UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 9, 2026, the registrant had
Table of Contents
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Page |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS |
3 |
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PART I. |
FINANCIAL INFORMATION |
5 |
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Item 1. |
Unaudited Financial Statements |
5 |
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Condensed Balance Sheets |
5 |
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Condensed Statements of Operations |
6 |
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Condensed Statements of Stockholders' Equity |
7 |
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Condensed Statements of Cash Flows |
8 |
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Notes to Unaudited Condensed Financial Statements |
9 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
28 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
45 |
Item 4. |
Controls and Procedures |
45 |
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PART II. |
OTHER INFORMATION |
47 |
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Item 1. |
Legal Proceedings |
47 |
Item 1A. |
Risk Factors |
47 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
47 |
Item 3. |
Defaults Upon Senior Securities |
48 |
Item 4. |
Mine Safety Disclosures |
48 |
Item 5. |
Other Information |
48 |
Item 6. |
Exhibits |
49 |
Signatures |
50 |
Intellectual Property
We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business, which include the Company’s “F” logo mark, “FOLD”, “FOLD CREDIT CARD”, “FOLD BITCOIN CREDIT CARD”, “FOLD BITCOIN REWARDS CREDIT CARD”, “FOLD DEBIT CARD”, “FOLD BITCOIN DEBIT CARD”, “FOLD BITCOIN REWARDS DEBIT CARD”, “FOLD GIFT CARD”, and “FOLD BITCOIN GIFT CARD”. This document may also include trademarks, service marks and tradenames that are the property of other organizations. Our use or display of any third party’s trademarks, service marks, trade names or products in this document is not intended to, and does not imply, a relationship with, endorsement of or sponsorship by us of, those third parties. Solely for convenience, trademarks, service marks and tradenames referred to in this document may appear without the ®, SM and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks, service marks and tradenames.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) of Fold Holdings, Inc. (“Fold,” the “Company,” “we,” “our,” and “us”) contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “approximately,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions.
We caution investors that any forward-looking statements presented in this Quarterly Report, or that we may make orally or in writing from time to time, are based on information currently available, as well as our beliefs and assumptions. The actual outcome related to forward-looking statements will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on forward-looking statements, which are based only on known results and trends at the time they are made, to anticipate future results or trends.
The forward-looking statements contained in this Quarterly Report are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:
risks that we will not be able to regain compliance with Nasdaq Listing Rule 5550(a)(2) or other listing requirements of Nasdaq or, even if we do, that our minimum bid price will remain over the minimum bid price requirement of The Nasdaq Capital Market following regaining compliance;
risks that any option that we may pursue in order to regain compliance with Nasdaq Listing Rule 5550(a)(2), such as a reverse stock split, could result in a significant devaluation of our market capitalization or the trading price of our Common Stock;
risks related to our financial and business performance, including financial projections and business metrics and any underlying assumptions thereunder;
volatility in the valuation of bitcoin, which may affect our operating results and our ability to obtain cash funding on favorable terms;
our reliance upon third-party partners, including reliance on only one custodian, BitGo (as defined below);
changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;
the implementation, market acceptance and success of our business model;
increased competition as the crypto-economy develops;
a still-developing and uncertain regulatory landscape;
our ability to scale and develop new products, such as the Fold Credit Card, in a cost-effective manner;
developments and projections relating to our competitors and industry;
our future capital requirements and sources and uses of cash for product development and other purposes;
our success in retaining or recruiting, or changes required in, officers, key employees or directors; the size of the addressable markets for our products and services;
the impact of geopolitical, macroeconomic, supply chain and market conditions, including tariffs, inflation, the ongoing war between Russia and Ukraine, the war among Israel, Iran and the United States, and the global response to such hostilities, which may negatively affect our operating results;
other risks and uncertainties described in this Quarterly Report, including in “Item 1A - Risk Factors”; and
those factors in the other documents filed by Fold from time to time with the U.S. Securities and Exchange Commission (“SEC”).
The discussion in this Quarterly Report should be read in conjunction with the condensed financial statements and notes thereto included in Item 1 of this Quarterly Report. Further, when reading this Quarterly Report, you should keep in mind those Risk Factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 filed on March 17, 2026. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
This Quarterly Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report, except as may be required by law.
