What changed in this filing

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Item 1A. Risk Factors

2026-03-31 compared with 2025-03-31 · 205 added, 259 removed, 232 unchanged (67% of the section changed)

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We are a young company with a limited operating history, making it difficult for you to evaluate our business and your investment.

KULR was formed in 2015 and KTC was formed in 2013.

The Company, as a whole, has limited operating history.

We are an early-stage company with limited operating history.

We have not yet demonstrated sales of products at a level capable of covering our fixed expenses.

Since inception, we have demonstrated limited capability to produce sufficient materials to generate the ongoing revenues necessary to sustain our operations in the long-term.

Nor have we demonstrated the ability to generate sufficient sales to sustain the business.

There can be no assurance that the Company will ever produce a profit.

Many of the Company’s products represent new products that have not yet been fully tested in commercial product settings and for which manufacturing operations have not yet been fully scaled.

Since inception, we have demonstrated limited capability to produce sufficient materials to generate the ongoing revenues necessary to sustain our operations in the long-term, nor have we demonstrated the ability to generate sufficient sales to sustain the business.

There can be no assurance that we will ever produce a profit.

Many of our products represent new products that have not yet been fully tested in commercial product settings and for which manufacturing operations have not yet been fully scaled.

This means that investors are subject to all the risks incident to the creation and development of multiple new products and their associated manufacturing processes, and each investor should be prepared to withstand a complete loss of their investment.

Because we are subject to these uncertainties, there may be risks that management has failed to anticipate and you may have a difficult time evaluating our business and your investment in our Company.

Our ability to become profitable depends primarily on our ability to successfully commercialize our products in the future.

Because we are subject to these uncertainties, there may be risks that management has failed to anticipate, and you may have a difficult time evaluating our business and your investment in us.

Our ability to become profitable depends primarily on our ability to

successfully commercialize our products in the future.

Even if we successfully develop and market our products, we may not generate sufficient or sustainable revenue to achieve or sustain profitability, which could cause us to cease operations.

KULR primarily sells engineered materials or products made with these materials to other companies for incorporation into their products.

We primarily sell engineered materials or products made with these materials to other companies for incorporation into their products.

Although KULR’s technologies were previously used in numerous advanced space and industrial applications for NASA, there has been no significant incorporation of our materials or products into customer products that are released for commercial sale as of the date of this report.

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We will need to raise substantial additional capital to fund our operations, and if we are not successful in securing additional financing on acceptable terms, we may be required to delay significantly, reduce the scope of or eliminate one or more of our research or development programs, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency, including arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies, product candidates or products.

We could experience significant disruptions in supply from our current or future sources.

We could experience significant disruptions in supply from our current or future supply sources which may be exacerbated by macroeconomic trends, including trade policies, political events and other international disputes.

We could experience significant disruptions as a result of global supply chain issues and, in the event of a disruption, we cannot make any assurances that we would be able to locate alternative suppliers of materials of comparable quality at an acceptable price, or alternative purchasers of our products.

Identifying suitable suppliers and purchasers is a resource-intensive process that requires us to become satisfied with quality control, responsiveness and service, financial stability and labor and other ethical practices.

In addition, any indirect supply chain disruptions due to United States trade policy with China or the ongoing military conflict in Ukraine may further complicate existing supply chain constraints and direct or indirect customers’ demand for our products.

Interruption of our supplies and in demand of our products by our purchasers, or the loss of one or more key suppliers or purchasers, could have a negative effect on the Company’s business and operating results.

Any delays, interruption or increased costs or manufacture of our products could have an adverse effect on our ability to meet customer demand for our products and result in lower net sales and operating income both in the short and long term, which could in turn negatively impact our business, financial condition and the price of our shares.

In addition, we cannot adequately predict the effects of the global supply chain disruptions on our customers or potential customers and the indirect effects such disruptions could have on our operations both in the short and long term, which could in turn negatively impact our business, financial condition and the price of our shares.

An additional negative affect on the supply chain is the “Tariff War”, especially with China, Canada and Mexico.

The increased tariffs with these countries could have an adverse effect on our supply chain potentially causing financial difficulty for our direct or indirect customers and reduced demand of our products.

A continuation of these conflicts could have adverse changes in international trade policies and relations.

Tariffs could increase the cost of our products and the components that go into making them.

These increased costs could adversely impact the gross margin that we earn on our products.

Tariffs could also make our products more expensive for customers, which could make our products less competitive and reduce consumer demand.

Changing our operations in accordance with new or changed trade restrictions can be expensive, time-consuming and disruptive to our operations.

The conflict between Russia and Ukraine and the war between Israel and Hamas have resulted in worldwide geopolitical and macroeconomic uncertainty, and we cannot predict how the conflicts will evolve or the timing thereof.

Any delays, interruption or increased costs in the manufacturing and delivery of our products could adversely affect our ability to meet customer demand and could result in reduced net sales, lower gross margins and operating income.

We cannot predict the extent to which supply chain disruptions may affect our customers, suppliers or end markets, or the indirect effects such disruptions may have on our operations and demand for our products.

In addition, geopolitical changes, such as trade disruptions, including the imposition of tariffs by the U.S.

on imports from certain countries and any resulting counter-tariffs, political unrest, warfare and military or armed conflict, including those involving China, Ukraine/Russia and the Middle East and the resulting macro-economic impacts from such geopolitical changes, could directly or indirectly cause or exacerbate supply chain disruptions and may further complicate existing supply chain constraints and demand for our products.

Increased tariffs or other trade restrictions involving the United States and key trading partners, including, among others, China, Canada and Mexico, may increase the cost of raw materials and components, disrupt cross-border supply chains and adversely affect our customers’ financial condition and demand for our products.

Ongoing trade disputes may continue to escalate which could increase the costs of our products and the components we use to manufacture them.

Additionally, the conflict between Russia and Ukraine and the conflicts in the Middle East have resulted in worldwide geopolitical and macroeconomic uncertainty, and we cannot predict how the conflicts will evolve or the timing thereof.

If these conflicts continue for a significant time or further expand to other countries and depending on the ultimate outcomes of these conflicts, which remain uncertain, they could have additional adverse effects on macroeconomic conditions, including but not limited to, increased costs, constraints on the availability of commodities, supply chain disruptions and decreased business spending.

Furthermore, continuation of the conflicts could give rise to disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion;

adverse changes in international trade policies and relations;

regulatory enforcement;

Furthermore, continuation of the conflicts could give rise to:

disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion;

our ability to implement and execute our business strategy;

terrorist activities;

our exposure to foreign currency fluctuations;

and constraints, volatility, or disruption in the

capital markets, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

The tensions between the U.S.

and China, the Russia-Ukraine war and conflicts in the Middle East remain uncertain, and while it is difficult to predict the impact of any of the foregoing, any escalation or additional uncertainty in these situations could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.

We have limited experience in higher volume manufacturing that will be required to support profitable operations, and the risks associated with scaling to larger production quantities may be substantial.

increased foreign currency fluctuations;

and constraints, volatility, or disruption in the capital markets.

