USBC, Inc 10-K, filed Mar 25, 2026
USBC, Inc. (USBC)
About this 10-K
USBC, Inc filed this 10-K on March 25, 2026, covering the fiscal year ended December 31, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: _______________
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from October 1, 2025 to
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Securities registered pursuant to Section 12(b) of the Act:
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Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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.
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☒ | Smaller reporting 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of June 30, 2025 (the last business day of our most recently completed second fiscal quarter), based upon the last reported trade on that date, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $
As of March 24, 2026, there were a total of
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Items 10, 11, 12, 13 and 14 of Part III of this Transition Report on Form 10-K is incorporated by reference from the registrant’s definitive proxy statement for its 2026 Annual Meeting of Stockholders, to be filed with the U.S. Securities and Exchange Commission within 120 days after December 31, 2025.
USBC, Inc.
Form 10-K
Transition Period Ended December 31, 2025
TABLE OF CONTENTS
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INTRODUCTORY NOTES
Change in Fiscal Year End
Effective beginning in fiscal year 2026, USBC, Inc. changed its fiscal year end from September 30 to December 31 to better align the Company’s financial reporting calendar with its operating cycle, internal budgeting and financial planning process, and to improve comparability with industry peers that report on a calendar-year basis. As a result, this Transition Report on Form 10-K covers the three-month transition period from October 1, 2025 through December 31, 2025 (the “Transition Period”).
Following the Transition Period, the Company will report its operating results on a calendar-year basis, beginning with the fiscal year ending December 31, 2026.
Unless otherwise indicated, references to “fiscal year 2025” refer to the fiscal year ended September 30, 2025, and references to the “Transition Period” refer to the three-month period ended December 31, 2025.
Operating results for the Transition Period are not directly comparable to results for prior annual periods due to the Company’s fiscal year end change from September 30 to December 31. Accordingly, the operating results for the Transition Period should not be considered indicative of historical or future full-year operating performance. Additionally, operating results for the three-month period ended December 31, 2024, presented for comparison to the Transition Period are unaudited.
Use of Terms
Except as otherwise indicated by the context and for the purposes of this report on Form 10-K only, references in this report to “we,” “us,” “our” and “our company” are to USBC, Inc. (f/k/a Know Labs, Inc.), a Nevada corporation, and its consolidated subsidiary.
Special Note Regarding Forward-Looking Statements
This report on Form 10-K contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance, tokenized cryptocurrency treasury strategy, anticipated events and trends affecting our business, the broader economy and other future conditions, and our interpretation of applicable state and federal securities laws and other laws and regulations relating to digital assets. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
| · | our goals and strategies, including our cryptocurrency treasury strategy; |
| · | our future business development, financial condition and results of operations, including our ability to achieve and maintain profitability in the future; |
| · | expected changes in our revenue, costs or expenditures; |
| · | growth of and competition trends in our industry; |
| · | our expectations regarding demand for, and market acceptance of, our services or products; |
| · | our expectations regarding our relationships with investors, institutional funding partners and other parties with whom we collaborate; |
| · | fluctuations in general economic and business conditions in the markets in which we operate and our ability to respond to those conditions; |
| · | the impact of the regulatory environment on our business and the complexities of compliance, including changes in state or federal securities laws or other laws and regulations; |
| · | our interpretation of applicable state and federal securities laws and other laws and regulations relating to digital assets; |
| · | relevant government policies and regulations relating to our industry; |
| · | fluctuations in the market price of Bitcoin and any associated unrealized gains or losses on our digital assets resulting from a decrease in the market price of Bitcoin below the value at which our Bitcoin is carried on our balance sheet; |
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| · | the effect of and uncertainties related to ongoing volatility in interest rates; |
| · | changes in accounting treatment relating to our Bitcoin holdings; |
| · | our ability to manage our growth effectively and to meet our expectations regarding the development and expansion of our business; and |
| · | our ability to access sources of capital—including equity, debt, and other financing—to fund operations and growth. |
In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A “Risk Factors” and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
Trademarks, Trade Names and Service Marks
We rely upon trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website names. Solely for convenience, some of the trademarks, service marks and trade names referred to in this report are listed without the ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks and trade names. This report may include trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this report are the property of their respective owners.
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PART I
ITEM 1. BUSINESS.
Overview
USBC, Inc. (NYSE American: USBC) is a publicly traded, multi-disciplinary technology company that we believe is an industry-leading innovator in digital financial technologies. USBC develops transformative financial services, including digital assets and banking solutions as well as non-invasive health monitoring research. USBC has implemented a Bitcoin treasury strategy to bolster development and research across its various divisions. A key focus of USBC is the further development of the USBC tokenized deposit offering, a tokenized representation of a U.S.-dollar denominated bank deposit account that operates on blockchain technology and is embedded with digital identity. With a focus on inclusion, innovation, and risk management, USBC is dedicated to creating long-term shareholder value in a rapidly evolving financial landscape.
Corporate History and Development
In August 2025, in connection with the closing of a $125 million strategic controlling-interest acquisition by Goldeneye 1995 LLC (an affiliate of our Chairman and Chief Executive Officer, Greg Kidd), we issued 357.8 million shares of our common stock in exchange for 1,000 Bitcoin and $15 million in cash. Mr. Kidd and his veteran team of finance and technology leaders who are part of the USBC founding team collectively bring with them decades of technology and fintech experience.
Following the closing of the capital investment by Goldeneye in August 2025, we changed our corporate name to USBC, Inc. and our ticker symbol to “USBC” on the NYSE American. Our corporate evolution reflects a strategic pivot to the further development of a financial-technology platform and establishment of a digital asset treasury reserve while continuing to maintain technology capabilities from our legacy sensor business. Prior to August 2025, we operated under the name Know Labs, Inc. and our primary focus was on non-invasive diagnostic and sensor technologies.
On January 20, 2026, we formalized our collaboration with Uphold HQ Inc. (“Uphold”) and Vast Bank, N.A. (“Vast Bank”), which will serve as the initial issuing bank for the U.S. Bank Coin (“USBC”) tokenized-deposit offering. Uphold is a financial technology company that provides modern infrastructure for on-chain payments, banking and investment services. Vast Bank is a federally regulated financial institution that will serve as the initial issuing bank for customer deposit accounts underlying the tokenized-deposit program. Under the tri-party agreement with Vast Bank and Uphold, USBC will serve as the network operator, Vast Bank will serve as the issuing bank for customer deposit accounts, and Uphold will provide platform integration and customer access services. We continue to advance technical, operational, and regulatory readiness in connection with subsequent phases of the delivery strategy and any future broader launch of the USBC tokenized-deposit offering.
In February 2026, we completed our evaluation of the legacy non-invasive sensor business and we have elected to proceed with a divestiture transaction. Negotiations with a potential buyer are nearing completion; however, there is no assurance that any transaction will be consummated. The financial impact of the potential divestiture transaction is not expected to be material to our financial statements.
On March 10, 2026, we initiated Phase 1 of our multi-phase delivery strategy for how we will bring the USBC tokenized deposit product to market. Phase 1 is being conducted with a limited group of internal users who have elected to participate in an expanded employee pilot program ahead of the public launch of the branded platform. Phase 1 is not a consumer offering and is not available to the public; it is intended solely to begin technical readiness testing. During this phase, testing activities are conducted exclusively with company-provided funds for internal evaluation purposes. The results of Phase 1 will inform our evaluation of the timing and scope of subsequent phases of the delivery strategy and when the tokenized deposit product offering may become available to retail customers. Any future retail launch will remain subject to the outcome of the pilot program and receipt of any required regulatory, board, and bank partner approvals.
On March 18, 2026, we entered into a Master Loan Agreement (the “MLA”) with Payward Interactive, Inc. (the “Lender”), pursuant to which the Company may, from time to time, borrow fiat currency or digital assets on the terms set forth therein in an aggregate principal amount of up to $25.0 million for up to a twelve-month term, subject to execution of one or more individual loan term sheets. The MLA contains customary conditions, initial collateral requirements, collateral maintenance and liquidation mechanics, and early return and recall rights. Borrowings under the MLA are solely secured by Bitcoin collateral held in and subject to collateral maintenance requirements based on specified margin ratios. On March 20, 2026, we entered into a term sheet for a fixed-term loan of $5.0 million bearing interest at a rate of 8.5% per annum under the MLA maturing on March 18, 2027. Proceeds from the Facility will be used primarily to fund further development costs of the tokenized deposit program offering, including costs paid to our affiliate, Vast Holdings, Inc. (“Vast”) under the terms of the Affiliate Services Agreement (the “Agreement”) we simultaneously entered into on March 18, 2026. Pursuant to the terms of the Agreement, we will reimburse Vast for the cost it incurs to perform certain strategic, operational, and administrative services in support of the further development of the tokenized deposit program offering. We believe that it will be more economical and efficient for certain services necessary for these operations to be performed by officers, employees or consultants of Vast, recognizing that cost reimbursements to Vast must be at least on or favorable to market terms. Total reimbursements under the Agreement are capped at $10.5 million during the term of the Agreement, unless mutually agreed upon with Vast and are subject to detailed invoicing, documentation, and approval requirements. The Agreement expires on December 31, 2026.
Our Strategy
Key elements of our business strategy include:
| · | Completing delivery of our USBC tokenized deposit offering, which is a U.S. dollar-denominated tokenized representation of deposit liabilities issued by one or more insured depository institutions (initially Vast Bank) and recorded on distributed-ledger technology (i.e., blockchain technology). We are building complementary compliance, risk management, and payments infrastructure around the tokenized deposit model, aimed at harnessing progressive identity frameworks and scalable financial services, with the goal of creating an integrated platform to enable USBC to serve as program manager for banks and distribution partners desiring to engage in various financial service activities. |
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| · | Capitalizing on digital asset security, treasury management and strategic asset allocation (including a Bitcoin treasury strategy) to support our development initiatives and strengthen our balance sheet flexibility. We utilize derivatives to earn yield on our Bitcoin-treasury assets through an external full-service advisor and maintain collateral arrangements customary for such activities. These agreements include provisions for margin and security interests, which are standard in institutional trading relationships. We conduct our derivative trading activities in accordance with applicable laws and regulatory guidance subject to internal risk management policies and counterparty controls. We do not operate a trading desk for third parties, and all derivative positions relate solely to management of our corporate treasury assets. |
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Tokenized Deposit Program
Our primary focus is on the further development and future launch of our tokenized deposit program. The tokenized deposit program has been in development from its inception by our Chairman and CEO, Greg Kidd for the better part of a decade. The USBC tokenized deposit offering will incorporate embedded digital identity and leverage blockchain technology. It is being designed to support financial inclusion and innovation, through partnerships with banks and distribution partners such as Uphold, a pioneering infrastructure provider for on-chain finance.
Unlike a stablecoin, USBC is not a newly-created digital asset backed by reserves, nor is USBC a deposit token. USBC is a tokenized representation of a bank deposit offered by banking institutions to their customers. Other tokenized deposit products may exist, but we believe that we will be the first to provide direct access to end users, made possible by its permissioned blockchain and risk management tech stack. USBC’s API-centric approach means that developers building on the platform will have the ability to offer their customers digital U.S. dollars and their own U.S. bank deposit account worldwide.
USBC’s core value proposition is that it provides a safe, compliant and versatile foundation for a variety of payment use cases and financial applications. By combining the real-time settlement and programmability of blockchain technology with the trust and familiarity of regulated bank money, USBC has the potential to unlock a wide range of opportunities that are designed to benefit both consumers and businesses.
We have identified numerous impactful use cases for USBC including financial inclusion and open access, cross-border payments and remittances, hedge against local currency instability, 24/7 instant payments, integrated programmable payments, and treasury management. These use cases illustrate how USBC can permeate many aspects of finance and commerce. While tokenized deposits do not necessarily replace existing systems overnight, they are intended to augment and coexist with traditional payment rails. For end-users who need the advantages, the tokenized option becomes available, while those comfortable with legacy methods can continue as before. Over time, as trust and familiarity grow, we anticipate broader adoption of tokenized deposits as an alternative to traditional bank deposit accounts.
Since USBC is a representation of an actual deposit account, a bank will be able to pay interest to the holder, just as it might on a typical interest-bearing checking or savings account. The interest payment could be structured as a baseline interest rate for all balances, tiered by user type or even as high-yield rewards such as blockchain-based digital reward units or loyalty points which will be portable, interoperable and programmable and can be earned, redeemed, or used across multiple platforms, partners or ecosystems.
USBC is underpinned by a blockchain ledger that serves as the single source of truth for all tokenized deposit transactions, providing customers with the ability to send, spend, convert, and load (and unload) funds from their account balances. These transactions are mirrored on-chain via tokenized representations of deposits and withdrawals made to customer accounts. Each on-chain transfer reflects a corresponding update in a customer’s tokenized deposit account transaction history.
The current implementation runs on a Solana-based blockchain, augmented by a rule engine which provides additional controls on top of the base blockchain and connects directly to the banking system. This setup will allow the banking partner to maintain regulatory oversight and operational control while still leveraging the transparency and immutability of the underlying blockchain. The ledger is permissioned, meaning that on USBC’s private chain, nodes are operated by USBC. On public chains, transactions occur through public nodes but USBC’s rule engine will enforce compliance and access controls. The blockchain network is governed by principles that ensure it remains secure, compliant with regulations and aligned with the interests of all stakeholders. A governance process for software updates is in place that mirrors enterprise IT and blockchain best practices.
The issuing bank will commit to clear and transparent rules for the USBC program and will maintain ultimate control and responsibility for the platform which will be subject to regulatory oversight by banking regulators. The USBC program will be integrated into the bank’s overall corporate governance structure and will be subject to oversight by the same audit and risk committees that oversee banking operations, ensuring that the highest level of the organization, the Board of Directors, is aware of and accountable for the program. In addition to governance conducted by the participating bank, the USBC network will undergo regular third-party audits and reviews, similar to those performed on traditional core banking systems, with full results made available to network participants and regulators to ensure transparency and trust.
Unlike permissionless cryptocurrency systems where anyone can create an address and transact, the USBC system contains a trust and identity management layer which requires users to build a verified digital identity before they can access or transact on the network. To open a USBC account, a user will need to go through an onboarding process that collects identity information and verifiable credentials which can be issued or validated by trusted third parties. Before any transaction is submitted to the blockchain, it must be reviewed and signed by the ledger’s rules engine, which enforces a configurable set of policies tied to user identity level, regulatory obligations and risk controls. Once funds are in a USBC tokenized deposit account, funds are immediately available, enabling same-day access to traditional financial infrastructure including wire transfers, ACH payments or spending via debit rails. There is no need to withdraw funds via an exchange or conversion to fiat currency through third party services, eliminating costly ramp fees, reducing counterparty risk and streamlining post-trade fund management.
The technology stack for USBC will be a hybrid of a traditional banking system and blockchain components. Developers and partners like Uphold will see a familiar blockchain environment to build upon that is enriched with identity and compliance layers not found on public chains. The user will experience the system through user-friendly banking apps or web interfaces that abstract away the blockchain complexity. Every transaction will be recorded as a blockchain event on a ledger with each on-chain transfer reflecting a corresponding update in the tokenized deposit account transaction history.
We have finalized our delivery strategy to bring the tokenized deposit product to market, setting the foundation for how we will scale the product offering and support real-world adoption of the USBC tokenized deposit offering. Our delivery strategy consists of multiple phases. We initiated Phase 1 of our multi-phase delivery strategy on March 10, 2026. Planning is underway for future phases of the delivery strategy which will be supported by the core technical foundations built during Phase 1. See “—Corporate History and Development” above for information regarding the scope and limitations of Phase 1 of the delivery strategy.
We expect that the aggregate costs associated with our phased delivery strategy will be substantial, with costs increasing relative to Phase 1 as we enter future phases of our strategy over the next several quarters. The timing, cost and success of future phases of our strategy is subject to uncertainty in how successful we will be in executing the strategy within anticipated parameters. While the timing and total cost of each phase is uncertain at this point in the strategy, we have identified key activities, cost drivers, and operational milestones associated with each phase.
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Markets and Distribution
Our platform is being designed to serve a broad group of customers in the emerging blockchain-based banking ecosystem, including retail users, fintech partners, and institutional counterparties, as described under “Tokenized Deposit Program” above.
In particular, we plan to target the following groups:
| · | Retail Deposit Customers: Individual customers who maintain traditional deposit accounts at our partner insured depository institutions. These users can hold and transfer tokenized U.S. dollar deposits 24/7 on blockchain rails, using our digital wallet for everyday payments and savings. See “Tokenized Deposit Program” above for a description of token functionality. |
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| · | Distribution Partners: Financial technology companies and other partners who will integrate our tokenization platform to expand their services. We aim to provide APIs and white-label solutions enabling fintechs and other partners to offer tokenized deposits to their own customers, and our platform will work with partners to enable users to custody their underlying fiat funds with our banking partner(s). This distribution strategy leverages partners’ existing customer bases while enabling regulatory compliance for the tokenized funds (e.g. KYC/AML checks via integrated digital identity). By working within the banking system, our platform will be built to comply with existing banking regulations while leveraging FDIC insurance eligibility, an approach that industry pilots have reportedly identified as a key advantage over stablecoins not subject to similar prudential frameworks. Our collaboration with Uphold and Vast Bank exemplifies this partner-integration model, demonstrating how blockchain technology may extend regulated, tokenized deposit functionality to both fintech platforms and their end users. |
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| · | Institutional Counterparties: Businesses, exchanges, and institutional investors that use our infrastructure for large-scale transactions and treasury management. These counterparties can leverage our blockchain rails to move funds efficiently across borders, using tokenized deposits for near-instant settlement. As the market for tokenized commercial bank money grows, institutions are seeking interoperable solutions that connect with global networks. Our platform will be designed for interoperability and broad accessibility, enabling tokenized deposits to be issued across multiple public blockchains, such as Ethereum, to support broad market adoption and liquidity. This global connectivity aligns with industry initiatives (like the BIS-led Project Agorá) that explore using tokenized bank deposits to streamline cross-border payments. Our distribution model will combine user-facing digital wallets, partnerships with regulated banks, and public blockchain infrastructure to reach customers worldwide. |
The market for tokenized banking services is projected to experience rapid growth, underscoring the importance of our global and regulation-aware strategy. Major financial institutions have reportedly begun piloting their own tokenized deposit and payment networks. For example, in late 2024, Citigroup announced that it had moved its deposit-token platform from pilot to live commercial use through its Citi Token Services initiative. Similarly, JPMorgan Chase has reported that its proprietary deposit-token system, part of its Onyx/Kinexys blockchain-based payments platform, has processed more than $1.5 trillion in transaction volume since launch. These systems, however, are primarily oriented toward institutional clients and backend settlement infrastructure rather than retail users. In the public crypto markets, the total supply of fiat-backed stablecoins was estimated at approximately $300 billion as of October 2025, according to publicly available industry data. This backdrop presents a significant opportunity for us to capture users transitioning to tokenized banking, and our focus on providing direct consumer access differentiates us within a landscape where institutional tokenization initiatives currently dominate, but it also reinforces that global reach and regulation-centric design are critical to success.
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We plan to tailor our tokenized deposit services platform to meet varied regulatory requirements across jurisdictions; for instance, our platform is being developed with robust tools designed to enable compliance with Bank Secrecy Act (BSA), anti-money laundering (AML), and Office of Foreign Asset Control (OFAC) requirements. Our platform is being built with digital identity integration from the ground up, embedding KYC/AML processes into the user experience to satisfy regulators and partner banks. This compliance-centric design aligns with evolving industry consensus that identity and trust frameworks must accompany blockchain-based financial services; indeed, the lack of robust on-chain identity solutions has been noted as a friction point in digital asset adoption, and addressing it is seen as key to broader institutional use. By proactively engineering a globally interoperable and regulation-ready system, we aim to broaden our market reach while seeking to navigate the complex legal landscape for digital assets. We believe that this “regulation aware” approach, coupled with our technology expertise, will help establish our distribution network as a trusted interface between traditional banking and the digital asset economy.
Bitcoin Overview
As of December 31, 2025, substantially all of our treasury reserve assets were invested in Bitcoin. Bitcoin, launched in 2009, is a decentralized digital asset that is issued by and transmitted through an open-source protocol collectively maintained by a distributed network of participants with no central authority. The Bitcoin network operates continuously, 24 hours a day, 7 days a week. The network hosts a public transaction ledger, known as the Bitcoin blockchain, on which Bitcoin holdings and all validated transactions that have ever taken place on the Bitcoin network are recorded. Balances of Bitcoin are stored in individual wallet functions, which associate network public addresses with one or more cryptographic private keys that control the transfer of Bitcoin. See “Custody of Our Bitcoin” below for additional information regarding wallet and key management.
Unlike fiat currencies, which can be printed indefinitely, the maximum possible supply of Bitcoin is capped at 21 million. New Bitcoins are created and allocated by the Bitcoin protocol through mining, a process that rewards users that validate transactions in the Bitcoin blockchain with newly issued Bitcoin and transaction fees. Because of periodic halvings, the rate of new Bitcoin creation slows over time. Halving events reduce mining rewards received, making Bitcoin scarcer over time and slowing the release of new coins into circulation. The most recent Bitcoin halving occurred in April 2024, and the next Bitcoin halving is expected to occur sometime in 2028. The final Bitcoin is projected to be mined in the year 2140.
Bitcoin can be transferred peer-to-peer over the public blockchain without intermediaries. Although no one person can unilaterally make changes to the software that runs the network, there is a core group of developers that maintains the code for the Bitcoin protocol, and they can propose changes to the source code and release periodic updates and other changes. Unlike most software that has a central entity that can push updates to users, bitcoin is a peer-to-peer network in which individual network participants, called nodes, decide whether to upgrade the software and accept the new changes. As a practical matter, a modification becomes part of the Bitcoin protocol only if the proposed changes are accepted by participants collectively having more than 50% of the processing power, known as hash rate, on the network. If a certain percentage of the nodes reject the changes, then a “fork” takes place, and participants can choose the version of the software they want to run. See “Custody of Our Bitcoin” below for a discussion of transaction‑related considerations for our treasury transfers.
The Bitcoin network may be subject to attacks, as with any computer network. Some forms of attack include unauthorized access to wallets that hold Bitcoin and direct attacks, like “denial-of-service attacks” or “51% attacks” on the Bitcoin network. A “denial-of-service attack” occurs when legitimate users are unable to access information systems, devices, or other network resources due to the actions of a malicious actor flooding the network with traffic until the network is unable to respond or crashes. The Bitcoin network has been, and can be in the future, subject to denial-of-service attacks, which can result in temporary delays in block creation and in the transfer of Bitcoin. A “51% attack” may occur when a group of miners attains more than 50% of the Bitcoin network’s mining power, thereby enabling them to control the Bitcoin network and protocol and manipulate the blockchain.
Bitcoin has become increasingly illiquid as long-term holders and institutional players lock up coins, reducing the amount available for trading and driving significant price volatility. According to a recent 2025 analysis from Fidelity Digital Assets, more than 28% of Bitcoin could be locked by long-term holders and corporate treasuries, tightening supply and potentially affecting the price of Bitcoin. Other factors that contribute to Bitcoin price volatility may include changes in market sentiment, regulatory developments, macroeconomic conditions, technological events affecting the Bitcoin network, and trading activity on global digital-asset exchanges.
The trading price of Bitcoin has experienced extreme volatility in recent periods and may continue to do so. The prevalence of digital assets, including Bitcoin, is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable. For example, steep increases in the value of certain digital assets, including Bitcoin, occurred over the course of 2017, and multiple market observers asserted that digital assets were experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2018 in digital asset trading prices, including for Bitcoin. Following the drawdowns, Bitcoin prices increased during 2019, decreased significantly again in early 2020 amidst broader declines as a result of the COVID-19 pandemic before increasing later in the year, and increased again in early 2021 to reach all-time highs. Yet, even during such overall price increase in early 2021, Bitcoin experienced substantial price volatility, including decreases of over 10% in a single day. Further, increases in 2021 were followed by steep drawdowns throughout 2022 in digital asset trading prices, including for Bitcoin. These episodes of rapid price appreciation followed by steep drawdowns have occurred not only as noted above, but multiple times throughout Bitcoin’s history, including in 2011 and 2013-2014. Bitcoin prices have continued to exhibit extreme volatility since the pandemic. Bitcoin markets may still be experiencing a bubble or may experience a bubble again in the future. Extreme volatility may continue to occur in the future, including further declines in the trading prices of Bitcoin.
As of March 20, 2026, the market capitalization of Bitcoin had decreased since mid-December 2025 by approximately 24%, to $1.33 trillion, based on a market price of approximately $70,400 and 20 million coins issued, although the effective circulating supply of Bitcoin may be even lower. Estimates suggest that 3.0 to 3.8 million Bitcoin may be permanently unrecoverable due to forgotten passwords, misplaced wallets, or dormant addresses, reducing the actual circulating supply to approximately 17 to 18 million Bitcoin, creating a structural scarcity effect which may also lead to Bitcoin price volatility.
We currently expect Bitcoin to remain the most significant component of our treasury assets for the foreseeable future. We do not maintain a fixed numerical target percentage allocation of treasury assets to Bitcoin. The substantial majority of our Bitcoin holdings were acquired as part of the Goldeneye 1995 LLC capital investment which closed on August 6, 2025. We do not currently intend to make any future purchases of Bitcoin through open market transactions for the foreseeable future. We do not intend to incur indebtedness for the purpose of acquiring additional Bitcoin to add to our treasury assets. The relative proportion of Bitcoin within our treasury assets may change over time due to operating liquidity needs, capital raising activities or changes in the market value of Bitcoin.
Bitcoin Treasury Strategy
We strategically utilize our Bitcoin holdings as a primary treasury reserve asset to generate yield to help support the current business and future growth and expansion of new business lines. We view our Bitcoin holdings as long-term strategic treasury assets rather than as short-term trading positions. We seek to enhance our Bitcoin-denominated holdings through our Bitcoin yield-generation strategy. Our Bitcoin treasury trading strategy is intended to boost our Bitcoin holdings through premiums collected on options. As part of our Bitcoin yield generation strategy trading activities, we have entered into option derivative contracts on our Bitcoin holdings. As previously disclosed, we have appointed Hyrcanian Asset Management, LLC (the “Manager”) to provide us with discretionary treasury management services with respect to our Bitcoin treasury strategy, specifically buying and selling call options on Bitcoin (the “Program”). The Manager commenced buying and selling call options on our Bitcoin holdings in the fourth fiscal quarter of 2025.
Pursuant to the Program, we enter into short-term arrangements that result in obtaining the right to receive or obligation to deliver a fixed amount of Bitcoin in the future. The Program is structured such that the net maximum notional exposure should not exceed the balance of the Bitcoin treasury holdings. The Program does not involve leveraged derivative exposure in excess of our Bitcoin holdings. While the ability to make further digital investments on our behalf is one of the premises of establishing the Manager, we have not and do not currently intend to utilize the Manager to do so.
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On December 12, 2025, we entered into an Amended and Restated Digital Asset Management Agreement (the “New Asset Management Agreement”) with the Manager, replacing the Digital Asset Management Agreement (the “Asset Management Agreement”) we previously entered into with the Manager on August 6, 2025, to govern the management of our Bitcoin treasury. The New Asset Management Agreement revised the fee structure in the Asset Management Agreement by eliminating the asset-based management fee component of the consideration for the Manager’s service and increasing the performance fee component of the consideration paid to the Manager.
Effective January 1, 2026, and subject to the terms of the New Asset Management Agreement, the Manager is solely paid a performance fee equal to 33% of the net realized gains and periodic mark-to-market changes generated by the options strategy, payable quarterly in Bitcoin, superseding the 25% performance fee and 1% asset-based management fee contained in the Asset Management Agreement. The revised performance fee in the New Asset Management Agreement incorporates a high-water mark and is subject to an annual reconciliation and clawback mechanism.
The New Asset Management Agreement enhances the operational framework supporting our Bitcoin treasury program by formally implementing reporting and risk-management obligations. Under the New Asset Management Agreement, the Manager is formally required to provide weekly and quarterly reports detailing key portfolio characteristics and commentary on market conditions. The Manager is also formally required to deliver quarterly reporting on trading performance, returns, risk posture, and forward-looking market analysis. In addition, the New Asset Management Agreement requires the Manager to maintain and periodically update a business continuity plan acceptable to us, and introduces protections addressing key-man risk associated with the principal individual responsible for overseeing our Bitcoin derivatives portfolio.
Except for the amendments described above, all other material terms of the Asset Management Agreement remain unchanged.
Custody of our Bitcoin
We intend to hold substantially all of our Bitcoin in offline cold storage with U.S.-based, institutional-grade custodians. The primary counterparty risk we are exposed to with respect to our Bitcoin is performance obligations under the various custody arrangements which we have entered into custody substantially all of our Bitcoin with Coinbase Custody Trust Company, LLC, (“Coinbase”), a U.S.-based, institutional-grade custodian with a demonstrated record of regulatory compliance and information security. Our custodial services agreement specifies that the private keys that control our Bitcoin will be held by Coinbase in offline or cold storage which is designed to mitigate risks that a system may be susceptible to when connected to the internet. Our custodial contract with Coinbase also contains liability provisions which hold Coinbase liable for its failure to safekeep our Bitcoin.
Our Bitcoin is controllable only by the possessor of both the unique public key and private keys relating to the local or online digital wallet in which the Bitcoin is held. Private keys used to access our Bitcoin balances are not widely distributed and are all held on hardware by the third party custodian at facilities within the U.S. and internationally. The cold-storage vaults used by the custodian use multilayered physical security, including biometric access controls and the vaults are geographically dispersed and access-controlled.
All of our Bitcoin holdings with Coinbase are held in segregated accounts. Coinbase is obligated by our contractual arrangement with them to keep timely and accurate bookkeeping records of our Bitcoin holdings under rigorous internal controls. As an institutional client, we have the ability to generate statements that contain account-level reporting which serves as an audit and verification mechanism to allow the existence of our crypto assets to be verified by us or our independent auditor. We do not have custody of Bitcoin held for clients. We do not self-custody any of our Bitcoin.
The portion of our Bitcoin that is not held with Coinbase is pledged to a designated counterparty in connection with our digital asset options trading activities. As of December 31, 2025, the amount of our Bitcoin that was pledged for digital asset options trading activities represents approximately 2% of our total Bitcoin treasury. The Bitcoin pledged as collateral for trading activities is held in cold storage wallets with one or more of the counterparty’s designated custodial partners. Private keys used to access the Bitcoin pledged as collateral are controlled by the designated trading counterparty.
From time to time, blockchain protocols may initiate hard forks or third parties may distribute airdrops that result in the creation or receipt of new digital assets. Our custodian does not guarantee support for any forked or airdropped assets. As a result, we do not take affirmative steps to solicit or endorse airdropped assets and we only recognize them when received and controlled and only if our custodian provides secure access.
While our custodian is required to maintain insurance as part of the custodial services they provide which is intended to cover potential losses of our Bitcoin holdings, the insurance covers only a small fraction of the value of the entirety of our Bitcoin holdings. Based on existing law and the terms and conditions of our contractual arrangements with our custodian, we believe that our property interests in the Bitcoin held by our custodian would not be subject to the claims of the custodian's creditors in the event the custodian enters bankruptcy, receivership or similar insolvency proceedings.
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Competition
We operate in a highly competitive and fast-evolving environment at the intersection of traditional finance and digital assets. Although there are barriers to enter the markets we plan to serve, our results of operations and future prospects for revenue will depend on the user and partner acceptance of the tokenized deposit platform we are currently developing. We expect that we will face competition from established financial institutions as well as new entrants leveraging blockchain technology seeking to capitalize on the same, or similar opportunities, we are pursuing.
Key competitive categories include:
| · | Traditional Banks: Large incumbent banks and financial consortia are reported to be developing their own blockchain-based payment networks and deposit tokens. Several major U.S. banks, including JPMorgan, Bank of America, Citigroup, and Wells Fargo, have announced plans to collaboratively explore a regulated digital dollar token for interbank use, positioning it as an alternative to privately issued stablecoins. These institutions benefit from trusted brands, large customer bases, deep regulatory experience, and extensive internal resources. If traditional banks, particularly the largest banks in the United States, are able to successfully launch their own tokenized deposit platforms, they could directly compete with our solutions by offering similar digital dollar services within their existing client ecosystems. Our strategy of partnering with banks (rather than competing against them outright) is meant to mitigate this risk, but well-resourced banks remain significant competitors in capturing enterprise and retail users for tokenized deposits. |
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| · | Fintech and Payments Firms: A range of fintech companies, neo-banks, and tech firms are entering the digital-asset payments space, blurring the line between banking and technology. Notably, in 2023, PayPal became one of the first major fintech companies to launch its own U.S. dollar stablecoin on Ethereum, providing its enormous user base with a token for payments and transfers. Similarly, consumer finance apps like Revolut have explored issuing stablecoins or offering crypto-enabled accounts to their millions of users. These fintech entrants often emphasize user experience and can rapidly scale new financial products through their apps. They represent direct competition for retail and small business customers who might use our tokenized banking services. We seek to differentiate our platform through bank-grade regulatory compliance and specialized focus on blockchain technology infrastructure, and strategic partnerships with Vast Bank and Uphold, which is being designed to provide a regulated distribution channel for retail tokenized deposits through Uphold’s existing customer platform. Nevertheless, we must compete with fintech firms’ agility and established networks in offering convenient digital dollar products. |
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| · | Stablecoin Issuers: Independent stablecoin providers dominate the existing market for blockchain-based U.S. dollar tokens. Companies like Tether and Circle have billions of dollars of stablecoins in circulation and well-developed liquidity pools across crypto markets. These stablecoins are widely used in trading, remittances, and DeFi applications, making them a de facto standard for digital dollars. Their incumbency creates a challenging competitive landscape for our tokenized deposit program as users and developers are already familiar with existing stablecoins that offer broader acceptance. In addition, the passage of the GENIUS Act on July 3, 2025, likely will introduce additional stablecoin issuers that may expand the competitive landscape for stablecoins. However, we aim to compete by offering tokenized deposits as a more transparently regulated alternative to stablecoins. |
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| · | Decentralized Finance (DeFi) Protocols: A unique source of competition comes from open source blockchain protocols that replicate financial services without centralized intermediaries. DeFi platforms enable activities like dollar-pegged stablecoin issuance, lending, payments, and trading through self-executing smart contracts. For example, decentralized stablecoins and lending protocols allow users to earn yield or borrow funds outside the traditional banking system. These services appeal to a segment of crypto-savvy users and developers who value programmability and permissionless access. While DeFi offerings lack the regulatory assurances of a platform like ours, they innovate rapidly and operate globally, which can draw away both retail and institutional participants (especially those seeking higher returns or censorship-resistant services). We see our role as bridging the gap between traditional finance and decentralized models by offering regulated on-ramps to digital assets. At the same time, we recognize that we will compete with DeFi alternatives whenever potential customers evaluate building on a public protocol instead of leveraging an infrastructure like ours. Our emphasis on compliance and asset quality is a conscious differentiator from many DeFi schemes. Nonetheless, the competitive pressure from DeFi is significant, as evidenced by the billions of dollars flowing into on-chain stablecoins and lending markets in recent years. |
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In this increasingly crowded digital asset landscape, our strategy seeks to differentiate our tokenized deposit platform initiative on factors such as compliance integration, adaptability, and risk management. Our platform will be designed to feature built-in digital identity and compliance frameworks that we do not believe many other competitors (especially in the crypto sector) offer. Each wallet or account will be designed to be linked to verified identity credentials, which will enable seamless KYC/AML processes and transaction traceability. This focus on identity is intended to address what is widely known to be an industry pain point: the absence of robust on-chain identity solutions and privacy measures has hindered adoption and created operational friction in tokenized finance. By seeking to solve for identity and compliance up front, we aim to attract institutions and end users who require a regulated environment without sacrificing the efficiency of blockchain.
We believe that our deep expertise in digital assets and partnership with a forward-thinking financial institution like Vast Bank, that exhibits regulatory agility will allow us to respond quickly to changing laws and guidance. For example, if new stablecoin reserve standards or licensing requirements emerge, Vast Bank may be able to update its programs and policies more rapidly than many large banks or slower moving peers. This agility is increasingly important as jurisdictions worldwide refine their rules for digital assets. Our management team is continuously monitoring these developments to ensure our proposed product will be in compliance and potentially even turn compliance into a selling point, offering features like real-time auditability and automated reporting.
Where a related party such as Vast Bank is involved, potential strategic benefits of a business partnership may include reduced transition costs, improved coordination and greater alignment of long-term strategic objectives. Vast Bank is majority-owned by Vast Holdings, Inc., in which our Chairman and Chief Executive Officer, Greg Kidd, holds a controlling interest and our Vice Chair, Linda Jenkinson, serves as Chair and CEO. We believe that our relationship with Vast Bank provides us with the ability to leverage strategic benefits from the business partnership with Uphold such as improved coordination, deeper operational knowledge, and faster execution of the business strategy while ensuring compliance with our related-party governance policies.
We believe that, over the long term, our integrated model combining bank-like trust, fintech agility, and a Bitcoin-enhanced balance sheet will position us distinctively against both incumbents and startups. However, we must execute diligently on this vision amid intense competition. If we are unable to successfully compete in our industry, our business, results of operations, financial condition and prospects could suffer materially. Ongoing innovation, strict compliance, and customer confidence will be critical for us to capture, maintain and have the potential to grow our share in the tokenized deposit market.
