{"url_path":"/sec/flddw/10-q/2026/item-7","section_key":"item-7","section_title":"Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations.","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-12","source_url":"https://www.sec.gov/Archives/edgar/data/1889123/0001193125-26-219476-index.html","accession_number":"0001193125-26-219476","cik":"0001889123","ticker":"FLD","issuer_name":"Fold Holdings, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1889123/0001193125-26-219476-index.html","primary_entity_key":"0001889123","primary_entity_name":"Fold Holdings, Inc."},"word_count":9825,"has_tables":true,"body_markdown":"Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.\n\n \n\nThe following discussion and analysis presents management’s perspective on our financial condition and results of operations, including performance metrics that management uses to assess company performance and should be read together with our financial statements and the related notes and other financial information included elsewhere in this filing.\n\nThe information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements are based upon current expectations, as well as management’s beliefs and assumptions, and involve a high degree of risk and uncertainty. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Statements that include the words “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar expressions that convey uncertainty of future events or outcomes are forward-looking statements. Our actual results could differ materially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to such differences include those described in Item 1A - Risk Factors of our Annual Report filed March 17, 2026. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information available to us as of the filing date of this Quarterly Report and we assume no obligation to update any forward-looking statements or the reasons why our actual results may differ. See also the Cautionary Note Regarding Forward-Looking Statements in the forepart of this Quarterly Report.\n\nUnless otherwise indicated or the context otherwise requires, references included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “Fold,” “we,” “us,” “our,” and the “Company” refer to the business of Fold, Inc., a Delaware corporation, prior to the Closing of the Merger, and Fold Holdings, Inc. after the Closing of the Merger. For any given valuation of bitcoin used herein, unless otherwise indicated, we use the market price of bitcoin on the Coinbase exchange at 11:59:59 pm UTC on the date stated.\n\nBusiness overview\n\nFounded in 2019, Fold is a bitcoin financial services company dedicated to expanding access to bitcoin through a comprehensive suite of consumer financial services. The Company was formed with the purpose of creating a modern financial services platform that allows customers to earn, accumulate, and utilize bitcoin in their everyday life. The Company offers consumers access to a variety of traditional financial services such as an FDIC insured checking account, the Fold Debit Card, the Fold Credit Card (which has been launched on a limited basis), a bitcoin gift card, bill payments, and an extensive catalog of merchant reward offers. The Company also offers a comprehensive suite of bitcoin trading and custody solutions with low-to-zero fees and insured custody. Fold aims to provide customers with the ability to seamlessly move between traditional USD and bitcoin products according to their financial needs. By integrating bitcoin across traditional financial services, the Company aims to act as a key point of entry for consumers to engage with and integrate bitcoin into their everyday lives. The Company's products and services are available in the United States through the Fold App.\n\n \n\nSince Fold was founded, we have sought to be a pioneer in bitcoin consumer financial services. In 2020, we partnered with Visa to launch the first ever bitcoin rewards debit card. In 2022, we launched a bitcoin trading and custody product and have since added a comprehensive suite of purchase options including spot buys, dollar-cost averaging, direct paycheck conversion, and round-ups. In 2024, we provided consumers the ability to “get on zero” - the ability to live primarily off of bitcoin instead of fiat currency - and we launched a rewards product for ACH payments that allows users to earn up to 1.5% back on paying mortgages, rent, and other bill payments. In May 2025, we released the Bitcoin Gift Card, one of the first of its kind to appear in physical retail networks across the country. In January 2026, we introduced the Employee Bitcoin Bonus program, which allows employers to offer bitcoin bonuses to their employee base and manage those assets through Fold, and announced Steak 'n Shake as our first partner for this program. In March 2026, we launched our bitcoin rewards credit card (the \"Fold Credit Card\") on a limited basis in partnership with Stripe and Visa. We expect to continue to innovate in the bitcoin consumer financial services space over the coming years. We have designed each of our core product lines to be product-level profitable at scale, inclusive of the contra-revenue effect of rewards, and we believe we are well positioned to scale those lines.\n\nIn addition to new products and features, we have committed significant resources towards optimizing our business through design and user experience updates, refinement of our systems architecture, scaling our customer support services, expanding our rewards network, and adding strategic partnerships.\n\nOne of the foundational value propositions of bitcoin is trust and security. Over the years, many “crypto”-adjacent business models have failed to live up to those values, prioritizing short-term gains over their duties to customers. As a result, many of these companies suffered a combination of reputational damage, bankruptcy, litigation, and fines. Throughout our existence, Fold has been focused on ensuring the safety and security of our customer assets while also complying with regulatory guidance relevant to our business. We\n\n28\n\n \n\nbelieve that a solid trust foundation is critical for continued user adoption and in building a positive brand image, both of which are crucial for our long-term success.\n\nIn addition to our core operating business, Fold has adopted a bitcoin treasury strategy that aligns our corporate goals with the products we offer to our customers. Fold views this treasury strategy as a reflection of alignment between Fold and its customers, providing exposure to the long-term value of bitcoin while supporting the financial strength and durability of the operating business. Fold considers its treasury allocation to be part of a disciplined capital strategy designed to support long-term operations and stockholder interests, rather than short-term financial outcomes. As of March 31, 2026, Fold held 826 bitcoin in our Investment Treasury. Refer to the Bitcoin treasury strategy section below for further detail.\n\nRecent developments\n\nIn May 2025, the Company launched the Fold Bitcoin Gift Card, which provides customers the ability to purchase USD denominated gift cards through the Fold App, through online gift card distributors, and through brick-and-mortar retail locations across the country and redeem those gift cards for bitcoin through Fold. This product is currently available for purchase on Fold platforms, via various participating online retailers and in Kroger marketplaces. We expect to continue to roll out this product to new distribution channels over the coming months.