The occurrence of any of these events may impact our ability to obtain raw materials to manufacture our products, serve our customers, raise additional capital when needed on acceptable terms, if at all, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

We have limited experience in higher volume manufacturing that will be required to support profitable operations, and the risks and costs associated with scaling to larger production quantities may be substantial.

We have limited experience manufacturing our products.

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At present, we rely on outsourced partners to produce high volume products.

In order to develop internal capacity to produce much higher volumes, it will be necessary to produce multiples of existing processes or engineer new production processes in some cases.

We have begun building up the scale of our automated battery cell facilities in our leased facility in San Diego but there is no guarantee that we will be able to economically scale-up our production processes to the levels required.

In order to develop internal capacity to produce much higher volumes, it will be necessary to produce multiples of

existing processes or engineer new production processes in some cases.

If we are unable to scale-up our production processes and facilities to support sustainable sales levels, the Company may be forced to curtail or cease operations.

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We are dependent on customers and partners to design and test our solution into new applications which may not be brought to market successfully.

The Company targets its thermal management solution for new applications and devices that require high performance and unique features offered by its products.

Our solutions are targeted for new applications and devices that require high performance and unique features offered by our products, and potential customers may not be aware of our unique offerings.

Developing new applications and devices involves a lengthy and complex process, and they may not be commercialized on a timely basis, or at all.

The Company’s success is directly related to the success of these new products.

The Company’s success is directly related to the marketability and adoption of these new products.

Furthermore, because the Company’s solutions are relatively new to mass market consumer electronics, the design and testing time is longer than traditional solutions.

Moreover, in transitioning to new technologies and products, we may not achieve design wins, our customers may delay transition to these new technologies, our competitors may transition more quickly than we do, or we may experience product delays, cost overruns or performance issues that could harm our operating results and financial condition.

We could be adversely affected by our exposure to customer concentration risk.

Moreover, in transitioning to new technologies and products, we may not achieve design wins, our customers may delay transitioning to these new technologies, our competitors may transition more quickly than we do, or we may experience product delays, cost overruns or performance issues that could harm our operating results and financial condition.

We could be adversely affected by our exposure to customer concentration risk and reduced manufacturing capacity.

We are subject to customer concentration risk as a result of our reliance on a relatively small number of customers for a significant portion of our revenues.

During 2024, we had 2 customers whose purchases, in the aggregate, accounted for 25% of total revenue.

During 2025, we had 2 customers whose purchases, in the aggregate, accounted for 28% of total revenue pursuant to our Energy Management Platform segment, and 1 customer whose purchases accounted for 100% of total revenue pursuant to our Mining of Digital Assets segment.

Due to the nature of our business and the relatively large size of many of the applications our customers are developing, we anticipate that we will be dependent on a relatively small number of customers for the majority of our revenues for the next several years.

It is possible that only one or two customers could place orders sufficient to utilize most or all of our existing manufacturing capacity.

In this case, there would be a risk of significant loss of future revenues if one or more of these customers were to stop ordering our materials, which could in turn have a material adverse effect on our business and on your investment.

Even if we expand our customer base, it is possible that orders from only one or two customers could exhaust most or all of our existing manufacturing capacity.

Accordingly, if one or more of these customers were to stop ordering our products or if we are unable to meet the manufacturing capacity demanded by new customers, there would be a risk of significant loss of future revenues, which could in turn have a material adverse effect on our business and on your investment.

We operate in an advanced technology arena where hypothesized properties and benefits of our products may not be achieved in practice, or in which technological change may alter the attractiveness of our products.

Because there is no sustained history of successful use of our products in commercial applications, there is no assurance that broad successful commercial applications may be technically feasible.

Some of the scientific and engineering data related to our products

has been generated in our own laboratories or in laboratory environments at our customers or third-parties.

It is well known that laboratory data is not always representative of commercial applications.

Some of the scientific and engineering data related to our products has been generated in our own laboratories or in laboratory environments at our customers or third-parties.

Laboratory data is not always representative of commercial applications.

Likewise, we operate in a market that is subject to rapid technological change.

Part of our business strategy is to monitor such change and take steps to remain technologically current, but there is no assurance that such strategy will be successful.

If the Company is not able to adapt to new advances in materials sciences, or if unforeseen technologies or materials emerge that are not compatible with our products and services or that could replace our products and services, our revenues and business prospects would likely be adversely affected.

If we are not able to adapt to new advances in materials sciences, or if unforeseen technologies or materials emerge that are not compatible with our products and services or that could replace our products and services, our revenues and business prospects would likely be adversely affected.

Such an occurrence may have severe consequences, including the potential for our investors to lose all of their investment.

Competitors that are larger and better funded may cause the Company to be unsuccessful in selling its products.

The Company operates in a market that is expected to have significant competition in the future.

Global research is being conducted by substantially larger companies who have greater financial, personnel, technical, and marketing resources.

There can be no assurance that the Company’s strategy of offering better thermal management solutions based on the Company’s proprietary carbon fiber-based products will be able to compete with other companies, many of whom will have significantly greater resources, on a continuing basis.

The Company operates in highly competitive markets.

Global research relating to thermal management solutions is being conducted by substantially larger companies who have greater financial, personnel, technical, and marketing resources than the Company.

greater resources, on a continuing basis.

In the event that we cannot compete successfully, the Company may be forced to cease operations.

Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our solutions.

Our ability to grow our customer base, achieve broader market acceptance, grow revenue, and achieve and sustain profitability will depend, to a significant extent, on our ability to effectively expand our sales and marketing operations and activities and educate potential customers about our solutions.

Substantial amounts of time and energy are dedicated to our sale and marketing efforts, and our operating results will suffer if our sales and marketing efforts do not contribute significantly to increasing revenue.

We make significant investments in research and development of new products and services that may not achieve expected returns.

We have made and will continue to make significant investments in research, development, and marketing for existing products, services, and technologies, as well as new technology or new applications of existing technology.

Investments in new technology are speculative.

Commercial success depends on many factors, including but not limited to, innovativeness, engineering support, and effective distribution and marketing.

There is no assurance that we will be rewarded from our investments in developing new services and products.

If our customers do not perceive our latest offerings as providing significant new functionality or other value, they may reduce their purchases of services or products, thus unfavorably affecting revenue and profits.

We may not achieve significant revenue from new products and services, or new applications of existing products and services, for several years, if at all.

New products and services may not be profitable, and even if they are profitable, operating margins for some new products, services and businesses may not be as high as the margins we have experienced historically.

Furthermore, developing new technologies is complex and unpredictable, which can require long development and testing periods.

Significant delays in new releases or significant problems in creating new products or offering new services could adversely affect our revenue and profits.

Because of our small size and limited operating history, we are dependent on key employees.

The Company’s operations and development are dependent upon the experience and knowledge of Michael Mo, our Chief Executive Officer, Shawn Canter, our Chief Financial Officer, Dr.