Supervision and Regulation
Regulation of Digital Asset and Financial Technology Infrastructure Activities
We operate within a highly regulated environment that spans federal securities laws, banking and financial services regulations, digital asset and token-related frameworks, and multiple layers of consumer protection and data privacy obligations. These regulatory regimes, especially those governing digital assets, payments, and financial technology infrastructure, are evolving rapidly and are likely to subject us to ongoing interpretation which may lead to potential enforcement activity. We monitor regulatory changes closely and are making significant investments in our legal, compliance, product and engineering teams to plan and prepare to comply with current and future regulations.
The following summarizes key areas of supervision which may be applicable to us and our operations. It is not intended to be a comprehensive analysis of all applicable laws, and is qualified by reference to the full text of statutes and regulations referenced below, which may be modified or amended from time to time. This section contains forward-looking statements regarding anticipated regulatory changes and their possible effects; actual outcomes may differ.
Federal Securities Laws and SEC Oversight
As a public company listed on the NYSE American, we are subject to U.S. federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934, and oversight by the SEC. We must file annual, quarterly, and current reports and we are required to maintain effective disclosure controls, financial reporting systems, and internal governance consistent with SEC and NYSE American requirements.
Digital Asset Regulatory Environment
General Regulatory Scope. Our strategy to develop a tokenized deposit program and hold Bitcoin as a treasury reserve asset places us at the intersection of multiple regulatory regimes. U.S. federal and state regulators, including the SEC, CFTC, FinCEN, OFAC, CFPB, banking regulators, and state licensing authorities, continue to increase their scrutiny of digital assets, emphasizing issues such as illicit finance, consumer protection, systemic risk, and prudential standards.
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AML and Sanctions Compliance. Although we are not registered as a money services business or otherwise engaged in regulated money transmission activities that would subject us to direct supervision by FinCEN (or an applicable state regulator), we are building policies for KYC, transaction monitoring, suspicious activity monitoring and reporting, and internal compliance oversight and training as oftentimes may be required by our bank partners and as otherwise expected by such partners. For example, FinCEN has recently enforced BSA compliance vigorously in the digital asset sector, with fines and penalties for firms operating without proper controls or licenses.
In parallel, we are subject to OFAC-administered economic sanctions that apply to activities involving tokenized assets, stablecoins, cryptocurrencies and smart contracts in the same way that traditional financial assets are treated for purposes of sanction compliance. Blockchain tracing tools help us screen addresses and counterparties against the SDN list. If any digital asset we process is later associated with a sanctioned individual or wallet, we may be required to freeze or block those assets, report the incident, and manage potential valuation and reputational fallout. This is particularly relevant for Bitcoin due to its pseudonymous and fungible characteristics.
Non-Bank Financial Model and Fintech Partnerships. We are not a chartered bank and we do not issue deposit accounts. We plan to deliver a platform to enable tokenized deposits and related services via partnerships with regulated banks and digital wallet operators. Our bank partners hold customer deposits and, in some cases, custody digital assets or issue payment instruments. These relationships will be governed by robust third-party risk management requirements, and we will adhere to our bank partners’ compliance standards where applicable, including those related to BSA/AML, consumer disclosures, and cybersecurity. We have entered into a commercial partnership with Vast Bank and Uphold to facilitate the future issuance and distribution of tokenized retail deposits. Under this partnership, Vast Bank will serve as the initial insured depository institution responsible for issuing the deposits, while Uphold will provide the retail user interface and wallet infrastructure under applicable regulatory supervision. These arrangements will be governed by contractual controls addressing compliance with BSA/AML, cybersecurity, and consumer-protection obligations as applicable.
Bank regulators, including the OCC, FDIC, and Federal Reserve, have recently increased scrutiny of fintech-bank partnerships, including requiring pre-approval for new product features and closer monitoring of operational risks. While no requirement to obtain regulatory pre-approval to tokenize bank deposit accounts has specifically been identified, we are coordinating closely with Vast Bank and Uphold to meet these expectations and avoid regulatory exposure that could delay or jeopardize the further development and future retail launch of the USBC tokenized deposit program.
Payments, Consumer Protection, and Data Privacy
Money Transmission and Electronic Payments. Because our tokenized deposit product is not yet live, we are not currently conducting any activity that may constitute “money transmission” under applicable laws. We are designing our tokenized deposit platform to ensure that we will never take custody, control, or possession of customer funds or digital assets. Customer funds remain on deposit with Vast Bank. Retail distribution of tokenized deposits will be facilitated through Uphold’s regulated platform, which provides wallet services to end users. As a result, we do not expect to be directly subject to regulation as a money transmitter or money services business (“MSB”) and we will instead rely on Vast Bank or our other partners’ existing licensure and regulatory frameworks to provide any regulated financial services. Accordingly, we are not registered with FinCEN as an MSB and we do not believe that we will be required to obtain state money-transmitter licenses. Nevertheless, we understand that our platform and our related services are subject to scrutiny not only by our bank partners but also their regulators. As a result, we are planning to implement and will maintain robust policies and procedures related to BSA/AML/OFAC, cybersecurity, and other applicable regulations.
Consumer Protection and UDAAP Compliance. The CFPB has authority over unfair, deceptive, or abusive acts and practices (“UDAAP”) involving consumer financial products. We are designing our compliance program to include regular reviews of our product marketing practices, fee structures, and user interfaces to ensure that they align with federal and state consumer protection laws. If we expand into additional services, such as lending or credit-related products, further rules (e.g., TILA, ECOA) may apply.
Privacy and Data Security. We are in pre-launch development and we do not currently collect or process sensitive personal information in a production environment. We are developing a comprehensive privacy and data-security program, including encryption, access controls, data minimization, incident response procedures and regulatory compliance measures as we are subject to federal laws like the Gramm-Leach-Bliley Act, which governs privacy notices, data usage, and security safeguards. We are also developing processes to monitor and comply with state-level privacy laws such as the California Consumer Privacy Act, and we are taking steps to ensure we remain aware of new rules related to emerging technology such as biometric data, AI in financial services, and cross-border data transfers. Subsequent to the future retail launch of the tokenized deposit offering, our security framework will be reviewed regularly and is being designed to include technical, administrative, and physical safeguards in line with industry standards.
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Regulatory Developments and Outlook
SEC and Securities Law Enforcement. The SEC continues to actively assert jurisdiction over a wide range of digital assets. While the SEC has indicated that Bitcoin is generally viewed as a commodity, other tokens may be deemed securities under the federal securities laws, depending on their structure and use. Our tokenized deposit product is not a newly-issued digital asset backed by reserves, nor is it a deposit token. We have designed it with a view to avoid classification as a security under current SEC guidance. However, regulatory interpretation remains uncertain, and further rulemaking or enforcement action could require us to register certain products or restructure features to ensure compliance.
AML and Sanctions Scrutiny. U.S. regulators, including FinCEN, OFAC, and the Department of Justice, have intensified scrutiny on AML and sanctions controls in the crypto sector. High-profile enforcement actions in 2023 and 2024 illustrate the risk of compliance lapses, including multimillion-dollar fines and criminal penalties. We are designing and testing transaction monitoring, sanctions screening, and blockchain analytics tools to meet regulatory expectations. Because regulatory expectations in the AML and sanctions landscape continue to evolve, we continuously update our policies to incorporate emerging guidance.
Bank-Fintech Oversight. Banking regulators have issued updated guidance on third-party risk management, particularly in the context of fintech partnerships. As a program manager and infrastructure provider working with chartered institutions, we must maintain controls commensurate with those of our regulated partners. Increased regulatory oversight could raise compliance costs and slow product rollouts, but we believe robust governance also serves as a competitive advantage.
Legislative and International Developments. The U.S. Congress continues to debate legislation that could further reshape the regulatory framework for stablecoins, tokenized deposits, and crypto assets. In particular, Congress passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (the “GENIUS” Act) in July 2025, which establishes a federal framework for the issuance and oversight of certain payment stablecoins. The interpretation, implementation, and any related rulemaking under the GENIUS Act remain evolving and could affect market structure, bank-fintech partnership expectations, and regulatory treatment of tokenized financial products, including tokenized deposits. In addition, major jurisdictions, including the European Union, Japan, Hong Kong, and Singapore, have adopted laws or regulatory frameworks addressing stablecoins and other digital asset activities. We monitor these developments and may need to adjust our current or future business operations to comply with applicable foreign laws and regulations.
Regulation of the Science Division
Our Science Division, which includes the legacy Know Labs business, remains focused on advancing our proprietary sensor technology. We have significantly reduced the scale of our research and development activities and are no longer conducting human clinical trials. Current efforts are limited to laboratory-based feasibility testing, intellectual property protection, and maintaining regulatory readiness for potential future commercialization. We are also focused on building strong external validation of our technology, primarily through technical studies.
Our operations, and those of any future development and research partners, may, if we decide to resume pursuit of medical applications of our sensor technology, be subject to regulation by the U.S. Food and Drug Administration (“FDA”) and other federal and state agencies under the Federal Food, Drug, and Cosmetic Act and related regulations. These laws govern, among other things, the design, clinical testing, manufacture, labeling, promotion, and sale of medical devices. Any medical-diagnostic products developed by the Science Division would be regulated by the FDA as medical devices, and must satisfy applicable pre-market review, quality-system, and post-market reporting requirements.
The FDA classifies medical devices into three categories—Class I, II, or III—based on the level of regulatory control necessary to assure safety and effectiveness. Class I devices are subject to general controls; Class II devices, such as most diagnostic instruments, generally require pre-market clearance through the 510(k) process or, where no predicate device exists, a De Novo classification request; and Class III devices require pre-market approval. The specific classification and pre-market pathway applicable to our Bio-RFID™-based products will depend on their final intended use, technological characteristics, and the availability of a legally marketed predicate device.
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If we resume active product development or clinical testing in the future, we expect that any future regulatory submission for the sensor product would likely proceed through the FDA’s De Novo or 510(k) process, supported by clinical data demonstrating substantial equivalence or reasonable assurance of safety and effectiveness. Should the FDA determine that the product represents a novel technology, the device could be subject to additional review or more extensive testing before marketing authorization is granted. We may also seek designation under the FDA’s Breakthrough Devices Program if our technology continues to demonstrate potential for materially improved diagnostic accuracy or patient outcomes.
Clinical testing of our investigational devices, if required, must comply with the FDA’s investigational device exemption regulations and be conducted under the oversight of Institutional Review Boards. These requirements govern study design, informed consent, monitoring, and reporting obligations. Even after a device receives marketing authorization, the manufacturer is subject to post-market surveillance, quality-system regulation compliance, medical-device reporting, and FDA inspection authority. Non-compliance with any of these obligations could result in enforcement actions, including fines, injunctions, product recalls, or civil and criminal penalties.
Because the Science Division’s current activities are primarily research-oriented, we have no current exposure to the full range of FDA and Federal Trade Commission marketing and labeling regulations at this time. Nevertheless, we continue to monitor evolving regulatory requirements to ensure that our intellectual property and development programs, advertising materials, and data-handling practices remain compliant. Any significant change in the regulatory framework applicable to medical-diagnostic technologies, or any adverse determination by the FDA, could materially affect our ability to advance or commercialize the Science Division’s products in the future.
Research and Development
Our research and development initiatives are primarily directed toward advancing the architecture, functionality, and scalability of our tokenized deposit platform and related digital financial infrastructure, including the pre-launch development of identity-integrated wallets, compliance-enabled smart contracts, blockchain interoperability features, reserve-management tooling, and user experience enhancements. Following the October 2025 announcement of our strategic partnership with Vast Bank and Uphold, our R&D activities will also include technical integration, compliance validation, and user-interface testing to support the further development of the USBC tokenized deposit offering. We are also focused on building modular program management systems that could support licensing or white- label deployment of our financial-technology stack.
While our core research and development efforts are now heavily focused on the financial technology and digital asset space, we continue to support limited development related to our legacy non-invasive sensor technology, primarily to preserve prior investment and explore potential integrations with our identity or health-related applications which may support future monetization or technology licensing.
Our research and development expenditures vary based on project cycles, regulatory requirements, technical hiring, and third-party partnerships. Integration testing and regulatory-readiness efforts associated with the Vast Bank and Uphold collaboration are expected to represent a meaningful portion of near-term R&D spending. We expect investment in platform security, cryptographic protocols, regulatory adaptability, and cross-chain deployment tools to remain a significant focus.
Human Capital Resources
As of December 31, 2025, we employed 31 individuals, including 16 full-time employees who support critical areas including platform development, financial operations, digital asset custody, product management, regulatory compliance, and strategic partnerships. Our employees work remotely from locations across the United States and abroad. Substantially all executive and team meetings are held virtually, with occasional in-person sessions for strategic planning or technical integration.
We prioritize recruiting and retaining professionals with experience in blockchain architecture, smart contract engineering, cybersecurity, AML/KYC compliance, and tokenomics. Our team structure is designed to remain agile, allowing us to scale selectively in line with evolving regulatory and business priorities. In execution of our hiring strategy, we maintain an equity incentive plan which we believe serves as a key incentive for our employees, aligning their long-term interests with our objectives as an organization.
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Key human-capital objectives include maintaining a culture of accountability, innovation, and regulatory compliance. To support these objectives, we emphasize:
| · | Recruitment and retention of professionals with experience in digital-asset infrastructure, risk management, and software engineering; |
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| · | Compliance and security training, including periodic instruction on anti-money-laundering, data-privacy, and cybersecurity obligations; and |
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| · | Equity-based compensation as a core retention and alignment tool, which links employee interests with long-term shareholder value. |
We continuously evaluate our human-capital programs and may adjust our practices as our business evolves.
Available Information
You can find reports on our company including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports on our Investor Relations website https://investors.usbc.xyz under the “Filings” heading. These reports are available free of charge and as soon as reasonably practicable after they have been filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”). We are providing the address of our website solely for the information of investors and the information on our website is not a part of or incorporated into this or any report that we file with the SEC.
ITEM 1A. RISK FACTORS.
An investment in our common stock involves a high degree of risk. You should carefully read and consider all of the risks described below, together with all of the other information contained or referred to in this report, before making an investment decision with respect to our common stock. If any of the following events occur, our financial condition, business and results of operations (including cash flows) may be materially adversely affected. In that event, the market price of our common stock could decline, and you could lose all or part of your investment.
Risk Related to Business, Finance and Operations
We have a history of losses, we may not be able to attain profitability in the future, and there is no assurance that our revenue and business model will be successful.
We have a history of net losses. We expect our costs will increase over time, and that we may continue to generate losses in the future as we invest significant additional funds toward growing our business and operating as a public company. Such losses may fluctuate significantly from quarter to quarter. We expect to expend substantial financial and other resources on pre-launch product development, including investments in our proposed product, engineering, data, and design teams and platform; our technology infrastructure, including systems architecture, management tools, scalability, availability, performance, security, and disaster recovery measures; our sales, marketing, and partner management organizations; acquisitions or strategic investments; and general administration, including legal and accounting expenses. These efforts may be more costly than we expect and may not result in the generation of any revenue. A failure to generate enough revenue to sufficiently keep pace with our investments and other expenses could prevent us from achieving profitability or positive cash flows. If we are unable to successfully address these risks and challenges as we encounter them, our business, financial condition, and results of operations could be adversely affected.
If we cannot keep pace with rapid changes in the digital asset industry, including technological developments and evolving regulatory frameworks, the potential use of our proposed products and services, and consequently our ability to generate revenue, could decline, which could adversely affect our business, financial condition, and results of operations.
The digital asset industry has been characterized by many rapid, significant, and disruptive products and services in recent years. These include decentralized applications, DeFi, yield farming, non-fungible tokens, play-to-earn games, lending, staking, token wrapping, governance tokens, innovative programs to attract customers such as transaction fee mining programs, initiatives to attract traders such as trading competitions, airdrops and giveaways, staking reward programs, “layer 2” blockchain networks, and novel digital asset fundraising and distribution schemes, such as “initial exchange offerings.” We expect new digital asset products, services, and technologies to continue to emerge and evolve, which may be superior to, or render obsolete, the products and services that we are currently developing. For example, disruptive technologies such as generative artificial intelligence (“AI”) may fundamentally alter the use of our proposed products or services in unpredictable ways. We cannot predict the effects of new services and technologies on our business. Our ability to generate net revenue will depend heavily on our ability to innovate and create successful new products and services, both independently and in conjunction with third-party developers. In particular, developing and incorporating these new products and services into our business may require substantial expenditures, take considerable time, and ultimately may not be successful. Any new products or services could fail to attract customers, generate revenue, or perform or integrate well with third-party applications and platforms. In addition, our ability to adapt and compete with new products and services may be inhibited by regulatory requirements and general uncertainty in the law and regulatory expectations, constraints by our banking partners and payment processors, third-party intellectual property rights, or other factors. Moreover, we must continue to enhance our technical infrastructure and other technology offerings to remain competitive and ensure our platform has the required functionality, performance, capacity, security, and speed to attract and retain customers. As a result, we expect to incur significant costs and expenses to continue developing the technical infrastructure required to meet the evolving needs of the industry. Our success will depend on our ability to develop and incorporate new offerings and adapt to technological changes and evolving industry practices. If we are unable to do so in a timely or cost-effective manner, our business and our ability to successfully compete to attract customers may be adversely affected.
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Since late 2025, policymakers in the United States and other jurisdictions have continued to consider legislation and regulatory proposals addressing digital assets, including frameworks relating to tokenized deposits, payment stablecoins, and other blockchain-based representations of financial assets. These proposals could impose new requirements relating to licensing, capital or reserve requirements, operational controls, consumer protections, and regulatory oversight of blockchain-based financial infrastructure. Because our business strategy includes the development of a tokenized deposit platform and related digital financial infrastructure, changes in law, regulation, or regulatory interpretation could affect our ability to launch or operate such services, require modifications to our platform architecture or compliance framework, or impose additional obligations on us or our partners. Regulatory developments could also impose additional supervisory expectations on bank-fintech partnerships or limit the types of institutions permitted to issue tokenized deposits. Any such developments could adversely affect our business, financial condition, and results of operations.
We may need additional capital, and we cannot be certain that additional financing will be available on favorable terms, or at all.
Historically, we have funded our operations and capital expenditures primarily through debt and equity issuance. While we currently anticipate that our existing liquidity sources, including our Bitcoin holdings and available borrowing capacity under our Bitcoin-collateralized loan facility, will be sufficient to meet our cash needs for at least the next 12 months, our anticipated cash needs may exceed our available resources as we execute our business strategy. As a result, we may require additional financing or other sources of liquidity to fund operations and support the continued development of our business. We may evaluate financing opportunities from time to time, including through sales of Bitcoin, Bitcoin-collateralized financing arrangements, related-party or other investor financing, and other debt or equity financings, and our ability to obtain financing will depend, among other things, on our pre-launch development efforts, outcome of the pilot program, business plans, operating performance, and the condition of the capital markets at the time we seek financing. We cannot assure you that additional financing or other liquidity sources will be available to us on favorable terms when required, or at all. In particular, if we seek to obtain financing through Bitcoin-collateralized financing arrangements, we may be required to pledge a substantial portion of our digital asset holdings and satisfy margin maintenance and other collateral requirements. If the value of the pledged collateral declines, we could be required to post additional collateral, repay indebtedness earlier than anticipated or permit the liquidation of pledged Bitcoin, which could adversely affect our liquidity, financial condition and results of operations. If we raise additional funds through the issuance of equity or equity-linked securities, those securities may have rights, preferences, or privileges senior to the rights of our common stock, and our stockholders may experience dilution. If we raise additional funds by incurring indebtedness, then we may be subject to increased fixed payment obligations and could be subject to restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely affect our ability to conduct our business. Any future indebtedness we may incur may result in terms that could be unfavorable to our investors.
In March 2026, we entered into a Master Loan Agreement with Payward Interactive, Inc., pursuant to which we may borrow from time to time, borrow fiat currency or digital assets on the terms set forth therein in an aggregate principal amount of up to $25.0 million for up to a twelve-month term, subject to execution of one or more individual loan term sheets. The MLA contains customary conditions, initial collateral requirements, collateral maintenance and liquidation mechanics, and early return and recall rights. The Bitcoin collateralizing the borrowing facility is held for the benefit of the Lender by an affiliate of the Lender, Payward Financial, Inc. (the "Custodian") and subject to an account control agreement by and among the Lender, the Company and the Custodian. As of March 20, 2026, we entered into a term sheet for a fixed-term loan of $5.0 million bearing interest at 8.5% per annum under the MLA maturing on March 18, 2027. Borrowings under the MLA are solely secured by Bitcoin collateral held in and subject to collateral maintenance requirements based on specified margin ratios. Due to the inherent volatility of Bitcoin and other digital assets, declines in the value of our pledged collateral could result in margin calls requiring us to repay borrowings earlier than anticipated or post additional collateral within short timeframes, each of which may strain our liquidity, or result in the liquidation of pledged assets at unfavorable prices. Any such events could adversely impact our financial condition, results of operations and ability to execute our business strategy.
Failure of vendors to perform their contractual agreements and our failure to effectively oversee vendor operations could adversely affect our business, financial condition, and results of operations.
We contract with vendors and service providers who perform services for us or to whom select functions are delegated and integrated into our processes. In some cases, third-party vendors are one of a limited number of sources. These service providers play an important role in supporting the technology, automation, and operational capabilities of our platform. If certain critical vendors were unable to perform, we could experience interruptions or delays in the delivery of our products and services while we identify and integrate suitable alternatives. We also rely on third-party providers for key technology functions, including system availability, cybersecurity, data processing, and infrastructure support. These providers supply resources that help maintain the reliability, scalability, and security of our systems and data. We utilize a variety of other vendors to detect and defend against malicious activity and threats. Any disruption, performance degradation, or failure by our vendors to meet their obligations could adversely affect the continuity of our operations.
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Our arrangements with vendors and service providers have in the past and may in the future disrupt or degrade our operations if they fail to satisfy their obligations to us or if they were to stop providing services to us either on a temporary or permanent basis. We may be unable to replace these vendors and service providers in a timely and efficient manner, on similar terms, or at all. In addition, our vendors and service providers may fail to operate in compliance with applicable laws, regulations, and rules. Despite our efforts to monitor our vendors and service providers with which we transact business, there is no guarantee that they will comply with their contractual obligations as agreed to or applicable laws and regulations. Failure to maintain an effective vendor oversight program and monitor our vendors’ compliance with applicable laws could result in fines, penalties or other liability for errors and omissions by these vendors and service providers, which could adversely affect our business, financial condition, and results of operations.
The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain qualified board members.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, the listing requirements of the NYSE American and other applicable securities rules and regulations. Compliance with these rules and regulations may increase our legal and financial compliance costs, make some activities more difficult, time consuming, or costly, and increase the demands on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations. In addition, we expect that our management and personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. We cannot predict or estimate the amount of additional costs we may incur as a result of being a public company or the timing of such costs.
Our executive officers have limited experience in dealing with the increasingly complex laws pertaining to public companies, which may increase the amount of their time devoted to these activities and result in less time being devoted to the management and growth of our business. We continue to evaluate whether we have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies. We may expand our employee base and hire additional employees to support our operations as a public company, which may in the future cause our operating costs to increase. If we fail to establish and maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
Being a public company also makes it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage, incur substantially higher costs to obtain coverage or only obtain coverage with a significant deductible. These factors could also make it more difficult for us to attract and retain qualified executive officers and qualified members of our board of directors in the future, particularly to serve on our audit committee and compensation committee.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations, and standards are subject to varying interpretations in many cases due to the lack of specificity and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. We invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If, notwithstanding our efforts, we fail to comply with new laws, regulations and standards or our efforts differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business, financial condition, and results of operations could be adversely affected.
We rely on an affiliated entity to provide key operational services, which exposes us to risks related to potential conflicts of interest, cost structure, operational dependency, and business continuity.
On March 18, 2026, we entered into an Affiliate Services Agreement with Vast Holdings, Inc., an affiliated entity, pursuant to which its wholly-owned OCC- chartered bank subsidiary, Vast Bank, provides strategic, operational, and administrative services supporting the further development of our tokenized deposit platform and related business lines (the “Services”). Under this arrangement, we reimburse Vast for the cost of the Services based on the actual costs incurred by Vast Bank, subject to a total reimbursement cap during the term of the agreement. Our reliance on an affiliated service provider exposes us to a number of risks including potential conflicts of interest, limitations on our operational independence, and reduced flexibility in managing our cost structure. In addition, because a significant portion of our operational infrastructure is supported by Vast, any disruption in services, disagreement regarding service levels or costs, or inability to scale services in line with our growth could adversely affect our business operations. Any of these factors could adversely affect our business, financial condition, results of operations, and ability to execute our strategic objectives.
Geopolitical and political instability, including armed conflicts, regional tensions, terrorism, sanctions, adverse economic conditions, and related disruptions in U.S. and global markets, could adversely affect our business and financial condition.
Political developments in the U.S. and other countries can cause uncertainty in the economic environment and market conditions in which we operate. Certain governmental policy initiatives, as well as heightened geopolitical tensions, could significantly affect U.S. and global economic growth and cause higher volatility in the financial markets, including: monetary policies and actions taken by the federal reserve and other central banks or governmental authorities; fiscal policies, including with respect to taxation and spending; foreign policies; economic or financial sanctions; the implementation of tariffs and other protectionist trade policies; and changes to immigration policies.
These types of political developments, and uncertainty about the possible outcomes of these developments, could: erode investor or consumer confidence in the U.S. economy and financial markets, which could potentially undermine the status of the U.S. dollar as a safe haven currency and cause stock price volatility; provoke retaliatory countermeasures by other countries and otherwise heighten tensions in regulatory, enforcement or diplomatic relations; increase the risk of targeted cyber attacks; increase concerns about whether the U.S. government will be funded, and its outstanding debt serviced, at any particular time; result in periodic shutdowns of the U.S. government; influence monetary policy actions of the federal reserve to moderate the economic impact of political developments; cause us to refrain from engaging in business opportunities that it might otherwise pursue; or cause us to have fewer business opportunities if governments or partners are unwilling to engage with us due to geopolitical tensions or adverse perceptions of U.S. businesses.
Ongoing geopolitical instability, including conflicts in the Middle East and related regional tensions, may contribute to volatility in global financial markets, including digital asset markets such as Bitcoin, which constitutes a significant portion of our treasury holdings. These events may also result in increased regulatory scrutiny, economic uncertainty, and disruptions to global capital markets, liquidity conditions, payment systems, or investor sentiment. Our ability to execute our business strategy, establish partnerships with financial institutions, and access capital may be adversely affected by changes in market conditions and investor sentiment resulting from geopolitical developments. Any such developments could adversely affect the value of our Bitcoin holdings and our ability to execute our broader treasury and growth strategies or cause us to have fewer business opportunities or partnerships.
The potential outcomes of these developments could be significant, which could adversely affect our stock price or our business, results of operations, financial condition or prospects.
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Risks Related to Ownership of our Common Stock
We are a “controlled company” within the meaning of the NYSE American rules and, as a result, we qualify for exemptions from certain corporate governance requirements. Our stockholders do not have the same protections afforded to stockholders of companies that are subject to such requirements.
Greg Kidd, our Chief Executive Officer and Chairman of the Board, beneficially owns a majority of the voting power of our outstanding common stock through his solely-owned entity, Goldeneye 1995 LLC (“Goldeneye”). As a result, we are a “controlled company” within the meaning of the NYSE American LLC Company Guide. Under the NYSE American rules, a company of which more than 50% of the voting power in the election of directors is held by an individual, group, or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements. For example, controlled companies:
| · | are not required to have a board of directors composed of a majority of “independent directors,” as defined under the NYSE American rules; |
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| · | are not required to have a compensation committee that is composed entirely of independent directors; and |
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| · | are not required to have director nominations be made, or recommended to the full board of directors, by independent directors or by a nominations committee that is composed entirely of independent directors. |
Accordingly, because we qualify as a controlled company, we may elect to rely on these exemptions and not implement certain governance practices (such as a fully independent board or committees). To the extent we choose to do so, our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the NYSE American’s corporate governance requirements. In addition, because our controlling stockholder also serves as our Chief Executive Officer and Chairman, the lack of independent oversight may increase the potential for related-party transactions or conflicts of interest that could be adverse to minority stockholders.
Our largest stockholder will continue to have a substantial influence over us for the foreseeable future, including the outcome of matters requiring stockholder approval. This concentration of control may prevent you and other stockholders from influencing significant corporate decisions, and it may result in conflicts of interest that could cause our stock price to decline.
As of February 28, 2026, Goldeneye, our largest stockholder, beneficially owned approximately 71.5% of the issued and outstanding shares of our common stock, on a fully diluted basis (and a higher percentage on a non-diluted basis), and exercised a corresponding level of voting control. As a result, Mr. Kidd, through Goldeneye, has the ability to control or heavily influence the election of our directors and the outcome of corporate actions requiring stockholder approval, such as: (i) a merger or a sale of the Company, (ii) a sale of all or substantially all of our assets, and (iii) amendments to our articles of incorporation and bylaws. This concentration of voting power could discourage or prevent a change in control that minority stockholders might consider favorable and could result in the approval of transactions that might not reflect arm’s-length terms. The significant concentration of ownership may also reduce the liquidity and trading volume of our common stock and could result in a lower trading price. In addition, the significant concentration of stock ownership may adversely affect the market value of our common stock due to investors’ perception that conflicts of interest may exist or arise, or due to the reduced public float and liquidity of our shares. This risk overlaps with the risks discussed under “Risk Factors—Our Bitcoin treasury strategy exposes us to conflicts of interest and governance risks” because control by a single stockholder may also influence treasury-management decisions.
We underwent a fundamental change in capitalization during 2025, and the issuance, repricing, or sale of substantial amounts of our common stock could result in significant dilution and adversely affect the market price of our shares.
In 2025, in connection with our recapitalization and the adoption of our Amended and Restated 2021 Equity Incentive Plan, our outstanding shares of common stock increased materially from approximately 3 million as of December 31, 2024 to approximately 388 million as of December 31, 2025. The amended plan authorizes the issuance of up to 115.3 million shares of common stock, with an evergreen provision that may automatically add up to 15 million shares each year through 2030.
In August and October 2025, we implemented significant equity-compensation actions, including the grant of new stock option awards and, in October, the repricing of the options granted in August, materially increasing the number of shares that may become eligible for future issuance, increasing our stock-based compensation expense.
In March 2026, our Board of Directors approved the repricing of all outstanding stock options and the grant of new equity awards to new hire employees and consultants. The repricing will be accounted for as a modification under applicable accounting guidance and may result in incremental stock-based compensation expense. In addition, the issuance of new equity awards will increase our stock-based compensation expense in future periods.
We use equity-based compensation as a key component of our incentive and retention strategy and we expect to continue granting stock options and other equity awards in the future. The issuance, vesting, or exercise of these awards, as well as any future equity financings, will increase the number of shares outstanding and may further dilute existing stockholders, reduce our earnings per share, and adversely affect the market price of our common stock.
In addition, a significant portion of our outstanding common stock is held by our principal stockholder, members of management, and other affiliates, resulting in a relatively limited public float. A limited float may contribute to price volatility and reduced liquidity in our stock. Sales of substantial amounts of our common stock by us in future offerings, upon the exercise of equity awards, or by existing stockholders (including affiliates pursuant to Rule 144 or an effective registration statement), or even the perception that such sales could occur, could adversely affect the market price of our common stock.
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Future issuances of equity or debt securities could further dilute stockholders or adversely affect the value of our common stock.
Under our articles of incorporation, we are authorized to issue 750 million shares of common stock and 5 million shares of preferred stock. The issuance of additional equity or convertible securities could result in further dilution and may adversely affect the trading price of our common stock. Similarly, any issuance of debt securities could impose restrictive covenants or liens that limit our operational flexibility or subordinate equity holders’ claims in a liquidation.
We may also offer debt securities that have rights senior to those of our common stock or contain restrictive covenants, including liens on our assets. Because our decision to issue securities or incur debt in our future offerings will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings and debt financing. Further, market conditions could require us to accept less favorable terms for the issuance of our securities in the future. Thus, you will bear the risk of our future offerings, reducing the value of your shares and diluting your interest in us.
We are currently operating under an accepted plan with the NYSE American to regain compliance with its continued listing standards, but there can be no assurance that we ultimately will do so, and additional or revised listing standards could increase the risk of suspension or delisting.
Our common stock is listed on the NYSE American, and the continued listing of our common stock on the NYSE American is contingent upon our ongoing compliance with a number of listing requirements. These include minimum share price, minimum number of public stockholders and minimum stockholders’ equity requirements, among others.
On September 27, 2024, we received a notice from the NYSE American stating that we were not in compliance with certain listing standards set forth in Sections 1003(a)(ii) and 1003(a)(iii) of the NYSE American LLC Company Guide. On December 10, 2024, the NYSE American accepted our plan to regain compliance and granted a plan period through March 27, 2026. As required by the NYSE American, we are obligated to provide quarterly updates concurrent with our interim and annual SEC filings and to demonstrate progress toward the initiatives outlined in our accepted plan. We will submit our required compliance update for the Transition Period ended December 31, 2025 to the NYSE American. Based on management’s current assessment, we expect that this submission will support a determination by the NYSE American that we have regained compliance with the applicable continued listing standards prior to the expiration of the plan period on March 27, 2026. However, the NYSE American retains sole discretion in evaluating our compliance status, and there can be no assurance that it will conclude that we have regained compliance.
The NYSE American may initiate delisting proceedings at any time if it determines that we are not making sufficient progress under the plan or otherwise fail to satisfy listing standards (including suitability standards under Section 1003(f)(v)). On January 29, 2025, the NYSE American announced that it would commence delisting proceedings against us for low bid price. We filed an appeal and continue to pursue corrective actions.
In addition, NYSE American has proposed amendments to its listing standards that, if adopted and applicable to us, could permit the exchange to suspend trading in, and commence delisting proceedings against, a listed company under stricter standards than those currently in effect. One pending proposal would permit immediate suspension and commencement of delisting proceedings if a listed company’s common stock falls below $0.25 per share. A separate pending proposal would permit immediate suspension and delisting proceedings if a listed company’s average global market capitalization over a consecutive 30 trading-day period falls below $5.0 million. The proposed amendments also provide that an issuer that falls below these proposed thresholds would not be eligible to submit a compliance plan under Section 1009 of the Company Guide. These proposed amendments to the NYSE American listing standards are subject to review and approval by the SEC and may be modified prior to adoption. If approved, the timing of implementation could occur during 2026 or later. The proposed rule change was filed with the SEC on December 3, 2025 and published by the SEC for public comment on December 12, 2025, and the SEC’s notice contemplates a comment period ending 21 days after publication in the Federal Register. In addition, NYSE American has proposed to make the $0.25 minimum trading price requirement effective on October 1, 2026.
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If these proposed amendments are adopted and become applicable to us, and if we are unable to maintain compliance with these or other continued listing standards, NYSE American could suspend trading in our common stock and commence delisting proceedings, regardless of whether we are otherwise operating under a compliance plan. Our stock price has recently traded in a range that is significantly closer to $0.25 than historical levels, and continued declines could increase the risk of suspension or delisting if the proposed amendments are approved and become effective. If our common stock is delisted from NYSE American and we are unable to list on another national securities exchange, our common stock may only be eligible for quotation on the over-the-counter market. This could result in significant adverse consequences, including:
| · | limited availability of market quotations for our common stock; |
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| · | reduced liquidity for our common stock; |
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| · | impaired ability to raise additional funds; |
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| · | loss of institutional investor interest and decreased ability to issue additional securities or obtain financing in the future; |
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| · | determination that our common stock is a “penny stock,” which would impose more stringent broker rules and possibly result in reduced trading activity; |
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| · | limited news and analyst coverage; and |
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| · | potential breaches of our agreements under which we made representations or covenants regarding compliance with listing requirements, which could result in costly litigation, liabilities and diversion of management’s time and attention. |
Although our compliance plan was accepted, and we have progressed through the plan period to our final compliance submission, there is no assurance that the NYSE American will determine that we have regained full compliance or that we will be able to maintain ongoing compliance with its continued listing requirements in the future. In addition, any delisting or prolonged non-compliance could delay or limit commercialization of our tokenized-deposit initiative by impairing counterparties’ or regulators’ willingness to proceed with required approvals and integrations.
We may consider implementing a reverse stock split in the future, which could adversely affect the market price and liquidity of our common stock.
From time to time, our Board of Directors may evaluate potential actions intended to increase the per-share trading price of our common stock or support compliance with applicable exchange listing requirements. One such action could include the implementation of a reverse stock split of our outstanding common stock, which would reduce the number of shares outstanding by combining multiple existing shares into a smaller number of shares.
We have not determined whether a reverse stock split will be pursued, and any such action would be subject to approval by our Board of Directors and, if required, our stockholders. However, if a reverse stock split were implemented, it may not result in a sustained increase in the market price of our common stock. Companies that implement reverse stock splits often experience declines in the market price of their securities following the transaction. In addition, a reverse stock split could reduce the liquidity of our common stock, increase price volatility, and reduce the number of investors willing or able to hold our shares.
Because we previously effected a reverse stock split within the last two years, NYSE American may review any additional reverse stock split under its continued listing and suitability standards. As a result, the ratio or effectiveness of any future reverse stock split could be limited. If a reverse stock split were implemented and the market price of our common stock does not increase proportionately or subsequently declines, our stockholders could experience a decrease in the value of their investment.
