Filed 2026-03-06 · Period ending 2025-12-31 · 116,815 words · SEC EDGAR
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# Athena Bitcoin Global (ABIT) — 10-K
**Filed:** 2026-03-06
**Period ending:** 2025-12-31
**Accession:** 0001683168-26-001588
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1095146/000168316826001588/)
**Origin leaf:** aa32d1d25de1526ff103d24bc1d0d02c973a788e76dd394fd0fed1c1ce67d5d2
**Words:** 116,815
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**Table
of Contents
UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**
Washington, D.C. 20549
**____________________**
**FORM
10-K**
**____________________**
**(Mark One)**
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
**For the fiscal year ended December
31, 2025**
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
**For the transition period from ______
to ______**
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**Commission File Number: 333-262629**
**____________________**
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*
**Athena Bitcoin Global**
(Exact name of registrant as specified in its charter)
____________________
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Nevada |
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87-0493596 | |
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(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) | |
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1 SE 3rd Avenue, Suite 2740
Miami, Florida |
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33131 | |
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(Address of principal executive offices) |
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(Zip Code) | |
**(312) 690-4466**
(Registrants telephone number, including
area code)
**____________________**
Securities registered pursuant
to Section 12(b) of the Act: **None**
Securities registered pursuant to Section
12(g) of the Act: **None.**
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes No
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. Yes No
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). Yes No
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.
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Large accelerated filer |
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Accelerated filer |
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Non-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
has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants
executive officers during the relevant recovery period pursuant to 240.10D-1(b).
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes No
On June 30, 2025, the last day of the registrants
most recently completed second quarter, the aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately
$49.4 million, based upon the closing price of the registrants Common Stock
on the OTC Markets, Inc. of $0.05 on June 30, 2025, the last trading day of the registrants most recently completed second fiscal
quarter. For purposes of calculating the aggregate market value of shares held by non-affiliates, we have assumed that all outstanding
shares are held by non-affiliates, except for shares held by each of our executive officers, directors and 5% or greater stockholders.
In the case of 5% or greater stockholders, we have not deemed such stockholders to be affiliates unless there are facts and circumstances
which would indicate that such stockholders exercise any control over our company, or unless they hold 10% or more of our outstanding
common stock. These assumptions should not be deemed to constitute an admission that all executive officers, directors and 5% or greater
stockholders are, in fact, affiliates of our company, or that there are not other persons who may be deemed to be affiliates of our company.
Further information concerning shareholdings of our officers, directors and principal stockholders is included in Part III, Item 12 of
this Annual Report on Form 10-K.
As of March 6, 2026, the registrant had
4,095,009,545 shares of its Common Stock, $0.001 par value, outstanding.
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**Athena Bitcoin Global**
**Annual Report on Form 10-K**
**Table of Contents**
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Cautionary Note Regarding Forward-Looking Statements |
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Glossary of Bitcoin and Crypto Terms |
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PART I |
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Item 1. |
Business |
1 | |
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Item 1A. |
Risk Factors |
32 | |
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Item 1B. |
Unresolved Staff Comments |
76 | |
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Item 1C. |
Cybersecurity |
76 | |
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Item 2. |
Properties |
77 | |
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Item 3. |
Legal Proceedings |
77 | |
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Item 4. |
Mine Safety Disclosures |
81 | |
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PART II |
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Item 5. |
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
82 | |
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Item 6. |
Selected Financial Data |
83 | |
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Item 7. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
83 | |
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Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
109 | |
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Item 8. |
Financial Statements and Supplementary Data |
110 | |
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Item 9. |
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
111 | |
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Item 9A. |
Controls and Procedures |
112 | |
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Item 9B. |
Other Information |
114 | |
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Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
114 | |
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PART III |
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Item 10. |
Directors, Executive Officers and Corporate Governance |
115 | |
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Item 11. |
Executive Compensation |
120 | |
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Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
122 | |
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Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
125 | |
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Item 14. |
Principal Accounting Fees and Services |
129 | |
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PART IV |
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Item 15. |
Exhibits, Financial Statement Schedules |
130 | |
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Item 16. |
Form 10-K Summary |
133 | |
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**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**
This Annual Report on Form
10-K (Report) contains forward-looking statements, within the federal securities laws, regarding future events and the future
results of Athena Bitcoin Global (the Company) that are based on current expectations, estimates, forecasts, and projections
about the industry in which the Company operates and the beliefs and assumptions of the management of the Company. Words such as expects,
anticipates, targets, goals, projects, intends, plans,
believes, seeks, estimates, variations of such words, and similar expressions are intended to
identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any
forward-looking statements.
All forward-looking statements
reflect our current views as of the date of the filing of this Report. The reader should not place undue reliance on these forward-looking
statements. Although we believe that our plans, intentions and expectations reflected in, or suggested by, the forward-looking statements
we make in this Report are reasonable, we provide no assurance that these plans, intentions or expectations will be achieved. We disclose
important factors that could cause our actual results to differ materially from our expectations under Risk Factors and
Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Report.
These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. Except as required
by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available
in the future.
Factors that might cause or
contribute to such differences include, but are not limited to, statements about:
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our future financial performance, including our expectations regarding our revenue, operating expenses, and our ability to achieve and maintain future profitability; | |
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our business plan and our ability to effectively manage our growth; | |
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our ability to raise sufficient capital to support our operations and
satisfy outstanding liabilities and judgments; | |
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anticipated trends, growth rates, and challenges in our business, the crypto economy, and in the markets in which we operate; | |
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market acceptance of our products and services; | |
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beliefs and objectives for future operations; | |
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our ability to further penetrate our existing customer base and maintain and expand our customer base; | |
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our ability to develop new products and services and grow our business in response to changing technologies, customer demand, and competitive pressures; | |
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our expectations concerning relationships with third parties; | |
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our ability to maintain, protect, and enhance our intellectual property; | |
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our ability to continue to expand internationally; | |
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the effects of increased competition in our markets and our ability to compete effectively; | |
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future acquisitions of or investments in complementary companies, products, services, or technologies and our ability to successfully integrate such companies or assets; | |
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our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally; | |
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economic and industry trends, projected growth, or trend analysis; | |
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trends in revenues, cost of revenues, and gross margin; | |
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trends in operating expenses, including technology and development expenses, sales and marketing expenses, and general and administrative expenses, and expectations regarding these expenses as a percentage of revenue; | |
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increased expenses associated with being a public company; | |
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other risks and uncertainties, including those described under Risk Factors, herein; and | |
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other statements regarding our future operations, financial condition, and prospects and business strategies. | |
| | ii | | |
These statements are not
guarantees of future performance or results. Forward-looking statements are based on information available at the time the statements
are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance
or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Report.
These factors include those set forth under Item 1A. Risk Factors, below.
In addition, statements
that we believe and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based
on information available to us as of the date of this Annual Report on Form 10-K. While we believe that such information provides a reasonable
basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have
conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors
are cautioned not to unduly rely on these statements.
You should read the matters
described in Item 1A. Risk Factors and the other cautionary statements made in this Report, and incorporated by reference
herein, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the
forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue
reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking
statements, even though our situation may change in the future.
**Glossary
of Bitcoin and Crypto Terms**
The following are abbreviations, acronyms and definitions
of certain terms used in this Report, which are commonly used in our industry:
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Address: An alphanumeric reference to where crypto assets can be sent or stored. | |
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Bitcoin (BTC): The first system of global, decentralized, scarce, digital money as initially introduced in a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto. Bitcoin, while having several of the primary attributes of money, is not considered a currency or money in the jurisdictions that the Company operates, with the exception of El Salvador where Bitcoin may be used for private trade, investment and voluntary use. | |
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Bitcoin ATM: A kiosk that can be used by a Customer to buy or sell bitcoin or other crypto assets in exchange for Cash. | |
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Bitcoin Cash (BCH): A fork of Bitcoin that seeks to add more transaction capacity to the network in order to be useful for everyday transactions. BCH is based on the original Bitcoin blockchain with some distinct differences. A major one is an increased maximum block size of 32MB, compared to just 1MB on Bitcoin. Increased block size allows BCH to process transactions faster than Bitcoin, with lower fees and an increased per-second transaction capacity. | |
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Block: A grouping of Transactions validated by Miners and disseminated by the Network to servers that maintain the records in a blockchain. Blocks are added to an existing blockchain as transactions occur on the network. Miners are rewarded for mining a new block. | |
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Blockchain: A cryptographically secure digital ledger that maintains a record of all transactions that occur on the Network and follows a consensus protocol for confirming new Blocks to be added to the blockchain. | |
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Cash: The physical specie or banknotes of a sovereign country including the U.S. Dollar and other countries that issue Fiat Currency in paper formats. | |
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Chivo: CHIVO, Sociedad Anonima de Capital Variable, a private company incorporated under the laws of the Republic of El Salvador, which is politically controlled by the Government of El Salvador (GOES), is the official Bitcoin service providerof the Government of El Salvador. The platform facilitates the exchange of Bitcoin and U.S. Dollar between users and their counterparties. The Chivo brand, which is the exclusive property of CHIVO, Sociedad Anonima de Capital Variable, is used across multiple products and services including a mobile wallet (Chivo wallet), integrated ATM (Chivo ATMs) and point-of-sale (POS) terminals. | |
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Cold storage: The storage of private keys in any fashion that is disconnected from the internet. Common cold storage examples include offline computers, USB drives, or paper records. | |
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Confirmation: A Bitcoin or similar transaction is considered confirmed when it is included in a new Block in the Blockchain. Each time another Block is appended to the chain, the Transaction is confirmed again. | |
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Crypto: A broad term for any cryptography-based market, system, application, or decentralized network. | |
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Cryptocurrency: Bitcoin and alternative coins, or altcoins. This category of crypto asset is designed to work as a medium of exchange, store of value, or to power applications and excludes security tokens. | |
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Customer: A retail user of our Bitcoin ATMs or client of one of our other services. | |
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Customer Buying: When a Customer acquires Bitcoin or another crypto asset in exchange for Cash or a Wire Transfer. In these transactions, the Company is selling Bitcoin or the crypto asset and acquiring Fiat Currency. | |
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Customer Selling: When a Customer acquires Fiat Currency, via either Cash or a Wire Transfer from the Company, in exchange for Bitcoin or another crypto asset. In these transactions, the Company is acquiring Bitcoin or another crypto asset in exchange for Fiat Currency. | |
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Crypto Asset or Digital Asset: Bitcoin and alternative digital forms of money, or altcoins, launched after the success of Bitcoin. This category of crypto asset is designed to work as a medium of exchange, store of value, or to power applications. The term altcoins is inclusive of Ethereum, Litecoin, Tether and Bitcoin Cash. | |
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Ethereum (ETH): A decentralized global computing platform that supports smart contract transactions and peer-to-peer applications, or Ether, the native crypto assets on the Ethereum network. | |
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Fiat Currency: The currency issued by a sovereign government or bloc including the U.S. Dollar, Argentine Peso, or Euro. | |
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Fork: A fundamental change to the software underlying a blockchain which results in two different blockchains, the original, and the new version. In some instances, the fork results in the creation of a new token. | |
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Hot Wallet: A wallet that is connected to the internet, enabling it to broadcast transactions. | |
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Miner: Individuals or entities who operate a computer or group of computers that add new transactions to blocks, and verify blocks created by other miners. Miners collect transaction fees and are rewarded with new tokens for their services. | |
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Mining: The process by which new blocks are created, and thus new transactions are added to the blockchain. | |
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Network: The collection of all Miners and Nodes that use computing power to maintain the ledger and add new blocks to the blockchain. Most networks are decentralized, reducing the risk of a single point of failure. | |
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Node: A server that maintains a record of the blockchain and can communicate with other Nodes on the Network to propagate new Transactions. Nodes can also maintain wallets and safeguard Private Keys. | |
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Protocol: A type of algorithm or software that governs how a blockchain operates. | |
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Public key or private key: Each public address has a corresponding public key and private key that are cryptographically generated. A private key allows the recipient to access any funds belonging to the address, similar to a bank account password. A public key helps validate transactions that are broadcasted to and from the address. Addresses are shortened versions of public keys, which are derived from private keys. | |
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Stable Coin: A Token issued for the purpose of maintaining a constant value relative to a Fiat Currency, most commonly the U.S. Dollar. Examples include Tether, USDC, Dai, BinanceUSD or GUSD. Many of these operate as un-regulated money market fund equivalents. Stable coins are a popular method to transfer funds between exchanges without taking price risk. | |
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Tether (USDt): A blockchain-based cryptocurrency whose tokens in circulation are backed by an equivalent amount of U.S. dollars, making it a stable coin with a price pegged to one U.S. Dollar $1.00. | |
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Token: A unit of a crypto asset or other instrument secured by and recorded on a blockchain. Tokens could include the primary units of a blockchain as in Ethereum or Bitcoin, or be a separate construct whose ownership is recorded using such a blockchain as in an ERC-20 Token, whose ownership might convey any number of properties. | |
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USD Coin (USDC): A blockchain-based cryptocurrency designed to maintain a
stable value relative to one U.S. Dollar $1.00, with tokens backed by reserve assets consisting primarily of U.S. dollars and short-term
U.S. Treasury securities. | |
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Transaction: The transfer of Bitcoin or a crypto asset from one Address to one or more Addresses. The Transaction is validated by Nodes and Miners according to the Protocol and specifically must be signed using the private key of the sending Address to be included in a block, whereby it becomes Confirmed. | |
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Wallet: A place to store public and private keys for crypto assets. Wallets are typically software, hardware, or paper-based. | |
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Wire Transfer: A permanent inter-bank transfer on a national or international settlement system including the Fedwire system in the United States or the SWIFT international system but excluding non-permanent systems like ACH (Automated Clearing House, a computer-based network that allows financial institutions to electronically process transactions). | |
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| | v | | |
PART I
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**Item 1. Business**
**Introduction**
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The information included
in this Report on Form 10-K should be read in conjunction with the consolidated financial statements and related notes in Item 8. Financial Statements and Supplemental Data of this Report.
Our logo and some of our
trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service marks that are the property
of others. Solely for convenience, trademarks, tradenames, and service marks referred to in this Report may appear without the ,
and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate in any way that we will
not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if any, nor that respective
owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their rights thereto. We do
not intend the use or display of other companies trademarks and trade names to imply a relationship with, or endorsement or sponsorship
of us by, any other companies.
The market data and certain
other statistical information used throughout this Report are based on independent industry publications, reports by market research firms
or other independent sources that we believe to be reliable sources. Industry publications and third-party research, surveys and studies
generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy
or completeness of such information; and we have not commissioned any of the market or survey data that is presented in this Report. We
are responsible for all the disclosures contained in this Report, and we believe these industry publications and third-party research,
surveys and studies are reliable. While we are not aware of any misstatements regarding any third-party information presented in this
Report, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties,
and are subject to change based on various factors, including those discussed under the section entitled Item 1A. Risk Factors.
These and other factors could cause our future performance to differ materially from our assumptions and estimates. Some market and other
data included herein, as well as the data of competitors as they relate to Athena Bitcoin Global, is also based on our good faith estimates.
Unless the context requires
otherwise, references to the Company, we, us, our,,
ABIT and Athena Global in this Report refer specifically to Athena Bitcoin Global,and
its consolidated subsidiaries.
In addition, unless the
context otherwise requires and for the purposes of this report only:
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Exchange Act refers to the Securities Exchange Act of 1934, as amended; | |
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SEC or the Commission refers to the United States Securities and Exchange Commission; | |
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Securities Act refers to the Securities Act of 1933, as amended; and | |
All dollar amounts in this
Report are in U.S. dollars and in thousands unless otherwise stated.
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**Available Information**
We file annual, quarterly,
and current reports and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC like us at https://www.sec.gov. Copies of documents
filed by us with the SEC (including exhibits) are also available from us without charge, upon oral or written request to our Secretary,
who can be contacted at the address and telephone number set forth on the cover page of this report.Our website address ishttps://athenabitcoin.com.
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed pursuant
to Section 15(d) of the Exchange Act of 1934, as amended, will be available through our website free of charge as soon as reasonably practical
after we electronically file such material with, or furnish it to, the SEC. The information on, or that may be accessed through, our website
is not incorporated by reference into this Report and should not be considered a part of this Report.
**Reverse Stock Split**
As previously disclosed in
the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on July 10, 2025, on July 7, 2025, the
majority stockholders of the Company, holding an aggregate of 2,118,734,867 shares of common stock or 51.7% of the Companys then
total voting shares as of the July 2, 2025 record date for the Written Consent (as defined below), following the recommendation of the
Board of Directors of the Company, took action via a written consent to action of the majority shareholders in lieu of a meeting of shareholders
(the Written Consent), and voted to approve, among other things, the filing of a Certificate of Amendment to the Companys
Articles of Incorporation, as amended, to effect a reverse stock split of the Companys issued and outstanding shares of common
stock, par value $0.001 per share, by a ratio of one-for-three hundred (the Reverse Stock Amendment and the Reverse
Stock Split). The Reverse Stock Split will have no effect on the Companys authorized shares of common stock or preferred
stock or the par value of the Companys common stock or preferred stock. The Reverse Stock Split has not been implemented to date,
and the Reverse Stock Amendment has not been filed with the Secretary of State of Nevada to date. As a result, the effects of the Reverse
Stock Split have not been affected throughout this Report. The Company may abandon the Reverse Stock Split or may seek stockholder approval
to adjust the Reverse Stock Split ratio in the future.
**Organizational History**
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Athena Bitcoin Global, a
Nevada corporation, and its wholly-owned subsidiary, Athena Bitcoin, Inc., a Delaware corporation (together referred to as Athena
Global or the Company) is a provider of various crypto asset transaction platforms, including the operation of automated
teller machines (ATMs) and personalized services (Athena Plus) for the purpose of selling and buying crypto
assets, white-label operations and payment services. The Companys network of Athena Bitcoin ATMs (Athena ATMs) is
active in thirty-three states and the territory of Puerto Rico in the United States, and four countries in Central and South America
as of February 25, 2026 (see below for corporate organizational chart and descriptions). The Company places its machines in convenience
stores, shopping centers, and other easily accessible locations.
The Company was incorporated
in the state of Nevada in 1991 under the name GamePlan, Inc. for the sole purpose of merging with Sunbeam Solar, Inc., a
Utah corporation, which merger occurred as of December 31, 1991, with GamePlan, Inc. as a sole surviving entity. The Company was involved
in various businesses, including, gaming and other consulting services, prior to becoming a company seeking acquisitions (a shell
company as defined in Rule 405 of the Securities Act). The Company was a reporting issuer under the Exchange Act from 1999 until
2015 when it filed Form 15 pursuant to Rule 12g-4(a)(1) with the Commission.
On March 28, 2014, the Company
entered into an Agreement and Plan of Merger (the Plan) with VPartments Inc. (VPartments); VPartments Acquisition
Corp., a Georgia corporation that was formed as a wholly-owned subsidiary of the Company (the Merger Subsidiary); and Mark
D. Anderson, Sr., who was the then beneficial owner of approximately 60.1 percent of the issued and outstanding shares of common stock
of VPartments. Under the terms of the Plan, the parties agreed that at the closing, the Merger Subsidiary would merge with and into VPartments,
with each 7.52034545757 then-outstanding shares of VPartments common stock to be converted into the right to receive one share of the
Companys common stock. The Company issued a total of 150.525 million restricted shares of its common stock to the
stockholders of VPartments, causing such stockholders to become the collective owners of approximately 90.8 percent of the Companys
then issued and outstanding shares of common stock. In connection with the change of control pursuant to the Plan, the Companys
then current officers and directors resigned, and the officers and directors were appointed. The Company (GamePlan, Inc.) had no operations
and was seeking acquisitions from April 2014 until January 30, 2020. The Company (GamePlan, Inc.) did not enter into debt obligations
during that period.
| | 2 | | |
In July, 2018, Magellan Capital
Partners, Inc., a Wyoming corporation, became a majority shareholder of the Company after the purchase of 90.421 million shares of common
stock (approximately 55% of the Companys then outstanding shares of common stock) in a private transaction with a majority shareholder,
Mark D. Anderson. Following the acquisition of control, Dempsey Mork, a beneficial owner of Magellan Capital Partners, Inc., was appointed
a sole officer and director of the Company, and subsequently elected as its sole director at a November, 2018 shareholders meeting.
On December 6, 2018, Mr. Mork entered into an agreement with Robert Berry, a former officer and director, to cancel all debts due to Mr.
Berry from the Company in consideration for the issuance of a total of 90.421 million shares of common stock of the Company to Mr. Berry
and another shareholder.
On January 14, 2020, the Company
entered into a Share Exchange Agreement (the Share Exchange Agreement), by and among the Company, Athena Bitcoin, Inc.,
a Delaware corporation (Athena Bitcoin) incorporated in 2015, and certain shareholders of Athena Bitcoin. The Agreement
provides for the reorganization of Athena Bitcoin, with and into the Company, resulting in Athena Bitcoin becoming a wholly-owned subsidiary
of the Company (the Share Exchange). The Company had a total of 486.171 million shares outstanding prior to the Share Exchange.
The Agreement was for the exchange of 100% shares of the outstanding common stock of Athena Bitcoin, for 3.594 billion shares of the Companys
common stock (an exchange rate of 1,244.69 shares of common stock of the Company for each share of Athena Bitcoin common stock). The exchange
rate was determined by the Board of Directors of Athena Bitcoin based on the arbitrary valuation of Athena Bitcoin by its Board of Directors
and negotiations with the principals of the Company. No independent valuation was obtained. The authorized capital stock of Athena Bitcoin
immediately preceding the closing of the Share Exchange consisted of (i) 3 million shares of the Athena Bitcoins common stock,
par value $0.001 per share, authorized, of which: 2.887 million shares were issued and outstanding immediately prior to the Share Exchange,
which included the following conversion events in connection with the Share Exchange: (i) 1.328 million shares resulting from the conversion
of certain Simple Agreements for Future Tokens (SAFT) issued by Athena Bitcoin in 2018 pursuant to the SAFT provisions providing
for the conversion into Athena Bitcoin equity under certain conditions were exchanged for 1.653 billion shares of the Companys
common stock at a conversion price of $4.09; (ii) 93.1 thousand shares resulting from the exercise of certain outstanding warrants at
an average exercise price of $2.00 per share, issued by Athena Bitcoin were exchanged for 115.888 million shares of the Companys
common stock; (iii) 126.7 thousand shares resulting from the exercise of stock options issued by Athena Bitcoin were exchanged for 157.635
million shares of the Companys common stock; and (iv) 336.7 thousand shares resulting from the conversion in connection with a
conversion and release agreement were exchanged for 419.1 million shares of the Companys common stock. The closing of the Share
Exchange transaction occurred as of January 30, 2020. Following the closing date of the transaction, there were 4.080 billion shares of
the Companys common stock outstanding. The Company had 5 billion shares of common stock authorized as of the closing date of the
Share Exchange transaction. Subsequently, in May 2020, the Company filed amended and restated articles of incorporation authorizing a
total of 4.41 billion shares of common stock. In January 2023, the Company filed second amended and restated articles of incorporation
authorizing 10 billion shares of common stock and 5 million shares of preferred stock, at $0.001 par value per share.
The Company approved the name
change from GamePlan, Inc. to Athena Bitcoin Global on March 10, 2021, by the unanimous consent of its Board
of Directors and a majority consent of its shareholders. The Company filed an amendment to its Articles of Incorporation with the Secretary
of State of the state of Nevada on April 6, 2021, with the effective date of April 15, 2021. The Companys name change, and trading
symbol change to ABIT were declared effective by FINRA on June 9, 2021.