William Walker, our Chief Technology Officer, Ted Krupp, our Vice President of Sales, and Michael Carpenter, our Vice President of Engineering.

William Walker, our Chief Technology Officer.

If the services of any of these individuals should become unavailable, the Company’s business operations might be adversely affected.

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Although we generally enter into confidentiality agreements with our employees and third parties to protect our intellectual property, these confidentiality agreements are limited in duration and could be breached, and may not provide meaningful protection of our trade secrets or proprietary manufacturing expertise.

Adequate remedies may not be available if there is an unauthorized use or disclosure of our trade secrets and manufacturing expertise.

Adequate remedies may not be available

if there is an unauthorized use or disclosure of our trade secrets and manufacturing expertise.

In addition, others may obtain knowledge about our trade secrets through independent development or by legal means.

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Government contracts utilizing our carbon fiber-based solutions.

Our future growth and success depend on our ability to sell effectively to, and manage relationships with, large enterprise and defense customers.

Our potential customers are manufacturers of products that tend to be large enterprises and organizations, including defense customers.

Therefore, our future success will depend on our ability to effectively sell our products to such large customers.

Sales to these customers involve risks that may not be present (or that are present to a lesser extent) with sales to smaller customers.

These risks include, but are not limited to, increased purchasing power and leverage held by large customers in negotiating contractual arrangements with us and longer sales cycles and the associated risk that substantial time and resources may be spent on a potential customer that elects not to purchase our products or solutions.

Large organizations often undertake a significant evaluation process that results in a lengthy sales cycle.

In addition, product purchases by large organizations are frequently subject to budget constraints, multiple approvals and unanticipated administrative, processing and other delays.

Finally, large organizations typically have longer implementation cycles, require greater product functionality and scalability, require a broader range of services, demand that vendors take on a larger share of risks, require acceptance provisions that can lead to a delay in revenue recognition and expect greater payment flexibility.

All of these factors can add further risk to business conducted with these potential customers.

Downturns in general economic conditions could adversely affect our profitability.

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Future economic conditions may not be favorable to our industry.

A decline in the demand for our products or a shift to lower-margin products due to deteriorating economic conditions could adversely affect sales of our products and our profitability and could also result in impairments of certain of our assets.

A decline in the demand for our products or a shift to

lower-margin products due to deteriorating economic conditions could adversely affect sales of our products and our profitability and could also result in impairments of certain of our assets.

Furthermore, any uncertainty in economic conditions may result in a slowdown to the global economy that could affect our business by reducing the prices that our customers may be able or willing to pay for our products or by reducing the demand for our products.

An increase in the cost of raw materials or electricity might affect our profits.

Recently, cost inflation stemming from the COVID-19 pandemic, the Ukraine/Russia crisis, the Israel/Hamas crisis, and other macroeconomic factors has caused prices to increase across various sectors of the economy.

Recently, cost inflation stemming from geopolitical factors, global crises and other macroeconomic factors has caused prices to increase across various sectors of the economy.

Any increase in the prices of our raw materials or energy might affect the overall cost of our products.

If we are not able to raise our prices to pass on increased costs to our customers, we would be unable to maintain our existing profit margins.

Our major cost components include items such as production materials and electricity, which items are normally readily available industrial commodities.

Our major cost components include items such as production materials and electricity, which are typically readily available industrial commodities.

During our history as a business, we have not seen any material impact on our cost structure from fluctuations in raw material or energy costs, but this could change in the future.

Our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period.

or changes in governmental enforcement policies, civil disruption, riots, terrorist attacks, war, and other events.

Our manufacturing operations may be subject to disruption due to extreme weather conditions, floods and similar events, major industrial accidents, strikes and lockouts, adoption of new laws or regulations, changes in interpretations of existing laws or regulations or changes in governmental enforcement policies, civil disruption, riots, terrorist attacks, war, and other events.

We cannot assure you that no such events will occur.

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We may become subject to liabilities related to risks inherent in working with hazardous materials.

Our development and manufacturing processes involve the controlled use of hazardous materials, such as acetone.

We are subject to federal, provincial and local laws and EPA regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste products.

Our development and manufacturing processes involve the controlled use of hazardous materials, such as acetone and other flammable chemicals, as well as lithium-ion batteries and components.

We are subject to federal, provincial and local laws, including EPA, OSHA and other regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste products.

Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by such laws and regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated.

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Significant disruptions of information technology systems, breaches of data security and other incidents could materially adversely affect our business, results of operations and financial condition.

See Item 1C – Cybersecurity for a discussion of our information technology systems.

We maintain information in digital and other forms that is necessary to conduct our business, and we are increasingly dependent on information technology systems and infrastructure to operate our business.

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If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our product development programs.

Any security compromise affecting us, our partners or our industry, whether real or perceived, could harm our reputation, erode confidence in the effectiveness of our security measures and lead to regulatory scrutiny, which could materially adversely affect our business, results of operations and financial condition.

Any security compromise affecting us, our partners or our industry, whether real or perceived, could harm our reputation, erode confidence in the

effectiveness of our security measures and lead to regulatory scrutiny, which could materially adversely affect our business, results of operations and financial condition.

See Item 1C – Cybersecurity for a discussion of our information technology systems.

The failure of financial institutions or transactional counterparties could adversely affect our current and projected business operation and our financial condition and results of operations.

During March 2023, Silicon Valley Bank (“SVB”), Signature Bank and Silvergate Capital Corp.

were each closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver.

A statement by the Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts.

The standard deposit insurance amount is up to $250,000 per depositor, per insured bank, for each account ownership category.

Although we do not have any funds deposited with the aforementioned banks that failed, we regularly maintain cash balances with other financial institutions in excess of the FDIC insurance limit.

A failure of a depository institution to return deposits could impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance.

We maintain domestic cash deposits in Federal Deposit Insurance Corporation, or FDIC, insured banks that exceed the FDIC insurance limits.

The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our operations, liquidity, and financial performance.

Bank failures;

events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions;

or concerns or rumors about such events may lead to liquidity constraints.

For example, in March 2023, Silicon Valley Bank failed and was taken into receivership by the FDIC.

We cannot guarantee that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S.

or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks or government institutions or by acquisition in the event of a failure or liquidity crisis.

Future adverse regulations could affect the viability of the business.

As a small generator of hazardous substances, we are subject to local governmental regulations relating to the storage, discharge, handling, emission, generation, manufacture and disposal of toxic or other hazardous substances, such as acetone that is used

in very small quantities to manufacture our products.

We are currently in compliance with these regulations.

However, there can be no assurance that future regulations might not change or raise the compliance standards, of which the Company may become in violate or for which we may incur substantial costs to comply.

In most cases, as far as we are aware, there are no current regulations elsewhere in the world that prevent or prohibit the sale of the Company’s products.

However, there is no assurance that any regulations will not be enacted in the future to require the Company’s products or production materials to be subject to test for toxicity or other health effects before they can be sold or used in the production process, if such regulations are enacted in the future, the Company’s business could be adversely affected because of the requirement for expensive and time-consuming tests or other regulatory compliance.