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Fold Holdings, Inc.
Condensed Balance Sheets
(Unaudited)
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June 30, |
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December 31, |
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2026 |
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2025 |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Credit card receivable, net |
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Inventories |
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Digital assets - rewards treasury |
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Prepaid expenses and other current assets |
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Total current assets |
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Digital assets - investment treasury |
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Capitalized software development costs, net |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders' equity |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Accrued legal settlement |
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February 2026 note - related party, net |
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Credit facility |
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Customer rewards liability |
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Deferred revenue |
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Total current liabilities |
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June 2025 convertible note, net |
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March 2025 convertible note - related party |
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Other non-current liabilities |
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Total liabilities |
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Commitments and contingencies (Note 12) |
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Stockholders’ equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in-capital |
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Accumulated deficit |
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( |
) |
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( |
) |
Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed financial statements
5
Fold Holdings, Inc.
Condensed Statements of Operations
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues, net |
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$ |
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$ |
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$ |
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$ |
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Operating expenses |
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Banking and payments costs |
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Custody and trading costs |
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Compensation and benefits |
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Marketing expenses |
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Professional fees |
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Amortization expense |
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(Gain) loss on customer rewards liability |
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( |
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( |
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(Gain) loss on digital assets - rewards treasury |
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( |
) |
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( |
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Other selling, general and administrative expenses |
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Total operating expenses |
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Operating loss |
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( |
) |
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( |
) |
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( |
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( |
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Other income (expense) |
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Gain (loss) on digital assets - investment treasury |
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( |
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Change in fair value of SAFEs |
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( |
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Change in fair value of convertible note |
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( |
) |
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( |
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Convertible note issuance costs and fees |
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( |
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Legal settlements |
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( |
) |
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( |
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Loss on extinguishment of debt |
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( |
) |
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( |
) |
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( |
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Interest expense |
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( |
) |
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( |
) |
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( |
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( |
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Other income |
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Other income (expense), net |
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( |
) |
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( |
) |
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( |
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Net income (loss) before income taxes |
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( |
) |
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( |
) |
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( |
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Income tax expense (benefit) |
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Net income (loss) |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
( |
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Net income (loss) attributable to common stockholders: |
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Basic |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
( |
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Diluted |
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$ |
( |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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Net income (loss) per share attributable to common stockholders: |
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Basic |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
( |
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Diluted |
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$ |
( |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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Weighted-average shares used to compute net income (loss) per share: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed financial statements
6
Fold Holdings, Inc.
Condensed Statements of Stockholders' Equity
(Unaudited)
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Convertible |
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Additional |
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Preferred Stock |
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Common Stock |
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Paid-In |
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Accumulated |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Total |
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Balance at January 1, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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( |
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Net loss |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
Reverse recapitalization, net of expenses |
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( |
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( |
) |
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- |
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Share based compensation expense |
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- |
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- |
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- |
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Exercise of Series B warrants |
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- |
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- |
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( |
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- |
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- |
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Issuance of March 2025 Closing Shares and Warrants |
|
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- |
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- |
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- |
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Change in fair value of Series C Warrants |
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- |
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- |
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- |
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- |
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- |
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||
Issuance of interest shares |
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- |
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- |
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- |
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||||
Issuance of placement shares |
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- |
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- |
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- |
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||||
Balance at June 30, 2025 |
|
|
- |
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- |
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( |
) |
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||||
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|||||||
Balance at January 1, 2026 |
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- |
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$ |
- |
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$ |
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$ |
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$ |
( |
) |
|
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||||
Net loss |
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|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Share based compensation expense |
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|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
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||||
Common stock withheld for employee tax obligations |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Issuance of interest shares |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
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|
|
- |
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||||
Issuance of Employee Stock Purchase Plan shares |
|
|
- |
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- |
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- |
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||||
Issuance of common stock |
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- |
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- |
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|
- |
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||||
Issuance of commitment shares |
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|
- |
|
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- |
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- |
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Issuance of common stock for intellectual property acquisition |
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|
- |
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- |
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- |
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||||
Balance at June 30, 2026 |
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|
- |
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|
$ |
- |
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|
$ |
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$ |
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$ |
( |
) |
|
$ |
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||||
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The accompanying notes are an integral part of these condensed financial statements
7
Fold Holdings, Inc.