Since our resale Form S-1
Registration Statement was declared effective on May 14, 2025, we have been subject to the reporting requirements of Section 15(d) of
the Exchange Act and file annual, quarterly, and current reports, and other information with the SEC.
| | 3 | | |
The Company owns 100% of our
operating subsidiary, Athena Bitcoin, Inc., a Delaware corporation. Our domestic business operations are conducted by Athena Bitcoin,
Inc. We also have operating subsidiaries in the specific countries where we operate. Our wholly-owned subsidiaries located outside of
the United States are: Athena Bitcoin S. de C.V., incorporated in Mexico (Athena SV); Athena Holdings Colombia SAS, incorporated
in Colombia; Athena Holding Company S.R.L, incorporated in Argentina; Athena Holdings of PR LLC, incorporated in Puerto Rico; Athena Holdings
Salvador, S.A. de C.V., incorporated in El Salvador; and Athena Business Holdings Panama S.A. incorporated in Panama.
|
(1) |
Athena Bitcoin, Inc. owns 99% of Athena Holdings El Salvador S.A. de C.V. and Eric Gravengaard, our former Chief Executive Officer and Chief Financial Officer, holds 1% on behalf of the Company. | |
|
|
| |
|
(2) |
Athena Bitcoin, Inc. beneficially owns and controls Athena Holdings Colombia SAS which is nominally owned by Eric Gravengaard 95% and Matias Goldenhrn 5% (our current Chief Executive Officer). | |
|
|
| |
|
(3) |
Athena Bitcoin, Inc. beneficially owns and controls Athena Holding Company SRL which is nominally owned by Eric Gravengaard 45%, Gilbert Valentine 45%, and Matias Goldenhrn 10%. | |
|
|
| |
|
(4) |
Athena Bitcoin, Inc. owns 2,999 Shares of Athena Bitcoin S de C.V. and Matias Goldenhrn owns 1 Share on behalf of the Company. | |
|
|
| |
|
(5) |
Athena Bitcoin, Inc. is the only member of Athena Holdings of PR, LLC. | |
|
|
| |
|
(6) |
Athena Bitcoin, Inc. owns 100% of Athena Business Holdings Panama S.A. | |
Our corporate office is located
at 1 SE 3rd Avenue Suite 2740, Miami, Florida 33131, and our telephone number is 312-690-4466. Our website iswww.athenabitcoin.com*.
The information on, or that can be accessed through, our website is not part of this Report and is not incorporated by reference herein.
| | 4 | | |
**Private Financings of Athena Bitcoin Global**
On January 31, 2020, the
Company closed a private placement of its 8% Convertible Debentures in the total amount of $3.1 million (the 8% Convertible Debentures).
The closing of the private placement was subject to the closing of the Share Exchange transaction by the Company. There were two purchasers
of the 8% Convertible Debentures: KGPLA, LLC, , an entity in which Michael Komaransky, a former director and 40.8% beneficial owner of
the Company has a controlling interest and serves as Manager of such entity, and whose Chief Investment Officer is Huaxing Jason
Lu, our director ($3.0 million principal amount of 8% Convertible Debenture) and Swingbridge Crypto III, LLC ($125 thousand principal
amount of 8% Convertible Debenture), an affiliate and former noteholder of the Company. The 8% Convertible Debentures had a maturity date
of January 31, 2025, which was extended until January 31, 2026, and bear interest at 8% per annum. The purchasers have an option to convert
the outstanding principal and accrued interest amount of their respective 8% Convertible Debentures into shares of common stock of the
Company at the lower of $0.012 per share or, if lower, a price determined by specified formulas depending on the type of conversion event.
Swingbridge Crypto III, LLC. converted its $125 thousand 8% Convertible Debenture into 10,416,666 shares of the Companys common
stock in December, 2021. In connection with the 8% Convertible Debentures private placement, the purchasers acquired certain registration
and voting rights, discussed below under Certain Relationships and Related Transactions, and Director Independence. The
8% Convertible Debenture held by KGPLA, LLC was amended and restated as of May 15, 2023 and became a secured, and not general unsecured,
obligation of the Company (the Amended and Restated Secured Convertible Debenture), on par with the notes issued pursuant
to the Senior Secured Loan Agreement entered into as of the same date. The repayment of the Amended and Restated Secured Convertible Debenture
was secured by all the assets of the Company, except for property previously pledged to Banco Hipotecario, and with respect to such assets,
the Company granted the lenders a second priority lien pursuant to that certain Security Agreement dated as of the date thereof by the
Company, KGPLA, LLC. and Athena Bitcoin, Inc. and Athena Holdings El Salvador SA de C.V., the Companys subsidiaries as guarantors.
On November 24, 2025, the
Company voluntarily repaid in full the outstanding balance of approximately $3 million plus accrued interest of $36 thousand owed to KGPLA
for a total payment of $3.036 million, under that certain Amended and Restated Secured Convertible Debenture entered into with KGPLA on
May 15, 2023, as amended from time to time. In connection with the repayment of all amounts owed pursuant to the Convertible Debenture,
the obligations and commitments owed by the Company to KGPLA under the (a) Convertible Debenture, (b) a Senior Secured Loan Agreement
entered into between KGPLA (and certain other borrowers named therein) and the Company dated May 15, 2023, and (c) a Security Agreement
dated May 15, 2023, between KGPLA and the Company, each as amended from time to time, were terminated and all collateral associated therewith
is required to be released by KGPLA. The voluntary prepayment was made using cash on hand and the Company did not incur any prepayment
penalties in connection with the repayment. The 8% Convertible Debenture (as amended and restated May 15, 2023) remained outstanding at
December 31, 2024 and, as indicated above, was voluntarily repaid in full on November 24, 2025.
**Who We Are, What We Do and Industry
Trends**
We are an early entrant in
the crypto asset market and one of the first U.S. publicly-traded companies using crypto assets and blockchain technologies in our business
operations which include a global network of Athena Bitcoin automated teller machines (ATMs) that allow our customers to buy or sell bitcoin
in exchange for their local Fiat Currency, such as the U.S. Dollar.
We are focused on making Bitcoin
more easily accessible, functional and usable for people, businesses and other organizations. Athena believes the great promise of Bitcoin
is the democratization of money. We believe that the traditional system of money and banking, with its many layers, costs and inefficiencies,
results in the disenfranchisement of enormous numbers of individuals and businesses in the world. According to the World Bank Groups
2025 Global Findex Database, 1.3 billion people in the world are unbanked. This is typically due to geographic and socio-economic factors.
We believe that Bitcoin, altcoins, blockchains and smart contracts are poised to transform the international financial order by providing
the unbanked and billions of others in the world with a connection to the new global digital financial system that allow our customers
to buy or sell bitcoin in exchange for their local Fiat Currency, such as the U.S. Dollar.
| | 5 | | |
**About Bitcoin**
Bitcoin is a system for
decentralized digital value exchange that is designed to enable units of Bitcoin to be transferred across borders without the need
for currency conversion. The supply of Bitcoin is not determined by a central government, but rather by an open-source software
program that limits both the total amount of Bitcoin that will be produced and the rate at which it is released into the network.
The responsibility for maintaining the official ledger of who owns what Bitcoin and for validating new Bitcoin transactions is not
entrusted to any single central entity. Instead, it is distributed among the networks participants. As such, crypto assets
are transferred entirely online, with no physical coins or bills. Instead of being held at a bank, crypto assets are held in
ones digital wallet, which is an online vault for holding public and private keys for crypto assets. Instead of being
transferred through banks, brokers, clearing houses, custodians and payment processors, crypto assets are transferred directly to
the recipient online and transactions are recorded on a blockchain or public ledger. This allows for an efficient and fully
transparent transfer of funds. The value of each crypto asset is determined by trading among buyers and sellers all over the world.
As of February 16, 2026, per coingecko.com, the overall market capitalization of crypto assets was $2.4 trillion and Bitcoin had a
market capitalization of $1.3 trillion representing 56.4% of the market. While Bitcoin has recently declined in value by
approximately 30% as of February 16, 2026, compared to December 31, 2025, and although the future of cryptocurrency is largely
unpredictable, a study undertaken by Grand Review Research projects that the global cryptocurrency market will reach $18.26 billion
USD by 2033, growing at a CAGR of 14.5 percent from 2026 to 2033
(https://www.grandviewresearch.com/industry-analysis/cryptocurrency-market-report ).
One challenge for Bitcoin
and other crypto assets is that they typically cannot be used to pay for common expenditures like groceries, utility bills, or a house.
When someone wants to spend their Bitcoin, they will generally need to convert it to their local currency. Crypto asset owners can use
crypto exchanges like Coinbase and Kraken and acquire U.S. Dollars by selling their crypto asset(s). On Coinbase, Kraken or other crypto
exchange, users can oftentimes sell their Bitcoin or other crypto assets for up to $50 thousand U.S. Dollars a day which can be wired
or otherwise sent directly to a bank account and typically usable after one or two business days. Crypto exchanges are well suited for
larger, planned transactions but can be inconvenient or entirely unsuitable for smaller or more immediate transactional needs or for those
who do not have access to institutionalized banking in their country. They also do not offer the level of convenience that bank customers
are accustomed to. Most people in the United States use bank ATMs rather than bank tellers to get spending cash due to their convenience.
**ATM Market**
According to Research &
Markets ATM Services Market Report, dated January 2026, The ATM services market size has grown strongly in recent years and is
projected to grow from $23.23 billion in 2025 to $24.71 billion in 2026 at a compound annual growth rate (CAGR) of 6.4%. The growth in
the historic period can be attributed to expansion of retail banking infrastructure, increasing consumer demand for self-service banking,
growth of off-premise atm installations, rising cash circulation in emerging economies, and wider acceptance of automated banking channels.
However, as of December 31, 2025, there were approximately39.2 thousandBitcoin ATMs worldwide, according to information posted
on MEXC, looking at data from Finbold Research based on Coin ATM Radar figures. This figure represents a net increase of 1.4 thousand
machines during 2025, marking a 3.8% year-over-year growth, with the United States remaining the dominant market.
Key details regarding the
2025 Bitcoin ATM market:
|
|
|
Total Count:The number of machines are estimated to have grown from 37.7 thousand on January 1, 2025, to 39.2 thousand by year-end. | |
|
|
|
Top Regions:The United States added 0.5 thousand machines to reach a total of 30.6 thousand, | |
|
|
|
Other Regions:Canada added 0.28 thousand machines and Europe added 0.1 thousand, bringing its respective totals to 3.7 thousand and 1.8 thousand while Australia experienced the fastest growth, adding 0.6 thousand machines (a 43% increase). | |
|
|
|
Growth Trend:While installation growth slowed compared to previous years, the network continued to expand, averaging nearly four new installations per day globally throughout 2025. | |
| | 6 | | |
Our two-way ATMs play a role
similar to the ATMs by providing cash conveniently and quickly. Individuals that own Bitcoin can visit our two-way ATMs and get up to
$2,000 in cash in a single transaction. While our two-way ATMs dispense cash to Bitcoin owners like a typical ATM cash machine does for
a bank customer, our ATMs capabilities are more akin to currency exchange booths at international airports. Our ATMs perform real-time
exchange between Bitcoin and Fiat Currency. The majority of our customers use our services to purchase Bitcoin with fiat currencies, most
commonly the U.S. Dollar. However, in Central and South America, there is a more even distribution between purchases and sales of crypto
assets. While our two-way ATMs differ substantially in function from bank ATMs, they provide a similar level of convenience. Our two-way
ATMs benefit from the publics vast experience using bank ATMs, which contributes to making our two-way ATMs a user-friendly and
familiar method for anyone who wishes to buy or sell Bitcoin.
**The Birth of Bitcoin ATMs**
In the earliest days of Bitcoin,
most transactions were done in person - often facilitated by websites. These sites matched prospective buyers with sellers and facilitated
communications and wallet coordination, allowing them to meet in public places like coffee shops and street corners, and exchange Bitcoin
for envelopes of cash. The first Bitcoin ATMs began appearing in 2014. These ATMs were popular with retail customers because they offered
instantaneous access to Bitcoin in a familiar and safe method.
According to a CNBC article
(*Why Bitcoin ATMs are taking over malls and gas stations across the U.S.* Published November 7, 2023), Bitcoin ATMs exploded in
popularity between 2020 and mid-2022, with a peak of approximately 34 thousand Bitcoin ATMs located in the United States in mid-2022.
There are many operators of Bitcoin ATM networks, from crypto businesses to major corporate and conventional kiosk companies including
Coinstar.
Some Bitcoin ATMs offer one-way
exchange, allowing customers to only buy crypto assets. Others offer two-way exchange, so customers can buy crypto assets for cash, or
sell some of their crypto assets and receive cash. Athena Bitcoin ATMs currently serve clients with only one crypto asset, Bitcoin, in
either one-way or two-way exchanges, depending on the functionality of the ATM machine.
**Industry Summary**
The Company is an active participant
in the operation of Bitcoin ATMs in the United States and Latin America. More broadly we operate in the market of retail sales of crypto
assets, where we facilitate small purchases of Bitcoin. There are multiple avenues that retail consumers, individuals purchasing small
amounts from one dollar to a few thousand dollars worth, can purchase or dispose of crypto assets.
The Company operates Bitcoin
ATMs in the United States and Latin America. However, on a broader level, we are better defined as operating in the market of retail sales
of crypto assets whereby we facilitate the purchases of Bitcoin. Our consumers can purchase as little as $1 dollar worth of Bitcoin and
up to a few thousand dollars worth of Bitcoin.
**Bitcoin Adoption**
Parties that want to use their
bank accounts to buy Bitcoin can do so without an ATM. These transactions are the domain of exchanges and specialty apps including services
from Coinbase, Gemini, Binance, Kraken, and Square. These services generally accept U.S. Dollar transfers from bank accounts and do not
accept physical currency. These services may or may not, depending on several factors including method of deposit, allow the purchaser
of a crypto asset on their platforms to immediately transfer the crypto asset into their own wallet. These services cater to larger purchasers
and investors of crypto assets. Users of exchanges and specialty apps may use ATMs as a convenient method to get cash, similar to how
a bank account and credit card holders use bank ATMs.
| | 7 | | |
According to Crypto.com in
its *Crypto Market Sizing 2025* report dated January 16, 2026:
|
|
|
Global cryptocurrency owners increased by12.4%in 2025, rising from 659 million in 2024 to741 millionin 2025. | |
|
|
|
Based on our on-chain estimates: | |
|
|
|
Bitcoin (BTC) owners grew by8.3%,from 337 million in 2024 to365 millionin 2025, accounting for 49.3% of global owners. | |
|
|
|
Ethereum (ETH) owners grew by22.6%,from 142 million in 2024 to175 millionin 2025, accounting for 23.6% of global owners. | |
|
|
|
There could be approximately 300,000 to 1.2 million people invested in BTC via US spot exchange-traded funds (ETFs), in addition to the estimates above. | |
*
We believe the trends shown
in the table above are due in part to an increase in companies and online service providers that are helping to make Bitcoin and other
crypto assets more widely and easily usable. This trend is also correlated with the increase in the price of Bitcoin and significant events
that have occurred in the crypto economy over the past several years, notwithstanding the recent declines beginning at the end of 2025
and continuing into 2026. Given the infancy of the new digital global financial system, there has been significant variability of price
since the inception of Bitcoin. There has also been negative press events, such as the FTX bankruptcy and Terra (LUNA), that have caused
fluctuations in the price of Bitcoin and in Bitcoins global adoption. However, we believe that the continued increase in crypto
owners shown in the table above demonstrates the durability of the new digital global financial system, and the Company is optimistic
that as worldwide adoption continues, the variability of the price and the frequency of these negative events will decrease.
While the COVID-19 pandemic
detrimentally impacted the world economy overall and aspects of our business operations, we also believe that the COVID-19 pandemic demonstrated
the benefits of crypto assets to the world. Christine Zhenwei Qiang, Global Director for Digital Development Global Practice for the World
Bank, said in 2022, that the COVID-19 pandemic has highlighted the fundamental role that digital infrastructure can play in rapidly
delivering services and social assistance to people.Integration of digital ID, digital payments, and trusted data sharing platforms
is critical for serving the poor at scale and connecting communities to opportunities.
We believe that the use of
Bitcoin ATMs will continue to rise as the Bitcoin and crypto industry and its many interconnected service providers expand.
| | 8 | | |
Our mission is to connect
the worlds cash to the new global digital financial system. We believe that providing the world with access to crypto assets will
help transform the international financial order by providing the unbanked (and billions of others) in the world with a connection to
a new global digital financial system that is more accessible, efficient and transparent than the legacy financial system.
We operate in the market of
retail sales of crypto assets, where we facilitate small purchases of Bitcoin. There are multiple avenues that retail consumers, individuals
purchasing small amounts from one dollar to a few thousand dollars worth, can purchase or dispose of crypto assets. We have several
products in our platform that include:
|
|
|
Athena Bitcoin ATMs; | |
|
|
|
Athena Plus; | |
|
|
|
White-label Service; | |
|
|
|
Athena Pay; and | |
|
|
|
Athena Bitcoin Affiliates Program. | |
Athena Bitcoin ATMs
The Company is focused on
developing, owning and operating a global network of Athena Bitcoin ATMs, which are free standing kiosks that permit customers to (i)
either buy or sell Bitcoin (two-way ATMs) in exchange for cash (banknotes) issued by sovereign governments - often referred to as fiat
currencies, or (ii) to buy Bitcoin (one-way ATMs) in exchange for fiat currencies. We utilize purchasing algorithms and other proprietary
systems to manage crypto assets to ensure that we are able to meet consumer demand for crypto assets.
The Company places its ATMs
in convenience stores, shopping centers, and other easily accessible locations. Our network presently includes ATMs in thirty-three U.S.
states, the territory of Puerto Rico along with Mexico, Colombia, Argentina, and El Salvador. We seek to expand our network in the U.S.
and globally, and to further develop Athena Bitcoin as a trusted and preferred brand for parties seeking to exchange fiat currency for
Bitcoin.
Customers can purchase
as little as $1 of Bitcoin but normally choose between $100 and $1,000 using Athena Bitcoin ATMs. The typical ATM that the Company operates
is about 5-feet tall and features a large touchscreen for customer interaction. The customer typically needs to have a wallet application
on their smart phone to buy or sell Bitcoin on our ATM. To initiate the transaction, the customer will follow the steps prompted on the
screen. When a customer is buying Bitcoin, the machine will require the customer to insert paper Fiat Currency since our ATMs do not accept
debit or credit cards. When the transaction is complete, a receipt will be printed showing exactly how many crypto assets have been bought
and the receiving address. The Companys ATMs do not contain the crypto assets private key. The Company sells Bitcoin from
cloud-based wallets in each country, enabling real-time supply of crypto assets to its customers.
Our hot wallets are maintained
by BitGo, a regulated third-party custodian, and not by Company personnel. The Company has engaged BitGo (a qualified custodian) to secure
our digital assets. BitGo provides multi-signature wallet services and secure key management for the Bitcoin that the Company holds for
its own account and for facilitating customer transactions. By entrusting this function to BitGo, we add a layer of security and risk
mitigation (given BitGos expertise and insurance arrangements) beyond what could be achieved with in-house custody.
At this time, the Company
does not maintain any balance of crypto assets in cold storage. The crypto assets the Company holds are available for immediate sale.
We do not have any insurance policies that cover the crypto assets held in our wallets.
We offer bitcoin for sale
at all of our ATM machines. For the years ended December 31, 2025 and 2024, we completed 213,683 and 185,789 transactions in Bitcoin through
our Bitcoin ATMs, respectively.
| | 9 | | |
The Company buys most of its
crypto assets through automated purchases on crypto exchanges and with digital assets trading firms based on algorithms the Company has
developed for balancing its holdings with anticipated demand. The Company is also active in the over-the-counter dealer market and has
bilateral relationships with several large crypto asset trading desks. We replenish our supply of Bitcoin, multiple times daily as needed,
and hold Bitcoin in our wallet to sell to users of our ATMs. On average, we sell our holdings of Bitcoin within 2 days of purchase. We
only transact in Bitcoin at our machines. We strive to keep holding periods short to reduce the effect of changes in Bitcoin/U.S. Dollar
exchange rates on our business and to maximize our working capital. We do not invest or have long term holdings of any crypto currency.
We charge a fee for Bitcoin
transactions through our Athena Bitcoin ATM, equal to the prevailing price at U.S.- based exchanges plus a markup that typically ranges
between 13% and 28%. The prices shown to customers on our Bitcoin ATM are inclusive of this price spread and are calculated by multiplying
the prevailing price level of crypto asset by one plus the markup. The markup varies by location. It is determined by a proprietary method
that is maintained as a trade secret. Our revenues associated with our ATM transactions are recognized at the time when the crypto asset
is delivered to the customers wallet.
For the years ended December
31, 2025, and 2024, the average markup on Bitcoin sold was 24% and 22%, respectively.
We offer bitcoin for sale
at all of our ATM machines. We also buy bitcoin at some of our ATM machines (also known as two-way ATMs). The cash withdrawal limit from
our two-way ATMs is $2,000 per transaction (maximum of $1,000 in California). We replenish or withdraw fiat currencies at our ATMs twice
a week or depending on usage, using bonded security companies.
Between January 1, 2022, and
December 31, 2025, Bitcoins price exhibited significant fluctuations. In early 2022, Bitcoins price was around $47,459 by
the end of March, before declining to approximately $29,000 by May 11, 2022. The downward trend continued, with the price falling below
$23,000 in June 2022. By the end of 2022, Bitcoins price was under $20,000. In 2023, Bitcoins price rose consistently, ending
the year at $42,258. In 2024, Bitcoins price continued to rise, reaching a then all-time high of $106,147 on December 17, 2024.
By December 31, 2024, the price was approximately $93,425. As of December 31, 2025, the price of Bitcoin was $87,711 and on August 14,
2025, Bitcoin reached an all-time high price of $124,457. Refer below for a graph from statista.com of the price of bitcoin from January
1, 2022 through December 31, 2025. This shows the fluctuations of the price of bitcoin over time.
**BITCOIN PRICE**
*Through February 1, 2026
| | 10 | | |
Bitcoin closing prices every 3 months
from Jan 1, 2022 through February 1, 2026. Data source: Stooq Bitcoin historical quarterly data.
We believe that we are in
the early stages of the new digital financial order system and that as crypto asset use cases expand and there is more worldwide adoption,
the fluctuations in volume and price will decrease. Our focus is on prioritizing growth, especially in geographic areas where consumers
are restricted from accessing the global financial system.
The Company has been active
in increasing its geographic presence by expanding its Athena Bitcoin ATM Fleet. Refer below for a chart showing the active Athena Bitcoin
ATMs from December 31, 2017, through December 31, 2025.
| | 11 | | |
**TOTAL ACTIVE ATMS OVER TIME**
****
****
****
**Number of Bitcoin ATMs by Year**
|
Year |
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 | |
|
# of Bitcoin ATMs |
65 |
64 |
59 |
137 |
392 |
445 |
1,829 |
3,111 |
2,953 | |
****
ATMs, by location, are presented below
as of December 31, 2025.
**ATMs BY LOCATION**
****
|
Country |
Number of Athena Bitcoin ATMs
(as of December 31, 2025) |
Type of Fiat Currency | |
|
Total |
Two-Way | |
|
United States |
2,903* |
- |
U.S. Dollar | |
|
El Salvador |
27 |
24 |
U.S. Dollar | |
|
Argentina |
6 |
6 |
Argentine peso | |
|
Colombia |
15 |
15 |
Colombian peso | |
|
Mexico |
2 |
2 |
Mexican peso | |
|
TOTAL |
2,953 |
47 |
| |
****
*Excludes Chivo, Sociedad Annima de Capital
Variable, a wholly-owned private company of the Government of El Salvador (Chivo) branded ATMs which the Company operates
on behalf of the Government of El Salvador for Chivo as white-label service.
