What changed in this filing

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Item 1A. Risk Factors

2025-03-11 compared with 2024-03-20 · 735 added, 155 removed, 415 unchanged (68% of the section changed)

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Company has principally funded its operations through the sale of equity and equity instruments, including sales of common stock of $7,339,477

and $587,863, net offering costs of $17,601 and $149,137, along with sales of preferred stock of $0 and $1,259,995, during the years

ended December 31, 2023 and 2022, respectively.

As the Company moves forward in developing its technology and commercializing the Thumzup

mobile application (the “Thumzup® App” or “App”), or as it responds to potential opportunities and/or adverse

events, the Company’s working capital needs may change.

Pending its ability to generate adequate cash flow, as to which no assurance

can be given, the Company likely will continue to incur significant losses in the foreseeable future for various reasons, including unforeseen

expenses, difficulties, complications, and delays, and other unknown events.

As a result, the Company will require additional funding

to sustain its ongoing operations and to continue its research and development activities.

The Company cannot assure that its available

funds will be sufficient to meet its anticipated needs for working capital and capital expenditures through any period of twelve months.

and $1,573,891, net offering costs, along with sales of preferred stock of $805,000 and $0, during the years ended December 31, 2024

and 2023, respectively.

As the Company moves forward in developing its technology and commercializing the Thumzup® mobile application

(the “Thumzup® App” or “App”), or as it responds to potential opportunities and/or adverse events, the Company’s

working capital needs may change.

Pending its ability to generate adequate cash flow, as to which no assurance can be given, the Company

likely will continue to incur significant losses in the foreseeable future for various reasons, including unforeseen expenses, difficulties,

complications, and delays, and other unknown events.

As a result, the Company will require additional funding to sustain its ongoing

operations and to continue its research and development activities.

The Company cannot assure that its available funds will be sufficient

to meet its anticipated needs for working capital and capital expenditures through any period of twelve months.

Company’s ability to generate positive cash flow will be dependent upon its ability to recruit and retain Advertisers and Creators.

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continuing operations, or that additional funding, if required, will be available when needed or, if available, on favorable terms.

Company’s ability to generate positive cash flow will be dependent upon its ability to recruit and retain Advertisers and Creators.

The Company can give no assurances it will generate sufficient cash flows in the future to satisfy its liquidity requirements or sustain

continuing operations, or that additional funding, if required, will be available when needed or, if available, on favorable terms.

Company was formed in October 2020 and has not yet established profitable operations and has generated nominal revenue.

the year ended December 31, 2023, we incurred a net loss available to shareholders of $3,324,180 primarily due to software research

and development expenses of $513,088, marketing expenses of $855,270, professional and consulting expenses of $727,554, and general

and administrative expenses of $395,624.

For the year ended December 31, 2022, the Company incurred a net loss available to

shareholders of $1,504,681, primarily due to software research and development expenses of $567,408, marketing expenses of $224,088,

and general and administrative expenses of $418,940.

Company expects to continue to incur losses from operations and negative cash flows, which raise substantial doubt about its ability

to continue as a “going concern.”

Company anticipates incurring additional losses until such time, if ever, it can obtain adequate Advertiser support and acceptance by

Substantial additional financing will be needed to fund the Company’s development, marketing and sales activities and

generally to commercialize its technology and develop brand support and Creator acceptance.

These factors raise substantial doubt about

the Company’s ability to continue as a going concern.

Company will seek to obtain additional capital through the issuance of debt or equity financings or other arrangements to fund operations;

however, there can be no assurance it will be able to raise needed capital under acceptable terms, if at all.

The sale of additional

equity may dilute existing shareholders and newly issued shares may contain senior rights and preferences compared to currently outstanding

shares of Common Stock.

Should the Company choose to issue debt in the future, such debt securities may contain covenants and limit the

Company’s ability to pay dividends or make other distributions to shareholders.

If the Company is unable to obtain such additional

financing, future operations would need to be scaled back or discontinued.

Due to the uncertainty in the Company’s ability to raise

capital, the Company believes that there is substantial doubt as to its ability to continue as a going concern.

Company’s independent registered public accounting firm’s reports have raised substantial doubt as to its ability to continue

as a “going concern.”

Company’s independent registered public accounting firm indicated in its reports on the audited financial statements for the years

ended December 31, 2023 and 2022 that there is substantial doubt about the Company’s ability to continue as a going concern.

“going concern” opinion indicates that the financial statements have been prepared assuming the business will continue as

a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of

assets, or the amounts and classification of liabilities that may result if the Company does not continue as a going concern.

prospective Investors should not rely on the Company balance sheet as an indication of the amount of proceeds that would be available

to satisfy claims of creditors, and potentially be available for distribution to shareholders, in the event of liquidation.

of the going concern note to the Company’s financial statements may have an adverse impact on the relationships the Company is

developing and plan to develop with third parties as it continues the commercialization of its products and could make it challenging

and difficult for the Company to raise additional financing, all of which could have a material adverse impact on the business and prospects

and result in a significant or complete loss of an investment.

is no assurance that the Company will ever be profitable or that debt or equity financing will be available to it in the amounts, on

terms, and at times deemed acceptable to the Company, if at all.

The issuance of additional equity securities by the Company would result

in a significant dilution in the equity interests of its Shareholders.

Obtaining commercial loans, assuming those loans would be available,

would increase the Company’s liabilities and future cash commitments.

If the Company is unable to obtain financing in the amounts

and on terms deemed acceptable to it, the Company may be unable to continue the business, as planned, and as a result may be required

to scale back or cease operations, the results of which would be that shareholders would lose some or all of their investment.

The financial

statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or

the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

continuing COVID-19 pandemic may have a significant negative impact on the Company’s business, sales, results of operations and

financial condition.

COVID-19 pandemic continues to adversely affect the United States of America and the world, including in the primary regions in which

the Company plans to operate.

Additionally, the Company’s liquidity could be negatively impacted if these conditions continue for

a significant period of time.

Capital and credit markets have been disrupted by the crisis and the Company’s ability to obtain

any required financing is not guaranteed and largely dependent upon evolving market conditions and other factors.

Depending on the continued

impact of the crisis, further actions may be required to improve the Company’s cash position and capital structure.

extent to which the COVID-19 outbreak could ultimately impact the Company’s business, sales, results of operations and financial

condition, will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the

duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what

extent normal economic and operating conditions can resume.

Even after the COVID-19 outbreak has fully subsided, the Company may continue

to experience significant impacts to its business as a result of its global economic impact, including any economic downturn or recession

that has occurred or may occur in the future.

the year ended December 31, 2024, we incurred a net loss available to shareholders of $3,999,905 primarily due to software research and

development expenses of $244,909, marketing expenses of $1,395,961, and general and administrative expenses of $653,611.

ended December 31, 2023, we incurred a net loss available to shareholders of $3,324,180 primarily due to software research and development

expenses of $513,088, marketing expenses of $855,270, professional and consulting expenses of $727,554, and general and administrative

expenses of $395,624.