Condensed Statements of Cash Flows
(Unaudited)
|
|
Six Months Ended June 30, |
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|||||
|
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2026 |
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2025 |
|
||
Cash flows from operating activities |
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|
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||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization expense |
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||
Loss (gain) on digital assets - rewards treasury |
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|
( |
) |
|
Loss (gain) on digital assets - investment treasury |
|
|
|
|
|
( |
) |
|
(Gain) loss on customer rewards liability |
|
|
( |
) |
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|
|
Change in fair value of convertible note |
|
|
( |
) |
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|
|
Convertible note issuance costs and fees |
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|
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|
||
Loss on extinguishment of debt |
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Amortization of debt issuance costs |
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|
||
Amortization of debt discount and premium |
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Change in fair value of SAFEs |
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Share-based compensation expense |
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Other non-cash adjustments |
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( |
) |
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Increase (decrease) in cash resulting from changes in: |
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|
||
Accounts receivable, net |
|
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|
( |
) |
|
Credit card receivable, net |
|
|
( |
) |
|
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|
|
Inventories |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
( |
) |
|
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|
Accrued expenses and other current liabilities |
|
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||
Accrued legal settlement |
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|
||
Customer rewards liability |
|
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|
||
Deferred revenue |
|
|
( |
) |
|
|
( |
) |
Other non-current liabilities |
|
|
( |
) |
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|
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
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|
||
Cash flows from investing activities |
|
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|
||
Purchases of digital assets |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of digital assets |
|
|
|
|
|
|
||
Payments for capitalized software development costs |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) investing activities |
|
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( |
) |
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||
Cash flows from financing activities |
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||
Proceeds from issuance of note |
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||
Repayment of convertible note |
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( |
) |
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Proceeds from recapitalization |
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||
Payments of deferred IPO costs |
|
|
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( |
) |
|
Payment of debt issuance costs |
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( |
) |
|
Proceeds from issuance of common stock |
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||
Proceeds from credit facility |
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|
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|
||
Repayment of credit facility |
|
|
( |
) |
|
|
|
|
Common stock withheld for employee tax obligations |
|
|
( |
) |
|
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Net cash provided by (used in) financing activities |
|
|
( |
) |
|
|
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|
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|
||
Net increase (decrease) in cash and cash equivalents |
|
|
|
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|
( |
) |
|
Cash and cash equivalents, beginning of period |
|
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||
Cash and cash equivalents, end of period |
|
$ |
|
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$ |
|
||
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||
Non-cash investing and financing activities |
|
|
|
|
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|
||
Non-cash payment of interest with common stock |
|
$ |
|
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$ |
|
||
Distributions of digital assets to fulfill customer reward redemptions |
|
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Distributions of digital assets to satisfy other current obligations |
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|
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Non-cash payment for intellectual property acquisition with common stock |
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Non-cash repayment of convertible note via transfer of digital assets - related party |
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Non-cash amortization of deferred issuance costs |
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Non-cash allocation of convertible note proceeds to embedded derivative |
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Non-cash allocation of note proceeds to commitment shares |
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Recapitalization |
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Proceeds from convertible debt received in digital assets - related party |
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Change in fair value of Series C Warrants included in loss on extinguishment |
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Distributions of digital assets for prepaid interest - related party |
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Supplemental disclosure of cash flow information |
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Cash paid during the period for interest expense |
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The accompanying notes are an integral part of these condensed financial statements
8
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Unless otherwise indicated or the context otherwise requires, references 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 (as such terms are defined below). 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.
Background and Business Combination
Fold Holdings, Inc. is a financial services company that operates across both U.S. dollars ("USD") and bitcoin, and is designed to connect these systems in a seamless manner. Fold’s consumer offerings include an FDIC-insured checking account, a Visa debit card (the "Fold Debit Card"), a Visa credit card (the "Fold Credit Card"), bill payment services, a bitcoin gift card, and an extensive catalog of merchant reward offers. The Company also offers various forms of bitcoin buying and selling with low-to-zero fees and insured custody. By integrating both dollars and 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 mobile application (the “Fold App”).
