Fold Holdings, Inc 10-Q for FY2026 Q1
Fold Holdings, Inc. (FLD)
About this 10-Q
Fold Holdings, Inc filed this 10-Q on May 12, 2026, covering the quarter ended March 31, 2026 (FY2026 Q1).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $5.59M
- down 21.1% from $7.09M a year earlier
- Net loss
- $29.17M
- compared with a net loss of $48.88M a year earlier
- Diluted EPS
- -$0.59
- compared with -$1.92 a year earlier
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:
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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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 May 10, 2026, the registrant had
Table of Contents
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PART I. |
5 |
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Item 1. |
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6 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
28 |
Item 3. |
42 |
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Item 4. |
42 |
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PART II. |
44 |
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Item 1. |
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Item 1A. |
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Item 2. |
44 |
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Item 3. |
44 |
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Item 4. |
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Item 5. |
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Item 6. |
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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, 2025 filed on March 17, 2026. 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)
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March 31, |
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December 31, |
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2026 |
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2025 |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventories |
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Digital assets - rewards treasury |
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Prepaid expenses and other current assets |
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Total current assets |
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Digital assets - investment treasury |
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Capitalized software development costs, net |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders' equity |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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February 2026 note - related party, net |
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Credit facility |
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Customer rewards liability |
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Deferred revenue |
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Total current liabilities |
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June 2025 convertible note, net |
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March 2025 convertible note - related party |
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Other non-current liabilities |
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Total liabilities |
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Stockholders’ equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in-capital |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed financial statements
5
Fold Holdings, Inc.
Condensed Statements of Operations
(Unaudited)
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Three Months Ended |
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2026 |
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2025 |
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Revenues, net |
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$ |
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$ |
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Operating expenses |
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Banking and payments costs |
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Custody and trading costs |
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Compensation and benefits |
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Marketing expenses |
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Professional fees |
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Amortization expense |
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(Gain) loss on customer rewards liability |
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( |
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( |
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(Gain) loss on digital assets - rewards treasury |
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Other selling, general and administrative expenses |
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Total operating expenses |
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Operating loss |
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( |
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( |
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Other income (expense) |
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Gain (loss) on digital assets - investment treasury |
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( |
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( |
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Change in fair value of SAFEs |
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( |
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Change in fair value of convertible note |
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( |
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Convertible note issuance costs and fees |
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( |
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Loss on extinguishment of debt |
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( |
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Interest expense |
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( |
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( |
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Other income |
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Other expense, net |
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( |
) |
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( |
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Net loss before income taxes |
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( |
) |
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( |
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Income tax expense (benefit) |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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Net loss per share attributable to common stockholders: |
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Basic and diluted |
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$ |
( |
) |
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$ |
( |
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Weighted-average common shares outstanding: |
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Basic and diluted |
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The accompanying notes are an integral part of these condensed financial statements
6
Fold Holdings, Inc.
Condensed Statements of Stockholders' Equity
(Unaudited)
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Convertible |
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Additional |
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Preferred Stock |
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Common Stock |
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Paid-In |
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Accumulated |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Total |
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Balance at January 1, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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Net loss |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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Reverse recapitalization, net of expenses |
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( |
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( |
) |
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- |
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Share based compensation expense |
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- |
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- |
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- |
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- |
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- |
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Exercise of Series B warrants |
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- |
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- |
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( |
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- |
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- |
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Issuance of March 2025 Closing Shares and Warrants |
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- |
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- |
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- |
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Balance at March 31, 2025 |
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- |
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$ |
- |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Balance at January 1, 2026 |
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- |
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$ |
- |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Net loss |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
Share based compensation expense |
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- |
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- |
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- |
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Common stock withheld for employee tax obligations |
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- |
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- |
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( |
) |
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- |
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( |
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- |
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( |
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Issuance of interest shares |
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- |
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- |
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- |
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Issuance of Employee Stock Purchase Plan shares |
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- |
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- |
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- |
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Issuance of common stock |
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- |
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- |
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- |
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Issuance of commitment shares |
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- |
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- |
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- |
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Balance at March 31, 2026 |
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- |
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$ |
- |
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$ |
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$ |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of these condensed financial statements
7
Fold Holdings, Inc.
Condensed Statements of Cash Flows
(Unaudited)
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Three Months Ended March 31, |
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2026 |
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2025 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization expense |
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Loss on digital assets - rewards treasury |
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Loss on digital assets - investment treasury |
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Gain on customer rewards liability |
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( |
) |
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( |
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Change in fair value of convertible note |
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( |
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Convertible note issuance costs and fees |
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Loss on extinguishment of debt |
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Amortization of debt issuance costs |
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Amortization of debt discount and premium |
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( |
) |
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Change in fair value of SAFEs |
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Share-based compensation expense |
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Other non-cash adjustments |
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( |
) |
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Increase (decrease) in cash resulting from changes in: |
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Accounts receivable, net |
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( |
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Inventories |
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( |
) |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts payable |
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Accrued expenses and other current liabilities |
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Customer reward liability |
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Deferred revenue |
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( |
) |
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( |
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Other non-current liabilities |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities |
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Purchases of digital assets |
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( |
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( |
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Proceeds from sales of digital assets |
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Payments for capitalized software development costs |
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( |
) |
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( |
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Net cash provided by (used in) investing activities |
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( |
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Cash flows from financing activities |
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Proceeds from issuance of note |
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Repayment of convertible note |
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( |
) |
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Proceeds from recapitalization |
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Payments of deferred IPO costs |
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( |
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Proceeds from issuance of common stock |
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Proceeds from credit facility |
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Common stock withheld for employee tax obligations |
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( |
) |
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Net cash provided by (used in) financing activities |
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( |
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Net increase (decrease) in cash and cash equivalents |
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( |
) |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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Non-cash investing and financing activities |
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Non-cash payment of interest with common stock |
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$ |
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$ |
|
||
Distributions of digital assets to fulfill customer reward redemptions |
|
|
|
|
|
|
||
Distributions of digital assets to satisfy other current obligations |
|
|
|
|
|
|
||
Non-cash repayment of convertible note via transfer of digital assets - related party |
|
|
|
|
|
|
||
Non-cash amortization of deferred issuance costs |
|
|
|
|
|
|
||
Non-cash allocation of convertible note proceeds to embedded derivative |
|
|
|
|
|
|
||
Non-cash allocation of note proceeds to commitment shares |
|
|
|
|
|
|
||
Recapitalization |
|
|
|
|
|
|
||
Proceeds from convertible debt received in digital assets - related party |
|
|
|
|
|
|
||
Distributions of digital assets for prepaid interest - related party |
|
|
|
|
|
|
||
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
||
Cash paid during the period for interest expense |
|
|
|
|
|
|
||
The accompanying notes are an integral part of these condensed financial statements
8
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). For any given valuation of bitcoin used herein, unless otherwise indicated, we use the market price of bitcoin on the Coinbase exchange at 11:59:59 pm UTC on the date stated.
