FLD 10-Q
Fold Holdings, Inc. (FLD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
|
|
|
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 for 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.
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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 |
|
☐ |
|
☒ |
|
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 Exchange Act). Yes ☐ No
As of November 10, 2025, the registrant had
Table of Contents
|
|
Page |
|
|
|
|
3 |
|
|
|
|
PART I. |
5 |
|
|
|
|
Item 1. |
5 |
|
|
5 |
|
|
6 |
|
|
7 |
|
|
8 |
|
|
9 |
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
31 |
Item 3. |
49 |
|
Item 4. |
50 |
|
|
|
|
PART II. |
51 |
|
|
|
|
Item 1. |
51 |
|
Item 1A. |
51 |
|
Item 2. |
53 |
|
Item 3. |
53 |
|
Item 4. |
53 |
|
Item 5. |
53 |
|
Item 6. |
54 |
|
55 |
||
Intellectual Property
We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business, which include the Company’s “F” logo mark, “FOLD”, “FOLD CREDIT CARD”, “FOLD BITCOIN CREDIT CARD”, “FOLD BITCOIN REWARDS CREDIT CARD”, “FOLD DEBIT CARD”, “FOLD BITCOIN DEBIT CARD”, “FOLD BITCOIN REWARDS DEBIT CARD”, “FOLD GIFT CARD”, and “FOLD BITCOIN GIFT CARD”. This document may also include trademarks, service marks and tradenames that are the property of other organizations. Our use or display of any third party’s trademarks, service marks, trade names or products in this document is not intended to, and does not imply, a relationship with, endorsement of or sponsorship by us of, those third parties. Solely for convenience, trademarks, service marks and tradenames referred to in this document may appear without the ®, SM and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks, service marks and tradenames.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) of Fold Holdings, Inc. (“Fold,” the “Company,” “we,” “our,” and “us”) contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “approximately,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions.
We caution investors that any forward-looking statements presented in this Quarterly Report, or that we may make orally or in writing from time to time, are based on information currently available, as well as our beliefs and assumptions. The actual outcome related to forward-looking statements will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on forward-looking statements, which are based only on known results and trends at the time they are made, to anticipate future results or trends.
The forward-looking statements contained in this Quarterly Report are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:
3
The discussion in this Quarterly Report should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report. Further, when reading this Quarterly Report, you should keep in mind those Risk Factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed on March 28, 2025, as well as the Risk Factors disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 filed on August 12, 2025. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
This Quarterly Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report, except as may be required by law.
4
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Fold Holdings, Inc.
Condensed Balance Sheets
(Unaudited)
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Assets |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable, net |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Digital assets - rewards treasury |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Digital assets - investment treasury |
|
|
|
|
|
|
||
Capitalized software development costs, net |
|
|
|
|
|
|
||
Deferred transaction costs |
|
|
|
|
|
|
||
Other non-current assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Liabilities and stockholders' equity (deficit) |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses and other current liabilities |
|
|
|
|
|
|
||
December 2024 convertible note, net |
|
|
|
|
|
|
||
Customer rewards liability |
|
|
|
|
|
|
||
Deferred revenue |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Deferred revenue, long-term |
|
|
|
|
|
|
||
June 2025 convertible note, net |
|
|
|
|
|
|
||
March 2025 convertible note - related party |
|
|
|
|
|
|
||
Simple Agreements for Future Equity (“SAFEs”) |
|
|
|
|
|
|
||
Other non-current liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Stockholders’ equity (deficit) |
|
|
|
|
|
|
||
Preferred stock, $ |
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Additional paid-in-capital |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Total stockholders’ equity (deficit) |
|
|
|
|
|
( |
) |
|
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
The accompanying notes are an integral part of these condensed financial statements
5
Fold Holdings, Inc.
Condensed Statements of Operations
(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Revenues, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Banking and payment costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Custody and trading costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketing expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Gain) loss on customer rewards liability |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
(Gain) loss on digital assets - rewards treasury |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain (loss) on digital assets - investment treasury |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Change in fair value of SAFEs |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Change in fair value of convertible note |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Convertible note issuance costs and fees |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Loss on extinguishment of debt |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense), net |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) before income taxes |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Income tax expense (benefit) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Diluted |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Net income (loss) per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Diluted |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Weighted-average shares used to compute net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these condensed financial statements
6
Fold Holdings, Inc.
Condensed Statements of Stockholders' Equity (Deficit)
(Unaudited)
|
|
Convertible |
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
||||||||||
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
|
|
|||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
|||||||
Balance at January 1, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||||
Retroactive application of recapitalization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
- |
|
|
|
- |
|
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance at January 1, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Reverse recapitalization, net of expenses |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Share based compensation expense |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Exercise of Series B warrants |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
||
Issuance of March 2025 closing shares and warrants |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Change in fair value of Series C Warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Issuance of interest shares |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Issuance of placement shares |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Issuance of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||||
Balance at September 30, 2025 |
|
|
- |
|
|
$ |
- |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
The accompanying notes are an integral part of these condensed financial statements
7
Fold Holdings, Inc.
Condensed Statements of Cash Flows
(Unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Amortization expense |
|
|
|
|
|
|
||
Gain on digital assets - rewards treasury |
|
|
( |
) |
|
|
( |
) |
(Gain) loss on digital assets - investment treasury |
|
|
( |
) |
|
|
|
|
Loss on customer rewards liability |
|
|
|
|
|
|
||
Change in fair value of convertible note |
|
|
|
|
|
|
||
Convertible note issuance costs and fees |
|
|
|
|
|
|
||
Loss on extinguishment of debt |
|
|
|
|
|
|
||
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Amortization of debt discount and premium |
|
|
|
|
|
|
||
Change in fair value of SAFEs |
|
|
|
|
|
|
||
Share-based compensation expense |
|
|
|
|
|
|
||
Increase (decrease) in cash resulting from changes in: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
|
|
|
|
||
Inventories |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
( |
) |
|
|
|
|
Accrued expenses and other current liabilities |
|
|
|
|
|
|
||
Customer reward liability |
|
|
|
|
|
|
||
Deferred revenue |
|
|
( |
) |
|
|
( |
) |
Other non-current liabilities |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
|
||
Purchases of digital assets |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of digital assets |
|
|
|
|
|
|
||
Payments for capitalized software development costs |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities |
|
|
|
|
|
|
||
Proceeds from recapitalization |
|
|
|
|
|
|
||
Payments of deferred IPO costs |
|
|
( |
) |
|
|
|
|
Proceeds received from SAFE financings |
|
|
|
|
|
|
||
Payment of debt issuance costs |
|
|
( |
) |
|
|
|
|
Proceeds from issuance of common stock |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net (decrease) increase in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Non-cash investing and financing activities |
|
|
|
|
|
|
||
Proceeds from SAFE financings received in digital assets |
|
$ |
|
|
$ |
|
||
Non-cash payment of interest with common stock |
|
|
|
|
|
|
||
Distributions of digital assets to fulfill customer reward redemptions |
|
|
|
|
|
|
||
Distributions of digital assets to satisfy other current obligations |
|
|
|
|
|
|
||
Recapitalization |
|
|
|
|
|
|
||
Proceeds from convertible debt received in digital assets - related party |
|
|
|
|
|
|
||
Change in fair value of Series C Warrants included in loss on extinguishment |
|
|
|
|
|
|
||
Non-cash amortization of deferred issuance costs |
|
|
|
|
|
|
||
Distributions of digital assets for prepaid interest - related party |
|
|
|
|
|
|
||
The accompanying notes are an integral part of these condensed financial statements
8
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Unless otherwise indicated or the context otherwise requires, references to “Fold,” “we,” “us,” “our,” and the “Company” refer to the business of Fold, Inc., a Delaware corporation, prior to the Closing of the Merger, and Fold Holdings, Inc. after the Closing of the Merger (as such terms are defined below).
Background and Business Combination
Fold Holdings, Inc. is a bitcoin financial services company dedicated to expanding access to bitcoin through a comprehensive suite of consumer financial services. The Company was formed with the purpose of creating a modern financial services platform that allows customers to earn, accumulate, and utilize bitcoin in their everyday life. The Company offers consumers an FDIC insured checking account through Sutton Bank, a prepaid Visa debit card (the "Fold Debit Card"), bill payments, and an extensive catalog of merchant reward offers. The Company also offers various forms of bitcoin buying and selling with low-to-zero fees, instant withdrawals, and insured custody. By integrating bitcoin across traditional financial services, the Company acts as a key point of entry for consumers to engage with and integrate bitcoin into their everyday lives. The Company's products and services are available in the United States through the Fold mobile application (the “Fold App”).
On July 24, 2024, Fold, Inc. ("Fold Predecessor") entered into a definitive agreement (the “Merger Agreement”) with FTAC Emerald Acquisition Corp. (“FTAC Emerald”), a publicly-traded special purpose acquisition company, providing for a proposed business combination (the “Merger”). The registration statement for the Merger was declared effective by the SEC on January 23, 2025, the Merger was approved by FTAC Emerald’s shareholders on February 13, 2025, and the Merger was consummated on February 14, 2025 (the "Closing"). Following the Merger, FTAC Emerald changed its name to Fold Holdings, Inc. and effectively assumed all of Fold Predecessor's material operations. The combined company now operates under the name Fold Holdings, Inc., and its common stock, par value $
Liquidity and capital resources
As of September 30, 2025, the Company had cash and cash equivalents of $
As of September 30, 2025, the Company held
As of September 30, 2025, we held
As of September 30, 2025, the Company had $
9
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
conversion of the March 2025 Investor Note to Common Stock, with a maximum potential repayment of
In June 2025, the Company entered into an agreement for a $
Management expects that the Company’s existing cash and cash equivalents, accounts receivable, financing available from the Facility, and digital assets received through September 30, 2025, will be sufficient to enable the Company to fund its anticipated level of operations through one year from the date of this report.
There is limited historical financial information about the Company upon which to base an evaluation of its performance. The business is subject to risks inherent in the establishment of an emerging growth enterprise, including limited capital resources, possible delays in product development, and possible cost overruns due to price and cost increases in services. The Company may require additional capital to pursue certain business opportunities or respond to technological advancements, competitive dynamics or technologies, customer demands, challenges, or unforeseen circumstances. Additionally, the Company has incurred significant costs related to the Merger and becoming a public company.
We may continue to pursue additional capital via various capital instruments in the future, however, such funding may not be available on terms acceptable to us or at all. Although management believes that such capital sources will continue to be available, there can be no assurances that financing will be available to the Company when needed, or if available, on terms acceptable to the Company. If the Company is unable to obtain adequate financing on terms that are satisfactory to the Company, when the Company requires it, the Company’s ability to continue to grow or support the business and to respond to business challenges could be significantly limited, which may adversely affect the Company’s business plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company.
Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. These condensed financial statements and accompanying notes should be read in conjunction with the audited financial statements and accompanying notes for the years ended December 31, 2024 and 2023. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The interim results for the periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any future periods.
Use of estimates
The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, as well as related disclosure of contingent assets and liabilities. The Company bases its estimates on historical experience and on assumptions that the Company believes are reasonable; however, actual results could significantly differ from those estimates. The Company evaluates these estimates on an ongoing basis.
10
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
Estimates, judgments, and assumptions in these financial statements include, but are not limited to, those related to the determination of the recognition, measurement, and valuation of current and deferred income taxes; the fair value of stock-based compensation; the useful lives and impairment assessment of long-lived assets; the fair value of convertible notes; allowance for credit losses; the fair value of customer reward liability derivative instruments; the fair value of Simple Agreements for Future Equity (“SAFEs”); and loss contingency identification and valuation, including assessing the likelihood of adverse outcomes from positions, claims, and disputes, recoveries of losses recorded, and associated timing.
Segment information
Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”), who is our , in deciding how to allocate resources and assessing performance. During the nine months ended September 30, 2025 and 2024, all operations were within the United States. The CODM allocates resources and assesses performance based upon financial information at the entity-wide level. Since the CODM makes operating decisions and allocates resources on an entity-wide basis, Fold operates as one operating segment and one reportable segment.
The CODM does not evaluate performance or allocate resources based on segment assets, and therefore such information is not presented in the notes to the financial statements.
Capitalized software development costs, net
The Company capitalizes significant costs incurred in the acquisition or development of the internal software for use in the Company's various service offerings. The Company incurs costs in developing software inclusive of direct external costs and internal payroll costs. Internal payroll costs typically include salaries and wages. Capitalized software costs are stated at cost net of accumulated amortization. Amortization is provided utilizing the straight-line method over the estimated useful life of the software, which is three years. Costs incurred in the preliminary and post-implementation phases of the Company's internal use software are expensed as incurred.
Capitalized software development costs consisted of the following:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||
Capitalized software, gross |
|
$ |
|
|
|
$ |
|
|
||
Less: accumulated amortization |
|
|
|
( |
) |
|
|
|
( |
) |
Capitalized software, net |
|
$ |
|
|
|
$ |
|
|
||
The gross carrying amount of internally developed software costs that had been capitalized but not placed into service is as follows:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||
Capitalized software not placed into service |
|
$ |
|
|
|
$ |
|
|
||
The Company recorded amortization expense on capitalized software development costs placed into service in the amount of $
Customer rewards liability
11
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
The Company offers certain rewards to its users through the Fold Rewards Program. This program allows the Company's users to earn promotional credits denominated in bitcoin by engaging in various actions, either by engaging in qualifying spend transactions (the “Revenue Rewards”) or performing certain actions designated by the Company as primarily for marketing, growth, and retention purposes (the “Marketing Rewards”). Revenue Rewards are defined as those that are earned in direct relation to a qualifying spend transaction such as spending on the Fold Debit Card, purchasing bitcoin, purchasing merchant offers, etc. Marketing Rewards are defined as those that are earned for behaviors unrelated to qualifying spend transactions such as sign-up bonuses, referral bonuses, spinning the daily spin wheel, etc. For accounting purposes, any reward that derives from a transaction where Fold receives revenue constitutes a Revenue Reward, whereas all other rewards constitute Marketing Rewards.
Revenue Rewards are considered earned at the time of the qualifying spend transaction. Revenue Rewards are immediately available for redemption by the user, except for those related to Fold Debit Card transactions which cannot be redeemed until after a 30-day settlement period. Marketing Rewards are earned and available immediately upon the performance of a qualifying action by the user. To redeem available rewards, a user may request a withdrawal to a personal bitcoin wallet.
The Company accrues both Revenue Rewards and Marketing Rewards (collectively, the "Rewards") within ‘Customer rewards liability’ in our accompanying balance sheets at the time the Reward is earned, with the corresponding impact on our statements of operations dependent on the type of Reward. Revenue Rewards are recorded as a reduction in the transaction price of the related revenue earned. Marketing Rewards are recorded as a marketing expense within operating expenses. The liability is initially recorded at the fair value of the bitcoin earned upon the action by the user and subsequently marked to fair value until redeemed or reversed, with gains and losses on this liability recorded within gain (loss) on customer rewards liability in our accompanying statements of operations. The liability is derecognized when the Reward is redeemed by the user and delivered to the user's bitcoin wallet.
Per the terms and conditions of the Fold Rewards Program, Rewards are subject to adjustment for chargebacks, returns, refunds, or other circumstances. In addition, Rewards are subject to expiry if users fail to maintain an active account for more than twelve consecutive months. The Company estimates the amount of Rewards that will expire based on historical data, current user trends, and other factors and records those estimated amounts in the period those Rewards were earned. These accruals are accounted for as an adjustment to the transaction price of the original revenue transaction if the expiration relates to Revenue Rewards, or as contra-expense within marketing expense if the expiration relates to Marketing Rewards.