On July 24, 2024, Fold, Inc. ("Fold Predecessor") 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 Merger was consummated on February 14, 2025 (the "Closing"). Following the Merger, FTAC Emerald changed its name to Fold Holdings, Inc. and effectively assumed all of Fold Predecessor's material operations. The combined company now operates under the name Fold Holdings, Inc., and its common stock, par value $
Liquidity and capital resources
As of June 30, 2026, the Company had cash and cash equivalents of $
As of June 30, 2026, the Company held
As of June 30, 2026, we held
The Company maintains a revolving credit facility (the "Credit Facility") with Two Prime Lending Limited ("Two Prime"), pursuant to which the Company, upon the deposit of bitcoin as collateral, may borrow from Two Prime up to $
On February 26, 2026, the Company closed on a transaction pursuant to which the March 2025 Investor Note was extinguished, at which time the
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
(as defined in Note 9) for $
In June 2025, the Company entered into an agreement for a $
The 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 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.
There 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.
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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company.
Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. These condensed financial statements and accompanying notes should be read in conjunction with the audited financial statements and accompanying notes for the years ended December 31, 2025 and 2024. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The interim results for the periods presented are not necessarily indicative of the results to be expected for the year ended December 31, 2026, or for any future periods.
Use of estimates
The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, as well as related disclosure of contingent assets and liabilities. The
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
Company bases its estimates on historical experience and on assumptions that the Company believes are reasonable; however, actual results could significantly differ from those estimates. The Company evaluates these estimates on an ongoing basis.
Estimates, judgments, and assumptions in these financial statements include, but are not limited to, those related to the determination of the recognition, measurement, and valuation of current and deferred income taxes; the useful lives and impairment assessment of long-lived assets; the fair value of convertible notes; allowance for credit losses; the fair value of customer reward liability derivative instruments; and loss contingency identification and valuation, including assessing the likelihood of adverse outcomes from positions, claims, and disputes, recoveries of losses recorded, and associated timing.
Segment information
Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”), who is our Chief Executive Officer, in deciding how to allocate resources and assessing performance. During the six months ended June 30, 2026 and 2025, all operations were within the United States. The CODM allocates resources and assesses performance based upon financial information at the entity-wide level. Since the CODM makes operating decisions and allocates resources on an entity-wide basis, Fold operates as
The CODM does not evaluate performance or allocate resources based on segment assets, and therefore such information is not presented in the notes to the financial statements.
Capitalized software development costs, net
The Company capitalizes significant costs incurred in the acquisition or development of the internal software for use in the Company's various service offerings. The Company incurs costs in developing software inclusive of direct external costs and internal payroll costs. Internal payroll costs typically include salaries and wages. Capitalized software costs are stated at cost net of accumulated amortization. Amortization is provided utilizing the straight-line method over the estimated useful life of the software, which is three years. Costs incurred in the preliminary and post-implementation phases of the Company's internal use software are expensed as incurred. The Company also capitalizes intangible assets acquired in connection with asset acquisitions where the nature and useful life of the acquired assets are consistent with internally developed software costs.
Capitalized software development costs consisted of the following:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Capitalized software, gross |
|
$ |
|
|
$ |
|
||
Less: accumulated amortization |
|
|
( |
) |
|
|
( |
) |
Capitalized software, net |
|
$ |
|
|
$ |
|
The gross carrying amount of internally developed software costs that had been capitalized but not placed into service is as follows:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Capitalized software not placed into service |
|
$ |
|
|
$ |
|
The Company recorded amortization expense on capitalized software development costs placed into service in the amount of $
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
Customer rewards liability
The Company offers certain rewards to its users through the Fold Rewards Program. This program allows the Company's users to earn promotional credits denominated in bitcoin by engaging in various actions, either by engaging in qualifying spend transactions (the “Revenue Rewards”) or performing certain actions designated by the Company as primarily for marketing, growth, and retention purposes (the “Marketing 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 or the Fold Credit 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.
Revenue Rewards are considered earned at the time of the qualifying spend transaction. Revenue Rewards are immediately available for redemption by the user, except for those related to Fold Debit Card and Fold Credit Card transactions which cannot be redeemed until after a 30-day settlement period. Marketing Rewards are earned and available immediately upon the performance of a qualifying action by the user. To redeem available rewards, a user may request a withdrawal to a personal bitcoin wallet.