Company may not generate sufficient cash flows to cover its operating expenses.

noted previously, the Company has incurred operating losses since inception and expects to continue to incur losses as a result of expenses

related to research and continued development of its technology, marketing expense, and corporate general and administrative expenses.

The Company has principally funded its operations through the sale of equity and equity instruments, including sales of common stock

of $1,573,891 and $587,863, net offering costs of $17,601 and $149,137, along with sales of preferred stock of $0 and $1,259,995, during

the years ended December 31, 2023 and 2022, respectively.

of December 31, 2023, the Company had total Shareholders’ equity of $349,327, an accumulated deficit of $5,691,803, and cash and

cash equivalents of approximately $259,212.

Although the Company had cash on hand of $259,212 as of December 31, 2023, there is no assurance

that these funds will prove adequate beyond twelve months.

As noted previously, the Company has incurred operating losses since inception and expects to continue to incur losses as a result of

expenses related to research and continued development of its technology, marketing expense, and corporate general and administrative

Company has principally funded its operations through the sale of equity and equity instruments, including sales of common stock of $7,339,477

and $1,573,891, net offering costs, along with sales of preferred stock of $805,000 and $0, during the years ended December 31, 2024

and 2023, respectively.

of December 31, 2024, the Company had total Shareholders’ equity of $4,767,261, an accumulated deficit of $9,691,708, and cash

and cash equivalents of approximately $4,680,840.

Although the Company had cash on hand of $4,680,840 as of December 31, 2024, there

is no assurance that these funds will prove adequate beyond twelve months.

the event that the Company is unable to generate sufficient cash from its operating activities or raise additional funds, it may be required

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Company’s continued success will depend, to a significant extent, on the services of its Directors, executive management team,

and key personnel.

If one or more of these individuals were to leave, there is no guarantee the Company could replace them with qualified

individuals in a timely or economically satisfactory manner or at all.

The loss or unavailability of any or all of these individuals

could harm the Company’s ability to execute its business plan, maintain important business relationships and complete certain product

development initiatives, which would have a material adverse effect on its business, results of operations and financial conditions.

and key personnel – including Chairman and Chief Executive Officer Robert Steele.

If one or more of these individuals were to leave,

there is no guarantee the Company could replace them with qualified individuals in a timely or economically satisfactory manner or at

The loss or unavailability of any or all of these individuals could harm the Company’s ability to execute its business plan,

maintain important business relationships and complete certain product development initiatives, which would have a material adverse effect

on its business, results of operations and financial conditions.

Company may not be able to successfully execute the business plan.

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in which it intends to operate.

Company was formed in Nevada in October 2020 and will encounter difficulties, including unforeseen difficulties as an early-stage, pre-revenue

company in establishing the credibility of its brand and service.

Company was formed in Nevada in October 2020 and will encounter difficulties, including unforeseen difficulties as an early-stage company

in establishing the credibility of its brand and service.

Company will incur net losses in the foreseeable future if it is unable to anticipate market trends and match its service offerings to

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such as establishing the Company’s position in the market and developing effective marketing of its Thumzup® App.

its business plan, the Company will be required to obtain additional financing but cannot guarantee that such additional financing will

its business plan, the Company may be required to obtain additional financing but cannot guaranty that such additional financing will

be available.

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any unexpected revenue shortfall.

This inability could cause the Company’s net losses in a given quarter to be greater than expected

and could further cause continuing greater losses quarter over quarter.

This inability could cause the Company’s net losses in a given period to be greater than expected

and could further cause continuing greater losses period over period.

Company’s ability to succeed will depend on the ability of its management to control costs .

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or security breaches of our networks or information technology systems could have an adverse effect on our business.

rely heavily on information technology (IT) both in our products and services for customers and in our IT systems used to run our

rely heavily on information technology (IT) both in our products and services for customers and in our IT systems used to run our business.

Further, we collect and store sensitive information in cloud-based data centers and on our networks.

Government agencies

and security experts have warned about growing risks of hackers, cyber-criminals, malicious insiders and other actors targeting confidential

information and all types of IT systems.

These actors may engage in fraudulent activities, theft of confidential or proprietary information

and sabotage or ransomware.

Government agencies and security

experts have warned about growing risks of hackers, cyber-criminals, malicious insiders and other actors targeting confidential information

and all types of IT systems.

These actors may engage in fraudulent activities, theft of confidential or proprietary information and sabotage

or ransomware.

IT systems, our connected products, and our confidential information may be vulnerable to damage or intrusion from a variety of attacks

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While we attempt to mitigate these risks through board oversight,

hiring additional internal cyber-security professionals to manage these risks, enhancing controls, due diligence, employee training

and communication, third party intrusion testing, system hardening, email and web filters, regular patching, multi-factor authentication,

hiring additional internal cyber-security professionals to manage these risks, enhancing controls, due diligence, employee training and

communication, third party intrusion testing, system hardening, email and web filters, regular patching, multi-factor authentication,

surveillance, encryption, and other measures, we remain vulnerable to information security threats.

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Despite the precautions we take, we have had, and could have again, an intrusion or infection of our systems or connected

While such intrusions or infections to date have not resulted in the significant disruption of our business, or a

loss of proprietary or confidential information, we cannot guarantee the same for future intrusions or infections.

Similarly, an attack

on our IT systems or connected products could result in theft or disclosure of trade secrets or other intellectual property, a breach

of confidential customer or employee information, or product failure or misuse.

Any such events could have an adverse impact on sales,

harm our reputation and cause us to incur legal liability and increased costs to address such events and related security concerns.

the threats evolve and become more potent, we may incur additional costs to secure the products that we sell, as well as our data and

infrastructure of networks and devices.

While such intrusions or infections to date have not resulted in the significant disruption of our business, or a loss of proprietary

or confidential information, we cannot guarantee the same for future intrusions or infections.

Similarly, an attack on our IT systems

or connected products could result in theft or disclosure of trade secrets or other intellectual property, a breach of confidential customer

or employee information, or product failure or misuse.

Any such events could have an adverse impact on sales, harm our reputation and

cause us to incur legal liability and increased costs to address such events and related security concerns.

As the threats evolve and

become more potent, we may incur additional costs to secure the products that we sell, as well as our data and infrastructure of networks

Related to the Common Stock

can be no assurance that our Common Stock will ever be approved for listing on a national securities exchange.

Failure to develop or

maintain an active trading market could negatively affect the value of our Common Stock and make it difficult or impossible for investors

to sell their shares in a timely manner.

is currently very limited trading of our Common Stock, and an active trading market may never develop.

Our Common Stock is quoted on

the OTCQB tier of the OTC Markets.

The OTCQB tier of the OTC Markets is a thinly traded market and lacks the liquidity of certain other

public markets with which some investors may have more experience.

While we remain determined to work towards getting our securities

listed on a national exchange, there can be no assurance that this will occur.

As a result, we may never develop an active trading market

for our securities which may limit our investors’ ability to liquidate their investments.

Company is controlled by its Chairman/Board of Directors, Chief Executive Officer, President, and additional Officers of the Company.

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financial condition, results of operations and prospects.

our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.

SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.

Penny stocks are generally

equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized

for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions

in such securities is provided by the exchange or system.

If we do not obtain a listing on a national securities exchange and if the

price of our common stock is less than $5.00, our common stock could be deemed a penny stock.

The penny stock rules require a broker-dealer,

before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing

specified information.

In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise

exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for

the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement;

(ii) a written

agreement to transactions involving penny stocks;

and (iii) a signed and dated copy of a written suitability statement.

These disclosure

requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders

may have difficulty selling their shares.

sale or availability for sale of substantial amounts of the Company’s common stock could adversely affect the market price of the

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of the Common Stock that is held by non-affiliates exceeds $700 million as of any June 30.

Company’s disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

Company is subject to the periodic reporting requirements of the Exchange Act, and will be required to maintain disclosure controls and

procedures that are designed to reasonably assure that information required to be disclosed by the Company in reports it files or submits

under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the

SEC, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure.

a public company, the Company is also required to maintain internal control over financial reporting and to report any material weaknesses

in those internal controls.

Such internal controls are designed 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.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is

a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented

or detected on a timely basis.

the material weaknesses in the Company’s internal controls are not fully remediated or if additional material weaknesses are identified,

those material weaknesses could cause the Company to fail to meet its future reporting obligations, reduce the market’s confidence

in its financial statements, harm the stock price and subject the Company to sanctions or investigations by the SEC or other regulatory

In addition, the Company’s common stock may not be able to remain quoted on OTCQB or any other securities quotation

service or exchange.

as long as the Company is an “emerging growth company,” as defined in the JOBS Act, or a non-accelerated filer, as defined

in Rule 12b-2 under the Exchange Act, the Company’s auditors will not be required to attest as to its internal control over financial

If the Company continues to identify material weaknesses in its internal control over financial reporting, are unable to comply

with the requirements of Section 404 in a timely manner, are unable to assert that its internal control over financial reporting is effective

or, once required, the Company’s independent registered public accounting firm is unable to attest that its internal control over

financial reporting is effective, investors may lose confidence in the accuracy and completeness of its financial reports and the market

price of the Company’s common stock could decrease.

The Company could also become subject to stockholder or other third-party litigation

as well as investigations by the securities exchange on which the Company’s securities are listed, the SEC or other regulatory

authorities, which could require additional financial and management resources and could result in fines, trading suspensions or other

equity research analysts do not publish research or reports about the company, or if they issue unfavorable commentary or downgrade its

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or cease publishing reports about the Company or its business.

we can issue additional shares of Common Stock, purchasers of our Common Stock may incur immediate dilution and experience further dilution.

are authorized to issue up to 250,000,000 shares of Common Stock, of which 9,426,502 shares of Common Stock are issued and outstanding

as of March 4, 2025.

Our Board of Directors has the authority to cause us to issue additional shares of Common Stock without consent

of any of stockholders.

Consequently, our stockholders may experience further dilution in their ownership of our stock in the future,

which could have an adverse effect on the trading market for our Common Stock.

As a newly Nasdaq-listed company, we will incur material increased costs and become subject to additional regulations and requirements.

a newly Nasdaq-listed public company, we will incur material additional legal, accounting and other expenses including recruiting and

retaining qualified independent directors, payment of annual Nasdaq fees, and satisfying Nasdaq’s standards for companies listed

Because our common stock is listed on the Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing.

If we violate Nasdaq’s listing requirements, our common stock may be delisted.

If we fail to meet any of the Nasdaq’s listing

standards, our common stock may be delisted.

In addition, our Board may determine that the cost of maintaining our listing on a national

securities exchange outweighs the benefits of such listing.

A delisting of our common stock from Nasdaq may materially impair our stockholders’

ability to buy and sell our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market

for, our common stock.

The delisting of our common stock could significantly impair our ability to raise capital and the value of your

You could lose some or all of your investment.

investment in our securities is speculative and involves a high degree of risk.

Potential investors should be aware that the value of

an investment in the Company may go down as well as up.

In addition, there can be no certainty that the market value of an investment

in the Company will fully reflect its underlying value.

You could lose some or all of your investment.

We are a “smaller reporting company” within the meaning of the Securities Act, and if we decide to take advantage of certain

exemptions from various reporting requirements applicable to smaller reporting companies, our common stock could be less attractive to

qualify as a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned

subsidiary of a parent company that is not a “smaller reporting company,” and have either:

(i) a public float of less than

$250 million or (ii) annual revenues of less than $100 million during the most recently completed fiscal year and (A) no public float

or (B) a public float of less than $700 million.

As a “smaller reporting company,” we are entitled to rely on certain reduced

disclosure requirements, such as an exemption from providing executive compensation information in our periodic reports and proxy statements.

We are also exempt from the auditor attestation requirements provided in Section 404(b) of the Sarbanes-Oxley Act.

These exemptions and

reduced disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our

results of operations and financial prospects.

We cannot predict if investors will find our Common Stock less attractive because we may

rely on these exemptions.

If some investors find our Common Stock less attractive as a result, there may be a less active trading market

for our Common Stock and our stock prices may be more volatile.

Related to Our Bitcoin Strategy and Holdings

bitcoin strategy exposes us to various risks, including risks associated with bitcoin.

bitcoin strategy exposes us to various risks, including the following:

is a highly volatile asset.

Bitcoin is a highly volatile asset that has traded below $50,000 per bitcoin and above $105,000 per bitcoin

on the Coinbase exchange (our principal market for bitcoin) in the 12 months preceding the date of this Annual Report.

The trading price

of bitcoin significantly decreased during prior periods, and such declines may occur again in the future.

does not pay interest or dividends.

Bitcoin does not pay interest or other returns and we can only generate cash from our bitcoin

holdings if we sell our bitcoin or implement strategies to create income streams or otherwise generate cash by using our bitcoin holdings.

Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our bitcoin holdings,

and any such strategies may subject us to additional risks.

bitcoin holdings significantly impact our financial results and the market price of our listed securities.

Our bitcoin holdings have

significantly affected our financial results and if we continue to increase our overall holdings of bitcoin in the future, they will

have an even greater impact on our financial results and the market price of our listed securities.

See “Risks Related to Our Bitcoin

Strategy and Holdings – Our historical financial statements do not reflect the potential variability in earnings that we may experience

in the future relating to our bitcoin holding s .”

assets are concentrated in bitcoin.

The vast majority of our assets are concentrated in our bitcoin holdings.

The concentration of

our assets in bitcoin limits our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of

treasury assets.

purchase bitcoin using primarily proceeds from equity and debt financings.

Our ability to achieve the objectives of our bitcoin strategy

depends in significant part on our ability to obtain equity and debt financing.

If we are unable to obtain equity or debt financing on

favorable terms or at all, we may not be able to successfully execute on our bitcoin strategy .

bitcoin strategy has not been tested over an extended period of time or under different market conditions.

We are continually examining

the risks and rewards of our strategy to acquire and hold bitcoin.

This strategy has not been tested over an extended period of time

or under different market conditions.