Because our stock price has fluctuated significantly and may remain volatile, the value of your investment may decline.
The market price of our common stock has been and is likely in the future to be volatile. Our common stock price may fluctuate in response to factors such as:
| · | changes in the market price of Bitcoin and resulting unrealized gains or losses from our Bitcoin treasury strategy; |
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| · | pre-launch developments in our tokenized-deposit initiative, including announcements of partnerships, pilot timing, product design, or regulatory feedback; |
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| · | changes to, delays in, or termination of relationships with our banking or distribution/technology partners for tokenized deposits; |
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| · | fluctuations in our financial results reflecting fair-value adjustments related to digital-asset holdings or share-based compensation; |
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| · | announcements by us regarding liquidity, significant acquisitions, equity investments and divestitures, strategic relationships, addition or loss of significant customers and contracts, capital expenditure commitments and litigation; |
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| · | issuance of stock options or other equity awards, convertible or equity securities and related warrants for general corporate or merger and acquisition purposes; |
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| · | issuance or repayment of debt, accounts payable or convertible debt for general corporate or merger and acquisition purposes; |
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| · | actual or perceived dilution arising from future equity financings or conversions; |
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| · | sale of a significant number of shares of our common stock by stockholders; |
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| · | general market and economic conditions, including volatility in the digital-asset sector; |
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| · | quarterly variations in our operating results; |
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| · | investor and public relation activities; |
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| · | announcements of technological innovations; |
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| · | new product introductions by us or our competitors; |
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| · | competitive activities; |
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| · | low liquidity; and |
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| · | additions or departures of key personnel. |
These broad market and industry factors may have a material adverse effect on the market price of our common stock, regardless of our actual operating performance. These factors could have a material adverse effect on our business, financial condition, and results of operations.
We do not anticipate paying any cash dividends on our capital stock in the foreseeable future.
We have never declared or paid cash dividends on our capital stock. We currently intend to continue to retain all of our future net earnings, if any, to finance the growth and development of our business, and we do not anticipate paying any cash dividends on our capital stock in the foreseeable future. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
Risks Related to Our Bitcoin Treasury Strategy and Holdings
Bitcoin price volatility and correlation to our stock could materially impact our financial results and market price.
Bitcoin’s price has experienced, and is expected to continue to experience, extreme volatility. Fluctuations in Bitcoin’s market price directly affect our reported net income or loss and may cause our stock to trade as a proxy for Bitcoin regardless of operational performance. Factors affecting Bitcoin’s price include investor sentiment, large-volume trading, market manipulation on unregulated venues, adverse publicity (including cybersecurity incidents or environmental critiques), regulatory posture and enforcement actions, macroeconomic conditions (such as interest rates and liquidity), technological competition, and breakthroughs that undermine cryptographic security. A material decline in Bitcoin’s price would directly reduce the value of our Bitcoin holdings, increase earnings volatility, and could adversely affect our financial condition and the market price of our common stock. See also “Risk Factors—Because our stock price has fluctuated significantly and may remain volatile, the value of your investment may decline.”
Concentration of our Bitcoin holdings and market-liquidity constraints magnify adverse outcomes.
A significant portion of our assets is concentrated in Bitcoin, limiting diversification and increasing exposure to Bitcoin-specific risks. Periods of limited market liquidity or exchange disruptions may impair our ability to liquidate positions at favorable prices—or at all—especially during stress events. Bitcoin held with custodians is not insured by the FDIC or SIPC, and private insurance may be limited. These factors reduce our financial flexibility in periods of market disruption and can exacerbate downside moves.
We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.
Mutual funds, ETFs and their directors and management are subject to extensive regulation as "investment companies” and “investment advisers” under U.S. federal and state law; this regulation is intended for the benefit of and protection of investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of our Bitcoin strategy, our use of leverage, the manner in which our Bitcoin is custodied, our ability to engage in transactions with affiliated parties and our operating and investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies and investment advisers. Our board of directors has broad discretion over the investment, leverage and cash management policies it authorizes, whether in respect of our Bitcoin holdings or other activities we may pursue, and has the power to change our current policies, including our Bitcoin strategy.
Our Bitcoin holdings are and will be less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
Historically, the Bitcoin market has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our Bitcoin at favorable prices or at all. For example, a number of Bitcoin trading venues temporarily halted deposits and withdrawals in 2022, although the Coinbase exchange (a major U.S.-based crypto exchange) has, to date, not done so. As a result, our Bitcoin holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, Bitcoin we hold with our custodians and transact with our trade execution partners will not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered Bitcoin or otherwise generate funds using our Bitcoin holdings, including in particular during times of market instability or when the price of Bitcoin has declined significantly. If we are unable to sell our Bitcoin, enter into additional capital raising transactions, including capital raising transactions using Bitcoin as collateral, or otherwise generate funds using Bitcoin holdings, or if we are forced to sell our Bitcoin at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
Counterparty, custody, and market-infrastructure risks, including contagion, could result in loss of assets or access.
We rely on U.S. institutional-grade custodians and contractual protections intended to establish our property interest in custodially-held Bitcoin; however, applicable insolvency and property law for digital assets remains unsettled. If a custodian were to become insolvent or enter receivership, our custodially-held Bitcoin could be treated as part of the custodian’s bankruptcy estate, and we could be deemed an unsecured creditor. Broader industry failures (such as FTX, Celsius, Voyager, and BlockFi, and banking exits affecting crypto-related services) illustrate counterparty and contagion risks that can depress liquidity and prices, restrict venues, and create new operational risks. Even absent insolvency, operational failures, security breaches, or non-performance by trading partners or service providers could delay access to or result in a partial or total loss of holdings, materially adversely affecting our condition and stock price. Insurance for digital-asset activities may be limited or unavailable, increasing residual loss exposure.
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Regulatory and accounting developments could increase compliance burdens and earnings volatility or restrict our strategy.
Digital assets exist within a rapidly evolving legal framework in the United States and abroad. Regulatory actions or new rules—covering securities, commodities, money-transmission, anti-money-laundering, tax, or prudential supervision, could impose licensing or registration requirements, restrict custodial or trading services, or otherwise limit our ability to hold or transact in Bitcoin. In 2025 we adopted Accounting Standards Update No. 2023-08, which requires fair-value measurement of certain crypto assets with changes in value recognized in net income (loss). This change could materially increase variability in our reported results and reduce period-to-period comparability.
If Bitcoin were deemed a “security,” our holdings could be treated as investment securities and we could be deemed an “investment company” under the Investment Company Act of 1940, fundamentally altering our operations and potentially forcing asset sales or restructuring to ensure conformity with exceptions provided by, and rules and regulations promulgated under, the Investment Company Act of 1940. We do not believe that we meet these definitions because we are primarily engaged in a non-investment company business.
Our valuation and financial-reporting controls for digital assets and derivatives are complex and involve significant judgment. Fair-value accounting requires estimates of market inputs and pricing data that may not be independently verifiable. If our valuation methods or internal controls prove inaccurate, we could be required to restate our financial statements or disclose a material weakness in internal control over financial reporting.
In addition, our Science Division’s sensor technologies may be classified as medical devices and hence could be subject to extensive and evolving FDA regulation; delays in review, additional data requirements, or changes in guidance could materially affect development timing and cost.
Yield-generation and derivative strategies are risky and relatively untested at public-company scale.
Bitcoin does not pay interest or dividends. We seek to generate yield or manage exposure through treasury strategies which may include lending, margin, or our current derivative trading strategy (such as selling calls or call spreads). These activities may expose us to leverage, counterparty default, and liquidity risk, including potential margin calls or forced liquidations during market volatility, which could materially reduce liquidity or magnify losses. In connection with these strategies, we may pledge digital assets as collateral under agreements that permit counterparties to exercise control and liquidate such assets without prior notice if margin requirements or other obligations are not met. While such arrangements are customary for institutional trading, they reduce our flexibility to deploy pledged assets and could result in asset sales at unfavorable prices during stress events. Our current Bitcoin treasury trading strategy, intended to boost holdings through premiums, has limited precedent across market cycles and may cap upside while increasing downside and earnings volatility under GAAP.
Operational, technology, cybersecurity, and market-access risks could disrupt execution of our strategy.
Secure custody depends on safeguarding private keys; loss, theft, or compromise (including custodian failures or cyberattacks) could permanently impair access to Bitcoin. Technological or cryptographic breakthroughs, including advances in quantum computing, or protocol failures could undermine Bitcoin’s security and value. We also rely on complex integrations, cloud infrastructure, and open-source and third-party software to operate securely and efficiently. Defects, outages, or vulnerabilities in these systems—or in the systems of our vendors—could interrupt service, delay transactions, or expose sensitive data. Cyberattacks, phishing, ransomware, or insider misconduct could compromise customer or company information and result in financial losses, regulatory scrutiny, or reputational harm. Perceived crypto-related risk may also limit access to traditional banking, payments, capital-markets services, or director-and-officer and other insurance, increasing costs and operational friction.
Risks Related to Our Product Development Initiatives
Our tokenized-deposit initiative has not yet launched and our Science Division remains in the development stage which subjects both initiatives to significant uncertainty.
We are continuing to develop our proposed products and services related to retail tokenized U.S.-dollar deposits, and our Science Division remains in the research and development stage. Our success depends on achieving technical validation and, where applicable, regulatory clearance for our proposed products, including our non-invasive glucose monitoring technology. The Science Division operates in a highly competitive and rapidly evolving field of medical-sensing technology, and advances by competitors could render our platform less attractive or obsolete before commercialization
On January 20, 2026, we entered into a Strategic Partnership Agreement with Uphold and Vast Bank, which formalized the parties’ respective roles and responsibilities in connection with the development and operation of the U.S. Bank Coin tokenized-deposit network. While this agreement represents an important milestone, the initiative remains subject to significant risks and uncertainties. Management believes the pilot program for the tokenized deposit initiative demonstrates commercial potential. However, the amount and timing of future revenue is uncertain and is subject to customer adoption. The ultimate plans for the rollout of the future retail launch are dependent on a number of factors, including the outcome of the pilot program, which may not reflect full-scale deployment.
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If we fail to demonstrate reliability, accuracy, and scalability, we may be unable to attract partners, obtain approvals, or generate revenue. There can be no assurance as to the timing, scope, or completion of any of these steps and either initiative may be delayed, modified, or discontinued if approvals are not obtained, if negotiations fail, or if our partners elect to pause or terminate participation.
We may be unable to launch retail tokenized U.S. dollar deposits within anticipated timelines, or at all, if required approvals are delayed, modified, or not obtained.
We may be unable to launch any retail tokenized-deposit product within anticipated timelines, or at all, if required regulatory, board, or banking-partner approvals are delayed, modified, or not obtained. Although we entered into a Strategic Partnership Agreement with Uphold and Vast Bank on January 20, 2026, the structure, rollout timeline and commercial launch of the contemplated product remain subject to ongoing technical, legal and regulatory review, the outcome of the pilot program, and required regulatory, board and banking-partner approvals. Any material changes in regulatory expectations, partner readiness, integration requirements, or supervisory feedback could delay, limit, or preclude commercialization.
Our ability to advance our tokenized-deposit initiative will depend entirely on the participation, regulatory standing, and technical readiness of third-party partners.
We will rely on the continuing engagement and performance of our banking and technology partners to design, integrate, and operate the contemplated platform. Changes in a partner’s regulatory posture, risk appetite, operational capacity, or strategic priorities could delay, limit, or halt development. Cybersecurity incidents, commercial disputes, or turnover among key personnel could also increase costs, require re-engineering, or force us to identify and onboard replacements, any of which could materially affect our plans.
In addition, heightened regulatory scrutiny of bank–fintech relationships may impose additional obligations or cause delays. U.S. banking regulators have issued guidance emphasizing enhanced oversight of third-party relationships, including due-diligence, monitoring, and approval expectations. If Vast Bank, or any future banking partner, becomes subject to restrictions, enforcement actions, or supervisory findings, it could be required to suspend or terminate its participation, which would compel us to seek alternative partners or pause the initiative altogether.
The legal and regulatory framework for tokenized deposits is unsettled and may impose obligations that make the initiative impractical.
The regulatory treatment of retail tokenized deposits, particularly with respect to FDIC insurance coverage, Regulation E, state money-transmission laws, bank third-party-risk-management standards, consumer-protection rules, and blockchain-settlement requirements, is evolving and uncertain, and may impose additional licensing, registration, or consumer-protection requirements that differ by jurisdiction. Regulators could determine that aspects of a proposed design are non-compliant or require licenses, charters, or additional controls, or could classify our tokenized deposits as securities, stablecoins, or other regulated instruments. Although we believe tokenized deposits represent traditional bank liabilities recorded on blockchain technology, regulators, including the SEC, OCC, or FDIC, could reach a different conclusion, which could require registration, licensing, or fundamental redesign of the program and materially limit or delay commercialization.
If regulators were to determine that any aspect of our activities constitutes custody or money transmission, we could be required to obtain federal or state money-transmitter licenses, register with FinCEN, or comply with additional custodial-safeguarding and reporting obligations. Satisfying these requirements or the process of seeking licenses in multiple jurisdictions could delay or prevent the commercial launch of our tokenized-deposit initiative, materially increase our ongoing compliance costs, or require structural changes to our business model.
Regulators may require banks to maintain traditional core-banking and general-ledger systems even if tokenized-deposit architecture is used, which could increase costs or limit the design of the product.
Although the contemplated tokenized-deposit design seeks to reduce reliance on traditional core-banking technology, U.S. banking regulators generally expect institutions to maintain comprehensive ledgering, reconciliation, operational-risk, and internal-control systems. There has been guidance, reports, and public statements issued by federal and state financial regulators regarding the legal permissibility of, and supervisory considerations relating to financial institutions engaging in blockchain-related activities. If regulators determine that blockchain-based infrastructure is insufficient to meet supervisory expectations, our banking partners may be required to maintain additional systems, controls, or vendors, which could increase costs, delay development, or limit the design of the product. Regulation of blockchain-related activities remains uncertain and will continue to evolve.
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Developing a tokenized-deposit platform exposes us to significant development, operational, security, and technology risks.
Our tokenized-deposit initiative will require substantial additional investments in software design, integration, and testing and require significant management time. Building and integrating mobile-application, blockchain, and banking-system infrastructure is costly, complex, and subject to execution risk. Development projects frequently exceed budget or schedule and may fail to deliver anticipated functionality or security. The product is heavily dependent on blockchain infrastructure and smart-contract functionality to represent deposit claims. Smart-contract defects, reconciliation errors between bank core systems and blockchain records, scalability limitations, or outages at infrastructure providers could result in loss of funds, service interruptions, or liability. Because these systems have not yet been formally implemented, the extent of these risks cannot yet be fully assessed.
Reputational or regulatory issues affecting our partners could harm the tokenized-deposit initiative, even if we are not directly implicated.
Adverse events at Vast Bank, Uphold, or other partners, such as enforcement actions, consent orders, or cybersecurity breaches, could reduce public trust, delay regulatory review, or constrain the design or rollout of any tokenized-deposit product which could damage our brand and adversely impact our results.
International access to tokenized deposits may be limited by sanctions, local-law restrictions, or bank-partner policies, which could materially reduce our addressable market and adversely affect our business, financial condition, results of operations and prospects.
Access to tokenized deposits by non-U.S. persons will depend on the issuing bank’s policies and compliance with applicable U.S. and foreign laws, including OFAC sanctions, anti-money-laundering rules, and local financial-services regulations. Foreign regulators may restrict, prohibit, or impose additional requirements on the offering of tokenized deposits in their jurisdictions. These limitations could delay or restrict international availability of tokenized deposits, materially reducing the addressable market and potentially increasing compliance costs.
Potential conflicts of interest involving our banking partner, if not appropriately addressed, could create regulatory or governance risks.
Our Vice Chair, Linda Jenkinson, also serves as Chair and Chief Executive Officer of Vast Holdings, Inc., the holding company that owns Vast Bank which will be our initial bank partner for the tokenized-deposit initiative. In addition, our Chairman and CEO, Greg Kidd, owns a controlling interest in Vast Holdings, Inc., which may cause regulators to view our relationship with Vast Bank as a related-party transaction subject to heightened scrutiny. All terms of the recent collaboration with Vast Bank and Uphold were negotiated at arm’s length and approved by disinterested members of our Board. Any actual or perceived conflict could invite additional regulatory review or require enhanced governance measures, which could increase costs or delay progress on the tokenized-deposit initiative.
Our success will depend on retaining qualified management and technical personnel.
Our business and future development efforts rely on the expertise of our management team and key technical employees, including software engineers, cybersecurity specialists, and compliance professionals. Competition for such talent in the fintech and digital-asset industries is intense. The loss of key employees could delay development initiatives, disrupt operations, or impair our ability to meet regulatory requirements. Replacing specialized personnel can be difficult and costly, particularly in emerging areas such as blockchain engineering and digital-asset compliance. If we fail to attract or retain qualified talent, our innovation and growth prospects could be materially and adversely affected.
Intellectual property challenges could impair our ability to protect or commercialize our technology.
Our success will depend on maintaining and enforcing patents and proprietary rights related to our sensor platform and other financial technologies. If competitors challenge, design around, or invalidate our patents, or if we fail to protect trade secrets, our competitive position could be materially weakened. Intellectual property disputes could also divert resources and delay development or commercialization.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
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ITEM 1C. CYBERSECURITY
Our cybersecurity and risk management program is designed to protect the confidentiality,
We leverage a combination of cybersecurity frameworks to protect our assets. We use the controls from these frameworks as well as guidelines and best practices from the industry to develop our cybersecurity plan. Our cybersecurity plan and its elements are reviewed regularly to ensure they meet the requirements and expectations of our security needs. We have a cybersecurity policy in place, which includes monthly meetings with internal cybersecurity and technology experts to review and maintain the procedures, ensuring they reflect current best practices.
Our cybersecurity program is spearheaded by our cybersecurity department, with support from external advisors and approval from executive management. The stakeholders have been identified and know their roles within the documented cybersecurity process.
Our
Risk is assessed based on multiple factors and is overseen by the Audit Committee. Our IT and cybersecurity teams update and maintain our digital asset inventory to ensure all digital assets are included in our risk management process. The same is also true for all physical records/files as well as physical assets that would be considered intellectual property. Key assets are identified, and risk is assessed based on business impact, availability of information, and attack feasibility. After the risks have been identified, they are reviewed with the Audit Committee and stakeholders to create action plans or exception requests for the acceptance of risk.
We leverage
An incident response plan has been established, which provides detailed information on actions to take in the event of an incident. The plan defines the incident response team, details the incident response lifecycle, and provides templates to make the process easier to document and follow. Timelines, communication methods, and notification information are included in the plan to ensure the process can be followed in high-pressure situations that can occur during incidents.
We have had
Sensitive and confidential data are an essential part of our business. We leverage a cybersecurity policy that identifies the type of information we store and what level of encryption and access role entitlement is required to store and access the data. This document also details the overarching requirements for encryption, such as encryption methods, and secret/key storage and retention. These requirements are periodically reviewed to ensure continued alignment with industry standards and regulatory expectations.
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ITEM 2. PROPERTIES.
Properties and Operating Leases
The address of our principal executive offices is located in Reno, Nevada.
We do not own any real property. Our Seattle facility is subject to a lease that is scheduled to expire in 2027. We believe that our existing leased facilities, together with our ability to obtain suitable additional physical office space as needed, are adequate to support our operations for the immediate future.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock trades on the NYSE American under the symbol “USBC”.
Number of Holders of our Common Shares
As of December 31, 2025, there were 388,143,679 shares of common stock issued and outstanding, held by approximately 174 stockholders of record. This number does not include approximately 7,300 beneficial owners whose shares are held in the names of various security brokers, dealers and registered clearing agencies.
Dividend Policy
We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our common stock in the near future. We may also enter into credit agreements or other borrowing arrangements in the future that could restrict our ability to declare or pay cash dividends on our common stock. Any future determination to declare dividends will be made at the discretion of our Board of Directors subject to limitations under applicable law (including Nevada Revised Statutes 78.288) and will depend on our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our Board of Directors may deem relevant. See also Item 1A “Risk Factors—Risks Related to Ownership of Our Common Stock—We do not anticipate paying any cash dividends on our capital stock in the foreseeable future.”
Securities Authorized for Issuance under Equity Compensation Plans
The information required by Item 201(d) of Regulation S-K regarding securities authorized for issuance under equity compensation plans is incorporated by reference from our definitive proxy statement for its 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after December 31, 2025.
Recent Sales of Unregistered Securities
During the Transition Period, we did not issue any securities in transactions that were not registered under the Securities Act of 1933.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During the Transition Period, we did not repurchase any shares of our common stock.
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Description of Securities
Our authorized capital stock and the rights of holders of common stock are described in Exhibit 4.2 to this Transition Report on Form 10-K, which description is incorporated herein by reference. As of December 31, 2025, only shares of our common stock were outstanding.
Market Price of and Dividends on Common Equity and Related Stockholder Matters
Our common stock trades on the NYSE American under the symbol “USBC.” On December 31, 2025, the last reported sale price of our common stock on the NYSE American was $0.63 per share.
As of December 31, 2025, there were approximately 174 holders of record of our common stock. This number does not include approximately 7,300 beneficial owners whose shares are held in the names of various security brokers, dealers and registered clearing agencies.
We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Any future determination regarding dividends will be made at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements, contractual restrictions, and other factors the Board deems relevant.
Transfer Agent and Registrar
We have appointed Equiniti Trust Company located at 48 Wall Street, Floor 23, New York, NY 10005, telephone number (800) 937-5449, as the transfer agent for our common stock.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”
Results of the Transition Period are not directly comparable to results for prior annual periods due to our fiscal year end change from September 30 to December 31. Accordingly, the operating results for the Transition Period should not be considered indicative of historical or future full-year operating performance.
Overview
USBC, Inc. is a publicly traded multi-disciplinary technology company that we believe is an industry leading innovator in digital financial technologies. Under the leadership of Chairman and Chief Executive Officer, Greg Kidd, USBC develops transformative financial services, including digital assets and banking solutions as well as non-invasive health monitoring research.
USBC, Inc. continues to focus on the development of its financial‑technology platform and related digital‑asset initiatives, including its pre‑launch tokenized‑deposit program and Bitcoin‑based treasury activities. Our operating results for the Transition Period primarily reflect ongoing investment in these initiatives, the integration of newly established banking and technology partnerships, and certain legacy research and development activities.
USBC has implemented a Bitcoin treasury strategy to bolster pre-launch development and research across its various divisions. A key focus of USBC is the further development of the USBC tokenized deposit offering, a U.S.-dollar denominated tokenized deposit that will operate on blockchain technology, be embedded with digital identity, and may offer high-yield rewards. With a focus on identity, inclusion, innovation, and risk management, USBC is dedicated to creating long-term shareholder value in a rapidly evolving financial landscape.
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A detailed description of our business, operating strategy and product development initiatives is included in Item 1 — Business, and the discussion below should be read together with that section as well as with the consolidated financial statements and accompanying notes. This MD&A focuses on the specific factors that affected our financial condition, results of operations, liquidity and capital resources during the Transition Period, including the impact of our digital‑asset treasury strategy, pre‑launch development expenditures, public‑company compliance requirements, and our recently implemented capital structure.
Recent Developments
On January 20, 2026, we entered into a Strategic Partnership Agreement with Uphold and Vast Bank, which formalized the parties’ respective roles and responsibilities related to the development and operation of the USBC tokenized deposit program, formalizing the terms of the parties’ preliminary partnership previously announced on October 23, 2025. Under the agreement, Vast Bank will serve as the issuing bank for customer deposit accounts, Uphold will provide platform integration and customer access, and we will operate the tokenized deposit network. The tokenized deposit program has not yet been commercially launched, and we continue to advance technical, operational, and regulatory readiness. The timing, scope, and ultimate commercial impact of the initiative remain subject to uncertainty and will depend on a number of factors, including regulatory considerations, partner alignment, and customer adoption.
In February 2026, we completed our evaluation of the legacy non-invasive sensor business and we have elected to proceed with a divestiture transaction. Negotiations with the potential buyer are nearing completion; however, there is no assurance that any transaction will be consummated. The financial impact of the potential divestiture transaction is not expected to be material to our financial statements.
On March 10, 2026, we initiated Phase 1 of our multi-phase delivery strategy for how we will bring the USBC tokenized deposit product to market. Phase 1 is being conducted with a limited group of internal users who have elected to participate in an expanded employee pilot program ahead of the public launch of the branded platform. Phase 1 is not a consumer offering and is not available to the public; it is intended solely to begin technical readiness testing. During this phase, testing activities are conducted exclusively with company-provided funds for internal evaluation purposes. The results of Phase 1 will inform our evaluation of the timing and scope of subsequent phases of the delivery strategy and when the tokenized deposit product offering may become available to retail customers. Any future retail launch will remain subject to the outcome of the pilot program and receipt of any required regulatory, board, and bank partner approvals.
On March 18, 2026, we entered into a secured borrowing facility with Payward Interactive, Inc. (the “Facility”), providing for aggregate borrowings of up to $25 million during the term of the Facility which matures on March 18, 2027. The Facility is collateralized by a portion of our Bitcoin treasury holdings and bears interest at a rate of 8.5% per annum. The Facility includes customary margin maintenance provisions that may require us to pledge additional Bitcoin collateral or partially repay outstanding borrowings in the event of a decline in the market value of Bitcoin. Proceeds from the Facility will be used primarily to fund further development costs of the tokenized deposit program offering, including costs paid to our affiliate, Vast Holdings, Inc. (“Vast”) under the terms of the Affiliate Services Agreement (the “Agreement”) we simultaneously entered into on March 18, 2026. Pursuant to the terms of the Agreement, we will reimburse Vast for the cost it incurs to perform certain strategic, operational, and administrative services in support of the further development of the tokenized deposit program offering. We believe that it will be more economical and efficient for certain services necessary for these operations to be performed by officers, employees or consultants of Vast, recognizing that cost reimbursements to Vast must be at least on or favorable to market terms. Total reimbursements under the Agreement are capped at $10.5 million during the term of the Agreement, unless mutually agreed upon with Vast and are subject to detailed invoicing, documentation, and approval requirements. The Agreement expires on December 31, 2026.
On March 18, 2026, our Board of Directors approved the repricing of all outstanding stock options, including (i) options originally granted in August 2025 and subsequently repriced in October 2025 to $1.10 per share, (ii) options granted in October 2025 with an exercise price of $1.10 per share, and (iii) options granted in October 2025 with an exercise price of $0.87 per share. The repricing reduced the exercise price of all such awards to $0.37 per share. No changes were made to the vesting schedules or contractual terms of these awards.
On March 18, 2026, our Board of Directors approved the issuance of stock option grants for 10,470,000 shares at an exercise price of $0.37 per share. The stock option grants expire in ten years and vest over four years.
Subsequent to December 31, 2025, 13,137,500 unvested stock options were forfeited pursuant to the terms of the 2021 Plan. Accordingly, such forfeited awards became available for future grant under the 2021 Plan.
Results of Operations
The following table sets forth key components of our results of operations for the three months ended December 31, 2025 (the “Transition Period”) and the comparable prior-year period.
(dollars in thousands)
|
| Three Months Ended, |
| |||||||||
|
| December 31, 2025 (Transition Period) |
|
| December 31, 2024 (Unaudited) |
|
| $ Variance |
| |||
Operating expenses- |
|
|
|
|
|
|
|
|
| |||
Research and development expenses |
| $ | 254 |
|
| $ | 802 |
|
| $ | (548 | ) |
Selling, general and administrative expenses |
|
| 16,874 |
|
|
| 1,965 |
|
|
| 14,909 |
|
Total operating expenses |
|
| 17,128 |
|
|
| 2,767 |
|
|
| 14,361 |
|
Operating loss |
|
| (17,128 | ) |
|
| (2,767 | ) |
|
| (14,361 | ) |
Other (Expense) Income, Net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 38 |
|
|
| 14 |
|
|
| 24 |
|
Interest expense |
|
| (11 | ) |
|
| (1,184 | ) |
|
| 1,173 |
|
Loss on debt settlements, net |
|
| - |
|
|
| (728 | ) |
|
| 728 |
|
Change in fair value of digital assets |
|
| (27,193 | ) |
|
| - |
|
|
| (27,193 | ) |
Other derivative income, net |
|
| 1,101 |
|
|
| - |
|
|
| 1,101 |
|
Total other (expense), net |
|
| (26,065 | ) |
|
| (1,898 | ) |
|
| (24,167 | ) |
Loss before income taxes |
|
| (43,193 | ) |
|
| (4,665 | ) |
|
| (38,528 | ) |
Income tax benefit |
|
| (15,737 | ) |
|
| - |
|
|
| (15,737 | ) |
Net loss |
| $ | (27,456 | ) |
| $ | (4,665 | ) |
| $ | (22,791 | ) |
Our operating results for the Transition Period, reflect the Company’s strategic transition towards its digital-asset treasury and financial-technology development initiatives following the Goldeneye capital investment completed on August 6, 2025.
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Revenues. We did not generate any operating revenue during the Transition Period or the comparable prior-year period. During the Transition Period, we continued to focus on financial-technology development activities, and we expect future operating revenues to be generated primarily from financial-technology network services, including the planned USBC tokenized deposit program.
Research and Development. R&D expense was $254,000 for the Transition Period, compared to $802,000 for the comparable prior-year period. The change of $548,000 was primarily driven by the Company’s strategic transition away from its legacy non-invasive diagnostics and sensor technology initiatives and toward the development of its tokenized deposit platform and related digital financial infrastructure. During the Transition Period, the Company reduced personnel and external consulting resources dedicated to its Science Division as it wound down certain research activities, resulting in lower expenditures related to the Bio-RFID™ technology.
Selling, General and Administrative. SG&A expense was $16.9 million for the Transition Period, compared to $2.0 million for the comparable prior-year period, representing an increase of $14.9 million. This increase was primarily attributable to non-cash stock-based compensation expense of $11.9 million, professional fees and other public-company and advisory costs associated with our strategic transition of $3.1 million, salary and benefits of $551,000 and, partially offset by reductions in legacy science-division expenses.
Other (Expense) Income, Net. Other expenses, net was $26.1 million for the Transition Period, compared to $1.9 million for the comparable prior-year period, representing an increase of $24.2 million. This increase was primarily driven by changes in the fair value of digital assets of $27.2 million, partially offset by derivative income, net of $1.1 million, generated from option premiums collected under our Bitcoin treasury trading strategy, reduced reliance on external financing of $1.2 million, and loss on debt settlements, net of $728,000 in the prior period.
Income tax benefit. Income tax benefit was $15.7 million for the Transition Period; there was no income tax benefit for the comparable prior-year period. This increase of $15.7 million is primarily related to the tax effect of the change in the fair value of digital assets during the Transition Period, driven by elevated volatility in digital asset markets, which caused a significant decline in the fair value of Bitcoin, as well as the netting of deferred tax assets against the deferred tax liability.
Net Loss. We reported a net loss of $27.5 million for the Transition Period, compared with a net loss of $4.7 million for the comparable prior-year period. The increase of $22.8 million primarily reflects the change in fair value of digital assets of $27.2 million related to elevated volatility in digital asset markets, non-cash stock-based compensation expense of $11.9 million, professional fees and other public-company and advisory costs associated with our strategic transition of $3.1 million, partially offset by deferred income tax benefits of $15.7 million associated with the change in fair value of digital assets.
Although we expect our operating losses to continue in the near term, we believe our potential revenue opportunities and strong capital structure provide us with flexibility to pursue our digital-asset treasury and financial-technology initiatives.
Known Trends and Uncertainties
We anticipate that our future operating results will be heavily influenced by the following factors:
| · | Financing dependence: We expect to require additional liquidity sources in the near term to fund the shortfall in net operating revenue as we continue investing in the further development of the tokenized deposit program, which sources may include equity or debt financings, potential sales of Bitcoin, Bitcoin-collateralized financing arrangements, and related-party or other investor financing. |
|
|
|
| · | Digital-asset market volatility: Changes in the market price of Bitcoin could cause material non-cash gains or losses in our operating expenses each period. |
|
|
|
| · | Integration of banking partners: Our future results will depend on successful technical and regulatory integration with partner banks and technology providers supporting our tokenized-deposit platform. Delays or changes in partner strategy could affect timing of launches and revenue realization. |
|
|
|
| · | Regulatory developments: Evolving federal and state treatment of digital assets, stablecoins, and related financial-technology services could adversely affect our business model and accounting policies. |
|
|
|
| · | Potential divestiture: As part of the ongoing review of our business operations, management has concluded that the legacy non-invasive sensor business no longer aligns with our long-term strategy, capital allocation priorities and revenue generation opportunities. A definitive decision has been made to pursue a divestiture transaction although, there can be no assurance that any transaction will ultimately occur. |
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Liquidity and Capital Resources
As of December 31, 2025, we had cash and cash equivalents of $4.1 million and working capital of $3.1 million. We have historically incurred recurring losses and had an accumulated deficit of $190.5 million as of December 31, 2025. We recorded a net loss of $27.5 million for the Transition Period and a net loss of $4.7 million for the comparable prior-year period.
Our liquidity during the Transition Period primarily reflects the net proceeds of the equity issuance from the private placement completed on August 6, 2025 in which we issued approximately 357.8 million shares of common stock at $0.335 per share, for an aggregate purchase price consisting of 1,000 Bitcoin and $15 million in cash. As such, a substantial portion of our assets consist of Bitcoin. We view our Bitcoin holdings as long-term strategic reserves rather than trading assets although we may convert Bitcoin to cash periodically to fund operations. During the Transition Period, liquidity was primarily utilized to fund operating expenses and working capital requirements. Management believes that existing liquidity and digital asset holdings are sufficient to fund operations for at least 12 months after issuance of these consolidated financial statements. Management expects that the Company may supplement its cash resources with additional liquidity sources as it executes its business plan. These sources may include sales of Bitcoin, potential Bitcoin-collateralized financing arrangements, related-party or other investor financing, and other debt or equity financings.
On March 18, 2026, we entered into a secured borrowing facility with Payward Interactive, Inc., providing for aggregate borrowings of up to $25 million during the term of the Facility, which matures on March 18, 2027. The Facility is collateralized by a portion of our Bitcoin treasury holdings and bears interest at a rate of 8.5% per annum. The Facility includes customary margin maintenance provisions that may require us to pledge additional Bitcoin collateral or partially repay outstanding borrowings in the event of a decline in the market value of Bitcoin. Proceeds from the Facility will be used primarily to fund further development costs of the tokenized deposit program offering, including costs paid to our affiliate, Vast Holdings, Inc., under the terms of the Affiliate Services Agreement we simultaneously entered into on March 18, 2026. Pursuant to the terms of the Agreement, we will reimburse Vast for the cost it incurs to perform certain strategic, operational, and administrative services in support of the further development of the tokenized deposit program offering. We believe that it will be more economical and efficient for certain services necessary for these operations to be performed by officers, employees or consultants of Vast, recognizing that cost reimbursements to Vast must be at least on or favorable to market terms. Total reimbursements under the Agreement are capped at $10.5 million during the term of the Agreement, unless mutually agreed upon with Vast and are subject to detailed invoicing, documentation, and approval requirements. The Agreement expires on December 31, 2026.
Non-GAAP Financial Measure
Adjusted EBITDA is a non-GAAP financial measure used by our management to better help evaluate our financial performance and provide more useful information to investors and others in understanding our operating results. This measure removes the effect of certain non-cash items, non-recurring items, unrealized gains or losses or other similar non-cash items that are included in our net loss that otherwise do not contribute directly to management's evaluation of its operating results.
Adjusted EBITDA is defined as net loss excluding interest expense primarily incurred in connection with the conversion or extinguishment of our convertible debt obligations, stock-based compensation expense, non-cash changes in the fair value of digital assets, income taxes, and any other items that management has determined are not reflective of our operating performance because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. Adjusted EBITDA should be viewed independently of our reported GAAP net loss as this metric is meant to be considered in addition to, not as a substitute for or in isolation from, our net loss prepared in accordance with GAAP.