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. Fold has built a financial services platform that operates across both U.S. dollars ("USD") and bitcoin, and is designed to connect these systems in a seamless manner. By integrating traditional financial services with bitcoin-based rewards and savings functionality, Fold seeks to help customers compound positive financial outcomes over time while maintaining familiar financial workflows. Fold’s consumer offerings include an FDIC-insured checking account, a Visa prepaid debit card (the "Fold Debit Card"), a bitcoin rewards credit card (the "Fold Credit Card"), bill payment services, a bitcoin gift card, and an extensive catalog of merchant reward offers. The Company also offers various forms of bitcoin buying and selling with low-to-zero fees and insured custody. By integrating bitcoin into traditional financial products, Fold aims to serve as a trusted entry point for consumers seeking to incorporate bitcoin into everyday financial activity in a responsible and accessible manner. 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 March 31, 2026, the Company had cash and cash equivalents of $
As of March 31, 2026, the Company held
As of March 31, 2026, we held
The Company maintains a revolving credit facility (the "Credit Facility") with Two Prime Lending Limited ("Two Prime"), pursuant to which the Company, upon the deposit of bitcoin as collateral, may borrow from Two Prime up to $
On February 26, 2026, the Company closed on a transaction pursuant to which the March 2025 Investor Note was extinguished, at which time the
9
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
investor. In conjunction with the extinguishment of the March 2025 Investor Note, the Company issued the February 2026 Investor Note (as defined in Note 10) for $
In June 2025, the Company entered into an agreement for a $
The Company performs an evaluation to determine whether there are conditions or events (known and reasonably knowable), considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed financial statements are available to be issued. Management expects that the Company’s existing cash and cash equivalents, accounts receivable, financing available from the Credit Facility and the Facility, and digital assets on hand through the date of filing, 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.
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, 2025 and 2024. 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 three months ended March 31, 2026, are not necessarily indicative of the results to be expected for the year ended December 31, 2026, or for any future periods.
Use of estimates
10
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
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.
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 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; 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 three months ended March 31, 2026 and 2025, 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
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:
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||
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:
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||
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 March 31, 2026 and December 31, 2025, the notional amount of the customer rewards liability outstanding was
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. When freestanding instruments, such as equity-classified shares or bifurcated derivative liabilities, are issued in connection with the new debt, the total proceeds are allocated among the instruments using a combination of the with-and-without method and the relative fair value method. Under this approach, proceeds equal to the fair value of any instruments required to be measured at fair value on a recurring basis, such as bifurcated derivative liabilities accounted for under ASC 815, are first allocated to those instruments using the with-and-without method. The remaining proceeds are then allocated among any remaining freestanding instruments, such as equity-classified shares, using the relative fair value method, with the debt host recorded at its allocated amount.
The difference between the carrying amount of the extinguished debt and the consideration transferred is recognized as an extinguishment gain or loss. Under an exchange or modification accounted for as a debt extinguishment, fees paid to the lender are included in the gain or loss on extinguishment of debt. Costs incurred with third parties, such as legal fees, directly related to the
12
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
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 on extinguishment.
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. Costs incurred with third parties, such as legal fees, directly related to the exchange or modification, are expensed as incurred, and previously deferred fees and costs are amortized as non-cash interest expense over the remaining initial term of the exchanged or modified debt.
Certain debt instruments may be designated at fair value under the fair value option election in accordance with ASC 825-10, with changes in fair value recognized in earnings each period. Upon extinguishment of a debt instrument carried at fair value, the carrying value equals its fair value on the reacquisition date. Any cumulative changes in fair value attributable to instrument-specific credit risk previously recognized in accumulated other comprehensive income are reclassified to earnings upon extinguishment, while changes attributable to other factors are recognized directly in net income as they occur.
Debt and related instruments
In February 2026, the Company extinguished all previously outstanding convertible notes and separately entered into the February 2026 Investor Note (as defined below). The Company accounts for the February 2026 Investor Note at amortized cost using the effective interest method.
The Company evaluates its debt instruments for embedded features requiring bifurcation in accordance with ASC 815. Embedded features that are not clearly and closely related to the debt host, are not remeasured at fair value under otherwise applicable GAAP, and that would qualify as derivatives on a standalone basis, are bifurcated and recorded as derivative liabilities at fair value, with subsequent changes in fair value recognized in earnings. The bifurcated derivative liability is remeasured at each reporting date, with changes in fair value recognized in the condensed statements of operations. Refer to Note 10 for further information.
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. 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. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures, but it is not expected to have a significant impact on the Company’s 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 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.
Recently adopted accounting pronouncements
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.
13
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
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 adopted ASU 2025-05 effective January 1, 2026. The adoption did not have a material impact on the Company's 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 $
14
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
4. REVENUE
Disaggregation of revenue
We disaggregate revenue by service type and by platform as follows:
|
|
|
Three Months Ended |
|
|||||
Revenue stream |
|
|
2026 |
|
|
2025 |
|
||
Banking and payments revenues |
|
|
$ |
|
|
$ |
|
||
Custody and trading revenues |
|
|
|
|
|
|
|
||
Other revenues |
|
|
|
|
|
|
|
||
Less: Sales returns and allowances |
|
|
|
( |
) |
|
|
( |
) |
Revenues, net |
|
|
$ |
|
|
$ |
|
||
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 March 31, 2026 and December 31, 2025, the contract liability related to our deferred subscription revenues was $
The activity in deferred revenue for the three months ended March 31, 2026 and the year ended December 31, 2025, was as follows:
|
|
Three Months Ended |
|
|
Year Ended December 31, 2025 |
|
||
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 months ended March 31, 2026 and 2025, 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 to support our operating business with the option to hold as a near- to long-term investment to preserve potential upside in the value of that bitcoin (“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:
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Rewards treasury (USD) |
|
$ |
|
|
$ |
|
||
Investment treasury (USD) |
|
|
|
|
|
|
||
Total bitcoin treasury (USD) |
|
$ |
|
|
$ |
|
||
15
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Rewards treasury (BTC) |
|
|
|
|
|
|
||
Investment treasury (BTC) |
|
|
|
|
|
|
||
Total bitcoin treasury (BTC) |
|
|
|
|
|
|
||
As of March 31, 2026 and December 31, 2025, the Company held
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, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Purchases of bitcoin |
|
|
|
|
|
|
|
|
|
|||
Bitcoin received from March 2025 Investor Note (2) |
|
|
|
|
|
|
|
|
|
|||
Disbursements of bitcoin (1) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Remeasurement gain (loss) on bitcoin (4) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Bitcoin held at March 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Purchases of bitcoin |
|
|
|
|
|
|
|
|
|
|||
Disbursements of bitcoin (1) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Remeasurement gain (loss) on bitcoin |