There can be no assurance that future regulations might not severely limit or even prevent the sale of the Company’s products in major markets, in which case the Company’s financial prospects might be severely limited, causing investors to lose some or all of their investment.

However, there can be no assurance that future regulations might not change or raise the compliance standards, with which the Company may no longer comply or for which we may incur substantial costs to comply.

As far as we are aware, there are no current regulations elsewhere in the world that prevent or prohibit the sale of the Company’s products.

If such regulations are enacted in the future, they may result in expensive and time-consuming tests or other actions to ensure regulatory compliance, which could adversely affect the Company’s business.

There can be no assurance that future regulations might not severely limit or even prevent the sale of the Company’s products in major markets, which could severely limit the Company’s financial prospects and cause investors to lose some or all of their investment.

Our directors and officers may be exposed to liability.

We currently maintain a policy for director and officer liability insurance, also known as “D&O Insurance.” However, the maximum coverage under our D&O Insurance policy may not be sufficient to cover all such liability exposure and, as a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and will divert time and attention away from revenue generating activities.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting.

Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased selling, general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities, which could have an adverse effect on our business.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting.

Our management team has invested and will need to continue to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased selling, general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities, which could have an adverse effect on our business.

If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected.

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Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition or results of operations.

In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors.

In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to

be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors.

Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting or disclosure of management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.

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WE ARE NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940 AND STOCKHOLDERS DO NOT HAVE THE PROTECTIONS ASSOCIATED WITH OWNERSHIP OF SHARES IN A REGISTERED INVESTMENT COMPANY NOR THE PROTECTIONS AFFORDED BY THE COMMODITIES EXCHANGE ACT.

Our bitcoin acquisition strategy may expose us to various risks associated with bitcoin

Our bitcoin acquisition strategy may expose us to various risks associated with bitcoin, including the following:

Bitcoin is a highly volatile asset.

Bitcoin is a highly volatile asset that has traded below $38,000 per bitcoin and above $106,000 per bitcoin on Coinbase during 2024.

The trading price of bitcoin was significantly lower during prior periods, and such decline may occur again in the future.

While Bitcoin prices are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms, they have historically been volatile and are impacted by a variety of factors.

Such factors include, but are not limited to, the worldwide growth in the adoption and use of Bitcoins, the maintenance and development of the software protocol of the Bitcoin network, changes in consumer demographics and public tastes, fraudulent or illegitimate actors, real or perceived scarcity, and political, economic, regulatory or other conditions.

Furthermore, pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of Bitcoin, or our share price, making prices more volatile.

Currently, we do not use a formula or specific methodology to determine whether or when we will sell Bitcoin that we hold, or the number of Bitcoins we will sell.

Rather, decisions to hold or sell Bitcoins are currently determined by management by analyzing forecasts and monitoring the market in real time.

Our BTC acquisition and holdings strategies may expose us to various risks associated with BTC

Our BTC acquisition and holdings strategies may expose us to various risks associated with BTC, including the following:

BTC is a highly volatile asset.

BTC is a highly volatile asset and has experienced, and may continue to experience, significant price volatility, including sharp declines over short periods.

While BTC prices are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms, they have historically been volatile and are impacted by a variety of factors, such as market sentiment, adoption trends, regulatory developments, macroeconomic conditions and speculation.

Currently, we do not use a formula or specific methodology to determine whether or when we will sell BTC and decisions to hold or sell BTC are made by management based on market conditions and liquidity needs.

Such decisions, however well-informed, may result in untimely sales and even losses, adversely affecting an investment in us.

At this time, we do not anticipate engaging in any hedging activities related to our holding of Bitcoin as this would expose us to substantial decreases in the price of Bitcoin.

Bitcoin 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.

We purchase bitcoin using primarily proceeds from equity financings.

Our ability to achieve the objectives of our bitcoin strategy depends in significant part on our ability to obtain equity financing.

If we are unable to obtain equity financing on favorable terms or at all, we may not be able to successfully execute on our bitcoin strategy.

Our bitcoin acquisition strategy has not been tested.

This bitcoin acquisition strategy has not been tested.

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.

Some investors and other market participants may disagree with our bitcoin acquisition strategy or actions we undertake to implement it.

If bitcoin prices were to decrease or our bitcoin acquisition strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our common stock would be materially adversely impacted.

BTC does not pay interest or dividends.

BTC does not pay interest or other returns, and we can only generate cash from our BTC holdings if we sell our BTC or implement strategies to create income streams or otherwise generate cash by using our BTC holdings.

Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our BTC holdings, and any such strategies may subject us to additional risks.

We purchase BTC using primarily proceeds from equity financings.

Our ability to execute on the acquisition portion of our BTC strategy depends in significant part on our ability to obtain equity financing.

If we are unable to obtain equity financing on favorable terms or at all, we may not be able to successfully execute on our BTC strategy.

We will be subject to counterparty risks, including in particular risks relating to our custodians.

Although we intend to implement various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the bitcoin we may 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 and this may ultimately result in the loss of the value related to some or all of such bitcoin.

ability to exercise ownership rights with respect to such bitcoin and this may ultimately result in the loss of the value related to some or all of such bitcoin.

Even if we are able to prevent our bitcoin from being considered the property of a custodian’s bankruptcy estate as part of an insolvency proceeding, it is possible that we would still be delayed or may otherwise experience difficulty in accessing our bitcoin held by the affected custodian during the pendency of the insolvency proceedings.

Any such outcome could have a material adverse effect on our financial condition and the market price of our common stock.

The 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, 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.

and Binance Holdings Ltd., 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 counterparty risks applicable to owning and transacting in digital assets.

Any similar bankruptcies, closures, liquidations and other events may not result in any loss or misappropriation of our bitcoin holdings, or adversely impact our access to our bitcoin holdings.

Or, any such bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry may 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.

Changes in the trading price of bitcoin could have significant accounting impacts, including increasing the volatility of our results.

The Company has adopted ASU 2023-08, 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.

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

Volatility in the price of bitcoin could have a material impact on the carrying value of our digital assets on our balance sheet, increase the volatility of our financial results, and it could also have adverse tax consequences, which in turn could have a material adverse effect on our financial results and the market price of our common stock.

Changes in the trading price of BTC or changes in the manner in which we own BTC could have significant accounting impacts, including increasing the volatility of our results.

The Company has adopted ASU 2023-08, which requires us to measure our BTC holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our BTC in net income each reporting period.

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

Volatility in the price of BTC could have a material impact on the carrying value of our digital assets on our balance sheet, increase the volatility of our financial results, and it could also have adverse tax consequences, which in turn could have a material adverse effect on our financial results and the market price of our common stock.

The 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.

Changes in our ownership of bitcoin could have accounting, regulatory and other impacts.

While we currently intend to own bitcoin directly, we may investigate other potential approaches to owning bitcoin, including indirect ownership (for example, through ownership interests in a fund that owns bitcoin).

