NASDAQ: EMPD

The key component of the digital asset strategy is
to optimize the Company’s capital structure to increase BTC per share to drive stockholder value. This includes issuing equity when
market conditions allow us to raise capital at a premium to net asset value (“NAV”), defined as the value of BTC holdings
plus cash, minus debt divided by adjusted outstanding shares which includes common stock outstanding plus all pre-funded warrants outstanding.
On October 18, 2024, the Company entered into an At-The-Market Issuance Sales Agreement with Aegis Capital Corp., as placement agent (“Aegis”),
as amended by Amendment No. 1 to the At-The-Market Issuance Sales Agreement on July 14, 2025 (the “ATM Sales Agreement”),
pursuant to which the Company established an At The Market (“ATM”) program pursuant to which the Company can sell up to $1.1
billion of common stock. Since the inception of the digital asset treasury strategy through March 25, 2026, the Company has sold
136,053 shares of common stock for $1.5 million, including commissions, at an average price of $10.90. The Company may also complete
other equity or convertible debt issuances if it determines market conditions are appropriate.

In addition, our strategy includes repurchasing our
common stock when our common stock is trading below NAV per share. The Company also has a share repurchase program that allows it to repurchase
up to $150.0 million of common stock as of December 31, 2025, which was expanded to $200.0 million on February 2, 2026 and through March
25, 2026 has bought 23,114,391 shares of common stock for $135.6 million, including commissions, at an average price of $5.87. Share repurchases
have been funded with proceeds from two borrowing arrangements, that allow for borrowings of up to $150.0 million, of which $95.0 million
has been drawn as of March 25, 2026, and sales of BTC. Some of our BTC is held by these lenders as collateral for outstanding borrowings,
which we may repay with future equity offerings or by selling BTC. See Note 7 to the consolidated financial statements for further discussion
of these borrowing arrangements.

Additionally, a significant component of the digital
asset treasury strategy is to reduce costs across the Company so that cash generated from operations can be used to pay operating expenses
and any excess cash generated can be used to purchase more BTC or repurchase shares of our common stock. We also generated, and may continue
to generate income through buying and selling derivatives on BTC, including the use of short-term put and call contracts. Since the inception
of our digital asset strategy through March 25, 2026, the Company generated income of $2.0 million from trading these derivatives, which
is recorded in Other income in the consolidated statement of operations.

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The Company also recognizes the risk that digital assets
pose with respect to digital wallets being compromised and the Company uses institutional-grade custodians to hold its BTC in wallets,
some of which are isolated from the internet, referred to as cold storage, to minimize this risk. We view our BTC as long-term holdings,
although there are no restrictions on selling BTC that is not held as collateral by our lenders. As of March 25, 2026 we have 3,359 BTC,
of which 2,891 are restricted by lenders as collateral for outstanding loan balances.

The BTC market has been characterized by significant
volatility in price, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation,
compliance and internal control failures at exchanges, and various other risks that are, or may be, inherent in its entirely electronic,
virtual form and decentralized network. For example, since the implementation of our digital asset treasury strategy through March 25,
2026, BTC has traded at a high of $126,117 and a low of $60,019 on the Gemini exchange.

Unrealized losses on digital assets significantly contributed to our
results of operations for the year ended December 31, 2025. The unrealized loss on digital assets of $122.7 million was recorded, representing
79.3%, of our operating expenses for the year.

Electric Vehicles

The Company began its operations as an all-electric,
off-road powersports vehicle business. Beginning in 2021, we began efforts to sell off-road powersports vehicles beginning with an electric
two-wheeled motorcycle that we discontinued in March 2025. In 2022 we introduced an E-Bike, the Brat, and continue to sell this product.
In late 2024 we began selling the HF1 UTV, the MN1 Adventurer and MN1 Tradesman UTV, along with a line of upgrades and accessories. As
discussed below, in October 2025, we sold the HF1 and MN1 product lines.

