is contingent upon the achievement of specified return thresholds. We treat carried interest as variable consideration and recognize it only to the extent it is probable that a significant reversal will not occur, with such assessment performed at each reporting period.

Revenue Outside the Scope of ASC 606 – Derivative Revenue

Income from put and call option contracts on Bitcoin that meet the definition of a derivative instrument is outside the scope of ASC 606 and is accounted for under ASC 815, Derivatives and Hedging. The income is presented as revenue in our condensed consolidated statements of comprehensive loss as we believe it would satisfy the definition (of that term) as included in the ASC master glossary. These derivative contracts are measured at fair value, with realized and unrealized changes in fair value recognized in earnings as they occur. See Note 8—Derivative Instruments for additional information regarding our derivative instruments.

Variable Interest Entities

We hold a variable interest in both 210k Capital and Bitcoin Ecosystem funds, which are considered variable interest entities (“VIE”). A company consolidates entities that meet the definition of a VIE if they are the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has the right to receive benefits from that entity that could potentially be significant to the entity. We are not considered the primary beneficiary for either 210k Capital or Bitcoin Ecosystem funds and neither is consolidated by us. We hold investments in these non-consolidated VIEs totaling $0.2 million and have receivables totaling $0.9 million. Total assets held by the non-consolidated VIEs are approximately $116.5 million.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. We are currently evaluating the impact this standard will have on our financial statements.

We currently believe there are no other issued and not yet effective accounting standards that are materially relevant to our interim unaudited condensed financial statements.

NOTE 3—BUSINESS COMBINATIONS

Acquisition of BTC Inc

On February 16, 2026, we entered into an Agreement and Plan of Merger (the “BTC Merger Agreement”) with BTC Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of ours (“BTC Merger Sub”), BTC Inc, and the stockholder representative party thereto.

On February 20, 2026 (the “Closing Date”), we completed the transaction contemplated by the BTC Merger Agreement (the “Closing”), pursuant to which BTC Merger Sub merged with and into BTC Inc, with BTC Inc surviving the merger as a wholly-owned subsidiary of ours (the “BTC Merger”). In connection with the Closing, we acquired all of the issued and outstanding securities of BTC Inc.

Concurrently with the BTC Merger, on February 20, 2026, we also completed the acquisition of UTXO (the “UTXO Acquisition”) through the exercise of a call option on UTXO equity interests that was held by BTC Inc and acquired as part of the BTC Merger. See below for further information regarding the UTXO Acquisition.

Upon consummation of the BTC Merger on the terms and conditions set forth in the BTC Merger Agreement, the holders of BTC Inc common and preferred stock received the right to receive 259,886,237 shares of our common stock (“Common Stock”), par value $0.001 per share (“BTC Merger Shares”) and we reserved 78,427,012 shares of Common Stock for issuance in connection with fully-vested BTC Inc stock options assumed by us (“BTC Stock Options” together with the BTC Merger Shares, the “BTC Consideration”).

Pursuant to the BTC Merger Agreement, 24,835,418 shares of our Common Stock were withheld from the BTC Consideration and will be available to offset any post-closing adjustments to the BTC Consideration and to support indemnification obligations (the “BTC Holdback Shares”). Certain stockholders of BTC Inc will receive their pro rata portions of the BTC Holdback Shares subject to the conditions in accordance with the BTC Merger Agreement. All of the remaining 235,050,819 shares of our Common Stock to be issued are dependent upon us receiving a letter of transmittal from previous BTC Inc stockholders (“Letter of Transmittal Shares”). As of March 31, 2026, we have received letters of transmittal representing 218,372,167 shares of Common Stock and have issued shares of Common Stock to those former BTC Inc shareholders. As of March 31, 2026, 16,678,652 Letter of Transmittal Shares remain subject to receipt and subsequent issuance of Common Stock.