Derivatives
As our customer rewards liability results in an obligation to deliver a fixed amount of digital assets in the future, the Company has determined that it meets the definition of a derivative and marked it to fair value as discussed above. The Company has not designated this derivative instrument as a hedging instrument. As of September 30, 2025 and December 31, 2024, the notional amount of the customer rewards liability outstanding was
Convertible notes and warrants
In December 2024, the Company entered into a Securities Purchase Agreement (the “December 2024 SPA”) with an institutional investor for the sale of a Senior Secured Convertible Note (the “December 2024 Initial Investor Note”) which is convertible into shares of the Company’s Common Stock. The Company has accounted for the December 2024 Initial Investor Note and related warrants using the relative fair value allocation method on the date of issuance. On June 16, 2025, the Company entered into a Waiver, Amendment and Joinder Agreement with its subsidiary, Fold, Inc., a Delaware corporation (“Subsidiary”), and the investor to amend the December 2024 SPA. This amendment resulted in the Company extinguishing the December 2024 Initial Investor Note and reissuing an amended note (the “June 2025 Amended Investor Note”). The Company has accounted for the June 2025 Amended Investor Note at fair value on the date of extinguishment of the December 2024 Initial Investor Note and issuance of the June 2025 Amended Investor Note. Refer to Note 10 for further information.
The December 2024 Initial Investor Note and June 2025 Amended Investor Note contain a host liability, freestanding warrants, and an embedded conversion feature. The Company uses the guidance under FASB ASC Topic 815 Derivatives and Hedging (“ASC 815”) to
12
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
determine if the embedded conversion feature must be bifurcated and separately accounted for as a derivative under ASC 815. It also determines whether any embedded conversion features requiring bifurcation and/or freestanding warrants qualify for any scope exceptions contained within ASC 815. Generally, contracts issued or held by a reporting entity that are both (i) indexed to its own stock, and (ii) classified in shareholders equity, would not be considered a derivative for the purposes of applying ASC 815. Any embedded conversion features and/or freestanding warrants that do not meet the scope exception noted above are classified as derivative liabilities, initially measured at fair value, and remeasured at fair value each reporting period with change in fair value recognized in the condensed statements of operations. Any embedded conversion features and/or freestanding warrants that meet the scope exception under ASC 815 are initially recorded at their relative fair value in paid-in-capital and are not remeasured at fair value in future periods.
In March 2025, the Company entered into a Securities Purchase Agreement (the “March 2025 SPA”) with a related party for the sale of a Convertible Note (“March 2025 Investor Note”) which is convertible into shares of the Company’s Common Stock upon certain triggering events or fully repayable in 500 bitcoin if no triggering events are met. The Company elected to account for the March 2025 Investor Note at the “fair value option” (“FVO”) election of ASC 825, Financial Instruments (“ASC 825”) on the date of issuance. The Company elected to use the FVO election as the debt host contained several embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815. Notwithstanding, ASC 825-10-15-4 provides for the FVO election, to the extent not otherwise prohibited by ASC 825-10-15-5, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date.
The estimated fair value adjustment, as required by ASC 825-10-45-5, is recognized as a component of other comprehensive income (“OCI”) with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value adjustment recognized as other income (expense) in the accompanying condensed statements of operations. With respect to the above notes, as provided for by ASC 825-10-50-30(b), the estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying condensed statements of operations, since the change in fair value of the March 2025 Investor Note was not attributable to instrument-specific credit risk. Refer to Note 10 for further information.
Exchange or Modification of Debt
We consider modifications or exchanges of debt as extinguishments in accordance with Accounting Standards Codification ("ASC") No. 470, Debt, with gains or losses recognized in current earnings if the terms of the new debt and original instrument are substantially different. If the original and new debt instruments are substantially different, the original debt is derecognized and the new debt is initially recorded at fair value, with the difference recognized as an extinguishment gain or loss. Under an exchange or modification accounted for as a debt extinguishment, fees paid to the lenders are included in the gain or loss on extinguishment of debt. Costs incurred with third parties, such as legal fees, directly related to the exchange or modification are capitalized as deferred financing costs and amortized over the initial term of the new debt. Previously deferred fees and costs for existing debt are included in the calculation of gain or loss. Under an exchange or modification not accounted for as a debt extinguishment, fees paid to the lenders are reflected as additional debt discount and amortized as non-cash interest expense over the remaining initial term of the exchanged or modified debt. Furthermore, costs incurred with third parties, such as legal fees, directly related to the exchange or modification, are expensed as incurred. Additionally, previously deferred fees and costs are amortized as non-cash interest expense over the remaining initial term of the exchanged or modified debt.
Revenue Recognition
The Company recognizes revenue from contracts with customers in accordance with the guidance in ASC 606, which involves the following steps:
• Identification of the contract, or contracts, with the customer;
• Identification of the performance obligations of the contract;
• Determination of the transaction price;
• Allocation of the transaction price to the performance obligations in the contract; and
• Recognition of the revenue when, or as, the Company satisfies a performance obligation. The Company’s primary revenue streams and related performance obligations are described below. See Note 3 for further details and disaggregation of amounts.
13
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
Custody and trading - Bitcoin Gift Cards
Fold offers the Fold Bitcoin Gift Card, which allows customers to purchase USD-denominated gift cards through the Fold App, online gift card distributors, and brick-and-mortar retail locations. Customers can redeem Fold Bitcoin Gift Cards for bitcoin through the Fold App.
The Company satisfies its performance obligation and records revenue when bitcoin is transferred to the customer's bitcoin wallet via the Fold App. The Company has concluded that it is the principal in these transactions because it controls the bitcoin prior to delivery to customers, it is primarily responsible for the delivery of the bitcoin to its customers, it is exposed to risks arising from fluctuations of the market price of bitcoin prior to delivery to customers, and it has full discretion in setting prices charged to customers. The Company therefore recognizes (1) gross revenues for the sales price of the gift card to the customer, and (2) gross costs of sales for the associated cost of bitcoin used to fulfil each gift card sold.
Recently issued accounting pronouncements not yet adopted
In November 2024, the FASB issued ASU 2024-03, Expense Disaggregation Disclosures (Topic 220), which requires entities to include more detailed information about the types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization, in commonly presented expense captions such as cost of sales, research and development, and selling, general and administrative expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures.
In January 2025, the FASB issued ASU 2025-01 “Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date” (“ASU 2025-01”) which clarifies the effective date of Accounting Standards Update 2024-03 “Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”) to stipulate that ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 will be effective for the Company beginning January 1, 2027 for the Company’s annual financial statements on Form 10-K and January 1, 2028 for the Company’s quarterly financial statements on Form 10-Q and is not expected to have a significant impact on the Company’s financial statements.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued Accounting Standards Update 2025-05, “Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"). ASU 2025-05 provides the option to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. ASU 2025-05 is effective for the Company for fiscal years beginning after December 15, 2025 and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of ASU 2025-05 on its consolidated financial statements.
In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software" ("ASU 2025-06"). ASU 2025-06 clarified and modernizes the accounting for costs related to internal-use software. The amendments in ASU 2025-06 remove all references to project stages throughout Subtopic 350-40 and clarify the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for the Company for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of ASU 2025-06 on its consolidated financial statements.
We do not believe that any other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on our financial statements.
14
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
3. RECAPITALIZATION
As described in Note 1, on February 14, 2025, Fold Predecessor closed the Merger pursuant to the terms of the Merger Agreement. Pursuant to the Merger Agreement, FTAC Emerald purchased from the legacy stockholders of Fold Predecessor all of the issued and outstanding equity interests of Fold Predecessor for $
The Merger was accounted for as a reverse recapitalization, with the net assets of FTAC Emerald stated at historical cost and no goodwill or other intangible assets recorded. Under this method of accounting, FTAC Emerald was treated as the acquired company for financial reporting purposes. This determination was primarily based on post-Merger relative voting rights, composition of the governing board, management and intent of the Merger. Accordingly, for accounting purposes, the Merger was accounted for as the equivalent of Fold Predecessor issuing stock for the net assets of FTAC Emerald, accompanied by a recapitalization. The reported amounts from operations included herein prior to the Merger are those of Fold Predecessor.
Share and per share information for all periods prior to the Merger have been retrospectively adjusted by the exchange ratio established in the Merger (“Exchange Ratio”) for the equivalent number of shares of Common Stock outstanding immediately after the Merger to effect the reverse recapitalization. Refer to Note 17 for further information.
In connection with the Merger, approximately
The number of shares of Common Stock of Fold Holdings, Inc. issued immediately following the consummation of the Merger was as follows:
Shares by Type |
Number of shares |
|
|
FTAC Emerald total shares outstanding prior to the Merger |
|
|
|
Less: Redemption of FTAC Emerald shares |
|
( |
) |
Class A Shares of FTAC Emerald |
|
|
|
Shares issued for Fold Common Stock |
|
|
|
Exercise of Series B warrants |
|
|
|
Issuance of March 2025 Closing Shares |
|
|
|
Total Shares of Common Stock outstanding |
|
|
|
Fold Holdings, Inc. incurred transaction costs related to the Merger of approximately $
4. REVENUE
Disaggregation of revenue
We disaggregate revenue by service type and by platform as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
Revenue stream |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Banking and payment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Custody and trading revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Sales returns and allowances |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Revenues, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
The above amounts are net of reductions in revenue related to Revenue Rewards totaling $
Deferred revenue
Contract liabilities are classified as deferred revenue in our balance sheets. As of September 30, 2025 and December 31, 2024, the contract liability related to our deferred subscription revenues was $
The activity in deferred revenue for the nine months ended September 30, 2025 and the year ended December 31, 2024, was as follows:
|
|
Nine Months Ended |
|
|
Year Ended December 31, 2024 |
|
||
Beginning of the period contract liability |
|
$ |
|
|
$ |
|
||
Revenue recognized from the contract liabilities included in the beginning balance |
|
|
( |
) |
|
|
( |
) |
Increases due to cash received net of amounts recognized in revenue during the period |
|
|
|
|
|
|
||
End of period contract liability |
|
$ |
|
|
$ |
|
||
Contract costs
For the three and nine months ended September 30, 2025 and 2024, we did
5. DIGITAL ASSETS
The Company holds digital assets, comprised solely of bitcoin, for two purposes: (1) to fulfill bitcoin rewards to customers in accordance with the terms and conditions of the Fold Rewards Program (“Rewards Treasury”); and (2) as a treasury asset with the intention to hold as a long-term investment (“Investment Treasury”). The Company purchases bitcoin for its Rewards Treasury to maintain a balance that is equal to or greater than its customer rewards liability and disburses bitcoin from its Rewards Treasury when customers redeem their rewards and the liability is satisfied.
The following is a summary of Fold’s bitcoin held in treasury as of the dates shown:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Rewards treasury (USD) |
|
$ |
|
|
$ |
|
||
Investment treasury (USD) |
|
|
|
|
|
|
||
Total bitcoin treasury (USD) |
|
$ |
|
|
$ |
|
||
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Rewards treasury (BTC) |
|
|
|
|
|
|
||
Investment treasury (BTC) |
|
|
|
|
|
|
||
Total bitcoin treasury (BTC) |
|
|
|
|
|
|
||
As of September 30, 2025 and December 31, 2024, the Company held
16
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
A reconciliation, in the aggregate, of beginning and ending balances of the Company’s digital assets as of the dates shown is as follows:
|
|
Rewards Treasury |
|
|
Investment Treasury |
|
|
Digital Assets |
|
|||
Bitcoin held at January 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Purchases of bitcoin |
|
|
|
|
|
|
|
|
|
|||
Disbursements of bitcoin (1) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Proceeds from SAFE financings received in bitcoin |
|
|
|
|
|
|
|
|
|
|||
Proceeds from sale of bitcoin |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Remeasurement gain (loss) on bitcoin |
|
|
|
|
|
( |
) |
|
|
|
||
Bitcoin held at September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Purchases of bitcoin |
|
|
|
|
|
|
|
|
|
|||
Disbursements of bitcoin (1) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Remeasurement gain (loss) on bitcoin |
|
|
|
|
|
|
|
|
|
|||
Bitcoin held at December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Purchases of bitcoin |
|
|
|
|
|
|
|
|
|
|||
Bitcoin received from March 2025 Investor Note (2) |
|
|
|
|
|
|
|
|
|
|||
Disbursements of bitcoin (1) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other bitcoin |
|
|
|
|
|
|
|
|
|
|||
Remeasurement gain (loss) on bitcoin |
|
|
|
|
|
|
|
|
|
|||
Bitcoin held at September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
(1)
(2)
The remeasurement gain of $
The remeasurement gain of $
6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||
Prepaid interest |
|
$ |
|
|
|
$ |
|
|
||
Prepaid expenses |
|
|
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
|
|
||
Interest receivable |
|
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
|
$ |
|
|
||
17
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
7. CUSTOMER REWARDS LIABILITY
A reconciliation, in the aggregate, of beginning and ending balances of the Company’s customer rewards liability as of the dates shown is as follows:
|
|
Customer Rewards Liability |
|
|
Balance at January 1, 2024 |
|
$ |
|
|
Rewards earned by customers |
|
|
|
|
Reward fulfilments (1) |
|
|
( |
) |
Expired rewards |
|
|
( |
) |
Remeasurement (gain) loss on customer rewards liability |
|
|
|
|
Balance at September 30, 2024 |
|
$ |
|
|
Rewards earned by customers |
|
|
|
|
Reward fulfilments (1) |
|
|
( |
) |
Expired rewards |
|
|
( |
) |
Remeasurement (gain) loss on customer rewards liability |
|
|
|
|
Balance at December 31, 2024 |
|
$ |
|
|
Rewards earned by customers |
|
|
|
|
Reward fulfilments (1) |
|
|
( |
) |
Expired rewards |
|
|
( |
) |
Remeasurement (gain) loss on customer rewards liability |
|
|
|
|
Balance at September 30, 2025 |
|
$ |
|
|
(1)
8. RELATED PARTIES
During the nine months ended September 30, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with SATS Credit Fund LP, pursuant to which the Company issued to SATS Credit Fund LP a convertible note in the aggregate principal amount of approximately $
During the year ended December 31, 2024, the Company entered into a SAFE with Thesis Inc., a principal shareholder of the Company, totaling $
During the three and nine months ended September 30, 2025, the Company recognized nominal amounts of revenue related to merchant offers purchased by Thesis Inc.