Venom Supply Agreement

On February 24, 2025, we entered into a supply agreement
with Venom-EV LLC (“Venom”) to supply Venom with certain golf carts. This agreement was amended and restated on April 25,
2025 (the “Venom Supply Agreement”). The Venom Supply Agreement allows Venom to purchase up to $2.0 million of golf carts
with payment terms of the earlier of 100 days from the date the golf carts are shipped from the manufacturer’s facility or upon
sale to Venom’s dealers or to consumers. These golf carts will be purchased through a manufacturer specified in the Venom Supply
Agreement and we will receive consideration of the cost of the golf carts plus a five percent margin. We received an initial order from
Venom for $2.0 million golf carts and paid a deposit to the manufacturer of $0.6 million on May 2, 2025 and paid $0.8 million in September
2025 for the golf carts which were shipped in September 2025. The remaining $0.6 million was paid in the fourth quarter of 2025. All units
were shipped by the manufacturer to Venom and Venom paid all amounts due on this purchase as of December 31, 2025.

On October 29, 2025, the Venom Supply Agreement was
amended to increase the available amount to purchase by $0.7 million and Venom agreed to purchase the remaining 138 MN1 units ordered
by the Company under the Super Sonic Distribution Agreement (as defined below) discussed below. Payment terms are the earlier of 60 days
from receipt or upon sale by Venom. All of these units were received by Venom by January 30, 2026 and payment is due by March 31, 2026.

On November 17, 2025, the Venom Supply Agreement was
amended to increase the available amount to purchase by $2.5 million (for an aggregate total of $4.5 million, excluding the October 29,
2025, amendment. Subsequent to December 31, 2025 through March 25, 2026, the Company has paid $0.9 million to the manufacturer for orders
placed by Venom, and additional payments due to be paid for orders placed by Venom as of March 25, 2026, are $1.4 million. Payment terms
are the earlier of 60 days from receipt of inventory by Venom or upon sale by Venom.

We expect that we will complete additional financing
transactions for Venom under the Venom Supply Agreement and we are actively in discussions for the opportunity to fund inventory purchases
with other companies that sell golf carts and UTVs.

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Venom Asset Purchase Agreement

On October 15, 2025, the Company entered into an asset purchase agreement with Venom (the “Venom APA”), to divest
the Volcon brand in exchange for a non-dilutable 10% equity position in Venom’s reorganized Delaware corporation on a fully-diluted
basis. The Company transferred all Volcon intellectual property, brand assets, trademarks, sales and distribution networks and engineering
documentation associated with the Volcon brand (the “Volcon IP”) other than its E-Bike, the Brat. The Company will have the
right to appoint one director to Venom’s board and may continue to finance Venom’s inventory purchases. In the event that
Venom does not complete its corporate reorganization within six months, the Company will have the option to repurchase the Volcon IP
for a nominal amount.

The Company expects that this agreement will reduce Empery Digital’s future product liability exposure by transferring ownership
of Volcon’s four-wheel vehicle business to Venom. The Company also plans to expand its vehicle financing operations for golf carts
and UTVs to generate positive cash flow by leveraging the spread between the Company’s cost of capital and interest income from
vehicle financing. The Company has been transitioning its powersports dealers to Venom but will continue ongoing warranty support through
the remaining warranty period of vehicles the Company sold within these channels.

The Company’s decision
to sell these assets represents a strategic shift in operations as the Company does not currently plan to sell any four-wheel products
after 2025. Therefore, in accordance with applicable accounting guidance, the results of the four-wheel product lines are presented as
discontinued operations in the Consolidated Statements of Income and, as such, have been excluded from both continuing operations and
segment results for all periods presented in this Annual Report on Form 10-K. All amounts and disclosures for all periods presented in
this Annual Report on Form 10-K reflect only the continuing operations unless otherwise noted. See Note 18 to the consolidated financial
statements for further discussion.

