# Fold Holdings, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [Fold Holdings, Inc.](/companies/fld.md) (CIK 1889123)
- Form: 10-Q
- Filed: 2025-05-15
- Accepted by EDGAR: May 15, 2025, 17:00 ET
- Period: 2025-03-31
- Accession: 0000950170-25-072818
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1889123/000095017025072818/ck0001889123-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1889123/000095017025072818/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $7.1m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $1.3m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $4.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$48.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$1.92 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$1.92 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 25,436,398 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$5.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2025-03-31 | $11.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $24.4m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $148.5m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $11.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $76.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $71.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 59,669 characters.

*The 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.*

*The 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 on Form 10-K for the year ended December 31, 2024 (“2024 10-K”). 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 on Form 10-Q and we assume no obligation to update any forward-looking statements or the reasons why our actual results may differ.*

*Unless 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, both prior and subsequent to the closing of the Merger.*

### Business overview

Founded 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 an FDIC insured checking account through Sutton Bank, a prepaid Visa debit card, bill payments, and an extensive catalog of merchant reward offers. The Company also offers various forms of bitcoin buying and selling with low-to-zero fees, instant withdrawals, and insured custody. By integrating bitcoin across traditional financial services, the Company acts 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 mobile app.

Since Fold was founded, we have been a pioneer in bitcoin consumer financial services. From our earliest days, Fold has provided users an opportunity to spend their bitcoin via the Lightning Network - a use case largely underrepresented in the overall bitcoin ecosystem. In 2020, we partnered with Visa to launch the first ever bitcoin rewards debit card. In 2022, we launched a bitcoin exchange 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 February 2025 we publicly announced our intention to offer a bitcoin-rewards credit card which we expect to launch in 2025, and in May 2025 we announced a Bitcoin Gift Card that is set to roll out to national merchant networks across the country over the coming months. We expect to continue to innovate in the bitcoin consumer financial services space over the coming years.

In addition to new products and features, we have committed significant resources towards optimizing our business through design and user experience ("UX") updates, refinement of our systems architecture, scaling our customer support services, expanding our rewards network, and adding strategic partnerships. Through these efforts we have achieved product-level profitability for all core product lines, inclusive of the contra-revenue effect of rewards, and we are well positioned to scale those lines.

One of the foundational value propositions of bitcoin is trust and security. Over the past few years, many “crypto”-adjacent business models failed to live up to those values, prioritizing short-term gains over their fiduciary 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 believe 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.

In 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. As of May 15, 2025, Fold has accumulated more than 1,490 bitcoin in our Investment Treasury, and we plan to continue to accumulate bitcoin over time. We view our bitcoin holdings as a long-term strategic investment and not as a trading asset.

### Recent developments

The Company was originally incorporated in the state of Delaware as Fold, Inc. on August 20, 2019. On July 24, 2024, Fold, Inc. entered into a definitive agreement (the "Merger Agreement") with FTAC Emerald Acquisition Corp. (“FTAC Emerald”), a publicly-traded special purpose acquisition company, providing for a proposed business combination (the "Merger"). The registration statement for the Merger was declared effective by the SEC on January 23, 2025, the Merger was approved by FTAC’s shareholders on February 13, 2025, and the business combination was finalized on February 14, 2025. The combined company now operates under the name Fold Holdings, Inc., and its common stock and warrants trade on the Nasdaq under the ticker symbols “FLD” and “FLDDW,” respectively. The Company is a remote-first company and does not designate a physical headquarters.

In July 2024, we released a new rewards program for ACH bill payments, a feature that we believe currently has limited competition in the financial payments industry. This program provides eligible users the ability to earn up to 1.5% back on their mortgage, rent, or other bill payments. The amount of ACH payments eligible for rewards are tied directly to spending volumes elsewhere in the Fold ecosystem - for example, by spending $1,000 to purchase bitcoin on Fold, a user can earn rewards on up to $1,000 in ACH payments. This feature had been sought after by our existing user base for some time, and we expect it to drive increased volumes across all forms of eligible spend on our platform.

In September 2024, we added support for users from the state of Texas for our bitcoin exchange product, and we added the ability for users to deposit bitcoin into Fold to use as a funding method.

In November 2024, we launched joint accounts, a feature that provides the ability for users to add authorized users to their existing accounts (i.e. add a family member to your Fold Debit Card).

From January 1, 2024, to December 31, 2024 the Company entered into SAFEs with various investors with aggregate proceeds of $72.1 million.