|
|
|
|
|
|
|
|
|
|||
Bitcoin held at December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Purchases of bitcoin |
|
|
|
|
|
|
|
|
|
|||
Bitcoin repayment for March 2025 Investor Note |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Sale of bitcoin (3) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Disbursements of bitcoin (1) |
|
|
( |
) |
|
|
|
|
( |
) |
||
Transfers of bitcoin from investment treasury |
|
|
|
|
|
( |
) |
|
|
|
||
Remeasurement gain (loss) on bitcoin (4) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Bitcoin held at March 31, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
(1)
(2)
(3)
(4)
6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||
Prepaid interest |
|
$ |
|
|
|
$ |
|
|
||
Prepaid expenses |
|
|
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
|
|
||
Interest receivable |
|
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
|
$ |
|
|
||
16
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, 2025 |
|
$ |
|
|
Rewards earned by customers |
|
|
|
|
Reward fulfilments (1) |
|
|
( |
) |
Expired rewards |
|
|
( |
) |
Remeasurement (gain) loss on customer rewards liability |
|
|
( |
) |
Balance at March 31, 2025 |
|
$ |
|
|
Rewards earned by customers |
|
|
|
|
Reward fulfilments (1) |
|
|
( |
) |
Expired rewards |
|
|
( |
) |
Remeasurement (gain) loss on customer rewards liability |
|
|
|
|
Balance at December 31, 2025 |
|
$ |
|
|
Rewards earned by customers |
|
|
|
|
Reward fulfilments (1) |
|
|
( |
) |
Expired rewards |
|
|
( |
) |
Remeasurement (gain) loss on customer rewards liability |
|
|
( |
) |
Balance at March 31, 2026 |
|
$ |
|
|
(1)
8. RELATED PARTIES
During the three months ended March 31, 2026, the Company entered into a Purchase Agreement (the "Purchase Agreement") with SATS Credit Fund LP ("SATS"), pursuant to which SATS purchased a senior unsecured promissory note in the principal amount of $
9. SAFEs
On February 14, 2025, in connection with the Closing of the Merger, all SAFE notes held by Fold Predecessor converted into
During the three months ended March 31, 2025, the Company recognized an increase in the SAFE liability of $
17
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
10. Debt and Financing Arrangements
Convertible notes and warrants
A summary of the Company’s convertible notes for the respective periods presented is as follows:
The June 2025 Amended Investor Note
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
June 2025 Amended Investor Note |
|
|
|
|
|
|
||
Convertible debt, gross |
|
$ |
|
|
$ |
|
||
Less: |
|
|
|
|
|
|
||
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 (the "December 2024 Initial Investor Note"). On June 16, 2025, the Company amended the December 2024 SPA, which was accounted for as an extinguishment of the December 2024 Initial Investor Note and issuance of a new debt instrument (the "June 2025 Amended Investor Note") with a principal amount of $
The June 2025 Amended Investor Note was scheduled to mature on
On February 27, 2026, the Company repaid the June 2025 Amended Investor Note with a cash payment of $
The Company accounted for the repayment as an extinguishment of debt in accordance with ASC 470. In connection with the extinguishment, the Company recognized additional interest expense of $
Total interest expense recognized related to the June 2025 Amended Investor Note for the three months ended March 31, 2026, prior to extinguishment, was nominal. Total interest expense recognized related to the December 2024 Initial Investor Note for the three months ended March 31, 2025 was $
The March 2025 Investor Note
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
March 2025 Investor Note |
|
$ |
|
|
$ |
|
||
Fair value adjustment |
|
|
|
|
|
|
||
March 2025 investor note - related party |
|
$ |
|
|
$ |
|
||
On March 6, 2025, Fold entered into a Securities Purchase Agreement (the “March 2025 SPA”) with a related party investor, SATS, pursuant to which Fold issued to the investor (i) a Convertible Note in an aggregate principal amount of $
18
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
2025 Warrants”), and (iii) an aggregate of
The Company elected to account for the March 2025 Investor Note using the fair value option. As of the date of issuance, the fair value of the March 2025 Investor Note was $
Total interest expense recognized related to the March 2025 Investor Note for the three months ended March 31, 2026 and 2025 was $
On February 26, 2026, the Company repaid and extinguished the March 2025 Investor Note by transferring the
Two Prime Credit Facility
On October 1, 2025, the Company entered into the Credit Facility, as subsequently amended in November 2025. The Credit Facility permits the Company to request, and Two Prime to make available at its discretion, USD-denominated loans up to an aggregate commitment amount of $
Under the Amendment, each loan bears interest at a rate of
On February 5, 2026, the Company received a collateral maintenance notice under its outstanding Credit Facility as a result of the decline in the market price of bitcoin below the collateral maintenance threshold. In accordance with the terms of the Credit Facility, the Company provided an additional
On March 16, 2026, the Company received a notice from Two Prime stating that we were eligible for a partial refund of collateral due to the appreciation of the price of bitcoin. The collateral refund was applied to reduce the incremental collateral required in connection with Loan Utilization Request #3 as described below.
On March 18, 2026, the Company borrowed an additional $
As of March 31, 2026, the outstanding principal balance under the Master Loan Agreement was $
February 2026 Investor Note
19
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
On February 25, 2026, the Company entered into a purchase agreement with SATS, a related party, and issued the February 2026 Investor Note, which has a principal amount of $
The Company accounts for the February 2026 Investor Note at amortized cost using the effective interest method and it is classified as a current liability as of the balance sheet date.
In connection with the issuance of the February 2026 Investor Note, the Company issued
The February 2026 Investor Note includes mandatory repayment triggers that require prepayment in increments of
Total interest expense recognized related to the February 2026 Investor Note for the period from issuance through March 31, 2026 was $
The February 2026 Investor Note provides for certain events of default. In connection with an event of default, SATS may declare all outstanding principal, accrued and unpaid interest, and other amounts payable to be immediately due and payable. The Company is also subject to certain customary affirmative and negative covenants, including a restriction on the incurrence of additional indebtedness above a specified threshold. As of March 31, 2026, the Company was in compliance with all covenants and there have been no events of default during the period.
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
20
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
As of March 31, 2026 and December 31, 2025, Fold had the following equity-classified warrants: (1)
The Series B warrants issued under the December 2024 SPA were exercised in connection with the Merger. The Series A and Series C warrants remain outstanding following the extinguishment of the June 2025 Amended Investor Note in February 2026, and expire on
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 March 31, 2026, employee payroll deductions had begun for the new offering period commencing March 1, 2026. The purchase date for the initial offering period occurred on February 28, 2026, at which time approximately
2025 Equity Line of Credit
On June 16, 2025, the Company entered into the Facility and a Registration Rights Agreement, each with SZOP Opportunities I LLC ("SZOP"). Pursuant to the Facility, the Company has the right to sell to SZOP up to the lesser of (i) $
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 the
21
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
2025 Incentive Award Plan (the "2025 Equity Plan") and the ESPP which became effective immediately on the date of the Merger. See Note 11 for further information regarding the Company's ESPP. Collectively, the 2019 Equity Plan and 2025 Equity Plan 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 March 31, 2026, 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
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 a public company,
22
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
the fair value of our Common Stock is determined on the grant date using the closing price of our Common Stock, which is traded on the Nasdaq Global Select Market.
RSU and RSA activity
The following table summarizes RSU and RSA share activity under the Equity Plans for the three months ended March 31, 2026 and 2025:
|
|
|
RSUs |
|
|
RSAs |
|
||
Shares nonvested at January 1, 2026 |
|
|
|
|
|
|
|
||
Granted |
|
|
|
|
|
|
|
||
Vested |
|
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
|
|
|
|
|
||
Shares nonvested at March 31, 2026 |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
RSUs |
|
|
RSAs |
|
||
Shares nonvested at January 1, 2025 |
|
|
|
|
|
|
|
||
Granted |
|
|
|
|
|
|
|
||
Vested |
|
|
|
( |
) |
|
|
( |
) |
Forfeited |
|
|
|
|
|
|
|
||
Shares nonvested at March 31, 2025 |
|
|
|
|
|
|
|
||
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 March 31, 2026 and 2025, 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.