If we were to own all or a portion of our bitcoin in a different manner, the accounting treatment for our bitcoin, our ability to use our bitcoin as collateral for additional borrowings, and the regulatory requirements to which we are subject, may correspondingly change.

For example, the volatile nature of bitcoin may force us to liquidate our holdings to use it as collateral, which could be negatively effected by any disruptions in the crypto market, and if liquidated, the value of the collateral would not reflect potential gains in market value of bitcoin, all of which could negatively affect our business and implementation of our bitcoin strategy.

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

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

The 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.

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.

Additionally, while we currently intend to own BTC directly, we may investigate other potential approaches to owning BTC, including indirect ownership (for example, through ownership interests in a fund that owns BTC).

If we were to own all or a portion of our BTC in a different manner, the accounting treatment for our BTC, our ability to use our BTC as collateral for additional borrowings, and the regulatory requirements to which we are subject, may correspondingly change.

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

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

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 BTC or the ability of individuals or institutions such as us to own or transfer BTC.

For example, the U.S.

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It is not possible to predict whether, or when, any of these developments will lead to Congress granting 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 authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function or the willingness of financial and other institutions to continue to provide services to the digital assets industry, nor how any new regulations or changes to existing regulations might impact the value of digital assets generally and bitcoin specifically.

The consequences of increased regulation of digital assets and digital asset activities could adversely affect the market price of bitcoin and in turn adversely affect the market price of our common stock.

Moreover, the risks of engaging in a bitcoin treasury 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.

The 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 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.

Because 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.

Similarly, the open-source nature of the bitcoin blockchain means the contributors and developers of the bitcoin blockchain are generally not directly compensated for their contributions in maintaining and developing the blockchain, and any failure to properly monitor and upgrade the bitcoin blockchain could adversely affect the bitcoin blockchain and negatively affect the price of bitcoin.

The consequences of increased regulation of digital assets and digital asset activities could adversely affect the market price of BTC and in turn adversely affect the market price of our common stock.

Moreover, the risks of engaging in a BTC treasury 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.

The growth of the digital assets industry in general, and the use and acceptance of BTC in particular, may also impact the price of BTC and is subject to a high degree of uncertainty.

The pace of worldwide growth in the adoption and use of BTC may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to BTC, institutional demand for BTC as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for BTC as a means of payment, and the availability and popularity of alternatives to BTC.

Even if growth in BTC adoption occurs in the near or medium-term, there is no assurance that BTC usage will continue to grow over the long-term.

Because BTC has no physical existence beyond the record of transactions on the BTC blockchain, a variety of technical factors related to the BTC blockchain could also impact the price of BTC.

For example, malicious attacks by miners, inadequate mining fees to incentivize validating of BTC transactions, hard “forks” of the BTC blockchain into multiple blockchains, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the BTC blockchain and negatively affect the price of BTC.

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

were to deny or limit banking services to businesses that hold BTC, provide BTC-related services or accept BTC as payment, which could also decrease the price of BTC.

Similarly, the open-source nature of the BTC blockchain means the contributors and developers of the BTC blockchain are generally not directly compensated for their contributions in maintaining and developing the blockchain, and any failure to properly monitor and upgrade the BTC blockchain could adversely affect the BTC blockchain and negatively affect the price of BTC.

Recent actions by U.S.

banking regulators have reduced the ability of bitcoin-related services providers to gain access to banking services and 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.

banking regulators have reduced the ability of BTC-related services providers to gain access to banking services and liquidity of BTC 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 BTC and other digital assets.

In addition, while the current administration has expressed support regarding the development and use of digital assets as the industry has anticipated, the specific regulatory frameworks are still to be developed.

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digital asset policy, including potential sentiments that the U.S.

government is not moving quickly enough or not meeting policy expectations, may adversely affect the price of bitcoin.

The availability of spot bitcoin ETPs may adversely affect the market price of our common stock.

Although 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, or NAV, possibly due to the relative scarcity of traditional investment vehicles providing investment exposure to bitcoin.

On 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 approximately $4.6 billion on the first trading day.

To the extent investors view our common stock as providing exposure to bitcoin, it is possible that the value of our common stock may also have included a premium over the value of our bitcoin due to the prior scarcity of traditional investment vehicles providing investment exposure to bitcoin, and that the value declined due to investors now having a greater range of options to gain exposure to bitcoin and investors choosing to gain such exposure through ETPs rather than our common stock.

Although we are an operating company providing technology solutions, and we believe we offer a different value proposition than a passive 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 Exchange Act, including Regulation M, and other securities laws, which enable spot bitcoin ETPs to continuously align the value of their shares to the price of the underlying bitcoin 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 NAV.

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 common stock.

Based on how we are viewed in the market relative to ETPs, and other vehicles that offer economic exposure to bitcoin, such as bitcoin futures ETFs and leveraged bitcoin futures ETFs, any premium or discount in our common stock relative to the value of our bitcoin holdings may increase or decrease in different market conditions.

As a result of the foregoing factors, availability of spot bitcoin ETPs on U.S.

national securities exchanges could have a material adverse effect on the market price of our common stock.

Our bitcoin treasury strategy subjects us to enhanced regulatory oversight.

As noted above in these Risk Factors, 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 NAV.

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.

In 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.

We may consider issuing debt or other financial instruments that may be collateralized by our bitcoin holdings.

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

These types of bitcoin-related transactions may be subject to 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.

Additional laws, guidance and policies may be issued by domestic and foreign regulators following the filing for Chapter 11 bankruptcy protection by FTX Trading, one of the world’s largest cryptocurrency exchanges, in November 2022.

and foreign regulators have also increased enforcement activity thereafter, and regulatory requirements continue to evolve in response to FTX Trading’s collapse as well as changes in government policies regarding cryptocurrencies.

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.

In addition, private actors that are wary of bitcoin or the regulatory concerns associated with bitcoin may in the future take further actions that may have an adverse effect on our business or the market price of our common stock.

Regulatory change reclassifying bitcoin as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940, as amended, or the 1940 Act, and could adversely affect the market price of bitcoin and the market price of our common stock.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S.

government securities and cash items) on an unconsolidated basis.

We do not believe that we are an “investment company,” as such term is defined in the 1940 Act, and are not registered as an “investment company” under the 1940 Act as of the date of this prospectus supplement.

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 1940 Act, if the portion of our assets consists of investments in bitcoins exceeds 40% safe harbor limits prescribed in the 1940 Act, which would subject us to significant additional regulatory controls that could have a material adverse effect on our business and operations and may also require us to change the manner in which we conduct our business.

We monitor our assets and income for compliance under the 1940 Act and seek to conduct our business activities in a manner such that we do not fall within its definitions of “investment company” or that we qualify under one of the exemptions or exclusions provided by the 1940 Act and corresponding SEC regulations.