Super Sonic Distribution Agreement

In January 2025, we entered into a distribution agreement with a golf cart manufacturer, Super Sonic Company Ltd. (Super Sonic),
located in Vietnam, a subsidiary of Odes Industry (the “Super Sonic Distribution Agreement”), to supply golf carts to other
companies in the U.S. who sell golf carts. On September 18, 2025, we received a notice of termination from Super Sonic pursuant to which
Super Sonic terminated this distribution agreement. The termination, which was effective upon receipt of the notice from Super Sonic,
was effected pursuant to the terms of the Super Sonic Distribution Agreement on the grounds that the Company has failed to meet the minimum
purchase requirement under the Super Sonic Distribution Agreement for two consecutive months, which gave Super Sonic the right to immediately
terminate the Super Sonic Distribution Agreement. The termination also eliminates any obligation of the Company to issue equity to Super
Sonic pursuant to the terms of the Super Sonic Distribution Agreement. The Company is not subject to any early termination penalties
related to the termination of the Super Sonic Distribution Agreement.

Two-Wheeled Products

We began selling the Grunt off-road motorcycle in September 2021 and the Grunt EVO off-road motorcycle replaced the Grunt in
September 2023. Due to the manufacturing cost of the Grunt EVO, we terminated the manufacturing contract for it in December 2024. As
of March 31, 2025, we have sold all of the remaining Grunt EVO units.

Beginning in the second quarter of 2024, we began evaluating other potential electric motorcycle offerings. We are determining what features
and specifications would be included for new offerings including considering a street legal version that would be dual purpose as an
on-road/off-road motorcycle (not highway legal). We have identified one new model which we are working on developing with a third-party
manufacturer. We received prototypes in February 2025 and we are testing them to evaluate the feasibility to have them manufactured at
a reasonable cost and sell them for an acceptable profit. Provided testing is successful and whether the product cost, including tariffs,
allows us to sell this product, we expect to start selling this product in the second half of 2026.

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In the fourth quarter of 2022, we began selling an
E-Bike, the Brat, which is manufactured by a third-party. The Brat is a class 2 E-Bike and can be used on-road or off-road. We have developed
a line of accessories for the Brat that include color panels, headlight cowl, and seat, among other things. We are also developing a new
model of the Brat that will incorporate some of these accessories in the base model.

Following the divestiture of the four-wheel products
noted above, the Company expects to concentrate on its two-wheel business, including the launch of new products in European markets in
the second half of 2026. We expect to continue to evaluate other potential two-wheel product offerings in 2026.

Customers

Dealers

Prior to the divestiture of our four-wheel product lines, we sold our products through powersports dealers, bicycle retailers, and
golf cart dealers. We expect to continue to utilize our bicycle dealers. We are transitioning our powersports and golf cart dealers to
Venom but will continue to support these dealers for service and warranty obligations for products sold to them.

International Distributors

We also sell our two-wheel products internationally
through importers. Each importer buys vehicles and accessories and sells them to local dealers or directly to consumers. Payment for vehicle
orders is required in advance of shipment. Local dealers or the importer will provide warranty and repair services for vehicles purchased
in their country and we will reimburse them for any parts or labor incurred for warranty repairs. As of March 25, 2026, we have one importer
in Mexico, one for the Caribbean Region, and one in New Zealand to sell our two-wheel vehicles and accessories in their assigned countries/markets.

Consumers

Consumers can purchase the Brat from our website and
have it delivered to a location of their choosing in the continental U.S.

Manufacturers

We outsource the manufacturing of all our two-wheel
products and accessories to an international third-party manufacturer, Huaian PX Intelligent Manufacturing Co., Ltd (“PXID”).
The estimated fulfillment of all two-wheeled orders we have received, or will receive, assumes that PXID can successfully meet our order
quantities and deadlines. In the past we have experienced delays due to PXID being unable to timely meet our order deadlines, and there
is no assurance that we will not experience delays in the future until such time as we are able to source products from multiple manufacturers
or from larger, more established manufacturers. If the manufacturer is unable to satisfy orders on a timely basis, our customers may
cancel their orders. Also, due to the Company currently only having PXID manufacture our
two-wheel products, if they experience financial hardship and cannot manufacture our products, our customers may cancel their orders
which will harm our sales. Due to new and increased tariffs and other trade policies introduced or threatened by the U.S. government
since the beginning of 2025, the cost of our products will increase without a decrease in manufacturing costs and may increase further
if additional changes in import laws or tariffs occur. We could also experience delays in receiving shipments of our products if there
are delays in getting carriers to ship our products or delays at the port of entry.