For example, although we believe bitcoin, due to its limited supply, has the potential to serve

as a hedge against inflation in the long term, the short-term price of bitcoin declined in recent periods during which the inflation

rate increased.

If bitcoin prices were to decrease or our bitcoin strategy otherwise proves unsuccessful, our financial condition, results

of operations, and the market price of our listed securities would be materially adversely impacted.

are subject to counterparty risks, including in particular risks relating to our custodians.

Although we have implemented various

measures that are designed to mitigate our counterparty risks, including by storing substantially all of the bitcoin we own in custody

accounts at U.S.-based, institutional-grade custodians and negotiating contractual arrangements intended to establish that our property

interest in custodially-held bitcoin is not subject to claims of our custodians’ creditors, applicable insolvency law is not fully

developed with respect to the holding of digital assets in custodial accounts.

If our custodially-held bitcoin were nevertheless considered

to be the property of our custodians’ estates in the event that any such custodians were to enter bankruptcy, receivership or similar

insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership

rights with respect to such bitcoin, or delaying or hindering our access to our bitcoin holdings, and this may ultimately result in the

loss of the value related to some or all of such bitcoin, which could have a material adverse effect on our financial condition as well

as the market price of our listed securities.

broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of bitcoin.

A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to

companies operating in the digital asset industry have highlighted the counterparty risks applicable to owning and transacting in digital

Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our

bitcoin, nor have such events adversely impacted our access to our bitcoin, they have, in the short-term, likely negatively impacted

the adoption rate and use of bitcoin.

Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events

involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of

bitcoin, limit the availability to us of financing collateralized by bitcoin, or create or expose additional counterparty risks.

in the accounting treatment of our bitcoin holdings could have significant accounting impacts, including increasing the volatility of

We have adopted ASU 2023-08 as of January 1, 2025, which requires us to measure our bitcoin holdings at fair value in

our statement of financial position, and to recognize gains and losses from changes in the fair value of our bitcoin in net income each

reporting period beginning January 1, 2025.

ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect

to our bitcoin holdings.

Due in particular to the volatility in the price of bitcoin, we expect the adoption of ASU 2023-08 to have a

material impact on our financial results in future periods, increase the volatility of our financial results, and affect the carrying

value of our bitcoin on our balance sheet.

As described in greater detail under the risk factor heading “Risks Related to Our Business

in General—Unrealized fair value gains on our bitcoin holdings could cause us to become subject to the corporate alternative minimum

tax under the Inflation Reduction Act of 2022,” ASU 2023-08 could also have adverse tax consequences.

These impacts could in turn

have a material adverse effect on our financial results and the market price of our listed securities.

broader digital assets industry, including the technology associated with digital assets, the rate of adoption and development of, and

use cases for, digital assets, market perception of digital assets, and the legal, regulatory, and accounting treatment of digital assets

are constantly developing and changing, and there may be additional risks in the future that are not possible to predict.

is a highly volatile asset, and fluctuations in the price of bitcoin have in the past influenced and are likely to continue to influence

our financial results and the market price of our listed securities

is a highly volatile asset, and fluctuations in the price of bitcoin have in the past influenced and are likely to continue to influence

our financial results and the market price of our listed securities.

Our financial results and the market price of our listed securities

adversely affected, and our business and financial condition would be negatively impacted,

if the price of bitcoin decreased substantially (as it has in the past, including during

2022), including as a result of:

user and investor confidence in bitcoin, including due to the various factors described herein;

and trading activities, such as (i) trading activities of highly active retail and institutional

users, speculators, miners and investors;

(ii) actual or expected significant dispositions

of bitcoin by large holders, including the expected liquidation of digital assets associated

with entities that have filed for bankruptcy protection and the transfer and sale of bitcoins

associated with significant hacks, seizures, or forfeitures, such as the transfers of bitcoin

to (a) creditors of the hacked cryptocurrency exchange Mt.

Gox which began in July 2024,

(b) claimants following proceedings related to a 2016 hack of Bitfinex—which claims

are currently being adjudicated, (c) the German government following the seizure of about

50,000 bitcoin in January 2024 from the operator of Movie2k.to, or (d) the Northern District

Court of California granting the U.S.

Department of Justice in January 2025 the right to

liquidate 69,370 bitcoin seized from the Silk Road marketplace;

and (iii) actual or perceived

manipulation of the spot or derivative markets for bitcoin or spot bitcoin exchange-traded

products (“ETPs”);

publicity, media or social media coverage, or sentiment due to events in or relating to,

or perception of, bitcoin or the broader digital assets industry, for example, (i) public

perception that bitcoin can be used as a vehicle to circumvent sanctions, including sanctions

imposed on Russia or certain regions related to the ongoing conflict between Russia and Ukraine,

or to fund criminal or terrorist activities, such as the purported use of digital assets

by Hamas to fund its terrorist attack against Israel in October 2023;

(ii) expected or pending

civil, criminal, regulatory enforcement or other high profile actions against major participants

in the bitcoin ecosystem, including the SEC’s enforcement actions against Coinbase,

and Binance Holdings Ltd.;

(iii) additional filings for bankruptcy protection or bankruptcy

proceedings of major digital asset industry participants, such as the bankruptcy proceeding

of FTX Trading and its affiliates;

and (iv) the actual or perceived environmental impact

of bitcoin and related activities, including environmental concerns raised by private individuals,

governmental and non-governmental organizations, and other actors related to the energy resources

consumed in the bitcoin mining process;

in consumer preferences and the perceived value or prospects of bitcoin;

● competition

from other digital assets that exhibit better speed, security, scalability, or energy efficiency,

that feature other more favored characteristics, that are backed by governments, including

government, or reserves of fiat currencies, or that represent ownership or security

interests in physical assets;

decrease in the price of other digital assets, including stablecoins, or the crash or unavailability

of stablecoins that are used as a medium of exchange for bitcoin purchase and sale transactions,

such as the crash of the stablecoin Terra USD in 2022, to the extent the decrease in the

price of such other digital assets or the unavailability of such stablecoins may cause a

decrease in the price of bitcoin or adversely affect investor confidence in digital assets

identification of Satoshi Nakamoto, the pseudonymous person or persons who developed bitcoin,

or the transfer of substantial amounts of bitcoin from bitcoin wallets attributed to Mr.