If bitcoin is determined to constitute a security for purposes of the federal securities laws, we would take steps to reduce the percentage of bitcoins that constitute investment assets under the 1940 Act.

steps may include, among others, selling bitcoins that we might otherwise hold for the long term and deploying our cash in non-investment assets, and we may be forced to sell our bitcoins at unattractive prices.

We may also seek to acquire additional non-investment assets to maintain compliance with the 1940 Act, and we may need to incur debt, issue additional equity or enter into other financing arrangements that are not otherwise attractive to our business.

Any of these actions could have a material adverse effect on our results of operations and financial condition.

Moreover, we can make no assurance that we would successfully be able to take the necessary steps to avoid being deemed to be an investment company in accordance with the safe harbor.

If we were unsuccessful, and if bitcoin is determined to constitute a security for purposes of the federal securities laws, then we would have to register as an investment company, and the additional regulatory restrictions imposed by 1940 Act could adversely affect the market price of bitcoin and in turn adversely affect the market price of our common stock.

We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations.

As bitcoin and other digital assets are relatively novel and the 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.

For examples, see “— Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty” above.

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 common stock.

See “— Regulatory change reclassifying bitcoin as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940, as amended, or the 1940 Act, and could adversely affect the market price of bitcoin and the market price of our common stock” above.

Moreover, the risks of us engaging in a bitcoin treasury strategy 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.

The 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 financial condition and results of operations.

As a result of our bitcoin treasury strategy, the majority of our cash is now 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.

While bitcoin is the largest digital asset by market capitalization as of the date of this annual report on Form 10-K, there are numerous alternative digital assets and many entities, including the U.S.

government, 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.

Other 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 the date of this annual report on Form 10-K, two of the seven largest digital assets by market capitalization are U.S.

dollar-backed 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 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 financial condition, and operating results.

Our intended bitcoin holdings may 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 markets have 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.

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 may hold with our custodians and transact with our trade execution partners may 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 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.

Due 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

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 problems.

In 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 that Binance Holdings Ltd.

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 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 understood.

Any actual or perceived false 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.

The price of our common stock may be 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 common stock.

If 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.

Currently, we intend to hold any bitcoin we may own, in custody accounts at U.S.-based 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.

government is not moving quickly enough or not meeting policy expectations, may adversely affect the price of BTC.

Regulatory change reclassifying BTC as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940, as amended, or the 1940 Act, and could adversely affect the market price of BTC and the market price of our common stock.

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, which would subject us to significant additional regulatory controls that could have a material adverse effect on our ability to execute on our bitcoin treasury strategy, and our business and operations and may also require us to substantially change the manner in which we conduct our business.

In 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 Common Stock.

Our intended BTC holdings may 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 BTC markets have 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 BTC at favorable prices or at all.

For example, a number of BTC trading venues temporarily halted deposits and withdrawals in 2022.

As a result, our BTC holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

Further, BTC we may hold with our custodians and transact with our trade execution partners may 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 BTC or otherwise generate funds using our BTC holdings, including in particular during times of market instability or when the price of BTC has declined significantly.

If we are unable to sell our BTC, enter into additional capital raising transactions using BTC as collateral, or otherwise generate funds using our BTC holdings, or if we are forced to sell our BTC at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.

If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our BTC, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our BTC and our financial condition and results of operations could be materially adversely affected.

Currently, we intend to hold any BTC we may own, in custody accounts at U.S.-based institutional-grade digital asset custodians.

Security breaches and cyberattacks are of particular concern with respect to our BTC.

BTC and other blockchain-based cryptocurrencies and the entities that provide services to participants in the BTC 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, although the flaw was subsequently fixed and Coinbase reimbursed affected customers.

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A successful security breach or cyberattack could result in:

● a 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;

● a partial or total loss of our BTC in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who hold our BTC;

● harm to our reputation and brand;

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● significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure.

Further, 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.

Attacks 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.

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

Attacks upon systems across a variety of industries, including industries related to BTC, 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.

The 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.

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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.

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.

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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 financial condition and results of operations.

Any future breach of our operations or those of others in the BTC industry, including third-party services on which we rely, could materially and adversely affect our financial condition and results of operations.

We rely entirely on third-party mining service providers and pool operators, and any failure by those counterparties could prevent us from maintaining our mining operations and receiving our estimated digital asset rewards.

Under our lease agreements, third parties own, house, power, and maintain all our leased miners, and our role is limited to supplying the contractual computing power that the operator directs to the mining pools of our choice.

We therefore have no physical possession of the machines, no direct visibility into uptime or energy-cost management and only limited contractual remedies if the operator experiences hardware failures, cyber-incidents, regulatory shutdowns, curtailments, or insolvency.

Should the operator misallocate hashrate, under-report our fractional share of daily block rewards, or alter pool-reward formulas, our revenue could decline sharply while our fixed lease payments continue.

Because we do not control the equipment, we may be unable to redeploy, repossess, or remarket the rigs, leaving us fully exposed to the operator’s performance and creditworthiness.

Any material disruption or dispute with this third party would materially and adversely affect our financial condition.

Because substantial portions of our lease commitments are paid in advance of the respective term, if our daily fractional share of block rewards falls below expectations or the value of the mining rewards substantially decreases, we may not achieve profitability or could suffer substantial losses.

We pre-pay or commit to short-term and long-term lease fees that are recorded as cost of revenue, even though the bitcoin rewards we receive fluctuate daily.

Our entitlement is calculated each 24-hour period as a fraction of the total blocks the entire bitcoin network is expected, and not guaranteed, to generate.

If the network produces fewer blocks than forecast, our operator’s pool misses solved blocks, or if network difficulty rises more swiftly than anticipated, our realized revenue from digital assets mined may fall short of the expected return while lease obligations remain fixed.

In such cases the cumulative bitcoin earned over the lease term may be unable to offset the cash we have expended, forcing us to recognize operating losses and constraining our liquidity.

We receive non-cash consideration that is subject to daily fair-value remeasurement, creating significant earnings volatility and potential liquidity mismatches.

We recognize revenue each day at the fair value, in U.S.

dollars, of the bitcoin awarded by the pool operator, and we subsequently mark our digital-asset inventory to fair value at every reporting date, recording unrealized gains or losses in the statement of operations.

Bitcoin’s market price can be highly volatile;

a sharp decline after the award date can convert recently recognized revenue into an accounting loss and erode shareholders’ equity, while a rapid price increase may inflate GAAP income without generating the

cash needed to satisfy fixed lease and operating expenses.

Because lease costs are largely fixed and paid in cash, any liquidity shortfalls could require us to liquidate treasury holdings at unfavorable prices, and materially and adversely affect our financial condition.

Bitcoin network difficulty, hashrate growth, and our lack of owned equipment may render the hashrate output of our leased miners uncompetitive.

A miner’s share of block rewards is proportional to its hashrate relative to the global network hashrate.

Network difficulty automatically rises when aggregate hashrate increases, often following periods of elevated bitcoin prices or the release of more efficient mining models.

If global hashrate grows faster than the incremental hashrate we are able to secure under existing or future leases, our percentage of daily rewards will contract.