Venom currently sources its golf cart and accessory
purchases from one international third-party manufacturer. Risks related to future purchases of their products from this manufacturer
are similar to those of our two-wheel products noted above and could result in delays in ordering and receiving products that could impact
the amount of inventory purchases that Venom may finance through the Company.

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Intellectual Property

As discussed above, prior to the Venom APA, we had
registrations for the trademarks VOLCON, GRUNT, and GRUNT EVO in the U.S. We have also applied to register additional trademarks –
including VOLCON, VOLCON BRAT, EMPOWERING ADVENTURE, STAG, VOLCON STAG, VLCN, VLCN BRAT, VLCN HF1, VLCN MN1, VLCN FT1, VLCN HT1, VLCN
SK1, and VLCN RV1 - in the U.S., Canada, New Zealand, Australia and certain additional countries in Latin America, and many of these trademarks
are now allowed or registered in these countries. Subsequent to the Venom APA, we only hold trademarks on the Volcon Brat and VLCN Brat
in various countries.

Upon the changing of the Company’s name to Empery
Digital Inc., we began registering trademarks for Empery in the U.S. and a number of other countries. Our efforts to secure trademark
registrations for Empery are ongoing and we may encounter resistance from other companies, particularly as we register in additional territories.
If we receive objections from other entities and are unsuccessful in obtaining agreements or otherwise resolving the matters with these
entities, we will need to consider the use of different trademarks for our Company and our products.

Competition

According to an article by CNBC dated December 5, 2025,
there are approximately 190 public companies employing digital asset treasury strategies that hold BTC, with another 10 to 20 companies
employing digital asset treasury strategies that hold other digital assets. These companies are estimated to collectively hold approximately
$100.0 billion worth of cryptocurrencies combined, according to data from The Block. Many of these companies with digital asset treasury
strategies hold more BTC than us and some have operations in other industries and generate cash to cover their operating costs. Some of
these companies’ securities trade at or above their NAV per share, while many also trade below their NAV per share. We believe our
ability to compete successfully with these competitors depends on our ability to increase NAV through the strategic sale or repurchase
of equity as market conditions warrant and to generate cash from derivative trading and operations to pay our expenses.

There are dozens of companies that sell E-Bikes in
the U.S. and even more globally, many of which may have greater financial and marketing resources than us and have a stronger established
brand name and product line, like Super 73. The markets for E-Bikes are highly competitive based on a number of factors, including innovation,
performance, price, technology, product features, styling, fit and finish, brand recognition, quality and distribution. We believe our
ability to compete successfully in these markets depends on our ability to capitalize on our competitive strengths and build brand recognition.

There are also many companies in the U.S. that finance
inventory purchases. These companies may have access to substantially more cash or can borrow cash at interest rates lower than ours.

Government regulations

We are not registered as an investment company under
the Investment Company Act of 1940, as amended, and stockholders do not have the protections associated with ownership of shares in a
registered investment company, nor the protections afforded by the Commodity Exchange Act of 1936.

The laws and regulations applicable to Bitcoin and
digital assets are evolving and subject to interpretation and change. Governments around the world have reacted differently to digital
assets; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in some jurisdictions,
such as the U.S., digital assets are subject to overlapping, uncertain and evolving regulatory requirements.

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As digital assets have grown in both popularity and
market size, the U.S. Executive Branch, Congress and a number of U.S. federal and state agencies, including the Financial Crimes Enforcement
Network, the Commodity Futures Trading Commission (“CFTC”), the SEC, the Financial Industry Regulatory Authority, the Consumer
Financial Protection Bureau, the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the
Internal Revenue Service (“IRS”) and state financial regulators, have been examining the operations of digital asset networks,
digital asset users and digital asset exchanges, with particular focus on the extent to which digital assets can be used to violate state
or federal laws, including to facilitate the laundering of proceeds of illegal activities or the funding of criminal or terrorist enterprises,
and the safety and soundness and consumer-protective safeguards of exchanges or other service-providers that hold, transfer, trade or
exchange digital assets for users. Many of these state and federal agencies have issued consumer advisories regarding the risks posed
by digital assets to investors. In addition, federal and state agencies, and other countries have issued rules or guidance regarding the
treatment of digital asset transactions and requirements for businesses engaged in activities related to digital assets.