● developments

relating to the Bitcoin protocol, including (i) changes to the Bitcoin protocol that impact

its security, speed, scalability, usability, or value, such as changes to the cryptographic

security protocol underpinning the Bitcoin blockchain, changes to the maximum number of bitcoin

outstanding, changes to the mutability of transactions, changes relating to the size of blockchain

blocks, and similar changes, (ii) failures to make upgrades to the Bitcoin protocol to adapt

to security, technological, legal or other challenges, and (iii) changes to the Bitcoin protocol

that introduce software bugs, security risks or other elements that adversely affect bitcoin;

● disruptions,

failures, unavailability, or interruptions in service of trading venues for bitcoin, such

as, for example, the announcement by the digital asset exchange FTX Trading that it would

freeze withdrawals and transfers from its accounts and subsequent filing for bankruptcy protection

and the SEC enforcement action brought against Binance Holdings Ltd., which initially sought

to freeze all of its assets during the pendency of the enforcement action and has since resulted

in Binance discontinuing all fiat deposits and withdrawals in the U.S.;

filing for bankruptcy protection by, liquidation of, or market concerns about the financial

viability of digital asset custodians, trading venues, lending platforms, investment funds,

or other digital asset industry participants, such as the filing for bankruptcy protection

by digital asset trading venues FTX Trading and BlockFi and digital asset lending platforms

Celsius Network and Voyager Digital Holdings in 2022, the ordered liquidation of the digital

asset investment fund Three Arrows Capital in 2022, the announced liquidation of Silvergate

Bank in 2023, the government-mandated closure and sale of Signature Bank in 2023, the placement

of Prime Trust, LLC into receivership following a cease-and-desist order issued by the Nevada

Department of Business and Industry in 2023, and the exit of Binance from the U.S.

as part of its settlement with the Department of Justice and other federal regulatory agencies;

● regulatory,

legislative, enforcement and judicial actions that adversely affect the price, ownership,

transferability, trading volumes, legality or public perception of bitcoin, or that adversely

affect the operations of or otherwise prevent digital asset

● custodians,

trading venues, lending platforms or other digital assets industry participants from operating

in a manner that allows them to continue to deliver services to the digital assets industry;

reductions in mining rewards of bitcoin, including due to block reward halving events, which

are events that occur after a specific period of time (the most recent of which occurred

in April 2024) that reduce the block reward earned by “miners” who validate bitcoin

transactions, or increases in the costs associated with bitcoin mining, including increases

in electricity costs and hardware and software used in mining, or new or enhanced regulation

or taxation of bitcoin mining, which could further increase the costs associated with bitcoin

mining, any of which may cause a decline in support for the Bitcoin network;

● transaction

congestion and fees associated with processing transactions on the Bitcoin network;

● macroeconomic

changes, such as changes in the level of interest rates and inflation, fiscal and monetary

policies of governments, trade restrictions, and fiat currency devaluations;

● developments

in mathematics or technology, including in digital computing, algebraic geometry and quantum

computing, that could result in the cryptography used by the Bitcoin blockchain becoming

insecure or ineffective;

in national and international economic and political conditions, including, without limitation,

federal government policies, trade tariffs and trade disputes, the adverse impacts attributable

to the current conflict between Russia and Ukraine and the economic sanctions adopted in

response to the conflict, and the broadening of the Israel-Hamas conflict to other countries

in the Middle East.

and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty

and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price.

application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and

it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner

that adversely affects the price of bitcoin or the ability of individuals or institutions such as us to own or transfer bitcoin.

federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory,

legislative, enforcement or judicial actions, that could materially impact the price of bitcoin or the ability of individuals or institutions

such as us to own or transfer bitcoin.

For example, within the past several years:

Trump signed an executive order instructing a working group comprised of representatives

from key federal agencies to evaluate measures that can be taken to provide regulatory clarity

and certainty built on technology-neutral regulations for individuals and firms involved

in digital assets, including through well-defined jurisdictional regulatory boundaries;

European Union adopted Markets in Crypto Assets Regulation (“MiCA”), a comprehensive

digital asset regulatory framework for the issuance and use of digital assets, like bitcoin;

June 2023, the SEC filed complaints against Binance Holdings Ltd.

and Coinbase, Inc., and

their respective affiliated entities, relating to, among other claims, that each party was

operating as an unregistered securities exchange, broker, dealer, and clearing agency;

November 2023, the SEC filed a complaint against Payward Inc.

and Payward Ventures Inc.,

together known as Kraken, alleging, among other claims, that Kraken’s crypto trading

platform was operating as an unregistered securities exchange, broker, dealer, and clearing

June 2023, the United Kingdom adopted and implemented the Financial Services and Markets

Act 2023 (“FSMA 2023”), which regulates market activities in “cryptoassets;”

November 2023, Binance Holdings Ltd.

and its then chief executive officer reached a settlement

with the U.S.

Department of Justice, CFTC, the U.S.

Department of Treasury’s Office

of Foreign Asset Control, and the Financial Crimes Enforcement Network to resolve a multi-year

investigation by the agencies and a civil suit brought by the CFTC, pursuant to which Binance

Holdings Ltd.

agreed to, among other things, pay $4.3 billion in penalties across the four

agencies and to discontinue its operations in the United States;

China, the People’s Bank of China and the National Development and Reform Commission

have outlawed cryptocurrency mining and declared all cryptocurrency transactions illegal

within the country.

is not possible to predict whether, or when, new laws will be enacted that change the legal framework governing digital assets or provide

additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will

take any similar actions.

It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation

or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions

to continue to provide services to the digital assets industry, or how any new laws or regulations, or changes to existing laws or regulations,

might impact the value of digital assets generally and bitcoin specifically.

The consequences of any new law or regulation relating to

digital assets and digital asset activities could adversely affect the market price of bitcoin, as well as our ability to hold or transact

in bitcoin, and in turn adversely affect the market price of our listed securities.

the risks of engaging in a bitcoin strategy are relatively novel and have created, and could continue to create, complications due to

the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer

liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.

growth of the digital assets industry in general, and the use and acceptance of bitcoin in particular, may also impact the price of bitcoin

and is subject to a high degree of uncertainty.

The pace of worldwide growth in the adoption and use of bitcoin may depend, for instance,

on public familiarity with digital assets, ease of buying, accessing or gaining exposure to bitcoin, institutional demand for bitcoin

as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for bitcoin

as a store of value or means of payment, and the availability and popularity of alternatives to bitcoin.

Even if growth in bitcoin adoption

occurs in the near or medium-term, there is no assurance that bitcoin usage will continue to grow over the long-term.

bitcoin has no physical existence beyond the record of transactions on the Bitcoin blockchain, a variety of technical factors related

to the Bitcoin blockchain could also impact the price of bitcoin.

For example, malicious attacks by miners, inadequate mining fees to

incentivize validating of bitcoin transactions, hard “forks” of the Bitcoin blockchain into multiple blockchains, and advances

in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the Bitcoin blockchain and negatively

affect the price of bitcoin.

The liquidity of bitcoin may also be reduced and damage to the public perception of bitcoin may occur, if

financial institutions were to deny or limit banking services to businesses that hold bitcoin, provide bitcoin-related services or accept

bitcoin as payment, which could also decrease the price of bitcoin.

Actions by U.S.

banking regulators, such as the issuance in February

2023 by Federal banking agencies of the “Interagency Liquidity Risk Statement,” which cautioned banks on contagion risks

posed by providing services to digital assets customers, and similar actions, have in the past resulted in or contributed to reductions

in access to banking services for bitcoin-related customers and service providers, or the willingness of traditional financial institution

to participate in markets for digital assets.