Accounting for the BTC Merger

Prior to the Closing Date, we held a call option on the equity interests of BTC Inc, which was accounted for as a derivative instrument measured at fair value with changes in fair value recognized in earnings. On the Closing Date, the call option was remeasured to its acquisition date fair value and applied as consideration in the BTC Merger in accordance with ASC 805.

The components of consideration used to measure goodwill are as follows (in thousands):

SCHEDULE OF GOODWILL

	Fair Value
Fair value of common stock including Letter of Transmittal Shares and BTC Holdback Shares (259,886,237 shares at $0.2482 per share)	$	64,504
Fair value of pre-combination BTC Stock Options assumed		19,008
Allocated portion of the acquisition date fair value of our previously held call option (see “Previously Held Call Option” below)		45,088
Total fair value used to measure goodwill	$	128,600

Previously Held Call Option

Prior to the Closing Date, we held a call option on the equity interests of BTC Inc, which was accounted for as a derivative instrument in accordance with ASC 815, Derivatives and Hedging, and measured at fair value with changes in fair value recognized in change in fair value of call option – related party in the unaudited condensed consolidated statements of comprehensive loss. On December 31, 2025, the fair value of the call option was $199.1 million. During the period from January 1, 2026, through the Closing Date, we recognized a loss of $107.7 million in change in fair value of the call option, reducing the fair value to $91.3 million immediately prior to the Closing Date.

On the Closing Date, the call option was remeasured to its acquisition date fair value and applied as consideration in the BTC Merger and, concurrently through the acquisition of BTC Inc’s call option on UTXO, the UTXO Acquisition. The $91.3 million acquisition date fair value of the call option has been allocated between the two transactions based on the relative fair value of the underlying BTC Inc and UTXO equity interests. Of the total, $45.1 million has been included in the consideration used to measure goodwill in the BTC Merger and $46.2 million has been allocated to the UTXO Acquisition.

The acquisition date fair value of the call option was measured based on the intrinsic value of the option at exercise. The acquisition date fair value of BTC’s equity interests of $128.6 million and the acquisition date fair value of UTXO’s interest of $52.8 million were determined by an independent third-party valuation specialist. As the call option was exercised on the Closing Date with no remaining time value, the intrinsic value approach is consistent with the fair value of the call option under ASC 820. The underlying equity valuations reflect significant unobservable (Level 3) inputs as defined in ASC 820.

Preliminary Purchase Price Allocation – BTC Inc

Our preliminary allocation of the acquisition price is based on our preliminary estimate of fair value for each of the acquired assets and liabilities. Such amounts are subject to revision as additional information about fair values of assets and liabilities becomes available. The following table summarizes the preliminary allocation of the fair value of consideration to the assets acquired and liabilities assumed as of the Closing Date for (in thousands):

	Preliminary Fair Value
Cash and cash equivalents	$	8,636
Prepaid expenses		7,431
Other current assets		5,104
Digital assets		86
Investments		450
Intangible assets		69,310
Other non-current assets		47
Total assets acquired (excluding goodwill)		91,064

Accounts payable and accrued expenses		(12,856	)
Contract liabilities current		(18,991	)
Contract liabilities non-current		(1,417	)
Net identifiable assets acquired		57,800
Goodwill		70,800
Total fair value used to measure goodwill	$	128,600

The preliminary fair values and weighted-average useful lives of identifiable intangible assets acquired are as follows (in thousands):

	Preliminary Fair Value		Weighted-Average Useful Life
Trade names	$	68,442	10 years
Customer relationships		868	8 years
Total	$	69,310	10 years

The fair value measurements of intangible assets reflect significant unobservable (Level 3) inputs as defined in ASC 820. No residual value has been assigned to these intangible assets and they do not contain material renewal or extension provisions.

Goodwill

We recognized preliminary Goodwill of $70.8 million as a result of the BTC Merger. None of the goodwill recognized is expected to be deductible for income tax purposes. All of the goodwill has been assigned to the Media & Information Services reportable unit.