\n\n \n\nIn June 2025, the Company entered into an agreement for a $250 million equity purchase facility (“Facility”). Pursuant to the Facility, the Company, in its sole discretion, has the right, but not the obligation, to issue and sell up to $250 million in newly issued shares of the Company’s Common Stock, subject to certain conditions. The Company expects that any proceeds received by it from the Facility will be used for, without limitation, working capital and general corporate purposes. If and when the Company elects to sell shares of Common Stock to the investor pursuant to the Facility, the investor may resell all, some or none of such shares of Common Stock in its discretion and at prices subject to the terms of the Facility. Actual sales of shares of Common Stock under the Facility will depend on a variety of factors to be determined by the Company from time to time, which may include, without limitation, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for its business and operational needs. The Facility terminates automatically on June 16, 2027 with an option for early termination by the Company. As of March 31, 2026, the Company had sold 1.59 million shares of Common Stock pursuant to the Facility for gross proceeds of $4.7 million, and recognized a nominal amount amortization related to deferred issuance costs. Refer to Note 11 for further information.\n\n \n\nIn October 2025, Fold, Inc. entered into a Master Loan Agreement with Two Prime, and subsequently entered into the First Amendment to the Master Loan Agreement (the \"Amendment\") in November 2025. The Master Loan Agreement and Amendment established a revolving credit facility (the \"Credit Facility\") pursuant to which the Company, upon the deposit of bitcoin as collateral, may borrow from Two Prime up to $45.0 million at an interest rate of 8.5% per annum. As of March 31, 2026, the Company has borrowed $20.0 million under the Credit Facility, with 430 bitcoin deposited as collateral with the custodian pursuant to the terms of the Credit Facility. The entire loan has a fixed one-year term, maturing on September 30, 2026. This loan may be renewed with substantially similar terms upon mutual agreement between the parties prior to the maturity date. Refer to Note 10 for further information.\n\n \n\nIn January 2026, we introduced the Employee Bitcoin Bonus program, which allows participating employers to offer bitcoin bonuses to their employee base and manage those assets through Fold, and announced Steak 'n Shake as our first partner for this program. Revenue and operating results from the Employee Bitcoin Bonus program were not material during the three months ended March 31, 2026.\n\nOn February 25, 2026, the Company entered into a Purchase Agreement (the \"Purchase Agreement\") with SATS Credit Fund L.P. (\"SATS\"), an affiliate of the Company's lead director. Pursuant to the Purchase Agreement, SATS purchased from the Company a $13.0 million senior unsecured promissory note (the \"February 2026 Investor Note\") and the Company issued to SATS 520,000 shares of Common Stock as additional consideration.\n\nOn February 26, 2026, the Company repaid and extinguished the March 2025 Investor Note by transferring the 500 bitcoin held as collateral in full satisfaction of all outstanding obligations thereunder. On February 27, 2026, the Company repaid the June 2025 Amended Investor Note with a cash payment of $27.5 million. Following these transactions, the Company no longer has any outstanding convertible notes. Refer to Note 10 for further information regarding these transactions.\n\nIn March 2026, we launched the Fold Credit Card on a limited basis, and we plan to continue to roll out this card to a larger customer base over the coming quarters. Revenue and operating results from the credit card program were not material during the three months ended March 31, 2026. As with our Fold Debit Card, we have partnered with Visa to launch this product. Stripe is our program manager. Premium customers receive unlimited 1.5% bitcoin rewards with the ability to earn up to 4% bitcoin rewards subject to certain conditions, and a free metal card, among other benefits.\n\n29\n\n \n\nLooking ahead\n\nFold has a proven track record of launching products that enhance engagement with our current customers and attract new customers to our platform. We intend to continue to build on this success by expanding our existing offerings to further engage our existing users, and we expect to introduce new products to attract new customers. Here is how we intend to continue our momentum:\n\nProduct strategy\n\nAs highlighted above, we have successfully launched several new product lines during the last twelve months: (1) the Fold Bitcoin Gift Card, (2) the Fold Bitcoin Bonus program, and (3) the Fold Credit Card on a limited basis. We expect these products to continue to expand to more users and to collectively drive higher volumes, revenues, and margins, but we also expect them to drive both new user acquisition and contribute to deeper engagement within the Fold ecosystem. Over the course of the next few quarters we will continue to explore opportunities to add new consumer financial services that complement and enhance our current offerings.\n\nThe timing, execution, and effectiveness of our product and feature releases will impact our ability to meet financial targets for 2026 and beyond; however, we expect that each of these releases will further enhance our existing market position and drive increased volumes across the platform.\n\nGrowth Strategy\n\nIn addition to our product strategy, we intend to grow our customer base, transaction volume, and revenues through increased investment into organic and paid marketing channels that have proven successful to-date.\n\nFold intends to continue to leverage our social media channels and customer referral program to drive growth via organic channels which have been our primary growth channels to date. In addition, to further accelerate growth, we intend to increase investments in paid marketing and affiliate opportunities in conjunction with key product rollouts.\n\nWhile we expect our existing products to benefit from this growth strategy, we also expect new products like the Fold Credit Card, the Fold Bitcoin Gift Card, and the Fold Bitcoin Bonus program to create synergies across product lines and attract new users who are looking for a more comprehensive suite of financial products.\n\nBitcoin treasury strategy\n\n \n\nAs of March 31, 2026, we held approximately 903 BTC in our bitcoin treasury which had a market value of $61.6 million on March 31, 2026, which was approximately $68.2 thousand.\n\n \n\nFold’s purpose for holding bitcoin in treasury is twofold: (1) to fulfill bitcoin rewards to customers in accordance with the terms and conditions of Fold’s user agreements (“Rewards Treasury”); and (2) as a treasury asset to support our operating business with the option to hold it as a near- to long-term investment to preserve potential upside in the value of that bitcoin (“Investment Treasury”). The following is a summary of Fold’s bitcoin held in treasury as of the dates shown:\n\n \n\n \n\n \n\nMarch 31, 2026\n\n \n\n \n\nDecember 31, 2025\n\n \n\nRewards treasury (USD)\n\n \n\n$\n\n5,253,902\n\n \n\n \n\n$\n\n6,872,869\n\n \n\nInvestment treasury (USD)\n\n \n\n \n\n56,355,303\n\n \n\n \n\n \n\n133,658,791\n\n \n\nTotal bitcoin treasury (USD)\n\n \n\n$\n\n61,609,205\n\n \n\n \n\n$\n\n140,531,660\n\n \n\n \n\n \n\n \n\nMarch 31, 2026\n\n \n\n \n\nDecember 31, 2025\n\n \n\nRewards treasury (BTC)\n\n \n\n \n\n77\n\n \n\n \n\n \n\n79\n\n \n\nInvestment treasury (BTC)\n\n \n\n \n\n826\n\n \n\n \n\n \n\n1,527\n\n \n\nTotal bitcoin treasury (BTC)\n\n \n\n \n\n903\n\n \n\n \n\n \n\n1,606\n\n \n\n \n\n \n\nOur treasury strategy contemplates that we may (i) periodically sell bitcoin for general corporate purposes to support our operating business, (ii) pledge or commit a portion of our bitcoin as collateral for purposes of entering into financing transactions, (iii) utilize our bitcoin as reserve collateral for various products used in our operating business, and/or (iv) consider opportunities to create income streams or otherwise generate funds using our bitcoin holdings. We may from time to time identify and/or implement additional\n\n30\n\n \n\nstrategies to more effectively utilize our Investment Treasury to support our overall business. Until such time that we consider it appropriate to utilize our bitcoin in one of those ways, we intend to hold bitcoin as a near- to long-term investment to preserve potential upside in the value of that bitcoin.\n\n \n\nAs of March 31, 2026, 430 bitcoin were restricted from use in operations as collateral under our Credit Facility.