The liquidity of bitcoin may also be impacted to the extent that changes in applicable

laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for bitcoin and other

digital assets.

historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to

our bitcoin holdings

historical financial statements do not fully reflect the potential variability in earnings that we may experience in the future from

holding or selling significant amounts of bitcoin.

price of bitcoin has historically been subject to dramatic price fluctuations and is highly volatile.

In December 2023, the FASB issued

ASU 2023-08, which we adopted as of January 1, 2025.

determine the fair value of our bitcoin based on quoted (unadjusted) prices on the Coinbase exchange (our principal market for bitcoin).

2023-08 requires us to measure our bitcoin holdings at fair value in our statement of financial position, and to recognize gains and

losses from changes in the fair value of our bitcoin in net income each reporting period.

ASU 2023-08 also requires us to provide certain

interim and annual disclosures with respect to our bitcoin holdings.

we intend to purchase additional bitcoin in future periods and increase our overall holdings of bitcoin, we expect that the proportion

of our total assets represented by our bitcoin holdings will increase in the future.

As a result, and in particular due to our adoption

of ASU 2023-08, volatility in our earnings may be significantly more than what we experienced in prior periods.

availability of spot ETPs for bitcoin and other digital assets may adversely affect the market price of our listed securities

bitcoin and other digital assets have experienced a surge of investor attention since bitcoin was invented in 2008, until recently investors

in the United States had limited means to gain direct exposure to bitcoin through traditional investment channels, and instead generally

were only able to hold bitcoin through “hosted” wallets provided by digital asset service providers or through “unhosted”

wallets that expose the investor to risks associated with loss or hacking of their private keys.

Given the relative novelty of digital

assets, general lack of familiarity with the processes needed to hold bitcoin directly, as well as the potential reluctance of financial

planners and advisers to recommend direct bitcoin holdings to their retail customers because of the manner in which such holdings are

custodied, some investors have sought exposure to bitcoin through investment vehicles that hold bitcoin and issue shares representing

fractional undivided interests in their underlying bitcoin holdings.

These vehicles, which were previously offered only to “accredited

investors” on a private placement basis, have in the past traded at substantial premiums to net asset value, possibly due to the

relative scarcity of traditional investment vehicles providing investment exposure to bitcoin.

January 10, 2024, the SEC approved the listing and trading of spot bitcoin ETPs, the shares of which can be sold in public offerings

and are traded on U.S.

national securities exchanges.

The approved ETPs commenced trading directly to the public on January 11, 2024,

with a trading volume of $4.6 billion on the first trading day.

Additionally, on May 23, 2024, the SEC approved rule changes permitting

the listing and trading of spot ETPs that invest in ether, the main crypto asset supporting the Ethereum blockchain.

The approved spot

ETPs commenced trading directly to the public on July 23, 2024.

The listing and trading of spot ETPs for ether offers investors another

alternative to gain exposure to digital assets, which could result in a decline in the trading price of bitcoin as well as a decline

in the value of our common stock relative to the value of our bitcoin.

we are an operating company, and we believe we offer a different value proposition than a bitcoin investment vehicle such as a spot bitcoin

ETP, investors may nevertheless view our common stock as an alternative to an investment in an ETP, and choose to purchase shares of

a spot bitcoin ETP instead of our common stock.

They may do so for a variety of reasons, including if they believe that ETPs offer a

“pure play” exposure to bitcoin that is generally not subject to federal income tax at the entity level as we are, or the

other risk factors applicable to an operating business, such as ours.

Additionally, unlike spot bitcoin ETPs, we (i) do not seek for

our shares of common stock to track the value of the underlying bitcoin we hold before payment of expenses and liabilities, (ii) do not

benefit from various exemptions and relief under the Securities Exchange Act of 1934, as amended, including Regulation M, and other securities

laws, which enable ETPs to continuously align the value of their shares to the price of the underlying assets they hold through share

creation and redemption, (iii) are a Delaware corporation rather than a statutory trust, and do not operate pursuant to a trust agreement

that would require us to pursue one or more stated investment objectives, and (iv) are not required to provide daily transparency as

to our bitcoin holdings or our daily net asset value.

Furthermore, recommendations by broker-dealers to buy, hold, or sell complex products

and non-traditional ETPs, or an investment strategy involving such products, may be subject to additional or heightened scrutiny that

would not be applicable to broker-dealers making recommendations with respect to our class A common stock.

Based on how we are viewed

in the market relative to ETPs, and other vehicles which offer economic exposure to bitcoin, such as bitcoin futures exchange-traded

funds (“ETFs”), leveraged bitcoin futures ETFs, and similar vehicles offered on international exchanges, any premium or discount

in our common stock relative to the value of our bitcoin holdings may increase or decrease in different market conditions.

a result of the foregoing factors, availability of spot ETPs for bitcoin and other digital assets could have a material adverse effect

on the market price of our listed securities.

bitcoin strategy subjects us to enhanced regulatory oversight

noted above, several spot bitcoin ETPs have received approval from the SEC to list their shares on a U.S.

national securities exchange

with continuous share creation and redemption at net asset value.

Even though we are not, and do not function in the manner of, a spot

bitcoin ETP, it is possible that we nevertheless could face regulatory scrutiny from the SEC or other federal or state agencies due to

our bitcoin holdings.

addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities,

fund criminal or terrorist activities, or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing

conflict between Russia and Ukraine.

While we have implemented and maintain policies and procedures reasonably designed to promote compliance

with applicable anti-money laundering and sanctions laws and regulations and take care to only acquire our bitcoin through entities subject

to anti-money laundering regulation and related compliance rules in the United States, if we are found to have purchased any of our bitcoin

from bad actors that have used bitcoin to launder money or persons subject to sanctions, we may be subject to regulatory proceedings

and any further transactions or dealings in bitcoin by us may be restricted or prohibited.

our bitcoin holdings do not currently serve as collateral securing any of our outstanding indebtedness as of December 31, 2024, we may

incur indebtedness or enter into other financial instruments in the future that may be collateralized by our bitcoin holdings.

also consider pursuing strategies to create income streams or otherwise generate funds using our bitcoin holdings.

These types of bitcoin-related

transactions are the subject of enhanced regulatory oversight.

These and any other bitcoin-related transactions we may enter into, beyond

simply acquiring and holding bitcoin, may subject us to additional regulatory compliance requirements and scrutiny, including under federal

and state money services regulations, money transmitter licensing requirements and various commodity and securities laws and regulations.

laws, guidance and policies may be issued by domestic and foreign regulators following the filing for Chapter 11 bankruptcy protection

by FTX, one of the world’s largest cryptocurrency exchanges, in November 2022.

While the financial and regulatory fallout from

FTX’s collapse did not directly impact our business, financial condition or corporate assets, the FTX collapse may have increased

regulatory focus on the digital assets industry.