In December 2024, Fold entered into a Securities Purchase Agreement (the “December 2024 Securities Purchase Agreement”) with an institutional investor (the “Investor”), pursuant to which (i) Fold issued to the Investor a Senior Secured Convertible Note in an aggregate principal amount of $20,000,000 (the “December 2024 Initial Investor Note”), and (ii) following the closing of the Merger, Fold (or New Fold, as successor to Fold) may issue to the Investor an additional Senior Secured Convertible Note in an aggregate principal amount of up to $10,000,000 (the “Additional Investor Note” and, together with the December 2024 Initial Investor Note, the “Investor Notes”), subject to the mutual discretion of Fold and the Investor. The Investor Notes will be convertible into shares of New Fold Common Stock at a conversion price of $11.50 per share. The Investor Notes are secured by Fold’s assets as collateral, including a portion of Fold’s proprietary bitcoin, and will mature on February 14, 2028.

In February 2025, we publicly announced a new product line, the Fold Bitcoin Rewards Credit Card. This product is an expansion of our current bitcoin-rewards Fold Debit Card. As with our Fold Debit Card, we have partnered with Visa to launch this product which is expected to launch in 2025. Premium customers will receive unlimited 2% bitcoin rewards, a free metal card, a variety of sign-up bonuses, and all the benefits of our premium membership, Fold+. A recent survey of Fold users indicated nearly 95% currently use credit cards, and over 85% indicated the ability to earn bitcoin instead of traditional cash back, miles, or points is "very important" or "extremely important" to them. Historically one of our most highly requested products, we expect the Fold Credit Card to drive both new user acquisition and deeper engagement within the Fold ecosystem.

In March 2025, Fold entered into a Securities Purchase Agreement (the “March 2025 SPA”) with a related party (the “Investor”), pursuant to which Fold issued to the Investor (i) a Convertible Note in an aggregate principal amount of $46.3 million (the “March 2025 Investor Note”), which is convertible into shares of Common Stock at any time, at the option of the Investor, at a conversion price of $12.50 per share, (ii) warrants exercisable for 925,590 shares of Common Stock with an exercise price of $15.00 per share (the “March 2025 Warrants”, and (iii) an aggregate of 750,000 shares of Common Stock (the “Closing Shares”). The March 2025 Investor Note was funded with 475 bitcoin, net of 25 bitcoin of which was paid to the Investor as prepayment for the first year of interest. On the maturity date, the Company shall transfer to the Investor the balance of any bitcoin not previously released to the Company upon conversion of the March 2025 Investor Note to Common Stock, with a maximum potential repayment of 500 bitcoin if no amounts convert to Common Stock during the life of the note. No cash payments by Fold are contemplated under the Note.

In May 2025, we publicly announced a new product line, the Fold Bitcoin Gift Card. This product will provide customers the ability to purchase USD denominated gift cards through the Fold app, through online gift card distributors, and through national brick-and-mortar merchant locations and redeem those gift cards for bitcoin through Fold. This product is expected to roll out to new distribution channels in phases throughout 2025.

### Looking ahead

Fold has a proven track record of launching products that enhance engagement with our current customers and attract new customers to our platform. In 2025, we intend to build on this success by expanding our existing offerings to further engage our existing users, and we expect to introduce several new products to attract new customers. Here is how we intend to continue our momentum:

#### Product strategy

As highlighted above, we announced two significant new product lines during the first few months of 2025: (1) the Fold Bitcoin Rewards Credit Card, which we expect to launch sometime in 2025; and (2) the Fold Bitcoin Gift Card, which was announced in May and we expect to roll out to new merchant locations throughout the remainder of 2025. These products are collectively expected to 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.

In addition to these new products, we are devoting significant time and resources to our Custody and Trading platform which we expect to continue to be 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. Over the course of 2025 we expect to add support for larger orders via wires, to open our exchange product to non-cardholder customers, and to add users from new states where we have not previously supported access.

The timing of these product and feature releases will impact our ability to meet financial targets for 2025, however, we expect that each of these releases will further enhance our existing market position and drive increased volumes across the platform.

#### Growth Strategy

In 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.

Fold intends to continue to leverage our social media channels and customer referral program to drive maximum 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 2025, with a budgeted allocation of approximately $3.0 million for traditional marketing and advertising strategies. This contrasts with our full year 2024 spend of $0.3 million.

While we expect our existing products to benefit from this growth strategy, we also expect the addition of new products like the Fold Credit Card and the Fold Bitcoin Gift Card to create synergies across product lines and attract new users who are looking for a more comprehensive suite of financial products.

