NOTE 9—DEBT

Promissory Note

On May 12, 2025, the Company entered into a non-interest bearing promissory note in favor of BTC Inc with a principal amount up to $1,750,000 (the “BTC Note”). Pursuant to the terms of the BTC Note, BTC Inc could make advances to the Company in an aggregate principal amount not to exceed $1,750,000, with individual advances capped at $350,000 in any calendar month. The BTC Note matured on the Closing Date. The Company did not draw any proceeds against the BTC Note and the BTC Note was terminated on August 14, 2025.

Convertible Debenture

On May 12, 2025, and in conjunction with the Merger with Nakamoto Holdings, see Note 3, the Company entered into the Debenture Purchase Agreement with the Convert Investor, under which, the Company agreed to sell and issue to the Convert Investor the Convertible Debenture in the aggregate principal amount of $200 million in exchange for cash or Bitcoin equal to 96.0% of the Principal Amount (the “Debt Financing”). The aggregate financing costs included, resulted in a debt discount of $8,150,000.

The Convertible Debenture had an interest rate of 0.0% per annum for the first two years, and 6.0% per annum for the third year and was payable on the third-year anniversary of the issuance date or earlier redemption. The interest rate would increase to a rate of 18.0% per annum upon the occurrence and during the continuance of an event of default. The Convertible Debenture was secured by Bitcoin having a value of not less than $400 million within 10 business days following the Merger. The Bitcoin serving as collateral for the obligations under the Convertible Debenture was at all times to be held by a special purpose “digital asset subsidiary” that fully guaranteed the obligations of the Company under the Convertible Debenture.

The Convert Investor could convert all or any portion of the principal amount of the Convertible Debenture, together with any accrued and unpaid interest, at an initial conversion rate of $2.80, which was subject to a one-time down round only reset. The Convert Investor was not permitted to convert the Convertible Debenture to the extent that the shares of Common Stock issuable upon conversion of the Convertible Debenture would exceed 19.99% of the Company’s outstanding shares immediately prior to executing the Debenture Purchase Agreement without prior stockholder approval.

The Company had the right to redeem the Convertible Debenture if (i) the volume-weighted average price of the Common Stock is less than the Fixed Price (as defined in the Convertible Debenture) and it provides the Convert Investor at least ten (10) trading days’ notice, or (ii) the volume-weighted average price of the Common Stock is equal to or greater than $4.50 and it provides the Convert Investor at least thirty (30) trading days’ notice, and in each case, at a redemption price equal to 101.5% of the principal amount redeemed plus accrued and unpaid interest thereon if redeemed within the first twelve (12) months, 103.0% if redeemed between twelve (12) and twenty-four (24) months, and 105.0% if redeemed between twenty-four (24) and third-six (36) months (the “Payment Premium”). Following such notice and prior to the respective redemption, the Convert Investor would have the right to elect to convert all or any portion of the outstanding principal plus all accrued and unpaid interest, plus the Payment Premium.

The Company evaluated the Convertible Debenture for potential embedded derivatives under ASC 815, “Derivatives and Hedging”. The Company concluded that the only potential embedded features were (i) the conversion option and (ii) the Company’s optional redemption provisions. After concluding that the embedded features satisfied the separation criteria in ASC 815-15-25, the Company then assessed the embedded options to determine whether they satisfied the scope exception outlined in ASC 815-40. To that extent, the Company concluded that the embedded features were both indexed to their stock and could be classified in stockholders’ equity. As such, the embedded options were not bifurcated and accounted for separately.

In addition, the Company issued 3,000,000 shares of Common Stock (the “Convert Fee Shares”) to the Convert Investor as payment for the Convert Investor’s fees for entering into that certain Debenture Purchase Agreement. The Convert Fee Shares were issued with a fair value of $1.12 per share, resulting in a debt discount on a relative fair value basis of $3,304,485. The Company recorded $188,545,515 of Convertible Debenture upon issuance, net of debt discount.

The Company executed its option of redemption, effective on September 29, 2025. As of December 31, 2025, the Convertible Debenture was fully repaid and there was no outstanding principal or accrued interest related to the Convertible Debenture.

Naka SPV2 Credit Facility

On September 30, 2025, the Company, through its subsidiary Naka SPV2, LLC, a Delaware limited liability company (“Naka”), entered into a Credit Facility agreement with Two Prime Lending Limited, a limited company existing under the laws of the British Virgin Islands, (the “Naka Credit Facility”), for an aggregate principal amount of $203,017,500. The Naka Credit Facility has an interest rate of 8.5% per annum and matures on September 30, 2026. The Company used proceeds of the Naka Credit Facility to satisfy its obligations in full under its outstanding Convertible Debenture.

Management deemed, under the guidance of ASC 470-50, “Debt-Modifications and Extinguishments”, that the satisfaction of the Convertible Debenture with the funds from the Naka Credit Facility qualified for debt extinguishment accounting. As a result, the Company recorded debt restructuring costs of $13,469,182 in Non-operating income (expense) on the consolidated statements of operations for the year ended December 31, 2025. The outstanding amount under the Naka Credit Facility was reduced to $0 with proceeds from a loan entered into on October 6, 2025 (see Loan Agreement below). The Naka Credit Facility is an uncommitted guidance line of credit and will remain open and available to Naka for future borrowings through September 30, 2026.

As of the date of this filing, the Naka Credit Facility remains open and has no principal drawn against it.

Antalpha Loan Agreement

On October 6, 2025, Naka entered into a Master Loan Agreement with Antalpha Digital Pte. Ltd. a private company organized under the laws of Singapore (“Holder”) (such Master Loan Agreement being referred to as, the “Loan Agreement”). The Holder extending a term loan facility in an aggregate principal amount of 206,000,000 USDT (the “Loan”), bearing interest of 7.0% per annum.