As of October 5, 2022, effective
July 1, 2022 and expiring on July 30, 2024, the Company and Chivo, signed a Master Services Agreement (MSA) and a Service
Level Agreement (SLA) which replaced the existing Master Services Agreement, Contracts and Athena Service Addendums 1 and
2 with the Department of Treasury of El Salvador. The MSA and SLA include the same services, performance obligations, pricing and terms
outlined in the original Master Services Agreement, Contracts and Addendums. In conjunction with the new MSA and SLA, the Company and
CHIVO completed a financial settlement agreement secured by certain assets to reconcile reporting, and settle the balances owed between
the parties. The settlement was completed as of April 2023 upon full satisfaction of all obligations thereunder. On December 20, 2024,
a new three-year MSA and SLA with Chivo was signed effective December 1, 2024.
| | 12 | | |
Athena Plus (Over-The-Counter or OTC)
The Company also offers personalized
services (Athena Plus) for the purpose of selling and buying crypto assets. Our Athena Plus service allows us to assist
crypto asset buyers and sellers who wish to use their bank accounts. Through Athena Plus, we also generate revenue by selling Bitcoin
directly to institutional traders, individuals and organizations. These transactions are typically completed telephonically for amounts
that exceed $10,000 U.S. Dollars. The Company utilizes Bitcoin on hand and additional purchases, if necessary, to provide Bitcoin for
the transaction. We charge a fee for Bitcoin transactions equal to the prevailing price at U.S.-based exchanges plus a markup.
White-label Service
We operate ATMs on behalf
of the Government of El Salvador. These Bitcoin ATMs are owned by the Company. This white-label service is comprised of installing the
machines for the customer and ensuring that the machines are operating in a way that they can be used by the Government of El Salvador
and their users. To achieve this, the Company is responsible for loading and unloading cash, setting up the network, performing repairs
and maintenance and other responsibilities to ensure that the machines are operating as intended. We charge a fixed monthly fee to operate
these Bitcoin ATMs, as well as an additional fixed price for specific services that are required. The additional fixed price for specific
services required is less than 1% of total revenue earned for the fixed monthly fee. The fixed price covers Athenas cost plus a
reasonable profit margin. The Companycharges a separate fixed fee for installation of the Bitcoin ATM as determined by the contract.
The Company also charges a fixed fee each month for operating the Bitcoin ATM. The Company does not sell Bitcoin directly to the users
of the Bitcoin ATM.
When a user purchases Bitcoin
from a Chivo-branded Bitcoin ATM, the Bitcoin ATM delivers the Bitcoin to the address selected by the user. This may be a Chivo wallet
or any other wallet address, including a non-custodial wallet.
|
|
|
Holder of Private Keys: If the user chooses to receive the Bitcoin in a Chivo wallet, then the Government of El Salvador (through the Chivo wallet system) retains custody of the private keys associated with that wallet. The Chivo wallet is a custodial wallet, meaning the end user does not have direct access to the private keys. In that scenario, the Government (or its designated Chivo wallet operator) has control over the crypto assets after delivery. | |
However, users are not required
to use a Chivo wallet. If the user inputs a non-custodial wallet address, the Bitcoin is delivered directly to that wallet, and the user
retains sole control of the associated private keys.In all cases, regardless of the destination address, the Company never holds
or has access to the private keys for Bitcoin purchased by users at the ATMs. Our role is strictly limited to operating the ATM infrastructure
and facilitating the transaction; we do not have custody or manage digital assets on behalf of users.
****
|
|
|
Method of Key Storage (Chivo Wallets): For transactions involving delivery to Chivo wallets, whereby the Company is not the custodian and does not have access to the Chivo wallet infrastructure, it is our understanding that the Government of El Salvador uses a combination of hot wallets (for real-time liquidity and immediate delivery) and potentially cold or multi-signature storage for operational security. Because transactions through Chivo ATMs require near-instantaneous delivery, the Chivo system maintains hot wallet liquidity to fulfill those transactions. The Company does not oversee or participate in the management of these storage practices. | |
The Government of El Salvador
has title to the private keys to the crypto assets. However, the Company acts as the custodian for the cash in the ATM machine as well
as cash that is in-transit.
| | 13 | | |
The Company began working
with the Government of El Salvador in June 2021 to support the implementation of its new Bitcoin Law which went into effect in September
2021 and made Bitcoin legal tender in El Salvador through January 29, 2025. To assist the Government of El Salvador with adoption of Bitcoin
as legal tender, the Company provided the white-label service discussed below, as well as certain ancillary services. These ancillary
services were provided to Chivo, a private company incorporated under the laws of the Republic of El Salvador, which is politically controlled
by the Government of El Salvador. However, six articles of the Bitcoin Law were modified and three others were repealed as of January
29, 2025. Under the new rules, Bitcoin is no longer considered currency, or legal tender. Another change makes
using Bitcoin entirely voluntary. Previously, the law mandated that businesses accept Bitcoin for any goods or services they provided.
Additionally, Bitcoin can no longer be used to pay taxes or settle government debts. These changes are not expected to harm our operations
because our Bitcoin ATM services in El Salvador do not depend on mandatory Bitcoin usage; rather, they cater to organic consumer demand.
We believe demand for Bitcoin transactions will continue to be driven by individuals who choose to use Bitcoin. Our role as a Bitcoin
ATM operator for Chivo remains unchanged whereby we continue to manage the Bitcoin ATMs on the governments behalf under our fixed-fee
service arrangement.
The government is also stepping
back from its involvement in Chivo Wallet, the state-backed digital wallet, by either transferring it to private sector management or
terminating the program, as part of the countrys agreement with the International Monetary Fund. We believe this development may
open opportunities for private companies (including the Company) to fill any service gaps left by the governments reduced role.
We have assessed the legislative changes and the Chivo transition, and do not foresee a negative impact on our business, in part because
our existing Bitcoin ATM operations and customer base in El Salvador are expected to continue without disruption. There is no assurance
that our assessment may not change depending on any future legal, political or economic changes in El Salvador.
This white-label service is
comprised of installing and operating a fixed number of Bitcoin ATMs for Chivo. Our services provide Company owned Bitcoin ATMs to Chivo,
which we operate on their behalf. These Bitcoin ATMs are located in El Salvador and in their consulates and other locations in the United
States. In the U.S., the Company operated a total of 43 Bitcoin ATMS in service for Chivo and 2,903 Athena Bitcoin branded machines as
of December 31, 2025. Our responsibilities operating the Bitcoin ATMs include ensuring that the Bitcoin ATMs have sufficient cash, performing
repairs and maintenance, loading and unloading cash, setting up the network connections, and software upgrades, as necessary. We charge
a separate monthly fixed fee to operate the Bitcoin ATM. We also charge a separate fixed fee for installation of the Bitcoin ATM as determined
by an applicable contract. The fixed fees provided in the contract are not the same for each Bitcoin ATM and depend on the location of
the Bitcoin ATM. The Company does not sell Bitcoin to the users of the machine, as the Bitcoin are the property of the Government of El
Salvador. Since the initial installation of the agreed-upon Bitcoin ATMs, the Company only provides on-going support services for these
Bitcoin ATMs. The Company has not installed any new white-label Bitcoin ATMs in fiscal years 2024, or 2025. The Company provided no services
related to the Chivo ecosystem in fiscal years 2024, or 2025.
In 2021 and 2022, we installed a total of 200 Chivo Bitcoin ATMs in
El Salvador, 10 Chivo Bitcoin ATMs at El Salvador consulates in the U.S. and 45 Chivo Bitcoin ATMs in other U.S. locations (43 of which
are actively operating). We currently operate 194 Chivo Bitcoin ATMs in El Salvador, 14 Chivo Bitcoin ATMs at El Salvador consulates in
the U.S., 29 Chivo Bitcoin ATMs in other U.S. locations, with 27 ATMs in storage (as of December 31, 2025).
Athena Pay
Athena Pay is a payment processor
application (app); that allows retailers to create QR codes with the specific amount to be charged to customers in Bitcoin.
Athena Bitcoin Affiliates Program
The Athena Bitcoin Affiliates Program provides Bitcoin ATM operators with a turnkey solution, offering software, compliance support, cash management, and marketing services to streamline operations and maximize profitability. This turnkey solution is for participating independent Bitcoin ATM operators (Affiliates) who will be able to leverage the Companys established platform and services to manage their own Bitcoin ATMs more efficiently.
| | 14 | | |
**Competitive Strengths**
We are focused on strategically
placing our ATMs in optimal locations that maximize both current income and future potential. Our Bitcoin ATMs are in urban, suburban,
and rural locations. Our site selection criteria and metrics are a closely guarded proprietary aspect of our business. In placing our
Bitcoin ATMs, we employ a data driven strategy based on a multitude of factors. In addition to data metrics, our placement strategy includes
analysis of immediate trends, as we are in a dynamic business where usage is widening dramatically and often in unpredicted ways. Each
location is chosen to complement the rest of the fleet and offer customers of diverse backgrounds access to convenient crypto assets transactions.
We are constantly working
to improve our operational efficiency. Our Bitcoin ATMs serve as remote tellers that connect individuals to our cloud-based transaction
operations. We utilize proprietary systems and methods of managing our currency transaction operations. The objective of our purchasing
algorithms is to frequently re-balance our Bitcoin holdings to meet the dynamic demand of our many customers while minimizing risk of
crypto asset rate fluctuations. Over-buying of Bitcoin can result in inefficiencies and exposure to price fluctuations while under-buying
may temporarily prevent us from selling Bitcoin at our Bitcoin ATMs. We strive to improve the efficiency of our currency transaction operations
to maximize our profits, manage risk and facilitate growth.
Our Bitcoin ATMs permit users
to obtain Bitcoin directly in their personal bitcoin wallet, which allows users to have full control of their crypto assets. Other payment
providers often utilize a centralized system where the users, while able to make payments in crypto for everyday expenditures, do not
have control of their crypto wallet due to not controlling the private keys to their crypto assets. We believe that this is contrary to
many users preferences, which is part of a transparent de-centralized digital financial system.
**Business Strategies**
****
We seek to grow and distinguish
Athena Bitcoin services based on our method of location selection, our global expansion, operational efficiencies, and our authenticity
as a crypto industry forerunner with respect to Bitcoin ATMs.
Our strategy is to become
a global financial services company that can connect the worlds cash to the world of Bitcoin. We have spent years learning how
to expand our business across borders. We believe that we have assembled the people, processes, and technologies to enable us to continue
to grow our global footprint that we believe is unmatched by our competition.
According to a database
earth report for 2025, the median age of the population in the United States is 38.5 years while in Latin America and the Caribbean,
it is 31.7 years.
As reported by the joint FINRA
Foundation-CFA Institute Research Focuses on Gen Z Investors in a report dated May 2023, which examines attitudes, behaviors of investors
ages 18 to 25, they find that despite their young age, a surprisingly large percentage of Gen Zs in the United States invest, with cryptocurrency
as their top choice: Close to six in 10 (56 percent) report owning at least some investments. They primarily invest in cryptocurrency
(55 percent) and individual stocks (41 percent). They are less likely than their older counterparts to use mutual funds and are more likely,
along with millennials, to invest in crypto and non-fungible tokens compared with Gen Xers.
As a result, we believe that
Bitcoin is poised to quickly become a part of the lives of a huge percentage of the developing worlds population. We project that
this global south offers a large green field expansion opportunity for us because it combines high usage of physical currency
with low median age and reduced access to quality banking and the legacy global financial system.
**Growth Strategies**
****
The Company is actively working
to expand its geographic presence throughout the world, in particular in Latin America, by expanding our global Bitcoin ATMs and discussing
with potential partners the service offerings that we are able to provide as the world continues to adopt the new digital financial system.
By working to increase our geographic service area, including our planned expansion of operations in El Salvador, we aim to make Athena
into a global financial services company that can connect the worlds cash to the world of crypto assets.
| | 15 | | |
See table below for our ATM
breakdown by country and type, as of December 31, 2025.
**ATMs BY COUNTRY AND TYPE**
|
Country |
Number of Athena Bitcoin ATMs
(as of December 31, 2025) |
Type of Fiat Currency | |
|
|
Total |
Two-Way |
| |
|
United States |
2,903* |
- |
U.S. Dollar | |
|
El Salvador |
27 |
24 |
U.S. Dollar | |
|
Argentina |
6 |
6 |
Argentine peso | |
|
Colombia |
15 |
15 |
Colombian peso | |
|
Mexico |
2 |
2 |
Mexican peso | |
|
Total |
2,953 |
47 |
| |
*Excludes Chivo-branded ATMs which the Company
operates on behalf of the Government of El Salvador for Chivo as white-label service.
Also, the Company has developed
and has started rolling out the Athena Bitcoin Affiliates Program which provides Bitcoin ATM operators with a turnkey solution, offering
industry-leading software, compliance support, cash management, and marketing services to streamline operations and maximize profitability.
This turnkey solution is for participating independent Bitcoin ATM operators (Affiliates) who will be able to leverage the
Companys established platform and services to manage their own Bitcoin ATMs more efficiently. The material terms of the program
include:
|
|
|
Services Offered: Affiliates receive access to our proprietary Bitcoin ATM software platform (including regular updates and maintenance), compliance support (such as anti-money laundering (AML) and know your customer (KYC) procedures developed by the Company), cash management guidance (e.g. armored transport coordination and vaulting services), and marketing support to help drive customer traffic to their Bitcoin ATMs. | |
|
|
|
| |
|
|
|
Fee Structure: Affiliates are charged a monthly service
fee, or they participate in a revenue share arrangement (a percentage of transaction revenues) with the Company in exchange for the
above services. The exact terms may vary by affiliate contract, but generally the Companys compensation is tied to the
affiliates transaction volume (revenue-sharing) and/or fixed fees for software licensing and support. A portion of these fees
are paid in Bitcoin and identified as Bitcoin received from independent Bitcoin ATM operators in the consolidated statements of
cashflows included in the audited financial statements included in this Report. | |
|
|
|
Affiliate Obligations: Affiliates retain ownership of their Bitcoin ATMs but are required to adhere to our operational standards and compliance protocols. For example, Affiliates must implement the KYC/AML processes we provide and maintain their machines in accordance with the Companys guidelines. This ensures a consistent and secure experience across the extended network of Bitcoin ATMs. | |
|
|
|
| |
|
|
|
Future Milestones: The Affiliates Program was launched in late 2024 (pilot phase) and fully
rolled out in June 2025. A near-term milestone is to onboard additional Bitcoin ATM operators in key markets throughout 2026, which we
believe will increase transaction volume and expand our brand presence without requiring significant capital expenditure by the Company.
Our goal is to have a certain number of affiliate-operated Bitcoin ATMs live by the end of 2026. We also plan to evaluate the programs
progress by metrics such as the number of affiliate Bitcoin ATMs deployed, and the incremental revenue generated for the Company. No assurances
can be made that we will be successful in achieving our goals with respect to future milestones. | |
****
****
****
****
| | 16 | | |
****
**Competition**
We operate in a global and
dynamic market and compete with a variety of organizations that offer services similar to those that we offer. We operate in a highly
competitive industry with an increasing number of participants. Industries adjacent to the digital financial system are highly fragmented,
quickly evolving, intensely competitive, and subject to growing regulatory scrutiny and oversight. The Bitcoin ATM industry is highly
competitive. A number of companies offer products that are similar to our products and target the same markets as we do. Certain of our
current and potential competitors have longer operating histories, greater financial, technical and marketing resources, and a larger
installed customer base than we do. These competitors may be able to respond more quickly than we can to new or emerging technologies
and changes in customer requirements, develop superior products, and devote greater resources to the development, promotion and sale of
their products than we can.
There are several publicly
traded companies that operate Bitcoin ATMs, including Bitcoin Depot Inc. and Bitcoin Well Inc.
Several private companies
and wholly-owned subsidiaries of other publicly traded companies may be considered to be our competitors, including BitNational, Bitstop,
Byte Federal, Inc., Cash2Bitcoin.com, Coin Hub, Coin Flip Bitcoin ATMs, Coinme, Instacoin, Moon Inc., dba LibertyX, a division of NCR
Atleos Corporation, Localcoin, NationalBitcoin ATM, and RockItCoin, among others.
We face competition primarily
from: (1) other Bitcoin ATM companies that provide competing services and products to customers, (2) online sellers and Bitcoin ATM operators
that develop their own proprietary capabilities, and (3) other similar existing or developing technology providers that develop competing
platforms for the purchase and sale of crypto-currency through ATMs, mobile apps or laptops / desktops.
Our primary competitors
are US-based crypto-currency technology companies as discussed above.
**Sales and Marketing**
Our sales team focuses principally on maintaining relationships with our existing retail
partners and developing new relationships with national, regional and local retail outlets such as gasoline stations, convenience stores
and retail malls. The team is focused on marketing to these specific retail industry segments, which allows us to tailor our offering
to the specific requirements of each retail partner. As of February 20, 2026, our sales and marketing teams consisted of 2 employees.
In addition to targeting new
business opportunities, our sales team supports our business initiatives by building and maintaining relationships with new retail partners.
We seek to identify growth opportunities within each account by analyzing the retailers sales at each of its locations and various
demographic data to determine the best opportunities for the placement of new Bitcoin ATMs.
Our marketing team is focused on attracting users to our Bitcoin ATMs retail locations. Our marketing
team primarily uses digital marketing tools to acquire and retain users but also deploys email, search engine optimization (SEO), and
physical marketing presences as applicable. Our marketing team also supports the sales team in attracting new retail partners.
**Intellectual Property, Patents and Trademarks**
****
Although we believe our success
depends upon our technical and marketing expertise more than our proprietary rights, our future success and ability to compete depend
in part upon our proprietary technology. We have registered or filed applications for our primary trademarks. Most of our technology is
not patented. Instead, we rely on a combination of contractual rights, copyrights, trademarks, and trade secrets to establish and protect
our proprietary technology. We generally enter into confidentiality agreements with our employees, consultants, third-party contractors,
and retail partners. Access to, and distribution of, our source code is restricted, and the disclosure and use of other proprietary information
is further limited. Despite our efforts to protect our proprietary rights, unauthorized parties can attempt to copy or otherwise obtain
or use our products or technology. We cannot be certain that the steps taken in this regard will be adequate to prevent misappropriation
of our technology or that our competitors will not independently develop technologies that are substantially equivalent or superior to
our technology in a manner that would avoid our intellectual property rights.
| | 17 | | |
**Research and Development**
****
We invest in ongoing research to develop new software solutions and services and
enhance existing solutions with additional functionality and features required to ensure regulatory compliance. Product-specific enhancements
are largely regulatory-driven and responsive to consumer input and challenges. We also continually evaluate and implement process improvements
that expedite the delivery of new products, services and enhancements to our users. Associated costs are recorded in Selling, general
and administrative expense on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) and to date have not been
material.
**Our Retail Partners**
****
In the U.S., we have contracts
with over 3 thousand regional retailers, including gas stations, convenience stores, supermarkets and retail malls which represent approximately
3 thousand Bitcoin ATMs. Many of our contracts include auto-renewal features providing for additional one-year terms following the expiration
of the initial term. Such contracts may be terminated at either partys option by giving proper notice in accordance with the subject
contract. The terms of our retail partner contracts vary because of negotiations at the time of execution.
**Suppliers of our ATMs**
In August 2021, we entered
into an agreement to purchase 100 Bitcoin ATMs from Bitaccess, Inc. The agreement included a per transaction fee while the agreement was
active. The machines are located in El Salvador of which 5 are Athena branded and 95 are Chivo branded machines. No additional Bitcoin
ATMs have been purchased from Bitaccess, Inc. and there is no agreement to purchase additional Bitcoin ATMs. When Bitaccess, Inc. was
acquired by another company, the change of ownership clause terminated the agreement along with the per transaction fee; as of December
31, 2025, the 100 Bitcoin ATMs, purchased from Bitaccess, Inc., are no longer active and are held in storage.
****
**Agreement with Genesis Coin, Inc.**
We currently do not have a
written contract for purchase and sale of ATMs with Genesis Coin (currently operating under the name BitcoinATM.com). We
have been operating based on our working relationship and the terms of the original purchase and sale contract with Genesis Coin, which
we entered into on October 1, 2015 and terminated on September 12, 2024 as part of a confidential settlement agreement and release in
a case captioned as Athena Bitcoin, Inc. v. Genesis Coin, Inc., Bitcoin ATM, LLC, ATM OPS, Inc., Kiosk Distributors, Inc., Andrew C. Barnard,
Douglas O. Carrillo, and Neil Hernandez at the U.S. District Court for the Northern District of Illinois, Case No. 1:24-cv-5985.
On July 16, 2024, the Company,
filed a Complaint against Genesis Coin, Inc., Bitcoin ATM, LLC, ATM OPS, Inc., Kiosk Distributors, Inc., Andrew C. Barnard, Douglas O.
Carrillo, and Neil Hernandez, for damages for violation of a federal statute and other claims, filed at the U.S. District Court for the
Northern District of Illinois (the Court). By September 12, 2024, the pertinent parties reached a settlement agreement and
release where the complaint and other proceedings that were initiated at other forums were dismissed, and certain monetary and technological
considerations were afforded between the parties.
Following the termination
of our agreement with Genesis Coin on September 12, 2024, and the execution of the subsequent confidential settlement agreement, the Company
no longer maintains any commercial or operational relationship with Genesis Coin. The termination resolved all outstanding obligations
between the parties, and as of the date of this filing, we do not engage in any business transactions with Genesis Coin, do not utilize
their software in our operations, and do not procure hardware or services from them.
In light of the contract termination,
Genesis Coin had previously been a significant vendor, providing a majority of our Bitcoin ATMs and related software systems, the Company
has since taken decisive steps to reduce and eliminate its dependency on Genesis Coin. Notably, we have:
|
| Successfully deployed our own proprietary ATM software platform which replaced Genesis Coins software
across our fleet, | |
|
| Transitioned to using other ATM manufacturers and service providers for hardware procurement and support
going forward, and | |
|
| Removed all reliance on Genesis Coin for technical support, software updates, or operational collaboration. | |
| | 18 | | |
We no longer rely on Genesis
Coin and any prior dependencies have been resolved through operational and technological changes made in 2024. The termination of the
Genesis Coin relationship has not had a material adverse impact on our operations.
**Agreements with Taproot Acquisition Enterprises,
LLC**
On April 13, 2023, Athena
Bitcoin signed a sublease agreement with Taproot Acquisition Enterprises, LLC to acquire 800 Bitcoin ATM machines. The agreement had a
term of three years unless terminated by either party subject to specified conditions and notifications. Lease payments under the agreement
were based on revenue generated by the locations subject to a cap and allows Athena Bitcoin to buy out or purchase the Bitcoin ATM machines
based on a formula that considers original cost, depreciation and market value of each unit.
On November 2, 2023, Athena
Bitcoin modified and amended the sublease agreement into an equipment financing agreement with Taproot pursuant to which Athena Bitcoin
agreed to purchase additional ATM machines in 2023 for a cash purchase price and certain revenue share payments. On December 31, 2023,
Athena Bitcoin entered into another equipment financing agreement with Taproot for a purchase of additional Bitcoin ATMs subject to payment
of the purchase price based on the specific payment dates, with the full balance due by December 31, 2024. Title to all Bitcoin ATM machines
was transferred to Athena Bitcoin as of December 31, 2023, upon signing the second financing agreement. The first payment was made to
Taproot in January 2024. The final payment was due by December 31, 2024. However, the payments of October 2024, November 2024 and December
2024 were rolled into a new Agreement dated September 19, 2024 (see below) along with the Agreements of April 13, 2023, the December 31,
2023 Agreement and the February 22, 2024 Agreement (see below).
On February 22, 2024, Athena
Bitcoin entered into a third equipment financing agreement with Taproot for the purchase of additional Bitcoin ATMs. Title to the machines
was transferred to Athena Bitcoin upon signing of the third financing agreement and required down payment which was paid on February 22,
2024.