The following table reconciles Adjusted EBITDA to net loss, the most closely comparable GAAP financial measure, for the Transition Period and the comparable prior-year period:
|
| Three Months Ended, |
|
| Years Ended, |
| ||||||||||
|
| December 31, 2025 |
|
| December 31, 2024 |
|
| September 30, |
|
| September 30, |
| ||||
|
| (Transition Period) |
|
| (Unaudited) |
|
| 2025 |
|
| 2024 |
| ||||
Net Loss |
| $ | (27,456,000 | ) |
| $ | (4,666,000 | ) |
| $ | (22,123,000 | ) |
| $ | (16,582,000 | ) |
Plus: Change in fair value of digital assets |
|
| 27,193,000 |
|
|
| - |
|
|
| 823,000 |
|
|
| - |
|
Plus: Stock-based compensation |
|
| 11,868,000 |
|
|
| 551,000 |
|
|
| 8,774,000 |
|
|
| 3,318,000 |
|
Subtract: Income tax benefit |
|
| (15,737,000 | ) |
|
| - |
|
|
| (173,000 | ) |
|
| - |
|
Plus: Interest expense |
|
| 11,000 |
|
|
| 1,184,000 |
|
|
| 2,834,000 |
|
|
| 1,514,000 |
|
Plus: Loss on debt settlements, net |
|
| - |
|
|
| 728,000 |
|
|
| 942,000 |
|
|
| - |
|
Adjusted EBITDA |
| $ | (4,121,000 | ) |
| $ | (2,203,000 | ) |
| $ | (8,923,000 | ) |
| $ | (11,750,000 | ) |
Financing Transactions Related to the August 2025 Private Placement
There were no financing transactions completed during the Transition Period. The Company’s liquidity position during the period reflects the impact of the private placement completed on August 6, 2025, pursuant to which we issued approximately 357.8 million shares of common stock to Goldeneye 1995 LLC at a purchase price of $0.335 per share, for aggregate consideration consisting of 1,000 Bitcoin and $15 million in cash. The cash proceeds were used primarily to repay or redeem outstanding preferred equity and convertible debt, pay transaction-related costs, and fund working capital. In connection with the transaction, holders of our Series C and Series D Convertible Preferred Stock elected redemption for approximately 8.3 million shares of common stock, certain holders of convertible debt elected conversion for $75,000 in cash and approximately 3.3 million shares of common stock, we issued an aggregate of 7.8 million shares of common stock to financial advisors, the sole holder of Series H Convertible Preferred Stock elected redemption for $654,276 in cash and 2,000,000 shares of common stock, and we repaid in full the Lind Global Fund II LP promissory note for approximately $2.35 million, including prepayment penalties. As a result of these transactions the Company eliminated all outstanding preferred equity and convertible debt and simplified its capital structure. The remaining proceeds continue to support the Company’s ongoing operations and strategic initiatives.
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Operating Activities
Net cash used in operating activities during the Transition Period was $4,630,194, which was primarily attributable to the net loss for the Transition Period of $27,455,848, partially offset by non-cash expenses of $22,273,348. Non-cash expenses during the Transition Period were primarily comprised of stock-based compensation expense of $11,868,452, unrealized losses related to the change in the fair value of digital assets of $27,192,987, partially offset by net gains on derivatives of $1,101,011, and the deferred income tax benefit of $15,736,607.
The net operating cash outflows primarily reflect operating expenses incurred with the Company’s strategic transition following the August 2025 capital investment, including the introduction of digital-asset treasury activities, partially offset by reduced legacy research and development expenditures.
Financing Activities
Net cash used in financing activities during the Transition Period was $99,497, which was primarily attributable to repayments of notes payable during the Transition Period.
The financing cash flows primarily reflect the timing of debt repayments, the absence of capital-raising activity during the Transition Period, and reduced reliance on external financing following the August 2025 capital investment.
Capital Requirements and Future Liquidity
We expect to continue incurring operating losses as we fund the further development of our tokenized deposit program. Our ability to sustain operations and execute our strategy depends on our capacity to raise additional capital through equity or debt financings, monetize Bitcoin holdings, including through potential sales, or obtain other sources of liquidity, including potential Bitcoin-collateralized financing arrangements, or related-party or other investor financing.
Future capital needs will depend on, among other things:
| · | potential licensing or technology-development expenditures, |
|
|
|
| · | regulatory and compliance costs associated with financial technology activities, and |
|
|
|
| · | any acquisitions or strategic investments. |
Management has completed its evaluation of whether a divestiture of the legacy non‑invasive sensor business may enhance strategic focus and longer‑term value. See Item 1 — Business — Science Division for additional background regarding the planned divestiture of the legacy sensor operations.
Based on our current projections, management believes we have adequate resources to meet our obligations for the next twelve months. As we continue to execute our business strategy, management may supplement cash on hand with additional liquidity sources, which could include digital asset sales, financing arrangements, or other debt or equity financings. Continuation of operations beyond that period will depend on market conditions for additional capital and the financial performance of our tokenized deposit program.
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Contractual Obligations and Commitments
Our contractual cash obligations as of December 31, 2025 are summarized in the table below.
|
|
|
| Less Than |
|
|
| |||||
Contractual Cash Obligations |
| Total |
|
| 1 Year |
|
| 1-3 Years |
| |||
Operating leases |
| $ | 257,648 |
|
| $ | 101,412 |
|
| $ | 156,236 |
|
|
| $ | 257,648 |
|
| $ | 101,412 |
|
| $ | 156,236 |
|
As of December 31, 2025, digital assets totaling approximately $25,447,882 were pledged as collateral under agreements that permit the secured party to exercise control and liquidate such assets under certain conditions, including events of default or margin deficiencies related to our derivative trading strategy. As of December 31, 2025, we had experienced no such events of default or margin deficiencies.
We had no other off-balance-sheet arrangements as of December 31, 2025.
Critical Accounting Policies Involving Significant Estimates
The following discussion relates to critical accounting policies for our company which involve significant estimates. The preparation of financial statements in conformity with United States generally accepted accounting principles, or GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation.
Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.
We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
Valuation of Digital Assets
We hold Bitcoin as the principal component of our consolidated balance sheet. Digital assets such as Bitcoin are initially recorded at cost and subsequently measured at fair value, with changes in fair value recognized in the line item, change in fair value of digital assets.
Because active quoted prices exist only on certain trading platforms, we use observable Level 1 inputs when available and Level 2 inputs (such as composite or volume-weighted prices) when market liquidity or trading restrictions make Level 1 data less representative. The determination of fair value requires judgment, particularly during periods of volatility or when exchanges experience constrained trading volumes.
The large majority of our Bitcoin holdings are custodied by a third-party institutional custodian under multi-signature cold-storage arrangements designed to mitigate security risk.
Digital assets - receivable, net
When we pledge collateral to a third-party entity, we first evaluate whether to derecognize such digital assets based on an evaluation of relevant control and asset derecognition considerations. If we conclude derecognition is appropriate, we derecognize the digital asset collateral that we no longer control and recognize a right to receive back in the future such pledged digital assets.
In accordance with ASU 2023-08, digital asset receivable is recorded at the fair value of the underlying digital assets. Throughout the period that the digital asset receivable is outstanding, the receivable will be measured at fair value of the underlying loaned digital asset with changes recorded in changes in fair value of digital assets in current period earnings.
We consider and account for the credit risk of the counterparty using the principles in Topic 326 – Financial Instruments - Credit Losses (“Topic 326”) to measure any credit impairment. The digital asset receivable is presented net of any allowance for credit losses if deemed material. We utilize the probability of default (“PD”) loss given default (“LGD”) approach to estimating the allowance for credit loss (“ACL”) at origination and subsequent reporting periods. In order to apply the PD LGD approach, management considers the lifetime of the digital asset receivable, the reasonable and supportable forecast period, and the PD LGD. As of December 31, 2025, the Company did not record an allowance for credit losses as management’s current estimate of expected credit losses was immaterial.
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Accounting for Derivatives & Trading Activities
As part of our Bitcoin yield generation strategy trading activities, we enter into option derivative contracts on our Bitcoin holdings. We enter into short-term arrangements that result in obtaining the right to receive or obligation to deliver a fixed amount of Bitcoin crypto assets in the future. Derivatives are instruments that derive their value from changes in an underlying reference outside of our control. Derivatives may be traded on an exchange (exchange-traded) or they may be privately negotiated contracts, which are usually referred to as over the counter (“OTC”) derivatives. We account for these derivatives in accordance with ASC 815, Derivatives and Hedging.
Stock-Based Compensation
Estimating the fair value of stock‑based awards requires significant judgment, including assumptions regarding expected volatility, risk‑free interest rates and expected term. Changes in these inputs may materially affect compensation expense. See Note 10 — Equity Incentive Plans for additional information regarding our stock‑based compensation accounting. We account for stock-based awards under ASC 718, Compensation – Stock Compensation. The fair value of stock options and warrants is estimated using the Black-Scholes-Merton option-pricing model, which requires assumptions regarding expected volatility, risk-free interest rates, expected term, and dividend yield. For restricted stock awards, fair value is based on the closing market price of our common stock on the grant date.
Because volatility and expected-term assumptions involve significant judgment, changes in these inputs could materially affect compensation expense recognized under the Amended and Restated 2021 Equity Incentive Plan (see “Executive Compensation” in Part III of this report, which is incorporated by reference from our definitive proxy statement for the 2026 Annual Meeting of Stockholders).
Convertible Instruments and Derivatives
Evaluating embedded conversion and redemption features requires judgment, including volatility estimates and discount‑rate assumptions that may result in non‑cash gains or losses. See Notes 3 and 5 for additional information on our accounting for convertible instruments and embedded derivatives prior to the Transition Period. When we issued convertible debt or equity instruments that may have contained embedded conversion or redemption features, we evaluated whether those features required bifurcation and separate accounting as derivatives under ASC 815. Determining the fair value of embedded derivatives involves the use of valuation models incorporating market-based assumptions, such as the volatility of our stock price, expected term, and discount rates. Future volatility or interest-rate changes could result in material non-cash gains or losses each period.
Potential Divestiture of Business
If a sale of the non-invasive sensor business becomes probable, the business may be evaluated for classification as held for sale and potentially as a discontinued operation under ASC 205-20, Presenting Discontinued Operations. As of the filing date, management has not concluded that classification as held for sale is appropriate because negotiations have not reached a stage where a sale is probable.
Going Concern
In accordance with ASC 205-40, management evaluates our ability to continue as a going concern for a period of one year after the date the financial statements are issued. Our assessment considers current cash on hand, expected cash flows from operations, and our ability to raise additional capital. In March 2026, the Company analyzed its cash requirements and operations at least through March 2027 and determined that, based upon the Company’s current available cash, digital asset holdings, and expected operations, the Company has no substantial doubt about its ability to continue as a going concern. While the capital investment significantly improved our liquidity, our business model remains dependent on external financing and the value of digital assets, both of which are subject to market volatility and investor sentiment.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable as a smaller reporting company.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our audited consolidated financial statements for the Transition Period are submitted as a separate section of this report on Form 10-K, beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
a) Evaluation of Disclosure Controls and Procedures
We conducted an evaluation, under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the Transition Period. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the Transition Period, December 31, 2025, our disclosure controls and procedures are effective at the reasonable assurance level.
b) Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP). Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of our company are being made only in accordance with authorization of management and directors of our company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Management assessed the effectiveness of our internal control over financial reporting as of the end of the Transition Period. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the 2013 Internal Control-Integrated Framework. Based on its evaluation, management has concluded that our internal control over financial reporting was effective as of the end of the Transition Period. In making this assessment, management considered the effects of the August 2025 capital investment, which resulted in significant changes to our ownership, leadership team, treasury strategy, and operating structure. As a result, our control environment and financial reporting processes continue to be enhanced and documented to reflect our evolving business model, including controls related to our Bitcoin treasury strategy.
Pursuant to Regulation S-K Item 308(b), and because we qualify as a smaller reporting company, this Transition Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their cost.
c) Changes in Internal Control over Financial Reporting
During the Transition Period, other than the continued integration and documentation of controls related to the August 2025 capital investment and our Bitcoin treasury activities, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We continue to evaluate and enhance control activities related to digital-asset custody, valuation, treasury operations, and related financial reporting processes to ensure our internal control over financial reporting remains effective as our operations evolve.
ITEM 9B. OTHER INFORMATION.
Master Loan Agreement
On March 18, 2026, the Company entered into a Master Loan Agreement (the “MLA”) with Payward Interactive, Inc. (the "Lender") pursuant to which the Company may, from time to time, borrow fiat currency or digital assets on the terms set forth therein in an aggregate principal amount of up to $25.0 million for up to a twelve-month term, subject to execution of one or more individual loan term sheets. The MLA contains customary conditions, initial collateral requirements, collateral maintenance and liquidation mechanics, and early return and recall rights.
Borrowings under the MLA are solely secured by Bitcoin collateral held in and subject to collateral maintenance requirements based on specified margin ratios. The Bitcoin collateralizing the borrowing facility is held for the benefit of the Lender by an affiliate of the Lender, Payward Financial, Inc. (the "Custodian") and subject to an account control agreement by and among the Lender, the Company and the Custodian.
On March 20, 2026, the Company entered into a term sheet for a fixed-term loan of $5.0 million bearing a fee of 8.5% per annum under the MLA maturing on March 18, 2027. The obligations under the MLA are prepayable at the Company's option after an initial term of three months. The MLA provides the Company with an additional source of liquidity to support its operations and strategic initiatives, primarily the further development and future launch of the tokenized deposit program.
The foregoing summary of the MLA does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is filed as Exhibit 10.34 of this Transition Report on Form 10-K and incorporated herein by reference.
Affiliate Services Agreement
On March 18, 2026, the Company entered into an Affiliate Services Agreement (the “Services Agreement”) with Vast Holdings, Inc. ("Vast"), an affiliated entity, pursuant to which the Company will reimburse Vast for the cost it incurs to perform certain strategic operational, and administrative services in support of the further development of the tokenized deposit offering. Total reimbursements under the Services Agreement are capped at $10.5 million during the term of the Agreement, unless mutually agreed upon with Vast with costs reimbursed by the Company as incurred and subject to detailed invoicing, documentation, and approval requirements. The Services Agreement expires on December 31, 2026. The Services Agreement and the transactions contemplated thereunder constitute related party transactions. Accordingly, the Services Agreement was reviewed and approved by the independent Audit Committee of the Company's Board of Directors (the "Board") and the Board prior to its execution.
The foregoing summary of the Services Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is filed as Exhibit 10.35 of this Transition Report on Form 10-K and incorporated herein by reference.
Trading Plans
During the Transition Period ended December 31, 2025, no director or officer of the Company adopted, modified, or terminated any ‘Rule 10b5-1 trading arrangement’ or ‘non-Rule 10b5-1 trading arrangement,’ in each case as defined in Item 408(a) of Regulation S-K. During the same period, the Company did not adopt or terminate any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
The information required by Part III (Items 10–14) of Form 10-K is incorporated by reference from our definitive proxy statement for our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after December 31, 2025, except as otherwise stated below.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Information required by Item 10 of Part III of Form 10-K is incorporated by reference from our definitive proxy statement for our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after December 31, 2025.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by Item 11 of Part III of Form 10-K is incorporated by reference from our definitive proxy statement for our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after December 31, 2025.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Information required by Item 12 of Part III of Form 10-K is incorporated by reference from our definitive proxy statement for our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after December 31, 2025.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Information required by Item 13 of Part III of Form 10-K is incorporated by reference from our definitive proxy statement for our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after December 31, 2025.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Information required by Item 14 of Part III of Form 10-K is incorporated by reference from our definitive proxy statement for our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after December 31, 2025.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) List of Documents Filed as a Part of This Report:
The Company’s financial statements for the Transition Period, as indicated by the Index to Consolidated Financial Statements set forth below, begin on page F-1. Financial statement schedules have been omitted because they are not applicable or the required information is included in the financial statements or notes thereto.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
| Page |
|
| F-1 |
| |
Consolidated Balance Sheets as of December 31, 2025, and September 30, 2025 |
| F-2 |
|
| F-3 |
| |
| F-4 |
| |
| F-5 |
| |
| F-6 |
|
(2) Index to Financial Statement Schedules:
All schedules have been omitted because the required information is included in the financial statements or the notes thereto, or because it is not required.
(3) Index to Exhibits:
See exhibits listed under Part (b) below.
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(b) Exhibits:
Exhibit No. |
| Description |
| Restated Articles of Incorporation, dated August 11, 2023 (incorporated by reference to the Company’s Current Report on Form 8-K, filed August 14, 2023). | |
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* | Filed herewith |
** | Furnished herewith |
† | Executive compensation plan or arrangement |
# | Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed |
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
USBC, Inc. (formerly Know Labs, Inc.)
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of USBC, Inc. (formerly Know Labs, Inc.) and its subsidiary (the “Company”) as of December 31, 2025 and September 30, 2025, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the three-month period ended December 31, 2025 and each of the two years in the period ended September 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and September 30, 2025, and the results of its operations and its cash flows for the three-month period ended December 31, 2025 and each of the two years in the period ended September 30, 2025 in conformity with the accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which it relates.
Evaluation of Audit Evidence Pertaining to the Existence and Control of Digital Assets
As described in Note 3 to the consolidated financial statements, the Company records digital assets at cost and subsequently measures at fair value, with changes in fair value recognized in change in fair value of digital assets. As of December 31, 2025, the fair value of the Company’s digital assets was $86,637,784. The Company’s digital asset holdings are custodied by a third-party institutional custodian under multi-signature cold-storage arrangements designed to mitigate security risk.
We identified the evaluation of audit evidence pertaining to the existence of the digital assets and whether the Company controls the digital assets as a critical audit matter. Especially subjective auditor judgment was involved in determining the nature and extent of evidence required to assess the existence of the digital assets and whether the Company controls the digital assets, as control over the digital assets is provided through private keys stored using third-party custodial services at multiple locations that are geographically dispersed. In addition, information technology (IT) professionals with specialized skills and knowledge in blockchain technology were needed to assist in the evaluation of the sufficiency of certain audit procedures.
Addressing the critical audit matter involved performing procedures and evaluating audit evidence over the digital assets in connection with forming our overall opinion on the consolidated financial statements. We evaluated the design and implementation of certain internal controls over the digital assets process, including a control over the comparison of the Company’s records of digital assets held to the custodial records. We involved IT professionals with specialized skills and knowledge in blockchain technology, who assisted in evaluating certain internal controls over the digital assets process related specifically to the generation of the private keys and the storing of these keys. We obtained confirmation of the Company’s digital assets in custody as of December 31, 2025 and compared the total digital assets confirmed to the Company’s record of digital asset holdings. We performed a test of control and custody, including proof of ownership and tested reconciliation of digital assets to the public blockchain ledger. We applied auditor judgment in determining the nature and extent of audit evidence required, especially related to assessing the existence of the digital assets and whether the Company controls the digital assets.
/s/
We have served as the Company’s auditor since October 2019.
March 24, 2026
| F-1 |
| Table of Contents |
USBC, INC.
(FORMERLY KNOW LABS, INC.)
CONSOLIDATED BALANCE SHEETS
|
| December 31, 2025 |
|
| September 30, 2025 |
| ||
ASSETS |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
CURRENT ASSETS: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Prepaid expenses |
|
|
|
|
|
| ||
Derivative assets |
|
|
|
|
|
| ||
Digital assets - receivable, net |
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, NET |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
OTHER ASSETS: |
|
|
|
|
|
|
|
|
Digital assets |
|
|
|
|
|
| ||
Other assets |
|
|
|
|
|
| ||
Operating lease right-of-use asset |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts payable - trade |
| $ |
|
| $ |
| ||
Accounts payable - related parties |
|
|
|
|
|
| ||
Accrued expenses |
|
|
|
|
|
| ||
Current portion of convertible notes payable, net |
|
|
|
|
|
| ||
Current portion of operating lease right-of-use liability |
|
|
|
|
|
| ||
Derivative liabilities |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Operating lease liability, net of current portion |
|
|
|
|
|
| ||
Deferred tax liability |
|
|
|
|
|
| ||
Total liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES (Note 13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Common stock - $ |
|
|
|
|
|
| ||
Additional paid in capital |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total stockholders' equity |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
| F-2 |
| Table of Contents |
USBC, INC.
(FORMERLY KNOW LABS, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
|
| Three Months Ended, |
|
| Years Ended, |
| ||||||||||
|
| December 31, 2025 (Transition Period) |
|
| December 31, 2024 (Unaudited) |
|
| September 30, 2025 |
|
| September 30, 2024 |
| ||||
OPERATING EXPENSES- |
|
|
|
|
|
|
|
|
|
|
|
| ||||
RESEARCH AND DEVELOPMENT EXPENSES |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
OPERATING LOSS |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE), NET |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Loss on debt settlements, net |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
| ||
Change in fair value of digital assets |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Other derivative income, net |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total other expense, net |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividends on Series C, D and H Preferred Stock |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding- basic and diluted (1) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
(1) Information pertaining to the number of shares outstanding gives retroactive effect to a 1 for 40 reverse stock split that became effective on February 19, 2025.
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
| Table of Contents |
USBC, INC.
(FORMERLY KNOW LABS, INC.)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
|
| Series C Convertible |
|
| Series D Convertible |
|
| Series H Convertible |
|
|
|
|
|
|
|
|
|
| Total |
| ||||||||||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
|
| Common Stock |
|
| Additional Paid in |
|
| Accumulated |
|
| Stockholders' Equity |
| |||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| $ |
|
| Shares (1) |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| (Deficit) |
| |||||||||||
Balance as of October 1, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||||
Stock compensation expense |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Issuance of common stock for stock option exercises |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||||||
Issuance of common stock for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Issuance of common stock for exercise of warrants |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Common stock dividends on Series C and D Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||||||
Deemed dividends on Series C and D Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||
Issuance of common stock for common stock offering |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Issuance of shares and warrants in connection with debt offering |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Expenses for extension of notes and warrants |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Issuance of common stock for debt payment |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
Balance as of September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||||
Stock compensation expense |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Issuance of common stock for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Deemed dividends on Series C, D and H Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||
Issuance of common stock for Goldeneye 1995 LLC investment, net of tax |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Issuance of common stock for transaction fee |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Issuance of common stock for common stock offering |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Deemed dividend due to repricing of Series C, D and H Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||
Issuance of common stock for At The Market common stock offering |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Issuance of Series H Convertible Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Conversion of Series C and D Convertible Preferred Stock |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Conversion of Series H Convertible Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) | ||||||
Issuance of common stock for debt payment |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Extension of warrants |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Impact of reverse stock split due to rounding |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
Balance as of September 30, 2025 |
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
Stock compensation expense |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
Balance as of December 31, 2025 |
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
(1) Information pertaining to the number of shares outstanding gives retroactive effect to a 1 for 40 reverse stock split that became effective on February 19, 2025.
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
| Table of Contents |
USBC, INC.
(FORMERLY KNOW LABS, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| Three Months Ended, |
|
| Years Ended, |
| ||||||||||
|
| December 31, 2025 (Transition Period) |
|
| December 31, 2024 (Unaudited) |
|
| September 30, 2025 |
|
| September 30, 2024 |
| ||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Stock based compensation - stock option grants |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Issuance of common stock for services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Amortization of operating lease right-of-use asset |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loss on debt extinguishment |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense for default of convertible notes |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense for repricing of warrants |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense for extension of notes and warrants |
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Amortization of debt issuance costs |
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Change in fair value of digital assets |
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Other derivative income, net |
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Deferred income taxes |
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Changes in operating assets and liabilities: |
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Prepaid expenses |
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Operating lease right-of-use liability |
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Derivative liabilities |
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Digital assets |
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Derivative assets |
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Other long-term assets |
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Accounts payable - trade, related parties and accrued expenses |
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NET CASH USED IN OPERATING ACTIVITIES |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of research and development equipment |
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NET CASH USED IN INVESTING ACTIVITIES: |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from issuance of common stock - Goldeneye 1995 LLC investment |
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Proceeds from issuance of common stock offering, net |
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Proceeds from issuance of common stock for warrant exercise |
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Proceeds from At The Market common stock offering |
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Redemption of Series H Preferred Stock |
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Repayment of convertible notes payable |
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Proceeds from convertible notes payable |
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NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES |
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
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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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| $ |
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Supplemental disclosures of cash flow information: |
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Interest paid |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Taxes paid |
| $ |
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| $ |
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| $ |
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| $ |
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Supplemental disclosure of non-cash investing and financing activity: |
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Deemed dividends on Series C, D and H Preferred Stock |
| $ |
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| $ |
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| $ |
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| $ |
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Common stock issued for debt payment |
| $ |
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| $ |
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| $ |
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| $ |
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Common stock issued for contribution of digital assets |
| $ |
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| $ |
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| $ |
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| $ |
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Deferred tax liability recognized from contribution of digital assets |
| $ |
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| $ |
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| $ |
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| $ |
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Common stock issued for conversion of Series H convertible preferred stock |
| $ |
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| $ |
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| $ |
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| $ |
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Issuance costs from common stock offering |
| $ |
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| $ |
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| $ |
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| $ |
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Warrants issued for debt offering |
| $ |
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| $ |
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| $ |
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| $ |
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Conversion of notes payable into Series H convertible preferred stock |
| $ |
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| $ |
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| $ |
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| $ |
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Bitcoin received from treasury trading strategy |
| $ |
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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 consolidated financial statements.
| F-5 |
| Table of Contents |
USBC, INC.
(FORMERLY KNOW LABS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Overview
USBC, Inc. (NYSE American: USBC) is a publicly-traded, diversified technology company with a strategic focus on developing innovative financial-services infrastructure to enable digital-asset banking capabilities and tokenized-deposit solutions for banks. Our principal executive offices are located in Reno, Nevada. We pursue long‐term value creation for our stockholders through advancement of our token offering, the “USBC deposit token,” and alignment of our research and business operations under a unified digital-finance and technology platform.
USBC, Inc. (the “Company”) was incorporated under the laws of the State of Nevada in 1998. As of December 31, 2025, the Company has authorized
Corporate History and Development
Until August 2025, the Company operated under the name Know Labs, Inc. and was primarily focused on non-invasive diagnostic and sensor technologies. In August 2025, following the closing of a controlling-interest acquisition by Goldeneye 1995 LLC (an affiliate of our Chairman and Chief Executive Officer, Greg Kidd), the Company changed its corporate name to USBC, Inc. and its ticker symbol to “USBC” on the NYSE American effective August 15, 2025. Our corporate evolution reflects a strategic pivot to a financial-services and digital-assets platform while continuing to maintain technology capabilities from our legacy sensor business.
Securities Purchase Agreement
On June 5, 2025, the Company entered into a Securities Purchase Agreement with Goldeneye 1995 LLC, a Nevada limited liability company, whereby the Company issued
2. LIQUIDITY AND GOING CONCERN
As of December 31, 2025, the Company had cash and cash equivalents of $
For the three months ended December 31, 2025 (transition period), the Company incurred a net loss of approximately $
In accordance with Accounting Standards Codification (“ASC”) 205-40, management evaluated the Company’s ability to continue as a going concern for a period of one year from the date the financial statements are issued. This assessment considered the Company’s cash on hand, expected cash flows from operations, and access to liquidity, including its Bitcoin treasury reserve. Based on this evaluation, management concluded that there is no substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.
| F-6 |
| Table of Contents |
In addition to its existing liquidity resources, the Company continually evaluates potential financing alternatives to support its operating plan and long-term growth objectives.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation – These consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include a three-month transition period ended December 31, 2025 resulting from the Company’s change in fiscal year-end. Accordingly, the results for the transition period are not necessarily comparable to the Company’s historical twelve-month fiscal periods. Unless otherwise indicated, references to “fiscal year 2025” refer to the fiscal year ended September 30, 2025, and references to the “Transition Period” refer to the three-month period ended December 31, 2025.
Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Particle. Intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates – Management makes estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements including, but not limited to, those estimates related to digital assets, digital assets receivable, derivatives, leases, debt stock-based compensation, and income taxes. Management believes that estimates utilized in preparing the financial statements are reasonable. Estimates, by their nature, are based on judgment and available information. As such, actual results could differ materially from these estimates included in these financial statements.
Cash and Cash Equivalents – The Company classifies highly liquid temporary investments with an original maturity of three months or less as cash equivalents.
Digital Assets – The Company began holding digital assets in the ordinary course of business as a treasury reserve asset upon receiving 1,000 Bitcoin as part of the closing of the Goldeneye capital investment on August 6, 2025. The Company holds Bitcoin principally as a long-term strategic treasury reserve and as a potential source of balance sheet flexibility and liquidity. From time to time, the Company may monetize a portion of its Bitcoin holdings, including through sales or collateralized financing arrangements, to fund operations, working capital needs, strategic initiatives or other corporate purposes.
As of December 31, 2025, the Company solely held Bitcoin in its corporate treasury. The Company views its Bitcoin as a productive asset, a source of liquidity, yield, and long-term capital appreciation. By activating substantially all of its Bitcoin holdings through structured trading arrangements, the Company seeks to generate incremental income that helps fund operations, expand infrastructure, and reduce the Company’s cost of capital. See description of the Company’s accounting policy for its digital asset derivatives below.
The Company generates yield through its derivative activities on its Bitcoin holdings and actively pursues risk-adjusted return opportunities that support its operating expenses. The Company reports its Bitcoin digital assets as part of the line item, non-current assets on the Consolidated Balance Sheets due to the Company’s intent to retain and hold Bitcoin under its Bitcoin investment approach. The Company engages in trading these assets via Bitcoin derivatives. Trades are executed over the counter via third party trading platforms. As of December 31, 2025, the Company had pledged 290 Bitcoin with a fair value of approximately $
The 1,000 Bitcoin received on August 6, 2025 as part of the Goldeneye capital investment was recorded at an average price of $115,567 per Bitcoin. During the Transition Period and the fiscal year ended September 30, 2025, the Company obtained 12.757 Bitcoin, and 2.617, respectively, through its trading strategy, which has been recognized as other derivative income, net, in the Consolidated Statements of Operations. While the Company may periodically make open market purchases of Bitcoin or opt to sell a portion of the Bitcoin it obtains through its treasury trading strategy from time to time, the Company did not purchase or sell any Bitcoin or any other digital assets during the Transition Period or in fiscal 2025.
| F-7 |
| Table of Contents |
A summary of the Bitcoin outstanding as of December 31, 2025 were as follows:
|
| Digital assets |
|
| Digital assets - receivable, net |
| ||
Bitcoin at fair value as of September 30, 2025 |
| $ |
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| $ |
| ||
Bitcoin generated through trading |
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| ||
Fees |
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| ( | ) |
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Collateral |
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| ( | ) |
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Unrealized gain/(loss) |
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| ( | ) |
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| |
Bitcoin at fair value as of December 31, 2025 |
| $ |
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| $ |
| ||
The Company stores its digital assets with a third-party qualified custodian that employs multi-signature, cold-storage and other industry standard security controls. Access to wallets and private keys is restricted to authorized personnel. The Company evaluates its custodial arrangements periodically and monitors counterparty, operational and cybersecurity risks associated with digital asset custody.
From time to time, blockchain protocols may initiate hard forks or third parties may distribute airdrops that result in the creation or receipt of new digital assets. The Company recognizes such assets only when it obtains control which generally occurs when (i) the asset is accessible within the Company’s custodial wallet environment, (ii) the Company can transfer, sell, or exchange the asset, and (iii) no legal or operational restrictions prevent disposition. When control is obtained, the new asset is recorded at its fair value on the date of recognition in accordance with ASC 820. The corresponding gain is recognized in other income (expense), net, in the Consolidated Statements of Operations. If the Company is unable to access or control the new asset (e.g., due to custodian limitations or unsupported network upgrades), no asset is recognized until such time as control is achieved. The Company does not actively pursue, solicit, or take technical actions to claim hard forks or airdrops and it does not engage in strategies designed to influence protocol events.
Subsequent to the Company’s adoption of ASU 2023-08 on July 1, 2025, the Company accounts for its digital assets, which are comprised solely of Bitcoin, at fair value as of the end of each reporting period. The fair value for its Bitcoin holdings is determined by which eligible market is the Company’s principal market under ASC 820, Fair Value Measurement. The Company determines its principal market annually to determine if (i) there have been recent changes to each market volume and level of activity in the trailing twelve months, (ii) if any markets have developed that the Company has access to, or (iii) if recent changes to each market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Company’s determination of its principal market. Bitcoin is considered a level 1 instrument.
The Company does not use derivatives, futures, options, or other hedging instruments to mitigate its exposure to Bitcoin price volatility. Accordingly, the carrying value of Bitcoin may experience significant fluctuations. Changes in the fair value of digital assets from period to period are recognized within change in the fair value of digital assets in the Consolidated Statements of Operations. The Company uses the specific identification method for its digital asset portfolio.
Digital Assets - Receivable, net – The Company pledges Bitcoin as collateral for its derivative trading activities. The digital assets receivables are initially measured upon transfer at fair value and subsequently remeasured at fair value each reporting period. The changes in fair value are recognized on the Consolidated Statements of Operations, in accordance with ASC 2023-08.
The digital assets receivable balance is evaluated for expected credit losses, in accordance with ASC 326 - Financial Instruments - Credit Losses (“ASC 326”). The Company estimates the allowance for credit losses on digital assets receivables under the current expected credit loss (“CECL”) model using a probability of default (“PD”) and loss given default (“LGD”) methodology. In order to apply the PD LGD approach, management considers the remaining expected time horizon of the receivables and reasonable and supportable forecasts of future conditions. If deemed material, an allowance for credit losses is recorded as a valuation account, directly offsetting the digital assets receivables on the Consolidated Balance Sheets. As of December 31, 2025, the Company had digital asset receivables outstanding of $
| F-8 |
| Table of Contents |
Property and Equipment – Equipment consists of machinery, and furniture and fixtures, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives or lease period of the relevant asset, generally three years. The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset).
Revenue Recognition – The Company will determine revenue recognition from contracts with customers through the following steps:
· | identification of the contract, or contracts, with the customer; |
|
|
· | identification of the performance obligations in the contract; |
|
|
· | determination of the transaction price; |
|
|
· | allocation of the transaction price to the performance obligations in the contract; and |
|
|
· | recognition of the revenue when, or as, the Company satisfies a performance obligation. |
Revenue will be recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
Revenue generated from financial instruments such as derivatives and investments are not subject to Financial Accounting Standards Board (“FASB”) ASC 606 - Revenue from Contracts with Customers (“ASC 606”), including revenue generated from financial instruments, such as derivatives and digital assets. The Company recognizes realized gains and losses, net from the trading of derivative contracts which are reported in other derivative income, net, in the Consolidated Statements of Operations. The Company carries certain assets and liabilities at fair value with changes in fair value reported in Change in fair value of digital assets and other derivative income, net, in the Consolidated Statements of Operations. Refer to Notes 4 and 5 for more information regarding fair value measurement.
Research and Development Expenses – Research and development expenses consist of the cost of officers, employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes.
The Company’s current research and development efforts are primarily focused on improving its radio frequency spectroscopy technology; extending its capacity and developing new and unique applications for this technology. The Company incurred research and development expenses of approximately $
Advertising – Advertising production and communication costs are expensed as incurred and included in selling, general and administrative expenses. Advertising and marketing expenses were $
Fair Value Measurements and Financial Instruments – Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 – Quoted prices in active markets for identical assets and liabilities;
Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
| F-9 |
| Table of Contents |
The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts payable, accrued expenses and accrued expenses - related parties approximate the fair value of the respective assets and liabilities as of December 31, 2025 and September 30, 2025 are based upon the short-term nature of the assets and liabilities. Digital assets and derivatives assets and liabilities are held at fair value in the Consolidated Balance Sheets and measured on a recurring basis.
Derivative Financial Instruments – Pursuant to ASC 815, Derivatives and Hedging, the Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company then determines if an embedded derivative must be bifurcated and separately accounted for. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the Consolidated Statements of Operations. For stock-based derivative financial instruments, the Company uses a Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the Consolidated Balance Sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the consolidated balance sheet date.
Digital Asset Derivatives – As part of its Bitcoin yield generation strategy trading activities, the Company has entered into option derivative contracts on its Bitcoin holdings that resulted in obtaining the right to receive or obligation to deliver a fixed amount of Bitcoin crypto assets in the future. Derivatives are instruments that derive their value from changes in an underlying reference outside the control of the Company. Derivatives may be traded on an exchange (exchange-traded) or they may be privately negotiated contracts, which are usually referred to as over the counter (“OTC”) derivatives. The Manager settled the options in physical delivery. The Company accounted for these derivatives in accordance with ASC 815, Derivatives and Hedging.
These derivative contracts derive their value from underlying asset prices, other inputs, or a combination of these factors. Derivative contracts are recognized as either assets or liabilities in the Consolidated Balance Sheets at fair value, with changes in fair value recognized in other operating expense, net, or other (income) expense, net in the Consolidated Statements of Operations, depending on the nature of the derivative. Cash flows from derivative contracts have been recognized as investing activities and adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities in the Consolidated Statements of Cash Flows, depending on the nature of the derivative.
Stock Based Compensation – The Company maintains a share-based compensation plan under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of Company common stock at the fair market value per share at the time of grant. Stock-based compensation is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. The Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. For an award that has a graded vesting schedule, compensation expense is recognized on a straight-line basis of the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. The amount of compensation cost recognized at any date must at least equal the portion of the grant-date value of the award that is vested at that date.
Convertible Securities – Based upon ASC 815-15, the Company utilized a sequencing approach which outlined the application of ASC 815-40 to convertible securities. The Company evaluated its contracts based upon the earliest issuance date. In the event partial reclassification of contracts subject to ASC 815-40-25 was necessary, due to the Company’s inability to demonstrate it had sufficient shares authorized and unissued, shares were allocated on the basis of issuance date, with the earliest issuance date receiving first allocation of shares. If a reclassification of an instrument were required, it would have resulted in the instrument issued latest being reclassified first. No convertible securities were outstanding as of September 30, 2025 or December 31, 2025.
Net Loss per Share – Under the provisions of ASC 260, Earnings Per Share, basic net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Deemed dividends to preferred shareholders increase the net loss available to common shareholders and impact the net loss per share calculation.
| F-10 |
| Table of Contents |
As of December 31, 2025, and September 30, 2025, the Company had
Comprehensive loss – Comprehensive loss is defined as the change in equity of a business during a period from non-owner sources.
Dividend Policy – The Company has never paid any cash dividends and intends, for the foreseeable future, to retain any future earnings for the development of its business. The Company’s future dividend policy will be determined by the board of directors on the basis of various factors, including results of operations, financial condition, capital requirements and investment opportunities.