9. SAFEs
On February 14, 2025, in connection with the Closing of the Merger, all SAFE notes held by Fold Predecessor converted into
As of and for the nine months ended September 30, 2025 and the year ended December 31, 2024, the fair value of the SAFEs was $
18
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
During the year ended December 31, 2024, Fold Predecessor entered into SAFEs with various investors with aggregate gross proceeds of $
10. CONVERTIBLE NOTES AND WARRANTS
A summary of the Company’s convertible notes for the respective periods presented is as follows:
The December 2024 Initial Investor Note and June 2025 Amended Investor Note
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
December 2024 Initial Investor Note |
|
$ |
|
|
$ |
|
||
June 2025 Amended Investor Note |
|
|
|
|
|
|
||
Convertible debt, gross |
|
$ |
|
|
$ |
|
||
Less: |
|
|
|
|
|
|
||
Debt discount, net of amortization |
|
|
|
|
|
|
||
Debt issuance costs, net of amortization |
|
|
|
|
|
|
||
Add: |
|
|
|
|
|
|
||
Amended debt premium, net of amortization |
|
|
|
|
|
|
||
Convertible debt, net |
|
$ |
|
|
$ |
|
||
Less: Current portion of long-term debt |
|
|
|
|
|
|
||
Amended December 2024 convertible note, net - long-term |
|
$ |
|
|
$ |
|
||
In December 2024, Fold Predecessor entered into a Securities Purchase Agreement (the “December 2024 SPA”) with an institutional investor for the sale of a Senior Secured Convertible Note which is convertible into shares of the Company’s Common Stock. Fold Predecessor executed the December 2024 SPA and consummated the issuance of (i) an Initial Note in the principal amount of $
On February 14, 2025, following the Closing of the Merger, the maturity of the December 2024 Initial Investor Note extended from 10 months to 36 months from Fold Predecessor's public listing event (the "Public Company Date") and was reclassified from a current liability to long term liability. The Series A warrants were exercisable immediately and expire eight years from the date of issuance. The Series B and Series C warrants became exercisable at the time of the Public Company Date and expire eight years from the date of issuance and one year from the Public Company Date, respectively. Following the Public Company Date, the investor exercised the Series B warrants in a cashless exercise, acquiring the
On June 16, 2025, the Company entered into a Waiver, Amendment and Joinder Agreement with Fold, Inc. and the investor to, among other things, amend the December 2024 SPA (as amended, the "Amended December 2024 SPA"). The terms of the Waiver and Amendment Agreement provide for administrative changes and (1) the extension of the Expiration Date of the Series C Warrant from February 14, 2026 to August 14, 2026; (2) a reduction of the Conversion Price of the Note (as defined therein) to $
In accordance with ASC 470-50-40-10, the Company determined that the change in Conversion Price of the December 2024 Initial Investor Note from $
19
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
In accordance with ASC 470-50-40-6, the Company derecognized the original debt instrument and recognized an amended note as a new debt instrument at its fair value as of the modification date, reflecting the updated terms. As of June 15, 2025 the net carrying amount of the extinguished note was approximately $
As of September 30, 2025, the principal amount outstanding under the June 2025 Amended Investor Note was $
The Company has accounted for the December 2024 Initial Investor Note and the Investor Warrants using the relative fair value allocation method on the date of issuance. The estimated fair values of the December 2024 Initial Investor Note and Investor Warrants were calculated under a Black-Scholes model utilizing the enterprise valuation of Fold's Common Stock as of the issuance date. The Company has elected not to subsequently remeasure the convertible note. Further, the Company concluded that the ability to issue the Additional Investor Note is separately exercisable from the December 2024 Initial Investor Note and the Investor Warrants. Each of the Investor Notes will be sold at an original issue discount of
The Company has accounted for the June 2025 Amended Investor Note at fair value on the date of extinguishment of the December 2024 Initial Investor Note and issuance of the June 2025 Amended Investor Note. The debt premium represents the
The Company recorded interest expense under the June 2025 Amended Investor Note using a stated interest rate of
The June 2025 Amended Investor Note, plus accrued and unpaid interest, is convertible at any time, at the investor’s option, into shares of the Company’s Common Stock at an initial fixed conversion price of $
The June 2025 Amended Investor Note provides for certain events of default, including, among other things, any breach of the covenants described in the Amended December 2024 SPA. In connection with an event of default, the investor may require the Company to redeem all or any portion of the June 2025 Amended Investor Note at a premium as set forth in the June 2025 Amended Investor Note. The Company is also subject to certain customary affirmative and negative covenants regarding the rank of the June 2025 Amended Investor Note, the incurrence of indebtedness, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters. As of September 30, 2025, the Company was in compliance with all covenants and there have been no events of default during the period.
The March 2025 Investor Note
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
March 2025 Investor Note |
|
$ |
|
|
$ |
|
||
Fair value adjustment |
|
$ |
|
|
|
|
||
March 2025 investor note - related party |
|
$ |
|
|
$ |
|
||
20
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
On March 6, 2025, Fold entered into a Securities Purchase Agreement (the “March 2025 SPA”) with a related party investor, SATS Credit Fund, LP, pursuant to which Fold issued to the investor (i) a Convertible Note in an aggregate principal amount of $
As of September 30, 2025, the principal amount outstanding under the March 2025 Investor Note was $
The March 2025 Investor Note was funded with
The Company has elected to account for the March 2025 Investor Note using the fair value option and will remeasure the March 2025 Investor Note at each reporting period. As of the date of issuance, the fair value of the March 2025 Investor Note was $
During the three months ended and nine months ended September 30, 2025, the Company recorded a $
The Company separately valued the March 2025 Warrants and Closing Shares issued at $
The March 2025 Investor Note will accrue interest at a rate of
The March 2025 Investor Note provides for certain events of default. In connection with an event of default, the investor may require the Company to redeem all or any portion of the March 2025 Investor Note by returning to the Holder (as defined therein) the amount of Bitcoin Collateral (as defined therein) that has not previously been released to the Company in connection with the conversion of the principal into shares of Common Stock. The Company is also subject to certain customary affirmative and negative covenants regarding the rank of the March 2025 Investor Note, the incurrence of indebtedness, the existence of liens, the repayment of indebtedness, distributions or redemptions, the transfer of assets, and the maturity of other indebtedness, among other customary matters. As of September 30, 2025, the Company was in compliance with all covenants and there have been no events of default during the period.
21
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
11. STOCKHOLDERS' EQUITY
Common stock
Pursuant to the Third Amended and Restated Certificate of Incorporation of the Company dated February 14, 2025, the Board is authorized to issue
Preferred stock
Pursuant to the Third Amended and Restated Certificate of Incorporation of the Company dated February 14, 2025, the Board is authorized to issue
Warrants
As of September 30, 2025, Fold had the following equity-classified warrants: (1)
2025 Employee Share Purchase Plan
Effective as of the Merger, the Board of Directors adopted the Fold Holdings, Inc. 2025 Employee Stock Purchase Plan (the "ESPP"), pursuant to which
On the purchase date of each offering (that is, the last date of the offering period), eligible employees have the option to purchase (with accumulated payroll deductions) Common Stock at a price per share equal to
As of September 30, 2025, employee payroll deductions had begun and the purchase date for the initial offering period will occur on
2025 Equity Line of Credit
On June 16, 2025, the Company entered into an Equity Purchase Facility Agreement (the “Facility”, “ELOC”) and a Registration Rights Agreement, each with SZOP Opportunities I LLC. Pursuant to the Facility, the Company has the right to sell to the investor up to the lesser of (i) $
22
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
Advance Notices (as defined in the ELOC) under the Facility in September 2025. During the three months ended September 30, 2025, the Company sold
12. SHARE-BASED COMPENSATION EXPENSE
Prior to the Merger, Fold Predecessor historically granted Restricted Stock Awards ("RSAs") and Restricted Stock Units (“RSUs”) under the Fold, Inc. 2019 Equity Incentive Plan (the “2019 Equity Plan”). In connection with the Merger, the Company adopted a new 2025 Incentive Award Plan (the "2025 Equity Plan") as well as the ESPP which became effective immediately on the date of the Merger. See Note 11 for further information regarding the Company's ESPP. Collectively, these plans are referred to as the "Equity Plans".
The purpose of the Equity Plans is to offer select Participants (defined as employees, consultants, or outside directors) the opportunity to acquire equity in the Company through the awards of Options, RSAs, Stock Appreciation Rights, RSUs, and Other Stock Awards (collectively and individually, “Awards”). RSUs are Awards of an unfunded and unsecured right to receive shares of Common Stock (or cash or a combination of shares of Common Stock and cash, as determined in the sole discretion of the Board) upon settlement of the Award. RSAs are Awards of restricted shares of Company Common Stock. Each Award may or may not be subject to vesting. Vesting occurs upon satisfaction of the conditions specified in each individual award agreement. As of September 30, 2025, the Company has
Restricted Stock Units
Prior to the Merger, Fold Predecessor's RSUs had two vesting conditions:
On February 14, 2025, upon Closing of the Merger, each outstanding Fold Predecessor RSU award was converted into an Award of RSUs covering a number of shares of Common Stock of Fold Holdings, Inc. determined by multiplying (i) the number of shares of Fold Predecessor Common Stock subject to the Fold Predecessor RSU Award immediately prior to the consummation of the Merger by (ii) ~
The Company recognized $
Restricted Stock Award
The Company's awarded RSAs are not subject to any performance condition vesting requirements and are instead subject only to service conditions. We recorded
23
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
30, 2024. There was
Determination of fair value
The initial value of the Awards on the dates that the RSUs and RSAs were granted was determined based on the underlying value of Fold Predecessor’s Common Stock. As securities of a private company, the Fold Predecessor's Common Stock was valued by performing an enterprise valuation using a guideline public company market approach method. This method leverages an analysis of publicly traded peers to develop relevant market multiples and ratios applied to the Company’s historical and expected cash flows. As securities of a public company, the Common Stock of Fold Holdings, Inc. is valued based on the Company's stock price.
RSU and RSA activity
The following table summarizes RSU and RSA share activity under the Equity Plans for the nine months ended September 30, 2025 and 2024:
|
|
|
RSUs |
|
|
RSAs |
|
||
Shares nonvested at January 1, 2025 |
|
|
|
|
|
|
|
||
Granted |
|
|
|
|
|
|
|
||
Vested |
|
|
|
( |
) |
|
|
( |
) |
Forfeited |
|
|
|
( |
) |
|
|
|
|
Shares nonvested at September 30, 2025 |
|
|
|
|
|
|
|
||
|
|
|
RSUs |
|
|
RSAs |
|
||
Shares nonvested at January 1, 2024 |
|
|
|
|
|
|
|
||
Granted |
|
|
|
|
|
|
|
||
Vested |
|
|
|
|
|
|
( |
) |
|
Forfeited |
|
|
|
( |
) |
|
|
|
|
Shares nonvested at September 30, 2024 |
|
|
|
|
|
|
|
||
13. COMMITMENTS AND CONTINGENCIES
401(k) Plan
We sponsor a 401(k) defined contribution plan covering all eligible U.S. employees. Both Company and employee contributions to the 401(k) plan are discretionary. For the three months ended September 30, 2025 and 2024, we recorded a nominal amount of expense related to the 401(k) plan, which is included in compensation and benefits in the accompanying statements of operations. For the nine months ended September 30, 2025 and 2024, we recorded $
June 2025 Amended Investor Note
The June 2025 Amended Investor Note contains a provision akin to a time-value make-whole provision wherein the investor will receive a special interest payment of $
Litigation
In connection with the chapter 11 bankruptcy proceeding of Prime Core Technologies, Inc. (“Prime Core”), on August 14, 2025, the Company was named as a defendant in a proceeding pending in the United States Bankruptcy Court for the District of Delaware (PCT Litigation Trust v. Fold Holdings, Inc., Adv. Pro. No. 25-52024 (JKS)), pursuant to which the litigation trust for Prime Core (“PCT Litigation Trust”) seeks avoidance and recovery of alleged preferential transfers. While the outcome of this proceeding cannot be predicted with certainty, the Company does not presently expect this matter to have a material adverse effect on its consolidated financial position, liquidity, capital resources, or annual results of operations.
24
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
From time to time, the Company may be subject to other claims, inquiries, or legal proceedings arising in the ordinary course of business. While the outcome of any future matter is inherently uncertain, we do not currently expect that any such matters, if they were to arise, would have a material adverse effect on our consolidated financial position, liquidity, capital resources, or annual results of operations.
14. INCOME TAXES
During the three and nine months ended September 30, 2025, the Company had net income and a net loss before income taxes of $
As of September 30, 2025, the Company has federal and state net operating loss (NOL) carryforwards available to offset future taxable income. Section 382 imposes an annual limitation on the amount of taxable income that can be offset by NOLs following a greater than
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the US. The OBBBA contains, among other provisions, certain changes to U.S. federal income tax laws. The accounting for changes in tax rates and tax law are required to be recognized in the period in which the legislation is enacted. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing the impact of the OBBBA on its financial statements.
15. FAIR VALUE MEASUREMENTS
Financial assets and liabilities that are measured at fair value on a recurring basis are classified as Level 1, Level 2, and Level 3 as follows:
|
|
As of September 30, 2025 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Digital assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer rewards liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
March 2025 Investor Note |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
25
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
|
|
As of December 31, 2024 |
|
|||||||||||||
|
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Digital assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer rewards liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
SAFEs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivables, accounts payable and accrued liabilities, and deferred revenue approximate their fair values due to their short-term nature.
The fair value of our digital assets was determined using the Level 1 input of bitcoin prices in the market we determined to be the principal market as of September 30, 2025 and December 31, 2024.
Customer rewards liability
The customer reward liability is classified as a Level 3 financial instrument within the fair value hierarchy primarily due to the reward forfeiture rate applied to the value of the bitcoin obligation, which is an unobservable input to the fair value measurement. The Company has determined the bitcoin price based on its value in the market we determined to be the principal market for the related digital asset as of September 30, 2025 and December 31, 2024, which is considered a Level 1 input. The forfeiture rate is then applied to reflect an estimated breakage rate of rewards that have been forfeited based on the contractual terms and conditions of our Rewards Program and historical trends of forfeiture rates on a
Simple Agreements for Future Equity
On February 14, 2025, upon Closing of the Merger, the SAFEs of Fold Predecessor converted into approximately
Prior to conversion, the estimated fair value of the SAFEs (refer to Note 9) was determined based on the aggregated, probability-weighted average of the outcomes of certain scenarios, including: (i) equity financing, with conversion of the SAFEs into a number of shares of convertible preferred stock at the lower of the post-money valuation cap price or discount price, (ii) a liquidity event (change of control, direct listing, or an initial public offering) with mandatory conversion to Common Stock at the lower of the post-money valuation cap price or discount price and (iii) a dissolution event, with SAFE holders automatically entitled to receive cash payments equal to the purchase amount, prior to and in preference to any distribution of any assets or surplus funds to the holders of convertible preferred and Common Stock. The combined value of the probability-weighted average of those outcomes was then discounted back to each reporting period in which the SAFEs are outstanding, in each case based on a risk-adjusted discount rate estimated to set the probability-weighted sum of each scenario to the purchase price. The discount rate at each valuation date was adjusted by the change in the USD CCC bond rate to reflect the market movement between the issuance date and valuation date. Additionally, in Fold Predecessor's estimate of the fair value of the Bitcoin SAFEs, the then current value of bitcoin was used as an estimate of the future value of a BTC-denominated payout. If there is not a Liquidity Event, the SAFE would have resulted in the repayment of the bitcoin contributed at the issuance of the note. To value this scenario, which was weighted at a
Fair value measurements associated with SAFEs were determined based on significant inputs not observable in the market, which represent Level 3 measurements within the fair value hierarchy. Increases and decreases in the fair value of the SAFEs can result from updates to assumptions such as expected timing and probability of a qualified financing event, or changes in discount rates, among other assumptions. Based on the Company’s assessment of the valuation of the SAFEs, performed by the Company’s third-party valuation specialists, none of the changes in the fair value of those instruments were due to changes in the Company’s own credit risk for the
26
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
reporting periods presented. Judgment is used in determining these assumptions as of the initial valuation date and at each subsequent reporting period. Changes or updates to assumptions could have a material impact on the reported fair value and the change in fair value of SAFEs and the results of operations in any given period.