### Bitcoin treasury strategy

As of March 31, 2025, we held approximately 1,579 BTC in our Bitcoin Treasury which had a market value of $130.3 million based on the market price of one bitcoin on the Coinbase exchange at 11:59:59 p.m. UTC time on March 31, 2025, which was approximately $82.5 thousand.

Fold’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 with the intention to hold as a long term investment (“Investment Treasury”). The following is a summary of Fold’s bitcoin held in treasury as of the dates shown:

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Rewards treasury (USD) | $7,365,544 | $8,569,651 |
| Investment treasury (USD) | 122,957,753 | 93,568,700 |
| Total bitcoin treasury (USD) | $130,323,297 | $102,138,351 |

29

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Rewards treasury (BTC) | 89 | 92 |
| Investment treasury (BTC) | 1,490 | 1,002 |
| Total bitcoin treasury (BTC) | 1,579 | 1,094 |

We believe existing macro conditions to be favorable towards adding additional bitcoin to our balance sheet at current market prices and we will continue to consider additional bitcoin accumulation opportunities over the near term. We have not set any specific target for the amount of bitcoin we seek to hold. We plan to fund further bitcoin acquisitions primarily through issuances of common stock and a variety of financial instruments, including debt, convertible notes, preferred stock, or other structures as may be considered appropriate for our business.

Our Investment Treasury strategy also contemplates that we may (i) periodically sell bitcoin for general corporate purposes, (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. As of March 31, 2025, 800 bitcoin are restricted from use in operations under collateral agreements related to our convertible notes.

### Key operating metrics

We 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.

### Accounts

- Active Accounts represent current Fold accounts that have not been deactivated by Fold or the user; and
- Verified Accounts represent users who have gone through Know Your Customer (“KYC”) verification to participate in our banking and exchange products.

During the three months ended March 31, 2025, we added:

- More than 17,000 new Active Accounts, bringing total Active Accounts to more than 609,000; and
- More than 5,000 Verified Accounts, bringing total Verified Accounts to more than 76,000.

### Transaction volumes

Transaction Volume is inclusive of deposits, spend, and withdrawals across our platform and are inclusive of both fiat ("USD") and bitcoin ("BTC") transaction volumes.

From inception through March 31, 2025, Fold processed approximately $2.8 billion in Transaction Volume through our platform. For the three months ended March 31, 2025, we averaged more than $84 million in monthly Transaction Volume.

### Key components of results of operations

### Revenue

#### Banking and payments revenue

Fold 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:

- **Fold+ 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.
- **Interchange:** Every 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.

- **Transaction 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.
- **Merchant 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.

The Company notes that the above categories of revenue are combined into Banking and Payments given their interconnected nature. For example, for the three months ended March 31, 2025, 97% of merchant offers were purchased with a Fold Debit Card. 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.

#### Custody and trading revenue

Fold partners with BitGo Trust Company, Inc. (“BitGo”) and Fortress Trust LLC (“Fortress”) (collectively “Exchange Providers”) 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 Providers, 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%).

#### Other revenue

We 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.

#### Revenue Rewards

Users can earn bitcoin rewards by engaging in qualifying revenue-generating activities (spending money on Fold’s products, “Revenue Rewards”). Revenue Rewards are defined as those that are earned in direct relation to a qualifying spend transaction such as spending on the Fold Debit Card, purchasing bitcoin, purchasing merchant offers, etc. Marketing Rewards are defined as those 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.

Revenue 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 (ex. we reduce interchange revenue by the amount of rewards earned by customers when completing qualifying spend transactions).

All 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 Card are subject to a 30-day settlement period before becoming available for redemption, a policy that is in place to prevent fraudulent activities.

The Company accrues both Revenue Rewards and Marketing Rewards, (collectively, the "Rewards") within ‘Customer rewards liability’ in our accompanying balance sheets at the time the Reward is earned, with the corresponding impact on our statements of operations dependent on the type of Reward. 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 Reward is redeemed by the user and delivered to the user's bitcoin wallet.

Per 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.

#### Sales returns and allowances

All 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.

### Operating Expenses

Operating 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.

#### Banking and payment costs

Banking 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.

#### Custody and trading costs

Custody and trading costs consist primarily of licensing, servicing, and custodial fees related to our bitcoin exchange product. Custody and trading costs scale in proportion to our volumes.

#### Compensation and benefits expenses

Compensation and benefits expenses primarily consist of salaries and wages, employee insurance expenses, share-based compensation, and other payroll benefits related to full time employees.