Income Taxes - The Company uses an asset and liability approach for accounting for deferred income taxes, which requires recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements but have not been reflected in its taxable income. Estimates and judgments are required in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred income tax assets, which arise from temporary differences and carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled.
The Company regularly assesses the likelihood that its deferred income tax assets will be realized from recoverable income taxes or recovered from future taxable income. To the extent that the Company believes any amounts are not “more likely than not” to be realized, the Company records a valuation allowance to reduce the deferred income tax assets. In the event the Company determines that all or part of the net deferred tax assets are not realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made. Similarly, if the Company subsequently determines that deferred income tax assets, previously determined to be unrealizable, are now realizable, the respective valuation allowance would be reversed, resulting in an adjustment to earnings in the period such determination is made.
ASC 740, Income Taxes, requires that the tax benefit of NOLs, temporary differences, and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Because the Company had previously concluded, based on all available evidence, it was not “more-likely-than-not” that sufficient tax earnings will be generated to utilize the NOL carryforwards, a corresponding valuation allowance equal to
The Company regularly reviews its tax positions. For a tax benefit to be recognized, the related tax position must be “more likely than not” to be sustained upon examination. Any amount recognized is generally the largest benefit that is “more likely than not” to be realized upon settlement. The Company’s policy is to recognize interest and penalties related to income tax matters as an income tax expense. The Company did not have any interest or penalties associated with unrecognized tax benefits for any periods presented in the accompanying financial statements.
On July 4, 2025, new U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act” or “OBBBA”), which made permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA made changes to certain U.S. corporate tax provisions, with certain provisions effective in 2025 and others to be implemented in 2026 and subsequent years. The Company is currently assessing the potential implications of the legislation on its operations and on the Company's consolidated financial statements and will continue to monitor future administrative guidance and regulations that clarify the legislative text of the OBBBA and the bill’s potential effect on the Company’s income taxes.
| F-11 |
| Table of Contents |
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires enhanced disclosures surrounding income taxes, particularly related to rate reconciliation and income taxes paid information. The standard is effective for the Company for annual periods beginning October 1, 2025 on a prospective basis with retrospective application permitted for all prior periods presented. The adoption will only impact annual disclosures. The Company adopted ASU No. 2023-09 for the Transition Period, with no material impact to the consolidated financial statements.
4. FAIR VALUE MEASUREMENTS
The Company’s assets and liabilities recorded at fair value measured on a recurring basis consist of investments in digital assets and derivative assets and liabilities.
In determining the fair value of its digital assets, the Company is able to cite quoted prices as determined by the Company’s principal market. As such, the Company’s digital assets and digital asset - receivables, net which consist entirely of Bitcoin were determined to be Level 1 assets.
In estimating the fair value of its derivative assets and derivative liabilities, the Company uses a market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities found on derivative exchanges. The Company determined that the derivative assets and liabilities are Level 2. Determining which category an asset or liability falls within the hierarchy requires significant judgment.
The Company has a money market account which is considered a Level 1 asset. The balance as of December 31, 2025 and September 30, 2025 was approximately $
There were no transfers in or out of Level 3 or between levels during the Transition Period or during the fiscal year ended September 30, 2025.
5. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In the normal course of business, the Company enters into transactions involving derivative instruments for trading purposes. Risks arise from changes in the market values of the underlying digital assets as well as the possible inability of counterparties to meet the terms of their contracts. The credit risk associated with these contracts is typically limited to the cost of replacing all contracts on which the Company has recorded an unrealized gain.
The Company enters into OTC derivatives, which are negotiated and settled bi-laterally with the derivative counterparty. These trades have maturities of 12 months or less and are not designated as hedging instruments under the authoritative accounting guidance.
The underlying transactions and the corresponding contracts are marked to market at the end of each quarter and the fair value impacts are reflected within the consolidated financial statement line item, other derivative income, net in the Consolidated Statements of Operations. As of December 31, 2025, the Company had outstanding digital asset option contracts with gross notional values of approximately $
As of December 31, 2025, the Company had outstanding digital asset option contracts recognized as current assets within derivative assets with a fair value of approximately $
| F-12 |
| Table of Contents |
6. PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2025 and September 30, 2025 was comprised of the following:
|
| Estimated Useful Lives |
| December 31, 2025 |
|
| September 30, 2025 |
| ||
Machinery and equipment |
|
| $ |
|
| $ |
| |||
Furniture and fixtures |
|
|
|
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|
| |||
Less: accumulated depreciation |
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
| $ |
|
| $ |
| ||
Depreciation expense totaled $
7. LEASES
The Company evaluates lease agreements to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases. Right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The incremental borrowing taking into consideration the Company’s credit quality and borrowing rate for similar assets is used in determining the present value of future payments. Because the rate implicit in each lease is not readily determinable, the Company uses its estimated incremental borrowing rate to determine the present value of the lease payments.
Lease expense is recorded within general and administrative expenses on the Company’s Consolidated Statements of Operations. The Company elected the package of transitional practical expedients, under which the Company (i) did not reassess whether any expired or existing contracts are or contain leases, (ii) the Company did not reassess the lease classification for any expired or existing leases and (iii) the Company did not reassess initial direct costs for any existing leases. Additionally, the Company elected the short-term lease recognition exemption, and does not recognize right-of-use assets or lease liabilities for leases with an initial term of twelve months or less. The Company also elected the practical expedient to not separate lease and non-lease components for all asset classes. In the event the Company is reasonably certain to exercise the option to extend a lease, the Company will include the extended terms.
The Company’s operating leases primarily relate to office and development facilities and generally have initial terms ranging from two to three years, with renewal options. ROU assets and Operating lease liabilities are recognized based on the present value of lease payments over the expected lease term. As of December 31, 2025 and September 30, 2025, ROU assets were $
The weighted average remaining lease term for the Company’s operating lease was approximately
| F-13 |
| Table of Contents |
The minimum future lease payments as of December 31, 2025 and September 30, 2025 were as follows:
|
| Year Ended Dec 31, |
|
| Year Ended Sep 30, |
| ||
2026 |
| $ |
|
| $ |
| ||
2027 |
|
|
|
|
|
| ||
Total remaining payments |
|
|
|
|
|
| ||
Less imputed interest |
|
| ( | ) |
|
| ( | ) |
Total lease liability |
| $ |
|
| $ |
| ||
8. CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
As of December 31, 2025, the Company had no convertible notes payable or promissory notes outstanding. All legacy convertible notes and promissory notes were repaid, converted, or otherwise extinguished prior to December 31, 2025. Accordingly, there was no notes payable activity during the Transition Period from October 1, 2025 through December 31, 2025.
Convertible notes payable as of December 31, 2025 and September 30, 2025 are summarized below:
|
| December 31, 2025 |
|
| September 30, 2025 |
| ||
Convertible note - 1800 Diagonal Lending LLC |
| $ |
|
| $ |
| ||
|
| $ |
|
| $ |
| ||
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|
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|
|
|
|
|
|
Short term - third party |
| $ |
|
| $ |
| ||
|
| $ |
|
| $ |
| ||
The closing of the Goldeneye private placement on August 6, 2025 was contingent upon a number of closing conditions, including, among other things, the conversion by the holder of the shares of the Company’s Series H Convertible Preferred Stock into shares of common stock, and the termination of the Lind Senior Convertible Note and the Struve Loan Documents.
● Convertible Promissory Notes with Clayton A. Struve
On August 6, 2025, the Company repaid in full and extinguished legacy obligations of $
● Convertible Redeemable Promissory Notes with J3E2A2Z LP – Related Party
On June 2, 2025, the Company entered into a Promissory Note Conversion Agreement with J3E2A2Z LP, an entity affiliated with and controlled by Ronald P. Erickson, the Company’s former Chief Executive Officer and Chairman, and the holder of two convertible redeemable promissory notes, pursuant to which J3E2A2Z LP agreed to exchange $
J3E2A2Z LP received one share of Series H Convertible Preferred Stock for every $70.00 in principal converted under the Conversion Agreement. The Series H Convertible Preferred Stock was convertible into Company common stock at an initial conversion price of $
| F-14 |
| Table of Contents |
On August 6, 2025, J3E2A2Z LP elected redemption of all 16,916 shares of the Company’s Series H Convertible Preferred Stock, including interest, for a combination of $
● Senior Convertible Note with Lind Global Fund II, LP
During the fiscal year ended September 30, 2025, the Company issued
Promissory Note with 1800 Diagonal Lending LLC
On February 28, 2025, the Company entered into a Promissory Note with 1800 Diagonal Lending LLC, pursuant to which the Company issued a promissory note with principal face amount of $
Original Issuance Discount Notes
During the fiscal year ended September 30, 2025, the Company entered into Original Issuance Discount Notes (the “Notes”) with three investors for approximately $
Promissory Note with Goldeneye 1995 LLC
On July 28, 2025, Goldeneye 1995 LLC and the Company entered into a Promissory Note in connection with the private placement pursuant to which Goldeneye loaned the Company an aggregate amount of $
During the Transition Period and the year ended September 30, 2025, the Company recognized total interest expense of approximately $
9. EQUITY
Authorized Capital Stock
The following description summarizes important terms of the classes of our authorized capital stock as of December 31, 2025. This summary does not purport to be complete and is qualified in its entirety by the provisions of our articles of incorporation as amended, and our second amended and restated bylaws.
The Company’s authorized capital stock consists of
| F-15 |
| Table of Contents |
Outstanding Shares of Capital Stock. The Company’s common stock is the only security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. All outstanding shares of the Company’s capital stock are fully paid and nonassessable. As of December 31, 2025, there were
Reverse Stock Split
The Board of Directors of the Company approved a reverse stock split of the Company’s authorized and issued and outstanding shares of common stock, par value $0.001 per share at a ratio of 1-for-40 (the “Reverse Stock Split”). The Company filed a Certificate of Change (the “Certificate of Change”) pursuant to Nevada Revised Statutes Section 78.209 with the Secretary of State of the State of Nevada on February 10, 2025. The reverse stock split was processed and announced by FINRA on February 18, 2025 and became effective on February 19, 2025.
As a result of the reverse stock split on the effective date, the number of shares of the Company’s authorized common stock was reduced from 300,000,000 shares to
The reverse stock split had no effect on the par value per share of the Company’s common stock or authorized or outstanding shares of preferred stock, and did not modify any voting rights or other terms of the common stock or preferred stock.
Common Stock Activity
Each share of common stock entitles its holder to one vote on each matter submitted to the stockholders for a vote, and no cumulative voting for directors is permitted. Stockholders do not have any preemptive rights to acquire additional securities issued by the Company.
Transition Period
During the Transition Period, the Company did not issue any shares of common stock, and there were no equity financings, conversions, or share issuances. As of December 31, 2025 and September 30, 2025, the Company had
Fiscal Year Ended September 30, 2025
On December 12, 2024, the Company entered into subscription agreements with certain investors for a registered direct offering of
On December 31, 2024, the Company entered into a Capital on Demand Sales Agreement (the “Sales Agreement”) with JonesTrading Institutional Services LLC, as sales agent, pursuant to which the Company may, from time to time, offer and sell shares of its common stock, through or to JonesTrading as its sales agent or manager.
The offer and sale of the Shares will be made pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-276246) filed with the U.S. Securities and Exchange Commission on December 22, 2023 and declared effective by the SEC on January 11, 2024, as supplemented by a prospectus supplement dated December 31, 2024 and filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended. Pursuant to the Prospectus Supplement, the Company may offer and sell up to a maximum of $
| F-16 |
| Table of Contents |
During the year ended September 30, 2025, the Company issued
During the year ended September 30, 2025, the Company issued
Securities Purchase Agreement with Goldeneye 1995 LLC and Related Transactions
On June 5, 2025, the Company entered into a Securities Purchase Agreement with Goldeneye 1995 LLC, a Nevada limited liability company, whereby the Company issued an amount of shares of the Company’s common stock to Goldeneye 1995 LLC in a private placement equal to the aggregate purchase price divided by the per share purchase price of $
In connection with the private placement, the Company issued
In connection with the private placement, the Company issued
During fiscal year 2025, the Company completed the conversion and redemption of all outstanding shares of its Series C, Series D, and Series H Convertible Preferred Stock in connection with strategic financing and recapitalization transactions. As of December 31, 2025, there were no shares of preferred stock issued or outstanding.
Warrants to Purchase Common Stock
Transition Period
During the Transition Period, warrants to purchase
As of December 31, 2025, the Company had warrants outstanding to purchase an aggregate of
| F-17 |
| Table of Contents |
A summary of the warrants outstanding as of December 31, 2025 were as follows:
|
|
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|
| Weighted |
| ||
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|
|
| Average |
| ||
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| Exercise |
| ||
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| Shares |
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| Price |
| ||
Outstanding as of October 1, 2024 |
|
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| $ |
| ||
Issued |
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| ||
Exercised |
|
| - |
|
|
| - |
|
Forfeited |
|
| ( | ) |
|
| ( | ) |
Expired |
|
|
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| ||
Outstanding as of September 30, 2025 |
|
|
|
| $ |
| ||
Issued |
|
| - |
|
|
| - |
|
Exercised |
|
| - |
|
|
|
| |
Forfeited |
|
| ( | ) |
|
| ( | ) |
Expired |
|
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| ||
Outstanding as of December 31, 2025 |
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| $ |
| ||
Year Ended September 30, 2025
On June 2, 2025, the exercise price of the
On December 12, 2024, the Company closed a registered direct offering and issued
The Company issued a warrant to purchase common stock of
Warrants to purchase
10. EQUITY INCENTIVE PLANS
On August 12, 2021, the Company established the 2021 Equity Incentive Plan, which was adopted by the Company’s shareholders on October 15, 2021. The 2021 Plan was approved for
| F-18 |
| Table of Contents |
Amended and Restated 2021 Equity Incentive Plan
On August 25, 2025, our Board of Directors approved, and on September 29, 2025, our stockholders adopted the Amended and Restated USBC, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), effective September 29, 2025, which increased the plan share reserve by
Under the 2021 Plan, all
The 2021 Plan contains an evergreen provision pursuant to which, on January 1 of each calendar year during the term specified in the 2021 Plan, the number of shares available for issuance under the 2021 Plan automatically increases by a number of shares equal to the lesser of
Stock Option Activity
Transition Period
During the Transition Period, the Company issued stock option grants for
During the Transition Period,
Fiscal Year Ended September 30, 2025
During the fiscal year ended September 30, 2025, the Company issued stock option grants for
A summary of the stock options outstanding as of December 31, 2025 were as follows:
|
|
|
| Weighted |
| |||
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|
| Averaged |
| |||
|
| Options |
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| Exercise Price |
| ||
Outstanding as of September 30, 2024 |
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Granted |
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Forfeitures |
|
| ( | ) |
|
| ( | ) |
Outstanding as of September 30, 2025 |
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| ||
Granted |
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Forfeitures |
|
| ( | ) |
|
| ( | ) |
Outstanding as of December 31, 2025 |
|
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| ||
| F-19 |
| Table of Contents |
The following table summarizes information about stock options outstanding and exercisable as of December 31, 2025:
|
|
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|
| Weighted |
|
| Weighted |
|
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| Weighted |
| ||||||
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| Average |
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| Average |
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| Average |
| ||||||
Range of |
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| Number |
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| Remaining Life |
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| Exercise Price |
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| Number |
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| Exercise Price |
| ||||||
Exercise Prices |
|
| Outstanding |
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| In Years |
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| Outstanding |
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| Exercisable |
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| Exercisable |
| ||||||
| $ |
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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 significant weighted average assumptions relating to the valuation of the Company’s stock option grants issued and repriced during the Transition Period were as follows:
Assumptions |
|
|
| |
Dividend yield |
|
| 0 | % |
Exercise price |
| $ |
| |
Expected term |
| |
| |
Expected volatility |
|
| % | |
Risk free interest rate |
|
| % | |
Stock Option Outstanding and Exercisable
As of December 31, 2025, stock option grants of
| F-20 |
| Table of Contents |
11. INCOME TAXES
The Company has opted to implement ASU 2023-09 on a prospective basis. The Company computes its income tax provision by applying the estimated annual effective tax rate to pretax income or loss and adjusts the income tax provision for discrete tax items recorded in the period. A summary of the income expense (benefit) for the period is as follows:
Income Before Taxes By Jurisdiction |
|
|
| |
|
| 12/31/2025 |
| |
Domestic (U.S) |
| $ | ( | ) |
Foreign |
|
|
| |
Total Income Before Taxes |
| $ | ( | ) |
Income Tax Benefit |
|
|
| |
|
| 12/31/2025 |
| |
Current Tax Expense |
|
|
| |
Federal |
| $ |
| |
State |
|
|
| |
Foreign |
|
|
| |
Total Current Tax Expense |
| $ |
| |
|
|
|
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|
Deferred Tax Expense (Benefit) |
|
|
|
|
Federal |
| $ | ( | ) |
State |
|
|
| |
Foreign |
|
|
| |
Total Deferred Expense (Benefit) |
| $ | ( | ) |
|
|
|
|
|
Total Income Tax Benefit |
| $ | ( | ) |
A reconciliation of the United States Federal Statutory rate to the Company’s effective tax rate for the Transition Period is as follows:
Rate Reconciliation |
|
|
|
|
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| ||
|
| 12/31/2025 |
| |||||
Federal income tax provision at statutory rate |
| $ | ( | ) |
|
| % | |
Changes in valuation allowances |
|
| ( | ) |
|
| % | |
Other deferred |
|
| ( | ) |
|
| % | |
Nontaxable or nondeductible items |
|
|
|
|
| % | ||
Effective tax rate |
| $ | ( | ) |
|
| % | |
The Company’s effective tax rate differs from the federal statutory rate for the Transition Period principally due to the tax effect of the change in valuation allowance and nondeductible expenses.
| F-21 |
| Table of Contents |
The tax effects of temporary differences that give rise to the principal components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and September 30, 2025 are as follows:
Schedule of Deferred Tax assets |
|
|
|
|
|
| ||
|
| December 31, 2025 |
|
| September 30, 2025 |
| ||
Net operating loss carryforward |
| $ |
|
| $ |
| ||
Unrealized Loss on Derivative Contracts |
|
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| ||
Stock based compensation |
|
|
|
|
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| ||
Research and Development |
|
|
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| ||
Accruals and reserves |
|
|
|
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|
| ||
Total Deferred Tax Assets |
|
|
|
|
|
| ||
Valuation allowance against deferred tax assets |
|
|
|
|
| ( | ) | |
Net Deferred Tax Assets |
| $ |
|
| $ |
| ||
Change in valuation allowance during the year |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Schedule of Deferred Tax Liabilities |
|
|
|
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|
|
|
|
Unrealized Gain on Derivative Contracts |
|
| ( | ) |
|
|
| |
Unrealized Gain on Digital Assets |
|
| ( | ) |
|
| ( | ) |
Net Unrealized Gain on Derivative Contracts and Digital Assets |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Net Deferred Tax Liabilities |
| $ | ( | ) |
| $ | ( | ) |
There were no income tax payments made during the Transition Period or the fiscal year ended September 30, 2025.
There were no state or foreign income taxes paid (net of refunds) exceeding 5 percent of total income tax paid (net of refunds).
The Company has incurred net losses since inception, which have generated net operating loss (NOL) carryforwards for federal and state tax purposes.
As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $
Because the Company had previously concluded, based upon all available evidence, it was not “more-likely-than-not” that sufficient tax earnings will be generated to utilize the NOL carryforwards, a corresponding valuation allowance equal to
Under the Tax Reform Act of 1986, the amounts of, and benefits from, NOLs may be limited in certain circumstances, including following a change in control. Section 382 and Section 383 of the Internal Revenue Code impose an annual limitation on the amount of U.S. tax attribute carry-forwards when a corporation has undergone a change in control. Based on the Company’s analysis of the change in control that occurred in 2025 as a result of the Goldeneye capital investment, the Section 382/383 limitation in conjunction with the twenty-year carryforward limitation caused approximately $
As of September 30, 2025, the Company recorded a deferred tax liability with respect to the unrealized gain on its digital asset holdings of approximately $
| F-22 |
| Table of Contents |
As of December 31, 2025, the Company recorded a deferred tax liability with respect to the unrealized gain on its digital asset holdings of approximately $
The Company recognized an income tax benefit of $
The Company is subject to possible tax examination by the IRS and various state taxing authorities for the years ended September 30, 2021 through December 31, 2025, although the Company is not currently under examination in any jurisdiction.
As of December 31, 2025, there were no uncertain tax positions. Management does not anticipate any future adjustments in the next twelve months which would result in a material change to its tax position. For the Transition Period and the year ended September 30, 2025, the Company did not have any interest and penalties.
12. SIGNIFICANT AND OTHER TRANSACTIONS WITH RELATED PARTIES
Transactions with Clayton A. Struve
On March 19, 2024, the Company signed an Extension of Warrant Agreement with Clayton A. Struve, a significant stockholder prior to the Goldeneye capital investment that closed on August 6, 2025, extending the exercise date of warrants covering
On August 6, 2025, Mr. Struve, the sole holder of Series C and D Convertible Preferred Stock, elected redemption of $
On August 6, 2025, Mr. Struve, the holder of convertible debt, elected conversion of $
As of December 31, 2025, all obligations under the Series C and D convertible preferred instruments and convertible notes payable had been satisfied.
Transactions with Former CEO and Chairman Ronald P. Erickson and J3E2A2Z LP
Mr. Erickson previously served as the Company’s Chief Executive Officer and Chairman from January 2023 through August 6, 2025, at which time he transitioned to his current position of President of the Science Division, Senior Vice President.
On January 30, 2024, the Company signed an Extension of Warrant Agreement with each of Mr. Erickson and J3E2A2Z LP, extending the exercise dates of the
On October 22, 2024, the due dates on the two Convertible Promissory Notes, each dated January 31, 2018, with J3E2A2Z LP, an entity controlled by Mr. Erickson, were extended to September 30, 2025 from September 30, 2024 and the interest rate was increased from
On June 2, 2025, the Company entered into a Promissory Note Conversion Agreement with J3E2A2Z LP, pursuant to which $
| F-23 |
| Table of Contents |
On August 6, 2025, upon election by J3E2A2Z LP, the Company redeemed all
On May 5, 2025, the Company issued
Effective August 6, 2025, the Company issued
Transactions with Former Chief Financial Officer Peter J. Conley
Mr. Conley served as our Chief Financial Officer from May 2022 through August 6, 2025. On October 10, 2023, the Company granted him options to purchase
On May 5, 2025, the Company issued
On August 6, 2025, the Company issued
Transactions with Goldeneye 1995 LLC and Robert Gregory Kidd
A majority of the voting power of our outstanding common stock is held by Goldeneye 1995 LLC, which is solely owned and managed by Robert Gregory Kidd, our Chairman and Chief Executive Officer.
On June 5, 2025, the Company entered into a Securities Purchase Agreement with Goldeneye 1995 LLC providing for a private placement of our common stock. At the closing on August 6, 2025, the Company issued approximately
As of December 31, 2025, Mr. Kidd beneficially owned approximately 82% of our outstanding common stock through Goldeneye 1995 LLC.
On July 28, 2025, Goldeneye 1995 LLC and the Company entered into a Promissory Note pursuant to which the Buyer has loaned the Company an aggregate amount of $
Transactions with our Vice Chair Linda Jenkinson and our non-CEO NEOs
On October 7, 2025, the Company’s Board approved a repricing of outstanding stock options granted on August 6, 2025 as permitted by our Amended and Restated 2021 Equity Incentive Plan, including options held by certain executive officers and directors. The exercise price of approximately
On October 7, 2025, our Board approved the grant of
| F-24 |
| Table of Contents |
On December 15, 2025, the Company and Kirk Chapman mutually agreed that Mr. Chapman would depart from his position as Chief Operating Officer, effective immediately. The departure was not the result of any disagreement with the Company on any matter related to the Company's operations, policies or practices. On January 6, 2026, the Company entered into a separation agreement with Mr. Chapman, in connection with his departure. Mr. Chapman’s separation from the Company became effective on December 31, 2025, at which time all of his unvested option awards were forfeited.
Transactions with Former Director John Cronin and ipCapital Group, Inc.
Mr. Cronin served as a director beginning in November 2023 and was the Company’s Interim Chief Technology Officer from September 2024 to August 2025. He is Chairman and CEO of ipCapital Group, Inc., to which the Company paid approximately $
Transactions with Vice Chair Linda Jenkinson, Chairman and CEO Robert Gregory Kidd and Vast Holdings, Inc.
Linda Jenkinson has served as the Company’s Vice Chair since August 2025 and is also the Chief Executive Officer and Chair of Vast Holdings, Inc., the holding company for Vast Bank. In 2024, the Company’s Chairman and CEO, Robert Gregory Kidd, personally invested $
Transactions with Directors
During the Transition Period, the Company did not issue any shares of common stock. During the year ended September 30, 2025, the Company issued an aggregate of
Other than the relationships described above, the Company did not engage in any material related-party transactions during the Transition Period, or the year ended September 30, 2025.
13. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS
Legal Proceedings
The Company may from time to time become a party to various legal proceedings arising in the ordinary course of business. The Company is currently not a party to any pending legal proceeding that is not ordinary routine litigation incidental to the Company’s business.
Properties and Operating Leases
The Company maintains executive and research and testing facilities in Seattle, Washington.
| F-25 |
| Table of Contents |
The Company does not own any real property and believes the existing facilities are suitable and adequate for its current needs.
14. SEGMENT REPORTING
The Financial Accounting Standards Board, Accounting Standard Codification Topic 280, Segment Reporting, requires that an enterprise report selected information about reportable segments in its financial reports issued to its stockholders. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Makers (“CODMs”) to allocate resources and assess performance. The Company has determined that its Chief Executive Officer and Chief Financial Officer collectively function as the CODM because they jointly review consolidated operating results, evaluate performance and make decisions regarding the allocation of resources on a consolidated basis. The CODMs monitor the expense components of the various products and services we offer, but operations are managed and financial performance is evaluated on a corporation-wide basis in comparison to a business plan which is developed each year.
Although the Company conducts activities across multiple business initiatives, including digital asset treasury activities, product development related to tokenized deposits, and legacy technology development, the Company does not prepare or utilize separate financial information at a level below the consolidated financial statements. In addition, the CODMs do not regularly review revenue, expense, or profitability information by business line, product, or service. Accordingly, all operations are considered by management to be one operating segment and one reportable segment as contained in the Consolidated Statements of Operations included in the consolidated financial statements.
The CODMs use consolidated net income (loss) as reported in the consolidated financial statements, as the primary measure of performance for assessing results and allocating resources.
15. SUBSEQUENT EVENTS
Management evaluated subsequent events, for purposes of determining whether adjustment to or disclosure in the financial statements was required through the date the financial statements were issued. Subsequent to December 31, 2025, the Company had the following material transactions requiring disclosure:
Strategic Business Partnership with Vast Bank and Uphold
On January 20, 2026, the Company entered into a Strategic Partnership Agreement with Vast and Uphold, which formalized the parties’ respective roles in the tokenized deposit network, including the Company’s role as network operator, Vast’s role as the issuing bank, and Uphold’s role as platform developer and service provider. The agreement also establishes a revenue-sharing framework and other commercial terms governing the program. The Company’s Chairman and Chief Executive Officer Robert Gregory Kidd has significant ownership interests in Vast Holdings, Inc. (parent of Vast Bank) and Uphold and the Company’s Vice Chair, Linda Jenkinson, serves as President and Chair of Vast Holdings, Inc. No related party transactions requiring disclosure occurred between the Company and these entities during the fiscal year ended December 31, 2025.
Master Loan Agreement
On March 18, 2026, the Company entered into a Master Loan Agreement (the “MLA”) with Payward Interactive, Inc. (the “Lender”), pursuant to which the Company may, from time to time, borrow fiat currency or digital assets on the terms set forth therein in an aggregate principal amount of up to $
On March 20, 2026, the Company entered into a term sheet for a fixed-term loan of $
Affiliate Services Agreement
The Company entered into an affiliate services agreement with Vast (the “Agreement”) on March 18, 2026. Pursuant to the terms of the Agreement, the Company will reimburse Vast for costs incurred to perform certain strategic, operational, and administrative services in support of the further development of the tokenized deposit program offering. We believe that it will be more economical and efficient for certain services necessary for these operations to be performed by officers, employees or consultants of Vast, recognizing that cost reimbursements to Vast must be at least on or favorable to market terms. Total reimbursements under the Agreement are capped at $
Repricing, Issuance, and Forfeiture of Stock Option Grants
On March 18, 2026,
On March 18, 2026, the Company’s Board of Directors approved the issuance of stock option grants for an aggregate of
Subsequent to December 31, 2025,
Bitcoin Market Price Volatility and Potential Earnings Impact
Subsequent to December 31, 2025, digital asset markets have exhibited elevated volatility. The fair value of Bitcoin has declined significantly compared to its reported fair value as of December 31, 2025. ASU No. 2023-08 requires that the fair value of the Company’s Bitcoin holdings be measured at the end of each reporting period with gains and losses from changes in the value of Bitcoin recognized in net income (loss). As a result, the Company’s earnings results are highly sensitive to and directly correlated with changes in the market price of Bitcoin.
None of these subsequent events affected conditions existing at December 31, 2025, and therefore, no adjustments have been made to the accompanying consolidated financial statements.
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| Table of Contents |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 25, 2026 | USBC, INC. |
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| /s/ Robert Gregory Kidd |
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| Name: Robert Gregory Kidd |
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| Title: Chief Executive Officer |
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| (Principal Executive Officer) |
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| /s/ Kitty Payne |
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| Name: Kitty Payne |
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| Title: Chief Financial Officer |
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| (Principal Financial and Accounting Officer) |
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE | TITLE |
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/s/ Robert Gregory Kidd |
| Chief Executive Officer and Director (principal executive officer) |
| March 25, 2026 |
Robert Gregory Kidd |
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/s/ Kitty Payne |
| Chief Financial Officer (principal financial and accounting officer) |
| March 25, 2026 |
Kitty Payne |
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/s/ Linda Jenkinson | Director, Vice Chair |
| March 25, 2026 | |
Linda Jenkinson |
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/s/ Larry K. Ellingson | Director |
| March 25, 2026 | |
Larry K. Ellingson |
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/s/ Ronald P. Erickson |
| Director |
| March 25, 2026 |
Ronald P. Erickson |
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/s/ William A. Owens |
| Director |
| March 25, 2026 |
William A. Owens |
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/s/ Jon Pepper |
| Director |
| March 25, 2026 |
Jon Pepper |
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/s/ Ichiro Takesako |
| Director |
| March 25, 2026 |
Ichiro Takesako |
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EXHIBIT 10.33
SEPARATION AND GENERAL RELEASE AGREEMENT
This Separation and General Release Agreement (“Agreement”) confirms the terms of the separation of Kirk Chapman’s (“you” or “your”) employment with USBC, Inc., a Nevada corporation (the “Company”), including the consideration described below in Section 3 that you will receive if you (a) sign and return this Agreement to the Company (Attn: Kitty Payne) within 21 days of receipt (the “Deadline”), (b) do not revoke the waiver set forth in Section 5 of this Agreement during the 7-day revocation period explained in Section 5 below, and (c) comply with the terms of this Agreement and the Employment Agreement (as defined below).
This Agreement supersedes and replaces all prior versions you received, is the result of negotiation and compromise, and reflects some but not all of your requested changes.
1. Separation of Employment/Service. You acknowledge that the last day of your employment with the Company is/was December 31, 2025 (“Separation Date”). Upon the Separation Date you will be deemed to have resigned from all positions that you hold with the Company and its subsidiaries and affiliates. You acknowledge and agree that the provisions of Sections 4(a) and 5 of that certain employment agreement by and between the Company and you dated August 6, 2025 (the “Employment Agreement”), and related terms and definitions thereof, shall survive the Separation Date, except as expressly modified herein (the “Continuing Obligations”).
2. Final Pay; Expenses. You will receive your final paycheck as required by applicable state law. Your final paycheck shall include payment for all salary/wages that you earned through and including your Separation Date, less applicable withholdings and deductions. You acknowledge and agree that you have submitted your final documented expense reimbursement statement reflecting all business expenses you incurred through the Separation Date, if any, for which you seek reimbursement.
3. Consideration. Subject to the terms and conditions set forth in this Agreement, if you choose to sign and return this Agreement by the Deadline, you do not revoke the waiver in Section 5 of this Agreement, and you abide by the other terms of this Agreement, the Company agrees that notwithstanding anything in the Employment Agreement to the contrary, the Company shall, in consideration of your release of claims under this Agreement:
(i) waive the post-employment non-competition obligations set forth in Section 5(d) of the Employment Agreement (the “Non-Competition Waiver”). For avoidance of doubt, all other post-employment restrictions set forth in Section 5 of the Employment Agreement shall remain in full force and effect; and
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(ii) continue, as severance, payment of your annual base salary (i.e., $320,000 per annum which is $13,333.33 per semi-monthly pay period) until December 31, 2026 (the “Severance Payments”), payable in accordance with the Company’s normal payroll practices and subject to all applicable withholding taxes, commencing on the first pay period after the Effective Date; provided, however, that the first installment shall include any payments that would have been made had such payments commenced with the pay period ending immediately following the Separation Date; and provided, further, however, that the Severance Payments shall cease as of the date (the “Commencement Date”) that you commence “Other Employment or Service” (as defined below). For purposes of the foregoing, the Commencement Date shall be the first date on which you perform any Other Employment or Service. You agree to notify the Company (Attn: Kitty Payne) at least five (5) business days before you commence any Other Employment or Service (or immediately if your Commencement Date is less than five (5) business days after you accept such Other Employment or Service), including the Commencement Date and identification of the Person with whom you will be engaged in such Other Employment or Service. If requested, you agree to provide the Company with documentation (e.g., offer letter, employment agreement) confirming the foregoing within three (3) business days after receiving such request. From time to time, but no more frequently than monthly, the Company may ask you to confirm whether or not you have entered into or agreed to enter into Other Employment or Service, and you agree to respond to any such request within three (3) business days after receiving such request. To the extent that any Severance Payments are made for any period of time following the Commencement Date, you agree to promptly return the gross amount of such Severance Payments (i.e., before applicable tax withholdings), but in any event no later than five (5) business days after your receipt of same.
For purposes of the foregoing, the following terms shall have the assigned meanings:
(a) “Other Employment or Service” shall mean any direct or indirect engagement of your services by any “Person” (as defined below) as an employee, consultant, advisor, independent contractor, director, partner, shareholder, member, joint venturer or in any other capacity.
(b) “Person” shall mean any individual, partnership, joint venture, corporation, limited liability company, firm, group or other entity, but shall not mean Omnumi, Inc.
You acknowledge that the Company is not under any obligation to provide the Non-Competition Waiver or the Severance Payments and that the Company would not agree to provide you with the Non-Competition Waiver or the Severance Payments without your general release of claims and other promises in this Agreement.
4. General Release of Claims. In exchange for the consideration described in Section 3, to which you are not otherwise entitled, you (for yourself and your heirs, executors, administrators, beneficiaries, personal representatives and assigns) hereby completely, forever, irrevocably and unconditionally release and discharge, to the maximum extent permitted by law, the Company, the Company’s past, present and future parent organizations, subsidiaries and other affiliated entities, related companies and divisions and each of their respective past, present and future officers, directors, employees, shareholders, trustees, members, partners, attorneys and agents (in each case, individually and in their official capacities) and each of their respective employee benefit plans (and such plans’ fiduciaries, agents, administrators and insurers, individually and in their official capacities), as well as any predecessors, future successors or assigns or estates of any of the foregoing (collectively, the “Released Parties”) from any and all claims, actions, charges, controversies, causes of action, suits, rights, demands, liabilities, obligations, damages, costs, expenses, attorneys’ fees, damages and obligations of any kind or character whatsoever, that you ever had, now have or may in the future claim to have by reason of any act, conduct, omission, transaction, agreement, occurrence or any other matter whatsoever occurring up to and including the date that you sign this Agreement.
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This general release of claims includes, without limitation, a release of any and all claims:
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| · | of discrimination, harassment, retaliation, or wrongful termination; |
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| · | for breach of contract, whether oral, written, express or implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel or slander; negligence; assault; battery; invasion of privacy; personal injury; compensatory or punitive damages, or any other claim for damages or injury of any kind whatsoever; |
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| · | for violation or alleged violation of any federal, state or municipal statute, rule, regulation or ordinance, including, but not limited to, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act of 1990, Title VII of the Civil Rights Act of 1964, the Civil Rights Acts of 1991, the Americans with Disabilities Act, the Fair Labor Standards Act, the Equal Pay Act, the Lilly Ledbetter Fair Pay Act, the Fair Credit Reporting Act, the Worker Adjustment and Retraining Notification Act, the Family & Medical Leave Act, the Sarbanes-Oxley Act of 2002, the federal False Claims Act, South Carolina Human Affairs Law, South Carolina Wage Payment Law, South Carolina Military Reemployment Rights Law, South Carolina Right to Work Law, South Carolina Interception of Wire, Electronic, or Oral Communications Law, Unlawful termination of an employee replaced by an authorized alien Law, Discrimination Against Employees Who Conscientiously Oppose Working on Sundays Law, in each case, as such laws have been or may be amended; |
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| · | for separation or severance payments and benefits under the Employment Agreement or otherwise, including, without limitation, any and all claims under the Employee Retirement Income Security Act of 1974 (other than Excluded Claims as defined below); |
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| · | to any non-vested ownership interest in the Company, contractual or otherwise, including, but not limited to, claims to stock, stock options, restricted stock, restricted stock units, or other equity or equity-based awards; |
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| · | arising out of or relating to any promise, agreement, offer letter, contract (whether oral, written, express or implied), understanding, personnel policy or practice, or employee handbook; |
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| · | relating to or arising from your employment with the Company, the terms and conditions of that employment, and the termination of that employment, including, without limitation any and all claims with respect to notice of termination, or for discrimination, harassment, retaliation or wrongful discharge under any common law theory, public policy or any federal state or local statute or ordinance not expressly listed above; and |
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| · | any and all claims for monetary recovery, including, without limitation, attorneys’ fees, experts’ fees, costs and disbursements. |
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You expressly acknowledge that this general release of claims includes any and all claims arising up to and including the date you sign this Agreement which you have or may have against the Released Parties, whether such claims are known or unknown, suspected or unsuspected, asserted or unasserted, disclosed or undisclosed. By signing this Agreement, you expressly waive any right to assert that any such claim, demand, obligation or cause of action has, through ignorance or oversight, been omitted from the scope of this release and you further waive any rights under statute or common law principles that otherwise prohibits the release of unknown claims.