The Loan had an initial maturity date of November 6, 2025, subject to an optional maturity date extension of an additional 30 days at the election of Naka. Naka elected to extend the maturity date to December 6, 2025. The obligations under the Loan Agreement were secured solely by Bitcoin or other digital assets agreed to by Naka and Holder, and were subject to customary affirmative and negative covenants, loan-to-value requirements, representations and warranties, and events of default. The collateral for the Loan was held by Holder.

Naka used the proceeds of the Loan to satisfy its existing obligations in full under that certain Naka Credit Facility, between the Company and Holder and for expenses incurred in connection with the Loan Agreement. As of December 31, 2025, the Loan was fully repaid and there was no outstanding principal or accrued interest related to the Loan.

Kraken Loan Agreement

On December 3, 2025, the Company, through its subsidiary Nakamoto Holdings, entered into a Master Loan Agreement with Payward Interactive, Inc., a Florida corporation, doing business as Kraken (“Kraken”) (the “Kraken Loan Agreement”), pursuant to which Nakamoto Holdings may, from time to time, borrow fiat or digital currencies on the terms set forth therein and in the related loan term sheets entered into thereunder. The Kraken Loan Agreement contains customary conditions, initial collateral requirements, collateral maintenance and liquidation mechanics, and early return and recall rights. The obligations under the Kraken Loan Agreement are prepayable at the option of Nakamoto Holdings, provided that, prepayments made prior to the six-month anniversary of the initial funding date shall be subject to a make-whole payment for such six-month period.

On December 4, 2025, Nakamoto Holdings and Kraken executed an initial term sheet (the “Initial Term Sheet”) under the Kraken Loan Agreement or a fixed-term loan of 93,000,000 USDT bearing a fee of 8.00% per annum, maturing on December 4, 2026 (the “Initial Loan”). On December 9, 2025, Nakamoto and Kraken executed a second term sheet (the “Second Term Sheet”) for a fixed-term loan of 210,000,000 USDT, which amount includes the Initial Loan balance (the “Kraken Loan”), bearing a fee of 8.00% per annum, maturing on December 4, 2026. The Second Term Sheet amends and supersedes the Initial Term Sheet in its entirety and confirms that the Initial Loan was deemed repaid and subsequently transferred to Nakamoto Holdings pursuant to the Second Term Sheet. The Kraken Loan is secured solely by 3,717 Bitcoin (the “Kraken Collateral”) as of December 31, 2025. On February 5, 2026, the Company pledged an additional 688 Bitcoin to Kraken to meet ongoing collateral maintenance requirements.

Nakamoto Holdings used the proceeds of the Kraken Loan to satisfy its existing obligations in full under that certain Loan with Antalpha Digital Pte. Ltd., dated as of October 6, 2025. Management deemed, under the guidance of ASC 470-50, “Debt-Modifications and Extinguishments”, that the satisfaction of the Loan with the funds from the Kraken Loan, qualified for debt extinguishment accounting. As a result, the Company recorded debt restructuring costs of $1,253,449 in Non-operating income (expense) on the consolidated statements of operations for the year ended December 31, 2025.

The Company classifies USDT as a nonfinancial intangible digital asset in accordance with ASC 350-60. Due to the Kraken Loan being denominated and repayable in USDT, it contains an embedded derivative representing the Company’s exposure to changes in the USDT/USD exchange rate. The Company evaluated the embedded derivative under ASC 815-15-25-1 and determined that all three bifurcation criteria are met for the USDT settlement feature. However, because USDT traded at $1.00 on both funding dates, the fair value of the embedded derivative was $0 at inception. The Company assessed the materiality of the embedded derivative at inception and at December 31, 2025, and concluded that its effect is not material to the consolidated financial statements. Accordingly, the embedded derivative is not presented as a separate line item on the balance sheet; the carrying value of the Kraken Loan is presented on a net basis reflecting the cumulative remeasurement of the embedded derivative.

The Kraken Loan was initially recognized at $210,000,000, representing the USD-equivalent of 210,000,000 USDT received at the prevailing exchange rate of $1.00 on the funding date. The host debt contract is carried at historical cost. The embedded derivative is remeasured at fair value at each reporting date under ASC 815, with changes in fair value recognized in Other income, net on the consolidated statement of operations. At December 31, 2025, the USDT/USD exchange rate was $0.99827, resulting in an unrealized gain of $363,300. The net carrying value, inclusive of unamortized debt issuance costs of $79,086, of the Kraken Loan on the consolidated balance sheet at December 31, 2025, was $209,557,614.

Prepayments made prior to June 4, 2026, are subject to a make-whole payment equal to the interest that would have accrued from the prepayment date through June 4, 2026. No prepayment penalty applies after June 4, 2026.

Other Loans Payable

On December 25, 2023, the Company entered into a loan agreement with a third-party in the amount of $79,975 for total cash proceeds of $70,000. The loan matured on June 25, 2025. The Company recorded a debt discount of $9,975, which was amortized under the effective interest method at an effective interest rate of 25.6%. As of December 31, 2025, the outstanding principal balance of the loan payable was paid in full.

On December 26, 2023, the Company entered into a loan agreement with a third-party in the amount of $285,573 for total cash proceeds of $249,300. The loan matured on June 26, 2025. The Company recorded a debt discount of $36,273, which was amortized under the effective interest method at an effective interest rate of 15.0%. As of December 31, 2025, the outstanding principal balance of the loan payable paid in full.