#### Marketing expenses

A significant portion of marketing expense is related to rewards earned for the purposes of marketing, growth, or retention under the Fold Rewards Program (the "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.

Per 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.

The other portion of marketing expense primarily relates to advertising and other promotional expenses.

#### Professional fees

Professional fees consist primarily of expenses related to fees paid for services, including legal, tax, accounting, and audit services.

#### Gain (loss) on customer rewards liability

Gain (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.

#### Gain (loss) on digital assets - rewards treasury

Gain (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.

#### Other selling, general and administrative expenses

Other 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.

### Other income (expense)

#### Gain (loss) on digital assets - investment treasury

Gain (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.

#### Change in fair value of SAFEs

Change in fair value of SAFEs results from unrealized gain or loss due to the change in fair value of SAFEs. For accounting purposes, outstanding SAFEs are classified as liabilities and the change in their fair value is reflected in the statement of operations. However, Fold's SAFEs were structured to be settled via the delivery of common and/or preferred shares upon execution of an equity financing or liquidity event. On February 14, 2025, upon finalization of the Merger with FTAC Emerald, all SAFEs held by the Company converted into common shares and we will not have future gains or losses related to SAFE fair value remeasurements.

#### Change in fair value of convertible note

Change in fair value of convertible note results from the fair value gain or loss related to the March 2025 Investor Note.

#### Convertible note issuance costs and fees

Convertible note issuance costs and fees relates to the March 2025 SPA including the March 2025 Warrants and Closing Shares.

#### Interest expense

Interest expense primarily consists of amortization of the convertible note discount and issuance costs, as well as interest expense on the convertible note.

#### Other income

Other income primarily consists of interest income earned on cash and cash equivalents.

### Income tax expense

The 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.

### Results of operations for the three months ended March 31, 2025 and 2024

### Results of operations

|  | Three Months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | --- |
| **Revenues, net** | **$7,087,837** | **$4,931,211** | **$2,156,626** | **44%** |
| Operating expenses |  |  |  |  |
| Banking and payment costs | 6,758,924 | 4,626,748 | 2,132,176 | 46% |
| Custody and trading costs | 45,785 | 21,288 | 24,497 | 115% |
| Compensation and benefits | 6,457,940 | 757,365 | 5,700,575 | NM(i) |
| Marketing expenses | 399,798 | 42,467 | 357,331 | NM(i) |
| Professional fees | 1,788,505 | 36,668 | 1,751,837 | NM(i) |
| Amortization expense | 91,071 | 57,353 | 33,718 | 59% |
| (Gain) Loss on customer rewards liability | (1,100,857) | 3,423,045 | (4,523,902) | -132% |
| Loss (gain) on digital assets - rewards treasury | 1,010,586 | (3,491,889) | 4,502,475 | -129% |
| Other selling, general and administrative expenses | 1,136,455 | 312,894 | 823,561 | NM(i) |
| Total operating expenses | 16,588,207 | 5,785,939 | 10,802,268 | 187% |
| **Operating loss** | (9,500,370) | (854,728) | (8,645,642) | NM(i) |
| Other income (expense) |  |  |  |  |
| Loss on digital assets - investment treasury | (15,617,152) | — | (15,617,152) | NM(i) |
| Change in fair value of SAFEs | (6,503,113) | (95,064) | (6,408,049) | NM(i) |
| Change in fair value of convertible note | (6,534,143) | — | (6,534,143) | NM(i) |
| Convertible note issuance costs and fees | (9,569,109) | — | (9,569,109) | NM(i) |
| Interest expense | (1,271,638) | — | (1,271,638) | NM(i) |
| Other income | 120,303 | 12,855 | 107,448 | NM(i) |
| **Other income (expense), net** | (39,374,852) | (82,209) | (39,292,643) | NM(i) |
| **Net loss before income taxes** | (48,875,222) | (936,937) | (47,938,285) | NM(i) |
| Income tax expense | 3,978 | 8,109 | (4,131) | -51% |
| **Net loss** | $(48,879,200) | $(945,046) | $(47,934,154) | NM(i) |

(i) Not meaningful ("NM")

### Revenue

|  | Three Months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | --- |
| Banking and payment revenues | $6,921,625 | $4,920,666 | $2,000,959 | 41% |
| Custody and trading revenues | 151,855 | 11,933 | 139,922 | NM(i) |
| Other revenues | 26,035 | 7 | 26,028 | NM(i) |
| Less: Sales returns and allowances | (11,678) | (1,395) | (10,283) | NM(i) |
| **Revenues, net** | **$7,087,837** | **$4,931,211** | **$2,156,626** | **44%** |

#### (i) Not meaningful ("NM")

Total net revenue for the three months ended March 31, 2025 increased by $2.2 million, or 44%, compared to the three months ended March 31, 2024. Those amounts are net of reductions in revenue related to Revenue Rewards totaling $0.5 million and $0.5 million for the three months ended March 31, 2025 and 2024, respectively.