Increased enforcement activity and changes in the regulatory environment, including

changing interpretations and the implementation of new or varying regulatory requirements by the government or any new legislation affecting

bitcoin, as well as enforcement actions involving or impacting our trading venues, counterparties and custodians, may impose significant

costs or significantly limit our ability to hold and transact in bitcoin.

addition, private actors that are wary of bitcoin or the regulatory concerns associated with bitcoin have in the past taken and may in

the future take further actions that may have an adverse effect on our business or the market price of our listed securities.

an affiliate of HSBC Holdings has prohibited customers of its HSBC InvestDirect retail investment platform from buying shares of our

class A common stock after determining that the value of our stock is related to the performance of bitcoin, indicating that it did not

want to facilitate exposure to virtual currencies.

to the unregulated nature and lack of transparency surrounding the operations of many bitcoin trading venues, bitcoin trading venues

may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset

classes, which may result in a loss of confidence in bitcoin trading venues and adversely affect the value of our bitcoin

trading venues are relatively new and, in many cases, unregulated.

Furthermore, there are many bitcoin trading venues which do not provide

the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance.

As a result, the marketplace may lose confidence in bitcoin trading venues, including prominent exchanges that handle a significant volume

of bitcoin trading and/or are subject to regulatory oversight, in the event one or more bitcoin trading venues cease or pause for a prolonged

period the trading of bitcoin or other digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational

2019 there were reports claiming that 80-95% of bitcoin trading volume on trading venues was false or non-economic in nature, with

specific focus on unregulated exchanges located outside of the United States.

The SEC also alleged as part of its June 5, 2023

complaint against Binance Holdings Ltd.

that Binance committed strategic and targeted “wash trading” through its

affiliates to artificially inflate the volume of certain digital assets traded on its exchange.

The SEC has also brought recent

actions against individuals and digital asset market participants alleging that such persons artificially increased trading volumes

in certain digital assets through wash trades, or repeated buying and selling of the same assets in fictitious transactions to

manipulate their underlying trading price.

Such reports and allegations may indicate that the bitcoin market is significantly

smaller than expected and that the United States makes up a significantly larger percentage of the bitcoin market than is commonly

Any actual or perceived wash trading in the bitcoin market, and any other fraudulent or manipulative acts and practices,

could adversely affect the value of our bitcoin.

Negative perception, a lack of stability in the broader bitcoin markets and the

closure, temporary shutdown or operational disruption of bitcoin trading venues, lending institutions, institutional investors,

institutional miners, custodians, or other major participants in the bitcoin ecosystem, due to fraud, business failure,

cybersecurity events, government-mandated regulation, bankruptcy, or for any other reason, may result in a decline in confidence in

bitcoin and the broader bitcoin ecosystem and greater volatility in the price of bitcoin.

For example, in 2022, each of Celsius

Network, Voyager Digital, Three Arrows Capital, FTX, and BlockFi filed for bankruptcy, following which the market prices of bitcoin

and other digital assets significantly declined.

In addition, in June 2023, the SEC announced enforcement actions against Coinbase,

Inc., and Binance Holdings Ltd., two providers of large trading venues for digital assets, which similarly was followed by a

decrease in the market price of bitcoin and other digital assets.

These were followed in November 2023, by an SEC enforcement action

against Payward Inc.

and Payward Ventures Inc., together known as Kraken, another large trading venue for digital assets.

price of our listed securities is affected by the value of our bitcoin holdings, the failure of a major participant in the

bitcoin ecosystem could have a material adverse effect on the market price of our listed securities.

concentration of our bitcoin holdings enhances the risks inherent in our bitcoin strategy

of March 3, 2025, we held approximately 19.11 bitcoins that were acquired at an aggregate purchase price of $2.00 million and we intend

to purchase additional bitcoin and increase our overall holdings of bitcoin in the future.

The concentration of our bitcoin holdings

limits the risk mitigation that we could achieve if we were to purchase a more diversified portfolio of treasury assets, and the absence

of diversification enhances the risks inherent in our bitcoin strategy.

The price of bitcoin experienced a significant decline in 2022,

and this had, and any future significant declines in the price of bitcoin would have, a more pronounced impact on our financial condition

than if we used our cash to purchase a more diverse portfolio of assets.

emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative

impact on the price of bitcoin and adversely affect our business

a result of our bitcoin strategy, our assets are concentrated in our bitcoin holdings.

Accordingly, the emergence or growth of digital

assets other than bitcoin may have a material adverse effect on our financial condition.

As of December 31, 2024, bitcoin was the largest

digital asset by market capitalization.

However, there are numerous alternative digital assets and many entities, including consortiums

and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets

that do not use proof-of-work mining like the Bitcoin network.

For example, in late 2022, the Ethereum network transitioned to a “proof-of-stake”

mechanism for validating transactions that requires significantly less computing power than proof-of-work mining.

The Ethereum network

has completed another major upgrade since then and may undertake additional upgrades in the future.

If the mechanisms for validating

transactions in Ethereum and other alternative digital assets are perceived as superior to proof-of-work mining, those digital assets

could gain market share relative to bitcoin.

alternative digital assets that compete with bitcoin in certain ways include “stablecoins,” which are designed to maintain

a constant price because of, for instance, their issuers’ promise to hold high-quality liquid assets (such as U.S.

dollar deposits

and short-term U.S.

treasury securities) equal to the total value of stablecoins in circulation.

Stablecoins have grown rapidly as an

alternative to bitcoin and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms.

As of December 31, 2024, two of the eight largest digital assets by market capitalization were U.S.

dollar-pegged stablecoins.

Additionally,

central banks in some countries have started to introduce digital forms of legal tender.

For example, China’s CBDC project was

made available to consumers in January 2022, and governments including the United States, the United Kingdom, the European Union, and

Israel have been discussing the potential creation of new CBDCs.

Whether or not they incorporate blockchain or similar technology, CBDCs,

as legal tender in the issuing jurisdiction, could also compete with, or replace, bitcoin and other digital assets as a medium of exchange

or store of value.

As a result, the emergence or growth of these or other digital assets could cause the market price of bitcoin to decrease,

which could have a material adverse effect on our business, prospects, financial condition, and operating results.

bitcoin holdings are 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.

example, a number of bitcoin trading venues temporarily halted deposits and withdrawals in 2022, although the Coinbase exchange (our

principal market for bitcoin) 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 does 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 our 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.

we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our bitcoin,

or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our bitcoin

and our financial condition and results of operations could be materially adversely affected

Substantially

all of the bitcoin we own is held in custody accounts at institutional-grade digital asset custodians.

Security breaches and cyberattacks

are of particular concern with respect to our bitcoin.

Bitcoin and other blockchain-based cryptocurrencies and the entities that provide

services to participants in the bitcoin ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or

other malicious activities.

For example, in October 2021 it was reported that hackers exploited a flaw in the account recovery process

and stole from the accounts of at least 6,000 customers of the Coinbase exchange (our principal market for bitcoin), although the flaw

was subsequently fixed and Coinbase reimbursed affected customers.