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 condensed financial position, liquidity, capital resources, or annual results of operations.
From time to time, the Company may be subject to, or pursue, 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 condensed consolidated financial position, liquidity, capital resources, or annual results of operations.
14. INCOME TAXES
During the three months ended March 31, 2026 and 2025, the Company had losses before income taxes of $
23
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
As of March 31, 2026, 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 2026 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 March 31, 2026 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Digital assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer rewards liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
February 2026 Investor Note - embedded derivative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
As of December 31, 2025 |
|
|||||||||||||
|
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Digital assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer rewards liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
March 2025 Investor Note |
|
|
|
|
|
|
|
|
|
|
|
|
||||
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 March 31, 2026 and December 31, 2025.
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 March 31, 2026 and December 31, 2025, 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
24
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
Simple Agreements for Future Equity
On February 14, 2025, upon Closing of the Merger, the SAFEs of Fold Predecessor converted into approximately
Convertible Note
In February 2026, the Company repaid the March 2025 Investor Note through the delivery of
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 January 1, 2025 |
|
$ |
|
|
Additions |
|
|
|
|
Fair value adjustment - day one loss on issuance of debt |
|
|
|
|
Fair value adjustment - change in fair value |
|
|
( |
) |
Balance at March 31, 2025 |
|
$ |
|
|
Fair value adjustment - change in fair value |
|
|
( |
) |
Balance at December 31, 2025 |
|
$ |
|
|
Fair value adjustment - change in fair value |
|
|
( |
) |
Settlement - delivery of |
|
|
( |
) |
Balance at March 31, 2026 |
|
$ |
|
|
The following table summarizes the significant inputs which the fair value measurements associated with the convertible note was determined:
|
|
As of March 31, 2026 |
|
As of December 31, 2025 |
|
||
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) |
|
|
|
|
% |
||
Embedded Derivative
The fair value of the bifurcated derivative liability associated with the February 2026 Investor 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, bitcoin price volatility, the Company's enterprise value volatility, and the correlation between bitcoin returns and the Company's enterprise value returns.
25
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
Fair value measurements associated with the bifurcated derivative 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 derivative can result from updates to assumptions such as the price of bitcoin, the probability and timing of the mandatory prepayment triggers being exercised, or changes in the risk-free rate, among other assumptions.
16. CUSTODY OF DIGITAL ASSETS
We provide custody services on behalf of our customers through an unrelated third-party service provider, who is a qualified custodian. 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 custodian used by Fold holds 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 three months ended March 31, 2026 or year ended December 31, 2025.
The fair value of customer digital assets held by our qualified custodian totaled $
17. NET LOSS PER SHARE
Basic net 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 loss per share is computed by dividing net 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, divided by (b) the number of shares of Fold Fully Diluted Capital Stock as defined in the Merger Agreement. Subsequent to the Merger, net loss per share is calculated based on the weighted average number of shares of Common Stock outstanding.
|
|
|
Three Months Ended |
|
|||||
|
|
|
2026 |
|
|
2025 |
|
||
Basic net loss per share: |
|
|
|
|
|
|
|
||
Numerator: |
|
|
|
|
|
|
|
||
Net loss |
|
|
$ |
( |
) |
|
$ |
( |
) |
Net loss attributable to common stockholders, basic and diluted |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
||
Denominator: |
|
|
|
|
|
|
|
||
Basic shares: |
|
|
|
|
|
|
|
||
Weighted-average shares used to compute basic and diluted net loss per share |
|
|
|
|
|
|
|
||
Net loss per share attributable to common stockholders: |
|
|
|
|
|
|
|
||
Basic and diluted |
|
|
$ |
( |
) |
|
$ |
( |
) |
The following potential Common Stock were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:
26
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
|
|
|
Three Months Ended |
|
|||||
|
|
|
2026 |
|
|
2025 |
|
||
Unvested restricted stock units (1) |
|
|
|
|
|
|
|
||
Convertible notes (2) |
|
|
|
|
|
|
|
||
Investor warrants (3) |
|
|
|
|
|
|
|
||
Employee stock purchase plan (4) |
|
|
|
|
|
|
|
||
Total anti-dilutive securities |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
18. SUBSEQUENT EVENTS
The Company evaluated subsequent events, if any, that would require an adjustment to the Company’s financial statements or require disclosure in the notes to the financial statements through May 12, 2026, the date the financial statements were issued. Where applicable, the notes to these financial statements have been updated to discuss significant subsequent events which have occurred.
Additionally, the Company identified the following subsequent events for disclosure:
Bold Technologies Intellectual Property Asset Acquisition
27
Item 7. Management’s Discussion and Analysis of Financial Condition 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 filed March 17, 2026. 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 and we assume no obligation to update any forward-looking statements or the reasons why our actual results may differ. See also the Cautionary Note Regarding Forward-Looking Statements in the forepart of this Quarterly Report.
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. For any given valuation of bitcoin used herein, unless otherwise indicated, we use the market price of bitcoin on the Coinbase exchange at 11:59:59 pm UTC on the date stated.
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, the Fold Credit Card (which has been launched on a limited basis), a bitcoin gift 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 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, one of the first of its kind to appear in physical retail networks across the country. In January 2026, we introduced the Employee Bitcoin Bonus program, which allows employers to offer bitcoin bonuses to their employee base and manage those assets through Fold, and announced Steak 'n Shake as our first partner for this program. In March 2026, we launched our bitcoin rewards credit card (the "Fold Credit Card") on a limited basis in partnership with Stripe and Visa. We expect to continue to innovate in the bitcoin consumer financial services space over the coming years. We have designed each of our core product lines to be product-level profitable at scale, inclusive of the contra-revenue effect of rewards, and we believe we are well positioned to scale those lines.
In addition to new products and features, we have committed significant resources towards optimizing our business through design and user experience updates, refinement of our systems architecture, scaling our customer support services, expanding our rewards network, and adding strategic partnerships.
One of the foundational value propositions of bitcoin is trust and security. Over the years, many “crypto”-adjacent business models have failed to live up to those values, prioritizing short-term gains over their 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
28
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.
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. Fold views this treasury strategy as a reflection of alignment between Fold and its customers, providing exposure to the long-term value of bitcoin while supporting the financial strength and durability of the operating business. Fold considers its treasury allocation to be part of a disciplined capital strategy designed to support long-term operations and stockholder interests, rather than short-term financial outcomes. As of March 31, 2026, Fold held 826 bitcoin in our Investment Treasury. Refer to the Bitcoin treasury strategy section below for further detail.
Recent developments
In May 2025, the Company launched the Fold Bitcoin Gift Card, which 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 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, 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. The Facility terminates automatically on June 16, 2027 with an option for early termination by the Company. As of March 31, 2026, the Company had sold 1.59 million shares of Common Stock pursuant to the Facility for gross proceeds of $4.7 million, and recognized a nominal amount amortization related to deferred issuance costs. Refer to Note 11 for further information.