#### Banking and payments

The primary driver behind increased banking and payments revenues related to merchant offers within our banking and payments business. Net revenues from merchant offers increased 48% from $4.4 million for the three months ended March 31, 2024 to $6.5 million for the three months ended March 31, 2025. This increase was driven primarily due to our intentional focus on marketing our merchant offers product during Q1 2025 via internal and external marketing channels.

Excluding merchant offers, our gross banking and payments revenues for the three months ended March 31, 2025 and three months ended March 31, 2024 were $0.5 million, respectively.

#### Custody and trading

Net revenues from custody and trading increased from a nominal amount for the three months ended March 31, 2024 to $0.2 million for the three months ended March 31, 2025. While still a small part of our overall revenue in 2025, we believe that custody and trading revenues will be an important growth driver for both volumes and revenues going forward. As highlighted above, we are devoting significant time and resources to our Custody and Trading platform which we expect to continue to be 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. Over the course of 2025 we expect to add support for larger orders via wires, to open our exchange product to non-Fold cardholders, and to add users from new states where we have not previously supported access.

Revenues from our newest product, the Fold Bitcoin Gift Card, will also be included within this revenue line going forward.

### Operating expenses

#### Banking and payments costs

Banking 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 increased in relation to our increased merchant offer volumes as noted above. Costs of sales from merchant offers increased 46% from $4.4 million for the three months ended March 31, 2024 to $6.4 million for the three months ended March 31, 2025.

Excluding merchant offers, our banking and payments costs increased to $0.4 million for the three months ended March 31, 2025 compared to $0.2 million for the three months ended March 31, 2024. This increase is driven by increased card fulfillment fees and KYC costs related to new cardholder sign-ups of $0.1 million during the three months ended March 31, 2025.

#### Custody and trading costs

Custody and trading costs consist primarily of licensing, servicing, and custodial fees related to our bitcoin exchange product. Custody and trading costs scale in proportion to our volumes. While most of our custody and trading costs scale in direct proportion to our volumes and revenues, some of our costs, such as monthly platform fees, are fixed and do not scale with volume. Due to this cost structure, our margins on custody and trading are expected to increase over time with increased volumes.

#### Compensation and benefits

During the three months ended March 31, 2025 we added 7 full time employees to support our continued growth and compliance obligations as a public company. Payroll expenses increased in correlation with our increased employee headcount, which was 35 employees as of March 31, 2025 and 22 employees as of March 31, 2024. We expect to hire additional staff in strategic roles to support the launches of our new product lines and continued growth throughout 2025.

Compensation and benefits expense for the three months ended March 31, 2025 and 2024 also included non-cash share-based compensation expense of $5.2 million and $0.0 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 as of December 31, 2024 that was immediately recognized due to the performance condition being satisfied on February 14, 2025 as a result of the Merger with FTAC Emerald. As the performance condition was not met as of March 31, 2024, no share-based compensation was recognized for the three months ended March 31, 2024. There was $5.2 million of unrecognized shared-based compensation expense related to unvested awards as of March 31, 2025.

#### Marketing expenses

Marketing expenses were under $0.4 million for the three months ended March 31, 2025 compared to nominal amounts for the three months ended 2024, respectively. As noted above, to further accelerate growth we plan to increase investments in paid marketing and affiliate opportunities in 2025, with a budgeted allocation of approximately $3.0 million for traditional marketing and advertising strategies.

#### Professional fees

Professional fees increased to $1.8 million for the three months ended March 31, 2025, compared to nominal amounts for the three months ended March 31, 2024. This increase was driven primarily by fees paid to our legal counsel, independent auditors, and third-party consultants during 2025 in support of our Merger with FTAC Emerald.

#### Gain (loss) on customer reward liability and digital assets - rewards treasury

Gain (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 $42.3 thousand, $71.3 thousand, $93.4 thousand and $82.5 thousand as of the three months ended December 31, 2023, March 31, 2024, December 31, 2024, and March 31, 2025, 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, 2025 and 2024.