\n\n \n\nIn February 2026, the Company sold 200 bitcoin for $14.4 million, or approximately $71.9 thousand per bitcoin, and repaid the March 2025 Investor Note by returning the 500 bitcoin that was previously reserved as collateral against that note. These transactions were used to consummate the capital markets transactions as further described in Note 10 of our financial statements. We may execute additional bitcoin sales based on market conditions and business requirements as part of our treasury management operations.\n\nKey operating metrics\n\nWe collect and analyze operating and financial data to evaluate the health of our business, allocate our resources, and assess our performance. In addition to certain GAAP metrics, we also monitor various non-GAAP measures to evaluate our business. We believe the following metrics and measures are useful to facilitate period-to-period comparisons of our business and to facilitate comparisons of our performance to that of other financial service providers. Where applicable we have provided definitions of metrics we consider key to our operations below.\n\nVerified Accounts\n\nVerified Accounts represent users who have gone through Know Your Customer (“KYC”) verification to participate in our banking and exchange products. These users represent Fold's highest potential value customers as they have passed through the verification necessary to participate in all of our core product lines.\n\nDuring the three months ended March 31, 2026, we added nearly 2,000 Verified Accounts, bringing total Verified Accounts to nearly 85,000.\n\nTransaction volumes\n\nTransaction Volume is inclusive of deposits, spend, and withdrawals across our platform and are inclusive of both fiat (“USD”) and bitcoin (“BTC”) transaction volumes. We consider Transaction Volume a key operating metric as the majority of our revenues are derived from these volumes.\n\nFrom inception through March 31, 2026, Fold processed over $3.6 billion in Transaction Volume through our platform. For the three months ended March 31, 2026, we averaged more than $57 million in Transaction Volume per month, respectively.\n\nKey components of results of operations\n\nRevenue\n\nBanking and payments revenue\n\nFold is a financial services platform and not a chartered bank. Our banking and payments revenues consist of revenues received from our Fold Debit Card and related product features, including:\n\n•\nFold+ Subscriptions: Fold’s premium membership tier, called “Fold+”, offers users reduced or no fees on eligible products, higher rewards, and access to limited features. Fold+ costs $100/year or $10/month depending on the customer’s payment frequency selection. As announced January 27, 2026, we intend to eliminate the fees for the Fold+ subscription during fiscal year 2026 as part of the larger rollout of our Fold Credit Card.\n\n•\nInterchange: Each time a Fold user makes a payment using their Fold Debit Card, Fold earns a share of the total interchange fee charged on that transaction. Interchange fees are set by the card network (Visa) and charged as a percentage of the total sale. The amount of interchange earned by Fold is dependent on a wide variety of factors, including whether the transaction is processed in- or out-of-network, the merchant and their assigned merchant category code (“MCC Code”), and the type of purchase being made (signature v PIN debit transaction), among other variables. Interchange rates are subject to change by the card network (Visa) at any time.\n\n•\nTransaction Fees: Certain fees are charged to our cardholders depending on their membership tier or the nature of the transaction. These fees primarily include instant transfer fees, international transaction fees, and ATM fees. These fees are stated either as a percentage of each transaction or as a fixed dollar amount depending on the nature of the transaction.\n\n31\n\n \n\n•\nMerchant Offers: Fold partners with a number of merchant offer wholesalers and individual merchants to offer gift cards, card-linked offers, and other affiliate offers. Fold has established an extensive partnership network across multiple vendors to provide customers with numerous and high quality merchant offers, and we regularly add new partnerships to optimize our offers network. For accounting purposes, the Company is the principal in gift card transactions and therefore recognizes (1) gross revenues for the sales price of the gift card to the customer, and (2) gross costs of sales for the cost of each gift card sold. Our merchant offers revenue is subject to seasonality and is typically higher around major shopping periods (ex. Amazon Prime Day) and in the fourth quarter, driven by holiday spending and travel.\n\nThe Company notes that the above categories of revenue are combined into Banking and Payments given their interconnected nature. For example, nearly all merchant offers are purchased in relation to a Fold Debit Card transaction or by Fold Debit Card holders. In addition, Fold primarily incentivizes users to sign up for its Fold+ subscription by reducing transaction fees and increasing rewards on Fold Debit Card transactions as well as by providing access to exclusive merchant offers. While Fold assesses each of these revenue streams separately for revenue recognition purposes, they all derive primarily from Fold Debit Card transactions which are funded by user accounts at Sutton Bank.\n\nCustody and trading revenue\n\nAs of March 31, 2026, Fold partnered with BitGo Bank & Trust, National Association (f/k/a BitGo Trust Company, Inc.), a federally chartered national trust bank (“BitGo”) (our “Exchange Provider”) to offer eligible customers the ability to buy, sell, store, insure, and withdraw bitcoin using the Fold App via an “Exchange Account.” Fold earns revenue on these transactions via a combination of transaction fees and transaction spreads. Spreads on trades include two components: (1) spreads charged by our Exchange Provider, which include any spreads passed on by their liquidity providers, and (2) Fold’s spread. For customers that do not have a Fold+ subscription, Fold also adds a transaction fee to certain buy and sell transactions as outlined in our terms and conditions, which can change from time to time. Transaction fees are stated as a percentage of the purchase or sale amount (i.e. 1.5%).\n\nAdditionally, revenues from the Fold Bitcoin Gift Card are included within this revenue line, as that product is effectively an alternative method of selling bitcoin. For accounting purposes, the Company is the principal in these transactions and therefore recognizes (1) gross revenues for the sales price of the gift card to the customer, and (2) gross costs of sales for the cost of each gift card sold.\n\nOther revenue\n\nWe occasionally earn revenues from alternate sources, including Fold merchandise sales, sponsorship revenues, affiliate revenues, and other one-off revenue models. These revenues are typically non-recurring and are not currently material to our business.\n\nRevenue Rewards\n\n \n\nUsers can earn bitcoin rewards by engaging in qualifying revenue-generating activities. \"Revenue Rewards\" are defined as rewards that are earned in direct relation to a qualifying spend transaction, such as spending on the Fold Debit Card, purchasing bitcoin, purchasing merchant offers, and so on. \"Marketing Rewards\" are defined as rewards that are earned for behaviors unrelated to qualifying spend transactions such as sign-up bonuses, referral bonuses, spinning the daily spin wheel, etc. For accounting purposes, any reward that derives from a transaction where Fold receives revenue constitutes a Revenue Reward, whereas all other rewards constitute Marketing Rewards. Marketing Rewards are recorded as a marketing expense within operating expenses.\n\n \n\nRevenue Rewards constitute a “non-revenue element” of our contracts with customers and are accounted for under ASC 815 – Derivatives and Hedging. Under that guidance, for all applicable revenue streams, Revenue Rewards are recorded as a direct reduction in the transaction price of the related revenue earned (i.e. we reduce interchange revenue by the amount of rewards earned by customers when completing qualifying spend transactions).\n\n \n\nAll rewards are earned immediately upon the performance of a qualifying action by the user, but not all rewards are immediately available for redemption. The redemption criteria for rewards varies by the type of qualifying action or transaction as outlined in the terms and conditions of the Fold Rewards Program. For example, rewards earned on the daily spin wheel are available for redemption immediately, while rewards earned via certain qualifying spend transactions on the Fold Debit Card are subject to a 30-day settlement period before becoming available for redemption, a policy that is in place to prevent fraudulent activities.\n\nThe Company accrues Revenue Rewards within ‘Customer rewards liability’ in our accompanying balance sheets at the time the Revenue Reward is earned. The liability is initially recorded at the fair value of the bitcoin earned upon the action by the user and subsequently marked to fair value until redeemed or reversed, with gains and losses on this liability recorded within 'Gain (Loss) on customer rewards liability' in our accompanying statements of operations. The liability is derecognized when the Revenue Reward is\n\n32\n\n \n\nredeemed by the user and delivered to the user's bitcoin wallet.\n \n\nPer the terms and conditions of the Fold Rewards Program, rewards are subject to adjustment for chargebacks, returns, refunds, or other circumstances. In addition, rewards are subject to expiry if users fail to maintain an active account for more than twelve consecutive months. The Company estimates the amount of rewards that will expire based on historical data, current user trends, and other factors and accrues for those amounts in the period those rewards were earned.\n\nSales returns and allowances\n\nAll revenue is recognized net of sales returns and allowances, when applicable, which arise from time to time for various reasons. Returns and allowances have been primarily related to merchant offers and have historically been immaterial to our business.\n\nOperating Expenses\n\nOperating expenses consist of the costs to satisfy our performance obligations to our customers; compensation and benefits; marketing expenses; professional fees; amortization of capitalized software development costs; and other selling, general, and administrative expenses.\n\nBanking and payments costs\n\nBanking and payments costs include direct costs related to licensing, servicing, and processing transactions within our banking and payments products, including costs related to our Fold Debit Card and merchant offers. For accounting purposes, the Company is the principal in gift card transactions and therefore recognizes (1) gross revenues for the sales price of the gift card to the customer, and (2) gross costs of sales for the cost of each gift card sold.\n\nCustody and trading costs\n\nCustody and trading costs consist primarily of licensing, servicing, and custodial fees related to our bitcoin exchange product. Some custody and trading costs scale in proportion to our volumes.\n\nAdditionally, custody and trading costs include costs related to our Fold Bitcoin Gift Card. For accounting purposes, the Company is the principal in these transactions and therefore recognizes (1) gross revenues for the sales price of the gift card to the customer, and (2) gross costs of sales for the cost of each gift card sold.\n\nCompensation and benefits expenses\n\nCompensation and benefits expenses primarily consist of salaries and wages, employee insurance expenses, share-based compensation, and other payroll benefits related to full time employees.\n\nMarketing expenses\n\nMarketing expenses consist of costs incurred to promote the Company's products and services, increase brand awareness, and drive sales. These expenses include paid advertising and growth initiatives such as digital campaigns, events and sponsorships, agency and content production, and press and public relations expenses, among others.\n\nIn addition, as described above, a portion of marketing expenses are Marketing Rewards. The Company accrues Marketing Rewards within ‘Customer rewards liability’ in our accompanying balance sheets at the time the Marketing Reward is earned, with the corresponding expense recorded within marketing expenses in our statements of operations. The liability is initially recorded at the fair value of the bitcoin earned upon the action by the user and subsequently marked to fair value, with gains and losses on this liability recorded within 'Gain (Loss) on customer rewards liability' in our accompanying statements of operations. The liability is derecognized when the reward is claimed by the user and delivered to the user's external bitcoin wallet.\n\nPer the terms and conditions of the Fold Rewards Program, rewards are subject to adjustment for chargebacks, returns, refunds, or other circumstances. In addition, rewards are subject to expiry if users fail to maintain an active account for more than twelve consecutive months. The Company estimates the amount of rewards that will expire based on historical data, current user trends, and other factors and accrues for those amounts in the period those rewards were earned. These accruals are accounted for as a contra-expense within marketing expense for Marketing Rewards.\n\n33\n\n \n\nProfessional fees\n\nProfessional fees consist primarily of expenses related to fees paid for services, including legal, tax, accounting, and audit services.\n\nGain (loss) on customer rewards liability\n\nGain (loss) on customer rewards liability includes components of unrealized gains (losses) resulting from the remeasurement in fair value of Revenue Rewards and Marketing Rewards denominated in bitcoin in the current reporting period, as well as realized gains (losses) that occur upon the fulfillment of Rewards. Management has determined that gains or losses on digital assets held for purposes of fulfilling Rewards are related to its core operations, and therefore classifies all gains and losses on the remeasurement of this liability as an operating income or expense in its financial statements.\n\nGain (loss) on digital assets - rewards treasury\n\nGain (loss) on digital assets - rewards treasury includes components of unrealized gains (losses) resulting from the remeasurement in fair value of bitcoin held by Fold in our Rewards Treasury in the current reporting period as well as realized gains (losses) that occur upon the fulfillment of Rewards. Management has determined that gains or losses on digital assets held for the purposes of rewards redemptions are related to its core operations, and therefore classifies all gains and losses on the remeasurement of these digital assets as an operating income or expense in its financial statements.\n\nOther selling, general and administrative expenses\n\nOther selling, general and administrative expenses consist primarily of costs associated with contract labor, computer and internet, insurance, customer support costs, dues and subscriptions, and travel.\n\nOther income (expense)\n\nGain (loss) on digital assets - investment treasury\n\nGain (loss) on digital assets - investment treasury includes components of unrealized gains (losses) resulting from the remeasurement in fair value of bitcoin held by Fold with the intention to hold as a long-term investment in the current reporting period. Management has determined that gains or losses on digital assets held as a long-term investment are not related to its core operations, and therefore classifies all gains and losses on the remeasurement of these digital assets as a non-operating income or expense in its financial statements.\n\nChange in fair value of SAFEs\n\nChange in fair value of SAFEs resulted from unrealized gain or loss due to the remeasurement of outstanding SAFEs, which were classified as liabilities for accounting purposes. On February 14, 2025, upon Closing of the Merger, all SAFEs held by Fold Predecessor converted into Common Stock of Fold Holdings, Inc. No SAFEs remained outstanding subsequent to the Closing, and accordingly, no future fair value remeasurements will be recognized.\n\nChange in fair value of convertible note\n\nChange in fair value of convertible note results from the fair value gain or loss related to the March 2025 Investor Note.