Notwithstanding the foregoing, the waiver and release of the claims in this Section 4 shall not become effective unless and until set forth in Section 5.
This general release of claims does not apply to, waive or affect: any rights or claims that may arise after the date you sign this Agreement; any claim for workers’ compensation benefits (but it does apply to, waive and affect claims of discrimination and/or retaliation on the basis of having made a workers’ compensation claim); claims for unemployment benefits or any other claims or rights that by law cannot be waived in a private agreement between an employer and employee; your rights to any vested benefits to which you are entitled under the terms of the applicable employee benefit plan; and any rights to insurance coverage that you may have with respect to any claims made or threatened against you in your capacity as an officer of the Company (the “Excluded Claims”). This general release of claims also does not apply to, waive, affect, limit or interfere with your preserved rights described in Section 12 below.
5. Waiver of Claims under ADEA; Time to Consider/Revoke. You acknowledge, understand and agree that the general release of claims in Section 4 above includes, but is not limited to, a waiver and release of all claims that you may have under the Age Discrimination in Employment Act of 1967, as amended (the “ADEA”) arising up to and including the date that you sign this Agreement. As required by the Older Workers Benefit Protection Act of 1990, you are hereby advised that:
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| · | you are not waiving any rights or claims under the ADEA that may arise after the date you sign this Agreement; |
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| · | you should consult with an attorney of your choice concerning your rights and obligations under this Agreement before signing this Agreement; |
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| · | you should fully consider this Agreement before signing it; |
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| · | nothing in this Agreement prevents or precludes you from challenging (or seeking a determination of) the validity of the waiver under the ADEA; |
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| · | you have up to twenty-one (21) days from the date you received this Agreement to consider whether or not you want to sign it. You also should understand that you may use as much or as little of the review period as you wish before deciding whether or not to sign this Agreement. You can choose to execute this Agreement immediately and waive the remainder of the consideration period; |
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| · | if you do not sign and return this Agreement within the required time period, then the Company’s offer to provide you with the consideration described in Section 3 above, will automatically terminate; |
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| · | at any time within seven (7) days after signing this Agreement, you may change your mind and revoke your acceptance of this Section 5 only. To be effective, your revocation must be in writing and either hand-delivered or sent electronically to the Company (Attn: Kitty Payne) within the 7-day period; |
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| · | the waiver set forth in this Section 5 is not effective or enforceable until (and if) the revocation period has passed without a revocation; |
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| · | if you exercise your right to revoke the waiver set forth in this Section 5, then the Company’s offer to provide you with the consideration described in Section 3 is deemed revoked; and |
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| · | if you do not revoke your acceptance of the waiver set forth in this Section 5, then the waiver set forth in this Section 5 shall automatically, without further action, notice or deed, become effective on the 8th day following the date that you sign this Agreement (the “Effective Date”). |
6. No Pending Claims. You represent and warrant that you have no charges, lawsuits, or actions pending in your name against any of the Released Parties relating to any claim that has been released in this Agreement. You also represent and warrant that you have not assigned or transferred to any third party any right or claim against any of the Released Parties that you have released in this Agreement. For the avoidance of doubt, nothing in this Agreement or any other agreement you may have signed for the benefit of the Company is intended to impair your preserved rights under whistleblower laws or cause you to disclose your participation in any governmental whistleblower program or proceeding.
7. Covenant not to Sue. Except as provided in Section 12 below, you covenant and agree that you will not report, institute or file a charge, lawsuit or action (or encourage, solicit, or voluntarily assist or participate in, the reporting, instituting, filing or prosecution of a charge, lawsuit or action by a third party) against any of the Released Parties with respect to any claim that has been released in this Agreement.
8. Cooperation.
(a) You agree that following your execution of this Agreement, at the Company’s request, you shall provide all assistance and advise the Company or any of its subsidiaries or affiliates in any investigation which may be performed by the Company or any of its subsidiaries or affiliates or any governmental agency of any kind and any litigation, actual or threatened, in which any Released Party may become involved, whether in defense or prosecution, or any other matter in which you were involved or had knowledge during your employment or service with the Company or its subsidiaries or affiliates and/or in which the Company determines that you are a relevant witness or possess relevant information. Such assistance shall include without limitation, (i) responding promptly and truthfully to any inquiries that may arise with respect to matters you were responsible for or involved with during your employment or service, (ii) furnishing good faith advice, information, judgment and knowledge with respect to matters you were responsible for or involved in during your employment or service, and (iii) you making yourself available for interviews by the Company or its subsidiaries or affiliates, or their respective counsel, deposition and/or court appearances at the Company’s request.
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(b) You further agree to cooperate in good faith with the Company in matters relating to the transition of your work and responsibilities on behalf of the Company. The Company will reimburse you for reasonable out-of-pocket expenses you incur in connection with any such cooperation and will make reasonable efforts to accommodate your schedule.
9. Non-Disparagement. You agree that you will not at any time make any disparaging or derogatory statements concerning the Company or its affiliates, or their respective officers, employees, consultants, directors, agents or shareholders, or the Company’s or its affiliates’ respective customers, businesses, products or services, including on social media such as Glassdoor or LinkedIn. However, nothing in this Section is intended to, and this Section shall not, restrict or limit you from exercising your preserved rights described in Section 12, including your protected rights under the National Labor Relations Act, government whistleblower programs, and whistleblowing statutes and regulations, or restrict or limit you from providing truthful information in response to a subpoena, other legal process or valid governmental inquiry.
10. Non-Disclosure Obligations. You acknowledge your obligation to keep confidential, and to not disclose or use (and you agree to keep confidential and not disclose or use) any and all confidential information or otherwise non-public information concerning the Company and its affiliates that you acquired during the course of your employment (such as non-public information about the Company’s business affairs, prospects and financial condition), unless such disclosure is made in response to a subpoena, other legal process, valid governmental inquiry or otherwise required by law or is reasonably necessary to exercise your preserved rights under Section 12. Confidential information includes all trade secrets and information related to know-how, show-how, technical, operating, financial, and other business information and materials. Except as modified by the Non-Competition Waiver, you acknowledge and reaffirm, and agree to comply with, your Continuing Obligations.
11. Return of Company Documents and Other Property. You confirm that you have returned to the Company any and all Company documents, materials and information (whether in hardcopy, on electronic media or otherwise) related to Company’s or its affiliates’ businesses and/or containing any non-public information concerning the Company or any of its affiliates or their respective clients, as well as all equipment, keys, access cards, credit cards, computers, computer hardware and software, sales and promotional materials, contact and client lists, files, notes, drawings, business plans and forecasts, financial information, electronic devices, automobiles and any other Company, affiliate, or client property in your possession, custody or control. You also represent and warrant that you have not retained copies of any of the Company’s or its affiliates’ or clients’ documents, materials or information (whether in hardcopy, on electronic media or otherwise). You also agree that you will disclose to the Company all passwords necessary or desirable to enable the Company to access all information which you have password-protected on any of its computer equipment or on its computer network or system.
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12. Preserved Rights: This Agreement is not intended to, and shall not, in any way prohibit, limit or otherwise interfere with:
(a) your protected rights under federal, state or local law to, without notice to the Company: (i) communicate or file a charge with a government regulator, (ii) participate in an investigation or proceeding conducted by a government regulator, or (iii) receive an award paid by a government regulator for providing information; provided, however, if you bring a claim before the EEOC or similar state or local agency, you shall not be entitled to any relief or recovery (whether monetary or otherwise) and you hereby waive any and all rights to relief or recovery under, or by virtue of, any such filing of a charge with, or investigation, hearing or proceeding conducted by, the EEOC or any other similar state or local government agency relating to any claim that has been released in this Agreement; or
(b) your protected rights to discuss or disclose information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful; or
(c) your protected right to test, under the Older Workers Benefit Protection Act, or like statute or regulation, the validity of the waiver of rights under ADEA in this Agreement; or
(c) your protected right to disclose any facts necessary to receive unemployment insurance, Medicaid, or other public benefits to which you are entitled; or
(d) your right to enforce the terms of this Agreement and to exercise your rights relating to any other Excluded Claims; or
(e) your protected rights, if any, under the National Labor Relations Act.
13. No Other Pay or Benefits; No-Right to Re-Employment. You acknowledge and agree that upon payment of the amounts described in Section 2 above, you will have been paid for all work performed including, without limitation, all salary/wages, bonuses, overtime, commissions and any earned, but unused, vacation time due to you up through and including the last day of your employment. You acknowledge and agree that, except for the Company’s obligation, subject to the terms of this Agreement, to provide the consideration specifically provided in Section 3, you are entitled to no other payments or benefits and the Released Parties have no further liabilities or obligations to you whatsoever, whether arising out of your employment with the Company, your separation from the Company or otherwise. You further acknowledge that you have no right to reinstatement or re-employment with the Company or any affiliate of the Company, or to service on its or their boards of directors and agree that any application by you for re-employment may be rejected without explanation or liability.
14. No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by you, the Company or any of the other Released Parties of any liability, wrongdoing or violation of law.
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15. Breach; Jury Waiver. In the event you breach any of your obligations under this Agreement or the Continuing Obligations, then, in addition to any of the Company’s other rights and remedies at law or in equity, the Company shall have the right to cease providing, and/or require you to repay, the Severance Payments and the Non-Competition Waiver shall be deemed revoked. All of the other terms of this Agreement will remain in effect. The exercise of your preserved rights under Section 12 will, in no event, be considered a breach of your obligations under this Agreement. You and the Company hereby waive your respective rights to trial by jury in any action concerning this Agreement or any and all matters arising directly or indirectly out of this Agreement. You represent that you have consulted with counsel of your choice or have chosen voluntarily not to do so specifically with respect to this jury trial waiver.
16. Section 409A. The intent of the parties is that payments and benefits under this Agreement comply with, or are exempt from, the Internal Revenue Code Section 409A and applicable guidance promulgated thereunder (collectively, “Section 409A”). Accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance with, or exempt from, Section 409A. In no event shall the Company or any of its affiliates be liable for any additional tax, interest or penalties that may be imposed on you under Section 409A or any damages for failing to comply with Section 409A. For purposes of Section 409A, each payment in a series of installment payments under this Agreement shall be treated as a separate payment.
17. Miscellaneous
(a) This Agreement contains the entire agreement and understanding between you and the Company concerning the subject matter of this Agreement and supersedes any and all prior agreements or understandings (both written and oral) between you and the Company concerning the subject matter of this Agreement, except that your Continuing Obligations shall remain in full force and effect (except as modified herein). This Agreement may only be modified by a written document signed by you and an authorized officer of the Company.
(b) This Agreement shall inure to the benefit of the Company and the other Released Parties and shall be binding upon the Company and its successors and assigns. This Agreement also shall inure to the benefit of, and be binding upon, you and your heirs, executors, administrators, trustees and legal representatives. This Agreement is personal to you, and you may not assign or delegate your rights or duties under this Agreement, and any such assignment or delegation will be null and void.
(c) The provisions of this Agreement are severable. If any provision in this Agreement is held to be invalid, illegal or unenforceable, the remaining provisions of this Agreement will remain in full force and effect and the invalid, illegal and unenforceable provision shall be reformed and construed so that it will be valid, legal and enforceable to the maximum extent permitted by law.
(d) The Company and you shall each bear their own costs, fees (including, without limitation, attorney’s fees) and expenses in connection with the negotiation, preparation and execution of this Agreement.
(e) Should the Company prevail in an action to enforce its rights under this Agreement, the Company shall be entitled to recover its costs and expenses, including the costs of litigation, court fees, and reasonable attorneys’ fees incurred in connection with such action.
(f) The failure of the Company to seek enforcement of any provision of this Agreement in any instance or for any period of time shall not be construed as a waiver of such provision or of the Company’s right to seek enforcement of such provision in the future.
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(g) This Agreement will be governed and interpreted under the laws of the State of Nevada, without giving effect to choice of law principles. The Company and you irrevocably consent to the jurisdiction of the federal and state courts in the State of Nevada for the resolution of any disputes arising under or respect to this Agreement.
(h) Given the full and fair opportunity provided to each party to consult with their respective counsel regarding terms of this Agreement, ambiguities shall not be construed against either party by virtue of such party having drafted the subject provision.
(i) The headings in this Agreement are included for convenience of reference only and shall not affect the interpretation of this Agreement.
(j) This Agreement may be executed in one or more counterparts (including by facsimile or electronic .pdf submission), each of which shall be deemed an original, and all of which shall constitute one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered (by telecopy, portable document format (.pdf) or otherwise) to the other party, it being understood that both parties need not sign the same counterpart.
18. Opportunity to Review. You represent and warrant that you:
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| · | have had sufficient opportunity to consider this Agreement; |
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| · | have carefully read this Agreement and understand all of its terms; |
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| · | are not incompetent and have not had a guardian, conservator or trustee appointed for you; |
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| · | have entered into this Agreement of your own free will and volition and that, except for the promises expressly made by the Company in this Agreement, no other promises or agreements of any kind have been made to you by any person or entity whatsoever to cause you to sign this Agreement; |
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| · | understand that you are responsible for your own attorneys’ fees and costs; |
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| · | have been advised and encouraged by the Company to consult with your own independent counsel before signing this Agreement; |
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| · | have had the opportunity to review this Agreement with counsel of your choice or have chosen voluntarily not to do so; |
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| · | you were given at least 21 days to review this Agreement before signing it and understood that you were free to use as much or as little of the review period as you wished or considered necessary before deciding to sign it; and |
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| · | understand that this Agreement is valid, binding, and enforceable against you and the Company according to its terms. |
19. Time for Acceptance. Notwithstanding in this Agreement to the contrary, this Agreement may only be accepted by you on or after the Separation Date (but in no event after the Deadline). You agree that any modifications, material or otherwise, made to this Agreement do not restart or affect in any manner the original twenty-one (21)-day consideration period.
[Signature Page Follows]
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If you wish to accept this Agreement, please sign, date and return it to the Company (Attn: Kitty Payne at kitty.payne@usbc.xyz on or after the Separation Date and no later than the Deadline.
| USBC, INC.: | |||
| By: | /s/ Robert Gregory Kidd | ||
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| Gregory Kidd | |
| Chief Executive Officer | |||
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| EXECUTIVE: |
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| By: | /s/ Kirk Chapman |
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| Kirk Chapman |
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Agreed to and accepted on this 6th day of January, 2026.
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CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
EXHIBIT 10.34
MASTER LOAN AGREEMENT
This Master Loan Agreement (this “Agreement”) is made as of March 18th, 2026 (the “Effective Date”), by and between Payward Interactive, Inc. (“Lender”), a Florida corporation, and USBC, Inc. (“Borrower”), a corporation organized and existing under the laws of the State of Nevada, with its official business address at 300 E 2nd Street, 15th Floor, Reno, Nevada 89501. Lender and Borrower are each individually, a “Party,” and collectively the “Parties”.
RECITALS
WHEREAS, subject to the terms and conditions of this Agreement, Borrower may, from time to time, seek to initiate a transaction pursuant to which Lender will loan certain Fiat Currency or Digital Currency to Borrower for Borrower’s use, and Borrower will pay a Loan Fee as provided in the applicable Loan Term Sheet and return such Fiat Currency or Digital Currency to Lender upon the termination of the Loan or upon such earlier date in accordance with the terms and conditions of this Agreement; and
WHEREAS, Borrower intends to use any Fiat Currency or Digital Currency loaned under this Agreement for lawful commercial purposes.
Now, therefore, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and Borrower hereby agree as follows:
I. Definitions.
“Account Control Agreement” has the meaning given to such term in Section IV(b).
“Airdrop” means a distribution of a new token or tokens resulting from the ownership of a preexisting token. An “Applicable Airdrop” is an Airdrop for which the distribution of new or preexisting tokens can be definitively calculated according to its distribution method, such as a pro rata distribution based on the amount of the relevant Digital Currency held at a specified time. A “Non-Applicable Airdrop” is an Airdrop for which the distribution of new or preexisting tokens cannot be definitively calculated, such as a random distribution, a distribution to every wallet of the relevant Digital Currency, or a distribution that depends on a wallet of the relevant Digital Currency meeting a threshold requirement.
“Anti-Corruption Laws” means the Foreign Corrupt Practices Act of 1977, as amended and the rules and regulations thereunder.
“Anti-Terrorism and Sanctions Laws” means any Applicable Law relating to terrorism, trade sanctions programs and embargoes, or money laundering, all as amended, supplemented or replaced from time to time.
“Applicable Law” means (regardless of jurisdiction) (i) any applicable federal, national, state and local laws, ordinances, regulations, orders, statutory instrument, rules, treaties, codes of practice, decrees, injunctions, or judgments and (ii) any applicable ruling, declaration, regulation, requirement, or interpretation issued by any regulatory, judicial, administrative or governmental body or Person.
“Authorized Agent” has the meaning set forth in Exhibit A.
“Business Day” means any day other than a Saturday or Sunday on which commercial banks are open for business in New York City.
“Business Hours” means between the hours of 9:00 am to 5:00 pm in New York on a Business Day.
“Call Option” means the right of Lender to demand immediate repayment of a Loaned Currency Recall Amount at any time pursuant to the terms of this Agreement.
“Change in Law” means that, on or after the Effective Date, (a) due to the adoption of or change in any Applicable Law or any regulation or (b) due to the promulgation or announcement of or any change in the interpretation by any Governmental Authority, Lender determines in good faith that (X) (i) it has become illegal to maintain or extend a Loan, receive repayment or delivery of Loaned Currency or hold and remain secured by Collateral, whether due to a Digital Currency being classified or interpreted as “securities” under the Securities Act or Exchange Act, or otherwise or (ii) the ability to transfer any Loaned Currency or Collateral has become materially impaired by virtue of its de-listing from two or more U.S. regulated digital currency exchanges.
“Collateral” has the meaning given to such term in Section IV(a).
“Collateral Account” and “Collateral Accounts” each have the meaning given to such term in Section IV(b).
“Collateral Call Margin Ratio” means, for any Loan, the Margin Ratio at or below which Lender may issue a Collateral Call Notification in accordance with this Agreement. The Collateral Call Margin Ratio for each Loan will be specified in the applicable Loan Term Sheet.
“Collateral Return Margin Ratio” means, for any Loan, the Margin Ratio above which Borrower may issue a Refund Notification in accordance with this Agreement. The Collateral Return Margin Ratio for each Loan will be specified in the applicable Loan Term Sheet.
“Confirmation Protocol” means the requirement that the transfer of a Digital Currency may not be deemed settled and completed until (i) the transaction has been recorded in a block and five (5) consecutive subsequent blocks referring back to such block (meaning six (6) blocks in total) have been added to the applicable blockchain; or (ii) the transaction has met a different protocol for a specific Digital Currency agreed to by the Parties in writing.
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“Covered Person” means Borrower, any direct or indirect subsidiary or parent of Borrower and any director, officer, agent, employee or affiliate of Borrower or any of its direct or indirect subsidiaries or parent entities.
“Custodian” has the meaning given to such term in Section IV(b).
“Custody Agreement” has the meaning given to such term in Section IV(b).
“Default Fee” has the meaning given to such term in Section III(c).
“Digital Currency” means Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), Ether Classic (ETC), or Litecoin (LTC), or any other digital currency as agreed upon by the Parties.
“Digital Currency Address” means an identifier of alphanumeric characters that represents a digital identity or destination for a transfer of Digital Currency.
“Early Return Option” means, with respect to a Loan, an option to return all (but not less than all) of the applicable Loaned Currency prior to the Loan Termination Date pursuant to the terms of this Agreement; provided that with respect to any Fixed Term Loan, Borrower shall have an Early Return Option solely to the extent agreed by Lender and Borrower and set forth in the applicable Loan Term Sheet.
“Fiat Currency” means official currency of a country issued by a central bank or other monetary authority.
“Fixed Term Loan” means a Loan with a pre-determined Loan Termination Date, where unless otherwise agreed in the applicable Loan Term Sheet, Lender does not have a Call Option and Borrower does not have an Early Return Option.
“Governmental Authority” means the government of any nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Hard Fork” means a permanent divergence in the blockchain (e.g., when non-upgraded nodes cannot validate blocks created by upgraded nodes that follow newer consensus rules), or an airdrop or any other event which results in the creation of a new token.
“Liquidation Ratio” means, for any Loan, the Margin Ratio at or below which Collateral will be liquidated. The Liquidation Ratio for each Loan will be specified in the applicable Loan Term Sheet.
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“Loan” means a provision of Fiat Currency or Digital Currency made pursuant to and in accordance with this Agreement and the terms and conditions set forth in the applicable Loan Term Sheet.
“Loan Documents” means this Agreement, all Loan Term Sheets entered into between Lender and Borrower from time to time, and any and all other documents, instruments and agreements entered into by the Parties in connection with any Loan hereunder.
“Loan Effective Date” means the date upon which a Loan begins.
“Loan Fee” means the fee Borrower shall pay to Lender for the provision of a Loan, as specified in the applicable Loan Term Sheet.
“Loan Request” has the meaning given to such term in Section II(b).
“Loan Term Sheet” means an agreement entered into by the Parties containing the terms and conditions of a Loan made under this Agreement and memorialized substantially in the form attached hereto as Exhibit B.
“Loan Termination Date” means, with respect to a Fixed Term Loan, the date on which such Loan shall terminate (other than upon an earlier termination pursuant to Section II(d)), as agreed upon by the Parties in a Loan Term Sheet.
“Loaned Currency” means any Fiat Currency or Digital Currency transferred in a Loan hereunder until such Fiat Currency or Digital Currency is transferred back to Lender hereunder; provided, that if any new or different Digital Currency is created or split by a Hard Fork or other alteration in the underlying blockchain and meets the requirements set forth in Section V, such new or different Digital Currency shall be deemed to become Loaned Currency in addition to the original Digital Currency for which such exchange is made.
“Loaned Currency Recall Amount” has the meaning given to such term in Section II(c)(ii).
“Margin Ratio” has the meaning given to such term in Section IV(a).
“Market Spot Rate” means, as at the time of determination, the spot rate for the applicable Digital Currency published on CFBenchmarks.com or such other reference spot rate mutually agreed by the Parties from time to time.
“Material Adverse Effect” means (a) a material adverse effect upon (including due to a material disruption of the bitcoin network or other blockchain network), the operations, business, assets or financial condition of Borrower; (b) a material impairment of the ability of Borrower to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity and/or enforceability of this Agreement or any of the Loan Documents.
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“New Token” means incremental tokens distributed to the holder of Digital Currency in connection with a Hard Fork in the Digital Currency protocol or an Applicable Airdrop.
“OFAC” means the United States Department of the Treasury’s Office of Foreign Assets Control.
“Open Loan” means a Loan without a Loan Termination Date, where Borrower has an Early Return Option and Lender has a Call Option.
“Person” means any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or governmental body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).
“Recall Delivery Day” means the day on which Borrower must return Loaned Currency to Lender in accordance with Lender’s exercise of a Call Option.
“Recall Request Day” means a day, which may be any calendar day, on which Lender exercises a Call Option by notification to Borrower and demands return of a portion or the entirety of the Loaned Currency; provided, however, if such notification is delivered at or after 11:00am New York time, then the next day shall be deemed to be the Recall Request Day.
“Redelivery Day” means the date on which Borrower shall return all of the Loaned Currency in accordance with Borrower’s exercise of an Early Return Option.
“Reportable Compliance Event” means that any Covered Person becomes a Sanctioned Person or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism and Sanctions Law or Anti-Corruption Law or any predicate crime to any Anti-Terrorism and Sanctions Law or Anti-Corruption Law.
“Request Day” has the meaning given to such term in Section II(b).
“Required Margin Ratio” means, for any Loan, the initial Margin Ratio that is required to be satisfied prior to the advance of such Loan. The Required Margin Ratio for each Loan will be specified in the applicable Loan Term Sheet.
“Rewards” means any rewards or other fees, excluding New Tokens, that a holder of certain eligible Digital Currencies may receive (such as in connection with a promotion or as compensation for certain on-chain activities) (i) directly from an issuer or administrator of such Digital Currency; (ii) from an exchange, custodian, or other service provider; or (iii) as a programmatic distribution automatically effected via the Digital Currency’s blockchain network.
“Rewards Account” has the meaning given to such term in Section V(a).
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“Sanctioned Country” means a country subject to a sanctions program maintained under any Anti-Terrorism and Sanctions Law (including, at the time of this Agreement, Russia, Cuba, Iran, North Korea, Syria, and the Crimea, Donetsk and Luhansk regions of the Ukraine).
“Sanctioned Person” means any Person included on a list of designated or restricted persons maintained by OFAC (including, without limitation, OFAC’s Specially Designated Nationals and Blocked Persons List and Sectoral Sanctions Identifications List).
“Term” has the meaning given to such term in Section XXVII.
“Total Loan Balance” means, as of the date of determination, the sum of: (i) the amount of any outstanding Loaned Currency provided to Borrower pursuant to all then outstanding Loans; (ii) the aggregate amount of any outstanding Loan Fees; and (iii) the aggregate amount of any other outstanding fees, expenses or indemnities due hereunder or under any other Loan Documents, in each case, including any fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding.
“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect from time to time in the State of Wyoming; provided, that if the laws of any other jurisdiction would govern the perfection or enforcement of any lien granted hereunder, Uniform Commercial Code or UCC means the Uniform Commercial Code as in effect from time to time in such jurisdiction with respect to such lien.
II. General Fiat Currency and Digital Currency Loan Terms.
(a) Provision of Fiat Currency or Digital Currency
Subject to the terms and conditions hereof, Borrower may, from time to time in its sole and absolute discretion, request a Loan from Lender, and Lender may but shall have no obligation to, in its sole and absolute discretion, extend such Loan on terms acceptable to and agreed by Lender and Borrower and as set forth in a corresponding Loan Term Sheet.
(b) Loan Procedure
From time to time during the Term of this Agreement, on any day (the “Request Day”), an Authorized Agent of Borrower may request from Lender, by email, Telegram or such other electronic means as agreed by Lender, the provision of a specific quantity of a Fiat Currency or Digital Currency (a “Loan Request”), for use by Borrower in accordance with the terms and conditions of this Agreement; provided, that if such Loan Request is received by Lender at or after 11:00 am New York time, then the next day will be deemed to be the Request Day. Once made, Loan Requests may not be withdrawn by Borrower. Upon receipt of a Loan Request, Lender shall inform Borrower whether Lender agrees to provide the requested Fiat Currency or Digital Currency on the terms set forth in the Loan Request. A Loan Request shall be deemed rejected by Lender unless accepted by Lender at or before 5:00 pm New York time on the Request Day or as otherwise agreed by the Parties.
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As part of its Loan Request, Borrower shall provide the following proposed terms:
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| (i) | the type of Fiat Currency or Digital Currency requested; |
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| (ii) | the amount of the Fiat Currency or Digital Currency requested; |
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| (iii) | the type of Collateral Borrower is willing to post; |
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| (iv) | whether the Loan is to be a Fixed Term Loan or an Open Loan; |
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| (v) | the Loan Effective Date; and |
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| (vi) | the Loan Termination Date (if a Fixed Term Loan). |
Upon agreement by and between Lender and Borrower regarding the terms of a Loan Request with respect to a Loan, Lender shall send Borrower a proposed Loan Term Sheet for such Loan. The specific and final terms of such Loan, including the Loan Fee and all applicable collateral requirements, shall be memorialized in such Loan Term Sheet, which shall be delivered and executed by the Parties after the final terms of a Loan are agreed to and prior to the delivery of the applicable Fiat Currency or Digital Currency. In the event of a conflict of terms between this Agreement and a Loan Term Sheet, the terms in such Loan Term Sheet shall govern with respect to the applicable Loan.
Upon execution of a Loan Term Sheet by Lender and Borrower, Borrower shall commence transmission of any required Collateral to satisfy the Required Margin Ratio as specified in such Loan Term Sheet. Following Custodian’s receipt of such Collateral in accordance with the Confirmation Protocol, Lender shall commence transmission of the Fiat Currency or Digital Currency specified in the applicable Loan Term Sheet to Borrower's bank account or Digital Currency Address as agreed by the Parties in such Loan Term Sheet or as directed by Borrower in writing.
(c) Return Procedure
(i) Loaned Currency Return
Borrower shall return the relevant amount of Loaned Currency to Lender by 5:00 p.m. New York Time on the earliest to occur of the Loan Termination Date, the Recall Delivery Day, and the Redelivery Day for such Loaned Currency. Loaned Currency shall be returned directly to a bank account or wallet address designated by Lender.
(ii) Call Option
Lender may, on and as of a Recall Request Day, initiate a Call Option by notification to Borrower and demand the return of a portion or the entirety of one or more Loans, together with all accrued and unpaid fees with respect to each such Loan (the “Loaned Currency Recall Amount”). Borrower shall have twenty-four (24) hours from the time Lender initiates a Call Option to deliver the Loaned Currency Recall Amount to Lender.
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(iii) Early Return Option
With respect to any Open Loan and, to the extent that Lender has agreed to an Early Return Option in the applicable Loan Term Sheet for a Fixed Term Loan, any such Fixed Term Loan, Borrower may notify Lender during Business Hours of Borrower's intent to return all or part of the applicable Loaned Currency prior to the Loan Termination Date or any Recall Request Day, as applicable, which notice shall specify the Loaned Currency to be returned and the contemplated Redelivery Day. Borrower shall provide Lender at least one (1) Business Day’s prior written notice of its intent to exercise its Early Return Option, which notice shall be irrevocable. In connection with its exercise of an Early Return Option with respect to any Open Loan, Borrower will not be responsible for any penalty or premium for the early return of Loaned Currency. In connection with its exercise of an Early Return Option with respect to any Fixed Term Loan, Borrower shall be responsible for an early return penalty with respect to such Loaned Currency to the extent set forth in the applicable Loan Term Sheet.
Borrower's exercise of an Early Return Option shall not relieve it of any of its other obligations herein, including without limitation the payment of outstanding fees (including Loan Fees). Upon receipt of Loaned Currency pursuant to an Early Return Option, Lender will promptly notify Borrower of any applicable Loan Fees or other fees on such returned amount accrued (but not yet paid) through such Redelivery Day, and Borrower shall have up to five Business Days after the Redelivery Day to pay such accrued Loan Fees and other fees (which due date will be deemed to be a “Payment Due Date” for purposes of Section III(d)).
(d) Termination of Loan
A Loan will terminate upon the earliest to occur of:
(i) the Loan Termination Date with respect to such Loan;
(ii) the date of redelivery by Borrower of all Loaned Currency under such Loan, together with all accrued and unpaid fees with respect to such Loan, pursuant to an exercise of an Early Return Option by Borrower or a Call Option by Lender; and
(iii) the occurrence of an Event of Default under Section IX(h) or (i) or the occurrence of any other Event of Default and Lender’s exercise of remedies pursuant to Section X.
Termination of a Loan shall not terminate, limit, or otherwise affect the Term of this Agreement, except as expressly provided otherwise in this Agreement.
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(e) Redelivery in an Illiquid Market; Acts by Governmental Authorities; Changes in Applicable Laws; Sanctions Events
(i) In the event that (A) there is a suspension of or limitation imposed on trading by one or more exchanges relating to any applicable Loaned Currency or (B) the reasonably demonstrated illiquidity of a particular Loaned Currency prevents its redelivery in accordance with this Agreement, then in each case, Lender shall have the right to recall any Loans affected thereby, as determined by Lender in its sole discretion. Following such recall, Borrower shall, within one Business Day, return to Lender any outstanding balance of such recalled Loan, such return to be made in the same quantity and type of the applicable Loaned Currency to the extent possible, and if not possible, shall be required to pay Lender for the value in U.S. Dollars of any affected Loaned Currency as calculated by Lender in its reasonable discretion.
(ii) If a Change in Law occurs with respect to one or more Loans, Lender shall have the right to recall a portion or the entirety of one or more of such affected Loans, together with all accrued and unpaid fees with respect to each such Loan, and within five (5) Business Days following the date on which Lender delivers a recall request:
A. if legally permissible and practicable following such Change in Law, including, without limitation, during any notice or grace period, Borrower shall return to Lender any outstanding balance of such recalled Loan, such return to be made in the same quantity and type of the applicable Loaned Currency; and
B. if return is not legally permissible and/or practicable following such Change in Law, Borrower shall be required to pay Lender for the value in U.S. Dollars of any Loaned Currency so restricted as calculated by Lender in its reasonable discretion.
(i) In the event Lender determines, in its commercially reasonable discretion, that any Covered Person is in violation of any Anti-Terrorism and Sanctions Law or Anti-Corruption Law, or that Lender’s extension or maintenance of a Loan to Borrower shall result in a violation of any Anti-Terrorism and Sanctions Law or Anti-Corruption Law, Lender shall have the right to recall any Loans affected thereby. Following delivery of a recall notice, Borrower shall return to Lender any outstanding balance of such recalled Loan on or before the close of business on the Business Day following the date on which Lender delivers a recall notice (provided that if such delivery occurs after 11:00am New York time, the following day shall be deemed to constitute the delivery date), and such return shall be made in the same quantity and type of the applicable Loaned Currency.
(f) Risk of Loss
During the period of Borrower's use of the Loaned Currency, such use beginning immediately upon Lender’s transfer of the Loaned Currency to Borrower's Digital Currency Address pursuant to the applicable Loan Term Sheet, and ending upon redelivery, all risk of loss related to such Loaned Currency passes to Borrower. Borrower acknowledges and agrees that Lender has no liability to Borrower or any third party for any loss, theft or misuse of any Loaned Currency that Lender has transferred at the instruction of Borrower as provided in this Agreement and the applicable Loan Term Sheet.
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III. Loan Fees.
(a) Loan Fee
Borrower agrees to pay Lender a Loan fee (a “Loan Fee”) on each Loan, at a rate per annum as set forth in the relevant Loan Term Sheet. Except as Lender and Borrower may otherwise agree, Loan Fees shall accrue on the outstanding Loaned Currency under a Loan from and including the date on which the Loaned Currency is transferred to Borrower to the date on which the Loaned Currency is returned in its entirety to Lender. Lender shall calculate any Loan Fees owed on a daily basis and provide Borrower with such calculation upon request.
(b) Origination Fee
From time to time, Lender and Borrower may agree that a fee (the “Origination Fee”) shall be paid in connection with the origination of a Loan. Any such Origination Fee shall be specified in the applicable Loan Term Sheet.
(c) Default Fee
For each calendar day after the Loan Termination Date, the Redelivery Day, or the Recall Delivery Day (whichever is applicable) for which Borrower has not returned any Loaned Currency or failed to timely pay when due any fees or other amounts hereunder, and for each calendar day during any period in which an Event of Default has occurred and is continuing, Borrower shall incur an additional fee (the “Default Fee”) that is equal to the sum of (i) five percent (5%) (annualized, calculated daily) on all outstanding portions of the Total Loan Balance, including accrued and unpaid fees and expenses. Any Default Fee imposed by Lender resulting from an event that constitutes an Event of Default shall not constitute a waiver of any such Event of Default.
(d) Payment of Fees
Unless otherwise agreed, any Loan Fee or other fee payable hereunder shall be paid by Borrower no later than 5:00 p.m. New York time on the fifth (5th) Business Day of each month (the “Payment Due Date”); provided that Default Fees shall be payable on demand. An invoice for Loan Fees and any other fees or amounts due hereunder (the “Invoice Amount”) shall be sent out by Lender on the first Business Day of the month and shall include any Loan Fees and other fees incurred during the previous month as well as any outstanding Loan Fees and other fees. Any fees or other amounts owed under this Agreement shall be payable, unless otherwise agreed by Lender and Borrower in the applicable Loan Term Sheet or as expressly provided otherwise in this Agreement, in the same type of Fiat Currency or Digital Currency that was loaned to Borrower in the applicable Loan, subject to Section II(e). Any failure by Lender to timely invoice Borrower shall not be deemed a default or breach of this Agreement by Lender nor shall any such failure relieve Borrower of its obligation to pay any fees owed under this Agreement or negate any Event of Default resulting from Borrower's failure to timely pay such fees; provided, however, in all instances, the Payment Due Date shall be no earlier than the date falling five (5) Business Days after delivery of an invoice detailing the relevant Invoice Amount.