The following table summarizes the changes in fair value associated with Level 3 SAFE financial instruments held at the beginning or end of the periods presented:
|
|
SAFEs |
|
|
Balance at January 1, 2024 |
|
$ |
|
|
Proceeds from issuances of SAFEs |
|
|
|
|
Change in fair value of SAFEs |
|
|
|
|
Balance at September 30, 2024 |
|
$ |
|
|
Proceeds from issuances of SAFEs |
|
|
|
|
Change in fair value of SAFEs |
|
|
|
|
Balance at December 31, 2024 |
|
$ |
|
|
Proceeds from issuances of SAFEs |
|
|
|
|
Change in fair value of SAFEs |
|
|
|
|
Conversion of SAFEs |
|
|
( |
) |
Balance at September 30, 2025 |
|
$ |
|
|
Convertible Note
The estimated fair value of the convertible note (refer to Note 10) was determined using a Monte Carlo simulation model, which requires the use of several inputs and significant assumptions, including the risk-free rate and volatility. The discount rate at each valuation date was the risk free rate. Additionally, in the Company’s estimate of the fair value of the convertible note, the forced conversion right was treated as soft call options within the valuation model.
Fair value measurements associated with the convertible note were determined based on significant inputs not observable in the market, which represent Level 3 measurements within the fair value hierarchy. Increases and decreases in the fair value of the convertible note can result from updates to assumptions such as the price of bitcoin, expected timing and probability of the Company being able to exercise their forced conversion right, or changes in the risk-free rate, among other assumptions. Based on the Company’s assessment of the valuation of the convertible note, performed by the Company’s third-party valuation specialists, none of the changes in the fair value of those instruments were due to changes in the Company’s own credit risk for the reporting periods presented. Judgment is used in determining these assumptions as of the initial valuation date and at each subsequent reporting period. Changes or updates to assumptions could have a material impact on the reported fair value and the change in fair value of the convertible note and the results of operations in any given period.
The following table summarizes the changes in fair value associated with Level 3 convertible note financial instruments held at the beginning or end of the periods presented:
|
|
Convertible Note |
|
|
Balance at December 31, 2024 |
|
$ |
|
|
Additions |
|
|
|
|
Fair value adjustment - day one loss on issuance of debt |
|
|
|
|
Fair value adjustment - change in fair value |
|
|
|
|
Balance at September 30, 2025 |
|
$ |
|
|
The following table summarizes the significant inputs which the fair value measurements associated with the convertible note was determined:
27
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
|
|
As of September 30, 2025 |
|
As of December 31, 2024 |
|
||
Risk-free rate (continuously compounded) |
|
|
% |
|
|
||
Fold volatility (annual) |
|
|
% |
|
|
||
Bitcoin volatility (annual) |
|
|
% |
|
|
||
Note term |
|
|
|
|
|||
Fold stock price |
|
$ |
|
|
|
||
Bitcoin price |
|
$ |
|
|
|
||
Correlation (Fold and Bitcoin) |
|
|
|
|
|
||
Conversion price |
|
$ |
|
|
|
||
Dividend yield (annual) |
|
|
% |
|
|
||
16. CUSTODY OF DIGITAL ASSETS
We provide custody services on behalf of our customers through unrelated third-party service providers, who are qualified custodians. We do not own digital assets held in a custodial capacity on behalf of our customers. We maintain internal record keeping of those assets and are obligated to safeguard the assets. We do not hold the cryptographic key information on behalf of our customers. The qualified custodians used by Fold hold our customer cryptographic key information. We are not aware of any actual or possible safeguarding loss events requiring recognition under ASC 450-20, Loss Contingencies, as of and for the nine months ended September 30, 2025 or year ended December 31, 2024.
The fair value of customer digital assets held by our qualified custodians totaled $
17. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing the net loss by the weighted-average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of Common Stock outstanding adjusted for the dilutive effect of all potential shares of Common Stock. In periods when the Company reported a net loss, diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items were anti-dilutive.
As described in Note 3, the Company accounted for the Merger as a reverse recapitalization. Net loss per share calculations for all periods prior to the Merger have been retrospectively adjusted by the Exchange Ratio for the equivalent number of shares of Common Stock outstanding immediately after the Merger to effect the reverse recapitalization. The Exchange Ratio was calculated as the quotient of (a) the Aggregate Merger Consideration (as defined in the Agreement and Plan of Merger attached as Exhibit 2.1 hereto), divided by (b) the number of shares of Fold Fully Diluted Capital Stock (as defined in the Agreement and Plan of Merger attached as Exhibit 2.1 hereto). Subsequent to the Merger, net loss per share is calculated based on the weighted average number of shares of Common Stock outstanding.
28
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Basic net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Net income (loss) attributable to common stockholders, basic and diluted |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares used to compute net income (loss) per share, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per share attributable to common stockholders, basic and diluted |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
The following potential Common Stock were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|||||
Unvested restricted stock units (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SAFEs (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible notes (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investor warrants (4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total anti-dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
29
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
18. SUBSEQUENT EVENTS
Fold, Inc. entered into a Master Loan Agreement with Two Prime Lending Limited ("Two Prime") on October 1, 2025 which established a revolving credit facility (the "Credit Facility") pursuant to which Fold, Inc., upon the deposit of bitcoin as collateral, may borrow from Two Prime up to $
Between October 1, 2025 and November 10, 2025, the Company sold
Between October 1, 2025, and November 10, 2025, the Company purchased approximately
30
r
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The following discussion and analysis presents management’s perspective on our financial condition and results of operations, including performance metrics that management uses to assess company performance and should be read together with our financial statements and the related notes and other financial information included elsewhere in this filing.
The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements are based upon current expectations, as well as management’s beliefs and assumptions, and involve a high degree of risk and uncertainty. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Statements that include the words “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar expressions that convey uncertainty of future events or outcomes are forward-looking statements. Our actual results could differ materially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to such differences include those described in Item 1A - Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 10-K”) and elsewhere in this Quarterly Report. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information available to us as of the filing date of this Quarterly Report on Form 10-Q and we assume no obligation to update any forward-looking statements or the reasons why our actual results may differ.
Unless otherwise indicated or the context otherwise requires, references included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “Fold,” “we,” “us,” “our,” and the “Company” refer to the business of Fold, Inc., a Delaware corporation, prior to the Closing of the Merger, and Fold Holdings, Inc. after the Closing of the Merger.
Business overview
Founded in 2019, Fold is a bitcoin financial services company dedicated to expanding access to bitcoin through a comprehensive suite of consumer financial services. The Company was formed with the purpose of creating a modern financial services platform that allows customers to earn, accumulate, and utilize bitcoin in their everyday life. The Company offers consumers access to a variety of traditional financial services such as an FDIC insured checking account, the Fold Debit Card, bill payments, and an extensive catalog of merchant reward offers. The Company also offers a comprehensive suite of bitcoin trading and custody solutions with low-to-zero fees, instant withdrawals, and insured custody. Fold aims to provide customers with the ability to seamlessly move between traditional USD and bitcoin products according to their financial needs. By integrating bitcoin across traditional financial services, the Company aims to act as a key point of entry for consumers to engage with and integrate bitcoin into their everyday lives. The Company's products and services are available in the United States through the Fold App.
Since Fold was founded, we have sought to be a pioneer in bitcoin consumer financial services. In 2020, we partnered with Visa to launch the first ever bitcoin rewards debit card. In 2022, we launched a bitcoin trading and custody product and have since added a comprehensive suite of purchase options including spot buys, dollar-cost averaging, direct paycheck conversion, and round-ups. In 2024, we provided consumers the ability to “get on zero” - the ability to live primarily off of bitcoin instead of fiat currency - and we launched a rewards product for ACH payments that allows users to earn up to 1.5% back on paying mortgages, rent, and other bill payments. In May 2025, we released the Bitcoin Gift Card which we expect will continue to roll out to online and physical retail networks across the country over the coming months. In September 2025, we publicly announced our partnerships with Stripe, Inc. ("Stripe") and Visa to offer a bitcoin rewards credit card (the "Fold Credit Card") which we expect to go live by the end of 2025. We expect to continue to innovate in the bitcoin consumer financial services space over the coming years.
In addition to new products and features, we have committed significant resources towards optimizing our business through design and user experience ("UX") updates, refinement of our systems architecture, scaling our customer support services, expanding our rewards network, and adding strategic partnerships. Through these efforts we have achieved product-level profitability for all core product lines, inclusive of the contra-revenue effect of rewards, and we are well positioned to scale those lines.
One of the foundational value propositions of bitcoin is trust and security. Over the past few years, many “crypto”-adjacent business models failed to live up to those values, prioritizing short-term gains over their fiduciary duties to customers. As a result, many of these companies suffered a combination of reputational damage, bankruptcy, litigation, and fines. Throughout our existence, Fold has been focused on ensuring the safety and security of our customer assets while also complying with regulatory guidance relevant to our business. We believe that a solid trust foundation is critical for continued user adoption and in building a positive brand image, both of which are crucial for our long-term success.
31
In addition to our core operating business, Fold has adopted a bitcoin treasury strategy that aligns our corporate goals with the products we offer to our customers. As of September 30, 2025, Fold held 1,494 bitcoin in our Investment Treasury, and we plan to continue to accumulate bitcoin over time. We view our bitcoin holdings as a long-term strategic investment and not as a trading asset.
Recent developments
On July 24, 2024, Fold, Inc. entered into the Merger Agreement with FTAC Emerald. The registration statement for the Merger was declared effective by the SEC on January 23, 2025, the Merger was approved by FTAC Emerald’s shareholders on February 13, 2025, and the business combination was finalized on February 14, 2025. The combined company now operates under the name Fold Holdings, Inc., and its Common Stock and warrants trade on the Nasdaq under the ticker symbols “FLD” and “FLDDW,” respectively. The Company is a remote-first company and does not designate a physical headquarters.
In May 2025, we publicly announced a new product line, the Fold Bitcoin Gift Card. This product provides customers the ability to purchase USD denominated gift cards through the Fold App, through online gift card distributors, and through brick-and-mortar retail locations across the country and redeem those gift cards for bitcoin through Fold. This product is currently available for purchase on Fold platforms, via various participating online retailers, and in physical stores throughout the country, including Kroger marketplaces. We expect to continue to roll out this product to new distribution channels over the coming months.
In June 2025, the Company entered into an agreement for a $250 million equity purchase facility (“Facility”). Pursuant to the Facility, the Company, in its sole discretion, has the right, but not the obligation, to issue and sell up to $250 million in newly issued shares of the Company’s Common Stock, subject to certain conditions. The Company expects that any proceeds received by it from the Facility will be used for, without limitation, purchasing additional bitcoin for the Company’s corporate treasury, working capital, and general corporate purposes. If and when the Company elects to sell shares of Common Stock to the investor pursuant to the Facility, the investor may resell all, some or none of such shares of Common Stock in its discretion and at prices subject to the terms of the Facility. Actual sales of shares of Common Stock under the Facility will depend on a variety of factors to be determined by the Company from time to time, which may include, without limitation, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for its business and operational needs. Subject to the earlier termination by the Company, as provided for in the Facility, the Facility terminates automatically on June 16, 2027. See Part II, Item 1A - Risk Factors of this Quarterly Report for additional information. As of September 30, 2025, the Company sold 1.15 million shares of Common Stock to the investor pursuant to the Facility for gross proceeds of $3.48 million, and recognized a nominal amount amortization related to deferred issuance costs. Refer to Note 11 of the Financial Statements for further information.
In September 2025, we announced Stripe as our program manager for the Fold Credit Card, a new product line we had publicly announced in February 2025. The Fold Credit Card is an expansion of our current bitcoin rewards Fold Debit Card. As with our Fold Debit Card, we have partnered with Visa to launch this product. Premium customers will receive unlimited 2% bitcoin rewards, a free metal card, and all the benefits of our premium membership, Fold+. Historically one of our most highly requested products, we expect the Fold Credit Card to drive both new user acquisition and deeper engagement within the Fold ecosystem.
Fold, Inc. entered into a Master Loan Agreement with Two Prime Lending Limited ("Two Prime") on October 1, 2025 which established a revolving credit facility (the "Credit Facility") pursuant to which Fold, Inc., upon the deposit of bitcoin as collateral, may borrow from Two Prime up to $45 million at an interest rate of 6.5% per annum. As of November 10, 2025, Fold, Inc. has borrowed $5 million under the Credit Facility, with 105 bitcoin deposited as collateral with the custodian pursuant to the terms of the Credit Facility. The initial advance of $5 million has a fixed one-year term, maturing on October 1, 2026. This loan may be renewed with substantially similar terms upon mutual agreement between the parties prior to the maturity date. Refer to our Current Report on Form 8-K filed on October 1, 2025 for further details.
32
Looking ahead
Fold has a proven track record of launching products that enhance engagement with our current customers and attract new customers to our platform. We intend to continue to build on this success by expanding our existing offerings to further engage our existing users, and we expect to introduce new products to attract new customers. Here is how we intend to continue our momentum:
Product strategy
As highlighted above, we announced two significant new product lines during the first half of 2025: (1) the Fold Credit Card and (2) the Fold Bitcoin Gift Card. These products are collectively expected to drive higher volumes, revenues, and margins, but we also expect them to drive both new user acquisition and contribute to deeper engagement within the Fold ecosystem.
In addition to these new products, we are devoting significant time and resources to our custody and trading platform which we expect to become a significant growth driver for Fold. Specifically, we are refining our onboarding experience, our funding options, our systems architecture, and our geographic footprint where we offer this product. Over the course of the next few quarters we expect to continue to add new consumer financial services that complement and enhance our current offerings.
The timing of these product and feature releases will impact our ability to meet financial targets for 2025 and beyond; however, we expect that each of these releases will further enhance our existing market position and drive increased volumes across the platform.
Growth Strategy
In addition to our product strategy, we intend to grow our customer base, transaction volume, and revenues through increased investment into organic and paid marketing channels that have proven successful to-date.
Fold intends to continue to leverage our social media channels and customer referral program to drive maximum growth via organic channels which have been our primary growth channels to date. In addition, to further accelerate growth we intend to increase investments in paid marketing and affiliate opportunities in conjunction with key product rollouts.
While we expect our existing products to benefit from this growth strategy, we also expect the addition of new products like the Fold Credit Card and the Fold Bitcoin Gift Card to create synergies across product lines and attract new users who are looking for a more comprehensive suite of financial products.
Bitcoin treasury strategy
As of September 30, 2025, we held approximately 1,575 BTC in our Bitcoin Treasury which had a market value of $179.7 million based on the market price of bitcoin on the Coinbase exchange at 11:59:59 p.m. UTC time on September 30, 2025, which was approximately $114.1 thousand.
Fold’s purpose for holding bitcoin in treasury is twofold: (1) to fulfill bitcoin rewards to customers in accordance with the terms and conditions of Fold’s user agreements (“Rewards Treasury”); and (2) as a treasury asset with the intention to hold as a long term investment (“Investment Treasury”). The following is a summary of Fold’s bitcoin held in treasury as of the dates shown:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Rewards treasury (USD) |
|
$ |
9,295,587 |
|
|
$ |
8,569,651 |
|
Investment treasury (USD) |
|
|
170,392,495 |
|
|
|
93,568,700 |
|
Total bitcoin treasury (USD) |
|
$ |
179,688,082 |
|
|
$ |
102,138,351 |
|
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Rewards treasury (BTC) |
|
|
81 |
|
|
|
92 |
|
Investment treasury (BTC) |
|
|
1,494 |
|
|
|
1,002 |
|
Total bitcoin treasury (BTC) |
|
|
1,575 |
|
|
|
1,094 |
|
In October 2025, the Company purchased approximately 32 bitcoin for $3.8 million, or approximately $117.9 thousand per bitcoin, for Fold's investment treasury, bringing our total Investment Treasury to 1,526 bitcoin. These purchases were funded using proceeds raised from our equity purchase facility.