In October 2025, Fold, Inc. entered into a Master Loan Agreement with Two Prime, and subsequently entered into the First Amendment to the Master Loan Agreement (the "Amendment") in November 2025. The Master Loan Agreement and Amendment established a revolving credit facility (the "Credit Facility") pursuant to which the Company, upon the deposit of bitcoin as collateral, may borrow from Two Prime up to $45.0 million at an interest rate of 8.5% per annum. As of March 31, 2026, the Company has borrowed $20.0 million under the Credit Facility, with 430 bitcoin deposited as collateral with the custodian pursuant to the terms of the Credit Facility. The entire loan has a fixed one-year term, maturing on September 30, 2026. This loan may be renewed with substantially similar terms upon mutual agreement between the parties prior to the maturity date. Refer to Note 10 for further information.
In January 2026, we introduced the Employee Bitcoin Bonus program, which allows participating employers to offer bitcoin bonuses to their employee base and manage those assets through Fold, and announced Steak 'n Shake as our first partner for this program. Revenue and operating results from the Employee Bitcoin Bonus program were not material during the three months ended March 31, 2026.
On February 25, 2026, the Company entered into a Purchase Agreement (the "Purchase Agreement") with SATS Credit Fund L.P. ("SATS"), an affiliate of the Company's lead director. Pursuant to the Purchase Agreement, SATS purchased from the Company a $13.0 million senior unsecured promissory note (the "February 2026 Investor Note") and the Company issued to SATS 520,000 shares of Common Stock as additional consideration.
On February 26, 2026, the Company repaid and extinguished the March 2025 Investor Note by transferring the 500 bitcoin held as collateral in full satisfaction of all outstanding obligations thereunder. On February 27, 2026, the Company repaid the June 2025 Amended Investor Note with a cash payment of $27.5 million. Following these transactions, the Company no longer has any outstanding convertible notes. Refer to Note 10 for further information regarding these transactions.
In March 2026, we launched the Fold Credit Card on a limited basis, and we plan to continue to roll out this card to a larger customer base over the coming quarters. Revenue and operating results from the credit card program were not material during the three months ended March 31, 2026. As with our Fold Debit Card, we have partnered with Visa to launch this product. Stripe is our program manager. Premium customers receive unlimited 1.5% bitcoin rewards with the ability to earn up to 4% bitcoin rewards subject to certain conditions, and a free metal card, among other benefits.
29
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 have successfully launched several new product lines during the last twelve months: (1) the Fold Bitcoin Gift Card, (2) the Fold Bitcoin Bonus program, and (3) the Fold Credit Card on a limited basis. We expect these products to continue to expand to more users and to collectively 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. Over the course of the next few quarters we will continue to explore opportunities to add new consumer financial services that complement and enhance our current offerings.
The timing, execution, and effectiveness of our product and feature releases will impact our ability to meet financial targets for 2026 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 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 new products like the Fold Credit Card, the Fold Bitcoin Gift Card, and the Fold Bitcoin Bonus program 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 March 31, 2026, we held approximately 903 BTC in our bitcoin treasury which had a market value of $61.6 million on March 31, 2026, which was approximately $68.2 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 to support our operating business with the option to hold it as a near- to long-term investment to preserve potential upside in the value of that bitcoin (“Investment Treasury”). The following is a summary of Fold’s bitcoin held in treasury as of the dates shown:
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Rewards treasury (USD) |
|
$ |
5,253,902 |
|
|
$ |
6,872,869 |
|
Investment treasury (USD) |
|
|
56,355,303 |
|
|
|
133,658,791 |
|
Total bitcoin treasury (USD) |
|
$ |
61,609,205 |
|
|
$ |
140,531,660 |
|
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Rewards treasury (BTC) |
|
|
77 |
|
|
|
79 |
|
Investment treasury (BTC) |
|
|
826 |
|
|
|
1,527 |
|
Total bitcoin treasury (BTC) |
|
|
903 |
|
|
|
1,606 |
|
Our treasury strategy contemplates that we may (i) periodically sell bitcoin for general corporate purposes to support our operating business, (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. We may from time to time identify and/or implement additional
30
strategies to more effectively utilize our Investment Treasury to support our overall business. Until such time that we consider it appropriate to utilize our bitcoin in one of those ways, we intend to hold bitcoin as a near- to long-term investment to preserve potential upside in the value of that bitcoin.
As of March 31, 2026, 430 bitcoin were restricted from use in operations as collateral under our Credit Facility.
In February 2026, the Company sold 200 bitcoin for $14.4 million, or approximately $71.9 thousand per bitcoin, and repaid the March 2025 Investor Note by returning the 500 bitcoin that was previously reserved as collateral against that note. These transactions were used to consummate the capital markets transactions as further described in Note 10 of our financial statements. We may execute additional bitcoin sales based on market conditions and business requirements as part of our treasury management operations.
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.
Verified Accounts
Verified Accounts represent users who have gone through Know Your Customer (“KYC”) verification to participate in our banking and exchange products. These users represent Fold's highest potential value customers as they have passed through the verification necessary to participate in all of our core product lines.
During the three months ended March 31, 2026, we added nearly 2,000 Verified Accounts, bringing total Verified Accounts to nearly 85,000.
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. We consider Transaction Volume a key operating metric as the majority of our revenues are derived from these volumes.
From inception through March 31, 2026, Fold processed over $3.6 billion in Transaction Volume through our platform. For the three months ended March 31, 2026, we averaged more than $57 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:
31
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 March 31, 2026, Fold partnered with BitGo Bank & Trust, National Association (f/k/a BitGo Trust Company, Inc.), a federally chartered national trust bank (“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 the Fold Bitcoin Gift Card are included within this revenue line, as that product is effectively an alternative method of selling bitcoin. 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, and so on. "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 (i.e. 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.
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
32
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 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. 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.
Additionally, custody and trading costs include costs related to our Fold Bitcoin Gift Card. 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.
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.
33
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 resulted from unrealized gain or loss due to the remeasurement of outstanding SAFEs, which were classified as liabilities for accounting purposes. On February 14, 2025, upon Closing of the Merger, all SAFEs held by Fold Predecessor converted into Common Stock of Fold Holdings, Inc. No SAFEs remained outstanding subsequent to the Closing, and accordingly, no future fair value remeasurements will be recognized.
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 extinguishment of the June 2025 Amended Investor Note and March 2025 Investor Note.
Interest expense
Interest expense primarily consists of contractual interest and amortization of debt discounts, premiums, and issuance costs related to the Company's convertible notes, the February 2026 Investor Note and the Credit Facility.
34
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 March 31, 2026 and 2025
Results of operations
|
|
Three Months Ended March 31, |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
||||
Revenues, net |
|
$ |
5,592,309 |
|
|
$ |
7,087,837 |
|
|
$ |
(1,495,528 |
) |
|
|
-21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Banking and payments costs |
|
|
4,806,374 |
|
|
|
6,758,924 |
|
|
|
(1,952,550 |
) |
|
|
-29 |
% |
Custody and trading costs |
|
|
598,415 |
|
|
|
45,785 |
|
|
|
552,630 |
|
|
NM(i) |
|
|
Compensation and benefits |
|
|
4,034,267 |
|
|
|
6,457,940 |
|
|
|
(2,423,673 |
) |
|
|
-38 |
% |
Marketing expenses |
|
|
268,108 |
|
|
|
399,798 |
|
|
|
(131,690 |
) |
|
|
-33 |
% |
Professional fees |
|
|
1,667,414 |
|
|
|
1,788,505 |
|
|
|
(121,091 |
) |
|
|
-7 |
% |
Amortization expense |
|
|
156,079 |
|
|
|
91,071 |
|
|
|
65,008 |
|
|
|
71 |
% |
(Gain) loss on customer rewards liability |
|
|
(1,507,471 |
) |
|
|
(1,100,857 |
) |
|
|
(406,614 |
) |
|
|
37 |
% |
(Gain) loss on digital assets - rewards treasury |
|
|
1,689,455 |
|
|
|
1,010,586 |
|
|
|
678,869 |
|
|
|
67 |
% |
Other selling, general and administrative expenses |
|
|
1,709,981 |
|
|
|
1,136,455 |
|
|
|
573,526 |
|
|
|
50 |
% |
Total operating expenses |
|
|
13,422,622 |
|
|
|
16,588,207 |
|
|
|
(3,165,585 |
) |
|
|
-19 |
% |
Operating loss |
|
|
(7,830,313 |
) |
|
|
(9,500,370 |
) |
|
|
1,670,057 |
|
|
|
-18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain (loss) on digital assets - investment treasury |
|
|
(28,629,465 |
) |
|
|
(15,617,152 |
) |
|
|
(13,012,313 |
) |
|
|
83 |
% |
Change in fair value of SAFEs |
|
|
- |
|
|
|
(6,503,113 |
) |
|
|
6,503,113 |
|
|
|
-100 |
% |
Change in fair value of convertible note |
|
|
13,200,089 |
|
|
|
(6,534,143 |
) |
|
|
19,734,232 |
|
|
|
-302 |
% |
Convertible note issuance costs and fees |
|
|
- |
|
|
|
(9,569,109 |
) |
|
|
9,569,109 |
|
|
|
-100 |
% |
Loss on extinguishment of debt |
|
|
(4,005,132 |
) |
|
|
- |
|
|
|
(4,005,132 |
) |
|
NM(i) |
|
|
Interest expense |
|
|
(2,273,828 |
) |
|
|
(1,271,638 |
) |
|
|
(1,002,190 |
) |
|
|
79 |
% |
Other income |
|
|
374,214 |
|
|
|
120,303 |
|
|
|
253,911 |
|
|
|
211 |
% |
Other income (expense), net |
|
|
(21,334,122 |
) |
|
|
(39,374,852 |
) |
|
|
18,040,730 |
|
|
|
-46 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss before income taxes |
|
|
(29,164,435 |
) |
|
|
(48,875,222 |
) |
|
|
19,710,787 |
|
|
|
-40 |
% |
Income tax expense (benefit) |
|
|
3,471 |
|
|
|
3,978 |
|
|
|
(507 |
) |
|
|
-13 |
% |
Net loss |
|
$ |
(29,167,906 |
) |
|
$ |
(48,879,200 |
) |
|
$ |
19,711,294 |
|
|
|
-40 |
% |
(i) Not meaningful ("NM")
Revenue
|
|
Three Months Ended March 31, |
|
|||||||||||||
Revenue stream |
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
||||
Banking and payments revenues |
|
$ |
4,931,213 |
|
|
$ |
6,921,625 |
|
|
$ |
(1,990,412 |
) |
|
|
-29 |
% |
Custody and trading revenues |
|
|
665,194 |
|
|
|
151,855 |
|
|
|
513,339 |
|
|
|
338 |
% |
Other revenues |
|
|
97 |
|
|
|
26,035 |
|
|
|
(25,938 |
) |
|
|
-100 |
% |
Less: Sales returns and allowances |
|
|
(4,195 |
) |
|
|
(11,678 |
) |
|
|
7,483 |
|
|
|
-64 |
% |
Revenues, net |
|
$ |
5,592,309 |
|
|
$ |
7,087,837 |
|
|
$ |
(1,495,528 |
) |
|
|
-21 |
% |
35
Net revenue for the three months ended March 31, 2026 decreased by $1.5 million, or 21%, to $5.6 million, compared to the net revenue of $7.1 million for the three months ended March 31, 2025. Those amounts are net of reductions in revenue related to Revenue Rewards totaling $0.3 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively.
The decrease in revenues reflects the broader downturn in digital asset markets that began in the fourth quarter of 2025 and carried into the current period. Having reached an all-time high of approximately $126,000 in early October 2025, bitcoin reversed sharply as leverage liquidations, long-term holder distributions, and macroeconomic uncertainties drove prices down toward the $88,000 range by December 2025. The drawdown extended into Q1 2026, with bitcoin falling further to a low of approximately $60,000, a decline of roughly 50% from the peak. This significant contraction in bitcoin valuations had a direct impact on customer activity within our platform. Specifically, for the three months ended March 31, 2026, we averaged approximately $57 million in Transaction Volume per month, compared to $72 million per month for the three months ended December 31, 2025, and $84 million per month for the three months ended March 31, 2025. Our volumes and revenue remains subject to ongoing bitcoin price volatility and broader macroeconomic conditions.
Banking and payments
The primary driver behind decreased banking and payments revenues related to merchant offers within our banking and payments business. Net revenue from merchant offers decreased 29% from $6.4 million for the three months ended March 31, 2025 to $4.5 million for the three months ended March 31, 2026. This decrease in merchant offers revenues resulted primarily from the decrease in customer volumes noted above, as well as the Company's continued optimization of its merchant offers portfolio to prioritize higher-margin offers, which reduced overall transaction volumes while improving unit economics.
Excluding merchant offers, our net banking and payments revenues for the three months ended March 31, 2026 and three months ended March 31, 2025 were $0.4 million and $0.5 million, respectively.
Custody and trading
Net revenues from custody and trading increased by approximately $0.5 million from $0.2 million for the three months ended March 31, 2025 to $0.7 million for the three months ended March 31, 2026. While still a small part of our overall revenues, 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. We expect to add support for enhanced funding options, to open our exchange product to non-Fold cardholders. As of March 31, 2026 Fold supports access to users from all 50 states.
Additionally, revenues from the Fold Bitcoin Gift Card, which launched in May, 2025, are included within custody and trading. Revenues from this product were $0.5 million for the three months ended March 31, 2026. The second quarter of fiscal year 2025 was the first period in which we offered this product. 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 throughout 2026.
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 decreased in relation to our decreased merchant offer volumes as noted above. Costs of sales from merchant offers decreased 30% from $6.4 million for the three months ended March 31, 2025 to $4.5 million for the three months ended March 31, 2026.
Excluding merchant offers and Visa rebates, our banking and payments costs decreased to $0.2 million for the three months ended March 31, 2026 compared to $0.4 million for the three months ended March 31, 2025. This decrease was driven by decreased processing fees, card fulfillment fees and KYC costs related to new cardholder sign-ups during the three months ended March 31, 2026.
Custody and trading costs
36
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. Costs from the Fold Bitcoin Gift Card are also included within custody and trading, primarily consisting of bitcoin fulfillment upon redemption and processing fees. Costs associated with this product were $0.5 million for the three months ended March 31, 2026.