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(e) Application of Payments and Deliveries
Borrower shall, at the time of making each payment or delivery under this Agreement, specify to Lender the Loan to which such payment or delivery is to be applied. In the event that Borrower fails to so specify, or if an Event of Default has occurred and is continuing, Lender may apply the payment or delivery in such manner as it may determine to be appropriate in its sole discretion.
(f) Application of Insufficient Payments or Deliveries
If at any time insufficient amounts are received by Lender to pay fully all amounts of applicable fees and other amounts then due and payable hereunder, Lender may apply such payment received as it may determine to be appropriate in its sole discretion. Lender may, in its sole discretion and if there is more than one outstanding Loan between the Parties, apply payments by Borrower in one Loaned Currency towards the satisfaction of obligations outstanding with respect to a Loan of another Loaned Currency; provided, that Lender shall make any conversions between such Loaned Currency based upon the applicable Market Spot Rate.
(g) Computations
Fees shall be computed on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which payable. Calculation of fees shall be based on the date when the relevant transfer is deemed to have occurred. Digital Currency shall be deemed to have been transferred by one Party to the other when the applicable Confirmation Protocol for the relevant Digital Currency has been completed and Fiat Currency shall be deemed to have been transferred by one Party to the other when received in the transferee’s bank account. If the requirements of the Confirmation Protocol are not met, or Fiat Currency is not received, by 5:00 pm New York time, the transfer shall be deemed to have been made on the following day.
(h) Taxes
(i) Withholding and/or Deduction for Taxes
All payments in respect of any Loan under this Agreement will be made free and clear of and without withholding or deduction for or on account of any present or future taxes (including without limitation goods and services tax, levies, imposts deductions, charges, and all liabilities with respect to any such present or future taxes, excluding taxes imposed on net income and (all such non-excluded taxes hereinafter referred to as “Taxes”)) other than any deduction or withholding required by Applicable Law.
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Borrower shall use its best efforts (provided that the Lender shall cooperate as may be reasonably required) to ensure that such payments can be made without deduction of withholding tax, or with deduction of withholding tax at a reduced rate, by discharging the liability to such tax by notification pursuant to applicable law (including tax treaties) rather than payment of the tax.
If Borrower becomes obliged to withhold or deduct from any payment to Lender any amount in respect of Taxes it will pay to the relevant governmental authority the full amount required to be deducted or withheld promptly upon determining that such deduction or withholding is required or upon receiving notice that such amount has been assessed against it. Borrower shall promptly notify the Lender that such notification or, as the case may be, deduction has been made, and provide the Lender with evidence that such a notification has been made or, as the case may be, such taxes deducted have been paid to the relevant taxing authority.
Upon request, Lender shall furnish Borrower a properly completed and executed US tax information certificate on the appropriate U.S. Internal Revenue Service Form W-8 or Form W-9, as applicable. Borrower shall report, if required under Applicable Law, all fees paid to Lender and any withheld taxes under this Agreement to the Internal Revenue Service and any relevant state revenue authority, and shall furnish Lender a copy of the applicable U.S. Internal Revenue Service Form 1099, Form 1042-S or other form required by Applicable Law.
(ii) Tax Gross-Up
In case any tax deduction or withholding is required by law on any payment from Borrower to Lender, then Borrower shall pay to the Lender such additional amounts as necessary in order that the net amounts received by the Lender after such deduction or withholding shall equal the respective amounts which would have been received had no such deduction or withholding been required.
(iii) Tax Treatment of Loans
For tax purposes, in the case of a Loan, each of Lender and Borrower intend that, absent a change in law or administrative practice to the contrary, the transfer and delivery of the Digital Currency shall be treated as a loan and not be treated as an exchange of property for other property differing materially in kind or extent (within the meaning of Section 1001 of the Internal Revenue Code of 1986, as amended, as well as the corresponding Treasury Regulations), and each of Lender and Borrower agrees that it will not take any position inconsistent with such treatment for all such tax purposes.
(iv) CARF and CRS
On October 10, 2022, the Organization for Economic Co-operation and Development (“OECD”) published the final rules and commentary of the Crypto-Asset Reporting Framework (“CARF”) as well as enhancements to the Common Reporting Standard (“CRS”).
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The local implementation of CARF and CRS for the jurisdictions in which the Parties operate may require the Parties to obtain additional documentation from each other, including, but not limited to, self-certification and supporting documentation. The Parties may also be required to report to their local tax authority under the local enactment and transposition of CARF and CRS. The Parties hereby agree to timely provide documentation requested by the other Party to enable reporting under CARF, CRS, and any future tax information reporting requirement, as required. The Parties also agree to comply with any reporting requirements resulting from the local enactment of CARF, CRS or other applicable reporting requirements, as applicable.
IV. Collateral Requirements
(a) Collateral
Borrower shall provide and maintain from time to time as collateral an amount of U.S. Dollars or Digital Currency (other than Loaned Currency) to be determined and agreed upon by Lender and Borrower (together with (i) all “security entitlement” (as defined in UCC Section 8-102(17) of the UCC) or “general intangibles” (as defined in UCC Section 9-102(42) of the UCC) of Borrower in respect of or relating to such Digital Currency, (ii) the Collateral Accounts, and (iii) all proceeds (as defined in the UCC) of the foregoing, the “Collateral”) and memorialized in a Loan Term Sheet; provided that upon the provision of any Additional Collateral (as defined below), the Collateral shall be deemed to include the Additional Collateral. The collateralization of any Loan, as of any date of determination, shall be measured as a percentage (the “Margin Ratio”), obtained by dividing (i) the value as of such date of the Collateral supporting such Loan (the “Collateral Value”), by (ii) the value as of such date of the outstanding Loaned Currency under such Loan, together with all accrued and unpaid fees with respect to such Loan, in each case, valued at the Market Spot Rate. To the extent applicable, the Collateral Value may be determined by converting any Digital Currency that serves as Collateral to U.S. Dollars, in each case using the applicable Market Spot Rate; provided that Collateral provided in U.S. Dollars shall always be valued at the face value thereof.
Borrower shall transfer to Custodian, or cause to be maintained in a Collateral Account, Collateral with a Collateral Value sufficient to satisfy the applicable Required Margin Ratio prior to Lender’s transfer to Borrower of any Loaned Currency pursuant to a particular Loan, and Lender shall have no obligation to transfer any Loaned Currency pursuant to a Loan prior to completion of the Confirmation Protocol with respect to the applicable Collateral. Notwithstanding the foregoing, if Lender provides a Loan to Borrower and Borrower does not transfer, or cause to be maintained in a Collateral Account, Collateral sufficient to satisfy the applicable Required Margin Ratio with respect to such Loan, Lender shall have the absolute right to the immediate return of the applicable Loaned Currency.
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(b) Grant of Security Interest
As security for the prompt and complete payment by Borrower of the Loaned Currency in respect of a Loan, all related fees, expenses and indemnities due hereunder, and all other obligations owing by Borrower to Lender hereunder or under any other Loan Document, Borrower hereby pledges, collaterally assigns and grants to Lender a continuing first priority perfected security interest in, and a lien upon, Borrower’s right, title and interest in and to, or otherwise with respect to, the Collateral (including any Additional Collateral), whether now owned or existing or hereafter acquired or arising and regardless of where located (the “Security Interest”). The Security Interest shall immediately and automatically attach upon the provision of the applicable Loaned Currency from Lender to Borrower in respect of such Loan and shall immediately and automatically terminate upon the return and repayment in full of the Loaned Currency under such Loan and all related fees, expenses and indemnities due hereunder and under any other Loan Documents. In addition to the rights and remedies granted to Lender hereunder, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code.
Unless expressly provided otherwise in the applicable Loan Term Sheet, Borrower hereby agrees and affirms Lender’s entitlement to the Collateral. Such entitlement shall not relieve Borrower of any of its obligations hereunder. All Collateral transferred to Custodian by Borrower shall be held in one or more segregated accounts, vaults or wallets maintained with or under the control of Lender or one of its affiliates (the “Custodian”) for the benefit of Borrower (together with any successor account, each, a “Collateral Account” and, collectively, the “Collateral Accounts”). To the extent any Collateral Account is maintained by the Custodian, such Collateral Account shall be subject to both (i) a custody agreement between the Custodian and Borrower (a “Custody Agreement”) and (ii) an account control agreement by and between each of the Custodian, Borrower and Lender (the “Account Control Agreement”). Borrower and Lender hereby agree that all U.S. Dollars and Digital Currency included in Collateral that are maintained in a Collateral Account with the Custodian that is a “securities account” (as defined in the UCC) will be treated as a “financial asset” under UCC Section 8-102. In the event Collateral is transferred to Lender or any of its affiliates (including Custodian), all such Collateral transferred to Lender or its affiliates by Borrower shall be held in one or more segregated accounts, vaults or wallets and shall not be commingled with any other assets or property owned or held by Lender or its affiliates.
For the avoidance of doubt, each Collateral Account (including income, if any, earned on the investments of Collateral in the Collateral Account) will be owned by Borrower for federal income tax purposes. Borrower shall provide to Lender a U.S. Internal Revenue Service Form W-9 or appropriate U.S. Internal Revenue Service Form W-8 no later than the date hereof. Upon the reasonable request of Lender, Borrower shall provide to Lender any additional U.S. Internal Revenue Service forms (or updated versions of any previously submitted U.S. Internal Revenue Service forms) or other documentation at such time or times required by applicable law as may be necessary (i) to reduce or eliminate the imposition of U.S. federal withholding taxes and (ii) to permit Lender to fulfill its federal tax reporting obligations under applicable law with respect to each Collateral Account or any amounts paid to Borrower. If any U.S. Internal Revenue Service form or other documentation previously delivered becomes inaccurate or incomplete in any material respect, Borrower shall promptly provide to Lender accurately updated and complete versions of such U.S. Internal Revenue Service forms or other documentation. Lender shall have no liability to Borrower or any other person in connection with any tax withholding amounts paid or withheld from a Collateral Account pursuant to applicable law to the extent arising from Borrower’s failure to timely provide an accurate, correct and complete U.S. Internal Revenue Service Form W-9, an appropriate U.S. Internal Revenue Service Form W-8 or such other documentation requested by Lender under this paragraph.
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(c) Perfection of Security Interest
Borrower shall take all action that may be necessary and that Lender may reasonably request so as at all times to maintain the validity, perfection, enforceability and first priority of Lender’s security interest in and lien on the Collateral and to enable Lender to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) promptly discharging all liens on the Collateral other than Lender’s security interest or any other liens permitted by this Agreement and (ii) executing and delivering financing statements, control agreements, instruments of pledge, notices and assignments, in each case, in form and substance reasonably satisfactory to Lender, relating to the creation, validity, perfection, maintenance or continuation of Lender’s security interest in and lien on the Collateral under the UCC or other Applicable Law. Borrower hereby authorizes Lender to file against Borrower one or more financing, continuation or amendment statements pursuant to the UCC in form and substance reasonably satisfactory to Lender, provided that the description of the collateral in any such statement is limited to only the Collateral.
(d) Collateral Calls
If at any time while a Loan is outstanding the Margin Ratio with respect to such Loan, is equal to or less than the Collateral Call Margin Ratio as set forth in the applicable Loan Term Sheet, Lender shall have the right to require Borrower to contribute additional Collateral (such Collateral, the “Additional Collateral”) or return sufficient Loaned Currency so that the Margin Ratio with respect to such Loan is equal to or greater than the Required Margin Ratio at the time of such contribution or repayment.
If Lender requires Borrower to increase the Margin Ratio so that it is equal to or greater than the Required Margin Ratio, it shall send a notification substantially in the form attached hereto as Exhibit C (the “Collateral Call Notification”) to Borrower that sets forth: (i) the Margin Ratio as of such time and (ii) the amount of Additional Collateral required to return to the Required Margin Ratio (using the applicable Market Spot Rate if required) as of such time. Borrower shall have twenty-four (24) hours from the time Lender sends the Collateral Call Notification to either (i) deliver the required amount of Additional Collateral to Lender or (ii) return to Lender the amount of Loaned Currency necessary, in each case, to cause the Margin Ratio to return to the Required Margin Ratio at the time of such delivery or return (which amount may differ than the amount specified in the Collateral Call Notification). Failure by Borrower to transfer sufficient Additional Collateral or return sufficient Loaned Currency in response to a Collateral Call Notification shall give Lender the option to declare an Event of Default under Section IX.
Delivery of the Additional Collateral shall be made by bank wire to the account, or if applicable, delivery to the Digital Currency Address designated by Lender, in each case, specified in the Collateral Call Notification, Loan Term Sheet, or as otherwise directed by Lender in a written notice to Borrower, as applicable.
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Borrower acknowledges and agrees that its obligations hereunder, including those contained in this Section IV, shall continue regardless of any request by Lender for Additional Collateral. Borrower further acknowledges and agrees that any failure by Lender to request Additional Collateral when it is entitled to pursuant to this Section (IV)(c) shall not constitute a waiver of its right to Additional Collateral.
(e) Refund of Excess Collateral
If at any time while a Loan is outstanding the Margin Ratio for such Loan is greater than the Collateral Return Margin Ratio as set forth in the applicable Loan Term Sheet for such duration as specified in such Loan Term Sheet, Borrower may request that Lender return such portion of the Collateral such that, after giving effect to the return of such Collateral, the Margin Ratio will not exceed the Required Margin Ratio for such Loan (such Collateral, the “Excess Collateral”).
Borrower shall request the withdrawal of Excess Collateral by notice to Lender and Custodian on a Business Day (the “Refund Notification”) which shall set forth: (i) the applicable Loan, the outstanding Loaned Currency under such Loan and all accrued and unpaid fees with respect to such Loan, (ii) the applicable Collateral Value, (iii) the applicable Market Spot Rate; and (iv) the amount of Excess Collateral to be withdrawn. Borrower may not proceed with a withdrawal of Excess Collateral without Lender’s prior approval. If a Refund Notification is received by Lender prior to 10:00 am New York time on a Business Day, Lender shall approve the Borrower’s withdrawal of Excess Collateral by 6:00 pm New York time on the following Business Day. If a Refund Notification is received by Lender after 10:00 am New York time on a Business Day, Lender shall approve the Borrower’s withdrawal of Excess Collateral by 6:00 pm New York time on the second Business Day following the date that the Refund Notification is received. Excess Collateral shall be withdrawn by Borrower to a Digital Currency Address specified by Borrower or by bank wire to an account specified by Borrower, as applicable. Unless otherwise agreed by Lender in its sole discretion, Borrower shall not be permitted to submit more than two Refund Notifications during any seven-day period. Notwithstanding the foregoing, a Refund Notification shall be null and void and the Lender shall have no obligation to approve the withdrawal of any Excess Collateral if (i) prior to the deadline for the withdrawal of such Excess Collateral, the Margin Ratio does not exceed the Collateral Return Coverage Ratio, or (iii) a default or Event of Default hereunder exists or would result from the withdrawal of such Excess Collateral. For the avoidance of doubt, Lender shall have no obligation to approve the withdrawal of any Excess Collateral to the extent that the withdrawal of such Excess Collateral would result in the Margin Ratio, as determined by Lender in its sole discretion, being less than the Required Margin Ratio after giving effect to such withdrawal of Excess Collateral.
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(f) Collateral Liquidation
If at any time while a Loan is outstanding the Margin Ratio for such Loan is equal to or less than the Liquidation Ratio (whether or not a Collateral Call Notification has been sent or is awaiting response) (a “Liquidation Trigger”), Lender may, at its sole discretion and with no notice required to Borrower, immediately liquidate Collateral and apply the proceeds of such liquidation, less the amount of the Liquidation Fee, to repayment of the Total Loan Balance, as provided below.
Upon the occurrence of a Liquidation Trigger and Lender’s election to liquidate Collateral:
(i) the Total Loan Balance shall become immediately due and payable;
(ii) Lender shall be entitled to a liquidation fee equal to 1% of the proceeds of the sale of the Collateral (the “Liquidation Fee”), which shall be deducted from the sale proceeds by Lender;
(iii) the proceeds of the sale of Collateral, less the Liquidation Fee, shall be applied to Borrower's obligations hereunder in any order as Lender may determine in its sole discretion;
(iv) Borrower shall be responsible for any shortfall to the extent the proceeds of the sale of Collateral are insufficient to pay all such amounts that are due and payable; and
(v) any remaining excess shall be remitted to Borrower.
Borrower shall be responsible for any tax consequences resulting from Lender’s sale of Collateral and application of proceeds in accordance with the foregoing.
(g) Return of Collateral
Upon redelivery of Loaned Currency to Lender by Borrower and completion of the applicable Confirmation Protocol, Lender shall promptly but in no event later than the close of business on the Business Day following such redelivery (the “Return Timing”) return to Borrower the applicable Collateral. For the avoidance of doubt, any Collateral or Excess Collateral returned by Lender shall be the same type and amount provided by Borrower to Lender, except as otherwise provided herein.
V. Distributions
(a) New Tokens
In the event of a Hard Fork or an Airdrop in the blockchain for any Loaned Currency or Collateral, any affected outstanding Loans will not be automatically terminated. Lender will be entitled to receive the benefit and ownership of any incremental tokens generated from Loaned Currency, and, subject to the immediately succeeding sentence, Borrower will be entitled to receive the benefit and ownership of any incremental tokens generated from Digital Currency provided as Collateral, in each case, as a result of a Hard Fork in the Digital Currency protocol or an Applicable Airdrop (each, a “New Token”), to the full extent that Lender or Borrower, as applicable, would have been entitled to such benefit and ownership had the applicable Digital Currency not been provided as Loaned Currency or Collateral, respectively. Notwithstanding anything herein to the contrary, Borrower’s entitlement to any New Tokens in accordance herewith shall be dependent upon Lender’s or its applicable affiliates’ agreement to support such New Tokens, as determined in its or their sole discretion.
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If Lender is entitled to any New Tokens in accordance with the foregoing, Lender shall have the right, in its sole discretion, to elect to receive or forfeit such New Tokens. If Lender elects to receive such New Tokens, Borrower shall promptly, and in any event within five days following the applicable Hard Fork or Applicable Airdrop, transfer such New Tokens to a Digital Currency Address designated by Lender or as otherwise directed in writing by Lender. If Borrower fails to transfer the New Tokens as and to the extent directed by Lender within 30 days following the applicable Hard Fork or Applicable Airdrop, such failure will be considered an Event of Default hereunder. If Borrower is entitled to any New Tokens in accordance with this subsection and such New Tokens are issued to Lender, such New Tokens shall be held by Lender as Additional Collateral hereunder, subject to the terms of this Agreement. Lender’s and Borrower's rights to New Tokens as set forth in this section shall survive the termination of the relevant Loan, return of the applicable Loaned Currency and Collateral, and termination of this Agreement.
(b) Rewards
Borrower will be entitled to receive the benefit and ownership of any Rewards derived from Digital Currency provided as Collateral, to the full extent that Borrower would have been entitled to such Rewards had the applicable Digital Currency not been provided as Collateral. If Borrower is entitled to any Rewards in accordance with this Section and such Rewards are distributed to Lender, Lender shall transfer such Rewards to a Digital Currency Address maintained by Custodian, designated by Borrower, as specified in the applicable Loan Term Sheet (“Rewards Account”).
VI. Conditions Precedent
This Agreement and the obligations set forth hereunder shall not become effective until the date on which the following conditions are satisfied in a manner satisfactory to, or waived in writing by, Lender in its sole discretion:
(a) Lender shall have received counterparts of this Agreement and each other applicable Loan Document duly executed and delivered by an authorized officer of Borrower;
(b) Lender shall have received an incumbency certificate or other documents evidencing Borrower’s authority to execute this Agreement, in form and substance satisfactory to Lender;
(c) Lender shall have received such documentation and other information requested by Lender in connection with regulatory requirements under the applicable “know-your-customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act;
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(d) Lender shall have received UCC, insolvency, tax, judgment lien and execution searches, or equivalent reports or searches with respect to Borrower, each as of a recent date, in each of the jurisdictions where Borrower is organized and the assets of Borrower are located (and other jurisdictions as may be required by Lender at its sole discretion), and Lender shall be satisfied with the results of such searches; and
(e) The Lender shall have received all such other information with respect to Borrower and its business as it shall have requested prior to the Effective Date.
VII. Representations and Warranties
Borrower hereby represent and warrants, as of the date hereof and as of the date of execution of each Loan Term Sheet, as follows:
(a) (i) Borrower has the power to execute and deliver this Agreement, to enter into the Loans contemplated hereby and to perform its obligations hereunder, (ii) Borrower has taken all necessary action to authorize such execution, delivery and performance, (iii) this Agreement constitutes a legal, valid, and binding obligation enforceable against Borrower in accordance with its terms, and (iv) Borrower's execution of this Agreement and entry into Loans contemplated hereby will not contravene (x) the constitutive documents of Borrower, (y) any Applicable Law, or (z) any judgment, award, injunction or similar legal restriction with respect to Borrower.
(b) As of the date of execution of this Agreement, the state of Borrower's organization and Borrower's official business address are accurately set forth in the preamble to this Agreement. Borrower has separately provided information regarding Borrower’s use of other names (including fictitious names, d/b/a’s, trade names or similar names) as well as other entities that have been merged into Borrower during the preceding five (5) years.
(c) No license, consent, authorization or approval or other action by, or notice to or filing or registration with, any Governmental Authority, and no other third-party consent or approval, is necessary for the due execution, delivery and performance by such party of this Agreement or for the legality, validity or enforceability thereof against such party, except for those actions or consents that have already been taken or obtained.
(d) Borrower has not relied on Lender for any tax or accounting advice concerning this Agreement and it has made its own determination as to the tax and accounting treatment of any Loan, Fiat Currency, Digital Currency, Collateral or funds received or provided hereunder.
(e) Borrower (i) is acting for its own account and (ii) is a sophisticated party and fully familiar with the inherent risks involved in the transaction contemplated in this Agreement, including, without limitation, risk of new financial regulatory requirements, potential loss of money and risks due to volatility of the price of any Loaned Currency or Collateral, and voluntarily takes full responsibility for any risk to that effect.
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(f) Borrower is not insolvent and is not subject to any bankruptcy or insolvency proceedings under any Applicable Laws.
(g) There are no proceedings pending or, to its knowledge, threatened, against Borrower, which could reasonably be anticipated to have any adverse effect on the transactions contemplated by this Agreement or the accuracy of the representations and warranties hereunder.
(h) No default or Event of Default hereunder has occurred and is continuing, and no default or Event of Default hereunder shall occur as a result of the provision of the Loan as requested in the applicable Loan Term Sheet.
(i) The transactions contemplated in this Agreement are not prohibited by Applicable Law or other authority in the jurisdiction of Borrower's place of incorporation, place of principal office, or residence and it has all necessary licenses and registrations to operate in the manner contemplated in this Agreement.
(j) Borrower has, or will have at the time of return of any Loaned Currency, the right to transfer such Loaned Currency pursuant to the terms and conditions hereof, free and clear of all liens and encumbrances other than those arising under this Agreement.
(k) Borrower has, or will have at the time of transfer of any Collateral, the right to grant a first priority security interest therein and the right to transfer such Collateral pursuant to the terms and conditions hereof, free and clear of all liens and encumbrances other than those arising under this Agreement. Except with respect to the financing statements filed by Lender, no financing statement covering any of the Collateral or any proceeds thereof is or will be on file in any public office.
(l) [Reserved].
(m) Borrower is an “eligible contract participant” as such term is defined in the Commodity Exchange Act (7 U.S.C. § 1a(18)), as amended from time to time, and any successor statute.
(n) Borrower is an accredited investor as such term is defined in Rule 501(a) of Regulation D (17 C.F.R. § 230.501(a)) as amended from time to time, and any successor regulation, promulgated under the Securities Act of 1933.
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(o) (i) No Covered Person is a Sanctioned Person and (ii) no Covered Person (A) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism and Sanctions Law; (B) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism and Sanctions Law; or (C) engages in any dealings or transactions prohibited by any Anti Terrorism and Sanctions Law.
(p) All information furnished by Borrower or on its behalf to Lender is true, accurate and complete in every material respect and no information provided herein or pursuant to the terms hereof is incorrect or misleading in any material respect.
VIII. Covenants.
Until the return of all Loaned Currency and the termination of this Agreement, Borrower hereby covenants and agrees with Lender as follows:
(a) Delivery of Financial Statements, Notices of Default, etc. Borrower shall furnish (or otherwise make publicly available) to Lender:
(i) as soon as available and in any event within one hundred and twenty (120) days of the end of each fiscal year of Borrower, a copy of the annual audited consolidated financial statements of Borrower and its consolidated subsidiaries as of the close of such fiscal year, including statements of income, stockholders’ or shareholders’ equity and cash flow and a balance sheet as at the end of such fiscal year, prepared in accordance with generally accepted accounting principles consistently applied, which financial statements shall be audited by independent public accountants of recognized national standing and accompanied by an opinion of such accountants (which opinion shall not be qualified as to scope of audit or as to the status of Borrower or any of its consolidated subsidiaries as a going concern); provided, however, that to the extent such statements are publicly available, such availability shall constitute delivery hereunder;
(ii) as soon as available and in any event within sixty (60) days of the end of each fiscal quarter of Borrower, a copy of the quarterly unaudited consolidated financial statements of Borrower and its consolidated subsidiaries as of the close of such fiscal quarter, including statements of income, stockholders’ or shareholders’ equity and cash flow and a balance sheet as at the end of such fiscal year, prepared in accordance with generally accepted accounting principles consistently applied, which financial statements shall be certified by a financial officer of Borrower as fairly presenting the consolidated financial condition and results of operations of Borrower and its consolidated subsidiaries, all in conformity with generally accepted accounting principles consistently applied; provided, however, that to the extent such statements are publicly available, such availability shall constitute delivery hereunder;
(iii) [Reserved];
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(iv) promptly, but in any event within one (1) Business Day of, the occurrence of any default or Event of Default under this Agreement, a written notice setting forth the nature of such occurrence and the steps being taken by Borrower to remedy such occurrence;
(v) promptly, but in any event within one (1) Business Day of, delivery to its investors, any investor communications;
(vi) promptly, but in any event within one (1) Business Day after obtaining knowledge thereof, written notice of (i) any investigation by a Governmental Authority or any litigation commenced or threatened against Borrower where Borrower is specifically named in such investigation or litigation, and (ii) any lien or “adverse claim” (within the meaning of Section 8-502 of the UCC) made or asserted against any Collateral; and
(vii) from time to time, such further information (whether or not of the kind mentioned above) regarding the business, affairs and financial condition of Borrower as Lender may reasonably request in writing.
(b) Notice of Certain Actions. Borrower shall provide Lender prompt notice (i) if at any time there is entered against Borrower any order, decree, determination or instruction issued on the authority of any rule, regulation or proceeding of any governmental commission, bureau or other administrative agency or self-regulatory organization, including the SEC and the NYSE, which is reasonably likely to materially adversely affect the borrowing of Loaned Currency by Borrower, (ii) if at any time any litigation, arbitration or similar proceeding against Borrower is commenced which is reasonably likely to materially adversely affect the borrowing of Loaned Currency by Borrower, (iii) if at any time there is commenced any investigation or proceeding which is reasonably likely to result in the expulsion of Borrower from any stock exchange, including the NYSE, or from the National Association of Securities Dealers, Inc., or from any material self-regulatory organization, or a suspension of Borrower's power under Federal or state law to transact business as a broker or dealer in securities or if Borrower is so expelled or suspended, (iv) if at any time Borrower shall receive written notice that Borrower is under special surveillance by any stock exchange, including the NYSE, or by any other self-regulatory organization, (v) if at any time Borrower shall receive written notice that the SEC or any material self-regulatory organization, including the NYSE, has notified the Securities Investor Protection Corporation (“SIPC”) pursuant to Section 5(a)(1) of the Securities Investor Protection Act of 1970 (“SIPC Act”) of facts which indicate that Borrower is in or is approaching financial difficulty, or (vii) if at any time SIPC shall file an application for a protective decree with respect to Borrower under Section 5(a)(3) of the SIPC Act. Any such notice shall set forth in reasonable detail a description of the event which has occurred and of the action, if any, which Borrower proposes to take with respect thereto. Borrower shall forward to Lender a copy of any order, decree, determination, instruction or other written evidence received by it of or with respect to any matter referred to in the first sentence of this subparagraph (b) with respect to which notice is required to be given to Lender by such sentence. Borrower shall comply with any such order, decree, determination or instruction within the time required for such compliance and with any changes of rules or regulations of the SEC or the NYSE or any other self-regulatory organization by the effective date thereof or the time for compliance specified therein or, within the time required for compliance, shall cause the same to be revoked, reversed, challenged or modified, provided that such modification avoids the occurrence of an event described in this Section VIII(c).
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(c) Further Acts. Borrower shall, from time to time, do and perform any and all acts and execute any and all further instruments necessary or reasonably requested by Lender to more fully effect the purposes of this Agreement and the pledge of the Collateral hereunder, including, without limitation, the execution and filing of financing statements and continuation statements relating to the Collateral under the provisions of the Uniform Commercial Code.
(d) Compliance with Laws. Borrower shall comply in all material respects with all Applicable Laws with respect to the Collateral or any part thereof or to the operation of Borrower's business.
(e) Conduct of Business and Maintenance of Existence and Assets. Borrower shall (i) conduct continuously and operate actively its business according to good business practices in the ordinary course of business; (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so would have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under any Applicable Laws, where the failure to do so would have a Material Adverse Effect.
(f) Books and Records. Borrower shall keep proper books of record and account in which full, true and correct entries, in all material respects, will be made of all dealings or transactions of or in relation to its business and affairs (including without limitation accruals for taxes), all in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by Borrower.
(g) Payment of Taxes. Borrower shall pay, when due, all material taxes, assessments and other charges lawfully levied or assessed upon Borrower or any of the Collateral, including material personal property taxes, assessments and charges and all material franchise, income, employment, social security benefits, withholding, and sales taxes.
(h) [Reserved].
(i) Insurance. Borrower shall maintain, at a minimum, commercial general liability insurance in an amount satisfactory to Lender, and such other insurance coverages, as is customary in the case of companies engaged in businesses similar to Borrower and having deductibles consistent with customary practice. Borrower's insurance shall include coverage that insures against the theft or the accidental or intentional loss or destruction of the private keys associated with the Collateral, subject to certain customary exclusions.
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(j) Payment of Indebtedness. Borrower shall pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods) all its material indebtedness.
(k) Standards of Financial Statements. Borrower shall cause all financial statements referred to in Section VIII(a) to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments) and to be prepared in reasonable detail throughout the periods reflected therein (except as disclosed therein and agreed to by the reporting accountants or officer, as applicable).
(l) Additional Beneficial Ownership Certification. Borrower shall provide to Lender, reasonably promptly, any change in the information provided in the most recent Beneficial Ownership Certification (if any) delivered to Lender that would result in a change to the list of beneficial owners identified in such certification.
(m) Operational Security. Borrower shall follow and maintain operational security standard practices throughout the term of this Agreement, including, without limitation, ensuring that all communications initiated by Borrower to Lender involving private or public keys or other sensitive information are accomplished through secure means, such as encrypted email communication. Borrower shall employ adequate security measures to safeguard any passwords, personal identification numbers and other credentials that can be used to access information about any Loan, the Loaned Currency, the Collateral and any related transfers of Digital Currency.
(n) Anti-Terrorism and Sanctions. (i) Borrower shall ensure that (A) no Covered Person shall become a Sanctioned Person, (B) no Covered Person shall use any Loan to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism and Sanctions Law, (C) the funds used to repay any amounts owing Lender hereunder shall not be derived from any unlawful activity and (D) with regard to the use of any Loan, each Covered Person shall comply with all Anti-Terrorism and Sanctions Laws and Anti-Corruption Laws, and (ii) Borrower shall promptly notify Lender in writing upon obtaining knowledge of the occurrence of a Reportable Compliance Event, except to the extent such notice is prohibited by Applicable Law.
(o) Sale of Collateral. Borrower shall not sell, lease, transfer or otherwise dispose of any Collateral in violation of this Agreement.
(p) Creation of Liens. Borrower shall not create or suffer to exist any lien or transfer upon or against any of the Collateral in violation of this Agreement. Notwithstanding anything to the contrary in the foregoing, the following liens are permitted: (a) liens arising as a matter of law (other than liens arising out of violations by Borrower of Applicable Law) incurred in the ordinary course of business and (b) liens on the Collateral in favor of Lender.
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(q) Nature of Business. Borrower shall not substantially change the nature of the business in which it is presently engaged other than in the ordinary course of Borrower's business and business activities reasonably incidental thereto, substantially related thereto, reasonable extensions thereof or complementary thereto.
(r) Fiscal Year and Accounting Changes. Borrower shall not change its fiscal year end or make any change (a) in accounting treatment and reporting practices except as required or permitted by GAAP, whether or not GAAP applies, or (b) in tax reporting treatment except as required by Applicable Law.
(s) Organizational Changes. Borrower shall not, without providing Lender thirty (30) calendar days’ prior written notice, change (i) its legal name, (ii) its jurisdiction of organization or, if not a registered organization, location for purposes of the UCC, (iii) its type of organization, (iv) the location of its principal place of business or chief executive office or (v) its constituent documents in a manner materially adverse to Lender.
(t) Lawful Commercial Purposes. Borrower shall use all Loaned Currency solely for lawful commercial (i.e., not for consumer, household, family or personal) purposes.
IX. Events of Default
Any of the following events shall constitute an event of default, and shall be herein referred to as an “Event of Default” or “Events of Default”:
(a) the failure of Borrower to return Loaned Currency upon the termination of any Loan, in accordance with applicable return terms and conditions ;
(b) the failure of Borrower to pay any and all Loan Fees, Default Fees or other fees or to remit any New Tokens, in each case, when due hereunder, and such failure is not remedied within two (2) Business Days;
(c) the failure of Borrower to transfer Collateral or Additional Collateral as required hereunder or pursuant to a Loan Term Sheet, or the failure by Borrower to timely and sufficiently respond to a Collateral Call Notification (including through the return of Loaned Currency) by increasing the Margin Ratio to no less than the Required Margin Ratio in accordance with Section IV(c);
(d) the failure of Borrower to perform, comply with or observe any agreement, covenant or obligation under Sections VIII(a), (b), (h), (o), (p), or (t) and in each case, such failure is not remedied within two (2) business days;
(e) the failure of Borrower to perform, comply with or observe any agreement, covenant or obligation under any provision of this Agreement or the Loan Documents (other than those provisions referred to in Sections IX(a), (b), (c) and (d), and such default shall not have been remedied within ten (10) Business Days following the occurrence of such default;
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(f) any representation or warranty made or furnished by Borrower in any of the Loan Documents shall prove to be incorrect or false in any material respect (or if already qualified by materiality, in any respect) as of the date of making or deemed making thereof;
(g) the occurrence of a Liquidation Trigger;
(h) any case or proceeding shall be commenced against Borrower or any of its subsidiaries in a court having competent jurisdiction seeking a decree, order or other relief in respect of Borrower or any of its subsidiaries (i) under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable United States federal or state bankruptcy or other similar law or, in each case, a similar case or proceeding under the laws of a foreign jurisdiction, or (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of Borrower or any of its subsidiaries or of any substantial part of its or their assets, and such case or proceeding under (i) or (ii) shall remain undismissed or unstayed for 60 consecutive days or such court shall enter a decree or order granting the relief sought in such case or proceeding;
(i) Borrower or any of its subsidiaries shall (i) file a petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable United States federal or state bankruptcy or other similar law or, in each case, a similar case or proceeding under the laws of a foreign jurisdiction, or (ii) consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of Borrower or any of its subsidiaries, or of any substantial part of its or their assets;
(j) the issuance of a notice of lien, levy, assessment, injunction or attachment against any material portion of the Collateral which is not stayed or lifted within thirty (30) days;
(k) any judgment or judgments, writ(s), order(s) or decree(s) by a court having competent jurisdiction for the payment of money are rendered against Borrower for an aggregate amount in excess of $1,000,000, and such judgment, action or lien shall remain undischarged or unstayed for a period of thirty (30) days;
(l) the occurrence of any event or development which has a Material Adverse Effect on Borrower;
(m) any lien created hereunder or provided for hereby or under any related agreement ceases to be or is not a valid and perfected lien having a first priority interest and is not remedied within five (5) Business Days from the date Borrower is notified of such failure;
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(n) (i) Borrower shall default in the payment (whether at stated maturity, upon acceleration, upon required prepayment or otherwise), beyond any period of grace provided therefor, of any principal of or interest on any indebtedness with a principal amount (individually or in the aggregate) in excess of $2,500,000, or (ii) any other breach or default (or other event or condition), beyond any period of grace provided therefor, shall occur under any agreement, indenture or instrument relating to any such indebtedness with a principal amount (individually or in the aggregate) in excess of $2,500,000, if the effect of such breach or default (or such other event or condition) is to cause the holder or holders of such other indebtedness (or a Person on behalf of such holder or holders) to cause (upon the giving of notice or otherwise), such indebtedness to be due and payable;
(o) any material portion of this Agreement or any Loan Document shall, for any reason, cease to be valid and binding on Borrower, or Borrower notifies Lender in writing of its inability to or its intention not to perform any of its obligations hereunder, or otherwise disaffirms, rejects, or repudiates any of its obligations hereunder in writing; or
(p) any material portion of the Collateral shall be seized, subject to garnishment or taken by a Governmental Body, and as a result, the Margin Ratio is less than the Required Margin Ratio, and Borrower has not remedied such default within one (1) Business Day of the occurrence of such default.