\n\nConvertible note issuance costs and fees\n\nConvertible note issuance costs and fees relates to the March 2025 SPA including the March 2025 Warrants and Closing Shares.\n\nLoss on extinguishment of debt\n\nConvertible note costs related to the extinguishment of the June 2025 Amended Investor Note and March 2025 Investor Note.\n\nInterest expense\n\nInterest expense primarily consists of contractual interest and amortization of debt discounts, premiums, and issuance costs related to the Company's convertible notes, the February 2026 Investor Note and the Credit Facility.\n\n34\n\n \n\nOther income\n\nOther income primarily consists of interest income earned on cash and cash equivalents.\n\nIncome tax expense\n\nThe provision for income taxes consists primarily of federal, state and local tax. Our effective tax rate fluctuates from period to period due to changes in the mix of income and losses in jurisdictions with a wide range of tax rates, changes resulting from the amount of recorded valuation allowance, permanent differences between U.S. generally accepted accounting principles and local tax laws, and certain one-time items.\n\n \n\nResults of operations for the three months ended March 31, 2026 and 2025\n\nResults of operations\n\n \n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n$ Change\n\n \n\n \n\n% Change\n\n \n\nRevenues, net\n\n \n\n$\n\n5,592,309\n\n \n\n \n\n$\n\n7,087,837\n\n \n\n \n\n$\n\n(1,495,528\n\n)\n\n \n\n \n\n-21\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBanking and payments costs\n\n \n\n \n\n4,806,374\n\n \n\n \n\n \n\n6,758,924\n\n \n\n \n\n \n\n(1,952,550\n\n)\n\n \n\n \n\n-29\n\n%\n\nCustody and trading costs\n\n \n\n \n\n598,415\n\n \n\n \n\n \n\n45,785\n\n \n\n \n\n \n\n552,630\n\n \n\n \n\nNM(i)\n\n \n\nCompensation and benefits\n\n \n\n \n\n4,034,267\n\n \n\n \n\n \n\n6,457,940\n\n \n\n \n\n \n\n(2,423,673\n\n)\n\n \n\n \n\n-38\n\n%\n\nMarketing expenses\n\n \n\n \n\n268,108\n\n \n\n \n\n \n\n399,798\n\n \n\n \n\n \n\n(131,690\n\n)\n\n \n\n \n\n-33\n\n%\n\nProfessional fees\n\n \n\n \n\n1,667,414\n\n \n\n \n\n \n\n1,788,505\n\n \n\n \n\n \n\n(121,091\n\n)\n\n \n\n \n\n-7\n\n%\n\nAmortization expense\n\n \n\n \n\n156,079\n\n \n\n \n\n \n\n91,071\n\n \n\n \n\n \n\n65,008\n\n \n\n \n\n \n\n71\n\n%\n\n(Gain) loss on customer rewards liability\n\n \n\n \n\n(1,507,471\n\n)\n\n \n\n \n\n(1,100,857\n\n)\n\n \n\n \n\n(406,614\n\n)\n\n \n\n \n\n37\n\n%\n\n(Gain) loss on digital assets - rewards treasury\n\n \n\n \n\n1,689,455\n\n \n\n \n\n \n\n1,010,586\n\n \n\n \n\n \n\n678,869\n\n \n\n \n\n \n\n67\n\n%\n\nOther selling, general and administrative expenses\n\n \n\n \n\n1,709,981\n\n \n\n \n\n \n\n1,136,455\n\n \n\n \n\n \n\n573,526\n\n \n\n \n\n \n\n50\n\n%\n\nTotal operating expenses\n\n \n\n \n\n13,422,622\n\n \n\n \n\n \n\n16,588,207\n\n \n\n \n\n \n\n(3,165,585\n\n)\n\n \n\n \n\n-19\n\n%\n\nOperating loss\n\n \n\n \n\n(7,830,313\n\n)\n\n \n\n \n\n(9,500,370\n\n)\n\n \n\n \n\n1,670,057\n\n \n\n \n\n \n\n-18\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther income (expense)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGain (loss) on digital assets - investment treasury\n\n \n\n \n\n(28,629,465\n\n)\n\n \n\n \n\n(15,617,152\n\n)\n\n \n\n \n\n(13,012,313\n\n)\n\n \n\n \n\n83\n\n%\n\nChange in fair value of SAFEs\n\n \n\n \n\n-\n\n \n\n \n\n \n\n(6,503,113\n\n)\n\n \n\n \n\n6,503,113\n\n \n\n \n\n \n\n-100\n\n%\n\nChange in fair value of convertible note\n\n \n\n \n\n13,200,089\n\n \n\n \n\n \n\n(6,534,143\n\n)\n\n \n\n \n\n19,734,232\n\n \n\n \n\n \n\n-302\n\n%\n\nConvertible note issuance costs and fees\n\n \n\n \n\n-\n\n \n\n \n\n \n\n(9,569,109\n\n)\n\n \n\n \n\n9,569,109\n\n \n\n \n\n \n\n-100\n\n%\n\nLoss on extinguishment of debt\n\n \n\n \n\n(4,005,132\n\n)\n\n \n\n \n\n-\n\n \n\n \n\n \n\n(4,005,132\n\n)\n\n \n\nNM(i)\n\n \n\nInterest expense\n\n \n\n \n\n(2,273,828\n\n)\n\n \n\n \n\n(1,271,638\n\n)\n\n \n\n \n\n(1,002,190\n\n)\n\n \n\n \n\n79\n\n%\n\nOther income\n\n \n\n \n\n374,214\n\n \n\n \n\n \n\n120,303\n\n \n\n \n\n \n\n253,911\n\n \n\n \n\n \n\n211\n\n%\n\nOther income (expense), net\n\n \n\n \n\n(21,334,122\n\n)\n\n \n\n \n\n(39,374,852\n\n)\n\n \n\n \n\n18,040,730\n\n \n\n \n\n \n\n-46\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss before income taxes\n\n \n\n \n\n(29,164,435\n\n)\n\n \n\n \n\n(48,875,222\n\n)\n\n \n\n \n\n19,710,787\n\n \n\n \n\n \n\n-40\n\n%\n\nIncome tax expense (benefit)\n\n \n\n \n\n3,471\n\n \n\n \n\n \n\n3,978\n\n \n\n \n\n \n\n(507\n\n)\n\n \n\n \n\n-13\n\n%\n\nNet loss\n\n \n\n$\n\n(29,167,906\n\n)\n\n \n\n$\n\n(48,879,200\n\n)\n\n \n\n$\n\n19,711,294\n\n \n\n \n\n \n\n-40\n\n%\n\n \n\n(i) Not meaningful (\"NM\")\n\nRevenue\n\n \n\n \n\n \n\nThree Months Ended March 31,\n\n \n\nRevenue stream\n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n$ Change\n\n \n\n \n\n% Change\n\n \n\nBanking and payments revenues\n\n \n\n$\n\n4,931,213\n\n \n\n \n\n$\n\n6,921,625\n\n \n\n \n\n$\n\n(1,990,412\n\n)\n\n \n\n \n\n-29\n\n%\n\nCustody and trading revenues\n\n \n\n \n\n665,194\n\n \n\n \n\n \n\n151,855\n\n \n\n \n\n \n\n513,339\n\n \n\n \n\n \n\n338\n\n%\n\nOther revenues\n\n \n\n \n\n97\n\n \n\n \n\n \n\n26,035\n\n \n\n \n\n \n\n(25,938\n\n)\n\n \n\n \n\n-100\n\n%\n\nLess: Sales returns and allowances\n\n \n\n \n\n(4,195\n\n)\n\n \n\n \n\n(11,678\n\n)\n\n \n\n \n\n7,483\n\n \n\n \n\n \n\n-64\n\n%\n\nRevenues, net\n\n \n\n$\n\n5,592,309\n\n \n\n \n\n$\n\n7,087,837\n\n \n\n \n\n$\n\n(1,495,528\n\n)\n\n \n\n \n\n-21\n\n%\n\n \n\n35\n\n \n\n \n\nNet revenue for the three months ended March 31, 2026 decreased by $1.5 million, or 21%, to $5.6 million, compared to the net revenue of $7.1 million for the three months ended March 31, 2025. Those amounts are net of reductions in revenue related to Revenue Rewards totaling $0.3 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively.\n\nThe decrease in revenues reflects the broader downturn in digital asset markets that began in the fourth quarter of 2025 and carried into the current period. Having reached an all-time high of approximately $126,000 in early October 2025, bitcoin reversed sharply as leverage liquidations, long-term holder distributions, and macroeconomic uncertainties drove prices down toward the $88,000 range by December 2025. The drawdown extended into Q1 2026, with bitcoin falling further to a low of approximately $60,000, a decline of roughly 50% from the peak. This significant contraction in bitcoin valuations had a direct impact on customer activity within our platform. Specifically, for the three months ended March 31, 2026, we averaged approximately $57 million in Transaction Volume per month, compared to $72 million per month for the three months ended December 31, 2025, and $84 million per month for the three months ended March 31, 2025. Our volumes and revenue remains subject to ongoing bitcoin price volatility and broader macroeconomic conditions.\n\n \n\nBanking and payments\n\nThe primary driver behind decreased banking and payments revenues related to merchant offers within our banking and payments business. Net revenue from merchant offers decreased 29% from $6.4 million for the three months ended March 31, 2025 to $4.5 million for the three months ended March 31, 2026. This decrease in merchant offers revenues resulted primarily from the decrease in customer volumes noted above, as well as the Company's continued optimization of its merchant offers portfolio to prioritize higher-margin offers, which reduced overall transaction volumes while improving unit economics.\n\nExcluding merchant offers, our net banking and payments revenues for the three months ended March 31, 2026 and three months ended March 31, 2025 were $0.4 million and $0.5 million, respectively.\n\nCustody and trading\n\nNet revenues from custody and trading increased by approximately $0.5 million from $0.2 million for the three months ended March 31, 2025 to $0.7 million for the three months ended March 31, 2026. While still a small part of our overall revenues, we believe that custody and trading revenues will be an important growth driver for both volumes and revenues going forward. We are devoting significant time and resources to our custody and trading platform which we expect to become a significant growth driver for Fold. Specifically, we are refining our onboarding experience, our funding options, our systems architecture, and our geographic footprint where we offer this product. We expect to add support for enhanced funding options, to open our exchange product to non-Fold cardholders. As of March 31, 2026 Fold supports access to users from all 50 states.