33
We believe existing macro conditions to be favorable towards adding additional bitcoin to our balance sheet at current market prices and we will continue to consider additional bitcoin accumulation opportunities over the near term. We have not set any specific target for the amount of bitcoin we seek to hold. We plan to fund further bitcoin acquisitions primarily through issuances of Common Stock through a variety of financial instruments, including our Facility, debt, convertible notes, preferred stock, or other structures as may be considered appropriate for our business.
Our Investment Treasury strategy also contemplates that we may (i) periodically sell bitcoin for general corporate purposes, (ii) pledge or commit a portion of our bitcoin as collateral for purposes of entering into financing transactions, (iii) utilize our bitcoin as reserve collateral for various products used in our operating business, and/or (iv) consider opportunities to create income streams or otherwise generate funds using our bitcoin holdings. As of September 30, 2025, 800 bitcoin are restricted from use in operations under collateral agreements related to our convertible notes.
Key operating metrics
We collect and analyze operating and financial data to evaluate the health of our business, allocate our resources, and assess our performance. In addition to certain GAAP metrics, we also monitor various non-GAAP measures to evaluate our business. We believe the following metrics and measures are useful to facilitate period-to-period comparisons of our business and to facilitate comparisons of our performance to that of other financial service providers. Where applicable we have provided definitions of metrics we consider key to our operations below.
Accounts
During the three months ended September 30, 2025, we added:
Transaction volumes
Transaction Volume is inclusive of deposits, spend, and withdrawals across our platform and are inclusive of both fiat (“USD”) and bitcoin (“BTC”) transaction volumes.
From inception through September 30, 2025, Fold processed over $3.3 billion in Transaction Volume through our platform. For the three months ended September 30, 2025, we averaged more than $78 million in Transaction Volume per month, respectively.
Key components of results of operations
Revenue
Banking and payments revenue
Fold is a financial services platform and not a chartered bank. Our banking and payments revenues consist of revenues received from our Fold Debit Card and related product features, including:
34
The Company notes that the above categories of revenue are combined into Banking and Payments given their interconnected nature. For example, nearly all merchant offers are purchased in relation to a Fold Debit Card transaction or by Fold Debit Card holders. In addition, Fold primarily incentivizes users to sign up for its Fold+ subscription by reducing transaction fees and increasing rewards on Fold Debit Card transactions as well as by providing access to exclusive merchant offers. While Fold assesses each of these revenue streams separately for revenue recognition purposes, they all derive primarily from Fold Debit Card transactions which are funded by user accounts at Sutton Bank.
Custody and trading revenue
As of September 30, 2025, Fold solely partnered with BitGo Trust Company, Inc. (“BitGo”) (our “Exchange Provider”) to offer eligible customers the ability to buy, sell, store, insure, and withdraw bitcoin using the Fold App via an “Exchange Account”. Fold earns revenue on these transactions via a combination of transaction fees and transaction spreads. Spreads on trades include two components: (1) spreads charged by our Exchange Provider, which include any spreads passed on by their liquidity providers, and (2) Fold’s spread. For customers that do not have a Fold+ subscription, Fold also adds a transaction fee to certain buy and sell transactions as outlined in our terms and conditions which can change from time to time. Transaction fees are stated as a percentage of the purchase or sale amount (i.e. 1.5%).
Additionally, revenues from our newest product, the Fold Bitcoin Gift Card, are included within this revenue line. For accounting purposes, the Company is the principal in these transactions and therefore recognizes (1) gross revenues for the sales price of the gift card to the customer, and (2) gross costs of sales for the cost of each gift card sold.
Other revenue
We occasionally earn revenues from alternate sources, including Fold merchandise sales, sponsorship revenues, affiliate revenues, and other one-off revenue models. These revenues are typically non-recurring and are not currently material to our business.
Revenue Rewards
Users can earn bitcoin rewards by engaging in qualifying revenue-generating activities. "Revenue Rewards" are defined as rewards that are earned in direct relation to a qualifying spend transaction, such as spending on the Fold Debit Card, purchasing bitcoin, purchasing merchant offers, etc. "Marketing Rewards" are defined as rewards that are earned for behaviors unrelated to qualifying spend transactions such as sign-up bonuses, referral bonuses, spinning the daily spin wheel, etc. For accounting purposes, any reward that derives from a transaction where Fold receives revenue constitutes a Revenue Reward, whereas all other rewards constitute Marketing Rewards. Marketing Rewards are recorded as a marketing expense within operating expenses.
Revenue Rewards constitute a “non-revenue element” of our contracts with customers and are accounted for under ASC 815 – Derivatives and Hedging. Under that guidance, for all applicable revenue streams, Revenue Rewards are recorded as a direct reduction in the transaction price of the related revenue earned (ex. we reduce interchange revenue by the amount of rewards earned by customers when completing qualifying spend transactions).
All rewards are earned immediately upon the performance of a qualifying action by the user, but not all rewards are immediately available for redemption. The redemption criteria for rewards varies by the type of qualifying action or transaction as outlined in the terms and conditions of the Fold Rewards Program. For example, rewards earned on the daily spin wheel are available for redemption immediately, while rewards earned via certain qualifying spend transactions on the Fold Debit Card are subject to a 30-day settlement period before becoming available for redemption, a policy that is in place to prevent fraudulent activities.
35
The Company accrues Revenue Rewards within ‘Customer rewards liability’ in our accompanying balance sheets at the time the Revenue Reward is earned. The liability is initially recorded at the fair value of the bitcoin earned upon the action by the user and subsequently marked to fair value until redeemed or reversed, with gains and losses on this liability recorded within 'Gain (Loss) on customer rewards liability' in our accompanying statements of operations. The liability is derecognized when the Revenue Reward is redeemed by the user and delivered to the user's bitcoin wallet.
Per the terms and conditions of the Fold Rewards Program, rewards are subject to adjustment for chargebacks, returns, refunds, or other circumstances. In addition, rewards are subject to expiry if users fail to maintain an active account for more than twelve consecutive months. The Company estimates the amount of rewards that will expire based on historical data, current user trends, and other factors and accrues for those amounts in the period those rewards were earned.
Sales returns and allowances
All revenue is recognized net of sales returns and allowances, when applicable, which arise from time to time for various reasons. Returns and allowances have been primarily related to merchant offers and have historically been immaterial to our business.
Operating Expenses
Operating expenses consist of the costs to satisfy our performance obligations to our customers; compensation and benefits; marketing expenses; professional fees; amortization of capitalized software development costs; and other selling, general, and administrative expenses.
Banking and payment costs
Banking and payments costs include direct costs related to licensing, servicing, and processing transactions within our banking and payments products, including costs related to our Fold Debit Card and merchant offers. For accounting purposes, the Company is the principal in gift card transactions and therefore recognizes (1) gross revenues for the sales price of the gift card to the customer, and (2) gross costs of sales for the cost of each gift card sold.
Custody and trading costs
Custody and trading costs consist primarily of licensing, servicing, and custodial fees related to our bitcoin exchange product. Some custody and trading costs scale in proportion to our volumes.
Compensation and benefits expenses
Compensation and benefits expenses primarily consist of salaries and wages, employee insurance expenses, share-based compensation, and other payroll benefits related to full time employees.
Marketing expenses
Marketing expenses consist of costs incurred to promote the Company's products and services, increase brand awareness, and drive sales. These expenses include paid advertising and growth initiatives such as digital campaigns, events and sponsorships, agency and content production, and press and public relations expenses, among others.
In addition, as described above, a portion of marketing expenses are Marketing Rewards. The Company accrues Marketing Rewards within ‘Customer rewards liability’ in our accompanying balance sheets at the time the Marketing Reward is earned, with the corresponding expense recorded within marketing expenses in our statements of operations. The liability is initially recorded at the fair value of the bitcoin earned upon the action by the user and subsequently marked to fair value, with gains and losses on this liability recorded within 'Gain (Loss) on customer rewards liability' in our accompanying statements of operations. The liability is derecognized when the reward is claimed by the user and delivered to the user's external bitcoin wallet.
Per the terms and conditions of the Fold Rewards Program, rewards are subject to adjustment for chargebacks, returns, refunds, or other circumstances. In addition, rewards are subject to expiry if users fail to maintain an active account for more than twelve consecutive months. The Company estimates the amount of rewards that will expire based on historical data, current user trends, and other factors and accrues for those amounts in the period those rewards were earned. These accruals are accounted for as a contra-expense within marketing expense for Marketing Rewards.
36
Professional fees
Professional fees consist primarily of expenses related to fees paid for services, including legal, tax, accounting, and audit services.
Gain (loss) on customer rewards liability
Gain (loss) on customer rewards liability includes components of unrealized gains (losses) resulting from the remeasurement in fair value of Revenue Rewards and Marketing Rewards denominated in bitcoin in the current reporting period, as well as realized gains (losses) that occur upon the fulfillment of Rewards. Management has determined that gains or losses on digital assets held for purposes of fulfilling Rewards are related to its core operations, and therefore classifies all gains and losses on the remeasurement of this liability as an operating income or expense in its financial statements.
Gain (loss) on digital assets - rewards treasury
Gain (loss) on digital assets - rewards treasury includes components of unrealized gains (losses) resulting from the remeasurement in fair value of bitcoin held by Fold in our Rewards Treasury in the current reporting period as well as realized gains (losses) that occur upon the fulfillment of Rewards. Management has determined that gains or losses on digital assets held for the purposes of rewards redemptions are related to its core operations, and therefore classifies all gains and losses on the remeasurement of these digital assets as an operating income or expense in its financial statements.
Other selling, general and administrative expenses
Other selling, general and administrative expenses consist primarily of costs associated with contract labor, computer and internet, insurance, customer support costs, dues and subscriptions, and travel.
Other income (expense)
Gain (loss) on digital assets - investment treasury
Gain (loss) on digital assets - investment treasury includes components of unrealized gains (losses) resulting from the remeasurement in fair value of bitcoin held by Fold with the intention to hold as a long-term investment in the current reporting period. Management has determined that gains or losses on digital assets held as a long-term investment are not related to its core operations, and therefore classifies all gains and losses on the remeasurement of these digital assets as a non-operating income or expense in its financial statements.
Change in fair value of SAFEs
Change in fair value of SAFEs results from unrealized gain or loss due to the change in fair value of SAFEs. For accounting purposes, outstanding SAFEs are classified as liabilities and the change in their fair value is reflected in the statement of operations. However, Fold Predecessor's SAFEs were structured to be settled via the delivery of common and/or preferred shares upon execution of an equity financing or liquidity event. On February 14, 2025, upon Closing of the Merger, all SAFEs held by Fold Predecessor converted into Common Stock of Fold Holdings, Inc. and we will not have future gains or losses related to SAFE fair value remeasurements.
Change in fair value of convertible note
Change in fair value of convertible note results from the fair value gain or loss related to the March 2025 Investor Note.
Convertible note issuance costs and fees
Convertible note issuance costs and fees relates to the March 2025 SPA including the March 2025 Warrants and Closing Shares.
Loss on extinguishment of debt
Convertible note costs related to the modification and extinguishment of the December 2024 Initial Investor Note and reissuing the debt as the June 2025 Amended Investor Note.
Interest expense
37
Interest expense primarily consists of amortization of the convertible note premium and issuance costs, as well as interest expense on the convertible notes.
Other income
Other income primarily consists of interest income earned on cash and cash equivalents.
Income tax expense
The provision for income taxes consists primarily of federal, state and local tax. Our effective tax rate fluctuates from period to period due to changes in the mix of income and losses in jurisdictions with a wide range of tax rates, changes resulting from the amount of recorded valuation allowance, permanent differences between U.S. generally accepted accounting principles and local tax laws, and certain one-time items.
Results of operations for the three months ended September 30, 2025 and 2024
|
|
Three Months Ended September 30, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Revenues, net |
|
$ |
7,398,939 |
|
|
$ |
5,241,889 |
|
|
$ |
2,157,050 |
|
|
|
41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Banking and payment costs |
|
|
6,519,736 |
|
|
|
5,014,699 |
|
|
|
1,505,037 |
|
|
|
30 |
% |
Custody and trading costs |
|
|
244,954 |
|
|
|
94,791 |
|
|
|
150,163 |
|
|
|
158 |
% |
Compensation and benefits |
|
|
3,728,954 |
|
|
|
734,193 |
|
|
|
2,994,761 |
|
|
|
408 |
% |
Marketing expenses |
|
|
237,625 |
|
|
|
138,765 |
|
|
|
98,860 |
|
|
|
71 |
% |
Professional fees |
|
|
1,294,394 |
|
|
|
3,171,141 |
|
|
|
(1,876,747 |
) |
|
|
-59 |
% |
Amortization expense |
|
|
232,853 |
|
|
|
88,155 |
|
|
|
144,698 |
|
|
|
164 |
% |
(Gain) loss on customer rewards liability |
|
|
506,796 |
|
|
|
(74,091 |
) |
|
|
580,887 |
|
|
NM(i) |
|
|
(Gain) loss on digital assets - rewards treasury |
|
|
(637,712 |
) |
|
|
(98,715 |
) |
|
|
(538,997 |
) |
|
NM(i) |
|
|
Other selling, general and administrative expenses |
|
|
1,211,657 |
|
|
|
342,110 |
|
|
|
869,547 |
|
|
|
254 |
% |
Total operating expenses |
|
|
13,339,257 |
|
|
|
9,411,048 |
|
|
|
3,928,209 |
|
|
|
42 |
% |
Operating loss |
|
|
(5,940,318 |
) |
|
|
(4,169,159 |
) |
|
|
(1,771,159 |
) |
|
|
42 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain (loss) on digital assets - investment treasury |
|
|
10,238,866 |
|
|
|
729,041 |
|
|
|
9,509,825 |
|
|
NM(i) |
|
|
Change in fair value of SAFEs |
|
|
- |
|
|
|
(58,910,897 |
) |
|
|
58,910,897 |
|
|
|
-100 |
% |
Change in fair value of convertible note |
|
|
(2,626,932 |
) |
|
|
- |
|
|
|
(2,626,932 |
) |
|
NM(i) |
|
|
Convertible note issuance costs and fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
NM(i) |
|
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
NM(i) |
|
|
Interest expense |
|
|
(1,179,216 |
) |
|
|
- |
|
|
|
(1,179,216 |
) |
|
NM(i) |
|
|
Other income |
|
|
60,961 |
|
|
|
47,036 |
|
|
|
13,925 |
|
|
|
30 |
% |
Other income (expense), net |
|
|
6,493,679 |
|
|
|
(58,134,820 |
) |
|
|
64,628,499 |
|
|
NM(i) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) before income taxes |
|
|
553,361 |
|
|
|
(62,303,979 |
) |
|
|
62,857,340 |
|
|
NM(i) |
|
|
Income tax expense (benefit) |
|
|
(881 |
) |
|
|
6,699 |
|
|
|
(7,580 |
) |
|
NM(i) |
|
|
Net income (loss) |
|
$ |
554,242 |
|
|
$ |
(62,310,678 |
) |
|
$ |
62,864,920 |
|
|
NM(i) |
|
|
(i) Not meaningful ("NM")
38
Revenue
|
|
Three Months Ended September 30, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Banking and payment revenues |
|
$ |
7,054,195 |
|
|
$ |
5,211,631 |
|
|
$ |
1,842,564 |
|
|
|
35 |
% |
Custody and trading revenues |
|
|
346,478 |
|
|
|
31,067 |
|
|
|
315,411 |
|
|
NM(i) |
|
|
Other revenues |
|
|
866 |
|
|
|
335 |
|
|
|
531 |
|
|
|
159 |
% |
Less: Sales returns and allowances |
|
|
(2,600 |
) |
|
|
(1,144 |
) |
|
|
(1,456 |
) |
|
|
127 |
% |
Revenues, net |
|
$ |
7,398,939 |
|
|
$ |
5,241,889 |
|
|
$ |
2,157,050 |
|
|
|
41 |
% |
(i) Not meaningful ("NM")
Net revenue for the three months ended September 30, 2025 increased by $ 2.2 million, or 41%, compared to the three months ended September 30, 2024. Those amounts are net of reductions in revenue related to Revenue Rewards totaling $0.4 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively.