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. Revenue Rewards are recorded as a reduction in the transaction price of the related revenue earned. Marketing Rewards are recorded as a marketing expense within operating expenses. 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 records those estimated amounts in the period those Rewards were earned. These accruals are accounted for as an adjustment to the transaction price of the original revenue transaction if the expiration relates to Revenue Rewards, or as contra-expense within marketing expense if the expiration relates to Marketing Rewards.
Derivatives
As our customer rewards liability results in an obligation to deliver a fixed amount of digital assets in the future, the Company has determined that it meets the definition of a derivative and marked it to fair value as discussed above. The Company has not designated this derivative instrument as a hedging instrument. As of June 30, 2026 and December 31, 2025, the notional amount of the customer rewards liability outstanding was
We consider modifications or exchanges of debt as extinguishments in accordance with Accounting Standards Codification ("ASC") No. 470, Debt, with gains or losses recognized in current earnings if the terms of the new debt and original instrument are substantially different. If the original and new debt instruments are substantially different, the original debt is derecognized and the new debt is initially recorded at fair value. When freestanding instruments, such as equity-classified shares or bifurcated derivative liabilities, are issued in connection with the new debt, the total proceeds are allocated among the instruments using a combination of the with-and-without method and the relative fair value method. Under this approach, proceeds equal to the fair value of any instruments required to be measured at fair value on a recurring basis, such as bifurcated derivative liabilities accounted for under ASC 815, are first allocated to those instruments using the with-and-without method. The remaining proceeds are then allocated among any remaining freestanding instruments, such as equity-classified shares, using the relative fair value method, with the debt host recorded at its allocated amount.
The difference between the carrying amount of the extinguished debt and the consideration transferred is recognized as an
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
extinguishment gain or loss. Under an exchange or modification accounted for as a debt extinguishment, fees paid to the lender are included in the gain or loss on extinguishment of debt. Costs incurred with third parties, such as legal fees, directly related to the exchange or modification are capitalized as deferred financing costs and amortized over the initial term of the new debt. Previously deferred fees and costs for existing debt are included in the calculation of gain or loss on extinguishment.
Under an exchange or modification not accounted for as a debt extinguishment, fees paid to the lenders are reflected as additional debt discount and amortized as non-cash interest expense over the remaining initial term of the exchanged or modified debt. Costs incurred with third parties, such as legal fees, directly related to the exchange or modification, are expensed as incurred, and previously deferred fees and costs are amortized as non-cash interest expense over the remaining initial term of the exchanged or modified debt.
Certain debt instruments may be designated at fair value under the fair value option election in accordance with ASC 825-10, with changes in fair value recognized in earnings each period. Upon extinguishment of a debt instrument carried at fair value, the carrying value equals its fair value on the reacquisition date. Any cumulative changes in fair value attributable to instrument-specific credit risk previously recognized in accumulated other comprehensive income are reclassified to earnings upon extinguishment, while changes attributable to other factors are recognized directly in net income as they occur.
Fold Credit Card Program
In partnership with a credit card issuing bank (the “Issuing Bank”), the Company offers the Fold Credit Card to cardholders. Credit card receivables represent amounts due from cardholders for purchases, fees, and other charges incurred through the use of the Fold Credit Card. Pursuant to the program agreements, the Company is obligated to purchase all receivables arising under the program, and accordingly, bears the risk of loss associated with cardholder nonpayment following purchase of the receivables. This commitment has been evaluated in accordance with ASC 860 and Fold has determined they are the owner of all purchased receivables from the Issuing Bank. The Company has an ongoing commitment to fund future receivable purchases as cardholder activity occurs. The amount of future receivable purchases will fluctuate based on cardholder spending volumes, credit utilization, and repayment behavior. As the owner of the receivables, the Company records credit card receivables, net of an allowance for expected credit losses in credit card receivables, net on the condensed balance sheets.
The allowance for expected credit losses is estimated in accordance with ASC 326 and reflects management’s estimate of lifetime expected losses based on historical loss experience, delinquency, market trends, charge off trends by FICO cohort and aging trends, and other relevant portfolio-level factors. The Company uses a roll-rate methodology, which applies historical delinquency migration and loss patterns to the outstanding receivable balance, to estimate expected losses. The provision for expected credit losses related to credit card receivables is recorded within other selling, general and administrative expenses in the condensed statement of operations and is nominal for both the three and six months ended June 30, 2026.
Debt and related instruments
In February 2026, the Company extinguished all previously outstanding convertible notes and separately entered into the February 2026 Investor Note (as defined below). The Company accounts for the February 2026 Investor Note at amortized cost using the effective interest method.
The Company evaluates its debt instruments for embedded features requiring bifurcation in accordance with ASC 815. Embedded features that are not clearly and closely related to the debt host, are not remeasured at fair value under otherwise applicable GAAP, and that would qualify as derivatives on a standalone basis, are bifurcated and recorded as derivative liabilities at fair value, with subsequent changes in fair value recognized in earnings. The bifurcated derivative liability is remeasured at each reporting date, with changes in fair value recognized in the condensed statements of operations. Refer to Note 9 for further information.
Recently issued accounting pronouncements not yet adopted
In November 2024, the FASB issued ASU 2024-03, Expense Disaggregation Disclosures (Topic 220), which requires entities to include more detailed information about the types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization, in commonly presented expense captions such as cost of sales, research and development, and selling, general and administrative expenses. In January 2025, the FASB issued ASU 2025-01 “Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date” (“ASU 2025-01”) which clarifies the effective date of Accounting Standards Update 2024-03 “Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”) to stipulate that ASU 2024-03 is
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
effective for public business entities for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 will be effective for the Company beginning January 1, 2027 for the Company’s annual financial statements on Form 10-K and January 1, 2028 for the Company’s quarterly financial statements on Form 10-Q. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures, but it is not expected to have a significant impact on the Company’s financial statements.
In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software" ("ASU 2025-06"). ASU 2025-06 clarifies and modernizes the accounting for costs related to internal-use software. The amendments in ASU 2025-06 remove all references to project stages throughout Subtopic 350-40 and clarify the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for the Company for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of ASU 2025-06 on its financial statements.
We do not believe that any other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on our financial statements.
Recently adopted accounting pronouncements
In July 2025, the FASB issued Accounting Standards Update 2025-05, “Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"). ASU 2025-05 provides the option to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. ASU 2025-05 is effective for the Company for fiscal years beginning after December 15, 2025 and interim periods within those fiscal years. The Company adopted ASU 2025-05 effective January 1, 2026. The adoption did not have a material impact on the Company's condensed financial statements.
3. REVENUE
Disaggregation of revenue
We disaggregate revenue by service type and by platform as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
Revenue stream |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Banking and payments revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Custody and trading revenues |
|
|
|
|
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|
|
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|
||||
Other revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Sales returns and allowances |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Revenues, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
The above amounts are net of reductions in revenue related to Revenue Rewards totaling $
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
Deferred revenue
Contract liabilities are classified as deferred revenue in our balance sheets. As of June 30, 2026 and December 31, 2025, the contract liability related to our deferred subscription revenues was $
The activity in deferred revenue for the six months ended June 30, 2026 and the year ended December 31, 2025, was as follows:
|
|
Six Months Ended |
|
|
Year Ended December 31, 2025 |
|
||
Beginning of the period contract liability |
|
$ |
|
|
$ |
|
||
Revenue recognized from the contract liabilities included in the beginning balance |
|
|
( |
) |
|
|
( |
) |
Increases due to cash received net of amounts recognized in revenue during the period |
|
|
|
|
|
|
||
End of period contract liability |
|
$ |
|
|
$ |
|
Contract costs
For the six months ended June 30, 2026 and 2025, we did
4. DIGITAL ASSETS
The Company holds digital assets, comprised solely of bitcoin, for two purposes: (1) to fulfill bitcoin rewards to customers in accordance with the terms and conditions of the Fold Rewards Program (“Rewards Treasury”); and (2) as a treasury asset to support our operating business with the option to hold as a near- to long-term investment to preserve potential upside in the value of that bitcoin (“Investment Treasury”). The Company purchases bitcoin for its Rewards Treasury to maintain a balance that is equal to or greater than its customer rewards liability and disburses bitcoin from its Rewards Treasury when customers redeem their rewards and the liability is satisfied.