\n\nAdditionally, revenues from the Fold Bitcoin Gift Card, which launched in May, 2025, are included within custody and trading. Revenues from this product were $0.5 million for the three months ended March 31, 2026. The second quarter of fiscal year 2025 was the first period in which we offered this product. This product provides customers the ability to purchase USD denominated gift cards through the Fold App, through online gift card distributors, and through brick-and-mortar retail locations across the country and redeem those gift cards for bitcoin through Fold. This product is currently available for purchase on Fold platforms, via various participating online retailers, and in physical stores throughout the country, including Kroger marketplaces. We expect to continue to roll out this product to new distribution channels throughout 2026.\n\nOperating expenses\n\nBanking and payments costs\n\nBanking and payments costs include direct costs related to licensing, servicing, and processing transactions within our banking and payments products, including costs related to our Fold Debit Card and merchant offers. Banking and payments costs decreased in relation to our decreased merchant offer volumes as noted above. Costs of sales from merchant offers decreased 30% from $6.4 million for the three months ended March 31, 2025 to $4.5 million for the three months ended March 31, 2026.\n\nExcluding merchant offers and Visa rebates, our banking and payments costs decreased to $0.2 million for the three months ended March 31, 2026 compared to $0.4 million for the three months ended March 31, 2025. This decrease was driven by decreased processing fees, card fulfillment fees and KYC costs related to new cardholder sign-ups during the three months ended March 31, 2026.\n\nCustody and trading costs\n\n36\n\n \n\nCustody and trading costs consist primarily of licensing, servicing, and custodial fees related to our bitcoin exchange product. While some of our custody and trading costs scale in direct proportion to our volumes and revenues, other costs, such as monthly platform fees, are fixed and do not scale with volume. Costs from the Fold Bitcoin Gift Card are also included within custody and trading, primarily consisting of bitcoin fulfillment upon redemption and processing fees. Costs associated with this product were $0.5 million for the three months ended March 31, 2026.\n\nCompensation and benefits\n\nPayroll expenses increased in correlation with our increased employee headcount, which was 44 employees as of March 31, 2026 and 35 employees as of March 31, 2025. We expect to hire incremental staff in strategic roles to support the launches of our new product lines and continued growth throughout 2026.\n\nCompensation and benefits expense for the three months ended March 31, 2026 and 2025 also included non-cash share-based compensation expense of $1.7 million and $5.2 million, respectively. The 5.2 million of share-based compensation expense for the three months ended March 31, 2025 included $4.4 million of unrecognized share-based compensation expense that was immediately recognized due to the performance condition under the 2019 Equity Plan being deemed satisfied on February 14, 2025 as a result of the Merger with FTAC Emerald. There was $13.0 million of unrecognized shared-based compensation expense related to unvested awards as of March 31, 2026.\n\nMarketing expenses\n\nMarketing expenses were $0.3 million for the three months ended March 31, 2026 compared to $0.4 million for the three months ended March 31, 2025, respectively. As noted above, we plan to increase investments in paid marketing and affiliate opportunities in 2026 to support the launches of our newest products, including the Fold Credit Card.\n\nProfessional fees\n\nProfessional fees decreased to $1.7 million for the three months ended March 31, 2026, compared to $1.8 million for the three months ended March 31, 2025. This decrease was driven primarily by lower fees paid to external legal counsel and third-party consultants compared to 2025 which included costs incurred to support our Merger with FTAC Emerald.\n\nGain (loss) on customer reward liability and digital assets - rewards treasury\n\nGain (loss) on customer reward liability and digital assets - rewards treasury include components of unrealized gains (losses) resulting from the remeasurement gain or loss for the change in fair value of bitcoin held by Fold for the purposes of fulfilling our customer rewards liability in the current reporting period, as well as realized gains (losses) that occur upon the fulfillment of customer rewards liabilities. The price of bitcoin was approximately $93.4 thousand, $82.5 thousand, $87.5 thousand, and $68.2 thousand as of December 31, 2024, March 31, 2025, December 31, 2025 and March 31, 2026, respectively. These price changes were the primary driver of gains (losses) for both customer rewards liabilities and digital assets - rewards treasury for the three months ended March 31, 2026 and 2025.\n\nOther Selling, General and Administrative Expenses\n\n \n\nOther Selling, General and Administrative expenses primarily consist of costs related to insurance premiums, prepaid amortization, contract labor, and other general business expenses. Total Other Selling, General and Administrative Expenses increased from $1.1 million for the three months ended March 31, 2025 to $1.7 million for the three months ended March 31, 2026. This increase was primarily driven by higher software amortization costs, contract labor including marketing related services, board compensation, and travel related expenses.\n\n \n\nOther income (expense)\n\nGain (loss) on digital assets - investment treasury include unrealized gains (losses) resulting from the remeasurement gain or loss for the change in fair value of bitcoin held by Fold as a long-term investment. The price of bitcoin was approximately $93.4 thousand, $82.5 thousand, 87.5 thousand and $68.2 thousand as of December 31, 2024, March 31, 2025, December 31, 2025 and March 31, 2026, respectively. The price changes were the primary driver of gains (losses) for digital assets - investment treasury for the three months ended March 31, 2026 and 2025.\n\nChange in fair value of SAFEs results from unrealized gain or loss due to the change in fair value of our long-term SAFE note liabilities, which is determined based on the aggregated, probability-weighted average of the outcomes of certain scenarios. For accounting purposes, outstanding SAFEs are classified as liabilities and the change in their fair value is reflected in the statements of operations. However, Fold Predecessor's SAFEs were structured to be settled via the delivery of common and/or preferred shares upon execution\n\n37\n\n \n\nof an equity financing or liquidity event. On February 14, 2025, upon Closing of the Merger, all SAFE notes held by Fold Predecessor converted into Common Stock of the Company.\n\nChange in fair value of convertible note results from the fair value gain or loss related to the March 2025 Investor Note. The gain on the fair value of the convertible note was $13.2 million during the three months ended March 31, 2026 The net loss on the fair value of the convertible note of $6.5 million during the three months ended March 31, 2025 is comprised of a $12.7 million day one loss on the issuance of debt offset by a $6.2 million gain on the change in fair value.\n\nConvertible note issuance costs and fees relates to the March 2025 SPA including the March 2025 Warrants and Closing Shares. The total issuance costs expensed were $9.6 million for the three months ended March 31, 2025.