Banking and payments
The primary driver behind increased banking and payments revenues related to merchant offers within our banking and payments business. Net revenues from merchant offers increased 39% from $4.8 million for the three months ended September 30, 2024 to $6.6 million for the three months ended September 30, 2025. This increase was driven primarily due to continued expansion of our merchant offers catalog via new brand offerings, and due to our intentional focus on marketing our merchant offers products via internal and external marketing channels to both new and existing Fold customers.
Excluding merchant offers, our gross banking and payments revenues for the three months ended September 30, 2025 and September 30, 2024 were $0.4 million and $0.4 million, respectively.
Custody and trading
Net revenues from custody and trading increased from a nominal amount for the three months ended September 30, 2024 to $0.3 million for the three months ended September 30, 2025. While still a small part of our overall revenue in 2025, we believe that custody and trading revenues will be an important growth driver for both volumes and revenues going forward. We are devoting significant time and resources to our custody and trading platform which we expect to become a significant growth driver for Fold. Specifically, we are refining our onboarding experience, our funding options, our systems architecture, and our geographic footprint where we offer this product. In the near term we expect to add support for enhanced funding options, to open our exchange product to non-Fold cardholders, and to add users from new states where we have not previously supported access.
Additionally, revenues from our newest product, the Fold Bitcoin Gift Card, are included within custody and trading. Revenues from this product were $0.2 million for the three months ended September 30, 2025. This product provides customers the ability to purchase USD denominated gift cards through the Fold App, through online gift card distributors, and through brick-and-mortar retail locations across the country and redeem those gift cards for bitcoin through Fold. This product is currently available for purchase on Fold platforms, via various participating online retailers, and in physical stores throughout the country, including Kroger marketplaces. We expect to continue to roll out this product to new distribution channels over the coming months.
Operating expenses
Banking and payments costs
Banking and payments costs include direct costs related to licensing, servicing, and processing transactions within our banking and payments products, including costs related to our Fold Debit Card and merchant offers. Banking and payments costs increased in relation to our increased merchant offer volumes as noted above. Costs of sales from merchant offers increased 40% from $4.7 million for the three months ended September 30, 2024 to $6.6 million for the three months ended September 30, 2025.
Excluding merchant offers and Visa rebates, our banking and payments costs were $0.4 million for the three months ended September 30, 2025 compared to $0.3 million for the three months ended September 30, 2024. This increase is driven by increased card fulfillment fees and KYC costs related to new Verified Accounts of $0.1 million during the three months ended September 30, 2025.
Custody and trading costs
39
Custody and trading costs consist primarily of licensing, servicing, and custodial fees related to our bitcoin exchange product. While some of our custody and trading costs scale in direct proportion to our volumes and revenues, other costs, such as monthly platform fees, are fixed and do not scale with volume. Due to this cost structure, our margins on custody and trading are expected to increase over time with increased volumes.
Compensation and benefits
Payroll expenses increased in correlation with our increased employee headcount, which was 39 employees as of September 30, 2025 and 22 employees as of September 30, 2024. We expect to hire additional staff in strategic roles to support the launches of our new product lines and continued growth throughout 2025.
Compensation and benefits expense for the three months ended September 30, 2025 and 2024 also included non-cash share-based compensation expense of $1.6 million and $0 million, respectively.
Marketing expenses
Marketing expenses were $0.2 million for the three months ended September 30, 2025 compared to $0.1 million for the three months ended 2024. As noted above, to further accelerate growth we plan to increase investments in paid marketing and growth partnership opportunities in 2025 to support the launches of our newest products, including the Fold Credit Card and Fold Bitcoin Gift Card.
Professional fees
Professional fees decreased to $1.3 million for the three months ended September 30, 2025, compared to $3.2 million for the three months ended September 30, 2024. This decrease was driven primarily by fees paid to our legal counsel, independent auditors, and third-party consultants in support of our transition to becoming a public company occurring during the three months ended September 30, 2024.
Gain (loss) on customer reward liability and digital assets - rewards treasury
Gain (loss) on customer reward liability and digital assets - rewards treasury include components of unrealized gains (losses) resulting from the remeasurement gain or loss for the change in fair value of bitcoin held by Fold for the purposes of fulfilling our customer rewards liability in the current reporting period, as well as realized gains (losses) that occur upon the fulfillment of customer rewards liabilities. The price of bitcoin was approximately $62.7 thousand, $63.3 thousand, $107.2 thousand, and $114.1 thousand as of June 30, 2024, September 30, 2024, June 30, 2025, and September 30, 2025, respectively. These price changes were the primary driver of gains (losses) for both customer rewards liabilities and digital assets - rewards treasury for the three months ended September 30, 2025 and 2024.
Other income (expense)
Gain (loss) on digital assets - investment treasury include unrealized gains (losses) resulting from the remeasurement gain or loss for the change in fair value of bitcoin held by Fold as a long-term investment. The price of bitcoin was approximately $62.7 thousand, $63.3 thousand, $107.2 thousand, and $114.1 thousand as of June 30, 2024, September 30, 2024, June 30, 2025, and September 30, 2025, respectively. The price changes were the primary driver of gains (losses) for digital assets - investment treasury for the three months ended September 30, 2025 and 2024.
Change in fair value of convertible note results from the fair value gain or loss related to the March 2025 Investor Note. During the three months ended September 30, 2025, the Company incurred a loss of $2.6 million due to the change in the fair value of the convertible note.
Interest expense relates to amortization of the June 2025 Amended Investor Note premium and issuance costs, as well as interest expense on the convertible notes. Of the total interest expense, $0.4 million relates to the June 2025 Amended Investor Note and $0.5 million relates to the March 2025 Investor Note. Interest expense also includes amortization of debt discount and debt issuance costs related to our December 2024 Initial Investor Note, prior to extinguishment.
Other Selling, General and Administrative Expenses
Other Selling, General and Administrative expenses primarily consist of costs related to insurance premiums, prepaid amortization, contract labor, and other general business expenses. Total Other Selling, General and Administrative Expenses increased from $0.3 million for the three months ended September 30, 2024 to $1.2 million for the three months ended September 30, 2025. This increase was primarily driven by higher insurance premiums and prepaid software amortization costs as a result of us transitioning to becoming a public company.
40
Results of operations for the nine months ended September 30, 2025 and 2024
Results of operations
|
|
Nine Months Ended September 30, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Revenues, net |
|
$ |
22,662,702 |
|
|
$ |
15,311,724 |
|
|
$ |
7,350,978 |
|
|
|
48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Banking and payment costs |
|
|
20,961,281 |
|
|
|
14,459,183 |
|
|
|
6,502,098 |
|
|
|
45 |
% |
Custody and trading costs |
|
|
433,550 |
|
|
|
144,577 |
|
|
|
288,973 |
|
|
|
200 |
% |
Compensation and benefits |
|
|
13,863,551 |
|
|
|
2,340,838 |
|
|
|
11,522,713 |
|
|
|
492 |
% |
Marketing expenses |
|
|
1,258,346 |
|
|
|
219,567 |
|
|
|
1,038,779 |
|
|
|
473 |
% |
Professional fees |
|
|
4,353,244 |
|
|
|
3,446,671 |
|
|
|
906,573 |
|
|
|
26 |
% |
Amortization expense |
|
|
430,761 |
|
|
|
207,900 |
|
|
|
222,861 |
|
|
|
107 |
% |
(Gain) loss on customer rewards liability |
|
|
1,477,444 |
|
|
|
2,344,103 |
|
|
|
(866,659 |
) |
|
|
-37 |
% |
(Gain) loss on digital assets - rewards treasury |
|
|
(1,961,803 |
) |
|
|
(2,639,860 |
) |
|
|
678,057 |
|
|
|
-26 |
% |
Other selling, general and administrative expenses |
|
|
3,612,533 |
|
|
|
1,001,612 |
|
|
|
2,610,921 |
|
|
|
261 |
% |
Total operating expenses |
|
|
44,428,907 |
|
|
|
21,524,591 |
|
|
|
22,904,316 |
|
|
|
106 |
% |
Operating loss |
|
|
(21,766,205 |
) |
|
|
(6,212,867 |
) |
|
|
(15,553,338 |
) |
|
|
250 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain (loss) on digital assets - investment treasury |
|
|
31,203,938 |
|
|
|
(377,039 |
) |
|
|
31,580,977 |
|
|
NM(i) |
|
|
Change in fair value of SAFEs |
|
|
(6,503,113 |
) |
|
|
(59,042,901 |
) |
|
|
52,539,788 |
|
|
|
-89 |
% |
Change in fair value of convertible note |
|
|
(14,470,683 |
) |
|
|
- |
|
|
|
(14,470,683 |
) |
|
NM(i) |
|
|
Convertible note issuance costs and fees |
|
|
(9,569,109 |
) |
|
|
- |
|
|
|
(9,569,109 |
) |
|
NM(i) |
|
|
Loss on extinguishment of debt |
|
|
(9,612,199 |
) |
|
|
- |
|
|
|
(9,612,199 |
) |
|
NM(i) |
|
|
Interest expense |
|
|
(4,425,703 |
) |
|
|
- |
|
|
|
(4,425,703 |
) |
|
NM(i) |
|
|
Other income |
|
|
247,662 |
|
|
|
72,203 |
|
|
|
175,459 |
|
|
|
243 |
% |
Other income (expense), net |
|
|
(13,129,207 |
) |
|
|
(59,347,737 |
) |
|
|
46,218,530 |
|
|
|
-78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss before income taxes |
|
|
(34,895,412 |
) |
|
|
(65,560,604 |
) |
|
|
30,665,192 |
|
|
|
-47 |
% |
Income tax expense (benefit) |
|
|
3,978 |
|
|
|
14,567 |
|
|
|
(10,589 |
) |
|
|
-73 |
% |
Net loss |
|
$ |
(34,899,390 |
) |
|
$ |
(65,575,171 |
) |
|
$ |
30,675,781 |
|
|
|
-47 |
% |
(i) Not meaningful ("NM")
Revenue
|
|
Nine Months Ended September 30, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Banking and payment revenues |
|
$ |
21,897,376 |
|
|
$ |
15,252,865 |
|
|
$ |
6,644,511 |
|
|
|
44 |
% |
Custody and trading revenues |
|
|
739,933 |
|
|
|
62,340 |
|
|
|
677,593 |
|
|
NM(i) |
|
|
Other revenues |
|
|
63,017 |
|
|
|
358 |
|
|
|
62,659 |
|
|
NM(i) |
|
|
Less: Sales returns and allowances |
|
|
(37,624 |
) |
|
|
(3,839 |
) |
|
|
(33,785 |
) |
|
NM(i) |
|
|
Revenues, net |
|
$ |
22,662,702 |
|
|
$ |
15,311,724 |
|
|
$ |
7,350,978 |
|
|
|
48 |
% |
(i) Not meaningful ("NM")
Net revenue for the nine months ended September 30, 2025 increased by $7.4 million, or 48%, compared to the nine months ended September 30, 2024. Those amounts are net of reductions in revenue related to Revenue Rewards totaling $1.5 million and $1.2 million for the nine months ended September 30, 2025 and 2024, respectively.
Banking and payments
The primary driver behind increased banking and payments revenues related to merchant offers within our banking and payments
41
business. Net revenues from merchant offers increased 48% from $13.9 million for the nine months ended September 30, 2024 to $20.6 million for the nine months ended September 30, 2025. This increase was driven primarily due to continued expansion of our merchant offers catalog via new brand offerings, and due to our intentional focus on marketing our merchant offers products via internal and external marketing channels to both new and existing Fold customers.
Excluding merchant offers, our gross banking and payments revenues for the nine months ended September 30, 2025 and nine months ended September 30, 2024 were $1.3 million and $1.4 million, respectively.
Custody and trading
Net revenues from custody and trading increased from a nominal amount for the nine months ended September 30, 2024 to $0.7 million for the nine months ended September 30, 2025. While still a small part of our overall revenue in 2025, we believe that custody and trading revenues will be an important growth driver for both volumes and revenues going forward. We are devoting significant time and resources to our custody and trading platform which we expect to become a significant growth driver for Fold. Specifically, we are refining our onboarding experience, our funding options, our systems architecture, and our geographic footprint where we offer this product. In the near term we expect to add support for enhanced funding options, to open our exchange product to non-Fold cardholders, and to add users from new states where we have not previously supported access.
Additionally, revenues from our newest product, the Fold Bitcoin Gift Card, are included within custody and trading. Revenues from this product were $0.2 million for the nine months ended September 30, 2025. This product provides customers the ability to purchase USD denominated gift cards through the Fold App, through online gift card distributors, and through brick-and-mortar retail locations across the country and redeem those gift cards for bitcoin through Fold. This product is currently available for purchase on Fold platforms, via various participating online retailers, and in physical stores throughout the country, including Kroger marketplaces. We expect to continue to roll out this product to new distribution channels over the coming months.
Operating expenses
Banking and payments costs
Banking and payments costs include direct costs related to licensing, servicing, and processing transactions within our banking and payments products, including costs related to our Fold Debit Card and merchant offers. Banking and payments costs increased in relation to our increased merchant offer volumes as noted above. Costs of sales from merchant offers increased 47% from $13.8 million for the nine months ended September 30, 2024 to $20.3 million for the nine months ended September 30, 2025.
Excluding merchant offers and Visa rebates, our banking and payments costs increased to $1.0 million for the nine months ended September 30, 2025 compared to $0.7 million for the nine months ended September 30, 2024. This increase is driven by increased card fulfillment fees and KYC costs related to new cardholder sign-ups of $0.3 million during the nine months ended September 30, 2025.
Custody and trading costs
Custody and trading costs consist primarily of licensing, servicing, and custodial fees related to our bitcoin exchange product. While some of our custody and trading costs scale in direct proportion to our volumes and revenues, other costs, such as monthly platform fees, are fixed and do not scale with volume. Due to this cost structure, our margins on custody and trading are expected to increase over time with increased volumes.
Compensation and benefits
Payroll expenses increased in correlation with our increased employee headcount, which was 39 employees as of September 30, 2025 and 22 employees as of September 30, 2024. We expect to hire additional staff in strategic roles to support the launches of our new product lines and continued growth throughout 2025.
Compensation and benefits expense for the nine months ended September 30, 2025 and 2024 also included non-cash share-based compensation expense of $8.5 million and $0 million, respectively. The $8.5 million of share-based compensation expense for the nine months ended September 30, 2025 included $4.4 million of unrecognized share-based compensation expense that was immediately recognized due to the performance condition under the 2019 Equity Plan was deemed being satisfied on February 14, 2025 as a result of the Merger with FTAC Emerald. As the performance condition under the 2019 Equity Plan was not met as of September 30, 2024, no share-based compensation was recognized for the nine months ended September 30, 2024. There was $15.5 million of unrecognized shared-based compensation expense related to unvested awards as of September 30, 2025.
42
Marketing expenses
Marketing expenses were $1.3 million for the nine months ended September 30, 2025 compared to $0.2 million for the nine months ended 2024, respectively. As noted above, to further accelerate growth, we plan to increase investments in paid marketing and affiliate opportunities in 2025 to support the launches of our newest products, including the Fold Credit Card and Fold Bitcoin Gift Card.