Depending on the regulatory characterization of Bitcoin,
the markets for Bitcoin in general, and our activities in particular, our business and our Bitcoin strategy may be subject to regulation
by one or more regulators in the U.S. and globally. Ongoing and future regulatory actions may alter, to a materially adverse extent, the
nature of digital assets markets, the participation of industry participants, including service providers and financial institutions in
these markets, and our ability to pursue our Bitcoin strategy. Additionally, U.S. state and federal and foreign regulators and legislatures
have taken action against industry participants, including digital assets businesses, and enacted restrictive regimes in response to adverse
publicity arising from hacks, consumer harm, or criminal activity stemming from digital assets activity. U.S. federal and state energy
regulatory authorities are also monitoring the total electricity consumption of cryptocurrency mining, and the potential impacts of cryptocurrency
mining to the supply and dispatch functionality of the wholesale grid and retail distribution systems. Many state legislative bodies have
passed, or are actively considering, legislation to address the impact of cryptocurrency mining in their respective states.

The CFTC takes the position that Bitcoin, as well as
some other digital assets, fall within the definition of a “commodity” under the Commodity Exchange Act (the “CEA”).
Under the CEA, the CFTC has broad enforcement authority to police market manipulation and fraud in spot digital assets markets in which
we may transact. Beyond instances of fraud or manipulation, the CFTC generally does not oversee cash or spot market exchanges or transactions
involving digital asset commodities that do not utilize margin, leverage, or financing. In addition, CFTC regulations and CFTC oversight
and enforcement authority apply with respect to futures, swaps, other derivative products and certain retail leveraged commodity transactions
involving digital asset commodities, including the markets on which these products trade.

The SEC and its staff have taken the position that
certain other digital assets, including certain spot crypto assets, fall within the definition of a “security” under the U.S.
federal securities laws. Public statements made by senior officials and senior members of the staff at the SEC indicate that the SEC does
not consider Bitcoin to be a security under the federal securities laws. However, such statements are not official policy statements by
the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized
to any other digital assets.

In addition, since transactions in Bitcoin provide
a degree of anonymity, they are susceptible to misuse for criminal activities, such as money laundering. This misuse, or the perception
of such misuse, could lead to greater regulatory oversight of Bitcoin and Bitcoin platforms, and there is the possibility that law enforcement
agencies could close or blacklist Bitcoin platforms or other Bitcoin-related infrastructure with little or no notice and prevent users
from accessing or retrieving Bitcoin held via such platforms or infrastructure. For example, the U.S. Treasury Department’s Office
of Foreign Assets Control has issued updated advisories regarding the use of virtual currencies, added a number of digital asset exchanges
and service providers to the Specially Designated Nationals and Blocked Persons list and engaged in several enforcement actions, including
a series of enforcement actions that have either shut down or significantly curtailed the operations of several smaller digital asset
exchanges associated with Russian and/or North Korean nationals.

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Activities involving Bitcoin and other digital assets
may fall within the jurisdiction of more than one financial regulator and various courts and such laws and regulations are rapidly evolving
and increasing in scope. On January 23, 2025, President Trump issued an executive order titled, Strengthening American Leadership in Digital
Financial Technology. While the executive order did not mandate the adoption of any specific regulations, the executive order identifies
certain key objectives to guide agencies involved in crypto regulation, including (i) protecting the sovereignty of the U.S, dollar by
promoting the development of U.S. dollar-backed stablecoins, (ii) providing regulatory clarity and certainty built on technology-neutral
regulations for individuals and firms involved in digital assets, including through well-defined jurisdictional regulatory boundaries,
and (iii) taking measures to protect Americans from the risks of Central Bank Digital Currencies. To achieve these objectives, the executive
order established a working group on digital asset markets within the National Economic Council, comprised of representatives from key
federal agencies, with a tight timeline for examining existing regulations and proposing a new regulatory framework. This working group
released a report on July 30, 2025 that recommended regulatory and legislative proposals to advance the policies established in the executive
order. The SEC also established a Crypto Task Force in furtherance of these objectives. Among other things, the Crypto Task Force is charged
with helping to draw clear regulatory lines and to appropriately distinguish securities from non-securities. The work of the Crypto Task
Force is in its early stages and it is not yet clear whether it will result in material changes to the existing regulatory framework of
digital assets. In addition, Congress has considered legislation to establish additional regulation and oversight of the digital asset
markets. The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), which regulates payment stablecoins,
was signed into law in July 2025. The Digital Asset Market Clarity Act of 2025 (H.R. 3633), which establishes a framework for digital
assets, passed the U.S. House of Representatives in July 2025. This bill distinguishes between digital commodities and digital securities,
and provides the CFTC with jurisdiction to oversee digital commodities, exchanges and brokers. As of January 2026, the U.S. Senate is
considering its own legislation to establish a framework for digital asset markets.