\n\nInterest expense relates to amortization of the December 2024 Investor Note discount and issuance costs, June 2025 Amended Investor Note premium and issuance costs, March 2025 Investor Note, interest expense related to the February 2026 Investor Note and interest expense related to the Credit Facility. For the three months ended March 31, 2026, we incurred a nominal amount of interest expense related to the amortization of debt premium and debt issuance costs related to the March 2025 Investor Note prior to extinguishment, $2.4 million of special interest expense related to the early prepayment of the June 2025 Amended Investor Note, 0.2 million related to the Credit Facility, and $0.2 million related to the February 2026 Investor Note. For the three months ended March 31, 2025, $1.1 million of interest expenses relates to the December 2024 Investor Note and $0.1 million of interest expense relates to the March 2025 Investor Note.\n\n \n\nNon-GAAP Financial Measures\n\nAdjusted EBITDA\n\n \n\nIn addition to net loss and other results under GAAP, we utilize non-GAAP calculations of adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) to monitor the financial health of our business. Adjusted EBITDA is defined as net loss, excluding (i) interest expense, (ii) provision for (benefit from) income taxes, (iii) depreciation and amortization, (iv) share-based compensation, (v) remeasurement gains and losses such as fair value remeasurements on our digital assets, convertible notes, and SAFE notes, and (vi) impairments, restructuring charges, and business acquisition- or disposition-related expenses that we believe are not indicative of our core operating results. This non-GAAP financial information has limitations as an analytical tool when assessing our operating performance, is presented for supplemental informational purposes only, should not be considered in isolation or as a substitute for, or superior to, financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies.\n\n \n\nThe above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items are unpredictable, are not driven by core results of operations, and/or render comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA and Adjusted EBITDA per share provide useful information to investors and others in understanding and evaluating our results of core operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Moreover, Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.\n\n \n\nThe following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net loss:\n\n \n\n38\n\n \n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nNet loss\n\n \n\n$\n\n(29,167,906\n\n)\n\n \n\n$\n\n(48,879,200\n\n)\n\nAdd:\n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest expense\n\n \n\n \n\n2,273,828\n\n \n\n \n\n \n\n1,271,638\n\n \n\nIncome tax expense (benefit)\n\n \n\n \n\n3,471\n\n \n\n \n\n \n\n3,978\n\n \n\nAmortization expense\n\n \n\n \n\n156,079\n\n \n\n \n\n \n\n91,071\n\n \n\nShare-based compensation expense\n\n \n\n \n\n1,709,413\n\n \n\n \n\n \n\n5,170,275\n\n \n\n(Gain) loss on customer rewards liability\n\n \n\n \n\n(1,507,471\n\n)\n\n \n\n \n\n(1,100,857\n\n)\n\n(Gain) loss on digital assets - rewards treasury\n\n \n\n \n\n1,689,455\n\n \n\n \n\n \n\n1,010,586\n\n \n\n(Gain) loss on digital assets - investment treasury\n\n \n\n \n\n28,629,465\n\n \n\n \n\n \n\n15,617,152\n\n \n\nChange in fair value of SAFEs\n\n \n\n \n\n-\n\n \n\n \n\n \n\n6,503,113\n\n \n\nChange in fair value of other liabilities\n\n \n\n \n\n(343,039\n\n)\n\n \n\n \n\n \n\nChange in fair value of convertible note\n\n \n\n \n\n(13,200,089\n\n)\n\n \n\n \n\n6,534,143\n\n \n\nConvertible note issuance costs and fees\n\n \n\n \n\n-\n\n \n\n \n\n \n\n9,569,109\n\n \n\nLoss on extinguishment of debt\n\n \n\n \n\n4,005,132\n\n \n\n \n\n \n\n-\n\n \n\nAdjusted EBITDA\n\n \n\n$\n\n(5,751,662\n\n)\n\n \n\n$\n\n(4,208,992\n\n)\n\n \n\nAdjusted EBITDA for the three months ended March 31, 2026 decreased by $1.5 million, or 37% compared to the three months ended March 31, 2025. The principal driver of decreased Adjusted EBITDA relates to (i) increased compensation and benefits expense, excluding share-based compensation, of $1.0 million; and (ii) increased other selling, general and administrative expenses related to contract labor expenses for product development and marketing.\n\n \n\nPayroll expenses increased in correlation with our increased employee headcount, which was 44 employees as of March 31, 2026 compared to 35 employees as of March 31, 2025. Marketing expenses increased in accordance with our planned growth strategy for 2026, which includes budgeted expenditures for paid marketing channels due to the release of new product such as the credit card.\n\nAdjusted EBITDA (Loss) Per Share\n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nAdjusted EBITDA (Loss)\n\n \n\n$\n\n(5,751,662\n\n)\n\n \n\n$\n\n(4,208,992\n\n)\n\nWeighted-average shares used to compute basic and diluted net loss per share\n\n \n\n \n\n49,656,409\n\n \n\n \n\n \n\n25,436,398\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAdjusted EBITDA (Loss) per share attributable to common stockholders:\n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic and diluted\n\n \n\n$\n\n(0.12\n\n)\n\n \n\n$\n\n(0.17\n\n)\n\nFinancial condition\n\nLiquidity and capital resources\n\nAs of March 31, 2026, the Company had cash and cash equivalents of $11.5 million and negative working capital of $22.0 million. The Company has a history of net operating losses, including an operating loss of $7.8 million for the three months ended March 31, 2026. The Company has an accumulated deficit of $200.1 million as of March 31, 2026. Of that amount, $98.7 million relates to historical fair value adjustments on the Company's SAFE notes which converted to Common Stock upon the closing of the Merger, $9.6 million relates to the loss on extinguishment of the December 2024 Initial Investor Note (as defined in Note 10 of our financial statements) in June 2025, and $4.0 million relates to loss on extinguishment of debt recognized during the three months ended March 31, 2026.\n\nAs of March 31, 2026, the Company held 826 bitcoin in our Investment Treasury, valued at $56.4 million based on the price of bitcoin as of that date. Of that amount, 430 bitcoin, valued at $29.3 million, were restricted from use as operating capital and served as collateral for our Credit Facility. During February 2026, the Company sold 200 bitcoin for approximately $14.4 million, with the proceeds used in connection with the extinguishment of the June 2025 Amended Investor Note, as discussed above.\n\n39\n\n \n\nAs of March 31, 2026, we held 77 bitcoin in our Rewards Treasury, valued at $5.3 million, which matched our existing customer rewards liability, which is denominated in bitcoin. The Company anticipates being able to cover the costs for future rewards via future revenues and operational capital on hand.\n\nThe Company maintains the Credit Facility, pursuant to which the Company, upon the deposit of bitcoin as collateral, may borrow from Two Prime up to $45.0 million at an interest rate of 8.5% per annum. As of March 31, 2026, the Company had borrowed $20.0 million pursuant to the Credit Facility, collateralized by 430 of the Company's bitcoin. The entire loan is a fixed-term loan, with a prepayment option, and matures on September 30, 2026. Refer to Note 10 for further information.\n\n \n\nOn February 26, 2026, the Company closed on a transaction pursuant to which the March 2025 Investor Note was extinguished, at which time the 500 bitcoin that had been reserved as collateral for this note, valued at approximately $34.0 million, were returned to the investor. In conjunction with the extinguishment of the March 2025 Investor Note, the Company entered into the February 2026 Investor Note (as defined in Note 10 of our Financial Statements) for $13.0 million. On February 27, 2026, the June 2025 Amended Investor Note was extinguished with a cash repayment of $27.5 million, which included cash proceeds from the aforementioned sale of 200 bitcoin and additional cash proceeds received from the February 2026 Investor Note. Refer to Note 10 of our Financial Statements for further information regarding these transactions.