#### Other income (expense)

Change 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 statement of operations. However, Fold's SAFEs were structured to be settled via the delivery of common and/or preferred shares upon execution of an equity financing or liquidity event. On February 14, 2025, upon finalization of the Merger Agreement with FTAC Emerald, all SAFE notes held by the Company converted into common shares.

Gain (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 depreciated to approximately $82.5 thousand as of the three months ended March 31, 2025. The price change is the primary driver of losses for digital assets – investment treasury for the three months ended March 31, 2025. There was no gain (loss) on digital asset - investment treasury for the three months ended March 31, 2024.

Change in fair value of convertible note results from the fair value gain or loss related to the March 2025 Investor Note. 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. There were no changes in fair value of convertible note for the three months ended March 31, 2024.

Convertible 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. There were no issuance costs or fees for the three months ended March 31, 2024.

Interest expense relates to amortization of the December 2024 Investor Note discount and issuance costs, as well as interest expense on the convertible notes. Of the total interest expense, $1.1 million relates to the December 2024 Investor Note and $0.1 million relates to the March 2025 Investor Note.

### Non-GAAP Financial Measures

### Adjusted EBITDA

In 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.

The 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 provides 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.

The following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net loss:

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| **Net loss** | $(48,879,200) | $(945,046) |
| Add: |  |  |
| Interest expense | 1,271,638 | - |
| Income tax expense | 3,978 | 8,109 |
| Amortization expense | 91,071 | 57,353 |
| Share-based compensation expense | 5,170,275 | - |
| (Gain) loss on customer rewards liability | (1,100,857) | 3,423,045 |
| Loss (gain) on digital assets - rewards treasury | 1,010,586 | (3,491,889) |
| Loss on digital assets - investment treasury | 15,617,152 | - |
| Change in fair value of SAFEs | 6,503,113 | 95,064 |
| Change in fair value of convertible note | 6,534,143 | - |
| Convertible note issuance costs and fees | 9,569,109 | - |
| **Adjusted EBITDA (non-GAAP)** | $(4,208,992) | $(853,364) |

Adjusted EBITDA (non-GAAP) for the three months ended March 31, 2025 decreased by $3.4 million, or 393% compared to the three months ended March 31, 2024. The principal driver of decreased Adjusted EBITDA (non-GAAP) relates to (i) increased professional fees of $1.8 million; (ii) increased compensation and benefits expense excluding share-based compensation of $0.5 million; (iii) increased marketing expenses of $0.4 million; and (iv) increased insurance expenses of $0.3 million.

Increased professional fees related directly to legal, advisory, and audit services incurred as part of our transition to becoming a public company. Payroll expenses increased in correlation with our increased employee headcount, which was 35 employees as of March 31, 2025 and 22 employees as of March 31, 2024. Marketing expenses increased in accordance with our planned growth strategy for 2025, which includes budgeted expenditures for paid marketing channels. Insurance expenses related to increased coverage premiums as result of our transition to becoming a public company.

### Adjusted EBITDA (Loss) Per Share

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Adjusted EBITDA (Loss) | $(4,208,992) | $(853,364) |
| Weighted-average shares used to compute basic and diluted net loss per share | 25,436,398 | 5,836,882 |
| **Adjusted EBITDA (Loss) per share attributable to common stockholders:** |  |  |
| Basic and diluted | $(0.17) | $(0.15) |

### Financial condition

### Liquidity and Capital Resources

As of March 31, 2025, the Company had cash and cash equivalents of $11.7 million and positive working capital of $13.3 million. The Company has a history of net operating losses, including net operating losses of $9.5 million for the three months ended March 31,

2025\. The Company has an accumulated deficit of $150.2 million. Of that amount, $98.0 million relates to fair value adjustments on the Company's SAFE notes, $16.6 million relates to fair value adjustments on the Company's digital assets, and $6.5 million relates to fair value adjustments on convertible debt instruments.

As of March 31, 2025, the Company held 1,490 bitcoin in our Investment Treasury, valued at $123.0 million. Of that amount, 800 bitcoin, valued at $66.0 million, were restricted from use as operating capital and served as collateral for our convertible notes. Our Investment Treasury is considered a long-term investment and we do not believe we will need to sell or engage in other transactions with respect to any of our Investment Treasury within the next twelve months to meet our working capital requirements, although we may from time to time sell or engage in other transactions with respect to our Investment Treasury as part of treasury management operations.

As of March 31, 2025, we held 89 bitcoin in our Rewards Treasury, valued at $7.4 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.