On September 19, 2024, Athena
Bitcoin and Taproot Acquisition Enterprises, LLC, a Delaware limited liability company, entered into that certain Omnibus Equipment Refinancing
Agreement providing for the refinance of Athena Bitcoins outstanding payables.
On October 30, 2024, Athena
Bitcoin entered into an Equipment Financing Agreement (the Financing Agreement) with Taproot, into an Equipment Financing
Agreement (the Agreement) to purchase certain Bitcoin ATM kiosks (the Equipment units) listed in the Agreement.
The Financing Agreement amends and supersedes previous equipment purchase agreements between the parties. Under the Financing Agreement,
Athena Bitcoin will acquire from Taproot installed Bitcoin ATMs or additional Bitcoin ATMs at the price per Bitcoin ATM set forth in the
Equipment Agreement. The downpayment was to be paid in 4 installments with the first payment due and paid by Athena Bitcoin as of October
31, 2024, and the last payment due by January 31, 2025; which last payment was made on January 27, 2025.
In addition, Athena Bitcoin
agreed to pay a fee equal to 0.8% of the revenue (to be paid weekly) derived from the sale of Bitcoin in each Bitcoin ATM location until
the expiration of the term of the Financing Agreement (36 months) or until full payment of total purchase price for the equipment subject
to certain additional limitations. The Financing Agreement also provides the provisions addressing the event of default by either Taproot
or Athena Bitcoin, and respective available remedies. Certain property on which the equipment units are located is subject to merchant
agreements (as listed in the Financing Agreement), and the Financing Agreement provides for assignment and assumption of merchant agreements
and leases, as may be applicable. Furthermore, Taproot is to maintain a first priority interest on the Bitcoin ATMs until fully paid for.
In connection therewith, Athena Bitcoin, Taproot and KGPLA Holdings LLC, an entity in which Mike Komaransky, a former director and principal
shareholder of Athena Bitcoin has a controlling interest and whose Chief Investment Officer
is Huaxing Jason Lu, our director, entered into a First Amendment to the Intercreditor Agreement dated as of October 23,
2024, pursuant to which KGPLA agreed to the subordination of its first priority security position on collateral of Athena Bitcoin to Taproot.
On September 4, 2025, the Company entered into a Release and Termination Agreement with Taproot and the Taproot Parties to terminate and
settle all outstanding obligations under several prior arrangements, including the Equipment Financing Agreements, the Omnibus Equipment
Refinancing Agreement, the Location Referral Agreement, the Client Services Agreement, and the Development Services Agreement (see Short-term
debt* below).
| | 19 | | |
On September 4, 2025, Athena Bitcoin entered into a Release and Termination
Agreement with Taproot and the Taproot Parties to terminate and settle all outstanding obligations under several prior arrangements,
including the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement, the Location Referral Agreement, the Client
Services Agreement, and the Development Services Agreement. Under the terms of the Release and Termination Agreement, the Company agreed
to pay the Taproot Parties an aggregate Termination Payment of $9 million, consisting of an upfront payment of $3 million upon execution
of the agreement and weekly installments of $115.4 thousand over 52 weeks. Upon payment in full, all security interests, liens, and other
encumbrances under the prior agreements will be released, and all outstanding obligations between the parties will be deemed satisfied
and discharged.
**
At the date of settlement,
the carrying amount of the debt obligation under the Equipment Financing Agreement was $4.3 million. The Company also recorded the following
items associated with the extinguishment of debt:
**
|
|
a) |
$3.2 million, related to the Equipment Financing Agreement and 2024 Financing Royalty Buy-Out, representing the lump-sum buy-out of a 0.5% vendor participation obligation. | |
|
|
b) |
$300 thousand, related to the Location Referral Agreement and Location Agreement Buy-Out, representing the lump-sum buy-out of a referral revenue share obligation. | |
|
|
c) |
$1.1 million, recorded as a settlement premium, representing the excess of the total settlement consideration over the carrying amount of the extinguished obligations. | |
During the twelve months ended
December 31, 2025, the Company recorded a loss due to the extinguishment of debt of $5,283 million related to the termination and settlement
of all outstanding obligations under the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement, the Location Referral
Agreement, the Client Services Agreement, and the Development Services Agreement. The loss included the extinguishment of the debt of
$4.6 million and $681 thousand of unamortized imputed interest, both of which are included in loss on extinguishment of debt expense in
the consolidated statements of operations and comprehensive income (loss).
**Agreements with PSBC, LLC**
On June 19, 2024, Athena Bitcoin,
Inc., the Companys wholly-owned subsidiary, entered into a Development Services Agreement (the Development Agreement) with
PSBC, LLC, a Delaware Limited Liability Company (PSBC), for a software platform to be used in connection with the operation
of Bitcoin ATMs. The Company began using the software platform in June 2024. The payment obligation for the software platform shall be
terminated when a fixed sum of payments has been achieved. These payments are based on a percentage of the Bitcoin ATM sales transactions
for using the software platform. All payments shall be made in Bitcoin.
PSBC shall, as security for
the payments, hold the software platform source code in an escrow account, which shall be releasedalong with infrastructure access
for the software platformto the Company when PSBC has received a designated metric. All rights, including new technology and intellectual
property developed under the Agreement, are transferred to the Company. PSBC certifies independent creation of the software, non-infringement,
and compliance with specifications and legal requirements. The Development Agreement includes customary indemnity clauses, confidentiality
obligations, and a defined process for dispute resolution (including arbitration). In addition, the Development Agreement includes provisions
for support services (for 12 months post-pilot) and detailed acceptance testing procedures.
On July 25, 2024, the Company
amended the Development Agreement with PSBC, pursuant to which PSBC released infrastructure access for the software platform to the Company
upon receiving a fixed payment amount, which was credited toward the payments for the software platform. The access to the software platform
includes build instructions, build scripts, databases, and all other tools or documentation necessary or desirable to create a working
software platform from the source code.
Should PSBC fail to provide
the services required herein, such that doing so would interrupt the Companys operations, then the Company would be granted unrestricted
use of the source code. The released source code shall be updated on a regular basis and at the direction of the Company.
**
**
**
**
| | 20 | | |
**
**Bitcoin ATM Operations and Cash Transportation**
****
We contract with Move On Security
LLC (of which Mr. Matias Goldenhrn, the Chief Executive Officer and director of the Company, has a 50% interest in Move On Security
LLC) to support the various activities of our Bitcoin ATMs operations related to deployment, repairs and maintenance, and wireless communications
(including traveling to various markets as needed).
We contract with Move On Tech
Service, LLC (of which Mr. Matias Goldenhrn, the Chief Executive Officer and director of the Company, has a 50% interest in Move
On Tech Services LLC) to provide Bitcoin ATM services for the Companys Bitcoin ATM operations in various states. Move On Tech Service,
LLC is responsible for Bitcoin ATM management, periodic Bitcoin ATM maintenance, installation, and deinstallation.
A significant operational
aspect of our business involves collecting physical fiat currencies from our Bitcoin ATM fleet and getting them safely deposited into
our bank account. The collection and deposit of the physical currencies received in our Bitcoin ATMs is a multi-step process. We do not
directly handle the currency operations. This function is contracted to bonded security companies that have armored vehicles and cash
storage vaults in many locations and includes multiple national and regional carriers such as Brinks International, Garda World, Thillens,
Loomis, New Century Armored Logistics (NCAL) and Move On Security LLC as well as Proteccion de Valores, S.A. de C.V. (PROVAL) and Servicio
Salvadoreo de Proteccin, S. A. de C. V.(SERSAPROSA) in El Salvador.
For logistic efficiency, it
is impractical to retrieve cash from one machine and go directly to a bank branch. Rather the cash from all our machines in a city is
collected by contracted armored vehicle companies on a periodic basis and brought to their regional centers where it is counted, inventoried,
and grouped with cash coming from our ATMs in other cities.
We actively oversee this process
in conjunction with our cash logistics contractors to adjust for factors like three-day weekends and unanticipated surges. While we can
manage the Bitcoin side of our business with real-time tracking, the current time period from retrieving cash from our Bitcoin ATMs to
having the funds available in our bank account is about three-to-seven (3-7) days. This time period directly impacts our working capital
and our ability to buy more Bitcoin; thus, we strive to keep it as short as possible.
Just as shortages of Bitcoin
can temporarily prevent us from selling Bitcoin to our customers, our Bitcoin ATMs running out of cash or becoming fully loaded with
cash (and unable to take more bills) can impede our users from completing certain transactions until our cash logistics contractors fixed
the issue at their next visit to our Bitcoin ATMs. Our business has variable demand, and it is unavoidable that some machines will at
times run out of cash or become fully loaded with cash (and unable to take more bills) for a time period.
**Bitcoin ATM Transactions**
****
We hold an amount of Bitcoin in a hot wallet that we own and send Bitcoin to users from that
wallet when transactions are completed at Bitcoin ATMs. We replenish our hot wallet from time to time through open market purchases of
Bitcoin with certain liquidity providers. When a customer buys Bitcoin from us, the purchase price is based on the spot price of Bitcoin
at the time of the users transaction. When a user sells Bitcoin to us, such Bitcoin is held in an Athena hot wallet for a period
of time, which could be up to several days, until such Bitcoin is later sold through a liquidity provider to fund operations or is resold
to users transacting at Bitcoin ATM kiosks; however, the volume of transactions of this type are de minimis.
We do not custody Bitcoin
for our kiosk users. Our relationship with our primary liquidity provider allows us to purchase Bitcoin to quickly replenish amounts sold
to users, which means that we hold relatively small amounts of Bitcoin for customer sales at any given time. Due to the minimal amount
of Bitcoin held at any given time (typically 5 to 7 Bitcoin) in our hot wallets to fulfill orders from users while we are automatically
placing orders with liquidity providers and exchanges to replenish the Bitcoin we have sold to users, coupled with our high transaction
volumes, we do not store Bitcoin in cold wallets.
| | 21 | | |
The Company has a standard service agreement with BitGo Trust Company, Inc. (BitGo)
(a qualified custodian) a third party custodian of the private keys for the wallets related to Bitcoin owned by the Company, who has
been engaged to secure our digital assets. BitGo manages the private keys for digital wallets holding Bitcoin owned exclusively by the
Company (i.e., held for our own account). All Bitcoin held as inventory, or held for operational liquidity by the Company, is secured
by BitGo, which manages the corresponding private keys on our behalf. BitGo provides multi-signature wallet services and secure key management
for the Bitcoin that the Company holds for its own account and for facilitating customer transactions.
**Environmental Impact**
El Salvadors Bitcoin
plan has put a spotlight on the environmental impact of cryptocurrency with the World Bank flagging such potential adverse effects among
its concerns. Mining digital currency requires large amounts of energy, and the Bitcoin industrys global CO2 emissions have risen
to an equivalent of 85.89 million tons of Co2 during the 2020 to 2021 period, equal to burning 84 billion pounds of coal, according to
a 2023 report by the American Geophysical Union (referred to in the article by Sanaz Chamanara, S. Arman Ghaffarizadeh, & Madani,
K. (2023), The Environmental Footprint of Bitcoin Mining Across the Globe). President Bukele sought to counter sustainability concerns
by engaging state-owned geothermal electric company, LaGeo SA de CV to offer Bitcoin mining facilities using renewable energy from the
countrys volcanoes.
**Marketing**
Our marketing consists of:
|
| Trade shows, | |
|
| Digital advertising on search engines, map sites, and industry-specific platforms, | |
|
| Social media, and | |
|
| SMS messaging. | |
Athena Bitcoin also
maintains country-specific websites that include information about how to access our service offerings as well as country-specific disclosures.
**Software Development Including Technology Research
and Intellectual Property Development**
Our intellectual property
(IP) includes proprietary algorithms that we have developed. Some effort is devoted to automating a majority of our crypto
purchases in a manner that helps us match supply with anticipated demand. In addition, we have invested in building automated systems
for customer onboarding including the collection of required KYC documentation as well as government transaction reporting.
Athena has not filed for protection
of our algorithms and maintains them as private and proprietary business information. The IP we use for the security of our Bitcoin ATMs
and transaction integrity is mostly provided by vendors, although we have added additional layers and extra private security measures
that are unique to the Company.
Athena Bitcoin has previously
registered both its name and distinctive owl logo with the United States Patent and Trademark Office. On December 18, 2024, the Company
renewed the registration of its name and logo.
**Recent Events**
During the second quarter
of 2024, the Company entered into a Development Services Agreement with PSBC, LLC, a third-party Delaware corporation, for a software
platform to use in connection with the operation of Bitcoin ATMs. The Company implemented and began to use the software platform in June
2024.
| | 22 | | |
On May 14, 2025, the Company
entered into a Second Amendment to the Development Services Agreement with PSBC, LLC, pursuant to which PSBC, LLC agreed to provide support
services through November 14, 2025, and agreed to pay PSBC, LLC, $50 thousand per month beginning on May 14, 2025, and each month thereafter
through November 14, 2025.
As discussed above, on September
4, 2025, the Company entered into a Release and Termination Agreement with Taproot Acquisition Enterprises, LLC, a Delaware limited liability
company, and its affiliated entities to terminate and settle all outstanding obligations under several prior arrangements, including
the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement, the Location Referral Agreement, the Client Services
Agreement, and the Development Services Agreement.
**Competition**
There are many different companies
that enable people and businesses to buy or sell Bitcoin and other crypto assets, including other operators of Bitcoin ATM networks, online
services and exchanges such as Coinbase and Gemini, and payment services such as Square and PayPal.
Our direct competition in
the U.S. includes Bitcoin Depot, Inc. a public corporation with operations in the U.S. and Canada, Coinflip, a private company with operations
in the U.S., Canada and Australia and other smaller bitcoin kiosk operators, as well as Coinstar, a major corporation that runs one of
the largest kiosk networks in the U.S. Coinstar is an existing operator of kiosks at major grocery chains that are used to exchange coinage
for a variety of payment instruments such as gift cards and in-store vouchers. In recent years, they have added the ability to use physical
coins and cash bills to buy Bitcoin on many of their kiosks, in partnership with Coinme. The other Bitcoin ATM network operators use machines
similar to the Companys fleet of Bitcoin ATMs.
The financial performance
of any Bitcoin ATM network is influenced by several factors. We believe that site selection and branding have the biggest effect on per-Bitcoin
ATM transaction volumes. Bitcoin Depot is a public corporation whose operating performance can be measured. We are not aware of the operating
performance of other competitors as they are private companies and do not provide any public financial disclosures. From our years of
experience in this industry, we believe the Companys Bitcoin ATMs perform at or above industry averages.
While there are many other
Bitcoin ATM operators, we believe the industry is nascent and that worldwide tens of thousands of attractive locations remain untouched.
While we recognize that there is a terminal limit to the number of Bitcoin ATMs that the U.S. market can support, we believe that that
limit has not yet been reached and is expanding as Bitcoin and other crypto assets gain more widespread use, especially in Latin America
and other regions. According to The Business Research Company, ATM Global Market Report 2025, published December 2025, where it was cited
that the total number of active ATMs ranges between 520,000 and 540,000.1
Per a Knowledge Sourcing Intelligence
LLP report titled Crypto ATM Market Global Forecasts Report 2025-2030: Rising Cryptocurrency Adoption and Expanding Installations Across
Hospitality and Retail Sectors, in November 2025, the global crypto ATM market size is projected to increase from $191.130 million in
2025 to $1.20 billion in 2030, with a 44.54% CAGR.
Below is a partial list of
Worldwide Bitcoin ATM networks3 networks (other than Athena Bitcoin) as of February 15, 2026 from coinatmradar.com:
|
Company Name |
Units | |
|
Bitcoin Depot Inc. |
9,150 | |
|
Coinflip |
5,679 | |
|
Bitstop |
2,751 | |
|
RockitCoin |
2,522 | |
|
Localcoin |
2,120 | |
|
CoinHub |
1,965 | |
|
Byte Federal |
1,300 | |
|
Unbank |
665 | |
|
Cash2Bitcoin |
631 | |
We have a small percentage
of the total market, operating approximately 10% of Bitcoin ATMs according to coinradar.
*__________________________*
1 ATM Global Market Report
2025, The Business Research Company. https://www.thebusinessresearchcompany.com/report/atm-global-market-report#:~:text=For%20instance%2C%20in%20September%202023,growth%20of%20the%20ATM%20industry
| | 23 | | |
Apps like Robinhood, PayPal,
and Cash App offer customers a way to purchase crypto assets using their smartphones and funds from their bank accounts. These apps offer
competitive pricing relative to our Bitcoin ATMs; however, they do not accept physical currency and typically require users to connect
their bank accounts. They also typically do not allow users access to the private keys of the cryptocurrency, thus resulting in centralization
which we believe many users do not want.
Full-service exchanges like
Coinbase Pro, Gemini, and Kraken allow traders to make investments in a wide variety of crypto assets. These exchanges cater to active
traders and the most highly price sensitive consumers. The Company often uses such services for purchasing its crypto assets. Users from
this segment of the overall market rarely overlap with the Bitcoin ATM industry.
**Competitive Advantages**
We believe we enjoy several
competitive advantages. We believe our foremost advantage is our many years of business experience combined with our insight into optimizing
many interrelated factors and aspects of the crypto business. We believe that this combination ultimately drives our bottom-line profits.
We believe that site selection
is a substantial factor in our overall performance. Our site selection methodology is a trade secret of our business. We believe that
our methodology is not easily uncovered as we have ATMs located in rural, urban, and suburban areas. We have learned and refined our site
selection methodology over the years, and we believe our expertise in this area constitutes a material competitive advantage.
We believe operational efficiency is in the same category of importance to us as site
selection. Our operational efficiencies included developing and implementing several proprietary approaches to manage our operations
efficiently with respect to all aspects of crypto transactions, risk management, and efficient cash handling spanning five countries.
Unlike many competitors that
focus on quickly installing dozens or hundreds of Bitcoin ATMs, we prioritized working to obtain profitability on a global scale with
a small base of Bitcoin ATMs that were installed in strategic sites. From 2017 through 2022, we focused on developing and putting in place
scalable systems and methods for managing a diverse global operation. This gave us a foundation to not only provide us with profitable
operations (during that period) but also the foundation to continue to grow. As a result of this strategy, we were able to increase our
total ATMs in service from 60 to 2,953 from 2017 to December 2025, respectively, with the ability to install hundreds of Bitcoin ATMs
at scale. When comparing Bitcoin ATMs to other methods of transacting, the primary advantage of a Bitcoin ATM is its ability to complete
a transaction from accepting payment to delivering crypto assets quickly. The Bitcoin ATM will only accept physical Fiat Currency, which
is an immediate and permanent form of payment. This subsequently facilitates the immediate delivery of crypto assets; also, an immediate
and permanent form of transaction. Apps and services that rely on ACH or other bank mechanisms for the fiat leg of a transaction often
cannot deliver the crypto assets quickly because the funding mechanism is neither immediate nor permanent.
We believe our branding gives
us a competitive advantage with many store owners. Large companies often have access to capital, but many have minimal to no experience
in the crypto industry. Companies that want to start a Bitcoin ATM network tomorrow can copy our offerings and hire top branding specialists,
but what they cannot do is create a brand that has roots to the early years of Bitcoin and Bitcoin ATMs. In our experience, many of these
large companies are treated with skepticism by many users of Bitcoin, as they represent centralized and institutionalized interests that
many believe are contrary to the goals of Bitcoin. The bright orange on our Athena Bitcoin ATMs is the same color as the orange in the
original Bitcoin logo, helping our brand stand out and represent the spirit and essence of Bitcoin and the entire crypto industry in any
stores where our Bitcoin ATMs are placed.
| | 24 | | |
While the end result of a
transaction on one Bitcoin ATM versus another may be similar, we believe that many store owners and customers looking for a Bitcoin ATM
will often prefer an Athena Bitcoin ATM versus, for example, a multipurpose Coinstar machine that can handle your loose change and also
sell you Bitcoin. We believe our branding and brand authenticity have been a contributing factor to getting good performing sites, and
that it will continue to be a big contributor to our expected future growth.
****
**Competitive Disadvantages**
Our competitive disadvantages
are that some of our competitors still have greater resources available to deploy new Bitcoin ATMs, develop new markets, and invest in
technology. We intend to raise capital several times in the coming years, through debt or the sale of equity, which may be dilutive to
existing stockholders, to expand our network, but we remain focused on keeping true to our core principles and will continue to focus
on bottom line performance and maintain our standards of effective site selection and monitoring.
**Employees**
We strive to foster a productive
and engaging work environment. Our talent strategy is aligned with our business vision and platform strategy. We hire intelligent people
with a passion for crypto assets and the possibilities to empower our customers to achieve their financial and transactional goals.
As of February 20, 2026, we
employed 18 people within the United States, and 47 people in our foreign subsidiaries. We also engage temporary consultants; as of February
20, 2026, 12 consultants were engaged throughout the Company and its subsidiaries, of which 10 consultants were engaged in the United
States and the remaining 2 consultants were engaged in Latin America. The employees in El Salvador are primarily responsible for customer
support of the Bitcoin ATMs, the Chivo wallet and the Chivo POS terminals in El Salvador.
**Seasonality and Inflation**
****
We have typically experienced
seasonality in the 4th quarter of the calendar year in our revenue and the related cost of cryptocurrency. We believe this trend is attributable
to less business days in the quarter as a result of public holidays. Our cost of goods, services and labor and third-party services have
been impacted by the recent high inflationary environment. To date, we have been successful in managing these inflationary cost increases
through pricing, productivity and cost-cutting initiatives. There can be no assurance that our operating results will not continue to
be affected by inflation in the future or that we will be successful in managing such cost increases.
**Governmental Regulation**
****
Currently, we operate in the
U.S., El Salvador, Argentina, Colombia and Mexico in a complex and rapidly evolving regulatory environment and are subject to a wide range
of laws, rules and regulations enacted by federal, state, territorial, local governments and regulatory authorities. At a high-level,
this evolving regulatory environment currently is characterized by a heightened focus by regulators on the cryptocurrency industry and
countering terrorist financing and anti-money laundering. The scope of laws, rules, and regulations that can impact our business, including
many laws, rules, and regulations that were enacted prior to the creation of the digital financial system, are expansive and include certain
of the requirements that apply to financial services, money transmission, privacy protection, cybersecurity, electronic payments, and
securities and commodities regulation, as well as bespoke cryptocurrency laws that have been adopted in some jurisdictions. Notwithstanding
the applicability of the above-described regulatory framework, currently we are not supervised or examined by any banking, securities
or commodities regulator such as the Office of the Comptroller of the Currency, the Office of the Superintendent of Financial Institutions,
the SEC, or the Commodity Futures Trading Commission.
| | 25 | | |
We monitor changes to the
regulatory environment closely and invest significant resources in our legal and compliance teams to ensure that we are able to design
and maintain appropriate compliance systems and practices. However, the complexity and evolving nature of our business and the significant
uncertainty surrounding the regulation of the digital financial system and related industries, require us to exercise our judgment as
to whether certain laws, rules, and regulations apply to us, and it is possible that regulators may disagree with our conclusions. New
or changing laws and regulations, including changes to their interpretation or implementation, as well as our failure to appreciate that
the laws and regulations apply to our business could have a material adverse impact on our business, results of operations, and financial
condition.
We regularly monitor official
SEC releases and comments made by senior SEC officials, including the sitting Chairman, regarding the regulation of cryptocurrencies and
related activities. Based on such statements, historical enforcement actions and existing regulations and laws, we have made the determination
that our activities and the cryptocurrencies that we currently sell, which consists of only Bitcoin, do not subject us to SEC regulation
(other than in connection with our status as a public company) and thus we believe we are not required to be registered with the SEC to
support transactions which consist of only Bitcoin at our Bitcoin ATMs. We have previously provided products and services related to Litecoin,
Ethereum, Bitcoin Cash and Tether; however, based on a risk-based determination made after consideration of public statements by the SEC,
historical enforcement actions, and existing regulations and laws in effect at the time, we limited our activities to Bitcoin only.
**Anti-money laundering and counter-terrorist
financing**
**
We are subject to various anti-money
laundering and counter terrorist financing laws, including the Bank Secrecy Act (BSA) in the U.S. As a money services business
registered with the Department of the Treasurys Financial Crimes Enforcement Network (FinCEN), the BSA requires
us to develop, implement, and maintain a risk-based anti-money laundering program, provide an anti-money laundering-related training
program, report suspicious activities and transactions, comply with certain reporting and recordkeeping requirements, and collect and
maintain information about our users. In addition, the BSA requires us to comply with certain user due diligence requirements as part
of our anti-money laundering obligations, including developing risk-based policies, procedures, and internal controls reasonably designed
to verify each users identity. We have implemented a compliance program designed to prevent our kiosks, products and services
from being used to facilitate money laundering, terrorist financing, and other illicit activity in countries, or with persons or entities,
included on designated lists issued by the OFAC, and equivalent foreign authorities. Our compliance program includes policies, procedures,
reporting protocols, training and internal controls, and is designed to address legal and regulatory requirements as well as to assist
us in managing business risks associated with money laundering and terrorist financing.
**Money transmission and virtual currency business
activity**
**
In the U.S., we have obtained
licenses to operate as a money transmitter, or the equivalent, in the states where we understand such licenses or equivalent are required
to conduct our business. As a licensed money transmitter, we are subject to a range of legal obligations and requirements including bonding,
net worth maintenance, customer notice and disclosure, reporting and recordkeeping requirements, and obligations that apply to the safeguarding
of third-party funds and crypto assets. In addition, the licensed entity within our corporate structure is subject to inspection and examination
by the state licensing agencies and certain actions involving that entity, such as changes in controlling equity holders, board members,
and senior management, may require regulatory approval.
**Privacy and protection of user data**
**
We are subject to a number
of laws, rules, directives, and regulations relating to the collection, use, retention, security, processing, and transfer of personally
identifiable information about our users and employees in the jurisdictions where we operate. We are subject to privacy and information
safeguarding requirements under the Gramm-Leach-Bliley Act and the California Consumer Privacy Act in the U.S., which impose certain privacy
protections and require the maintenance of a written, comprehensive information security program.
| | 26 | | |
Our business relies on the
processing of personal data in many jurisdictions and the movement of data across state and national borders. As a result, much of the
personal data that we process, which may include certain financial information associated with individuals, is regulated by multiple privacy
and data protection laws and, in some cases, the privacy and data protection laws of multiple jurisdictions. In many cases, these laws
apply not only to third-party transactions, but also to transfers of information between or among us, our subsidiaries, and other parties
with which we have commercial relationships.
Regulatory scrutiny of privacy,
data protection, cybersecurity practices, and the processing of personal data is increasing in the U.S. and around the world. Regulatory
authorities are continuously considering numerous new legislative and regulatory proposals and interpretive guidelines that may contain
additional privacy and data protection obligations. Any expansion or changes in the application of these privacy, data protection and
cybersecurity laws or other regulatory requirements could increase our compliance costs and have a material adverse impact on our business,
results of operations, and financial condition.
**Consumer protection**
**
The U.S. Federal Trade Commission (FTC), the Consumer Financial Protection Bureau
(CFPB), and other U.S. federal, state, and local and foreign regulatory agencies regulate business activities, including
money transfer services related to remittance or user-to-user transfers. These agencies, as well as certain other governmental bodies,
including state attorneys general, have broad consumer protection mandates and discretion in enforcing consumer protection laws, including
matters related to unfair or deceptive, and, in the case of the CFPB, abusive, acts or practices, or Unfair, deceptive, or abusive acts
and practices (UDAAPs), and they promulgate, interpret, and enforce rules and regulations that affect our business. The
CFPB has enforcement authority to prevent an entity that offers or provides financial services or products to consumers in the United
States from committing or engaging in UDAAPs, including the ability to engage in joint investigations with other agencies, issue subpoenas
and civil investigative demands, conduct hearings and adjudication proceedings, commence a civil action, grant relief (e.g., limit activities
or functions; rescission of contracts), and refer matters for criminal proceedings.
**Federal Regulation**
Certain federal agencies and
representatives have introduced or have pending legislation regarding cryptocurrency, digital or virtual currency. We cannot be sure of
the impact such pending or future legislation might have on our results of operations or financial condition, or the probability that
such bills will be entered into law. We continue to monitor the status of pending legislation.
The Company is subject
to regulation by the United States, FinCEN as a money services business. This regulation was established in 2013 when FinCEN
released interpretive guidance to clarify the applicability of the regulations implementing the Bank Secrecy Act
(BSA) to person creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies
(FIN-2013-G001). Since that time, all businesses that deal in crypto assets in the manner of the Company must register as a Money
Service Business (MSB) with FinCEN and comply with the requirements of the BSA, the Patriot Act, and other amendments
and administrative guidance issued by FinCEN and the Department of the Treasury.
We are subject to various
anti-money laundering and counter-terrorist financing laws, including the BSA in the United States, and similar laws and regulations abroad.
In the United States, as a money services business registered with FinCEN, the BSA requires us to among other things, develop, implement,
and maintain a risk-based anti-money laundering program, provide an anti-money laundering-related training program, report suspicious
activities and transactions to FinCEN, comply with certain reporting and recordkeeping requirements, and collect and maintain information
about our customers. In addition, the BSA requires us to comply with certain customer due diligence requirements as part of our anti-money
laundering obligations, including developing risk-based policies, procedures, and internal controls reasonably designed to verify a customers
identity. Many states and other countries impose similar and, in some cases, more stringent requirements related to anti-money laundering
and counter-terrorist financing. We have implemented a compliance program designed to prevent our platform from being used to facilitate
money laundering, terrorist financing, and other illicit activity in countries, or with persons or entities, included on designated lists
promulgated by Office of Foreign Assets Control (OFAC) and equivalent foreign authorities. Our compliance program includes
policies, procedures, reporting protocols, and internal controls, and is designed to address legal and regulatory requirements as well
as to assist us in managing risks associated with money laundering and terrorist financing. Anti-money laundering regulations are constantly
evolving and vary from jurisdiction-to-jurisdiction. We continuously monitor our compliance with anti-money laundering and counter-terrorist
financing regulations and industry standards and implement policies, procedures, and controls in light of the most current legal requirements.
| | 27 | | |
Athena Bitcoin is registered
with FinCEN and has registration number 31000207507771. In addition, Athena Bitcoin has appointed Sam Nazzaro as its Chief Compliance
Officer, written and distributed a BSA Compliance Policy, and engages an outside review firm to perform an annual review of its Compliance
Policy.
Under the U.S. Commodities
Exchange Act of 1936, the Commodity Futures Trading Commission (CFTC) has broad enforcement authority to police market manipulation
and fraud in spot commodity markets, including the spot crypto markets.
The Securities and Exchange
Commission has broad regulatory and enforcement authority over intermediaries transacting in crypto assets, to the extent those crypto
assets meet the criteria to be considered to constitute securities (see also [Risk Factors](#k_003)).
FinCEN has issued a notice
of proposed rulemaking to see public comments on a proposal to require banks and money service businesses to submit reports, keep records,
and verify the identity of customers in relation to transactions involving convertible virtual currency (CVS) or digital
assets with legal tender status (LTDA) held in unhosted wallets (as defined below), or held in wallets hosted in a jurisdiction
identified by FinCEN. FinCEN is proposing to adopt these requirements pursuant to the BSA. To effectuate certain of these proposed requirements,
FinCEN proposes to prescribe by regulation that CVC and LTDA are monetary instruments for purposes of the BSA. However,
FinCEN is not proposing to modify the regulatory definition of monetary instruments or otherwise alter existing BSA regulatory
requirements applicable to monetary instruments in FinCENs regulations, including the existing currency transaction reporting
(CTR) requirement and the existing transportation of currency or monetary instruments reporting requirement.
On February 25, 2025, the
Crypto ATM Fraud Prevention Act was introduced by Senator Dick Durbin (D-IL), proposing significant regulatory changes that could materially
adversely impact our operations. If enacted, the bill would impose new customer transaction limits, fee caps, refund requirements, and
additional compliance measures for cryptocurrency kiosk operators. The bill defines new customers as individuals who have
signed up within the past 14 days and imposes a transaction limit of $2,000 per day and $10,000 in total transactions during that period.
Specifically, operators would be required to issue full refunds for transactions conducted by new customers within the first 14 days of
signing up, with refund requests allowed up to 30 days after the transaction. For existing customers, fee refunds would be required if
requested within 30 days. The bill also mandates verbal confirmation for transactions exceeding $500, which may introduce operational
challenges and increased processing times. We are unable to predict whether or not the proposed legislation will be passed into law (or
even if it will be voted upon).
**International Regulations**
Outside of the United States,
the countries where the Company operates are members of an array of regional Anti-Money-Laundering (AML) treaty organizations.
Specifically, Argentina and Colombia are signatories to the Financial Action Task Force of Latin America (GAFILAT). Argentina
is also a member of Financial Action Task Force (FATF). El Salvador is a member of Caribbean Financial Action Task Force
(CFATF). The United States is a member of both FATF and Asia/Pacific Group on Money Laundering (APG). These
relationships, both overlapping and non-overlapping, result in legal interpretations, regulation, and enforcement that is heterogeneous.
In each of these jurisdictions, membership in one or more AML treaty organizations can influence the specific documentation, record keeping,
and financial limits placed on MSB, or dealers in crypto assets.
**State Regulations**
****
Depending on the state where
the Company places a Bitcoin ATM, there are local laws and regulations which the Company must comply with to operate legally. These laws
usually require the Company to register with a state agency, provide a surety bond, and make regular reports about its activities in the
state and its financial health.
| | 28 | | |
In some jurisdictions, the
Company may be required to obtain operating permits from the city or county. These typically involve the payment of registration fees.
**California**
**
As expanded upon below, California
passed certain legislation over the past year which limited our ability to operate effectively in that state. As a result, the Company
has significantly reduced its footprint of kiosks in the state of California. However, we continue to evaluate the regulatory environment
and our ability to comply with new regulations and reinstate operations there.
On November 20, 2023, the California Department of Financial Protection and Innovation (DFPI) issued an invitation
for comments on a potential rulemaking relating to two new California laws that impose sweeping obligations on companies engaged in virtual
currency activities in California and with California residents. The first law, Assembly Bill 39, prohibits people from engaging in digital
financial asset business activity or holding themselves out as being able to engage in digital financial asset business activity
without meeting certain criteria and obtaining a license from the DFPI, including compliance obligations and stable coin approvals
among other guidelines. The second, Senate Bill 401, imposes requirements on operators of digital financial asset transaction kiosks.
The DFPI refers to the two bills collectively as the Digital Financial Assets Law (DFAL). The DFAL took effect on January
1, 2024, with covered persons required to be licensed, or to have submitted a license application and be awaiting approval or denial
of that application, on or before July 1, 2026.
*Requirements applicable
to digital financial asset kiosks*
****
The State Senate Bill 401
supplements the DFAL by prohibiting an operator of a digital financial asset kiosk from accepting or dispensing more than $1,000 a day
from, or to, a customer through a kiosk. Further, this law requires operators to provide certain written disclosures to a customer before
the digital financial asset transaction takes place, including disclosure of terms and conditions of the transaction, whether the operator
provides a method to reverse or refund a transaction (including any warnings if such transaction is final and cannot be reversed), the
amount of the digital financial asset involved, and the amount of fees and other charges in U.S. Dollars, among other disclosures. The
operators will also be required to provide customers with detailed transaction disclosures, including the crypto amount, dollar amount,
and fees charged thus customers must receive receipts containing vital transaction details, including the information of the licensed
exchange used to calculate the price spread.
**
The law includes various customer
protections and prohibits an operator from charging fees that exceed the greater of $5.00 or 15% of the U.S. Dollar equivalent of the
digital financial assets involved in the transaction based on the market price of that same asset quoted by a licensed digital financial
asset exchange. Under the new law, operators must maintain an up-to-date list of kiosk locations.
There is no private right
of action under the DFAL except under a narrow exception related to a covered persons obligation to hold digital financial assets
on behalf of California residents pursuant to the state Uniform Commercial Code.
*Impact of DFAL on digital
assets regulation*
****
The enactment of the new laws
is significant as it pushes California to the forefront of the digital asset regulatory landscape with other states that have enacted
similar requirements.
Moreover, in light of the
acknowledgment from California Governor Newsom that certain aspects of the laws are ambiguous, as well as the legal complexity of engaging
in digital assets activities throughout the United States, we expect further refinement of the DFAL requirements as the DFPI introduces
regulations or guidance to supplement the law.
| | 29 | | |
The Company has tested
its procedures in its kiosks in the state of California and believes that they are fully compliant with the requirements of DFAL.
See also [Risk Factors](#k_003).
Effective as of January 1,
2025, the DFAL requires a kiosk operator to: (a) limit the charges that may be collected from a customer, such that they may not collect
direct or indirect charges from a customer related to a single digital financial asset transaction that exceeds the greater of (x) $5,
or (y) 15% of the U.S. Dollar equivalent of digital financial assets involved in the transaction, and (b) provide written disclosures
to a customer prior to completing a transaction, that includes the following certain minimum information.
Effective as of January 1,
2024, pursuant to the Digital Financial Assets Law of California, operators of digital financial asset transaction kiosks in California
are required to 1) provide to the Department of Financial Protection and Innovation of California (DFPI) a list of all locations
of kiosks that the operator owns, operates or manages in California and to provide the DFPI with any updates to these locations within
30 days of any change; 2) abide by transaction limits of $1,000 in a day from a customer via kiosk; and 3) provide customers with receipts
that include certain information regarding the transaction.
**Connecticut**
**
On October 1, 2024, the Connecticut Act Concerning Digital Assets became effective in Connecticut, placing
heavy regulatory, process and compliance burdens on our operations in the state. This bill allows the banking commissioner to adopt regulations,
forms and orders governing the business use of digital assets by entities that, and individuals, who are under his regulatory jurisdiction
(e.g. state-chartered banks and credit unions). The regulations, forms, and orders must ensure consumer protection and the commissioner
may consult with federal and other states financial services regulators, other stakeholders, and industry professionals to ensure
that digital assets receive, to the extent practicable, consistent treatment. Further, the bill created a transaction limit of $2,500
for new customers and a $5,000 transaction limit for existing customers and capped fees for all transactions at 15%.
The bill also imposes several
disclosures and receipt requirements on virtual currency kiosk owners and operators. It further requires them to allow customers to cancel
and receive a full refund for a virtual currency transaction within seventy-two hours after the new customer registered as a customer
of such owner or operator if, not later than thirty days after the last virtual currency transaction that occurred during such seventy-two-hour
period. Lastly, the bill allows the banking commissioner to establish a schedule of maximum fees that an owner or operator of a virtual
currency kiosk may charge for specific services.
**Minnesota**
**
On August 1, 2024, the Minnesota
Act Regulating Disclosures and Consumer Protections Related to Virtual-Currency Kiosks became effective, which placed additional compliance
burdens on our operations and increased the risk of deterring consumers or decreasing market confidence in cryptocurrency. This bill requires
virtual currency kiosk operators to (1) disclosure to consumers the relevant terms and conditions of the transactions; (2) issue full
refunds for transactions made within seventy two hours of becoming a new customer if fraudulently induced to engage in virtual currency
transactions and is reported within 14 days of the last transaction during the seventy two hour window and the customer contacts the virtual
currency kiosk operator and a government or law enforcement agency informing of them of the fraudulent nature of the transaction; and
(3) set maximum daily transaction limits of $2,000 for new customers. The disclosures on material risks must be made to customers before
entering into the virtual currency transaction and must include at least certain enumerated risks.
| | 30 | | |
**Nebraska**
**
In September 2025, LB 609 took effect in
Nebraska. The law establishes a transaction limit of $2,000 for new customers (defined as individuals within 14 days of signing up),
while existing customers will be permitted to transact up to $10,500 per day. Additionally, LB 609 imposes an 18% fee cap on transactions
and requires operators to issue full refunds for transactions conducted by new customers within their first 14 days of registration,
with refund requests permitted up to 90 days after the transaction.
**Vermont**
**
On May 10, 2024, the Vermont Act Relating
to Banking, Insurance and Securities was signed into law. This act imposes a daily transaction limit of $1,000, a fee cap of 3% on transactions
and a one year moratorium (beginning at the end of June 2024) on the installation of any new kiosks in the state. Effective July 1, 2025,
these limits were raised to $2,000 for new customers and $5,000 for existing customers and raised the maximum fee to the greater of $5
or 15% of the transaction value, with a moratorium on new installations extended to July 1, 2026. This has limited our ability to grow
sales, transaction volumes and our consumer base in the state.
**Additional regulatory developments**
**
Various regulatory authorities
continue to evaluate and implement laws, rules and regulations governing a wide variety of issues, including cryptocurrencies, identity
theft, account management guidelines, disclosure rules, cybersecurity, marketing, environmental, social and governance performance, transparency,
and reporting, including requirements related to overall corporate environmental, social and governance disclosures and climate-related
financial disclosures which may impact our business. For an additional discussion on the impact of governmental regulation on our business,
please see [Risk Factors](#k_003) included in this Annual Report on Form 10-K.
****
****
| | 31 | | |
****
**Item 1A. Risk Factors**
An investment in our common
stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of
the other information in this Annual Report on Form 10-K, including the section titled [Managements Discussion and Analysis of Financial Condition and Results of Operations](#k_012) and the consolidated financial statements and related notes. The risks and uncertainties
described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we deem immaterial may
also become important factors that adversely affect our business. If any of the following risks occur, our business, operating results,
financial condition, and future prospects could be materially and adversely affected. Many risks affect more than one category, and the
risks are not in order of significance or probability of occurrence because they have been grouped by categories. In that event, the market
price of our common stock could decline, and you could lose part or all of your investment.
A summary of risk factors
relating to the Company and our securities follows:
**Risks Related to Our Business, Operations,
and Financial Position**
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Dependence on Transaction Volume and Volatility: Our revenue relies heavily on crypto transaction volumes, which fluctuate with volatile crypto prices. Declines in prices or volume, as well as failures of major market participants, could materially harm results and investor confidence. | |
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Forecasting Challenges: Operating in a new, rapidly evolving crypto product market makes forecasting demand, volume, and performance difficult. | |
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Indebtedness: We carry significant debt secured by most assets, with restrictive covenants that limit flexibility. We may lack sufficient cash flow to meet obligations, and raising additional capital may be difficult, forcing operational changes or, in extreme cases, closure. | |
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Asset and Private Key Security: Our cash and crypto assets face risks of theft or loss, especially from compromised private keys. Hacks, breaches, or key loss could cause major financial, regulatory, and reputational damage. Insurance coverage is limited. | |
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Operational Disruptions: Failures in ATMs, software, information technology (IT), or blockchain networks could reduce users, harm our brand, and negatively affect results. Retaining and growing users is critical to our success. | |
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International Risks: Operations in El Salvador and elsewhere create risks from political or economic instability, enforcement issues, and restrictions on asset ownership. Our role in El Salvadors Bitcoin Law and Chivo wallet carries custody and government-related risks. | |
|
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Economic and Market Confidence: Weak global or regional economies and negative sentiment toward crypto could reduce demand for our services. | |
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Intellectual Property: Inability to protect our IP or defend against infringement claims could disrupt operations. | |
**Risks Related to the Bitcoin Network, Crypto
Assets, and Blockchain Technology**
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Crypto Nature and Private Keys: Control depends solely on private keys, which carry theft and loss risks. | |
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Development and Acceptance: Future growth and adoption of Bitcoin, crypto assets, and blockchain protocols are uncertain; if they stall, our business could suffer. Stablecoins may not retain value. | |
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Forks and Technical Issues: Blockchain forks or integration challenges could create instability and harm operations. | |
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Transaction Fees: High miner or validator fees increase costs and reduce margins. | |
**Risks Related to Regulation, Legal Compliance,
and Enforcement**
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Regulatory Uncertainty: Crypto laws and regulations are rapidly changing. Reclassification of assets as securities, forfeiture actions, or banking restrictions could harm our business. | |
|
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Licensing and Registration: Failure to secure required licenses or comply with AML, privacy, and other laws could halt operations or result in penalties. | |
|
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Government Intervention: Crypto use may be restricted or banned by governments, limiting our ability to operate. | |
| | 32 | | |
**Risks Related to Employees and Service Providers**
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Key Personnel: Loss of senior management or inability to attract talent could hurt performance. | |
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Misconduct: Employee or service provider errors or misconduct could damage financials and reputation. | |
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Conflicts of Interest: Interests in other crypto projects by insiders could create conflicts affecting our business. | |
**Risks Associated with Governing Documents
and Nevada Law**
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Change of Control Limits: Provisions in our charter, bylaws, and Nevada law may deter takeovers, affecting stock value. | |
**Risks Related to Our Securities**
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No Market / Volatility: Our stock lacks a trading market and may face volatility unrelated to performance. | |
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Insider Control: Founders and major shareholders hold significant control, influencing shareholder decisions. | |
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Dilution: Future equity raises, if any, may dilute shareholders. | |
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Stock Price Volatility: Prices may remain volatile and decline significantly. | |
**Implications of Being an Emerging Growth Company
and Smaller Reporting Company**
We are an emerging
growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). For as long as we continue
to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to
other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and exemptions from the requirements of holding nonbinding advisory votes on
executive compensation and stockholder approval of any golden parachute payments not previously approved. We will remain an emerging
growth company until December 31, 2030, although circumstances could cause us to lose that status earlier, including if the market
value of our common stock held by non-affiliates exceeds $700 million as of any December 31 before that time or, if we have total
annual gross revenue of $1.235 billion or more during any fiscal year before that time, in which cases we would no longer be an
emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any
three-year period before that time, we would cease to be an emerging growth company immediately. Even after we no longer qualify as
an emerging growth company, we may still qualify as a smaller reporting company which would allow us to take advantage
of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements. Additionally, even if we no longer qualify as an emerging growth company,
as long as we are neither a large accelerated filer nor an accelerated filer, we would not be required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We cannot predict if investors will
find our securities less attractive because we may rely on these exemptions, which could result in a less active trading market for
our securities and increased volatility in the price of our securities.
Finally, we are a smaller
reporting company (and may continue to qualify as such even after we no longer qualify as an emerging growth company) and accordingly
may provide less public disclosure than larger public companies, including the inclusion of only two years of audited financial statements
and only two years of managements discussion and analysis of financial condition and results of operations disclosure. As a result,
the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which
you hold equity interests.
**
**
**
**
| | 33 | | |
**
**The Most Material Risks
Related to Our Business and Financial Position**
**We might require additional capital to support
business growth, and this capital might not be available on favorable terms, if at all.**
We have funded our operations
since inception primarily through debt and revenue generated by our operations. While we believe that our existing cash and cash equivalents
and availability under our debt financing agreements are sufficient to meet our working capital needs and planned capital expenditures,
and to service our debt, there is no guarantee that this will continue to be true in the future. We cannot be certain when or if our operations
will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments
in our business to respond to business opportunities and challenges, including developing new products and services, enhancing our operating
infrastructure, expanding our non-U.S. operations, and acquiring complementary businesses and technologies, all of which may require us
to secure additional funds. In the future, we may also require additional capital due to refinancing needs, regulatory surety bond requirements,
or unforeseen circumstances and may decide to engage in equity, equity-linked or debt financings, or enter into additional debt financing
agreements for any of the foregoing reasons. We may not be able to secure any such additional financing on terms favorable to us, in a
timely manner, or at all.
The trading prices for our
common stock may be highly volatile, which may reduce our ability to access capital on favorable terms or at all. In addition, a slowdown
or other sustained adverse downturn in the general economic or digital asset markets could adversely affect our business and the value
of our common stock. Because our decision to raise capital in the future will depend on numerous considerations, including factors beyond
our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of securities. As a result, our stockholders
bear the risk of future issuances of debt or equity securities reducing the value of the common stock and diluting their interests. Our
inability to obtain adequate financing or financing on terms satisfactory to us, when we require it, could significantly limit our ability
to continue supporting our business growth and responding to business challenges.
****
**Our total revenue is substantially
dependent on the volume of transactions conducted by our customers. If such volume declines, our business, operating results, and financial
position would be adversely affected.**
We generate substantially
all our revenue from the sale of crypto assets to our customers, either using our Bitcoin ATMs or over the phone. Revenue is based on
the prices that we charge our customers based on prevailing market prices. This revenue may fluctuate based on the price of crypto assets.
As such, any declines in the volume of transactions, the price of crypto assets, or market liquidity for crypto assets generally may result
in lower total revenue to us.
The price of crypto assets
and associated demand for buying, selling, and trading crypto assets have historically been subject to significant volatility. The price
and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including:
|
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market conditions across all elements of the crypto-economy; | |
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our business is in a relatively new consumer product segment, which is difficult to forecast; | |
|
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|
our operating results may fluctuate due to the highly volatile nature of crypto; | |
|
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|
changes in liquidity, market-making volume, and trading activities; | |
|
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|
trading activities on other crypto platforms worldwide, many of which may be unregulated, and may include manipulative activities; | |
|
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|
investment and trading activities of highly active retail and institutional users, speculators, miners, and investors; | |
|
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|
the speed and rate at which crypto assets and specifically Bitcoin can gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all; | |
|
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|
decreased user and investor confidence in crypto assets and associated exchanges and service providers; | |
|
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|
negative publicity and events relating to Bitcoin, blockchain technology, or the digital currency economy as a whole; | |
| | 34 | | |
|
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|
unpredictable social media coverage or trending of Bitcoin or other crypto assets; | |
|
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|
the ability for crypto assets to meet user and investor demands; | |
|
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|
consumer preferences and perceived utility and value of crypto assets and associated markets; | |
|
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|
increased competition from other payment services or other crypto assets that exhibit better speed, security, scalability, or other characteristics; | |
|
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|
regulatory or legislative changes and updates affecting the use, storage, ownership, exchange, or any other aspect of the crypto-economy; | |
|
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|
the characterization of crypto assets under the laws of various jurisdictions around the world; | |
|
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|
the maintenance, troubleshooting, and development of the blockchain networks underlying crypto assets, including by miners, validators, and developers worldwide; | |
|
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|
the ability for protocol networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently; | |
|
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|
ongoing technological viability and security of protocols and their associated crypto assets, smart contracts, applications, and networks, including vulnerabilities against hacks and scalability; | |
|
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|
fees and speed associated with processing blockchain transactions, including on the underlying protocol networks and on exchanges and other platforms for trading; | |
|
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financial strength of wholesale market participants; | |
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the availability and cost of funding and capital; | |
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the liquidity of over-the-counter trading desks, market-makers, exchanges, and other wholesale dealers of crypto assets; | |
|
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interruptions in service from or failures of major crypto exchanges and platforms; | |
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availability of banking and payment services to support crypto-related projects; | |
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global level of interest rates and inflation; | |
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monetary policies of governments, trade restrictions, and Fiat Currency valuation changes; and | |
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national and international economic and political conditions. | |
There is no assurance that
any supported crypto asset will maintain its value or that there will be meaningful levels of interest from customers. If the demand for
purchasing or selling crypto assets declines, our business, operating results, and financial condition would be adversely affected.
****
**The prices of Bitcoin and other crypto assets
are volatile.**
We generate substantially
all our revenue from the sale of crypto assets to our customers, either using our Bitcoin ATMs or over the phone. Revenue is based on
the prices that we charge our customers based on prevailing market prices. The price at which we are able to purchase crypto assets prior
to selling those same crypto assets may not be lower than the sale price if the market conditions change between those two points in time.
The value of the entirety of our crypto assets held could be lost if the prices of those crypto assets were to significantly decrease,
which would adversely affect our operating results. There are no assurances that the crypto assets we hold will have value from one day
to the next and we could suffer a loss if any of the prices of those crypto assets declines or is permanently depressed.
Bitcoin has experienced significant price volatility in recent months,
with sharp and unpredictable swings in valuation that can materially affect investment outcomes. In late 2025 and early 2026, Bitcoins
price has fluctuated widely, at times dropping from near record highs of over $126,000 to levels around $60,000, followed by abrupt rebounds
and multi-day swings of 5% or more. This heightened volatility reflects broader market sell-offs, divergence in macroeconomic expectations,
leveraged trading dynamics, and rapid shifts in sentiment rather than fundamentals alone.
| | 35 | | |
**Our transaction volume may be partially dependent
on the prices of Bitcoin we sell, which can be volatile. If such prices decline, the volume of user transactions could decrease and our
business, operating results, and financial condition would be adversely affected.**
**
We generate substantially
all of our revenue from the cash paid by customers to purchase Bitcoin from our ATMs. The number of user transactions and our transaction
volumes may be partially dependent on the prices of Bitcoin, as well as the associated demand for buying, selling and trading Bitcoin,
which can be and historically have been volatile. If such prices decline, the number of user transactions or our transaction volumes could
decrease. As such, any such declines, or any declines in the price of Bitcoin or market liquidity for cryptocurrency generally, may result
in lower total revenue to us. The price and trading volume of any cryptocurrency, including Bitcoin, is subject to significant uncertainty
and volatility, depending on a number of factors, including:
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market conditions of, and overall sentiment towards, cryptocurrency; | |
|
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changes in liquidity, market-making volume, and trading activities; | |
|
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trading activities in cryptocurrency, including on other cryptocurrency platforms worldwide, many of which may be unregulated, and may include manipulative activities; | |
|
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|
investment and trading activities of highly active retail and institutional users, speculators, miners, and investors; | |
|
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|
the speed and rate at which cryptocurrency is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all; | |
|
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|
changes in user and investor confidence in cryptocurrency and cryptocurrency platforms; | |
|
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|
negative publicity and events relating to the digital financial system; | |
|
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|
unpredictable social media coverage or trending of, or other rumors and market speculation regarding cryptocurrency; | |
|
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the ability for cryptocurrency to meet user and investor demands; | |
|
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|
the functionality and utility of cryptocurrency and its associated ecosystems and networks, including cryptocurrency designed for use in various applications; | |
|
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retail user preferences and perceived value of cryptocurrency and cryptocurrency markets; | |
|
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|
increased competition from other payment services or cryptocurrency for which we do not sell that exhibit better speed, security, scalability, or other characteristics; | |
|
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regulatory or legislative changes and updates affecting the digital financial system; | |
|
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|
the characterization of cryptocurrency under the laws of various jurisdictions around the world; | |
|
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|
the adoption of unfavorable taxation policies on cryptocurrency investments by governmental entities; | |
|
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|
the maintenance, troubleshooting, and development of the blockchain networks underlying cryptocurrency, including by miners, validators, and the development community; | |
|
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the ability for cryptocurrency networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently; | |
|
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legal and regulatory changes affecting the operations of miners and validators of blockchain networks, including limitations and prohibitions on mining activities, or new legislative or regulatory requirements as a result of growing environmental concerns around the use of energy in mining cryptocurrency, including Bitcoin, and other proof-of-work mining activities; | |
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ongoing technological viability and security of cryptocurrency and its associated smart contracts, applications and networks, including vulnerabilities against hacks and scalability; | |
| | 36 | | |
|
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fees and speed associated with processing cryptocurrency transactions, including on the underlying blockchain networks and on cryptocurrency platforms; | |
|
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financial strength of market participants; | |
|
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|
the availability and cost of funding and capital; | |
|
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|
interruptions in service from or failures of major cryptocurrency platforms; | |
|
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availability of an active derivatives market for various cryptocurrencies; | |
|
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availability of banking and payment services to support cryptocurrency-related projects; | |
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level of interest rates and inflation; | |
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monetary policies of governments, trade restrictions, and Fiat Currency devaluations; and | |
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national, North American and international economic and political conditions. | |
****
There is no assurance that
any given cryptocurrency will maintain or increase in value or that there will be meaningful transaction volumes from our users. In the
event that the price or trading of, or demand for, cryptocurrency declines, our business, operating results, and financial condition would
be adversely affected.
**Bankruptcies of major crypto asset market participants
have impacted the broader crypto economy.**
The failure of several prominent
crypto trading venues and lending platforms, such as FTX, Celsius Networks and Voyager has impacted and may continue to affect the broader
cryptoeconomy. The full extent of these impacts may not yet be known but may include, the consequent and ongoing financial distress and
bankruptcy of certain crypto market participants, loss of confidence in the broader cryptoeconomy, reputational harm to crypto asset platforms
generally, increased negative publicity of the broader cryptoeconomy, heightened scrutiny by regulators and lawmakers and calls for increased
regulation of crypto assets and crypto asset platforms. We have not experienced a material direct impact to our business, financial condition,
customers or counterparties from these bankruptcies; however, these bankruptcies did cause a change to crypto market prices, crypto market
volatility, crypto market volume and customer sentiment, and each of these drivers do indirectly impact our business and our revenue potential.
A combination of such drivers could have been a contributing factor in a decrease in transaction volume that the Company experienced after
these bankruptcies. We do not have any known material financial exposure to other cryptoeconomy participants that faced insolvency and
liquidity issues, experienced excessive redemptions or suspended redemptions or withdrawals of crypto assets, allegedly mishandled customer
funds, or experienced significant corporate compliance failures in connection with these bankruptcies.
**Our business is in a new consumer product segment,
which is difficult to forecast.**
Our industry segment is new
and is constantly evolving. As a result, there is a lack of available information with which to forecast industry trends or patterns.
There is no assurance that sustainable industry trends or preferences will develop that will lead to predictable growth or earnings forecasts
for individual companies or the industry segment. We are also unable to determine what impact future governmental regulation may have
on trends and preferences or patterns within our industry segment. See [Risk Factors Related to Current and Future Regulations and other Law Enforcement Actions](#k_150) for a discussion of the risks associated with governmental regulation.
****
****
****
****
| | 37 | | |
****
**We have a significant level of indebtedness
that may have an adverse impact on us.**
As of December 31, 2025, our
total indebtedness, excluding lease liabilities, was $21.3 million including, $4.0 million of short-term notes payable, and $327 thousand
of insurance financing debt. Our significant level of indebtedness could have important consequences for us, including the following:
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requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations and future business opportunities; | |
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restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; | |
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limiting our ability to obtain additional equity or debt financing for general corporate purposes, acquisitions, investments, capital expenditures or other strategic purposes; | |
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limiting our ability to adjust to changing business conditions and placing us at a competitive disadvantage to our less highly leveraged competitors; and | |
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making us more vulnerable to general economic downturns and adverse developments in our business. | |
The above factors could limit
our financial and operational flexibility and, as a result, could have a material adverse effect on our business, financial condition
and results of operations. Furthermore, if our debt obligation is not repaid prior to its respective maturity date, it will go into default
which could cause you to lose a portion or all of your investment in the Company.
**The future development and growth of crypto
assets and protocols is subject to a variety of factors that are difficult to predict and evaluate. If the future does not develop and
grow as we expect, our business, operating results, and financial condition could be adversely affected.**
Blockchain technology was
only introduced in 2008 and remains in the early stages of development. In addition, different protocols are designed for different purposes.
Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system, while Ethereum was designed to be a smart contract
and decentralized application platform. Many other protocol networksranging from cloud computing to tokenized securities networkshave
only recently been established. The further growth and development of any crypto assets and their underlying networks and other cryptographic
and algorithmic protocols governing the creation, transfer, and usage of crypto assets represent a new and evolving paradigm that is subject
to a variety of factors that are difficult to evaluate, including:
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Many protocol networks have limited operating histories, have not been validated in production, and are still in the process of developing and making significant decisions that will affect the design, supply, issuance, functionality, and governance of their respective tokens and underlying blockchain networks, any of which could adversely affect their respective usefulness. | |
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Many networks are in the process of implementing software upgrades and other changes to their protocols, which could introduce bugs, security risks, or adversely affect the respective crypto networks. | |
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Several large networks, including Bitcoin and Ethereum, are developing new features to address fundamental speed, scalability, and energy usage issues. If these issues are not successfully addressed, or are unable to receive widespread adoption, it could adversely affect the underlying crypto asset. | |
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Security issues, bugs, and software errors have been identified with many protocols and their underlying blockchain networks, some of which have been exploited by malicious actors. There are also inherent security weaknesses in some crypto assets and their networks and protocols, such as when creators of certain crypto networks use procedures that could allow hackers to counterfeit tokens. Any weaknesses identified with a protocol, token or blockchain could adversely affect its price, security, liquidity, and adoption. If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the compute or staking power on a crypto network, as has happened in the past, it may be able to manipulate transactions, which could cause financial losses to holders, damage the networks reputation and security, and adversely affect its value. | |
| | 38 | | |
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The development of new technology for mining, such as improved application-specific integrated circuits (commonly referred to as ASICs), or changes in industry patterns, such as the consolidation of mining power in a small number of large mining farms, could reduce the security of blockchain networks, lead to increased liquid supply of the crypto asset token, and reduce its price and attractiveness. | |
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If rewards and transaction fees for miners or validators on any protocol network are not sufficiently high to attract and retain miners, a networks security and speed may be adversely affected, increasing the likelihood of a malicious attack. | |
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The governance of many decentralized blockchain networks is by voluntary consensus and open competition, and many developers are not directly compensated for their contributions. As a result, there may be a lack of consensus or clarity on the governance of any crypto network, a lack of incentives for developers to maintain or develop the network, and other unforeseen issues, any of which could result in unexpected or undesirable errors, bugs, or changes, or stymie such networks utility and ability to respond to challenges and grow. | |
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Many crypto networks are in the early stages of developing partnerships and collaborations, all of which may not succeed and adversely affect the usability and adoption of the respective crypto asset token. | |
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Various other technical issues have also been uncovered from time to time that resulted in disabled functionalities, exposure of certain users personal information, theft of users assets, and other negative consequences, and which required resolution with the attention and efforts of their global miner, user, and development communities. If any such risks or other risks materialize, and if they are not resolved, the development and growth of crypto assets, blockchain technology, or Bitcoin may be significantly affected and, as a result, our business, operating results, and financial condition could be adversely affected. | |
****
**Loss of a banking relationship could adversely
impact our business, operating results, and financial condition.**
Athena depends on having regular
and normalized access to a bank checking account for normal business purposes and also for taking deposits of the cash received from the
ATM fleet. As a money services business registered with the Financial Crimes Enforcement Network (FinCEN) under the Bank
Secrecy Act, as amended by the USA PATRIOT Act of 2001, and its implementing regulations enforced by FinCEN, our banking partners view
us as a higher risk customer for purposes of their anti-money laundering programs. We may face difficulty establishing or maintaining
banking relationships due to our banking partners policies and some prior bank partners have terminated their relationship with
Athena. The loss of these banking partners or the imposition of operational restrictions by these banking partners and the inability for
us to utilize other redundant financial institutions may result in a disruption of business activity as well as regulatory risks. In addition,
financial institutions in the United States and globally may, because of the myriads of regulations or the perceived risks of crypto assets,
decide to not provide accounts, payments, or other financial services to us. Such events could negatively affect an investment in our
common stock.
**We may be unable to generate sufficient cash
to service all of our indebtedness and financial commitments.**
****
Our ability to make scheduled
payments on or to refinance our indebtedness and financial commitments depends on our financial condition and operating performance, which
are subject to prevailing economic and competitive conditions including financial, business and other factors beyond our control. We may
be unable to generate sufficient cash flow to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital
resources are insufficient to fund debt and other obligations, we may be forced to reduce or delay capital expenditures, sell assets,
seek additional capital or restructure our indebtedness. Our ability to restructure or refinance indebtedness will depend on the condition
of the capital markets and our financial condition at such time. Any refinancing of indebtedness could be at higher interest rates and
may require us to comply with more onerous covenants, which could further restrict our operations. The terms of existing or future debt
instruments may restrict us from adopting some of these alternatives. In addition, any failure to service our debt would likely result
in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. If we face substantial liquidity problems,
we might be required to sell assets to meet debt and other obligations. Our debt restricts our ability to dispose of assets and dictates
our use of the proceeds from such disposition.
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We may not be able to consummate
dispositions, and the proceeds of any such disposition may be inadequate to meet obligations. We may be unable to access adequate funding
as a result of a decrease in lender commitments due to an unwillingness or inability on the part of lending counterparties to meet their
funding obligations and the inability of other lenders to provide additional funding to cover a defaulting lenders portion. As
a result, we may be unable to execute our plan of operations, make acquisitions or otherwise conduct operations, which would have a material
adverse effect on our financial condition and results of operations.
**The Company may be forced to cease operations.**
It is possible that, due to
any number of reasons, including, but not limited to, an unfavorable fluctuation in the value of cryptographic and fiat currencies, the
inability by the Company, whether in the United States or globally, to obtain clients, the failure of commercial relationships, the failure
of development of the necessary technical environment, the failure of government actors to provide needed regulatory clarity, the failure
of technology development by third parties, or intellectual property ownership challenges, the Company may no longer be viable to operate
and the Company may dissolve, either in whole or part, or take actions that result in a dissolution event. During the past six years there
have been several rumors that regulation specifically aimed at terminating the practice of selling crypto assets via kiosks, such as the
Companys fleet of Bitcoin ATMs, would be forthcoming. While the regulations hypothesized by these rumors have never been enacted,
the state of California recently enacted the law (DFAL) regulating digital assets and restricting operations of financial
assets kiosks (see BusinessGovernmental Regulation State Regulation of this Report), it remains a risk to
the Companys principal operations and could be detrimental to an investment in the Companys common stock. The DFAL began
taking effect on January 1, 2024, with covered persons required to be licensed, or to have submitted a license application and be awaiting
approval or denial of that application, on or before July 1, 2025.
**Other Risk Factors Related
to Our Business Operations and Financial Position**
**Currently, there is a small use of Bitcoin
in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that
could adversely affect an investment in our common stock.**
Bitcoin and the Bitcoin Network
have only recently become accepted as a means of payment for goods and services by certain major retail and commercial outlets, and the
use of Bitcoin by consumers to pay such retail and commercial outlets remains limited. Conversely, a significant portion of Bitcoin demand
is generated by speculators and investors seeking to profit from the short- or long-term holding of Bitcoin. A lack of expansion by Bitcoin
or other crypto assets into retail and commercial markets, or a contraction of such use, may result in decreased demand for the Companys
services or increased demand for services the Company is not able to provide, either of which could adversely affect an investment in
our common stock.
****
**The Companys assets could be stolen
and would be difficult to recover due to the nature of cash and crypto assets.**
It is possible that, due
to any number of reasons, including, but not limited to, an unfavorable fluctuation in the value of cryptographic and fiat currencies,
the inability by the Company, whether in the United States or globally, to obtain clients, the failure of commercial relationships, the
failure of development of the necessary technical environment, the failure of government actors to provide needed regulatory clarity,
the failure of technology development by third parties, or intellectual property ownership challenges, the Company may no longer be viable
to operate and the Company may dissolve, either in whole or part, or take actions that result in a dissolution event. During the past
six years there have been several rumors that regulation specifically aimed at terminating the practice of selling crypto assets via
kiosks, such as the Companys fleet of Bitcoin ATMs, would be forthcoming. While the regulations hypothesized by these rumors have
never been enacted, the state of California recently enacted the law (DFAL) regulating digital assets and restricting operations
of financial assets kiosks (see BusinessGovernmental Regulation State Regulation of this Report), it remains
a risk to the Companys principal operations and could be detrimental to an investment in the Companys common stock. The
DFAL began taking effect on January 1, 2024, with covered persons required to be licensed, or to have submitted a license application
and be awaiting approval or denial of that application, on or before July 1, 2025.
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**Crypto assets and funds that the Company holds
on Bitcoin exchanges could be lost, stolen, or otherwise impaired.**
From time to time and for
customary reasons of procuring Bitcoin on crypto exchanges. The Company uses Kraken as its primary crypto exchange. The Company carefully
selects the platforms that it chooses to do business with; however this may not be sufficient to avoid losses if those exchanges suffer
losses or other impairments. In 2018, Quadriga filed for bankruptcy protection following the death of its Chief Executive Officer and
subsequent discovery of its insolvency. In addition, several other well-known and highly regarded exchanges have suffered similar fates.
For example, in February 2014, Mt. Gox, then the largest bitcoin exchange worldwide, filed for bankruptcy protection in Japan after an
estimated 700,000 bitcoin were stolen from its wallets. In May 2019, Binance, one of the worlds largest exchanges was hacked, resulting
in losses of approximately $40 million. Neither of these incidents had any impact on the Company. Any such losses by an exchange could
have a negative impact on the financial position of the Company and adversely impact an investment in our common stock.
**The Company may not always maintain sufficient
crypto assets to satisfy customer transaction requests, which could adversely affect its business and results of operations.**
****
The Company relies on proprietary
tools and analytics, together with managements judgment, to monitor its crypto asset holdings and determine the level of crypto
assets it believes is necessary to support anticipated customer transactions. If these tools, analytics, or judgments indicate that the
Companys holdings are insufficient, the Company seeks to acquire additional crypto assets from liquidity providers. There have
been limited instances prior to fiscal year 2023, each lasting less than 24 hours, in which the Company did not maintain adequate levels
of crypto assets to permit customer transactions, and during such periods no customer transactions were processed. Although the Company
subsequently acquired additional crypto assets and resumed transaction processing, any future failure to maintain sufficient levels of
crypto assets could impair the Companys ability to satisfy customer demand, result in lost revenue, and negatively impact the Companys
business, financial condition, and results of operations.
****
**The theft, loss, or destruction of private
keys required to access any Bitcoin may be irreversible. If we are unable to access our private keys or if we experience a hack or other
data loss relating to our ability to access any bitcoin, it could cause regulatory scrutiny, reputational harm, and other losses.**
Bitcoin is generally accessible
only by the possessor of the unique private key relating to the digital wallet in which the Bitcoin is held. While blockchain protocols
typically require public addresses to be published when used in a transaction, private keys must be safeguarded and kept private to prevent
a third party from accessing the Bitcoin held in the applicable wallet. To the extent that any of the private keys relating to our wallets
containing Bitcoin held for our own account or our users private keys relating to their un-hosted wallets is lost, destroyed, or
otherwise compromised or unavailable, and no backup of the private key is accessible, we or our users will be unable to access the Bitcoin
held in the related wallet. Further, we cannot provide assurance that our or our users wallets will not be hacked or otherwise
compromised. Cryptocurrency and blockchain technologies have been, and may in the future be, subject to security breaches, hacking, or
other malicious activities. Any loss of private keys relating to, or any hack or other compromise of, digital wallets used to store our
users Bitcoin could adversely affect our users ability to access or sell their Bitcoin, as well as result in loss of user
trust in us. As such, any loss of private keys due to a hack, employee or service provider misconduct or error, or other compromise by
third parties could hurt our brand and reputation, result in significant losses, and adversely impact our business. However, the Company
does not (i) custody Bitcoin purchased by customers, (ii) manage or have access to private keys belonging to customers personal
(un-hosted) wallets, or (iii) hold private keys for users. Customers are solely responsible for their own wallets and private keys. When
a customer uses an Athena Bitcoin ATM to purchase Bitcoin, the Bitcoin is directly delivered to a wallet address provided by the user
(typically a mobile wallet app). These user wallets are un-hosted or self-custodied, meaning the users alone control their
private keys.
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The
risk of loss or compromise of private keys related to Bitcoin owned by the Company is mitigated by our use of a third-party custodian,
BitGo Trust Company, Inc. (a qualified custodian) who has been engaged to secure our digital assets. BitGo manages the private keys for
digital wallets holding Bitcoin owned exclusively by the Company (i.e., held for our own account). This means all Bitcoin held as inventory,
or held for operational liquidity by the Company, is secured by BitGo, which manages the corresponding private keys on our behalf. If
these keys were lost or compromised, BitGos protocols, including secure backups and recovery processes, would mitigate this risk.
BitGo provides multi-signature
wallet services and secure key management for the Bitcoin that the Company holds for its own account and for facilitating customer transactions.
By entrusting this function to BitGo, we add a layer of security and risk mitigation (given BitGos expertise and insurance arrangements)
beyond what could be achieved with in-house custody.
The Company has a standard
service agreement with BitGo under which BitGo safeguards the private keys and crypto assets that the Company deposits with it. BitGos
custodial accounts are segregated and secure, and BitGo carries insurance policies that may cover certain losses (providing an additional
layer of protection to the Company). BitGo has and maintains insurance policies for custodial services through Lloyds of London
who provides crime insurance coverage with a limit of $5.0 million and specie insurance coverage with a limit of $250 million. The specie
insurance aims to cover the permanent loss of cryptocurrency from its designated blockchain address if an insured event occurs. However,
this coverage has significant exclusions, such as theft or dishonesty by key company insiders (like major shareholders or directors, unless
they are specifically designated custodians), losses from trading or loan defaults, and issues arising from improperly secured or lost
private keys (like those stored on internet-connected devices). It also doesnt cover cryptocurrency network failures or losses
not reported promptly, nor does it apply to broader events like war, terrorism, or money laundering.
The crime insurance component
addresses risks like employee theft, losses of property at BitGos premises or during transit, and fraud committed by third parties
through computer systems or fund transfers, including related legal expenses. Exclusions under this part include fraud by directors with
significant ownership (with some exceptions if theyre treated as regular employees), losses from employees known to be previously
dishonest, and losses of potential income or trade secrets. It also wont cover issues like accounting errors, mechanical failures,
the cryptocurrencys underlying protocol failing, or broader events like war.
BitGo is a qualified custodian
regulated by the South Dakota Division of Banking, which provides assurance that our custodied assets are held in a compliant manner.
**Any significant disruption in our ATMs or software,
information technology systems, or any of the blockchain networks related to our business, could result in a loss of users or funds and
adversely impact our brand and reputation and our business, operating results, and financial condition.**
****
Our reputation and ability
to attract and retain users and grow our business depends on our ability to operate our products and services at high levels of reliability,
scalability, and performance, including the ability to process and monitor, on a daily basis, the transactions that occur across multiple
systems. Our ATMs and software, the ability of our users to transact in Bitcoin, and our ability to operate at a high level, are dependent
on our ability to access the blockchain networks underlying the supported Bitcoin, for which access is dependent on our systems
ability to access the internet. Further, the successful and continued operations of such blockchain networks will depend on a network
of computers, miners, or validators, and their continued operations, all of which may be impacted by service interruptions.
Our ATMs and certain cryptocurrency
and blockchain networks have experienced from time to time, and may experience in the future, service interruptions or degradation because
of hardware and software defects or malfunctions, distributed denial-of-service and other cyberattacks, insider threats, break-ins, sabotage,
human error, vandalism, earthquakes, hurricanes, floods, fires, and other natural disasters, power losses, disruptions in telecommunications
services, fraud, military or political conflicts, terrorist attacks, computer viruses or other malware, or other events. In addition,
extraordinary transactions or site usage could cause our kiosks to operate at an unacceptably slow speed or even fail.
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If any of our ATMs are disrupted
for any reason, our products and services may fail, resulting in unanticipated disruptions, slower response times and delays in our users
transaction execution and processing, failed transactions, incomplete or inaccurate accounting, recording or processing of transactions,
unauthorized transactions, loss of user information, increased demand on limited user support resources, user claims, complaints with
regulatory organizations, lawsuits, or enforcement actions. A prolonged interruption in the availability or reduction in the availability,
speed, or functionality of our products and services could harm our business. Significant or persistent interruptions in our services
could cause current or potential users to believe that our ATMs or software are unreliable, leading them to switch to our competitors
or to avoid or reduce the use of our products and services, and could permanently harm our reputation and brands. Moreover, to the extent
that any system failure or similar event results in damages to our users, these users could seek significant compensation from us for
their losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address. Problems with the reliability
or security of our ATMs or software could cause damage to our reputation and the cost of resolving these problems could negatively affect
our business, operating results, and financial condition.
Because we are a regulated
money services business in certain jurisdictions, interruptions have resulted and in the future may result in regulatory scrutiny, and
significant or persistent interruptions could lead to significant fines and penalties, and mandatory and costly changes to our business
practices, and ultimately could cause us to lose existing licenses or banking and other relationships that we need to operate or prevent
or delay us from obtaining additional authorizations, registrations or licenses that may be required for our business.
In addition, we are continually
improving and upgrading our information systems and technologies. We also rely on technologies developed by others, and if we are unable
to continue to obtain licenses for such technologies or licenses to substitute for similar technologies, our business could be adversely
impacted. Implementation of new systems and technologies is complex, expensive, time-consuming, and may not be successful. If we fail
to timely and successfully implement new information systems and technologies, or improvements or upgrades to existing information systems
and technologies, or if such systems and technologies do not operate as intended, it could have an adverse impact on our business, internal
controls (including internal controls over financial reporting), operating results, and financial condition.
**The Company does not insure against all potential
losses, which could result in significant financial exposure. Additionally, our lack of insurance protection for crypto assets
held by the Company could adversely impact our business, operating results, and financial condition.**
The Company does not have
commercial insurance or third-party indemnities to fully cover all operational risks or potential liability in the event of a significant
incident or series of incidents causing catastrophic loss. As a result, the Company is, to a substantial extent, self-insured for such
events. The Company relies on existing liquidity, financial resources and borrowing capacity to meet short-term obligations that would
arise from such an event or series of events. The occurrence of a significant incident, series of events, or unforeseen liability for
which the Company is self-insured, not fully insured or for which insurance recovery is significantly delayed could have a material adverse
effect on the Companys results of operations or financial condition.
Additionally, the crypto assets
held by us are not insured. We also do not rely on insurance carriers to insure losses resulting from a breach of our physical security,
cyber security, or by employee or service provider theft since we do not carry crime insurance. We only maintain a general liability insurance
which does not cover crypto assets or breaches described above. Therefore, we may suffer a loss which is not covered by insurance in damages.
Such a loss could cause a substantial business disruption of our operations, adverse reputational impact, inability to compete with our
competitors, regulatory scrutiny, and consequently, it could adversely impact an investment in our shares of common stock.
**The Company operates in locations outside of
the United States and, as such, is subject to additional risks with respect to enforcement of its contractual rights.**
We currently operate and intend
to grow our operations in a number of jurisdictions outside of the United States. Laws and business practices that favor local competitors
or prohibit or limit foreign ownership of certain businesses, or our failure to adapt our practices, systems, processes, and business
models effectively to the traveler and supplier preferences (as well as the regulatory and tax landscapes) of each country into which
we expand, could impede our ability to enter into, negotiate or enforce contracts in those markets. In addition to the other risks described
in this Report, our companys international operations would be subject to numerous other risks, including, but not limited to,
weaker enforcement of our companys contractual rights, longer payment cycles, and difficulties in collecting accounts receivable.
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**The countries we operate in, may or may not
have stable economies, stable banking sectors, or stable governments which may or may not permit us to repatriate profits, maintain ownership
of our business or its assets, or continue operations.**
From time to time, certain
governments have seized foreign companies, their assets, and/or their operations. It is possible for us to face significant losses if
such an event occurs, either specific to us or broadly across the entire country or industry in which we operate. We may, for example
no longer be permitted to purchase additional crypto assets, or operate our machines, or return capital or profits to our parent company
in the United States. This may result in a total and complete loss of our assets within that country as well as further costs to continue
to pay our existing liabilities within that country.
**If we fail to retain existing users or add
new users, or if our users decrease their level of engagement with our products and services, our business, operating results, and financial
condition may be significantly harmed.**
****
Our success depends on our
ability to retain existing users and attract new users to increase engagement with our products and services. To do so, we must continue
to offer leading technologies and ensure that our products and services are secure, reliable, and engaging. We must also expand our products
and services and offer competitive transaction and other fees in an increasingly crowded and price-sensitive market. There is no assurance
that we will be able to continue to do so, that we will be able to retain our current users or attract new users, or keep our users engaged.
Any number of factors can negatively affect user retention, growth, and engagement, including if:
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we fail to increase awareness of our brand and
successfully compete with the offerings and prices of other companies, or if our users otherwise increasingly engage with competing
products and services, including those that we are unable to offer due to regulatory reasons; | |
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we fail to introduce new and improved products and services, or if we introduce new products or services that are not favorably received; | |
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we fail to successfully identify and acquire or invest in businesses, products or technologies that we believe could complement or expand our business; | |
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we fail to support new and in-demand cryptocurrencies or if we elect to support cryptocurrencies with negative reputations; | |
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there are changes in sentiment about the quality or usefulness of our products and services or concerns related to privacy, security, or other factors including, without limitation, changes in macro-level user preference for using cash to purchase Bitcoin; | |
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there are adverse changes in our products and services that are mandated by legislation, regulatory authorities, or litigation; | |
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we fail to maintain existing authorizations as well as obtain newly required authorizations, registrations and licenses for our products; | |
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users perceiving Bitcoin and other cryptocurrencies to be a bad investment, or experiencing significant losses in Bitcoin or other cryptocurrencies, may not desire to utilize our products and services; | |
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technical or other problems prevent us from delivering our products and services with the speed, functionality, security and reliability that our users expect, or if we fail to otherwise gain and maintain the trust and confidence of our users; | |
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there are cybersecurity incidents, employee or service provider misconduct or other unforeseen activities that cause losses to us or our users; | |
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there are modifications to our fee model, including as a result of changes in or the adoption of any laws or regulations imposing restrictions or limitations on the markup at which we sell bitcoin to users or the separate flat transaction fee that we are able to charge our users, or modifications by competitors to their fee models; | |
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we fail to provide adequate customer service for our users and retail partners; | |
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regulatory and governmental bodies in countries that we target for expansion express negative views towards cryptocurrency-related services and, more broadly, the digital financial system; or | |
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we or other companies in our industry are the subject of adverse media reports or other negative publicity. | |
From time to time, certain
of these factors have negatively affected user retention, growth, and engagement to varying degrees. If we are unable to maintain or increase
our user base and user engagement, our revenue and financial results may be adversely affected. Any decrease in user retention, growth,
or engagement could render our products and services less attractive to users, which may have an adverse impact on our revenue, business,
operating results, and financial condition. If our user growth rate slows or declines, we will become increasingly dependent on our ability
to maintain or increase levels of user engagement and monetization in order to drive growth of revenue.
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**Adverse economic conditions may affect our
business.**
Our performance is subject
to general economic conditions, and their impact on the digital currency markets and our customers. The United States and other international
economies have experienced cyclical downturns from time to time in which economic activity declined resulting in lower consumption rates,
restricted credit, reduced profitability, weaknesses in financial markets, bankruptcies, and overall uncertainty with respect to the economy.
The impact of general economic conditions on the Company is highly uncertain and dependent on a variety of factors, including global adoption
of cryptocurrencies, central bank monetary policies, and other events beyond our control. Geopolitical developments, such as trade wars
and foreign exchange limitations can also increase the severity and levels of unpredictability globally and increase the volatility of
global financial and digital currency markets. To the extent that conditions in the general economic and digital currency markets materially
deteriorate, our ability to attract and retain customers may suffer.
**Due to unfamiliarity and some negative publicity
associated with cryptocurrency-related businesses, existing and potential users may lose confidence in cryptocurrency-related products
and services, which could negatively affect our business.**
****
Cryptocurrency and related
products and services are relatively new. Many of our competitors are unlicensed, unregulated, operate without supervision by any governmental
authorities, and do not provide the public with significant information regarding their ownership structure, management team, corporate
practices, cybersecurity, and regulatory compliance. As a result, users and the general public may lose confidence in cryptocurrency businesses,
including regulated businesses like ours.
Since the inception of the
digital financial system, numerous cryptocurrency businesses have been sued, investigated, or shut down due to fraud, manipulative practices,
business failure, and security breaches. In many of these instances, customers of these businesses were not compensated or made whole
for their losses. Larger businesses, like us, are more appealing targets for hackers and malware and may also be more likely to be targets
of regulatory enforcement actions. For example, in May 2019, Binance, one of the worlds largest platforms, was hacked, resulting
in losses of approximately $40 million, and in February 2021, Bitfinex settled a long-running legal dispute with the State of New York
related to Bitfinexs alleged misuse of over $800 million of customer assets. Further, in the first half of 2022, major cryptocurrency
lending platforms declared bankruptcy, resulting in a loss of confidence in participants of the digital financial system and negative
publicity surrounding cryptocurrency more broadly.
**Risk Factors Related
to Our Operations in El Salvador**
**Expansion of business operations in El Salvador
may not produce the positive results as planned.**
We have established significant
operations in El Salvador. However, there are many factors that could disrupt the implementation of Bitcoin Law in El Salvador, and as
a result, our operations in El Salvador. Any of such disruptions can have a negative impact on the financial position of the Company.
They could jeopardize our expansion plan and be detrimental to our business. Six articles of the Bitcoin Law were modified, and three
others were repealed as of January 29, 2025. Under the new rules, Bitcoin is no longerconsideredcurrency, or
legal tender. Another change makes using Bitcoin entirely voluntary. Previously, the lawmandatedthat businesses
accept Bitcoin for any goods or services they provided. Additionally, Bitcoin can no longer be used to pay taxes or settle government
debts. These changes are not expected to harm our operations because our Bitcoin ATM services in El Salvador do not depend on compulsory
Bitcoin usage; rather, they cater to organic consumer demand. We believe demand for Bitcoin transactions will continue to be driven by
individuals who choose to use Bitcoin. Our role as an ATM operator for Chivo remains unchanged whereby we continue to manage the Bitcoin
ATMs on the governments behalf under our fixed-fee service arrangement.
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The government is also stepping
back from its involvement in Chivo Wallet, the state-backed digital wallet, by either transferring it to private sector management or
terminating the program, as part of the countrys agreement with the International Monetary Fund. We believe this development may
open opportunities for private companies (including the Company) to fill any service gaps left by the governments reduced role.
We have assessed the impact of the legislative changes and the Chivo transition and do not foresee a negative impact on our business,
in part because our existing ATM operations and customer base in El Salvador are expected to continue without disruption. There is no
assurance that our assessment may not change depending on any future legal, political or economic changes in El Salvador.
Our operations in El Salvador are subject to the
following additional risks:
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Exposure to Bitcoin volatility. While Bitcoin can be used as a speculative asset to generate significant
gains, it can also generate major losses. Bitcoin pricing has fluctuated from $16,500 on December 31, 2022 to $42,000 on December 31,
2023 to $93,429 on December 31, 2024 to $87,711 on December 31, 2025, with more recent trading as of the date of this Report being around
$60,000-$70,000. Holding or transacting in such an unstable asset is particularly risky for people with low incomes, who can ill afford
to sustain price swings as large as 30% in a single day and may become victims of a significant collapse. If there was a significant reduction
in the fair value of Bitcoin, the reduction of value of Bitcoin held in the El Salvadoran national reserves could be a destabilizing event
for the country and could impact the existing Bitcoin Law. Six articles of the Bitcoin Law were modified, and three others were repealed
as of January 29, 2025. Under the new rules, Bitcoin is no longerconsideredcurrency, or legal tender.
Another change makes using Bitcoin entirely voluntary. Previously, the lawmandatedthat businesses accept Bitcoin for any goods
or services they provided. Additionally, Bitcoin can no longer be used to pay taxes or settle government debts. These changes are not
expected to harm our operations because our Bitcoin ATM services in El Salvador do not depend on compulsory Bitcoin usage; rather, they
cater to organic consumer demand. We believe demand for Bitcoin transactions will continue to be driven by individuals who choose to use
Bitcoin. Our role as an ATM operator for Chivo remains unchanged whereby we continue to manage the Bitcoin ATMs on the governments
behalf under our fixed-fee service arrangement. | |
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The government is also stepping back from its
involvement in Chivo Wallet, the state-backed digital wallet, by either transferring it to private sector management or terminating the
program, as part of the countrys agreement with the International Monetary Fund. We believe this development may open opportunities
for private companies (including the Company) to fill any service gaps left by the governments reduced role. We have assessed the
impact of the legislative changes and the Chivo transition and do not foresee a negative impact on our business, in part because our existing
ATM operations and customer base in El Salvador are expected to continue without disruption.
There is no assurance that our assessment may
not change depending on any future legal, political or economic changes in El Salvador. | |
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Depletion of banking assets.In todays El Salvador, banks connect savers and borrowers. If most Salvadorans start using Bitcoin, their savings will be stored in digital wallets away from potential borrowers who would otherwise use it to fund projects. Massive adoption of Bitcoin could drain banks of savings and raise the cost of borrowing for companies and individuals, who would face higher interest rates. If that occurs, the economy of El Salvador and implementation of the Bitcoin Law could be negatively affected. | |
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Lack of transparency/money laundering. Internationally, the cryptocurrency has been used for money laundering and to facilitate illegal activities. The intergovernmental Financial Action Task Force (FATF) may increase monitoring of El Salvadoran banks, businesses, and other financial institutions. The FATF is the international money laundering and terrorist financing watchdog. It reviews countries anti-money laundering and counter-financing terrorism practices. If the FATF determines that a country is exposed to financial crime, the flagged country is placed on either the list of Jurisdictions under Increased Monitoring, known as the grey list, or the list of Jurisdictions subject to a Call for Action, known as the black list. When acountry is placed on the grey list, it must cooperate with increased FATF monitoring. When acountry is placed on the black list, the FATF urges its 39 member nations and over 200 affiliated nations to apply enhanced due diligence and impose countermeasures, such as sanctions. From an FATF regulatory perspective, El Salvador has been in full compliance, however, that may likely change after the Bitcoin Law has been fully implemented. For example, the FATF mandates that the parties engaging in virtual-asset transactions provide complete and sufficient know-your-customer information. It also requires that senders and recipients of virtual assets obtain accurate knowledge and information about the transaction, the source of funds, and the relationship with the counterparty. The chances of Bitcoin transactions meeting such requirements are unlikely and El Salvador may be subject to sanctions. Please note that six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. See Risk Factor(s) above discussing the new rules under the provisions of the modified Bitcoin Law and their impact on the Companys operations. | |
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Loss of central bank reserves.El Salvador currently carries a large debt burden (approximately 87.9% of GDP as of April 2025 according to the International Monetary Fund (IMF)) and has a challenging amortization schedule. To navigate this difficult fiscal environment during the pandemic, El Salvador reached out to the IMF and was approved for a 40-month arrangement under the Extended Fund Facility for El Salvador, with access to $1.4 billion and an immediate disbursement of $113 million. The IMF stipulated that the arrangement is expected to catalyze additional multilateral financial support, for a combined overall financing package of over US$3.5 billion over the program period. The IMF also declared that the potential risks of the Bitcoin project are being addressed in line with Fund policies and with Fund advice to the authorities. Prior actions include legal reforms that have made acceptance of Bitcoin by the private sector voluntary and ensured that tax payments are made only in U.S. dollars. Transparency of the public crypto e-wallet has been strengthened, and the government plans to gradually unwind its participation in the e-wallet. Going forward, program commitments will confine government engagement in Bitcoin-related economic activities, as well as government transactions in and purchases of Bitcoin. Regulation and supervision of digital assets will be enhanced in line with evolving international best practices. Moodys rating agency has downgraded the countrys debt further from B3 to Caa3 on November 26, 2024, with its outlook stable; that rating has remained unchanged. Those factors may negatively affect the economy of El Salvador and disrupt the implementation of the Bitcoin Law. However, six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. See Risk Factor(s) above discussing the new rules under the modified Bitcoin Law and their impact on the Companys operations. | |
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Continued negative publicity in the media with respect to Chivo S.A. de C.V. the Chivo Ecosystem, of Bitcoin ATMs in general, or of the Companys services could have a material adverse effect on our business.The Government of El Salvador, through Chivo operates the Chivo digital wallet. The government purchased software and related services from the Company and used this software from the launch of the Chivo digital wallet in September of 2021 until December of 2021. According to media reports, the Chivo companys operation of the Chivo digital wallet is not subject to public reporting or auditing by a banking regulator. Therefore, there is no way for an outside observer to know that the assets held by Chivo S.A. de C.V. are sufficient to cover the liabilities (user balances) of the Chivo digital wallet. If there are negative views presented in the news about the assets held by Chivo S.A. de C.V, or of the quality of its service offerings, or its lack of transparency, or fraud, or identity theft connected with the usage of the Chivo digital wallet, or any reported problems related to the Chivo digital wallet (either the version written by the Company or any subsequent version not using the Companys Intellectual Property), then the Companys reputation could be damaged which may negatively affect an investment in our common stock. | |
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Failure to maintain sufficient cash in Chivo branded ATMs to meet demand could have a material adverse effect on our reputation.Chivo S.A. de C.V. also directs the Company as to how much physical cash should be loaded into the Chivo ATMs in El Salvador for the purpose of ATM users retrieving U.S. Dollar currency in exchange for their Bitcoin or dollars held in the Chivo digital wallet. If for any reason, there is not sufficient physical cash loaded into a Chivo ATM to meet the total demand for such cash, the ATM will be unable to initiate additional transactions to dispense cash to a user and the user will see the machine as non-functional. This could create negative impression of the Chivo Ecosystem, of Bitcoin ATMs in general, of the Companys services, or the Companys reputation and negatively affect an investment in our common stock. | |
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Capital flight.Bitcoin Law could facilitate a capital
flight, especially during a crisis. Many emerging markets control the flow of capital in and out of their countries to avoid a
macroeconomic crisis or to prevent one from worsening. However, Bitcoin can facilitate such a flight: Once dollars are converted to
Bitcoin, they can easily be sent to anyone in the world, without any control or tracking. Such an event would have a negative effect
on the economy of El Salvador. Six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025.
See the Risk Factor(s) above discussing the new rules under the provisions of the modified Bitcoin Law and their impact on the
Companys operations. | |
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Environmental concerns about Bitcoin mining.The system on which Bitcoin is currently based consumes large amounts of electricity, making it particularly taxing for the environment. President Bukele believes that the countrys cheap, clean, and renewable geothermal energy from volcanoes can power Bitcoin mining rigs, thus reducing its carbon footprint. It is not clear at this time if such a solution would solve the environmental concerns. | |
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**Risks related to the custody of the private
keys associated with the Chivo wallet system, including any risk of loss or compromise of such private keys.**
The Government of El Salvador
(or its designated Chivo wallet operator) retains custody of the private keys associated with the Chivo wallet system. The Companys
role is strictly limited to operating the ATM infrastructure and facilitating the transfer of cash from the ATMs to the banks that Chivo
transacts with. We do not have custody or manage Bitcoin on behalf of Chivo or its end users. Furthermore, the Company does not have access
to end users of the Chivo system. The end users who participate in the Chivo wallet system, also do not have access to the private keys
to the Chivo wallet. When the end user chooses to receive Bitcoins in the Chivo wallet, the end user agrees that the Government of El
Salvador (or its designated Chivo wallet operator) retains custody of the private keys associated with the wallet. Since the Company is
neither the custodian of the private keys nor is the Company involved in the transactions between the end users and Chivo, any compromise
or loss of these private keys could adversely affect public confidence in the Chivo wallet system, negatively affecting its reputation
or brand, and consequently potentially reducing the number of transactions conducted through Chivo-branded ATMs resulting in lowering
associated management fees earned by the Company. However, based on the Companys assessment, such loss or compromise of private
keys associated with the Chivo wallet system, would likely have only limited potential impact on the Companys overall business
because revenues from Chivo represent an insignificant fraction of the Companys total operations and revenues. No assurance can
be made that the impact of any reputational risk will not be of a significant nature in the future.