Compensation and benefits
Payroll expenses increased in correlation with our increased employee headcount, which was 44 employees as of March 31, 2026 and 35 employees as of March 31, 2025. We expect to hire incremental staff in strategic roles to support the launches of our new product lines and continued growth throughout 2026.
Compensation and benefits expense for the three months ended March 31, 2026 and 2025 also included non-cash share-based compensation expense of $1.7 million and $5.2 million, respectively. The 5.2 million of share-based compensation expense for the three months ended March 31, 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 being deemed satisfied on February 14, 2025 as a result of the Merger with FTAC Emerald. There was $13.0 million of unrecognized shared-based compensation expense related to unvested awards as of March 31, 2026.
Marketing expenses
Marketing expenses were $0.3 million for the three months ended March 31, 2026 compared to $0.4 million for the three months ended March 31, 2025, respectively. As noted above, we plan to increase investments in paid marketing and affiliate opportunities in 2026 to support the launches of our newest products, including the Fold Credit Card.
Professional fees
Professional fees decreased to $1.7 million for the three months ended March 31, 2026, compared to $1.8 million for the three months ended March 31, 2025. This decrease was driven primarily by lower fees paid to external legal counsel and third-party consultants compared to 2025 which included costs incurred to support our Merger with FTAC Emerald.
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 $93.4 thousand, $82.5 thousand, $87.5 thousand, and $68.2 thousand as of December 31, 2024, March 31, 2025, December 31, 2025 and March 31, 2026, 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 March 31, 2026 and 2025.
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 $1.1 million for the three months ended March 31, 2025 to $1.7 million for the three months ended March 31, 2026. This increase was primarily driven by higher software amortization costs, contract labor including marketing related services, board compensation, and travel related expenses.
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 $93.4 thousand, $82.5 thousand, 87.5 thousand and $68.2 thousand as of December 31, 2024, March 31, 2025, December 31, 2025 and March 31, 2026, respectively. The price changes were the primary driver of gains (losses) for digital assets - investment treasury for the three months ended March 31, 2026 and 2025.
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 statements of operations. However, Fold Predecessor's SAFEs were structured to be settled via the delivery of common and/or preferred shares upon execution
37
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 the Company.
Change in fair value of convertible note results from the fair value gain or loss related to the March 2025 Investor Note. The gain on the fair value of the convertible note was $13.2 million during the three months ended March 31, 2026 The net loss on the fair value of the convertible note of $6.5 million during the three months ended March 31, 2025 is comprised of a $12.7 million day one loss on the issuance of debt offset by a $6.2 million gain 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 three months ended March 31, 2025.
Interest expense relates to amortization of the December 2024 Investor Note discount and issuance costs, June 2025 Amended Investor Note premium and issuance costs, March 2025 Investor Note, interest expense related to the February 2026 Investor Note and interest expense related to the Credit Facility. For the three months ended March 31, 2026, we incurred a nominal amount of interest expense related to the amortization of debt premium and debt issuance costs related to the March 2025 Investor Note prior to extinguishment, $2.4 million of special interest expense related to the early prepayment of the June 2025 Amended Investor Note, 0.2 million related to the Credit Facility, and $0.2 million related to the February 2026 Investor Note. For the three months ended March 31, 2025, $1.1 million of interest expenses relates to the December 2024 Investor Note and $0.1 million of interest expense relates to the March 2025 Investor Note.
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 and Adjusted EBITDA per share provide 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:
38
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net loss |
|
$ |
(29,167,906 |
) |
|
$ |
(48,879,200 |
) |
Add: |
|
|
|
|
|
|
||
Interest expense |
|
|
2,273,828 |
|
|
|
1,271,638 |
|
Income tax expense (benefit) |
|
|
3,471 |
|
|
|
3,978 |
|
Amortization expense |
|
|
156,079 |
|
|
|
91,071 |
|
Share-based compensation expense |
|
|
1,709,413 |
|
|
|
5,170,275 |
|
(Gain) loss on customer rewards liability |
|
|
(1,507,471 |
) |
|
|
(1,100,857 |
) |
(Gain) loss on digital assets - rewards treasury |
|
|
1,689,455 |
|
|
|
1,010,586 |
|
(Gain) loss on digital assets - investment treasury |
|
|
28,629,465 |
|
|
|
15,617,152 |
|
Change in fair value of SAFEs |
|
|
- |
|
|
|
6,503,113 |
|
Change in fair value of other liabilities |
|
|
(343,039 |
) |
|
|
|
|
Change in fair value of convertible note |
|
|
(13,200,089 |
) |
|
|
6,534,143 |
|
Convertible note issuance costs and fees |
|
|
- |
|
|
|
9,569,109 |
|
Loss on extinguishment of debt |
|
|
4,005,132 |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
(5,751,662 |
) |
|
$ |
(4,208,992 |
) |
Adjusted EBITDA for the three months ended March 31, 2026 decreased by $1.5 million, or 37% compared to the three months ended March 31, 2025. The principal driver of decreased Adjusted EBITDA relates to (i) increased compensation and benefits expense, excluding share-based compensation, of $1.0 million; and (ii) increased other selling, general and administrative expenses related to contract labor expenses for product development and marketing.
Payroll expenses increased in correlation with our increased employee headcount, which was 44 employees as of March 31, 2026 compared to 35 employees as of March 31, 2025. Marketing expenses increased in accordance with our planned growth strategy for 2026, which includes budgeted expenditures for paid marketing channels due to the release of new product such as the credit card.
Adjusted EBITDA (Loss) Per Share
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Adjusted EBITDA (Loss) |
|
$ |
(5,751,662 |
) |
|
$ |
(4,208,992 |
) |
Weighted-average shares used to compute basic and diluted net loss per share |
|
|
49,656,409 |
|
|
|
25,436,398 |
|
|
|
|
|
|
|
|
||
Adjusted EBITDA (Loss) per share attributable to common stockholders: |
|
|
|
|
|
|
||
Basic and diluted |
|
$ |
(0.12 |
) |
|
$ |
(0.17 |
) |
Financial condition
Liquidity and capital resources
As of March 31, 2026, the Company had cash and cash equivalents of $11.5 million and negative working capital of $22.0 million. The Company has a history of net operating losses, including an operating loss of $7.8 million for the three months ended March 31, 2026. The Company has an accumulated deficit of $200.1 million as of March 31, 2026. Of that amount, $98.7 million relates to historical fair value adjustments on the Company's SAFE notes which converted to Common Stock upon the closing of the Merger, $9.6 million relates to the loss on extinguishment of the December 2024 Initial Investor Note (as defined in Note 10 of our financial statements) in June 2025, and $4.0 million relates to loss on extinguishment of debt recognized during the three months ended March 31, 2026.
As of March 31, 2026, the Company held 826 bitcoin in our Investment Treasury, valued at $56.4 million based on the price of bitcoin as of that date. Of that amount, 430 bitcoin, valued at $29.3 million, were restricted from use as operating capital and served as collateral for our Credit Facility. During February 2026, the Company sold 200 bitcoin for approximately $14.4 million, with the proceeds used in connection with the extinguishment of the June 2025 Amended Investor Note, as discussed above.
39
As of March 31, 2026, we held 77 bitcoin in our Rewards Treasury, valued at $5.3 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.