Similarly, in November 2022, hackers exploited weaknesses in the security

architecture of the FTX Trading digital asset exchange and reportedly stole over $400 million in digital assets from customers.

security breach or cyberattack could result in:

partial or total loss of our bitcoin in a manner that may not be covered by insurance or

the liability provisions of the custody agreements with the custodians who hold our bitcoin;

to our reputation and brand;

disclosure of data and violations of applicable data privacy and other laws;

● significant

regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual

and financial exposure.

any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that

operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader

Bitcoin blockchain ecosystem or in the use of the Bitcoin network to conduct financial transactions, which could negatively impact us.

upon systems across a variety of industries, including industries related to bitcoin, are increasing in frequency, persistence, and sophistication,

and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors.

techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets),

disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized

or detected until after they have been launched against a target.

These attacks may occur on our systems or those of our third-party

service providers or partners.

We may experience breaches of our security measures due to human error, malfeasance, insider threats,

system errors or vulnerabilities or other irregularities.

In particular, unauthorized parties have attempted, and we expect that they

will continue to attempt, to gain access to our systems and facilities, as well as those of our partners and third-party service providers,

through various means, such as hacking, social engineering, phishing and fraud.

In the past, hackers have successfully employed a social

engineering attack against one of our service providers and misappropriated our digital assets, although, to date, such events have not

been material to our financial condition or operating results.

Threats can come from a variety of sources, including criminal hackers,

hacktivists, state-sponsored intrusions, industrial espionage, and insiders.

In addition, certain types of attacks could harm us even

if our systems are left undisturbed.

For example, certain threats are designed to remain dormant or undetectable, sometimes for extended

periods of time, or until launched against a target and we may not be able to implement adequate preventative measures.

Further, there

has been an increase in such activities due to the increase in work-from-home arrangements since the onset of the COVID-19 pandemic.

The risk of cyberattacks could also be increased by cyberwarfare in connection with the ongoing Russia-Ukraine and Israel-Hamas conflicts,

or other future conflicts, including potential proliferation of malware into systems unrelated to such conflicts.

Any future breach of

our operations or those of others in the bitcoin industry, including third-party services on which we rely, could materially and adversely

affect our business.

face risks relating to the custody of our bitcoin, including the loss or destruction of private keys required to access our bitcoin and

cyberattacks or other data loss relating to our bitcoin

hold our bitcoin with regulated custodians that have duties to safeguard our private keys.

Our custodial services contracts do not restrict

our ability to reallocate our bitcoin among our custodians, and our bitcoin holdings may be concentrated with a single custodian from

time to time.

In light of the significant amount of bitcoin we hold, we continually seek to engage additional custodians to achieve a

greater degree of diversification in the custody of our bitcoin as the extent of potential risk of loss is dependent, in part, on the

degree of diversification.

If there is a decrease in the availability of digital asset custodians that we believe can safely custody

our bitcoin, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services

in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures

to custody our bitcoin, and our ability to seek a greater degree of diversification in the use of custodial services would be materially

adversely affected.

of December 31, 2024, the insurance that covers losses of our bitcoin holdings covers only a small fraction of the value of the entirety

of our bitcoin holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have

or that such coverage will cover losses with respect to our bitcoin.

Moreover, our use of custodians exposes us to the risk that the

bitcoin our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor

of the custodian, inhibiting our ability to exercise ownership rights with respect to such bitcoin.

Any loss associated with such insolvency

proceedings is unlikely to be covered by any insurance coverage we maintain related to our bitcoin.

is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet

in which the bitcoin is held.

While the Bitcoin blockchain ledger requires a public key relating to a digital wallet to be published

when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the bitcoin

held in such wallet.

To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup

of the private key(s) is accessible, neither we nor our custodians will be able to access the bitcoin held in the related digital wallet.

Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will

not be compromised as a result of a cyberattack.

The bitcoin and blockchain ledger, as well as other digital assets and blockchain technologies,

have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.

change reclassifying bitcoin as a security could lead to our classification as an “investment company” under the Investment

Company Act of 1940 and could adversely affect the market price of bitcoin and the market price of our listed securities

assets are concentrated in our bitcoin holdings.

While senior SEC officials have stated their view that bitcoin is not a “security”

for purposes of the federal securities laws, a contrary determination by the SEC could lead to our classification as an “investment

company” under the Investment Company Act of 1940, which would subject us to significant additional regulatory controls that could

have a material adverse effect on our ability to execute on our bitcoin strategy, and our business and operations and may also require

us to substantially change the manner in which we conduct our business.

addition, if bitcoin is determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions

imposed by such a determination could adversely affect the market price of bitcoin and in turn adversely affect the market price of our

listed securities.

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

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 and protection of investors.

subject to, and do not otherwise voluntarily comply with, these laws and regulations.

This means, among other things, that the execution

of or changes to our Treasury Reserve Policy or 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.

although a significant change to our Treasury Reserve Policy would require the approval of our board of directors, no shareholder or

regulatory approval would be necessary.

Consequently, 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 strategy of acquiring and holding bitcoin.

bitcoin strategy exposes us to risk of non-performance by counterparties

bitcoin strategy exposes us to the risk of non-performance by counterparties, whether contractual or otherwise.

Risk of non-performance

includes inability or refusal of a counterparty to perform because of a deterioration in the counterparty’s financial condition

and liquidity or for any other reason.

For example, our execution partners, custodians, or other counterparties might fail to perform

in accordance with the terms of our agreements with them, which could result in a loss of bitcoin, a loss of the opportunity to generate

funds, or other losses.

primary counterparty risk with respect to our bitcoin is custodian performance obligations under the various custody arrangements we

have entered into.

A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events

relating to companies operating in the digital asset industry, including the filings for bankruptcy protection by Three Arrows Capital,

Celsius Network, Voyager Digital, FTX Trading and Genesis Global Capital, the closure or liquidation of certain financial institutions

that provided lending and other services to the digital assets industry, including Signature Bank and Silvergate Bank, SEC enforcement

actions against Coinbase, Inc., Binance Holdings Ltd., and Kraken, the placement of Prime Trust, LLC into receivership following a cease-and-desist

order issued by Nevada’s Department of Business and Industry, and the filing and subsequent settlement of a civil fraud lawsuit

by the New York Attorney General against Genesis Global Capital, its parent company Digital Currency Group, Inc., and former partner

Gemini Trust Company have highlighted the perceived and actual counterparty risk applicable to digital asset ownership and trading.

these bankruptcies, closures and liquidations have not resulted in any loss or misappropriation of our bitcoin, nor have such events

adversely impacted our access to our bitcoin, legal precedent created in these bankruptcy and other proceedings may increase the risk

of future rulings adverse to our interests in the event one or more of our custodians becomes a debtor in a bankruptcy case or is the

subject of other liquidation, insolvency or similar proceedings.

all of our custodians are subject to regulatory regimes intended to protect customers in the event of a custodial bankruptcy, receivership

or similar insolvency proceeding, no assurance can be provided that our custodially-held bitcoin will not become part of the custodian’s

insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings.

Additionally, if

we pursue any strategies to create income streams or otherwise generate funds using our bitcoin holdings, we would become subject to

additional counterparty risks.

Any significant non-performance by counterparties, including in particular the custodians with which we

custody substantially all of our bitcoin, could have a material adverse effect on our business, prospects, financial condition, and operating

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors