NYSE: USBC

On January 20, 2026, we formalized our collaboration with Uphold HQ Inc. (“Uphold”) and Vast Bank, N.A. (“Vast Bank”), which will serve as the initial issuing bank for the U.S. Bank Coin (“USBC”) tokenized-deposit offering. Uphold is a financial technology company that provides modern infrastructure for on-chain payments, banking and investment services. Vast Bank is a federally regulated financial institution that will serve as the initial issuing bank for customer deposit accounts underlying the tokenized-deposit program. Under the tri-party agreement with Vast Bank and Uphold, USBC will serve as the network operator, Vast Bank will serve as the issuing bank for customer deposit accounts, and Uphold will provide platform integration and customer access services. We continue to advance technical, operational, and regulatory readiness in connection with subsequent phases of the delivery strategy and any future broader launch of the USBC tokenized-deposit offering.

In February 2026, we completed our evaluation of the legacy non-invasive sensor business and we have elected to proceed with a divestiture transaction. Negotiations with a potential buyer are nearing completion; however, there is no assurance that any transaction will be consummated. The financial impact of the potential divestiture transaction is not expected to be material to our financial statements.

On March 10, 2026, we initiated Phase 1 of our multi-phase delivery strategy for how we will bring the USBC tokenized deposit product to market. Phase 1 is being conducted with a limited group of internal users who have elected to participate in an expanded employee pilot program ahead of the public launch of the branded platform. Phase 1 is not a consumer offering and is not available to the public; it is intended solely to begin technical readiness testing. During this phase, testing activities are conducted exclusively with company-provided funds for internal evaluation purposes. The results of Phase 1 will inform our evaluation of the timing and scope of subsequent phases of the delivery strategy and when the tokenized deposit product offering may become available to retail customers. Any future retail launch will remain subject to the outcome of the pilot program and receipt of any required regulatory, board, and bank partner approvals.

On March 18, 2026, we entered into a Master Loan Agreement (the “MLA”) with Payward Interactive, Inc. (the “Lender”), pursuant to which the Company may, from time to time, borrow fiat currency or digital assets on the terms set forth therein in an aggregate principal amount of up to $25.0 million for up to a twelve-month term, subject to execution of one or more individual loan term sheets. The MLA contains customary conditions, initial collateral requirements, collateral maintenance and liquidation mechanics, and early return and recall rights. Borrowings under the MLA are solely secured by Bitcoin collateral held in and subject to collateral maintenance requirements based on specified margin ratios. On March 20, 2026, we entered into a term sheet for a fixed-term loan of $5.0 million bearing interest at a rate of 8.5% per annum under the MLA maturing on March 18, 2027. Proceeds from the Facility will be used primarily to fund further development costs of the tokenized deposit program offering, including costs paid to our affiliate, Vast Holdings, Inc. (“Vast”) under the terms of the Affiliate Services Agreement (the “Agreement”) we simultaneously entered into on March 18, 2026. Pursuant to the terms of the Agreement, we will reimburse Vast for the cost it incurs to perform certain strategic, operational, and administrative services in support of the further development of the tokenized deposit program offering. We believe that it will be more economical and efficient for certain services necessary for these operations to be performed by officers, employees or consultants of Vast, recognizing that cost reimbursements to Vast must be at least on or favorable to market terms. Total reimbursements under the Agreement are capped at $10.5 million during the term of the Agreement, unless mutually agreed upon with Vast and are subject to detailed invoicing, documentation, and approval requirements. The Agreement expires on December 31, 2026.

Our Strategy

Key elements of our business strategy include:

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Completing delivery of our USBC tokenized deposit offering, which is a U.S. dollar-denominated tokenized representation of deposit liabilities issued by one or more insured depository institutions (initially Vast Bank) and recorded on distributed-ledger technology (i.e., blockchain technology). We are building complementary compliance, risk management, and payments infrastructure around the tokenized deposit model, aimed at harnessing progressive identity frameworks and scalable financial services, with the goal of creating an integrated platform to enable USBC to serve as program manager for banks and distribution partners desiring to engage in various financial service activities.

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Capitalizing on digital asset security, treasury management and strategic asset allocation (including a Bitcoin treasury strategy) to support our development initiatives and strengthen our balance sheet flexibility. We utilize derivatives to earn yield on our Bitcoin-treasury assets through an external full-service advisor and maintain collateral arrangements customary for such activities. These agreements include provisions for margin and security interests, which are standard in institutional trading relationships. We conduct our derivative trading activities in accordance with applicable laws and regulatory guidance subject to internal risk management policies and counterparty controls. We do not operate a trading desk for third parties, and all derivative positions relate solely to management of our corporate treasury assets.

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Tokenized Deposit Program

Our primary focus is on the further development and future launch of our tokenized deposit program. The tokenized deposit program has been in development from its inception by our Chairman and CEO, Greg Kidd for the better part of a decade. The USBC tokenized deposit offering will incorporate embedded digital identity and leverage blockchain technology. It is being designed to support financial inclusion and innovation, through partnerships with banks and distribution partners such as Uphold, a pioneering infrastructure provider for on-chain finance.

Unlike a stablecoin, USBC is not a newly-created digital asset backed by reserves, nor is USBC a deposit token. USBC is a tokenized representation of a bank deposit offered by banking institutions to their customers. Other tokenized deposit products may exist, but we believe that we will be the first to provide direct access to end users, made possible by its permissioned blockchain and risk management tech stack. USBC’s API-centric approach means that developers building on the platform will have the ability to offer their customers digital U.S. dollars and their own U.S. bank deposit account worldwide.

USBC’s core value proposition is that it provides a safe, compliant and versatile foundation for a variety of payment use cases and financial applications. By combining the real-time settlement and programmability of blockchain technology with the trust and familiarity of regulated bank money, USBC has the potential to unlock a wide range of opportunities that are designed to benefit both consumers and businesses.

We have identified numerous impactful use cases for USBC including financial inclusion and open access, cross-border payments and remittances, hedge against local currency instability, 24/7 instant payments, integrated programmable payments, and treasury management. These use cases illustrate how USBC can permeate many aspects of finance and commerce. While tokenized deposits do not necessarily replace existing systems overnight, they are intended to augment and coexist with traditional payment rails. For end-users who need the advantages, the tokenized option becomes available, while those comfortable with legacy methods can continue as before. Over time, as trust and familiarity grow, we anticipate broader adoption of tokenized deposits as an alternative to traditional bank deposit accounts.

Since USBC is a representation of an actual deposit account, a bank will be able to pay interest to the holder, just as it might on a typical interest-bearing checking or savings account. The interest payment could be structured as a baseline interest rate for all balances, tiered by user type or even as high-yield rewards such as blockchain-based digital reward units or loyalty points which will be portable, interoperable and programmable and can be earned, redeemed, or used across multiple platforms, partners or ecosystems.

USBC is underpinned by a blockchain ledger that serves as the single source of truth for all tokenized deposit transactions, providing customers with the ability to send, spend, convert, and load (and unload) funds from their account balances. These transactions are mirrored on-chain via tokenized representations of deposits and withdrawals made to customer accounts. Each on-chain transfer reflects a corresponding update in a customer’s tokenized deposit account transaction history.

The current implementation runs on a Solana-based blockchain, augmented by a rule engine which provides additional controls on top of the base blockchain and connects directly to the banking system. This setup will allow the banking partner to maintain regulatory oversight and operational control while still leveraging the transparency and immutability of the underlying blockchain. The ledger is permissioned, meaning that on USBC’s private chain, nodes are operated by USBC. On public chains, transactions occur through public nodes but USBC’s rule engine will enforce compliance and access controls. The blockchain network is governed by principles that ensure it remains secure, compliant with regulations and aligned with the interests of all stakeholders. A governance process for software updates is in place that mirrors enterprise IT and blockchain best practices.

The issuing bank will commit to clear and transparent rules for the USBC program and will maintain ultimate control and responsibility for the platform which will be subject to regulatory oversight by banking regulators. The USBC program will be integrated into the bank’s overall corporate governance structure and will be subject to oversight by the same audit and risk committees that oversee banking operations, ensuring that the highest level of the organization, the Board of Directors, is aware of and accountable for the program. In addition to governance conducted by the participating bank, the USBC network will undergo regular third-party audits and reviews, similar to those performed on traditional core banking systems, with full results made available to network participants and regulators to ensure transparency and trust.

Unlike permissionless cryptocurrency systems where anyone can create an address and transact, the USBC system contains a trust and identity management layer which requires users to build a verified digital identity before they can access or transact on the network. To open a USBC account, a user will need to go through an onboarding process that collects identity information and verifiable credentials which can be issued or validated by trusted third parties. Before any transaction is submitted to the blockchain, it must be reviewed and signed by the ledger’s rules engine, which enforces a configurable set of policies tied to user identity level, regulatory obligations and risk controls. Once funds are in a USBC tokenized deposit account, funds are immediately available, enabling same-day access to traditional financial infrastructure including wire transfers, ACH payments or spending via debit rails. There is no need to withdraw funds via an exchange or conversion to fiat currency through third party services, eliminating costly ramp fees, reducing counterparty risk and streamlining post-trade fund management.

The technology stack for USBC will be a hybrid of a traditional banking system and blockchain components. Developers and partners like Uphold will see a familiar blockchain environment to build upon that is enriched with identity and compliance layers not found on public chains. The user will experience the system through user-friendly banking apps or web interfaces that abstract away the blockchain complexity. Every transaction will be recorded as a blockchain event on a ledger with each on-chain transfer reflecting a corresponding update in the tokenized deposit account transaction history.

We have finalized our delivery strategy to bring the tokenized deposit product to market, setting the foundation for how we will scale the product offering and support real-world adoption of the USBC tokenized deposit offering. Our delivery strategy consists of multiple phases. We initiated Phase 1 of our multi-phase delivery strategy on March 10, 2026. Planning is underway for future phases of the delivery strategy which will be supported by the core technical foundations built during Phase 1. See “—Corporate History and Development” above for information regarding the scope and limitations of Phase 1 of the delivery strategy.

We expect that the aggregate costs associated with our phased delivery strategy will be substantial, with costs increasing relative to Phase 1 as we enter future phases of our strategy over the next several quarters. The timing, cost and success of future phases of our strategy is subject to uncertainty in how successful we will be in executing the strategy within anticipated parameters. While the timing and total cost of each phase is uncertain at this point in the strategy, we have identified key activities, cost drivers, and operational milestones associated with each phase.

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Markets and Distribution

Our platform is being designed to serve a broad group of customers in the emerging blockchain-based banking ecosystem, including retail users, fintech partners, and institutional counterparties, as described under “Tokenized Deposit Program” above.

In particular, we plan to target the following groups:

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Retail Deposit Customers: Individual customers who maintain traditional deposit accounts at our partner insured depository institutions. These users can hold and transfer tokenized U.S. dollar deposits 24/7 on blockchain rails, using our digital wallet for everyday payments and savings. See “Tokenized Deposit Program” above for a description of token functionality.

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Distribution Partners: Financial technology companies and other partners who will integrate our tokenization platform to expand their services. We aim to provide APIs and white-label solutions enabling fintechs and other partners to offer tokenized deposits to their own customers, and our platform will work with partners to enable users to custody their underlying fiat funds with our banking partner(s). This distribution strategy leverages partners’ existing customer bases while enabling regulatory compliance for the tokenized funds (e.g. KYC/AML checks via integrated digital identity). By working within the banking system, our platform will be built to comply with existing banking regulations while leveraging FDIC insurance eligibility, an approach that industry pilots have reportedly identified as a key advantage over stablecoins not subject to similar prudential frameworks. Our collaboration with Uphold and Vast Bank exemplifies this partner-integration model, demonstrating how blockchain technology may extend regulated, tokenized deposit functionality to both fintech platforms and their end users.

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Institutional Counterparties: Businesses, exchanges, and institutional investors that use our infrastructure for large-scale transactions and treasury management. These counterparties can leverage our blockchain rails to move funds efficiently across borders, using tokenized deposits for near-instant settlement. As the market for tokenized commercial bank money grows, institutions are seeking interoperable solutions that connect with global networks. Our platform will be designed for interoperability and broad accessibility, enabling tokenized deposits to be issued across multiple public blockchains, such as Ethereum, to support broad market adoption and liquidity. This global connectivity aligns with industry initiatives (like the BIS-led Project Agorá) that explore using tokenized bank deposits to streamline cross-border payments. Our distribution model will combine user-facing digital wallets, partnerships with regulated banks, and public blockchain infrastructure to reach customers worldwide.

The market for tokenized banking services is projected to experience rapid growth, underscoring the importance of our global and regulation-aware strategy. Major financial institutions have reportedly begun piloting their own tokenized deposit and payment networks. For example, in late 2024, Citigroup announced that it had moved its deposit-token platform from pilot to live commercial use through its Citi Token Services initiative. Similarly, JPMorgan Chase has reported that its proprietary deposit-token system, part of its Onyx/Kinexys blockchain-based payments platform, has processed more than $1.5 trillion in transaction volume since launch. These systems, however, are primarily oriented toward institutional clients and backend settlement infrastructure rather than retail users. In the public crypto markets, the total supply of fiat-backed stablecoins was estimated at approximately $300 billion as of October 2025, according to publicly available industry data. This backdrop presents a significant opportunity for us to capture users transitioning to tokenized banking, and our focus on providing direct consumer access differentiates us within a landscape where institutional tokenization initiatives currently dominate, but it also reinforces that global reach and regulation-centric design are critical to success.

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We plan to tailor our tokenized deposit services platform to meet varied regulatory requirements across jurisdictions; for instance, our platform is being developed with robust tools designed to enable compliance with Bank Secrecy Act (BSA), anti-money laundering (AML), and Office of Foreign Asset Control (OFAC) requirements. Our platform is being built with digital identity integration from the ground up, embedding KYC/AML processes into the user experience to satisfy regulators and partner banks. This compliance-centric design aligns with evolving industry consensus that identity and trust frameworks must accompany blockchain-based financial services; indeed, the lack of robust on-chain identity solutions has been noted as a friction point in digital asset adoption, and addressing it is seen as key to broader institutional use. By proactively engineering a globally interoperable and regulation-ready system, we aim to broaden our market reach while seeking to navigate the complex legal landscape for digital assets. We believe that this “regulation aware” approach, coupled with our technology expertise, will help establish our distribution network as a trusted interface between traditional banking and the digital asset economy.

Bitcoin Overview

As of December 31, 2025, substantially all of our treasury reserve assets were invested in Bitcoin. Bitcoin, launched in 2009, is a decentralized digital asset that is issued by and transmitted through an open-source protocol collectively maintained by a distributed network of participants with no central authority. The Bitcoin network operates continuously, 24 hours a day, 7 days a week. The network hosts a public transaction ledger, known as the Bitcoin blockchain, on which Bitcoin holdings and all validated transactions that have ever taken place on the Bitcoin network are recorded. Balances of Bitcoin are stored in individual wallet functions, which associate network public addresses with one or more cryptographic private keys that control the transfer of Bitcoin. See “Custody of Our Bitcoin” below for additional information regarding wallet and key management.

Unlike fiat currencies, which can be printed indefinitely, the maximum possible supply of Bitcoin is capped at 21 million. New Bitcoins are created and allocated by the Bitcoin protocol through mining, a process that rewards users that validate transactions in the Bitcoin blockchain with newly issued Bitcoin and transaction fees. Because of periodic halvings, the rate of new Bitcoin creation slows over time. Halving events reduce mining rewards received, making Bitcoin scarcer over time and slowing the release of new coins into circulation. The most recent Bitcoin halving occurred in April 2024, and the next Bitcoin halving is expected to occur sometime in 2028. The final Bitcoin is projected to be mined in the year 2140.

Bitcoin can be transferred peer-to-peer over the public blockchain without intermediaries. Although no one person can unilaterally make changes to the software that runs the network, there is a core group of developers that maintains the code for the Bitcoin protocol, and they can propose changes to the source code and release periodic updates and other changes. Unlike most software that has a central entity that can push updates to users, bitcoin is a peer-to-peer network in which individual network participants, called nodes, decide whether to upgrade the software and accept the new changes. As a practical matter, a modification becomes part of the Bitcoin protocol only if the proposed changes are accepted by participants collectively having more than 50% of the processing power, known as hash rate, on the network. If a certain percentage of the nodes reject the changes, then a “fork” takes place, and participants can choose the version of the software they want to run. See “Custody of Our Bitcoin” below for a discussion of transaction‑related considerations for our treasury transfers.

The Bitcoin network may be subject to attacks, as with any computer network. Some forms of attack include unauthorized access to wallets that hold Bitcoin and direct attacks, like “denial-of-service attacks” or “51% attacks” on the Bitcoin network. A “denial-of-service attack” occurs when legitimate users are unable to access information systems, devices, or other network resources due to the actions of a malicious actor flooding the network with traffic until the network is unable to respond or crashes. The Bitcoin network has been, and can be in the future, subject to denial-of-service attacks, which can result in temporary delays in block creation and in the transfer of Bitcoin. A “51% attack” may occur when a group of miners attains more than 50% of the Bitcoin network’s mining power, thereby enabling them to control the Bitcoin network and protocol and manipulate the blockchain.

Bitcoin has become increasingly illiquid as long-term holders and institutional players lock up coins, reducing the amount available for trading and driving significant price volatility. According to a recent 2025 analysis from Fidelity Digital Assets, more than 28% of Bitcoin could be locked by long-term holders and corporate treasuries, tightening supply and potentially affecting the price of Bitcoin. Other factors that contribute to Bitcoin price volatility may include changes in market sentiment, regulatory developments, macroeconomic conditions, technological events affecting the Bitcoin network, and trading activity on global digital-asset exchanges.

The trading price of Bitcoin has experienced extreme volatility in recent periods and may continue to do so. The prevalence of digital assets, including Bitcoin, is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable. For example, steep increases in the value of certain digital assets, including Bitcoin, occurred over the course of 2017, and multiple market observers asserted that digital assets were experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2018 in digital asset trading prices, including for Bitcoin. Following the drawdowns, Bitcoin prices increased during 2019, decreased significantly again in early 2020 amidst broader declines as a result of the COVID-19 pandemic before increasing later in the year, and increased again in early 2021 to reach all-time highs. Yet, even during such overall price increase in early 2021, Bitcoin experienced substantial price volatility, including decreases of over 10% in a single day. Further, increases in 2021 were followed by steep drawdowns throughout 2022 in digital asset trading prices, including for Bitcoin. These episodes of rapid price appreciation followed by steep drawdowns have occurred not only as noted above, but multiple times throughout Bitcoin’s history, including in 2011 and 2013-2014. Bitcoin prices have continued to exhibit extreme volatility since the pandemic. Bitcoin markets may still be experiencing a bubble or may experience a bubble again in the future. Extreme volatility may continue to occur in the future, including further declines in the trading prices of Bitcoin.

As of March 20, 2026, the market capitalization of Bitcoin had decreased since mid-December 2025 by approximately 24%, to $1.33 trillion, based on a market price of approximately $70,400 and 20 million coins issued, although the effective circulating supply of Bitcoin may be even lower. Estimates suggest that 3.0 to 3.8 million Bitcoin may be permanently unrecoverable due to forgotten passwords, misplaced wallets, or dormant addresses, reducing the actual circulating supply to approximately 17 to 18 million Bitcoin, creating a structural scarcity effect which may also lead to Bitcoin price volatility.

We currently expect Bitcoin to remain the most significant component of our treasury assets for the foreseeable future. We do not maintain a fixed numerical target percentage allocation of treasury assets to Bitcoin. The substantial majority of our Bitcoin holdings were acquired as part of the Goldeneye 1995 LLC capital investment which closed on August 6, 2025. We do not currently intend to make any future purchases of Bitcoin through open market transactions for the foreseeable future. We do not intend to incur indebtedness for the purpose of acquiring additional Bitcoin to add to our treasury assets. The relative proportion of Bitcoin within our treasury assets may change over time due to operating liquidity needs, capital raising activities or changes in the market value of Bitcoin.

Bitcoin Treasury Strategy

We strategically utilize our Bitcoin holdings as a primary treasury reserve asset to generate yield to help support the current business and future growth and expansion of new business lines. We view our Bitcoin holdings as long-term strategic treasury assets rather than as short-term trading positions. We seek to enhance our Bitcoin-denominated holdings through our Bitcoin yield-generation strategy. Our Bitcoin treasury trading strategy is intended to boost our Bitcoin holdings through premiums collected on options. As part of our Bitcoin yield generation strategy trading activities, we have entered into option derivative contracts on our Bitcoin holdings. As previously disclosed, we have appointed Hyrcanian Asset Management, LLC (the “Manager”) to provide us with discretionary treasury management services with respect to our Bitcoin treasury strategy, specifically buying and selling call options on Bitcoin (the “Program”). The Manager commenced buying and selling call options on our Bitcoin holdings in the fourth fiscal quarter of 2025.

Pursuant to the Program, we enter into short-term arrangements that result in obtaining the right to receive or obligation to deliver a fixed amount of Bitcoin in the future. The Program is structured such that the net maximum notional exposure should not exceed the balance of the Bitcoin treasury holdings. The Program does not involve leveraged derivative exposure in excess of our Bitcoin holdings. While the ability to make further digital investments on our behalf is one of the premises of establishing the Manager, we have not and do not currently intend to utilize the Manager to do so.

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On December 12, 2025, we entered into an Amended and Restated Digital Asset Management Agreement (the “New Asset Management Agreement”) with the Manager, replacing the Digital Asset Management Agreement (the “Asset Management Agreement”) we previously entered into with the Manager on August 6, 2025, to govern the management of our Bitcoin treasury. The New Asset Management Agreement revised the fee structure in the Asset Management Agreement by eliminating the asset-based management fee component of the consideration for the Manager’s service and increasing the performance fee component of the consideration paid to the Manager.

Effective January 1, 2026, and subject to the terms of the New Asset Management Agreement, the Manager is solely paid a performance fee equal to 33% of the net realized gains and periodic mark-to-market changes generated by the options strategy, payable quarterly in Bitcoin, superseding the 25% performance fee and 1% asset-based management fee contained in the Asset Management Agreement. The revised performance fee in the New Asset Management Agreement incorporates a high-water mark and is subject to an annual reconciliation and clawback mechanism.

The New Asset Management Agreement enhances the operational framework supporting our Bitcoin treasury program by formally implementing reporting and risk-management obligations. Under the New Asset Management Agreement, the Manager is formally required to provide weekly and quarterly reports detailing key portfolio characteristics and commentary on market conditions. The Manager is also formally required to deliver quarterly reporting on trading performance, returns, risk posture, and forward-looking market analysis. In addition, the New Asset Management Agreement requires the Manager to maintain and periodically update a business continuity plan acceptable to us, and introduces protections addressing key-man risk associated with the principal individual responsible for overseeing our Bitcoin derivatives portfolio.

Except for the amendments described above, all other material terms of the Asset Management Agreement remain unchanged.

Custody of our Bitcoin

We intend to hold substantially all of our Bitcoin in offline cold storage with U.S.-based, institutional-grade custodians. The primary counterparty risk we are exposed to with respect to our Bitcoin is performance obligations under the various custody arrangements which we have entered into custody substantially all of our Bitcoin with Coinbase Custody Trust Company, LLC, (“Coinbase”), a U.S.-based, institutional-grade custodian with a demonstrated record of regulatory compliance and information security. Our custodial services agreement specifies that the private keys that control our Bitcoin will be held by Coinbase in offline or cold storage which is designed to mitigate risks that a system may be susceptible to when connected to the internet. Our custodial contract with Coinbase also contains liability provisions which hold Coinbase liable for its failure to safekeep our Bitcoin.

Our Bitcoin is controllable only by the possessor of both the unique public key and private keys relating to the local or online digital wallet in which the Bitcoin is held. Private keys used to access our Bitcoin balances are not widely distributed and are all held on hardware by the third party custodian at facilities within the U.S. and internationally. The cold-storage vaults used by the custodian use multilayered physical security, including biometric access controls and the vaults are geographically dispersed and access-controlled.

All of our Bitcoin holdings with Coinbase are held in segregated accounts. Coinbase is obligated by our contractual arrangement with them to keep timely and accurate bookkeeping records of our Bitcoin holdings under rigorous internal controls. As an institutional client, we have the ability to generate statements that contain account-level reporting which serves as an audit and verification mechanism to allow the existence of our crypto assets to be verified by us or our independent auditor. We do not have custody of Bitcoin held for clients. We do not self-custody any of our Bitcoin.

The portion of our Bitcoin that is not held with Coinbase is pledged to a designated counterparty in connection with our digital asset options trading activities. As of December 31, 2025, the amount of our Bitcoin that was pledged for digital asset options trading activities represents approximately 2% of our total Bitcoin treasury. The Bitcoin pledged as collateral for trading activities is held in cold storage wallets with one or more of the counterparty’s designated custodial partners. Private keys used to access the Bitcoin pledged as collateral are controlled by the designated trading counterparty.

From time to time, blockchain protocols may initiate hard forks or third parties may distribute airdrops that result in the creation or receipt of new digital assets. Our custodian does not guarantee support for any forked or airdropped assets. As a result, we do not take affirmative steps to solicit or endorse airdropped assets and we only recognize them when received and controlled and only if our custodian provides secure access.

While our custodian is required to maintain insurance as part of the custodial services they provide which is intended to cover potential losses of our Bitcoin holdings, the insurance covers only a small fraction of the value of the entirety of our Bitcoin holdings. Based on existing law and the terms and conditions of our contractual arrangements with our custodian, we believe that our property interests in the Bitcoin held by our custodian would not be subject to the claims of the custodian's creditors in the event the custodian enters bankruptcy, receivership or similar insolvency proceedings.

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Competition

We operate in a highly competitive and fast-evolving environment at the intersection of traditional finance and digital assets. Although there are barriers to enter the markets we plan to serve, our results of operations and future prospects for revenue will depend on the user and partner acceptance of the tokenized deposit platform we are currently developing. We expect that we will face competition from established financial institutions as well as new entrants leveraging blockchain technology seeking to capitalize on the same, or similar opportunities, we are pursuing.

Key competitive categories include:

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Traditional Banks: Large incumbent banks and financial consortia are reported to be developing their own blockchain-based payment networks and deposit tokens. Several major U.S. banks, including JPMorgan, Bank of America, Citigroup, and Wells Fargo, have announced plans to collaboratively explore a regulated digital dollar token for interbank use, positioning it as an alternative to privately issued stablecoins. These institutions benefit from trusted brands, large customer bases, deep regulatory experience, and extensive internal resources. If traditional banks, particularly the largest banks in the United States, are able to successfully launch their own tokenized deposit platforms, they could directly compete with our solutions by offering similar digital dollar services within their existing client ecosystems. Our strategy of partnering with banks (rather than competing against them outright) is meant to mitigate this risk, but well-resourced banks remain significant competitors in capturing enterprise and retail users for tokenized deposits.

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Fintech and Payments Firms: A range of fintech companies, neo-banks, and tech firms are entering the digital-asset payments space, blurring the line between banking and technology. Notably, in 2023, PayPal became one of the first major fintech companies to launch its own U.S. dollar stablecoin on Ethereum, providing its enormous user base with a token for payments and transfers. Similarly, consumer finance apps like Revolut have explored issuing stablecoins or offering crypto-enabled accounts to their millions of users. These fintech entrants often emphasize user experience and can rapidly scale new financial products through their apps. They represent direct competition for retail and small business customers who might use our tokenized banking services. We seek to differentiate our platform through bank-grade regulatory compliance and specialized focus on blockchain technology infrastructure, and strategic partnerships with Vast Bank and Uphold, which is being designed to provide a regulated distribution channel for retail tokenized deposits through Uphold’s existing customer platform. Nevertheless, we must compete with fintech firms’ agility and established networks in offering convenient digital dollar products.

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Stablecoin Issuers: Independent stablecoin providers dominate the existing market for blockchain-based U.S. dollar tokens. Companies like Tether and Circle have billions of dollars of stablecoins in circulation and well-developed liquidity pools across crypto markets. These stablecoins are widely used in trading, remittances, and DeFi applications, making them a de facto standard for digital dollars. Their incumbency creates a challenging competitive landscape for our tokenized deposit program as users and developers are already familiar with existing stablecoins that offer broader acceptance. In addition, the passage of the GENIUS Act on July 3, 2025, likely will introduce additional stablecoin issuers that may expand the competitive landscape for stablecoins. However, we aim to compete by offering tokenized deposits as a more transparently regulated alternative to stablecoins.

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Decentralized Finance (DeFi) Protocols: A unique source of competition comes from open source blockchain protocols that replicate financial services without centralized intermediaries. DeFi platforms enable activities like dollar-pegged stablecoin issuance, lending, payments, and trading through self-executing smart contracts. For example, decentralized stablecoins and lending protocols allow users to earn yield or borrow funds outside the traditional banking system. These services appeal to a segment of crypto-savvy users and developers who value programmability and permissionless access. While DeFi offerings lack the regulatory assurances of a platform like ours, they innovate rapidly and operate globally, which can draw away both retail and institutional participants (especially those seeking higher returns or censorship-resistant services). We see our role as bridging the gap between traditional finance and decentralized models by offering regulated on-ramps to digital assets. At the same time, we recognize that we will compete with DeFi alternatives whenever potential customers evaluate building on a public protocol instead of leveraging an infrastructure like ours. Our emphasis on compliance and asset quality is a conscious differentiator from many DeFi schemes. Nonetheless, the competitive pressure from DeFi is significant, as evidenced by the billions of dollars flowing into on-chain stablecoins and lending markets in recent years.

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In this increasingly crowded digital asset landscape, our strategy seeks to differentiate our tokenized deposit platform initiative on factors such as compliance integration, adaptability, and risk management. Our platform will be designed to feature built-in digital identity and compliance frameworks that we do not believe many other competitors (especially in the crypto sector) offer. Each wallet or account will be designed to be linked to verified identity credentials, which will enable seamless KYC/AML processes and transaction traceability. This focus on identity is intended to address what is widely known to be an industry pain point: the absence of robust on-chain identity solutions and privacy measures has hindered adoption and created operational friction in tokenized finance. By seeking to solve for identity and compliance up front, we aim to attract institutions and end users who require a regulated environment without sacrificing the efficiency of blockchain.

We believe that our deep expertise in digital assets and partnership with a forward-thinking financial institution like Vast Bank, that exhibits regulatory agility will allow us to respond quickly to changing laws and guidance. For example, if new stablecoin reserve standards or licensing requirements emerge, Vast Bank may be able to update its programs and policies more rapidly than many large banks or slower moving peers. This agility is increasingly important as jurisdictions worldwide refine their rules for digital assets. Our management team is continuously monitoring these developments to ensure our proposed product will be in compliance and potentially even turn compliance into a selling point, offering features like real-time auditability and automated reporting.

Where a related party such as Vast Bank is involved, potential strategic benefits of a business partnership may include reduced transition costs, improved coordination and greater alignment of long-term strategic objectives. Vast Bank is majority-owned by Vast Holdings, Inc., in which our Chairman and Chief Executive Officer, Greg Kidd, holds a controlling interest and our Vice Chair, Linda Jenkinson, serves as Chair and CEO. We believe that our relationship with Vast Bank provides us with the ability to leverage strategic benefits from the business partnership with Uphold such as improved coordination, deeper operational knowledge, and faster execution of the business strategy while ensuring compliance with our related-party governance policies.

We believe that, over the long term, our integrated model combining bank-like trust, fintech agility, and a Bitcoin-enhanced balance sheet will position us distinctively against both incumbents and startups. However, we must execute diligently on this vision amid intense competition. If we are unable to successfully compete in our industry, our business, results of operations, financial condition and prospects could suffer materially. Ongoing innovation, strict compliance, and customer confidence will be critical for us to capture, maintain and have the potential to grow our share in the tokenized deposit market.

Supervision and Regulation

Regulation of Digital Asset and Financial Technology Infrastructure Activities

We operate within a highly regulated environment that spans federal securities laws, banking and financial services regulations, digital asset and token-related frameworks, and multiple layers of consumer protection and data privacy obligations. These regulatory regimes, especially those governing digital assets, payments, and financial technology infrastructure, are evolving rapidly and are likely to subject us to ongoing interpretation which may lead to potential enforcement activity. We monitor regulatory changes closely and are making significant investments in our legal, compliance, product and engineering teams to plan and prepare to comply with current and future regulations.

The following summarizes key areas of supervision which may be applicable to us and our operations. It is not intended to be a comprehensive analysis of all applicable laws, and is qualified by reference to the full text of statutes and regulations referenced below, which may be modified or amended from time to time. This section contains forward-looking statements regarding anticipated regulatory changes and their possible effects; actual outcomes may differ.

Federal Securities Laws and SEC Oversight

As a public company listed on the NYSE American, we are subject to U.S. federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934, and oversight by the SEC. We must file annual, quarterly, and current reports and we are required to maintain effective disclosure controls, financial reporting systems, and internal governance consistent with SEC and NYSE American requirements.

Digital Asset Regulatory Environment

General Regulatory Scope. Our strategy to develop a tokenized deposit program and hold Bitcoin as a treasury reserve asset places us at the intersection of multiple regulatory regimes. U.S. federal and state regulators, including the SEC, CFTC, FinCEN, OFAC, CFPB, banking regulators, and state licensing authorities, continue to increase their scrutiny of digital assets, emphasizing issues such as illicit finance, consumer protection, systemic risk, and prudential standards.

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AML and Sanctions Compliance. Although we are not registered as a money services business or otherwise engaged in regulated money transmission activities that would subject us to direct supervision by FinCEN (or an applicable state regulator), we are building policies for KYC, transaction monitoring, suspicious activity monitoring and reporting, and internal compliance oversight and training as oftentimes may be required by our bank partners and as otherwise expected by such partners. For example, FinCEN has recently enforced BSA compliance vigorously in the digital asset sector, with fines and penalties for firms operating without proper controls or licenses.

In parallel, we are subject to OFAC-administered economic sanctions that apply to activities involving tokenized assets, stablecoins, cryptocurrencies and smart contracts in the same way that traditional financial assets are treated for purposes of sanction compliance. Blockchain tracing tools help us screen addresses and counterparties against the SDN list. If any digital asset we process is later associated with a sanctioned individual or wallet, we may be required to freeze or block those assets, report the incident, and manage potential valuation and reputational fallout. This is particularly relevant for Bitcoin due to its pseudonymous and fungible characteristics.