X. Remedies
(a) Upon the occurrence and during the continuation of any Event of Default, Lender may, at its option, do any or all of the following: (1) declare the entire outstanding Total Loan Balance and any outstanding fees or other amounts accrued hereunder immediately due and payable; (2) terminate this Agreement and any Loan hereunder upon written notice to Borrower; and (3) exercise all other rights and remedies available to Lender hereunder, under Applicable Law, or in equity; provided, that upon any Event of Default under Section IX(h) or (i), this Agreement and any and all Loans provided pursuant to this Agreement shall automatically be terminated and all fees and other amounts accrued hereunder shall become due and payable immediately.
(b) In connection with the exercise of its remedies pursuant to this Section X, Lender may (1) exchange, enforce, waive or release any portion of the Collateral or Loaned Currency in favor of Lender; (2) apply such Collateral or security and direct the order or manner of sale thereof as Lender may, from time to time, determine; and (3) settle, compromise, collect or otherwise liquidate any such Collateral or security in any manner upon the occurrence and during the continuation of an Event of Default, without affecting or impairing Lender’s right to take any other further action with respect to any Collateral or security or any part thereof. The proceeds of the sale of Collateral by Lender shall be applied to Borrower's obligations hereunder in any order as Lender may determine in its sole discretion. In connection the sale of Collateral or other assets of Borrower as an exercise of remedies pursuant to this Section X, Lender shall be entitled to a liquidation fee equal to 3% of the proceeds of the sale of the Collateral, which shall be deducted from the sale proceeds by Lender prior to application to any other amounts owed hereunder.
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(c) Lender shall also have the right, in connection with the exercise of its remedies pursuant to this Section X, to purchase any relevant Fiat Currency or Digital Currency in the amount of any insufficiency in a commercially reasonable manner, or foreclose on, liquidate, sell or collect on the Collateral or any other assets of the Borrower that Lender or any affiliate of Lender may then hold (including any such assets of Borrower held in a customer account at Lender or any affiliate of Lender), and apply the proceeds to satisfy any and all obligations of Borrower to Lender or any affiliate, whether arising under a different Loan or agreement, or net, set off and/or recoup any and all obligations of Lender or any affiliate of Lender to Borrower, against either the purchase price of such replacement Fiat Currency or Digital Currency or any such obligations of Borrower to Lender or any affiliate of Lender. In connection with the exercise of such remedies, Lender and its affiliates are hereby authorized to apply or transfer any Collateral of Borrower interchangeably between Borrower and its affiliates solely to satisfy any obligations of Borrower to Lender or its affiliates at any time with prior notice (email sufficient) to Borrower.
(d) Borrower acknowledges that the price of Digital Currency is (i) volatile and thus may decline speedily in value, and (ii) Digital Currencies are a type of asset customarily sold on a recognized market. Accordingly, Borrower acknowledges and agrees that it would not be necessary under Section 9-611(b) of the Uniform Commercial Code to give notice of any proposed disposition of the Collateral. Borrower acknowledges that upon the occurrence of an Event of Default and the exercise of remedies pursuant to the Loan Documents, (x) a commercially reasonable bulk sale of the Collateral may occur which may result in a substantially discounted realization value with respect to the Collateral compared to the then current market price, and (b) a commercially reasonable private sale of the Collateral may occur which may result in less proceeds than in a public sale.
XI. Rights and Remedies Cumulative.
No delay or omission by a Party in exercising any right or remedy hereunder shall operate as a waiver of the future exercise of that right or remedy or of any other rights or remedies hereunder. All rights of each Party stated herein are cumulative and in addition to all other rights provided by law, in equity.
XII. Survival.
Any expiration or termination of this Agreement will not affect any accrued claims, rights or liabilities of the Parties, and all provisions which must survive to fulfill their intended purposes, or by their nature are intended to survive such expiration or termination will survive, including Sections XII, XVI, XXVI, XXIX.
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XIII. Collection Costs.
In the event Borrower fails to return any Loaned Currency or upon the occurrence and during the continuation of any Event of Default hereunder, Borrower shall, upon demand, pay to Lender all reasonable costs and expenses, including without limitation, reasonable attorneys’ fees and court costs, broker fees, and technology costs incurred by Lender in connection with the enforcement of its rights hereunder.
XIV. Passwords and Security.
Each Party is responsible for maintaining adequate security and control of any and all passwords, private keys, and any other codes that it uses to transfer or receive Loaned Currency hereunder. Each Party will be solely responsible for the private keys that it uses to make the transfers and maintaining secure back-ups. Borrower will promptly notify Lender of any security breach of its accounts, systems or networks as soon as possible. Borrower will reasonably cooperate with Lender in the investigation of any suspected unauthorized transfers or attempted transfers using a Party’s account credentials or private keys, and any security breach of a Party’s accounts, systems, or networks, and Borrower shall provide Lender with the results of any third-party forensic investigation that it may undertake. Each Party will be responsible for any unauthorized transfers made utilizing its passwords, private keys, and any other codes it uses to make or receive transfers.
XV. Governing Law; Dispute Resolution.
This Agreement and each Collateral Account (and any account agreement governing such Collateral Account is hereby amended to provide that such Collateral Account) is governed by, and shall be construed and enforced under, the laws of the State of Wyoming without regard to any choice or conflict of laws rules. If a dispute arises out of or relates to this Agreement, or the breach thereof, and if such dispute cannot be settled through negotiation it shall be finally resolved by binding arbitration administered in the County of Santa Clara, State of California, by the American Arbitration Association under its Commercial Arbitration Rules, or such other applicable arbitration body as required by law or regulation. The Parties agree to waive their rights to a jury trial. If any proceeding is brought for the enforcement of this Agreement, then the successful or prevailing Party shall be entitled to recover reasonable and documented attorneys’ fees and other costs incurred in such proceeding in addition to any other relief to which it may be entitled.
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XVI. Confidentiality.
(a) Each Party to this Agreement shall hold in confidence all information obtained from the other Party in connection with this Agreement and the transactions contemplated hereby, including without limitation any discussions preceding the execution of this Agreement (collectively, “Confidential Information”). Confidential Information shall not include information that the receiving Party demonstrates with competent and documented evidence was, or becomes, (i) available to the public through no violation of this Section XVI, (ii) rightfully in the possession of the receiving Party on a non-confidential basis prior to disclosure, (iii) available to the receiving Party on a non-confidential basis from a source other than the other Party or its affiliates, subsidiaries, officers, directors, employees, contractors, attorneys, accountants, bankers or consultants (the “Representatives”), or (iv) independently developed by the receiving Party without reference to or use of such Confidential Information.
(b) Each Party shall (i) keep and maintain such Confidential Information confidential in the same manner as it treats its own confidential information and shall not, without the prior written consent of the other Party, disclose or allow the disclosure of such Confidential Information to any third party, except as otherwise herein provided, and (ii) restrict internal access to and reproduction of the Confidential Information to a Party’s Representatives only on a bona fide need to know basis related to effecting the purpose of this Agreement; provided, however, that such Representatives shall be under an obligation of confidentiality at least as strict as set forth in this Section XVI.
(c) Each Party also agrees not to use Confidential Information for any purpose other than in connection with transactions contemplated by this Agreement.
(d) The provisions of this Section XVI will not restrict a Party from disclosing the other Party’s Confidential Information to the extent required by any law, regulation, or written direction by a court of competent jurisdiction or government agency or regulatory authority with jurisdiction over said Party; provided that the Party required to make such a disclosure, to the extent practicable and permitted by law, uses reasonable efforts to give the other Party reasonable advance notice of such required disclosure in order to enable the other Party to prevent or limit such disclosure.
(e) The obligations with respect to Confidential Information shall survive so long as a Party retains the other Party’s Confidential Information. Notwithstanding anything in this Agreement to the contrary, a Party may retain copies of Confidential Information (the “Retained Confidential Information”) to the extent necessary (i) to comply with its legal, regulatory recordkeeping obligations, (ii) in the routine backup of data storage systems in the event that such stored data is unreasonably burdensome to remove, and (iii) in order to determine the scope of, and compliance with, its obligations under this Section XVI; provided, however, that such Party agrees that any Retained Confidential Information shall be accessible only by legal or compliance personnel of such Party and the confidentiality obligations of this Section XVI shall survive with respect to the Retained Confidential Information for so long as such information is retained.
(f) Neither Party will use any name, trade name, trademark, or other designation of the other Party in advertising, publicity, promotional, or marketing materials, or any other activity, including announcements about this Agreement, without the express prior written consent of the other Party in each instance.
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XVII. Notices.
Unless otherwise provided in this Agreement, all notices or demands relating to this Agreement shall be in writing and shall be personally delivered or sent by express or certified mail (postage prepaid, return receipt requested) or overnight courier to the respective address set forth below, by electronic mail (at such email addresses as set forth below or as a Party may designate in accordance herewith), or by Telegram or through other electronic means as agreed between the Parties:
Lender:
Payward Interactive, Inc.
106 E. Lincolnway
Fourth Floor
Cheyenne, Wyoming, 82001
Email: treasury@kraken.com; legal@kraken.com
Borrower:
Robert Gregory Kidd
300 E 2nd Street, 15th Floor
Reno, Nevada 89501
Email: greg.kidd@usbc.xyz; legal@usbc.xyz
Either Party may change its address by giving the other Party written notice of its new address as herein provided.
Notice of a Collateral Call Notification shall only be effective pursuant to the sending of electronic mail to the email addresses indicated above, provided that copies (which shall not constitute notice) may also be provided by telephone, Telegram or through other electronic means as agreed between the Parties.
Notices and other communications sent by hand or overnight courier service, or mailed by express or certified mail, shall be deemed to have been given when received. For all purposes under this Agreement, an email is deemed to be sent and received immediately after the time sent (as recorded on the device or system from which the sender sent the email), unless the sender receives an automated message that the email has not been delivered (it being understood that an “out of office” or similar reply does not constitute a failure to deliver message for this purpose). Notices or communications sent via Telegram shall be deemed received immediately after the time sent.
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XVIII. Modifications.
All modifications or amendments to this Agreement shall be effective only when reduced to writing and signed by both Parties hereto. Loan Term Sheets may be amended (other than with respect to increases in principal) when reduced to a writing by both parties, with email, Telegram and other forms of electronic written communication being sufficient.
XIX. Single Agreement.
Lender and Borrower acknowledge that and have entered into this Agreement in reliance on the fact that all Loans hereunder constitute a single business and contractual relationship and have been entered into in consideration of each other. Accordingly, Lender and Borrower hereby agree that payments, deliveries, and other transfers made by either of them in respect of any Loan shall be deemed to have been made in consideration of payments, deliveries, and other transfers in respect of any other Loan hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted. In addition, Lender and Borrower acknowledge that, and have entered into this Agreement in reliance on the fact that, all Loans hereunder have been entered into in consideration of each other. Accordingly, Borrower hereby agrees that (a) it shall perform all of its obligations in respect of each Loan hereunder, and that a default in the performance of any such obligation by Borrower in any Loan hereunder shall constitute a default by the Borrower under all such Loans hereunder, and (b) Lender shall be entitled to set off claims and apply property held by it in respect of any Loan hereunder against obligations owing to it in respect of any other Loan with Borrower.
XX. Entire Agreement.
This Agreement, each exhibit referenced herein, and all Loan Term Sheets constitute the entire Agreement among the Parties with respect to the subject matter hereof and supersede any prior negotiations, understandings and agreements with respect to the subject matter of this Agreement. This Agreement shall govern the terms of the transactions contemplated hereunder, and such transactions shall not be governed by the Lender’s or any of its affiliates’ Terms of Service, and in the case of any inconsistency between this Agreement and such Terms of Service, this Agreement shall control.
XXI. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the Parties; provided, that Borrower may not assign this Agreement or any rights or duties hereunder without the prior written consent of the Lender, in its sole discretion. Lender may assign its rights or obligations hereunder upon no less than five (5) Business Days prior written notice to Borrower to one or more parties without Borrower’s consent; provided, that any such assignment shall not (i) require any adjustment to, or replacement of, the Account Control Agreement, other than adjusting the definition of “Secured Party” together with any necessary administrative updates, or (ii) otherwise impose upon Borrower any additional Collateral requirements outside the terms of this Agreement.
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XXII. Severability of Provisions.
Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
XXIII. Counterpart Execution.
This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by email or other electronic method of transmission (including email transmission of a PDF image or the use of a third-party platform, including DocuSign) shall be equally as effective as delivery of an original executed counterpart of this Agreement. The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transactions Act, or any other similar state laws based on the Uniform Electronic Transactions Act. The parties hereto consent to the use of electronic signatures and records with respect to this Agreement.
XXIV. Relationship of Parties.
Nothing contained in this Agreement shall be deemed or construed by the Parties, or by any third party, to create the relationship of partnership or joint venture between the Parties hereto, it being understood and agreed that no provision contained herein shall be deemed to create any relationship between the parties hereto other than the relationship of Lender and Borrower.
XXV. No Waiver.
The failure of or delay by either Party to enforce an obligation or exercise a right or remedy under any provision of this Agreement or to exercise any election in this Agreement shall not be construed as a waiver of such provision, and the waiver of a particular obligation in one circumstance will not prevent such Party from subsequently requiring compliance with the obligation or exercising the right or remedy in the future. No waiver or modification by either Party of any provision of this Agreement shall be deemed to have been made unless expressed in writing and signed by both parties.
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XXVI. Indemnification.
(a) IN NO EVENT SHALL EITHER PARTY, ITS AFFILIATES, OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, AGENTS, EMPLOYEES OR REPRESENTATIVES, BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INCIDENTAL, INDIRECT, INTANGIBLE, OR CONSEQUENTIAL DAMAGES OR DAMAGES FOR LOSS OF PROFITS, WHETHER BASED ON CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, OR OTHERWISE, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO AUTHORIZED OR UNAUTHORIZED LOANS SUBJECT TO THIS AGREEMENT.
(b) Borrower shall indemnify and hold harmless Lender, its affiliates and their respective owners, directors, officers, employees, representatives and agents (each, an “Indemnified Person”) from and against any and all third-party claims, demands, losses, expenses and liabilities of any and every nature (including reasonable and documented attorneys’ fees of the Indemnified Person’s choosing to defend against any such claims, demands, losses, expenses and liabilities) that any Indemnified Person may sustain or incur or that may be asserted against it arising out of any investigation, litigation or other proceeding related to Borrower's breach of any covenant, representation or warranty made to Lender herein, except for any and all claims, demands, losses, expenses and liabilities arising out of or relating to Lender’s bad faith, gross negligence or willful misconduct in the performance of its duties under this Agreement. The obligations of Borrower under this Section XXVI shall be continuing and survive termination of this Agreement.
XXVII. Term and Termination.
The term of this Agreement (the “Term”) shall commence on the date hereof for a period of one year and shall automatically renew for successive one-year terms annually, unless (i) Lender provides notice of a desire to terminate this Agreement no less than ten (10) days prior to the end of such one-year period, as applicable, or (ii) Borrower, at any time, delivers a termination notice, in which case this Agreement shall terminate immediately upon delivery of such notice and satisfaction of all outstanding obligations under the Loans in accordance with their terms (a “Termination Notice”). The foregoing notwithstanding, this Agreement may be terminated as set forth in Section X or upon 30 days’ written notice (email sufficient) by either Party to the other. Notwithstanding anything herein to the contrary, if there are any Loans outstanding at the time either Party sends a notice of termination pursuant to this Section XXVII, such termination of this Agreement will not be effective until all Loans are terminated on the relevant Loan Termination Date or pursuant to Section (II)(d). In the event of a termination of this Agreement, all fees and other amounts owed hereunder shall be payable immediately.
XXVIII. Compliance.
Borrower must maintain systems, safeguards, and procedures sufficient to ensure its compliance with its obligations in this Agreement and maintain related records for at least two (2) years after the termination of the Agreement. Lender reserves the right to conduct an audit of Borrower's systems, safeguards, procedures, and records for compliance with its obligations under this Agreement. This section shall survive termination of the Agreement for a period of two (2) years.
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XXIX. Fee Limitation.
Notwithstanding anything herein to the contrary, if at any time the fees, charges and other amounts that are treated as interest on any Loan under Applicable Law (collectively the “Charges”), will exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by Lender in accordance with Applicable Law, the Loan Fees hereunder, together with all Charges payable in respect of all Loans, will be limited to the Maximum Rate and, to the extent lawful, the Loan Fees and Charges that would have been payable in respect of this Agreement but were not payable as a result of the operation of this Section XXVIII will be cumulated and the Loan Fees and Charges payable to Lender in respect of other periods will be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with Loan Fees thereon, will have been received by Lender.
XXX. Miscellaneous.
(a) Whenever used herein, the singular number shall include the plural, the plural the singular, and the use of the masculine, feminine, or neuter gender shall include all genders where necessary and appropriate. This Agreement is solely for the benefit of the Parties hereto and their respective successors and assigns, and no other Person shall have any right, benefit, priority or interest under, or because of the existence of, this Agreement. The section headings are for convenience only and shall not affect the interpretation or construction of this Agreement. The Parties acknowledge that this Agreement and any Loan Term Sheet are the result of negotiation between the Parties which are represented by sophisticated counsel and therefore none of the Agreement’s provisions will be construed against the drafter.
(b) If an error is made hereunder in connection with a payment under any Loan Document, and such payment is an overpayment or a payment not anticipated thereunder, the party receiving the payment in error shall refund the mistaken amount to the paying party as promptly as is commercially practicable; provided that the paying party may, in its sole discretion and upon written notice of the amount and basis for such offset, elect to set-off such amounts against future payments hereunder.
[signatures appear on next page]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the date first above written.
| Lender: | |||
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| PAYWARD INTERACTIVE, INC. |
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| By: | /s/ Cynthia Del Pozo | ||
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| Name: | Cynthia Del Pozo | |
| Title: | CEO and President | ||
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| Borrower: |
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| USBC, INC. |
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| By: | /s/ Robert Gregory Kidd |
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| Name: | Robert Gregory Kidd |
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| Title: | Chairman and CEO |
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EXHIBIT A
Authorized Agents
[***]
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EXHIBIT B
Loan Term Sheet
[***]
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EXHIBIT C
[FORM OF] COLLATERAL CALL NOTIFICATION
[***]
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ADDENDUM TO MASTER LOAN AGREEMENT
[***]
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EXHIBIT 10.35
Affiliate Services Agreement
This Affiliate Services Agreement (this “Agreement”) is made and entered into as of March 18, 2026, between USBC, Inc. a Nevada corporation (the “Company”) and Vast Holdings Inc., a national bank holding company with its main office located in Tulsa, Oklahoma (the “Bank,” and together with the Company, the “Parties”).
Recitals
A. Management of the Company and the Bank believe that it is in the Parties’ best interests and will be more economical and efficient for certain services necessary for the operations of the Company to be performed by officers, employees or consultants of the Bank, recognizing that compensation must be at least on or favorable to market terms.
B. The Parties desire to define the terms governing the services provided by the Bank to the Company, for such services and the related billing and payment arrangements.
C. This Agreement sets forth the terms under which the Bank will perform such services, in accordance with all applicable laws and regulations, including without limitation, Sections 23A and 23B of the Federal Reserve Act.
Now, Therefore, in consideration of the mutual representations, warranties, covenants and agreements hereinafter set forth, and for other good and valuable consideration, the Parties agree as follows:
Agreements
Section 1. Term. Except as otherwise provided in Section 9 herein, for a period commencing on the date of this Agreement and shall continue through December 31, 2026 (the “Initial Term”), the Bank shall provide the Company with the services described in Sections 2 and 3 of this Agreement. Unless otherwise agreed by the parties in writing, this Agreement shall expire on December 31, 2026 and shall not automatically renew.
Section 2. Strategic Services Provided by the Bank. During the Term, the Bank shall perform services relating to the strategic direction of the Company to enable the Bank to perform its obligations as described in Schedule 1 attached hereto (the “Bank Services”). The Bank shall provide the Bank Services in a manner consistent with safe and sound banking practices.
Section 3. Billing for Company Services.
(a) Computation of Fees. The Parties agree that the fees charged for Bank Services during the Initial Term will be as set forth in Schedule 2. The fees charged by the Bank will represent either: (x) the market value of Bank Services; or (y) if there is no market established for a particular Bank Service, the actual costs of providing such Bank Services. In the case of those Bank Services for which the fees charged will represent the actual costs of providing such Bank Services, the Bank will determine the actual costs by determining: (i) the amount of time that each officer or employee of the Bank spends rendering the applicable Bank Services to or on behalf of the Company; (ii) the amount of usage by the Bank’s officers and employees of equipment of the Bank in direct connection with rendering such Bank Services to or on behalf of the Company; (iii) the amount of overhead expenses that are incurred by the Bank in direct connection with rendering such Bank Services to or on behalf of the Company; and (iv) the amount of any actual expenses incurred in connection with providing such Bank Services.
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(b) Amendments to Fee Schedule. Schedule 2 will be amended annually during the Term of this Agreement to reflect changes in the fees to be charged for Bank Services based upon (i) changes in the market value of any Bank Service; and/or (ii) a recalculation of the Bank’s actual costs of providing Bank Services and/or the reasonable premium, and such annual amendment shall be provided to the Company at least thirty (30) days prior to the end of the Initial Term and each Renewal Term. Schedules 1 and 2 will also be amended from time to time during the Term of this Agreement, as necessary to reflect the fees to be charged for additional Bank Services that may be requested by the Company and agreed to by the Bank.
(c) Fees for Third-Party Services. In addition to the fees for Bank Services provided by Bank employees, the Company will reimburse the Bank for its pro rata share, if any, of fees charged to the Bank for services provided by third parties (e.g., outside counsel, audit, or consultants) only to the extent such third-party services (i) are directly related to the Bank Services, (ii) have been approved in advance in writing by the Company to the extent required under this Agreement or the applicable Schedule, and (iii) are supported by reasonable documentation evidencing the amount charged, the allocation methodology used, and the specific services provided.
(d) Billing Frequency. Within fifteen (15) calendar days after the end of each calendar month during the Term, the Bank will provide the Company with invoices for Bank Services rendered during the immediately preceding calendar month. The Company shall review the invoice and, upon approval of such invoice, pay the Bank the amount due under the invoices within fifteen (15) days of the date of any such invoice. Each invoice shall include reasonable supporting detail, including, as applicable, a description of services performed, the identity or role of personnel performing such services, hours worked, applicable rates, allocation methodology (if any), copies of third-party invoices, and reasonable backup for any reimbursable travel or out-of-pocket expenses.
(e) Outside Cap. Absent a written agreement to the contrary, in no circumstances can reimbursement under this agreement exceed $10,500,000.00 during the Term of this Agreement, unless mutually agreed upon by the Company and the Bank.
Section 4. Guaranty of Payment. The Company shall pay all amounts due under any invoice issued by the Bank for the Bank Services performed pursuant to this Agreement, notwithstanding any disputes between the Bank and the Company that may arise concerning any such amount. The Parties shall work in good faith to resolve any invoice dispute promptly.
Section 5. No Authority Granted. This Agreement shall not be construed as granting the Bank any authority to operate the Company or over any of the Company’s respective directors or officers.
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Section 6. Standard of Care. The Bank acknowledges that, while it does not guarantee any particular business outcome or commercial result arising from the Company’s use of the Bank Services, the Bank shall perform the Bank Services in a professional and commercially reasonable manner and in accordance with the terms of this Agreement and applicable law. In performing Bank Services for or on behalf of the Company, the Bank will use the same systems and procedures and exercise the same standard of care as it uses or exercises when performing the same or similar services for itself. The use of such systems and procedures shall not, by itself, be deemed conclusive evidence of due and proper performance under this Agreement if such systems, procedures, or performance are inconsistent with the terms of this Agreement, applicable law, or commercially reasonable standards applicable to similar services. Without limiting the foregoing, the Bank shall not be liable to the Company in connection with the Bank Services except to the extent any loss, damage, cost, or expense results from the Bank’s breach of this Agreement, gross negligence, bad faith, willful misconduct, violation of applicable law, or material failure to perform the Bank Services in accordance with the standards expressly set forth in this Agreement. Further, the Bank shall not be liable for any delay or failure to perform any Bank Service by reason or act of government authority, strike, lockout, civil insurrection, act of terrorism, act of God or any other event, whether similar or dissimilar, beyond the reasonable control of the Bank. If the Bank becomes liable to the Company in connection with providing Bank Services, its liability shall be limited to the lesser of: (i) the amount of actual and direct damages suffered by the Company; or (ii) the amount of fees that the Bank collected from the Company for the immediately preceding six (6) months, provided, however, that such limitation of liability shall not apply to losses arising from the Bank’s fraud, willful misconduct, gross negligence, breach of confidentiality obligations, violation of applicable law, or indemnification obligations under this Agreement. Except with respect to fraud, willful misconduct, gross negligence, breach of confidentiality obligations, violation of applicable law, or a Party’s indemnification obligations under this Agreement, neither Party shall be liable to the other for any special, incidental, punitive, or consequential damages, whether foreseen or unforeseen.
Section 7. Confidentiality. The Bank agrees to cause any of its officers or employees who provide Bank Services to preserve the confidentiality of all information, records, and other data received, maintained or prepared by them in the course of rendering Bank Services, to make no disclosure thereof to third parties other than as may be instructed by executive officers of the Bank or as may be required by any applicable laws or regulations. Each of the Parties shall permit the examination of its books and records relating to Bank Services by any regulatory authorities having jurisdiction over the Company or the Bank and shall otherwise cooperate with such regulatory authorities.
Section 8. Indemnification of the Bank. The Company shall indemnify, defend, and hold harmless the Bank and its directors, officers, employees, and representatives from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys’ fees) arising out of or relating to (i) the Company’s breach of this Agreement, (ii) the gross negligence, bad faith, willful misconduct, or fraud of the Company or its personnel, or (iii) the Company’s violation of applicable law, in connection with the Bank’s provision of the Bank Services. .
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Section 9. Termination.
(a) Termination without Cause. The Company may terminate the Bank Services upon sixty (60) days’ prior written notice to the other Party. The Company may terminate this Agreement in its entirety with respect to all Bank Services upon sixty (60) days’ prior written notice to the other Party.
(b) Termination for Cause. The Bank or the Company may terminate this Agreement (the “Terminating Party”) relative to any of the Bank Services immediately upon giving written notice to the other Party if:
(i) the other Party breaches its obligations to the Terminating Party under this Agreement and fails to cure such breach within fifteen (15) days after the Terminating Party has provided the breaching Party with written notice of such breach; or
(ii) any state or federal regulatory authority having jurisdiction over the Terminating Party requests or directs the Terminating Party to terminate this Agreement, or if the Terminating Party’s actions hereunder are criticized or challenged by any such regulatory authority during a regulatory examination of such Party or otherwise.
(c) Effects of Termination. Unless all Bank Services are terminated hereunder, this Agreement will continue to be effective with respect to any Bank Services that have not been terminated.
(d) Reimbursement of Termination Costs. In the event that the Company terminates this Agreement with respect to the Bank Services, the Company shall be responsible for reimbursing the Bank for reasonable, documented, unavoidable, and non-cancelable third-party costs actually incurred by the Bank solely as a direct result of such termination, to the extent such costs were either expressly contemplated by this Agreement or approved in advance in writing by the Company. For the avoidance of doubt, the Company shall not be responsible for any internal overhead, lost profit, unamortized internal costs, or severance or other employee-related termination payments, except to the extent expressly approved in advance in writing by the Company.
Section 10. General Provisions.
(a) Entire Agreement; Modifications. This Agreement constitutes the entire agreement between the Parties respecting the subject matter hereof, and supersedes all prior negotiations, undertakings, agreements and arrangements with respect thereto, whether written or oral. Except as otherwise explicitly provided herein, this Agreement may not be amended or modified except by written agreement signed by the Parties.
(b) Enforcement and Governing Law. The provisions of this Agreement shall be regarded as divisible and separate. If a court of competent jurisdiction should declare any provision hereof invalid or unenforceable, the validity and enforceability of the remaining provisions shall not be affected thereby. This Agreement shall be construed and the legal relations of the Parties hereto shall be determined in accordance with the laws of the United States and of the State of Oklahoma without reference to the law regarding conflicts of law.
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(c) Waiver. No waiver by either Party at any time of any breach by the other Party of, or compliance with, any condition or provision of this Agreement to be performed by the other Party, shall be deemed a waiver of any similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
(d) Notices. Notices pursuant to this Agreement shall be in writing (including Communication by facsimile copy or other electronic means) and shall be deemed to have been duly given when received; and, if mailed, shall be mailed by first-class United States mail, to each of the Parties addressed to its principal headquarters, or to such other address as the Party to be notified shall have given to the other.
[Signature Page Follows]
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In witness whereof, the Parties have executed this Agreement as of the date first above written.
| Company:
USBC, Inc.
By: /s/ Kitty Payne Name: Kitty Payne Title: Chief Financial Officer | Bank:
vast holdings, inc.
By: /s/ Veronica Bickerstaff Name: Veronica Bickerstaff Title: Chief Financial Officer |
Schedule 1
Bank Services
1. Tokenized Deposit Services. During the Term, the Bank may provide services to the Company, as may be agreed to by the Bank and the Company from time to time relevant to the deployment and management of a new tokenized deposit line of business (the “Tokenized Deposit Services”). All costs incurred by the Bank to support this business line will be reimbursed as Bank Services, in accordance with Schedule 2 of this Agreement.
Reimbursable expenses shall be limited to expenses directly attributable to the Tokenized Deposit Services to the extent expressly approved in advance in writing by the Company. Ordinary course operational expenses of the Bank that would be incurred irrespective of the services provided under this Agreement shall not be reimbursable.
2. Fair Access Services. During the Term, the Bank may provide services to the Company, as may be agreed to by the Bank and the Company from time to time, relevant to the deployment and management of a new fair access banking line of business (the “Fair Access Services” and, together with the all costs incurred by the Bank to support this business line will be reimbursed as Bank Services), in accordance with Schedule 2 of this Agreement.
Reimbursable expenses shall be limited to expenses directly attributable to the Fair Access Services to the extent expressly approved in advance in writing by the Company. Ordinary course operational expenses of the Bank that would be incurred irrespective of the services provided under this Agreement shall not be reimbursable.
3. Employees. Officers and staff of the Bank whose services are directly attributable to, and actually performed in support of, the Tokenized Deposit Services and Fair Access Services business line, in each case to the extent such services are specifically identifiable, documented, and invoiced in accordance with this Agreement.
4. Other Expenses. The following other expenses will be reimbursed as these apply to the Bank Services and Fair Access Services. For the avoidance of doubt, no expense, fee, benefit, equipment cost, or other amount may be charged to the Company more than once or through more than one cost category under this Agreement.
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| a. | Outside consultants. Consultants engaged to support the Tokenized Deposit Services and/or the Fair Access Services shall be reimbursable only if such consultant engagement and fee structure have been approved in writing by the Company in advance. Consultant fees shall not exceed the rates specified in the approved engagement letter between the Consultant and the Bank. All consultant charges must be supported by invoices or other reasonable documentation and amounts allocated to the Company (if any) using a reasonable, consistently applied methodology. |
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| b. | Employee and consultant travel: Expenses billed to the Company shall comply with the Bank’s Travel and Expense Policy, as may be amended from time to time. Reimbursement shall consist of expenses that are allowable under such policy and shall not exceed the applicable spending thresholds, reimbursement limits, or approval requirements set forth therein. Any travel expenses submitted that do not comply with the Company’s Travel and Expense Policy must be approved in advance in writing by the Company. All travel expenses submitted for reimbursement must be directly attributable to the Tokenized Deposit Services or the Fair Access Services, as applicable, and supported by customary receipts or equivalent documentation in accordance with the Company’s Travel and Expense Policy. |
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| c. | Legal fees. Legal fees shall be reimbursable only to the extent such services are provided pursuant to engagement letters or fee arrangements that have been approved in advance in writing by the Company. The Bank shall not engage outside legal counsel for services to be reimbursed under this Agreement without the Company’s prior written approval of the engagement terms, including the scope of services and applicable billing rates. Any such legal fees shall be limited to services directly related to the Tokenized Deposit Services or the Fair Access Services, as applicable, and shall be supported by invoices or other reasonable documentation describing the nature of the services performed, subject to redaction of privileged information as appropriate. |
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| d. | Documentation and Audit. Expense reimbursements submitted by the Bank with expenses directly attributable to the Tokenized Deposit Service or the Fair Access Services business lines, as applicable, shall include reasonable supporting documentation sufficient for the Company to verify the nature, amount, and allocation of the services and expenses billed. The Company reserves the right to request additional supporting information or clarification as reasonably necessary to validate any amounts billed under this Agreement. Any reimbursement request submitted without adequate supporting documentation may be deferred by the Company until sufficient documentation is provided to substantiate the expense. |
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| e. | Any other applicable expenses. Any other expenses as mutually agreed upon by the parties. |
Schedule 2
Calculation of Fees for Bank Services
General Calculation
| 1) | Hourly Rate Determination: | |
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| The Bank will determine the hourly compensation rate for each employee by calculating the total base salary and employer’s portion of payroll taxes with respect to such employee divided by the total hours worked/expected to be worked (the “Hourly Rate”). For the avoidance of doubt, the Hourly Rate shall not include bonuses, incentive compensation, benefits, equipment costs, overhead, or any other amounts separately recoverable under this Agreement. For employees whose primary role is to provide Tokenized Deposit Services and Fair Access Services, only those employees mutually identified by the Parties in writing in advance shall be treated as primarily dedicated personnel, and only the portion of such employees’ compensation and approved related costs attributable to the applicable Bank Services may be allocated to the Company in accordance with a reasonable, consistently applied, and documented allocation methodology. | |
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| 2) | Total Fees Charged: The Bank will be compensated for Bank Services rendered by each Bank employee as follows: | |
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| a) | the Hourly Rate will be multiplied by the hours actually worked by the employee that are directly attributable to the applicable Bank Services, as supported by reasonable documentation and reflected in the applicable invoice; PLUS |
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| b) | An overhead premium in the amount of 25% of the employee’s total base salary (the “Overhead Premium”), solely to the extent intended to account for general benefits and ordinary equipment usage, provided that no amount included within the Overhead Premium may also be separately charged to the Company as a reimbursable expense or other fee category under this agreement; PLUS |
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| c) | The amount of any actual expenses, including bonuses, travel, computer equipment and any other expenses, incurred in connection with providing the Bank Services. Any bonus or incentive compensation charged to the Company shall be limited to amounts expressly approved under the Bank’s applicable incentive compensation plan or otherwise approved in writing by the Company in advance, and shall not be estimated, implied, or allocated in the Bank’s sole discretion. |
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| 3) | Audit Right. Upon reasonable prior notice, the Company shall have the right, no more than once annually unless a material billing discrepancy is identified, to review reasonable supporting documentation relating to amounts invoiced under this Schedule for the limited purpose of verifying compliance with this Agreement, subject to appropriate confidentiality restrictions and redaction of privileged information as appropriate. | |
EXHIBIT 21.1
SUBSIDIARY
As of December 31, 2025, the following was the Registrant’s significant operating Subsidiary:
Name: Particle, Inc.
Country of Organization: U.S.
Percent Ownership by Registrant: 100.0% by USBC, Inc.
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in these Registration Statements on Form S-8 (Nos. 333-261597, 333-286762, 333- 289254, 333-291083), on Form S-3 (Nos. 333-268655 and 333-276246) and on Form S-1, as amended (No. 333-290403) of our report dated March 24, 2026 relating to the consolidated financial statements of USBC, Inc. for the Transition Period from October 1, 2025 through December 31, 2025, which appears in these Registration Statements. We also consent to the reference to us under the heading “Experts” in such Registration Statements.
Santa Rosa, California
March 24, 2026
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert Gregory Kidd, certify that:
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| 1. | I have reviewed this transition report on Form 10-K of USBC, Inc. for the transition period from October 1, 2025 through December 31, 2025; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
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| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
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| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: March 25, 2026
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| /s/ Robert Gregory Kidd |
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| Robert Gregory Kidd |
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| Chief Executive Officer (Principal Executive Officer) |
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EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kitty Payne, certify that:
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| 1. | I have reviewed this transition report on Form 10-K of USBC, Inc. for the transition period from October 1, 2025 through December 31, 2025; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
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| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
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| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: March 25, 2026
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| /s/ Kitty Payne |
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| Kitty Payne |
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| Chief Financial Officer (Principal Financial and Accounting Officer) |
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EXHIBIT 32.1
CERTIFICATION 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 Transition Report of USBC, Inc. (the “Company”) on Form 10-K for the transition period from October 1, 2025 through December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Robert Gregory Kidd, Chief Executive Officer (Principal Executive Officer) of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: March 25, 2026 | /s/ Robert Gregory Kidd |
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| Robert Gregory Kidd |
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| Chief Executive Officer (Principal Executive Officer) |
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A signed original of this written statement required by Section 906 has been provided to USBC, Inc. and will be retained by USBC, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
EXHIBIT 32.2
CERTIFICATION 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 Transition Report of USBC, Inc. (the “Company”) on Form 10-K for the transition period from October 1, 2025 through December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Kitty Payne, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: March 25, 2026 | /s/ Kitty Payne |
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| Kitty Payne |
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| Chief Financial Officer (Principal Financial and Accounting Officer) |
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A signed original of this written statement required by Section 906 has been provided to USBC, Inc. and will be retained by USBC, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.