As of March 31, 2025, the Company had debt principal due of $66.3 million in the form of two convertible notes. The December 2024 Senior Secured Investor Note has a principal due of $20.0 million and is convertible into common shares at a conversion price of $11.50 per share. The note is secured by Fold’s assets as collateral, including 300 of Fold’s proprietary bitcoin, and will mature three years after the closing of the Merger. The March 2025 Investor Note has a principal due of $46.3 million and is convertible into common shares at a price of $12.50 per share. The Note is secured by Fold’s assets as collateral, including 500 of Fold’s proprietary bitcoin, and will mature five years from the date the note was issued. On the maturity date, the Company shall transfer to the Investor the balance of any bitcoin not previously released to the Company upon conversion of the March 2025 Investor Note to Common Stock, with a maximum potential repayment of 500 bitcoin if no amounts convert to Common Stock during the life of the note. No cash payments by Fold are contemplated under the Note.

Management expects that the Company’s existing cash and cash equivalents, accounts receivable, and digital assets received through March 31, 2025 will be sufficient to enable the Company to fund its anticipated level of operations through one year from the date these financial statements are available to be issued.

We 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.

### For the three months ended March 31, 2025 and 2024

The following table summarizes our cash flow activities:

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(4,954,200) | $(354,231) |
| Net cash used in investing activities | (1,829,194) | (612,601) |
| Net cash provided by financing activities | 152,587 | 500,000 |
| Net increase (decreased) in cash | $(6,630,807) | $(466,832) |

### Cash flows from operating activities

For the three months ended March 31, 2025, cash used in operating activities was $5.0 million compared to $0.4 million for the three months ended March 31, 2025. This increase was driven primarily due to (i) increased professional fees of $1.8 million; (ii) increased compensation and benefits expense excluding share-based compensation of $0.5 million; (iii) increased marketing expenses of $0.4 million; and (iv) increased insurance expenses of $0.3 million.

Increased professional fees related directly to legal, advisory, and audit services incurred as part of our transition to becoming a public company. Payroll expenses increased in correlation with our increased employee headcount, which was 35 employees as of March 31, 2025 and 22 employees as of March 31, 2024. Marketing expenses increased in accordance with our planned growth strategy for 2025, which includes budgeted expenditures for paid marketing channels. Insurance expenses related to increased coverage premiums as result of our transition to becoming a public company.

### Cash flows from investing activities

Cash flows used in investing activities increased from March 31, 2024 to March 31, 2025 by $1.2 million, primarily due to increased volume of purchases of bitcoin for our Investment Treasury.

### Cash flows from financing activities

For the three months ended March 31, 2025 and 2024, cash provided by financing activities was $0.2 million and $0.5 million, respectively. For the three months ended March 31, 2025 and 2024, we raised $0.0 million and $0.5 from SAFE note financings, respectively. 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.

### Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2025. 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.

### Critical Accounting Estimates

Our 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 U.S. Securities and Exchange Commission (SEC), a "critical accounting estimate" is defined as an estimate that meets two criteria:

**1. Material 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.

**2. Judgment 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.

#### Simple agreements for future equity ("SAFEs")

The Company has issued certain SAFEs, none of which remained outstanding as of March 31, 2025, that grant investors rights to participate in a future equity financing. The number of shares deliverable upon settlement is determined based on the market price of the shares at the settlement date. The Company’s SAFEs are recorded as a liability in the accompanying balance sheets and the Company records subsequent remeasurements in changes in fair value of SAFEs in the statements of operations. Issuance costs related to the SAFEs are expensed in the period incurred.

#### Convertible notes and warrants

The Company has accounted for the December 2024 Investor Note and the related Investor Warrants issued using the relative fair value allocation method on the date of issuance. The estimated fair values of the conversion option under the December 2024 Initial Investor Note and Investor Warrants were calculated under a Black-Scholes model utilizing the enterprise valuation of Fold's common shares as of December 31, 2024.

The fair value of the December 2024 Investor Note included the fair value of the conversion option as well as the discounted future contractually obligated cash flows under scenarios in which the Company achieved or did not achieve a public offering.

The estimated fair value of the March 2025 Investor Note was calculated under a Monte Carlo model as of March 31, 2025. The March 2025 Warrants were calculated under a Black-Scholes model utilizing Fold's stock price as of the issuance date.

#### Stock-based compensation expense

Each of the granted RSU's in historical periods required both service-based and performance-based vesting criteria, including the occurrence of a specified liquidity event in order to vest. The liquidity event requirements were met in conjunction with the Merger, and as such the Company recognized stock-based compensation expense associated with the outstanding RSU grants vested on that date. The Fold Board of Directors relied on independent third-party valuations of Fold Common Stock in determining the fair value of the RSU's on each grant date. Between grant dates, Fold evaluated whether there were any changes to forecasts or events that would impact the value of its common stock and obtained updated third-party valuations as necessary.