Non-Bank Financial Model and Fintech Partnerships. We are not a chartered bank and we do not issue deposit accounts. We plan to deliver a platform to enable tokenized deposits and related services via partnerships with regulated banks and digital wallet operators. Our bank partners hold customer deposits and, in some cases, custody digital assets or issue payment instruments. These relationships will be governed by robust third-party risk management requirements, and we will adhere to our bank partners’ compliance standards where applicable, including those related to BSA/AML, consumer disclosures, and cybersecurity. We have entered into a commercial partnership with Vast Bank and Uphold to facilitate the future issuance and distribution of tokenized retail deposits. Under this partnership, Vast Bank will serve as the initial insured depository institution responsible for issuing the deposits, while Uphold will provide the retail user interface and wallet infrastructure under applicable regulatory supervision. These arrangements will be governed by contractual controls addressing compliance with BSA/AML, cybersecurity, and consumer-protection obligations as applicable.

Bank regulators, including the OCC, FDIC, and Federal Reserve, have recently increased scrutiny of fintech-bank partnerships, including requiring pre-approval for new product features and closer monitoring of operational risks. While no requirement to obtain regulatory pre-approval to tokenize bank deposit accounts has specifically been identified, we are coordinating closely with Vast Bank and Uphold to meet these expectations and avoid regulatory exposure that could delay or jeopardize the further development and future retail launch of the USBC tokenized deposit program.

Payments, Consumer Protection, and Data Privacy

Money Transmission and Electronic Payments. Because our tokenized deposit product is not yet live, we are not currently conducting any activity that may constitute “money transmission” under applicable laws. We are designing our tokenized deposit platform to ensure that we will never take custody, control, or possession of customer funds or digital assets. Customer funds remain on deposit with Vast Bank. Retail distribution of tokenized deposits will be facilitated through Uphold’s regulated platform, which provides wallet services to end users. As a result, we do not expect to be directly subject to regulation as a money transmitter or money services business (“MSB”) and we will instead rely on Vast Bank or our other partners’ existing licensure and regulatory frameworks to provide any regulated financial services. Accordingly, we are not registered with FinCEN as an MSB and we do not believe that we will be required to obtain state money-transmitter licenses. Nevertheless, we understand that our platform and our related services are subject to scrutiny not only by our bank partners but also their regulators. As a result, we are planning to implement and will maintain robust policies and procedures related to BSA/AML/OFAC, cybersecurity, and other applicable regulations.

Consumer Protection and UDAAP Compliance. The CFPB has authority over unfair, deceptive, or abusive acts and practices (“UDAAP”) involving consumer financial products. We are designing our compliance program to include regular reviews of our product marketing practices, fee structures, and user interfaces to ensure that they align with federal and state consumer protection laws. If we expand into additional services, such as lending or credit-related products, further rules (e.g., TILA, ECOA) may apply.

Privacy and Data Security. We are in pre-launch development and we do not currently collect or process sensitive personal information in a production environment. We are developing a comprehensive privacy and data-security program, including encryption, access controls, data minimization, incident response procedures and regulatory compliance measures as we are subject to federal laws like the Gramm-Leach-Bliley Act, which governs privacy notices, data usage, and security safeguards. We are also developing processes to monitor and comply with state-level privacy laws such as the California Consumer Privacy Act, and we are taking steps to ensure we remain aware of new rules related to emerging technology such as biometric data, AI in financial services, and cross-border data transfers. Subsequent to the future retail launch of the tokenized deposit offering, our security framework will be reviewed regularly and is being designed to include technical, administrative, and physical safeguards in line with industry standards.

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Regulatory Developments and Outlook

SEC and Securities Law Enforcement. The SEC continues to actively assert jurisdiction over a wide range of digital assets. While the SEC has indicated that Bitcoin is generally viewed as a commodity, other tokens may be deemed securities under the federal securities laws, depending on their structure and use. Our tokenized deposit product is not a newly-issued digital asset backed by reserves, nor is it a deposit token. We have designed it with a view to avoid classification as a security under current SEC guidance. However, regulatory interpretation remains uncertain, and further rulemaking or enforcement action could require us to register certain products or restructure features to ensure compliance.

AML and Sanctions Scrutiny. U.S. regulators, including FinCEN, OFAC, and the Department of Justice, have intensified scrutiny on AML and sanctions controls in the crypto sector. High-profile enforcement actions in 2023 and 2024 illustrate the risk of compliance lapses, including multimillion-dollar fines and criminal penalties. We are designing and testing transaction monitoring, sanctions screening, and blockchain analytics tools to meet regulatory expectations. Because regulatory expectations in the AML and sanctions landscape continue to evolve, we continuously update our policies to incorporate emerging guidance.

Bank-Fintech Oversight. Banking regulators have issued updated guidance on third-party risk management, particularly in the context of fintech partnerships. As a program manager and infrastructure provider working with chartered institutions, we must maintain controls commensurate with those of our regulated partners. Increased regulatory oversight could raise compliance costs and slow product rollouts, but we believe robust governance also serves as a competitive advantage.

Legislative and International Developments. The U.S. Congress continues to debate legislation that could further reshape the regulatory framework for stablecoins, tokenized deposits, and crypto assets. In particular, Congress passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (the “GENIUS” Act) in July 2025, which establishes a federal framework for the issuance and oversight of certain payment stablecoins. The interpretation, implementation, and any related rulemaking under the GENIUS Act remain evolving and could affect market structure, bank-fintech partnership expectations, and regulatory treatment of tokenized financial products, including tokenized deposits. In addition, major jurisdictions, including the European Union, Japan, Hong Kong, and Singapore, have adopted laws or regulatory frameworks addressing stablecoins and other digital asset activities. We monitor these developments and may need to adjust our current or future business operations to comply with applicable foreign laws and regulations.