The Company maintains the Credit Facility, pursuant to which the Company, upon the deposit of bitcoin as collateral, may borrow from Two Prime up to $45.0 million at an interest rate of 8.5% per annum. As of March 31, 2026, the Company had borrowed $20.0 million pursuant to the Credit Facility, collateralized by 430 of the Company's bitcoin. The entire loan is a fixed-term loan, with a prepayment option, and matures on September 30, 2026. Refer to Note 10 for further information.
On February 26, 2026, the Company closed on a transaction pursuant to which the March 2025 Investor Note was extinguished, at which time the 500 bitcoin that had been reserved as collateral for this note, valued at approximately $34.0 million, were returned to the investor. In conjunction with the extinguishment of the March 2025 Investor Note, the Company entered into the February 2026 Investor Note (as defined in Note 10 of our Financial Statements) for $13.0 million. On February 27, 2026, the June 2025 Amended Investor Note was extinguished with a cash repayment of $27.5 million, which included cash proceeds from the aforementioned sale of 200 bitcoin and additional cash proceeds received from the February 2026 Investor Note. Refer to Note 10 of our Financial Statements for further information regarding these transactions.
In June 2025, the Company entered into the 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. The Company expects that any proceeds received by it from the Facility will be used for, without limitation, working capital, general corporate purposes, and purchasing additional bitcoin for the Company’s corporate treasury should the conditions to do so align with our treasury strategy. As of March 31, 2026, the Company had sold 1.59 million shares of Common Stock pursuant to the Facility for gross proceeds of $4.7 million, and recognized a nominal amount amortization related to deferred issuance costs. Refer to Note 11 for further information.
The Company performs an evaluation to determine whether there are conditions or events (known and reasonably knowable), considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are available to be issued. Management expects that the Company’s existing cash and cash equivalents, accounts receivable, financing available from the Credit Facility and the Facility, and digital assets on hand through the date of filing, 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.
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, or pursue, 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. ¶
40
Summary of cash flow activities
The following table summarizes our cash flow activities:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net cash used in operating activities |
|
$ |
(6,592,367 |
) |
|
$ |
(4,954,200 |
) |
Net cash provided by (used in) investing activities |
|
|
13,192,937 |
|
|
|
(1,829,194 |
) |
Net cash provided by (used in) financing activities |
|
|
(2,726,302 |
) |
|
|
152,587 |
|
Net increase (decreased) in cash |
|
$ |
3,874,268 |
|
|
$ |
(6,630,807 |
) |
Cash flows from operating activities
For the three months ended March 31, 2026, cash used in operating activities was $6.6 million compared to $5.0 million for the three months ended March 31, 2025. The increase in cash used was driven primarily by increased compensation and benefits, excluding share-based compensation, of $1.0 million in connection with increased employee headcount, which was 44 employees as of March 31, 2026 compared to 35 employees as of March 31, 2025, and contract labor and software costs increased $0.5 million to support platform development and operations.
Cash flows from investing activities
Cash flows provided by investing activities increased by $15.0 million from $1.8 million of cash used in investing activities for the three months ended March 31, 2025 to $13.2 million of cash provided by investing activities for the year ended March 31, 2026, primarily due to the sale of 200 bitcoin from our investment treasury for $14.4 million and a decrease in purchases of digital assets.
Cash flows from financing activities
For the three months ended March 31, 2026, cash used in financing activities was $2.7 million and $0.2 million, respectively. For the three months ended March 31, 2026 we received proceeds from the issuance of the February 2026 Investor Note; however, those proceeds were immediately used to pay of the June 2025 Amended Investor Note. For the three months ended March 31, 2026 we received $0.30 million in proceeds from the issuance of shares of Common Stock through the Facility and $10.0 million pursuant to draws on the Credit Facility. For the three months ended March 31, 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.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2026. 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:
41
During the three months ended March 31, 2026, the Company extinguished all previously outstanding convertible notes. As a result, the critical accounting estimates related to the fair value of convertible notes, as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, are no longer applicable. The critical accounting estimates related to the fair value of SAFEs and pre-Merger stock-based compensation, also described in our Form 10-K, were no longer applicable as of December 31, 2025. As of March 31, 2026, there are no accounting estimates that meet the criteria for disclosure as critical accounting estimates.
Recent accounting pronouncements
See “Recently issued accounting pronouncements not yet adopted” and "Recently adopted accounting pronouncements" described in Note 2 of the Financial Statements, Summary of Significant Accounting Policies.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
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 March 31, 2026. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as a result of the material weakness in our internal control over financial reporting described below, the design and operation of our disclosure controls and procedures were not effective as of March 31, 2026.
Material Weakness
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 weakness in our internal control over financial reporting existed as of March 31, 2026:
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 the material weakness. 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 weakness or determine to modify the
42
remediation plans described above. We will not be able to conclude that we have remediated the material weakness 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 March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
43
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.
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 Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Other than 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 sold unregistered securities pursuant to its transactions with (i) Bold Technologies, Inc. ("Bold") and (ii) SATS. On February 2, 2026, the Company exercised an option to acquire certain intellectual property of Bold. The option exercise resulted in the acquisition of certain intellectual property in exchange for $0.5 million in shares of the Company's Common Stock. Additionally, pursuant to its Purchase Agreement with SATS dated February 25, 2026, the Company issued to SATS 520,000 shares of Common Stock as additional consideration for SATS' purchase of a $13.0 million promissory note (for additional information, see
the discussion in Note 8 and Note 11). In both cases, the shares were sold by the Company in transactions that were exempt from the registration requirements of the Securities Act, in reliance on Section 4(a)(2) of the Securities Act. Both Bold and SATS represented to the Company that they were “accredited investors” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act).
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the three months ended March 31, 2026, none of our directors or officers
44
Item 6. Exhibits.
Exhibit Number |
|
Description |
2.1 |
|
|
3.1 |
|
|
3.2 |
|
|
10.1†^
|
|
|
10.2†
|
|
|
10.3†
|
|
|
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. |
45
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.
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Fold Holdings, Inc. |
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Date: May 12, 2026 |
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By: |
/s/ Will Reeves |
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Will Reeves |
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Chief Executive Officer (Principal Executive Officer) |
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Date: May 12, 2026 |
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By: |
/s/ Wolfe Repass |
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Wolfe Repass |
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Chief Financial Officer (Principal Accounting Officer) |
46
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Will Reeves, certify that:
Date: May 12, 2026 |
By: |
/s/ Will Reeves |
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Will Reeves |
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Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Wolfe Repass, certify that:
Date: May 12, 2026 |
By: |
/s/ Wolfe Repass |
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Wolfe Repass |
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Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the period ending March 31, 2026 of Fold Holdings, Inc., a Delaware corporation (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Will Reeves, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
Date: May 12, 2026 |
By: |
/s/ Will Reeves |
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Will Reeves |
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Chief Executive Officer |
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(Principal Executive Officer) |
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Fold Holdings, Inc. and will be retained by Fold Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the period ending March 31, 2026 of Fold Holdings, Inc., a Delaware corporation (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Wolfe Repass, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
Date: May 12, 2026 |
By: |
/s/ Wolfe Repass |
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Wolfe Repass |
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Fold Holdings, Inc. and will be retained by Fold Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.