\n\n \n\nIn June 2025, the Company entered into the Facility. Pursuant to the Facility, the Company, in its sole discretion, has the right, but not the obligation, to issue and sell up to $250 million in newly issued shares of the Company’s Common Stock, subject to certain conditions. The Company is not required to use the Facility and controls the timing and amount of any drawdown on the Facility, subject to certain restrictions under the Facility. The Company expects that any proceeds received by it from the Facility will be used for, without limitation, working capital, general corporate purposes, and purchasing additional bitcoin for the Company’s corporate treasury should the conditions to do so align with our treasury strategy. As of March 31, 2026, the Company had sold 1.59 million shares of Common Stock pursuant to the Facility for gross proceeds of $4.7 million, and recognized a nominal amount amortization related to deferred issuance costs. Refer to Note 11 for further information.\n\n \n\nThe Company performs an evaluation to determine whether there are conditions or events (known and reasonably knowable), considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are available to be issued. Management expects that the Company’s existing cash and cash equivalents, accounts receivable, financing available from the Credit Facility and the Facility, and digital assets on hand through the date of filing, will be sufficient to enable the Company to fund its anticipated level of operations through one year from the date of this report.\n\nThere is limited historical financial information about the Company upon which to base an evaluation of its performance. The business is subject to risks inherent in the establishment of an emerging growth enterprise, including limited capital resources, possible delays in product development, and possible cost overruns due to price and cost increases in services. The Company may require additional capital to pursue certain business opportunities or respond to technological advancements, competitive dynamics or technologies, customer demands, challenges, or unforeseen circumstances.\n\nWe may continue to pursue additional capital via various capital instruments in the future, however, such funding may not be available on terms acceptable to us or at all. Although management believes that such capital sources will continue to be available, there can be no assurances that financing will be available to the Company when needed, or if available, on terms acceptable to the Company. If the Company is unable to obtain adequate financing on terms that are satisfactory to the Company, when the Company requires it, the Company’s ability to continue to grow or support the business and to respond to business challenges could be significantly limited, which may adversely affect the Company’s business plan.\n\nLegal Proceedings ¶\n\n \n\nIn connection with the chapter 11 bankruptcy proceeding of Prime Core Technologies, Inc. (“Prime Core”), on August 14, 2025, the Company was named as a defendant in a proceeding pending in the United States Bankruptcy Court for the District of Delaware ( PCT\n\nLitigation Trust v. Fold Holdings, Inc., Adv. Pro. No. 25-52024 (JKS)), pursuant to which the litigation trust for Prime Core (“PCT Litigation Trust”) seeks avoidance and recovery of alleged preferential transfers. While the outcome of this proceeding cannot be predicted with certainty, the Company does not presently expect this matter to have a material adverse effect on its consolidated financial position, liquidity, capital resources, or annual results of operations. ¶\n\n \n\nFrom time to time, the Company may be subject to, or pursue, other claims, inquiries, or legal proceedings arising in the ordinary course of business. While the outcome of any future matter is inherently uncertain, we do not currently expect that any such matters, if they were to arise, would have a material adverse effect on our consolidated financial position, liquidity, capital resources, or annual results of operations. ¶\n\n40\n\n \n\nSummary of cash flow activities\n\nThe following table summarizes our cash flow activities:\n\n \n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nNet cash used in operating activities\n\n \n\n$\n\n(6,592,367\n\n)\n\n \n\n$\n\n(4,954,200\n\n)\n\nNet cash provided by (used in) investing activities\n\n \n\n \n\n13,192,937\n\n \n\n \n\n \n\n(1,829,194\n\n)\n\nNet cash provided by (used in) financing activities\n\n \n\n \n\n(2,726,302\n\n)\n\n \n\n \n\n152,587\n\n \n\nNet increase (decreased) in cash\n\n \n\n$\n\n3,874,268\n\n \n\n \n\n$\n\n(6,630,807\n\n)\n\n \n\nCash flows from operating activities\n\nFor the three months ended March 31, 2026, cash used in operating activities was $6.6 million compared to $5.0 million for the three months ended March 31, 2025. The increase in cash used was driven primarily by increased compensation and benefits, excluding share-based compensation, of $1.0 million in connection with increased employee headcount, which was 44 employees as of March 31, 2026 compared to 35 employees as of March 31, 2025, and contract labor and software costs increased $0.5 million to support platform development and operations.\n\nCash flows from investing activities\n\nCash flows provided by investing activities increased by $15.0 million from $1.8 million of cash used in investing activities for the three months ended March 31, 2025 to $13.2 million of cash provided by investing activities for the year ended March 31, 2026, primarily due to the sale of 200 bitcoin from our investment treasury for $14.4 million and a decrease in purchases of digital assets.\n\nCash flows from financing activities\n\nFor the three months ended March 31, 2026, cash used in financing activities was $2.7 million and $0.2 million, respectively. For the three months ended March 31, 2026 we received proceeds from the issuance of the February 2026 Investor Note; however, those proceeds were immediately used to pay of the June 2025 Amended Investor Note. For the three months ended March 31, 2026 we received $0.30 million in proceeds from the issuance of shares of Common Stock through the Facility and $10.0 million pursuant to draws on the Credit Facility. For the three months ended March 31, 2025 we received proceeds from issuance of the March 2025 Investor Note; however, those proceeds were received in bitcoin rather than cash and are therefore not included in cash provided by financing activities.\n\nOff-Balance Sheet Financing Arrangements\n\nWe have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.\n\n \n\nCritical Accounting Estimates\n\nOur discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. GAAP requires us to make certain estimates and judgments that affect the amounts reported in our financial statements. We base our estimates on historical experience, anticipated future trends, and other assumptions we believe to be reasonable under the circumstances. Because these accounting estimates require significant judgment, our actual results may differ materially from our estimates. According to the SEC, a \"critical accounting estimate\" is defined as an estimate that meets two criteria:\n\n1.\nMaterial impact: The accounting estimate must involve a significant degree of estimation uncertainty and have a material impact on the financial condition or operating performance as presented in the financial statements.\n\n2.\nJudgment and complexity: The estimate involves a high degree of judgment and complexity, where changes in the assumptions and estimates could significantly alter the financial portrayal of the company's condition and results.\n\n41\n\n \n\nDuring the three months ended March 31, 2026, the Company extinguished all previously outstanding convertible notes. As a result, the critical accounting estimates related to the fair value of convertible notes, as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, are no longer applicable. The critical accounting estimates related to the fair value of SAFEs and pre-Merger stock-based compensation, also described in our Form 10-K, were no longer applicable as of December 31, 2025. As of March 31, 2026, there are no accounting estimates that meet the criteria for disclosure as critical accounting estimates.\n\nRecent accounting pronouncements\n\nSee “Recently issued accounting pronouncements not yet adopted” and \"Recently adopted accounting pronouncements\" described in Note 2 of the Financial Statements, Summary of Significant Accounting Policies."}