Regulation of the Science Division

Our Science Division, which includes the legacy Know Labs business, remains focused on advancing our proprietary sensor technology. We have significantly reduced the scale of our research and development activities and are no longer conducting human clinical trials. Current efforts are limited to laboratory-based feasibility testing, intellectual property protection, and maintaining regulatory readiness for potential future commercialization. We are also focused on building strong external validation of our technology, primarily through technical studies.

Our operations, and those of any future development and research partners, may, if we decide to resume pursuit of medical applications of our sensor technology, be subject to regulation by the U.S. Food and Drug Administration (“FDA”) and other federal and state agencies under the Federal Food, Drug, and Cosmetic Act and related regulations. These laws govern, among other things, the design, clinical testing, manufacture, labeling, promotion, and sale of medical devices. Any medical-diagnostic products developed by the Science Division would be regulated by the FDA as medical devices, and must satisfy applicable pre-market review, quality-system, and post-market reporting requirements.

The FDA classifies medical devices into three categories—Class I, II, or III—based on the level of regulatory control necessary to assure safety and effectiveness. Class I devices are subject to general controls; Class II devices, such as most diagnostic instruments, generally require pre-market clearance through the 510(k) process or, where no predicate device exists, a De Novo classification request; and Class III devices require pre-market approval. The specific classification and pre-market pathway applicable to our Bio-RFID™-based products will depend on their final intended use, technological characteristics, and the availability of a legally marketed predicate device.

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If we resume active product development or clinical testing in the future, we expect that any future regulatory submission for the sensor product would likely proceed through the FDA’s De Novo or 510(k) process, supported by clinical data demonstrating substantial equivalence or reasonable assurance of safety and effectiveness. Should the FDA determine that the product represents a novel technology, the device could be subject to additional review or more extensive testing before marketing authorization is granted. We may also seek designation under the FDA’s Breakthrough Devices Program if our technology continues to demonstrate potential for materially improved diagnostic accuracy or patient outcomes.

Clinical testing of our investigational devices, if required, must comply with the FDA’s investigational device exemption regulations and be conducted under the oversight of Institutional Review Boards. These requirements govern study design, informed consent, monitoring, and reporting obligations. Even after a device receives marketing authorization, the manufacturer is subject to post-market surveillance, quality-system regulation compliance, medical-device reporting, and FDA inspection authority. Non-compliance with any of these obligations could result in enforcement actions, including fines, injunctions, product recalls, or civil and criminal penalties.

Because the Science Division’s current activities are primarily research-oriented, we have no current exposure to the full range of FDA and Federal Trade Commission marketing and labeling regulations at this time. Nevertheless, we continue to monitor evolving regulatory requirements to ensure that our intellectual property and development programs, advertising materials, and data-handling practices remain compliant. Any significant change in the regulatory framework applicable to medical-diagnostic technologies, or any adverse determination by the FDA, could materially affect our ability to advance or commercialize the Science Division’s products in the future.

Research and Development

Our research and development initiatives are primarily directed toward advancing the architecture, functionality, and scalability of our tokenized deposit platform and related digital financial infrastructure, including the pre-launch development of identity-integrated wallets, compliance-enabled smart contracts, blockchain interoperability features, reserve-management tooling, and user experience enhancements. Following the October 2025 announcement of our strategic partnership with Vast Bank and Uphold, our R&D activities will also include technical integration, compliance validation, and user-interface testing to support the further development of the USBC tokenized deposit offering. We are also focused on building modular program management systems that could support licensing or white- label deployment of our financial-technology stack.

While our core research and development efforts are now heavily focused on the financial technology and digital asset space, we continue to support limited development related to our legacy non-invasive sensor technology, primarily to preserve prior investment and explore potential integrations with our identity or health-related applications which may support future monetization or technology licensing.

Our research and development expenditures vary based on project cycles, regulatory requirements, technical hiring, and third-party partnerships. Integration testing and regulatory-readiness efforts associated with the Vast Bank and Uphold collaboration are expected to represent a meaningful portion of near-term R&D spending. We expect investment in platform security, cryptographic protocols, regulatory adaptability, and cross-chain deployment tools to remain a significant focus.

Human Capital Resources

As of December 31, 2025, we employed 31 individuals, including 16 full-time employees who support critical areas including platform development, financial operations, digital asset custody, product management, regulatory compliance, and strategic partnerships. Our employees work remotely from locations across the United States and abroad. Substantially all executive and team meetings are held virtually, with occasional in-person sessions for strategic planning or technical integration.

We prioritize recruiting and retaining professionals with experience in blockchain architecture, smart contract engineering, cybersecurity, AML/KYC compliance, and tokenomics. Our team structure is designed to remain agile, allowing us to scale selectively in line with evolving regulatory and business priorities. In execution of our hiring strategy, we maintain an equity incentive plan which we believe serves as a key incentive for our employees, aligning their long-term interests with our objectives as an organization.

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Key human-capital objectives include maintaining a culture of accountability, innovation, and regulatory compliance. To support these objectives, we emphasize:

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Recruitment and retention of professionals with experience in digital-asset infrastructure, risk management, and software engineering;

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Compliance and security training, including periodic instruction on anti-money-laundering, data-privacy, and cybersecurity obligations; and

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Equity-based compensation as a core retention and alignment tool, which links employee interests with long-term shareholder value.

We continuously evaluate our human-capital programs and may adjust our practices as our business evolves.

Available Information

You can find reports on our company including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports on our Investor Relations website https://investors.usbc.xyz under the “Filings” heading. These reports are available free of charge and as soon as reasonably practicable after they have been filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”). We are providing the address of our website solely for the information of investors and the information on our website is not a part of or incorporated into this or any report that we file with the SEC.