NOTE 3—ASSET ACQUISITION

Merger with Nakamoto Holdings

On May 12, 2025, the Company entered into the Merger Agreement, by and among the Company, the Company’s newly formed, wholly-owned subsidiary Kindly Holdco Corp., a Delaware corporation (“Merger Sub”), Nakamoto Holdings Inc., a Delaware corporation, and Wade Rivers, LLC, a Wyoming limited liability company.

On August 14, 2025 (the “Closing Date”), the Company effected a reverse triangular merger with Nakamoto Holdings, whereby Merger Sub merged with and into Nakamoto Holdings, with Nakamoto Holdings surviving as a wholly owned subsidiary of the Company (the “Surviving Corporation”), in accordance with the Merger Agreement (such transaction, the “Merger”). In connection with the Closing, the Company acquired all of the issued and outstanding securities of Nakamoto Holdings, a privately held Bitcoin treasury company.

Upon consummation of the Merger on the terms and subject to the conditions set forth in the Merger Agreement, the holders of Nakamoto Holdings Class A and Class B common stock (other than shares held in treasury or by dissenting stockholders) received an aggregate 22.3 million shares of Common Stock. Shares of Merger Sub’s common stock were converted into shares of common stock of the Surviving Corporation. No fractional shares were issued.

Concurrently with the execution of the Merger Agreement, the Company entered into subscription agreements (collectively, the “Initial Subscription Agreements”) with certain accredited investors (the “Initial Subscribers”) in an aggregate amount of approximately $512 million, pursuant to which the Company agreed to issue, and the Initial Subscribers agreed to purchase, 322,979,583 shares of Common Stock at a purchase price of $1.12 per share and/or 133,800,773 pre-funded warrants to purchase shares of Common Stock (the “Pre-Funded Warrants”), in a private placement (the “Initial PIPE Financing”). Additionally, the Company entered into a Secured Convertible Debenture Purchase Agreement (the “Debenture Purchase Agreement”) with YA II PN, Ltd., an investment fund managed by Yorkville Advisors (the “Convert Investor”), under which the Company agreed to sell and issue to the Convert Investor a secured convertible debenture (the “Convertible Debenture”) in aggregate principal amount of $200.0 million (the “Principal Amount”) in exchange for cash or Bitcoin equal to 96.0% of the Principal Amount (the “Debt Financing”).

Additionally, on June 19, 2025, the Company subsequently entered into additional subscription agreements, (the “Additional Subscription Agreements” and, together with the Initial Subscription Agreements, the “Subscription Agreements”), with certain new and/or existing investors (the “Additional Subscribers” and, together with the Initial Subscribers, the “Subscribers”) in an aggregate amount of approximately $28 million. Under these Additional Subscription Agreements, the Company agreed to issue and sell to the Additional Subscribers 5,682,586 shares of Common Stock at a purchase price of $5.00 per share in a private placement on substantially similar terms as the Initial Subscription Agreements (the “Additional PIPE Financing” and, together with the Initial PIPE Financing, the “PIPE Financings”). The Company received net proceeds after issuance costs of approximately $518 million from the PIPE Financings.

The Company also issued 14,530,063 shares of Common Stock as compensation to certain advisors in connection with the PIPE Financings.

Accounting for the Merger

Pursuant to the Merger Agreement, the stockholders of Nakamoto Holdings received 22,321,143 shares of Common Stock as consideration for the Merger. Such shares of Common Stock were issued on August 14, 2025, based on the fair value of $1.12 per share, resulting in total consideration of $24,999,679. The stock price of $1.12 per share was determined based on the price of the Company’s Common Stock in the PIPE Financings that closed on the same date, in which the Company issued 346,192,232 shares of Common Stock. The Company concluded that the $1.12 per share price used in the PIPE Financings more accurately represented the fair value of the Common Stock on the acquisition date than the closing market price of $15.02 per share reported on the Nasdaq Stock Market.

In accounting for the transaction, the Company concluded that (i) Nakamoto Holdings was a variable interest entity at the acquisition date (“VIE”) under ASC 810, “Consolidation”, as its pre-Merger equity capitalization was (by design) not sufficient to finance its activities without additional subordinated financial support, and (ii) Nakamoto was the primary beneficiary. As such, Nakamoto recognized a $59,753,811 loss on the acquisition measured as the difference between the fair value of the consideration transferred and the net amount of Nakamoto Holdings’ identifiable assets and liabilities measured in accordance with ASC 805, which was primarily comprised of the put option liability.

Loss on Acquisition Calculation

As discussed above, the Company recognized a loss of $59,753,811 on the acquisition of Nakamoto Holdings in accordance with ASC 810-10-30, calculated as the difference between the sum of the fair value of the consideration paid and the net amount of the VIE’s identifiable assets and liabilities recognized and measured in accordance with ASC 805.

The recognized loss on the acquisition as of August 14, 2025 was calculated as follows:

 SCHEDULE OF PRELIMINARY PRICE ALLOCATION

Call Option Asset – BTC Marketing and Sales Agreement

In connection with the Merger, the Company assumed a Marketing and Sales Agreement from Nakamoto Holdings (the “BTC Media Agreement”) with BTC Media LLC (“BTC Media”). The BTC Media Agreement provides for certain marketing and promotional rights and includes put and call options (collectively, the “Options”) that permit either the Company to acquire, or BTC Media to sell, an equity interest in BTC Media. The call/put option had an exercise period of 36 months beginning with the date of the merger.

If exercised, the Options would be settled through the issuance of shares of Common Stock, with the number of shares determined based on BTC Inc’s enterprise valuation (calculated as BTC Media’s EBITDA multiplied by an agreed upon multiple) divided by the PIPE Financing price of $1.12 (“the call consideration”).

The Company analyzed the put and call options in the BTC Media Agreement under the relevant accounting guidance, including ASC 480, “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives and Hedging”.

Based on that analysis, the Company concluded that the put and call options should be considered a non-derivative asset or liability in accordance with ASC 815-40 and should therefore be re-measured to fair value at the end of each reporting period. As of the date the transaction, the Company concluded that the call/put option was a liability with a fair value of $27,314,000. Further, upon re-measurement of the call/put option as of December 31, 2025, the Company determined that the fair value of the call/put option resulted in a $199,060,000 call option asset on the consolidated balance sheets. The $226,374,000 change in fair value was recognized as a gain in the consolidated statement of operations under Non-operating income (expense) during the year ended December 31, 2025 and was primarily the result of the decrease in fair value the Company’s Common Stock as of December 31, 2025 as compared to the fair value as of August 14, 2025.

As discussed in Note 14, the Company considers BTC Inc to be a related party as it has significant influence over that entity. To that extent, the Company determined that the call option should not be considered in-substance Common Stock (resulting in recognition using the equity method investment) as the call option does not have risks and rewards that are substantially similar to an investment in that entity’s common stock.