Professional fees
Professional fees increased to $4.4 million for the nine months ended September 30, 2025, compared to $3.4 million for the nine months ended September 30, 2024. This increase was driven primarily by fees paid to our legal counsel, independent auditors, and third-party consultants during 2025 in support of our Merger with FTAC Emerald and in support of ongoing regulatory and compliance costs associated with being a public company.
Gain (loss) on customer reward liability and digital assets - rewards treasury
Gain (loss) on customer reward liability and digital assets - rewards treasury include components of unrealized gains (losses) resulting from the remeasurement gain or loss for the change in fair value of bitcoin held by Fold for the purposes of fulfilling our customer rewards liability in the current reporting period, as well as realized gains (losses) that occur upon the fulfillment of customer rewards liabilities. The price of bitcoin was approximately $42.3 thousand, $63.3 thousand, $93.4 thousand and $114.1 thousand as of December 31, 2023, September 30, 2024, December 31, 2024, and September 30, 2025, respectively. These price changes were the primary driver of gains (losses) for both customer rewards liabilities and digital assets - rewards treasury for the nine months ended September 30, 2025 and 2024.
Other income (expense)
Change in fair value of SAFEs results from unrealized gain or loss due to the change in fair value of our long-term SAFE note liabilities, which is determined based on the aggregated, probability-weighted average of the outcomes of certain scenarios. For accounting purposes, outstanding SAFEs are classified as liabilities and the change in their fair value is reflected in the statement of operations. However, Fold Predecessor's SAFEs were structured to be settled via the delivery of common and/or preferred shares upon execution of an equity financing or liquidity event. On February 14, 2025, upon Closing of the Merger, all SAFE notes held by Fold Predecessor converted into Common Stock of Fold Holdings, Inc.
Gain (loss) on digital assets - investment treasury include unrealized gains (losses) resulting from the remeasurement gain or loss for the change in fair value of bitcoin held by Fold as a long-term investment. The price of bitcoin was approximately $42.3 thousand, $63.3 thousand, $93.4 thousand and $114.1 thousand as of December 31, 2023, September 30, 2024, December 31, 2024, and September 30, 2025, respectively. The price changes were the primary driver of gains (losses) for digital assets - investment treasury for the nine months ended September 30, 2025 and 2024.
Change in fair value of convertible note results from the fair value gain or loss related to the March 2025 Investor Note. The net loss on the fair value of the convertible note of $14.5 million during the nine months ended September 30, 2025 is comprised of a $12.8 million day one loss on the issuance of debt offset by a $1.7 million loss on the change in fair value.
Convertible note issuance costs and fees relates to the March 2025 SPA including the March 2025 Warrants and Closing Shares. The total issuance costs expensed were $9.6 million for the nine months ended September 30, 2025.
Loss on extinguishment of debt of $9.6 million in the condensed statement of operations, which comprised of expensing the original debt's unamortized debt discount of $5.8 million, expensing the original debt's unamortized debt issuance costs of $1.4 million, recording the amended debt premium of $2.0 million and recognizing $0.5 million of additional paid-in capital due to the change in the fair value of the Series C warrants due to the change in exercise price.
Interest expense relates to amortization of the June 2025 Amended Investor Note premium and issuance costs, as well as interest expense on the convertible notes. Of the total interest expense, $1.6 million relates to the December 2024 Initial Investor Note and June 2025 Amended Investor Note and $1.2 million relates to the March 2025 Investor Note. Interest expense also includes amortization of debt discount and debt issuance costs related to our December 2024 Initial Investor Note, prior to extinguishment.
Other Selling, General and Administrative Expenses
Other Selling, General and Administrative expenses primarily consist of costs related to insurance premiums, prepaid amortization, contract labor, and other general business expenses. Total Other Selling, General and Administrative Expenses increased from $1.0M for the nine months ended September 30, 2024 to $3.6M for the nine months ended September 30, 2025. This increase was primarily driven by higher insurance premiums and prepaid software amortization costs as a result of us transitioning to becoming a public company.
43
Non-GAAP Financial Measures
Adjusted EBITDA
In addition to net loss and other results under GAAP, we utilize non-GAAP calculations of adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) to monitor the financial health of our business. Adjusted EBITDA is defined as net loss, excluding (i) interest expense, (ii) provision for (benefit from) income taxes, (iii) depreciation and amortization, (iv) share-based compensation, (v) remeasurement gains and losses such as fair value remeasurements on our digital assets, convertible notes, and SAFE notes, and (vi) impairments, restructuring charges, and business acquisition- or disposition-related expenses that we believe are not indicative of our core operating results. This non-GAAP financial information has limitations as an analytical tool when assessing our operating performance, is presented for supplemental informational purposes only, should not be considered in isolation or as a substitute for, or superior to, financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies.
The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items are unpredictable, are not driven by core results of operations, and/or render comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of core operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Moreover, Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.
The following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net loss:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net income (loss) |
|
$ |
554,242 |
|
|
$ |
(62,310,678 |
) |
|
$ |
(34,899,390 |
) |
|
$ |
(65,575,171 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
1,179,216 |
|
|
|
- |
|
|
|
4,425,703 |
|
|
|
- |
|
Income tax expense (benefit) |
|
|
(881 |
) |
|
|
6,699 |
|
|
|
3,978 |
|
|
|
14,567 |
|
Amortization expense |
|
|
232,853 |
|
|
|
88,155 |
|
|
|
430,761 |
|
|
|
207,900 |
|
Share-based compensation expense |
|
|
1,575,422 |
|
|
|
- |
|
|
|
8,470,902 |
|
|
|
- |
|
(Gain) loss on customer rewards liability |
|
|
506,796 |
|
|
|
(74,091 |
) |
|
|
1,477,444 |
|
|
|
2,344,103 |
|
(Gain) loss on digital assets - rewards treasury |
|
|
(637,712 |
) |
|
|
(98,715 |
) |
|
|
(1,961,803 |
) |
|
|
(2,639,860 |
) |
(Gain) loss on digital assets - investment treasury |
|
|
(10,238,866 |
) |
|
|
(729,041 |
) |
|
|
(31,203,938 |
) |
|
|
377,039 |
|
Change in fair value of SAFEs |
|
|
- |
|
|
|
58,910,897 |
|
|
|
6,503,113 |
|
|
|
59,042,901 |
|
Change in fair value of convertible note |
|
|
2,626,932 |
|
|
|
- |
|
|
|
14,470,683 |
|
|
|
- |
|
Convertible note issuance costs and fees |
|
|
- |
|
|
|
- |
|
|
|
9,569,109 |
|
|
|
- |
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
9,612,199 |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
(4,201,998 |
) |
|
$ |
(4,206,774 |
) |
|
$ |
(13,101,239 |
) |
|
$ |
(6,228,521 |
) |
Adjusted EBITDA for the three months ended September 30, 2025 was flat compared to the three months ended September 30, 2024. For the three months ended September 30, 2025, Adjusted EBITDA remained consistent due to a decrease in professional fees of $1.9 million; offset by (ii) increased compensation and benefits expense, excluding share-based compensation, of $1.4 million; and (iii) increased insurance expenses of $0.4 million.
Adjusted EBITDA for the nine months ended September 30, 2025 decreased by $6.9 million, or 110% compared to the nine months ended September 30, 2024. The principal driver of decreased Adjusted EBITDA relates to (i) increased professional fees of $0.9 million; (ii) increased compensation and benefits expense, excluding share-based compensation, of $3.1 million; (iii) increased marketing expenses of $1.0 million; and (iv) increased insurance expenses of $1.2 million.
Increased professional fees related directly to legal, advisory, and audit services incurred as part of our transition to becoming a public company and costs incurred in support of ongoing regulatory and compliance costs associated with being a public company. Payroll expenses increased in correlation with our increased employee headcount, which was 39 employees as of September 30, 2025 and 22 employees as of September 30, 2024. Marketing expenses increased in accordance with our planned growth strategy for 2025, which
44
includes budgeted expenditures for paid marketing channels. Insurance expenses related to increased coverage premiums as result of our transition to becoming a public company.
Adjusted EBITDA (Loss) Per Share
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Adjusted EBITDA (Loss) |
|
$ |
(4,201,998 |
) |
|
$ |
(4,206,774 |
) |
|
$ |
(13,101,239 |
) |
|
$ |
(6,228,521 |
) |
Weighted-average shares used to compute basic and diluted net loss per share |
|
|
46,911,561 |
|
|
|
5,836,882 |
|
|
|
39,781,781 |
|
|
|
5,836,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA (Loss) per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.72 |
) |
|
$ |
(0.33 |
) |
|
$ |
(1.07 |
) |
Financial condition
Liquidity and Capital Resources
As of September 30, 2025, the Company had cash and cash equivalents of $6.7 million and positive working capital of $6.1 million. The Company has a history of net operating losses, including net operating losses of $5.9 million for the three months ended September 30, 2025 and $21.8 million for the nine months ended September 30, 2025. The Company has an accumulated deficit of $136.2 million as of September 30, 2025. Of that amount, $98.0 million relates to fair value adjustments on the Company's SAFE notes, $9.6 million relates to loss on extinguishment of debt, and $14.5 million relates to fair value adjustments on convertible debt instruments.
As of September 30, 2025, the Company held 1,494 bitcoin in our Investment Treasury, valued at $170.4 million. Of that amount, 800 bitcoin, valued at $91.3 million, were restricted from use as operating capital and served as collateral for our convertible notes. Our Investment Treasury is considered a long-term investment and we do not believe we will need to sell or engage in other transactions with respect to any of our Investment Treasury within the next twelve months to meet our working capital requirements, although we may from time to time sell or engage in other transactions with respect to our Investment Treasury as part of treasury management operations.
As of September 30, 2025, we held 81 bitcoin in our Rewards Treasury, valued at $9.3 million, which matched our existing customer rewards liability, which is denominated in bitcoin. The Company anticipates being able to cover the costs for future rewards via future revenues and operational capital on hand.
As of September 30, 2025, the Company had $66.3 million in principal debt outstanding in the form of two convertible notes. The June 2025 Amended Investor Note has a principal due of $20.0 million and is convertible into Common Stock at a conversion price of $9.00 per share. This note is secured by Fold’s assets as collateral, including 300 of Fold’s proprietary bitcoin, and will mature on February 14, 2028. The March 2025 Investor Note has a principal due of $46.3 million and is convertible into Common Stock at a price of $12.50 per share. This note is secured by Fold’s assets as collateral, including 500 of Fold’s proprietary bitcoin, and will mature on March 6, 2030. On the maturity date, the Company shall transfer to the investor the balance of any bitcoin not previously released to the Company upon conversion of the March 2025 Investor Note to Common Stock, with a maximum potential repayment of 500 bitcoin if no amounts convert to Common Stock during the life of the note. No cash payments by Fold are contemplated under the March 2025 Investor Note. Refer to Note 10 of our Financial Statements for further information regarding the conversion features of the convertible notes.
In June 2025, the Company entered into an agreement for a $250 million equity purchase facility (“Facility”). Pursuant to the Facility, the Company, in its sole discretion, has the right, but not the obligation, to issue and sell up to $250 million in newly issued shares of the Company’s Common Stock, subject to certain conditions. The Company is not required to use the Facility and controls the timing and amount of any drawdown on the Facility, subject to certain restrictions under the Facility (for additional information, see Part II,
Item 1A – Risk Factors). The Company expects that any proceeds received by it from the Facility will be used for, without limitation, purchasing additional bitcoin for the Company’s corporate treasury, working capital and general corporate purposes. As of September 30, 2025, the Company sold 1.15 million shares of Common Stock to the investor pursuant to the Facility for gross proceeds of $3.48 million, and recognized a nominal amount amortization related to deferred issuance costs. Refer to Note 11 of our Financial Statements for further information.
45
Management expects that the Company’s existing cash and cash equivalents, accounts receivable, financing available from the Facility, and digital assets received through September 30, 2025 will be sufficient to enable the Company to fund its anticipated level of operations through one year from the date of this report.
We may continue to pursue additional capital via various capital instruments in the future; however, such funding may not be available on terms acceptable to us or at all. Although management believes that such capital sources will continue to be available, there can be no assurances that financing will be available to the Company when needed, or if available, on terms acceptable to the Company. If the Company is unable to obtain adequate financing on terms that are satisfactory to the Company, when the Company requires it, the Company’s ability to continue to grow or support the business and to respond to business challenges could be significantly limited, which may adversely affect the Company’s business plan.
Legal Proceedings
In connection with the chapter 11 bankruptcy proceeding of Prime Core Technologies, Inc. (“Prime Core”), on August 14, 2025, the Company was named as a defendant in a proceeding pending in the United States Bankruptcy Court for the District of Delaware (PCT Litigation Trust v. Fold Holdings, Inc., Adv. Pro. No. 25-52024 (JKS)), pursuant to which the litigation trust for Prime Core (“PCT Litigation Trust”) seeks avoidance and recovery of alleged preferential transfers. While the outcome of this proceeding cannot be predicted with certainty, the Company does not presently expect this matter to have a material adverse effect on its consolidated financial position, liquidity, capital resources, or annual results of operations.
From time to time, the Company may be subject to other claims, inquiries, or legal proceedings arising in the ordinary course of business. While the outcome of any future matter is inherently uncertain, we do not currently expect that any such matters, if they were to arise, would have a material adverse effect on our consolidated financial position, liquidity, capital resources, or annual results of operations.
For the nine months ended September 30, 2025 and 2024
The following table summarizes our cash flow activities:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net cash used in operating activities |
|
$ |
(11,426,231 |
) |
|
$ |
(3,393,225 |
) |
Net cash used in investing activities |
|
|
(3,758,069 |
) |
|
|
(1,711,247 |
) |
Net cash provided by financing activities |
|
|
3,517,404 |
|
|
|
8,000,000 |
|
Net increase (decreased) in cash |
|
$ |
(11,666,896 |
) |
|
$ |
2,895,528 |
|
Cash flows from operating activities
For the nine months ended September 30, 2025, cash used in operating activities was $11.4 million compared to $3.4 million for the nine months ended September 30, 2024. This increase was driven primarily by (i) increased professional fees of $0.9 million; (ii) increased compensation and benefits expense, excluding share-based compensation of $3.1 million; (iii) increased marketing expenses of $1.0 million; and (iv) increased insurance expenses of $1.2 million.
Increased professional fees related directly to legal, advisory, and audit services incurred as part of our transition to becoming a public company and costs incurred in support of ongoing regulatory and compliance costs associated with being a public company. Payroll expenses increased in correlation with our increased employee headcount, which was 39 employees as of September 30, 2025 and 22 employees as of September 30, 2024. Marketing expenses increased in accordance with our planned growth strategy for 2025, which includes budgeted expenditures for paid marketing channels. Insurance expenses related to increased coverage premiums as result of our transition to becoming a public company.
Cash flows from investing activities
Cash flows used in investing activities increased from September 30, 2024 to September 30, 2025 by $2.0 million, primarily due to increased purchases of bitcoin for our Investment Treasury.