Unlike miners that own their rigs and can swiftly liquidate and reinvest, we are bound by fixed-term leases that restrict our ability to swap in newer models, scale capacity, or relocate hardware to cheaper power markets.

Should the price of bitcoin stagnate or fall while difficulty rises, the revenue generated by our leased fleet may drop below the all-in lease and power costs, forcing us to mine at a loss or idle equipment while continuing to pay the lease.

Moreover, accurately forecasting future difficulty is inherently uncertain;

unexpected spikes could prevent us from recovering our lease commitments and erode our competitive position.

Risks Relating to Our Common Stock and Preferred Stock

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Our common stock is currently listed on the NYSE American.

In order to maintain our listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of shareholders’ equity and a minimum number of public shareholders.

In order to maintain our listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of stockholders’ equity and a minimum number of public stockholders.

In addition to these objective standards, the NYSE American may delist the securities of any issuer if, in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory;

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or if any other event occurs or any condition exists which makes continued listing on the NYSE American, in its opinion, inadvisable.

On December 20, 2023, we received a letter (the “Letter”) from the staff of NYSE American stating that the Company’s stockholders’ equity as reported in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 was not in compliance with the NYSE American’s continued listing standards under Section 1003(a)(iii) of the NYSE American Company Guide (the “Company Guide”).

On December 20, 2023, we received a letter from the staff of NYSE American stating that the Company’s stockholders’ equity as reported in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 was not in compliance with the NYSE American’s continued listing standards under Section 1003(a)(iii) of the NYSE American Company Guide (the “Company Guide”).

Section 1003(a)(iii) of the Company Guide requires a listed company to have stockholders’ equity of $6 million or more if the listed company has reported losses from continuing operations and/or net losses in its five most recent fiscal years.

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On March 5, 2024, we received a notification from the NYSE American that the Company’s plan to regain compliance was accepted.

On February 12, 2024, we received a letter from the staff of NYSE American LLC (the “Exchange”) stating that the Company’s securities’ performance of trading price is below compliance criteria pursuant to Section 1003(f)(v) of the NYSE American Company Guide, which the Exchange determined to be a 30-trading day average of less than $0.20 per share.

The Company’s continued listing is predicated on it demonstrating sustained price improvement within a reasonable period of time, which the Exchange has determined to be no later than August 12, 2024, or otherwise effecting a reverse stock split of its common stock.

On May 6, 2024, the Company received a letter from the NYSE American indicating that the Company has regained compliance with the NYSE American continued listing standard set forth in Section 1003(f)(v) of the NYSE American Company Guide due to its shares of common stock demonstrating sustained price improvement.

On December 18, 2024, the Company received a letter from the NYSE American indicating that the Company has regained compliance with the NYSE American continued listing standard set forth in Sections 1003(a)(i), (ii) and (iii) of the Company Guide.

On February 12, 2024, we received a letter from the staff of NYSE American stating that the Company’s securities’ performance of trading price is below compliance criteria pursuant to Section 1003(f)(v) of the NYSE American Company Guide, which NYSE American determined to be a 30-trading day average of less than $0.20 per share.

The Company’s continued listing was predicated on it demonstrating sustained price improvement within a reasonable period of time, which NYSE American had determined to be no later than August 12, 2024, or otherwise effecting a reverse stock split of the Company’s common stock.

On May 6, 2024, the Company received a letter from the staff of NYSE American indicating that the Company had regained compliance with the NYSE American continued listing standard set forth in Section 1003(f)(v) of the NYSE American Company Guide due to its shares of common stock demonstrating sustained price improvement.

On December 18, 2024, the Company received a letter from the staff of NYSE American indicating that the Company had regained compliance with the NYSE American continued listing standard set forth in Sections 1003(a)(i), (ii) and (iii) of the Company Guide.

To resolve the deficiency, the Company demonstrated compliance with the applicable standards for two consecutive quarters, pursuant to Section 1009(f) of the Company Guide.

Effective as of the opening of trading on December 17, 2024, the below compliance indicator was removed, and the Company’s name was removed from the list of NYSE American noncompliant issuers.

Effective as of the opening of trading on December 17, 2024, the compliance indicator was removed, and the Company’s name was removed from the list of NYSE American noncompliant issuers.

The Company remains subject to the NYSE American’s continued listing standards.

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We could issue additional common stock, which might dilute the book value of our common stock.

Our Board of Directors has the authority, without action or vote of our shareholders, to issue all or a part of our authorized but unissued shares.

Our Board of Directors has the authority, without action or vote of our stockholders, to authorize the issuance of all or a part of our authorized but unissued shares.

Such stock issuances could be made at a price that reflects a discount or a premium from the then-current trading price of our common stock.

In addition, in order to raise capital, we have and may need to issue securities that are convertible into or exchangeable for a significant amount of our common stock.

These issuances would dilute the percentage ownership interest, which would have the effect of reducing your influence on matters on which our shareholders vote and might dilute the book value of our common stock.

These issuances would dilute the percentage ownership interest, which would have the effect of reducing your influence on matters on which our stockholders vote and might dilute the book value of our common stock.

You may incur additional dilution if holders of stock options, whether currently outstanding or subsequently granted, exercise their options, or if warrant holders exercise their warrants, whether currently outstanding or subsequently granted, to purchase shares of our common stock.

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In the past, we have issued convertible securities (such as convertible debentures and notes), warrants and options in order to raise money or as compensation for services and incentive compensation for our employees and directors.

We have shares of common stock reserved for issuance upon the exercise of certain of these securities and may increase the shares reserved for these purposes in the future.

We have shares of common stock reserved for issuance upon the exercise of certain of these securities and may increase the shares reserved for these purposes in

Our issuance of these convertible securities, options and warrants could affect the rights of our stockholders, could reduce the market price of our common stock or could result in adjustments to exercise prices of outstanding warrants (resulting in these securities becoming exercisable for, as the case may be, a greater number of shares of our common stock), or could obligate us to issue additional shares of common stock to certain of our stockholders.

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We cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

Global economic uncertainty and financial market volatility caused by political instability, changes in international trade relationships and conflicts, such as the war in Ukraine and the Israel-Hamas war, could make it more difficult for us to access financing and could adversely affect our business and operations.

Global economic uncertainty and financial market volatility caused by political instability, changes in international trade relationships and conflicts, such as the war in Ukraine and conflicts in the Middle East, could make it more difficult for us to access financing and could adversely affect our business and operations.

Our ability to raise capital is subject to the risk of adverse changes in the market value of our stock.

Periods of macroeconomic weakness or recession and heightened market volatility caused by adverse geopolitical developments could increase these risks, potentially resulting in adverse impacts on our ability to raise further capital on favorable terms.

The impact of geopolitical tension, such as a deterioration in the bilateral relationship between the US and China or an escalation in conflict between Russia and Ukraine and the Israel-Hamas war, including any resulting sanctions, export controls or other restrictive actions that may be imposed by the US and/or other countries against governmental or other entities in, for example, Russia, also could lead to disruption, instability and volatility in global trade patterns, which may in turn impact our ability to source necessary reagents, raw materials and other inputs for our research and development operations.