Revenue and Earnings of BTC Inc Since the Closing Date

The amounts of revenue and net loss of BTC Inc included in our unaudited condensed consolidated statement of comprehensive loss from the Closing Date through March 31, 2026, were as follows (in thousands):

Revenue		$	833
Net loss		$	(2,759	)

Acquisition of UTXO Management GP, LLC

On February 20, 2026, concurrent with the Closing of the BTC Merger (see above), we completed the UTXO Acquisition. In connection with the Closing, we issued an aggregate of 26,481,860 shares of Common Stock (the “UTXO Consideration”), of which 2,648,186 shares were withheld from the UTXO Consideration to support indemnification obligations (the “UTXO Holdback Shares”). Certain equity holders of UTXO will receive their pro rata portion of the UTXO Holdback Shares subject to the conditions in and in accordance with the UTXO Merger Agreement.

Accounting for the UTXO Acquisition

Prior to the Closing Date, we held a call option on the equity interests of BTC Inc, and BTC Inc held a call option on the equity interests of UTXO. Concurrent with the Closing of the BTC Merger, we (through BTC Inc) exercised BTC Inc’s call option on UTXO to complete the UTXO Acquisition. The portion of the acquisition date fair value of our previously held call option on BTC Inc equity interests allocated to the UTXO Acquisition, together with the UTXO Consideration, constitutes the consideration used to measure goodwill in the UTXO Acquisition.

The components of consideration used to measure goodwill are as follows (in thousands):

SCHEDULE OF GOODWILL

	Fair Value
Fair value of UTXO Consideration (26,481,860 shares at $0.2482 per share)	$	6,573
Allocated portion of the acquisition date fair value of our previously held call option (see “Previously Held Call Option” above)		46,227
Total fair value used to measure goodwill	$	52,800

Preliminary Purchase Price Allocation - UTXO

	Preliminary Fair Value
Cash and cash equivalents	$	94
Prepaid expenses		53
Other current assets		870
Investments		61
Intangible assets		29,952
Total assets acquired (excluding goodwill)		31,030

Accounts payable and other current liabilities		(936	)
Net identifiable assets acquired		30,094
Goodwill		22,706
Total fair value used to measure goodwill	$	52,800

The preliminary fair values and weighted-average useful lives of identifiable intangible assets acquired are as follows (in thousands):

	Preliminary Fair Value		Weighted-Average Useful Life
Trade names	$	1,567	10 years
Management contracts		28,385	10 years
Total	$	29,952	10 years

Goodwill

We recognized preliminary Goodwill of $22.7 million as a result of the UTXO Acquisition. None of the goodwill recognized is expected to be deductible for income tax purposes. All of the goodwill has been assigned to the Asset Management reportable unit.

Revenue and Earnings of UTXO Since the Closing Date

The amounts of revenue and net loss of UTXO included in our unaudited condensed consolidated statement of comprehensive loss from the Closing Date through March 31, 2026, were as follows (in thousands):

Revenue		$	209
Net loss		$	(453	)

Acquisition-Related Costs

We incurred acquisition-related costs of $6.1 million during the three months ended March 31, 2026, related to both the BTC Merger and UTXO Acquisition, consisting primarily of advisory, legal, valuation, and due diligence fees, which are included in general and administrative expenses in the unaudited condensed consolidated statement of comprehensive loss.

Supplemental Pro Forma Information (Unaudited)

The following unaudited supplemental pro forma information presents our combined results of operations as though the BTC Merger and UTXO Acquisition had occurred on January 1, 2025. The pro forma results reflect adjustments directly attributable to the BTC Merger and UTXO Acquisition that are factually supportable, including additional amortization of acquired intangible assets, reversal of nonrecurring acquisition-related costs and reversal of the portion of the change in fair value of the call option allocated to the BTC Merger and UTXO Acquisition. The pro forma information is not necessarily indicative of results that would have been achieved had the BTC Merger and UTXO Acquisition been completed on January 1, 2025, nor is it indicative of future results (in thousands):