The valuations utilized the guideline public company method within the market approach whereby the valuation leveraged guidance company market multiples and ratios such as revenue, earnings before interest and taxes, earnings before interest, taxes, depreciation, and amortization, and net income and/or tangible book value to apply to Fold's corresponding financial data to compute the implied total value of Fold equity. Guideline companies were selected based on business description, financial size and performance, and stock liquidity. Weighting was applied to the identified guideline public companies to obtain multiples that most appropriately reflected Fold's current performance and financial metrics. The risk-free rate used was the constant maturity U.S. Treasury rate corresponding to the applicable time to liquidity.

### Recent accounting pronouncements

See “Recent accounting pronouncements” described in Note 2, *Summary of Significant Accounting Policies* within Notes to the Financial Statements.

## Market risk

As filed, 2,341 characters.

### Macroeconomic trends impacting our market

The following macroeconomic factors as they relate to bitcoin specifically impact our business:

- *Awareness*: The perception of bitcoin as a legitimate and secure asset class and technology by the general public plays a crucial role. The pace and effectiveness of continued education and awareness will impact adoption rates.
- *Regulation*: The global regulatory landscape for bitcoin, including clarity around legal status, accounting and tax treatment, and other compliance requirements will significantly impact its growth. Favorable regulations can encourage adoption, while restrictive measures can hinder it.
- *Institutional Adoption*: Increased participation by institutional investors, including hedge funds, mutual funds, corporations, and nation states can drive market confidence and liquidity, supporting continued growth.
- *Political environment*: Bitcoin has entered the political conversation in the United States and abroad. As a global leader in innovation and new technologies, we anticipate the United States political environment will become increasingly favorable for our industry.
- *Monetary Policy*: Central bank monetary policies, especially those related to interest rates and monetary supply, can influence bitcoin adoption. Low-interest rates and expansive monetary policies that lead to currency debasement often lead to a search for alternative investments like bitcoin.
- *Technological innovation*: Advances in blockchain technology, improvements in scalability (e.g., Lightning Network), and enhanced security protocols can increase bitcoin adoption and integration into various financial systems.

### Bitcoin market price risk

Some of our assets and liabilities are denominated in bitcoin, including our bitcoin Investment Treasury, our customer rewards liability, and the March 2025 Investor Note. These assets and liabilities are remeasured to fair value at the end of each reporting period using observed bitcoin prices from active exchanges. Fair value adjustments are recorded in the statements of operations and could result in volatility in our financial results in future periods. Negative swings in the market price of bitcoin could have a material impact on our earnings and on the carrying value of our bitcoin-denominated assets and liabilities.

## Controls and procedures

As filed, 3,714 characters.

#### Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

#### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as a result of the material weaknesses in our internal control over financial reporting described below, the design and operation of our disclosure controls and procedures were not effective as of March 31, 2025.

#### Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses in our internal control over financial reporting exist as of March 31, 2025:

- We did not formally document a top-down risk assessment related to the design, implementation, and operating effectiveness of our business cycle related to internal control over financial reporting.
- We did not design or operate effective controls surrounding our financial reporting to ensure accurate disclosures are filed with the SEC.

We have begun the process of, and are focused on, designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate these material weaknesses. Our efforts include several actions:

- We have engaged consultants to provide additional depth and breadth in our technical accounting and financial reporting capabilities.
- We have engaged consultants to assist with the financial statement closing process and segregating duties among accounting personnel to enable adequate review controls.

The actions that we are taking are subject to ongoing senior management review, as well as oversight of the audit committee of our Board. We also may conclude that additional measures may be required to remediate the material weaknesses or determine to modify the remediation plans described above. We will not be able to conclude that we have remediated the material weaknesses until the applicable controls are fully implemented and operate for a sufficient period of time and management has concluded, through formal testing, that these controls are operating effectively. We will continue to monitor the design and effectiveness of these and other processes, procedures, and controls and make any further changes management deems appropriate.

#### Changes in Internal Control over Financial Reporting

Other than the ongoing remediation efforts described above, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 207 characters.

There are numerous factors that affect our business and operating results, many of which are beyond our control. There have been no material changes to the risk factors previously described in our 2024 10-K.

Filed May 15, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-072818. Last ingested by Listed: Nov 2, 2026, 16:47 ET. No prices; not investment advice.