The impact of geopolitical tension, such as a deterioration in the bilateral relationship between the US and China or an escalation in conflict between Russia and Ukraine and the conflicts in the Middle East, including any resulting sanctions, export controls or other restrictive actions that may be imposed by the US and/or other countries against governmental or other entities in, for example, Russia, also could lead to disruption, instability and volatility in global trade patterns, which may in turn impact our ability to source necessary reagents, raw materials and other inputs for our research and development operations.

We do not intend to pay dividends.

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There is no assurance that we will pay any dividends in the future, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.

Voting power of our shareholders is highly concentrated by insiders.

Voting power of our stockholders is highly concentrated by insiders.

Our officers, directors and affiliates currently beneficially own approximately 70.45% of the voting power of our voting stock.

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Sales by our insiders or affiliates, along with any other market transactions, could affect the value of our common stock.

We have 1,000,000 shares of Series A Voting Preferred Stock with super voting rights.

Our capital stock as of the date hereof consists of common stock and Series A Voting Preferred Stock.

We have shares of Series A Voting Preferred Stock outstanding with super voting rights.

Our outstanding capital stock as of the date hereof consists of common stock and Series A Voting Preferred Stock.

All 1,000,000 shares of Series A Voting Preferred Stock have been issued to Mr.

Michael Mo, our Chairman and Chief Executive Officer.

Each share of common stock is entitled to one (1) vote and each share of Series A Voting Preferred Stock is entitled to one hundred (100) votes on any matter on which action of the stockholders of the corporation is sought.

Each share of common stock is entitled to one vote and each share of Series A Voting Preferred Stock is entitled to 100 votes on any matter on which action of the stockholders of the Company is sought.

Approximately 97.30% of Mr.

Mo’s voting power stems

from his holdings of the Series A Voting Preferred Stock.

Mo’s voting power stems from his holdings of the Series A Voting Preferred Stock.

The Series A Voting Preferred Stock will vote together with the common stock.

Our articles of incorporation or the Certificate of Designation of Preferences, Rights and Limitations of the Non-convertible Series A Voting Preferred Stock do not provide for any sunset provisions that limit the lifespan of our Series A Voting Preferred Stock, including in the case of the death of a Series A Voting Preferred Stock shareholder or intra-family transfers of shares of Series A Voting Preferred Stock.

The holders of Series A Voting Preferred Stock shall not be entitled to receive dividends of any kind or be entitled to any liquidation preference.

The Series A Voting Preferred Stock shall not be subject to conversion into common stock or other equity authorized to be issued by the Company.

See “Description of Capital Stock” for additional information regarding our Series A Voting Preferred Stock.

Our certificate of incorporation or the Certificate of Designation of Preferences, Rights and Limitations of the Non-convertible Series A Voting Preferred Stock do not provide for any sunset provisions that limit the lifespan of our Series A Voting Preferred Stock, including in the case of the death of a Series A Voting Preferred Stock stockholder or intra-family transfers of shares of Series A Voting Preferred Stock.

The holders of Series A Voting Preferred Stock are not entitled to receive dividends of any kind or to any liquidation preference.

The Series A Voting Preferred Stock is not convertible into common stock or any other equity authorized to be issued by the Company.

In addition to the dilutive effect on the voting power and value of our common stock, the foregoing structure of our capital stock may render our common stock ineligible for inclusion in certain securities market indices, and thus adversely affect the price and liquidity of, and public sentiment regarding, our common stock or other securities.

The existence of, and voting rights associated with, our Series A Voting Preferred Stock, either alone or in conjunction with certain of the other provisions of our articles of incorporation, could also have the effect of delaying, deterring or preventing a change in our control or make the removal of our management more difficult.

Our Chairman and CEO owns our Series A Voting Preferred Stock and will be able to exert significant control over matters subject to shareholder approval.

The existence of, and voting rights associated with, our Series A Voting Preferred Stock, either alone or in conjunction with certain of the other provisions of our certificate of incorporation, could also have the effect of delaying, deterring or preventing a change in our control or make the removal of our management more difficult.

Our Chairman and CEO owns our Series A Voting Preferred Stock and will be able to exert significant control over matters subject to stockholder approval.

Michael Mo, our Chairman and CEO, currently beneficially owns common stock and Series A Voting Preferred Stock that provide him with 70.28% of the voting power of our voting stock.

Therefore, even after further offerings, he will have the ability to substantially influence us through this ownership position.

Therefore, even after any further dilution from future equity issuances, he will have the ability to substantially influence us through this ownership position.

For example, he may be able to significantly influence elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.

His interests may not always coincide with our corporate interests or the interests of other shareholders, and he may act in a manner with which you may not agree or that may not be in the best interests of our other shareholders.

So long as he continues to own a significant amount of our equity, he will continue to be able to strongly influence or effectively control our decisions.

Our articles of incorporation allow for our board to create a new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our Common Stock.

His interests may not always coincide with our corporate interests or the interests of other stockholders, and he may act in a manner with which you may not agree or that may not be in the best interests of our other stockholders.

So long as he continues to hold a significant amount of voting power, he will continue to be able to strongly influence or effectively control our decisions.

Our certificate of incorporation allows for our board to create a new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock.

Our Board of Directors have the authority to issue up to 20,000,000 shares of our preferred stock, terms of which may be determined by the Board without further stockholder approval.

Our Board of Directors have the authority to authorize the issuance of up to 20,000,000 shares of our preferred stock, terms of which may be determined by the Board without further stockholder approval.

As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock.

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On January 16, 2025, the Board of Directors approved the issuance of an additional 270,000 shares of Non-convertible Series A Voting Preferred Stock to the Chief Executive Officer, bringing his total holdings up to 1,000,000 shares of Series A Voting Preferred Stock.

The issuance of up to 1,000,000 shares of Non-convertible Series A Voting Preferred Stock was previously approved and authorized by a vote of the majority stockholders of the Company and reinforces and enhances the Company’s flexibility to optimize the Company’s negotiating position in any potential current and/or future engagements with commercial, financial, and/or strategic parties, and to provide defenses against potential hostile third-party actions.

Each record holder of Non-convertible Series A Voting Preferred Stock shall have that number of votes (identical in every other respect to the voting rights of the holders of Common Stock entitled to vote at any regular or special meeting of the shareholders or by written consent) equal to one-hundred (100) votes per share of Non-convertible Series A Voting Preferred Stock held by such record holder.

parties, and to provide defenses against potential hostile third-party actions.

Each record holder of Non-convertible Series A Voting Preferred Stock has 100 votes per share of Non-convertible Series A Voting Preferred Stock held by such record holder, but the Series A Voting Preferred Stock is otherwise identical in every other respect to the voting rights of the holders of common stock entitled to vote at any regular or special meeting of the stockholders or by written consent.

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