Vehicles

Federal, state, and local governments have promulgated
and/or are considering promulgating laws and regulations relating to the safety of our products. In the U.S., the Consumer Product Safety
Commission (CPSC) has federal oversight over product safety issues related to E-Bikes. We believe that our products comply with all applicable
CPSC safety standards as well as all other applicable safety standards in the U.S.

E-Bikes sold internationally are subject to the local
laws of each jurisdiction in which we have or may sell our product. Our international distributors are responsible for ensuring that our
products comply with the jurisdiction in which they are importing the product. Costs associated with compliance are the responsibility
of the distributor. These regulations may result in increased costs and expenses, which may materially and adversely affect the distributors’
business where it may not be economically feasible to sell our products locally, which in turn will adversely impact our results of operations
or financial condition.

Human Capital

Employees

As of December 31, 2025,
the Company employed 15 employees, all of whom were full time employees. None of our employees are represented by a labor union or subject
to a collective bargaining agreement. We have not experienced any material work stoppages, and we consider our relations with our employees
to be good.

Employee Engagement

Our Co-CEO, Ryan Lane, and COO, Tim Silver, who were
hired when the Company initiated its digital asset strategy, have significant experience investing in various markets and asset classes.

Our Co-CEO, John Kim, has extensive experience with
the development and sales of E-Bikes. He was the founder of Super 73, one of the first and industry leading E-Bike brands prior to selling
Super 73. Our employees and contractors serving the E-Bike and inventory financing operations focus on customer care, developing and sourcing
our products, and building our marketing channels.

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We believe we offer competitive benefits and programs
to develop employees’ expertise, performance, and engagement, while implementing corporate policies to provide a safe, harassment-free
work environment. This work environment is guided by principles of fair and equal treatment and prioritizes effective communication and
employee engagement.

We are committed to building a strong culture with
high levels of employee engagement. We hold ad hoc meetings where management discusses various topics with employees including operational
updates, vehicle development, financing activities, company policies and safety. Management is also committed to being available to discuss
any employee concerns on a one-on-one basis.

Available Information

Our website is at www.emperydigital.com. We make
available, free of charge, live up to date information about our financial position on our corporate website, our annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable
after they are electronically filed with the SEC. The SEC maintains an internet site that contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC at www.sec.gov. Information contained on our website does
not, and shall not be deemed to, constitute part of this Annual Report on Form 10-K. Our reference to the URL for our website is intended
to be an inactive textual reference only.

We also use other mediums, including the following
social media channels as a means of disclosing information about the company, our products, our planned financial and other announcements
and attendance at upcoming investor and industry conferences, and other matters and for complying with our disclosure obligations under Regulation
FD:

Website Homepage: https://www.emperydigital.com/

Treasury Dashboard: https://www.emperydigital.com/treasury-dashboard

X (f/k/a Twitter) Account: https://x.com/EMPD_BTC

Instagram Account: https://www.instagram.com/empd_btc

YouTube Account: https://www.youtube.com/@emperydigital

Instagram Account: https://www.instagram.com/Volcon.ev/

These channels may be updated from time to time
on our investor relations website at https://ir.EmperyDigital.com. The information we post through these channels may be deemed material.
Accordingly, investors should monitor them in addition to following our investor relations website, press releases, SEC filings, and public
conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part
of this Annual Report on Form 10-K.

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