The following is a summary of Fold’s bitcoin held in treasury as of the dates shown:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Rewards treasury (USD) |
|
$ |
|
|
$ |
|
||
Investment treasury (USD) |
|
|
|
|
|
|
||
Total bitcoin treasury (USD) |
|
$ |
|
|
$ |
|
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Rewards treasury (BTC) |
|
|
|
|
|
|
||
Investment treasury (BTC) |
|
|
|
|
|
|
||
Total bitcoin treasury (BTC) |
|
|
|
|
|
|
As of June 30, 2026 and December 31, 2025, the Company held
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
A reconciliation, in the aggregate, of beginning and ending balances of the Company’s digital assets as of the dates shown is as follows:
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Rewards Treasury |
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Investment Treasury |
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Digital Assets |
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Bitcoin held at January 1, 2025 |
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$ |
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$ |
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$ |
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Purchases of bitcoin |
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Bitcoin received from March 2025 Investor Note (2) |
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Disbursements of bitcoin (1) |
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( |
) |
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( |
) |
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Remeasurement gain (loss) on bitcoin (4) |
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Bitcoin held at June 30, 2025 |
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$ |
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$ |
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$ |
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|||
Purchases of bitcoin |
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|
|
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|
|
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Disbursements of bitcoin (1) |
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|
( |
) |
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|
|
|
|
( |
) |
|
Remeasurement gain (loss) on bitcoin |
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|
( |
) |
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|
( |
) |
|
|
( |
) |
Bitcoin held at December 31, 2025 |
|
$ |
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|
$ |
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|
$ |
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|||
Purchases of bitcoin |
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Bitcoin repayment for March 2025 Investor Note |
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( |
) |
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( |
) |
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Sale of bitcoin (3) |
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( |
) |
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( |
) |
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Disbursements of bitcoin (1) |
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( |
) |
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( |
) |
||
Transfers of bitcoin from investment treasury |
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( |
) |
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Remeasurement gain (loss) on bitcoin (4) |
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|
( |
) |
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( |
) |
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|
( |
) |
Bitcoin held at June 30, 2026 |
|
$ |
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|
$ |
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|
$ |
|
(1)
(2)
(3)
(4)
The remeasurement loss of $
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
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June 30, 2026 |
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December 31, 2025 |
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Prepaid interest |
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$ |
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$ |
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Prepaid expenses |
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Other receivables |
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Interest receivable |
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Total |
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$ |
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|
$ |
|
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
6. CUSTOMER REWARDS LIABILITY
A reconciliation, in the aggregate, of beginning and ending balances of the Company’s customer rewards liability as of the dates shown is as follows:
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Customer Rewards Liability |
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Balance at January 1, 2025 |
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$ |
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|
Rewards earned by customers |
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Reward fulfillments (1) |
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( |
) |
Expired rewards |
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|
( |
) |
Remeasurement (gain) loss on customer rewards liability |
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|
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Balance at June 30, 2025 |
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$ |
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|
Rewards earned by customers |
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|
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Reward fulfillments (1) |
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( |
) |
Expired rewards |
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|
( |
) |
Remeasurement (gain) loss on customer rewards liability |
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|
( |
) |
Balance at December 31, 2025 |
|
$ |
|
|
Rewards earned by customers |
|
|
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Reward fulfillments (1) |
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|
( |
) |
Expired rewards |
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|
( |
) |
Remeasurement (gain) loss on customer rewards liability |
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|
( |
) |
Balance at June 30, 2026 |
|
$ |
|
|
|
|
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(1)
8. SAFEs
On February 14, 2025, in connection with the Closing of the Merger, all SAFE notes held by Fold Predecessor converted into
During the three and six months ended June 30, 2025, the Company recognized an increase in the SAFE liability of $
9. DEBT AND FINANCING ARRANGEMENTS
Convertible notes and warrants
A summary of the Company’s convertible notes for the respective periods presented is as follows:
The June 2025 Amended Investor Note
Fold Holdings, Inc.
Notes to Unaudited Condensed Financial Statements
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June 30, 2026 |