Cash flows from financing activities
For the nine months ended September 30, 2025 and 2024, cash provided by financing activities was $3.5 million and $8.0 million, respectively. For the nine months ended September 30, 2025 and 2024, we raised $0 million and $8.0 from SAFE note financings,
46
respectively. For the nine months ended September 30, 2025 we received proceeds from issuance of the March 2025 Investor Note; however, those proceeds were received in bitcoin rather than cash and are therefore not included in cash provided by financing activities. For the nine months ended September 30, 2025 we received proceeds from the issuance of shares of Common Stock through the Facility of $3.48 million.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2025. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. GAAP requires us to make certain estimates and judgments that affect the amounts reported in our financial statements. We base our estimates on historical experience, anticipated future trends, and other assumptions we believe to be reasonable under the circumstances. Because these accounting estimates require significant judgment, our actual results may differ materially from our estimates. According to the SEC, a "critical accounting estimate" is defined as an estimate that meets two criteria:
Simple agreements for future equity ("SAFEs")
The Company has issued certain SAFEs, none of which remained outstanding as of September 30, 2025, that grant investors rights to participate in a future equity financing. The number of shares deliverable upon settlement is determined based on the market price of the shares at the settlement date. The Company’s SAFEs are recorded as a liability in the accompanying balance sheets and the Company records subsequent remeasurements in changes in fair value of SAFEs in the statements of operations. Issuance costs related to the SAFEs are expensed in the period incurred. For more information regarding our treatment of the SAFEs, please see Note 9 of our Financial Statements.
Convertible notes and warrants
The Company has accounted for the December 2024 Initial Investor Note and the related warrants issued using the relative fair value allocation method on the date of issuance. The estimated fair values of the conversion option under the December 2024 Initial Investor Note and warrants were calculated under a Black-Scholes model utilizing the enterprise valuation of Fold's Common Stock as of December 31, 2024.
The Company has accounted for the June 2025 Amended Investor Note and the related warrants issued using the relative fair value allocation method on the date of issuance. The estimated fair values of the conversion option under the June 2025 Amended Investor Note and warrants were calculated under a Black-Scholes model utilizing the enterprise valuation of Fold's Common Stock as of September 30, 2025.
The fair value of the December 2024 Investor Note and June 2025 Amended Investor Note included the fair value of the conversion option as well as the discounted future contractually obligated cash flows under scenarios in which the Company achieved or did not achieve a public offering.
The estimated fair value of the March 2025 Investor Note was calculated under a Monte Carlo model as of September 30, 2025. The March 2025 Warrants were calculated under a Black-Scholes model utilizing Fold's stock price as of the issuance date.
For further information regarding our treatment of the convertible notes and warrants, please see Note 10 of our Financial Statements.
Stock-based compensation expense
RSUs granted prior to the Merger required both service-based and performance-based vesting criteria, including the occurrence of a
47
specified liquidity event in order to vest. The liquidity event requirements were met in conjunction with the Merger, and as such the Company recognized stock-based compensation expense associated with the outstanding RSU grants vested on that date. The Fold Board of Directors relied on independent third-party valuations of Fold Common Stock in determining the fair value of the RSUs on each grant date. Between grant dates, Fold evaluated whether there were any changes to forecasts or events that would impact the value of its Common Stock and obtained updated third-party valuations as necessary.
The valuations utilized the guideline public company method within the market approach whereby the valuation leveraged guidance company market multiples and ratios such as revenue, earnings before interest and taxes, earnings before interest, taxes, depreciation, and amortization, and net income and/or tangible book value to apply to Fold's corresponding financial data to compute the implied total value of Fold equity. Guideline companies were selected based on business description, financial size and performance, and stock liquidity. Weighting was applied to the identified guideline public companies to obtain multiples that most appropriately reflected Fold's current performance and financial metrics. The risk-free rate used was the constant maturity U.S. Treasury rate corresponding to the applicable time to liquidity. For further information regarding our treatment of the RSUs, please see Note 12 of our Financial Statements.
Recent accounting pronouncements
See “Recent accounting pronouncements” described in Note 2 of the Financial Statements, Summary of Significant Accounting Policies.
48
Item 3. Quantitative and Qualitative Disclosures about Market Risks
The following discussion about our market risk exposure involves forward-looking statements. Actual results could differ materially
from those projected in these forward-looking statements. We are exposed to the market price change in bitcoin.
Macroeconomic trends impacting our market
The following macroeconomic factors as they relate to bitcoin specifically impact our business:
Bitcoin market price risk
Some of our assets and liabilities are denominated in bitcoin, including our bitcoin Investment Treasury, our customer rewards liability, and the March 2025 Investor Note. These assets and liabilities are remeasured to fair value at the end of each reporting period using observed bitcoin prices from active exchanges. Fair value adjustments are recorded in the statements of operations and could result in volatility in our financial results in future periods. Negative swings in the market price of bitcoin could have a material impact on our earnings and on the carrying value of our bitcoin-denominated assets and liabilities. For additional information, see Note 2 – Derivatives, and Note 15, in our Financial Statements.
49
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our principal executive officer (our Chief Executive Officer) and our principal financial officer (our Chief Financial Officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2025. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as a result of the material weaknesses in our internal control over financial reporting described below, the design and operation of our disclosure controls and procedures were not effective as of September 30, 2025.
Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses in our internal control over financial reporting exist as of September 30, 2025:
We have begun the process of, and are focused on, designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate these material weaknesses. Our remediation efforts include several actions:
The actions that we are taking are subject to ongoing senior management review, as well as oversight of the audit committee of our Board. We also may conclude that additional measures may be required to remediate the material weaknesses or determine to modify the remediation plans described above. We will not be able to conclude that we have remediated the material weaknesses until the applicable controls are fully implemented and operate for a sufficient period of time and management has concluded, through formal testing, that these controls are operating effectively. We will continue to monitor the design and effectiveness of these and other processes, procedures, and controls and make any further changes management deems appropriate.
Changes in Internal Control over Financial Reporting
Other than the ongoing remediation efforts described above, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
50
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be subject to various claims, lawsuits and other legal and administrative proceedings that may arise in the ordinary course of business. Some of these claims, lawsuits and other proceedings may range in complexity and result in substantial uncertainty; it is possible that they may result in damages, fines, penalties, non-monetary sanctions, or relief. We are currently the defendant in a bankruptcy clawback proceeding as described in Part I, Item 2 - Management's Discussion & Analysis and Analysis of Financial Conditions and Results of Operations; while the outcome of this proceeding is uncertain, we do not believe it is likely to result in a material adverse effect on our future operating results, financial condition, or cash flows.
Item 1A. Risk Factors.
The Company entered into the Facility, dated as of June 16, 2025, with SZOP Opportunities I, LLC (“SZOP”), in connection with
which it filed a registration statement on Form S-1 with the SEC (File No. 333-288623) (the "Registration Statement").
There are numerous factors that affect our business and operating results, many of which are beyond our control. There have been no material changes to the risk factors previously described in our 2024 Form 10-K, except for the following in connection with the Facility:
The sale of our Common Stock to SZOP may cause dilution to existing stockholders and the subsequent sale of the shares of Common Stock acquired by SZOP, or the perception that such sales may occur, could cause the price of our Common Stock to fall.
On June 16, 2025, we entered into the Facility with SZOP, pursuant to which SZOP committed to purchase up to $250,000,000 of our Common Stock. The shares that we may issue and sell to SZOP under the Facility may be sold by us to SZOP from time to time at our discretion over a 24-month period commencing on the date that the conditions set forth in the Facility are satisfied. The purchase price for the shares that we may issue and sell to SZOP under the Facility will vary based on the price of our Common Stock at the time we initiate the sale. Depending on market liquidity at the time, sales of such shares may cause the trading price of our Common Stock to fall.
We generally have the right to control the timing and amount of any future sales of our shares to SZOP. Sales of shares of our Common Stock to SZOP under the Facility, if any, will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to SZOP all or only some of the shares of our Common Stock that may be available for us to sell pursuant to the Facility. If and when we do sell shares to SZOP, after SZOP has acquired the shares, SZOP may resell all, some or none of those shares at any time or from time to time in its discretion. Therefore, sales to SZOP by us could result in substantial dilution to the interests of other holders of our Common Stock. Additionally, the sale of a substantial number of shares of our Common Stock to SZOP, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
It is not possible to predict the actual number of shares of Common Stock we may sell to SZOP under the Facility, or the actual gross proceeds resulting from such sales.
Because the purchase price per share to be paid by SZOP for the shares of Common Stock that we may elect to sell to SZOP under the Facility, if any, will fluctuate based on the market prices of our Common Stock at the time we elect to sell shares to SZOP pursuant to the Facility, if any, it is not possible for us to predict, as of the date of this Quarterly Report and prior to any future such sales, the total number of shares of Common Stock that we will sell to SZOP under the Facility, the purchase price per share that SZOP will pay for future shares purchased from us under the Facility, or the aggregate gross proceeds that we will receive from those purchases by SZOP under the Facility.
Moreover, although the Facility provides that we may sell up to an aggregate of $250,000,000 of our Common Stock to SZOP, only 9,207,287 shares of Common Stock are being registered under the Securities Act for resale by SZOP under the Registration Statement. These 9,207,287 shares represent the shares that we may elect to issue and sell to SZOP, without the prior approval of our stockholders and in our sole discretion, from time to time from and after the date that the conditions set forth in the Facility are satisfied.
The Company cannot effect any sales under the Facility and SZOP will not have any obligation to purchase shares of our Common Stock under the Facility to the extent that after giving effect to such purchase and sale the aggregate number of shares of Common Stock issued under the Facility together with any shares of Common Stock issued in connection with any other transaction that may be considered part of the same series of transactions, the number of shares issued would exceed the number of shares representing 19.99% of the issued and outstanding shares of Common Stock as of the date of the Facility (the “Exchange Cap”), unless the Company has obtained stockholder approval as required for issuance of Common Stock in excess of the Exchange Cap, in accordance with applicable rules of Nasdaq. Accordingly, the Company may not have access to the right to sell the full Commitment to SZOP. As of June 15, 2025, there were 46,434,655 shares of Common Stock outstanding, and therefore the Exchange Cap is 9,282,287 shares of Common Stock.
51
SZOP will also not be required to subscribe for any shares of Common Stock under the Facility which, when aggregated with all other shares of Common Stock then beneficially owned by SZOP and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act, and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by SZOP and its affiliates to exceed 9.99% of the outstanding voting power or number of the Common Stock.
If, following satisfaction of the conditions set forth in the Facility, we elect to sell to SZOP all of the 9,207,287 shares of Common Stock registered for resale under the Registration Statement, depending on the market prices of our Common Stock at the time of such sales, the gross proceeds from such sales of all such shares of Common Stock by us to SZOP may be substantially less than the $250,000,000 total purchase commitment available to us under the Facility, which could materially adversely affect our liquidity.
If it becomes necessary for us to issue and sell to SZOP shares of Common Stock in excess of the Exchange Cap under the Facility in order to receive additional gross proceeds up to $250,000,000 under the Facility, then for so long as the Exchange Cap continues to apply to the issuances and sales of our Common Stock under the Facility, we must first obtain stockholder approval to issue shares of Common Stock in excess of the Exchange Cap in accordance with the applicable Nasdaq listing rules. Additionally, if we elect to issue and sell to SZOP more than the 9,207,287 shares of our Common Stock, we must first file with the SEC one or more additional registration statements to register under the Securities Act for resale by SZOP such additional shares of our Common Stock we wish to sell from time to time under the Facility, which the SEC must declare effective, in each case before we may elect to sell any additional shares of our Common Stock to SZOP under the Facility. There is no assurance that we would obtain the approval of our stockholders to issue shares in excess of the Exchange Cap or that we would be able to register timely the additional shares of Common Stock. Any issuance and sale by us under the Facility of shares of Common Stock in excess of the Exchange Cap could cause additional substantial dilution to our stockholders. The number of shares of our Common Stock ultimately offered for sale by SZOP is dependent upon the number of shares of Common Stock, if any, we ultimately sell to SZOP under the Facility, and the sale of Common Stock under the Facility may cause the trading price of our Common Stock to decline.
We may not have access to the full amount available under the Facility with SZOP. We may require additional financing to sustain our operations, without which we may not be able to continue operations, and the terms of subsequent financings may adversely impact our stockholders.
We may direct SZOP to purchase up to $250,000,000 worth of shares of our Common Stock in a Regular Purchase from time to time under the Facility over a 24-month period generally in amounts of shares of Common Stock that vary depending on the closing sale price of our Common Stock at the time of sale. Moreover, under certain circumstances as set forth in the Facility, we may, in our sole discretion, also direct SZOP to purchase additional shares of Common Stock in “accelerated purchases” as set forth in the Facility.
Depending on the prevailing market price of our Common Stock, we may not be able to sell shares to SZOP for the maximum $250,000,000 over the term of the Facility. We will need to seek stockholder approval before issuing more than the Exchange Cap limit of 9,282,287 shares of Common Stock under the Facility. There is no assurance we would obtain the approval of our stockholders to issue shares in excess of the Exchange Cap. In addition, SZOP will not be required to purchase any shares of our Common Stock if such sale would result in SZOP’s beneficial ownership of our Common Stock exceeding the Beneficial Ownership Cap (as such term is defined in the Facility) under the Facility. Our inability to access a portion or the full amount available under the Facility, in the absence of any other financing sources, could have a material adverse effect on our business.
The extent we rely on SZOP as a source of funding will depend on a number of factors including the prevailing market price of our Common Stock and the extent to which we are able to raise capital from other sources. Assuming a purchase price of $4.51 per share (which represents the closing price of our Common Stock on July 9, 2025), the purchase by SZOP of the entire 9,207,287 shares of Common Stock issuable under the Facility being registered for resale by SZOP hereunder would result in gross proceeds to us of approximately $41.5 million. If obtaining sufficient funding from SZOP were to prove unavailable or prohibitively dilutive, we will need to secure another source of capital in order to satisfy our working capital needs. Even if we sell all $250,000,000 of shares of our Common Stock to SZOP under the Facility, we will need to raise substantial additional capital to continue to fund our operations and execute our current business strategy.
Sales of a substantial number of our securities in the public market by the selling stockholders named in our Registration Statement and/or by our existing securityholders could cause the price of our shares of Common Stock to fall.
The selling stockholders named in the Registration Statement can sell, pursuant to prospectus under the Registration Statement, up to 9,282,287 shares of Common Stock, constituting approximately 19.88% of our issued and outstanding shares of Common Stock as of the date of the Registration Statement.
Sales of a substantial number of our shares of Common Stock in the public market by such selling stockholders and/or by our other existing securityholders, or the perception that those sales might occur, could depress the market price of our shares of Common Stock and Warrants and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price of our shares of Common Stock and Warrants.
52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Except as previously reported by us on our Current Report on Form 8-K, during the period covered by this Quarterly Report on Form 10-Q, the Company did not sell any unregistered securities.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the three months ended September 30, 2025, none of our directors or officers
53
Item 6. Exhibits.
Exhibit Number |
|
Description |
2.1 |
|
|
3.1 |
|
|
3.2 |
|
|
10.1# |
|
|
10.2 |
|
|
10.3#* |
|
Fold Holdings, Inc. Amended and Restated Executive Severance Plan. |
10.4# |
|
|
31.1* |
|
|
31.2* |
|
|
32.1** |
|
|
32.2** |
|
|
101.INS* |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104* |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* |
|
Filed herewith. |
** |
|
Furnished herewith. |
† |
|
Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is not material and is the type of information that the Registrant treats as private or confidential. The Registrant agrees to furnish supplementally a copy of such schedules, or any section thereof, to the SEC upon request. |
^ |
|
Certain schedules, exhibits and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a copy of such schedules, or any section thereof, to the SEC upon request |
# |
|
Indicate management contract or compensatory plan or arrangement. |
54
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
Fold Holdings, Inc. |
|
|
|
|
|
Date: November 10, 2025 |
|
By: |
/s/ Will Reeves |
|
|
|
Will Reeves |
|
|
|
Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
Date: November 10, 2025 |
|
By: |
/s/ Wolfe Repass |
|
|
|
Wolfe Repass |
|
|
|
Chief Financial Officer (Principal Accounting Officer) |
55