The Company entered into certain
agreements with the government of El Salvador, for the operation and management of the Chivo branded ATMs, however such contracts do not
obligate the Company to assume the risk of loss or compromise of private keys associated with the Chivo wallet system.
**Political and economic developments in El Salvador
may adversely affect Bitcoin Law.**
****
El Salvadors Bitcoin
Law has been greeted with skepticism from both Salvadorans and international financial institutions. The population might not fully embrace
Bitcoin. Requiring every business to accept Bitcoin for goods and services without adequate access to technology may be a difficult obstacle
to overcome and Bitcoin Law can be changed if it remains unpopular under a successor administration. Any of these concerns could disrupt
our operations in El Salvador and have a negative impact on the financial position of the Company. It should be noted that six articles
of the El Salvadorian Bitcoin Law were modified, and three others were repealed as of January 29, 2025. See Risk Factor(s) above discussing
the new rules under the provisions of the modified Bitcoin Law and their impact on the Companys operations.
There is political discontent
in El Salvador with President Bukeles ouster of Supreme Court judges and the potential for the president to seek a second consecutive
term. The presidential period is five years in El Salvador. Consecutive re-election is not permitted, though previously elected presidents
may run for a second, non-consecutive term. Recently, El Salvadors top court and its election authority have removed what seemed
to be a constitutional ban on consecutive presidential reelection, which has resulted in President Nayib Bukele seeking a second term
in 2024. President Bukele won his second term in February 2024 with the vote of 85%, however, if there is a change in El Salvadors
administration after his five-year term expires, it may negatively affect Bitcoin Law and our operations in El Salvador.
**Our contracts with the El Salvador government
may be negatively impacted.**
We have entered into agreements
with the Government of El Salvador, pursuant to which we have installed and are currently operating 194 Chivo Bitcoin ATMs in El Salvador,
14 Chivo Bitcoin ATMs at El Salvador consulates in the U.S., 29 Chivo Bitcoin ATMs in other U.S. locations, with 27 ATMs in storage (as
of December 31, 2025), importing and delivering 950 Chivo POS terminals for local businesses in El Salvador to transact with bitcoin,
and developing and maintaining the software for the Chivo digital wallet. Each obligation comes with its own set of operational risks
in addition to risks set forth herein, including but not limited to the volatile nature of crypto assets, data breach and crypto hacks,
fraud conducted by users of the services offered by the Government of El Salvador, changes in U.S. and foreign laws and regulations, talent
acquisition and retention, and general economic conditions. If we fail to fulfil our contractual obligations, our agreements may be terminated
which may negatively impact our financial standing and reputation. For the twelve months ended December 31, 2025, and 2024, approximately
1% and 2%, respectively, of our revenues have been from the El Salvador government through our white-label service. In December 2024,
the Company entered into a new Master Services Agreement (MSA) and Service Level Agreement (SLA) with the
Government of El Salvador, which expires in December 2027. In conjunction with the new MSA and SLA, the Company and CHIVO completed a
financial settlement agreement to finalize balances owed between the parties and terminate the original MSA, Contracts and Addendums between
the Company and the Department of Treasury of El Salvador. The settlement was effective as of April 2023 with full satisfaction of all
obligations thereunder. Our agreements with the Government of El Salvador may also be modified or terminated by the Government of El Salvador
for any reason including but not limited to regime change, additional competition, and loss of political support. Any such unfavorable
change in our business operations in El Salvador, including the termination of any contracts with the Government of El Salvador, would
adversely affect our revenues and profitability, and could negatively affect an investment in our shares of common stock. No white-label
ATMs have been terminated by the El Salvador government through December 31, 2025. Please note that six articles of the Bitcoin Law were
modified, and three others were repealed as of January 29, 2025. See Risk Factor(s) above discussing the new rules under the provisions
of the modified Bitcoin Law and their impact on the Companys operations.
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**Risk Factors Related
to the Bitcoin Network, Wallets, Bitcoin, and Crypto Assets**
****
**Bitcoin, and most other crypto assets based
on public key cryptography, are controllable only by the possessor of both the unique public key and private key relating to the local
or online digital wallet in which the bitcoin are held.**
While the Bitcoin Network,
and similar blockchain protocol networks, require a public key relating to a digital wallet to be published when used in a spending transaction,
private keys must be safeguarded and kept private in order to prevent a third party from accessing the Bitcoin held in such wallet. To
the extent a private key is lost, destroyed, or otherwise compromised and no backup of the private key is accessible, Athena will be unable
to access the Bitcoin, or other crypto assets, held in the related digital wallet. Any loss of private keys relating to digital wallets
used to store Athenas Bitcoin, or other crypto assets, could adversely affect our business, financial condition and results of
operations and ultimately any investment in our common stock. Our hot wallets are maintained by BitGo, a regulated third-party custodian,
and not by Company personnel. The Company has engaged BitGo (a qualified custodian) to secure our digital assets. BitGo provides multi-signature
wallet services and secure key management for the Bitcoin that the Company holds for its own account and for facilitating customer transactions.
By entrusting this function to BitGo, we add a layer of security and risk mitigation (given BitGos expertise and insurance arrangements)
beyond what could be achieved with in-house custody.
**The future and development of the Bitcoin Protocol
and other blockchain technologies are subject to a variety of factors that are difficult to evaluate.**
The further development and
acceptance of the Bitcoin Network and other cryptographic and algorithmic protocols governing the issuance of transactions in Bitcoin
and other crypto asset, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to
evaluate. Athena does not participate in the development of the Bitcoin Network and has little to no influence over the software developers
who write the code or the miners who run the Bitcoin Network. The slowing or stopping of the development or acceptance of the Bitcoin
Network could adversely affect our business, financial condition and results of operations and ultimately any investment in our common
stock.
**The further development and acceptance of cryptocurrency
networks and other cryptocurrencies, which represent a new and rapidly changing industry, are subject to a variety of factors that are
difficult to predict and evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect
an investment in us**.
**
Cryptocurrency that may be
used to buy and sell goods and services, among other things, are a new and rapidly evolving industry which is subject to a high degree
of uncertainty. The factors affecting the further development of the digital asset industry, as well as the digital asset networks, include:
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continued worldwide growth in the adoption and use of cryptocurrencies; | |
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governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the digital asset network or similar cryptocurrency systems; | |
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the maintenance and development of the open-source software protocol of cryptocurrency networks; | |
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changes in consumer demographics and public tastes and preferences; | |
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the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; | |
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general economic conditions and the regulatory environment relating to cryptocurrency; and | |
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the impact of regulators focusing on cryptocurrencies and digital securities and the costs associated with such regulatory oversight. A decline in the popularity or acceptance of the digital asset networks could adversely affect an investment in us. | |
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We are, or may in the future,
be susceptible to risks arising from disruptions in crypto asset markets. Such risks could potentially result in, among other things:
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the depreciation of investments held in us, including the depreciation in the price of our publicly-traded stock; | |
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decreased user demand for our products and services; | |
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financing risks to us, including relating to our ability to obtain equity and debt financing; | |
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increased losses attributable to the crypto assets held by
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legal proceedings and government investigations involving us or our affiliates or other third-parties with which we do business; or | |
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indirect risks to our business due to any adverse impact of recent or future crypto market disruptions on our users, suppliers or other counterparties. | |
Additionally, although we
are not directly connected to recent crypto market events, we may still suffer reputational harm due to our association with the cryptocurrency
industry in light of the recent disruption in, or as a result of any future disruptions in, the crypto asset markets. Specifically, recent
negative publicity stemming from these market disruptions and speculation of potential future disruptions increases our risk of reputational
harm simply by association with the industry.
Further, any future market
disruptions resulting in overall decreased interest in Bitcoin could harm our business. The prevalence of cryptocurrency is a relatively
recent trend, and the long-term adoption of cryptocurrency by investors, consumers, and businesses remains uncertain.
The number of user transactions
and our transaction volumes is partially dependent on the price of bitcoin, as well as the associated demand for buying, selling, and
trading bitcoin, which can be, and historically have been, volatile. If such prices decline, the number of user transactions or our transaction
volumes could decrease. As such, any such declines, or any declines in the price of bitcoin or market liquidity for cryptocurrency generally,
may result in lower total revenue to us due to an associated decrease in demand for our products and services. The price and trading volume
of any cryptocurrency, including bitcoin, is subject to significant uncertainty and volatility, depending on a number of factors, as discussed
elsewhere in this section under the subheading *Our transaction volume may be partially dependent on the prices of bitcoin we
sell, which can be volatile. If such prices decline, the volume of user transactions could decrease and our business, operating results,
and financial condition would be adversely affected*.
****
**Stablecoins may not have any intrinsic value.**
Tether, USD Coin, Dai and
TrueUSD are examples of stablecoins. Stablecoins are crypto assets designed to have a stable value over time as compared to typically
volatile crypto assets and are typically marketed as being pegged to a Fiat Currency, most commonly the U.S. Dollar, at a rate of 1:1.
Stablecoins market cap is at $312 Billionand has a 12.69% share of the total crypto market cap as of December 31, 2025 (according
to CoinGecko https://www.coingecko.com/). The largest stablecoin is Tether, which is the third largest crypto asset by market cap at $187
billion per coinmarketcap.com as of December 31, 2025. Some have argued that some stablecoins, particularly Tether, are improperly issued
without sufficient backing, and have also argued that those associated with certain stablecoins may be involved in laundering money. On
February 17, 2021, the New York Attorney General entered into an agreement with Tethers operators, requiring them to cease any
further trading activity with New York persons and pay $18.5 million in penalties for false and misleading statements made regarding the
assets backing Tether. Terra (LUNA), another stablecoin, collapsed in May 2022 due to issues with its algorithm, resulting in the stablecoin
losing all value. This sent shockwaves through the crypto market, with the total market cap of crypto assets decreasing significantly
during May 2022. Volatility in stablecoins, operational issues with stablecoins (for example, technical issues that prevent settlement),
concerns about the sufficiency of any reserves that support stablecoins, or regulatory concerns about stablecoin issuers or intermediaries,
such as crypto asset spot markets, that support stablecoins, could have a significant impact on the global crypto market.
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**A temporary or permanent blockchain fork
to any supported crypto asset could adversely affect our business.**
Blockchain protocols, including
Bitcoin, Ethereum, and Litecoin, are open source. Any user can download the software, modify it, and then propose that Bitcoin, Ethereum,
Litecoin, or other blockchain protocols users and miners adopt the modification. When a modification is introduced and a substantial majority
of users and miners consent to the modification, the change is implemented and the Bitcoin, Ethereum, Litecoin, or other blockchain protocol
networks, as applicable, remain uninterrupted. However, if less than a substantial majority of users and miners consent to the proposed
modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known
as a fork (i.e., split) of the impacted blockchain protocol network and respective blockchain, with one prong
running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two
parallel versions of the Bitcoin, Ethereum, Litecoin, or other blockchain protocol network, as applicable, running simultaneously, but
with each split networks crypto asset lacking interchangeability.
Both Bitcoin and Ethereum
protocols have been subject to forks that resulted in the creation of new networks, including Bitcoin Cash ABC, Bitcoin
Cash SV, Bitcoin Diamond, Bitcoin Gold, Ethereum Classic, and others. Some of these forks have caused fragmentation among platforms as
to the correct naming convention for forked crypto assets. Due to the lack of a central registry or rulemaking body, no single entity
can dictate the nomenclature of forked crypto assets, causing disagreements and a lack of uniformity among platforms on the nomenclature
of forked crypto assets, and which results in further confusion to customers as to the nature of assets they hold on platforms. In addition,
several of these forks were contentious and as a result, participants in certain communities may harbor ill will towards other communities.
As a result, certain community members may take actions that adversely impact the use, adoption, and price of Bitcoin, Ethereum, Litecoin,
or any of their forked alternatives.
Furthermore, hard forks can
lead to new security concerns. For instance, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which
transactions from one network were rebroadcast on the other network to achieve double-spending, plagued platforms that traded
Ethereum through at least October 2016, resulting in significant losses to some crypto asset platforms. Similar replay attacks occurred
in connection with the Bitcoin Cash and Bitcoin Cash SV network split in November 2018. Another result of a hard fork is an inherent decrease
in the level of security due to the splitting of some mining power across networks, making it easier for a malicious actor to exceed 50%
of the mining power of that network, thereby making crypto assets that rely on proof-of-work more susceptible to attack, as has occurred
with Ethereum Classic.
Future forks may occur at
any time. A fork can lead to a disruption of networks and our information technology systems, cybersecurity attacks, replay attacks, or
security weaknesses, any of which can further lead to temporary or even permanent loss of our assets.
****
**From time to time, we may encounter technical
issues in connection with the integration of supported crypto assets and changes and upgrades to their underlying networks, which could
adversely affect our business.**
To support any crypto asset,
a variety of front and back-end technical and development work is required to ensure proper operations including pricing, transfer, accounting,
and other solutions for our Bitcoin ATM fleet, and to integrate such supported crypto asset with our existing infrastructure. For certain
crypto assets, a significant amount of development work is required and there is no guarantee that we will be able to integrate successfully
with any existing or future crypto asset. In addition, such integration may introduce software errors or weaknesses into our platform,
including our existing infrastructure. Even if such integration is initially successful, any number of technical changes, software upgrades,
soft or hard forks, cybersecurity incidents, or other changes to the underlying blockchain network may occur from time to time, causing
incompatibility, technical issues, disruptions, or security weaknesses to our platform. If we are unable to identify, troubleshoot and
resolve any such issues successfully, we may no longer be able to support such crypto assets, our assets may be frozen or lost, the security
of our crypto asset wallets may be compromised, and technical infrastructure may be affected, all of which could adversely impact our
business.
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**If miners or validators of any crypto asset
network demand high transaction fees, our operating results may be adversely affected.**
We pay miner fees when transmitting crypto assets including bitcoin to customers upon completion of
their purchase. In addition, we also pay miner fees when we move crypto assets for various operational purposes, such as when we transfer
bitcoin between our regional wallets. However, miner fees can be unpredictable. For instance, in 2017, Bitcoin miner fees increased from
approximately $0.35 per transaction in January 2017 to over $50 per transaction in December 2017. Even though Bitcoins miner fees
have since decreased to an average of $0.30 per transaction as of February 20, 2026, if the demand for Bitcoin remains at current levels,
we could experience high costs in excess of our historical performance. Although we attempt to adjust our pricing to pass through these
expenses to our customers, we have in the past incurred, and expect to incur from time to time, losses associated with the payment of
miner fees in excess of what we charge our customers, resulting in adverse impacts on our operating results.
****
**We are subject to an extensive and rapidly
evolving regulatory environment, and if a particular crypto asset we transact or transacted in is characterized as a security,
we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating
results, and financial condition.**
Our business is subject to
extensive laws, rules, regulations, policies, orders, determinations, directives, and legal and regulatory interpretations and guidance
in the markets in which we operate. The scope of laws, rules, and regulations that can impact our business is expansive and includes certain
of the requirements that apply to financial services, money transmission, privacy protection, cybersecurity, electronic payments, securities
and commodities regulation, data governance, data protection, fraud detection, marketing (including the Telephone Consumer Protection
Act of 1991), civil rights (including the Americans with Disabilities Act, which generally requires, among other things, that our Athena
Bitcoin ATMs be accessible to individuals with disabilities, such as visually- impaired persons), competition, bankruptcy, tax, anti-bribery,
economic and trade sanctions, anti-money laundering, and counter-terrorist financing as well as bespoke cryptocurrency, and related cryptocurrency
laws that have been adopted in some jurisdictions that can impact cryptocurrency custody, cryptocurrency exchange and transfer, as well
as cross-border and domestic cryptocurrency transmission.
We evaluate all products and
services prior to launch under U.S. federal and applicable international securities laws. As part of determining whether a particular
crypto asset is a security for purposes of the federal securities laws, we have taken into account a number of factors, including the
various definitions of security under the federal securities laws and federal court decisions interpreting elements of these
definitions, such as the U.S. Supreme Courts decisions in the *Howey* and *Reves* cases, as well as reports, orders,
press releases, public statements and speeches by the SEC and its staff providing guidance on when a digital asset may be a security for
purposes of the federal securities laws. Depending on its characteristics, a digital asset may be considered a security
under the federal securities laws. The test for determining whether a particular digital asset is a security is complex
and difficult to apply, and the outcome is difficult to predict. Whether a digital asset is a security under the federal securities laws
depends on whether it is included in the lists of instruments making up the definition of security in theSecurities
Act, theExchange Act and the Investment Company Act. Digital assets as such do not appear in any of these lists, although each list
includes the terms investment contract and note, and the SEC has typically analyzed whether a particular digital
asset is a security by reference to whether it meets the tests developed by the federal courts interpreting these terms, known as the
*Howey*and *Reves* tests, respectively. For many digital assets, whether or not the *Howey*or *Reves*tests are
met is difficult to resolve definitively, and substantial legal arguments can often be made both in favor of and against a particular
digital asset qualifying as a security under one or both of the*Howey*and*Reves*tests. Adding to the
complexity, the SEC staff has indicated that the security status of a particular digital asset can change over time as the relevant facts
evolve. The laws, rules, and regulations thereunder may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction
to another, and may conflict with one another. Moreover, the complexity and evolving nature of our business and the significant uncertainty
surrounding the regulation of the cryptoeconomy requires us to exercise our judgment as to whether these crypto assets meet the definition
of a security. Our conclusions based on our legal analysis of the criteria discussed herein, do not constitute a legal determination and
are not binding on regulators or the courts. It is possible that governmental bodies and regulators may disagree with our conclusions.
To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines, revocation of licenses,
limitations on or temporary or permanent suspensions of our products and services, reputational harm, and other regulatory consequences,
each of which may be significant and could adversely affect our business, operating results, and financial condition.
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The SEC and its staff have
taken the position that certain crypto assets fall within the definition of a security under the U.S. federal securities
laws. The SECs Strategic Hub for Innovation and Financial Technology published a framework for analyzing whether any given crypto
asset is a security in April 2019. The legal test for determining whether any given crypto asset is a security is a highly complex, fact-driven
analysis that evolves over time. We have established policies and practices to evaluate each crypto asset that we sell to customers, as
discussed above, including applying the*Howey*and*Reves*tests, as may be applicable, to each crypto
asset that we sell to customers. The*Howey*test is a legal framework outlined by the U.S. Supreme Court to determine
whether a transaction qualifies as an investment contract (security) and would be subject to U.S. securities laws. This test requires
the following four criteria to be met: investment of money, expectations of profits, common enterprise and reliance on the efforts of
others. The crypto assets that the Company sells to customers do not meet all four of these definitions. The Company does not believe
that Bitcoin and Bitcoin Cash meet the criterion of satisfying the definition of a common enterprise; as investors are not pooling their
funds, there is no promoter or issuer and they have never sought public funds to help develop its technology. Further, an investors
success is not reliant on the efforts of others. The Company evaluated Ethereum, including the assessment of the impacts of the change
from proof-of-work to proof-of-stake and concludes that Ethereum does not meet the definition of a security as it does not satisfy the
common enterprise criterion or the reliance of others criterion. We believe that the Ethereum network remains decentralized and that there
is no horizontal or vertical commonality between validators. Horizonal and vertical commonality requires the entrepreneurial efforts of
a promoter, which the Company believes that Ethereum does not have. Profits (rewards) are determined primarily based on each validators
individual effort and they do not expect rewards from the efforts of other validators. The Company further notes that the Company has
not provided staking abilities and benefits to customers for Ethereum, resulting in no change in the Companys conclusion that Ethereum
does not meet the*Howey*test.
We have considered and
determined that the recent completion of Ethereums transition to Proof-of-Stake consensus, known as the Merge,
has not caused Ethereum to have become a security for a variety of reasons including, but not limited to those discussed below.
Consistent with the holdings in recent federal court cases involving*Ripple*and*Terraform*, we believe
that whether something is an investment contract under the*Howey*test is a transaction-specific assessment that
does not attach to the underlying object of that transaction as the underlying object of a transaction is not itself a
contract, transaction or scheme. We therefore believe that a digital asset such as Ethereum cannot itself be an investment
contract security, including after the Merge. We also believe that Ethereum is a consumable commodity that is not a security.
Ethereum was used in making gas fee payments on the Ethereum Network prior to the Merge and continues to be extensively used in this
capacity after the Merge. The Merge also introduced a new use for Ethereum as part of the new consensus mechanism, which provides
further evidence that Ethereum is a consumable commodity and not a security. We further believe that any expectations of profit a
purchaser of Ethereum may possess from their purchase depends on the overall market for Ethereum, not any identifiable
other or issuer as required in the*Howey*test. Specifically, we believe that Ethereums value
derives from the supply and demand for useful applications built on the Ethereum Network. We believe this to be the case before the
Merge and continues to be the case after the Merge. We also believe that even if a holder of Ethereum expects profits based upon the
action of persons directly involved in updating the Ethereum Networks code, or in publishing new blocks of transactions on
the Ethereum Network, the group of persons involved in such activities is sufficiently decentralized such that there is no
other upon whom a purchaser could rely for*Howey*purposes. There were thousands of developers working
on the Ethereum Networks code before the Merge, and there continue to be today, and the same can be said of thousands of
miners publishing blocks on the Ethereum Network. We therefore believe that the Ethereum Network remains sufficiently
decentralized and that Ethereum is not a security. We have also considered that, similar to profits that could be sought from
mining under proof of work, any profits realized from validating Ethereum transactions only accrue to those who affirmatively engage
in validation efforts, rather than holders of Ethereum more generally. Any of these profits are also based on the validators
own efforts to engage in validation, and not the efforts of identifiable others more generally. We believe Ethereum is
not a security because futures contracts with Ethereum as the underlying asset continue to be offered by trading platforms regulated
only by the Commodity Futures Trading Commission (CFTC), even after the Merge. In addition, we have considered generally
whether the Merge may have caused Ethereum to be classified as a security under*Reves*or any other instrument
making up the definition of security in theSecurities Act, theExchange Actand theInvestment
Company Act, and concluded that it did not.
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We believe that we have
applied the proper legal standards in determining that Ethereum is not a security in light of the uncertainties inherent in the *Howey*
and *Reves*tests. In light of these uncertainties and the fact-based nature of the analysis, we acknowledge that Ethereum may
currently be a security, based on the facts as they exist today, or may in the future be found by the SEC or a federal court to be a
security under the federal securities laws notwithstanding our prior conclusion; and our prior conclusion, even if reasonable under
the circumstances, would not constitute a legal determination binding on regulators or the courts and would not preclude legal or
regulatory action based on the presence of a security.
The Company does not believe
that Tether or Litecoin meet the criterion of expectation of profit and therefore they are not securities. While Tether is a stable coin
that is pegged to the U.S. Dollar, Litecoin is not a stable coin, and it is valued based on market value.
We currently offer only Bitcoin
for sale at all our ATM machines. We also operate Athena Plus for private clients and trade customers of the Company. We buy and sell
Bitcoin through our Athena Plus services, but we have also facilitated transactions in other crypto assets prior to July 19, 2023. For
the year ended December 31, 2025, and 2024, we had 228 and 83 Athena Plus transactions, respectively, for Bitcoin. Since July 19, 2023,
we do not transact, or make offers to transact with our customers, in any crypto assets except Bitcoin. We may offer additional
cryptocurrencies in the future only if there were significant customer demand for a specific crypto asset and that crypto asset was available
to us through multiple trading partners, crypto exchanges and crypto asset brokers.
We believe that we have applied
the proper legal standards in determining that the crypto assets we sell to customers are not a security in light of the
uncertainties inherent in the*Howey*and*Reves*tests. In light of these uncertainties and the fact-based
nature of the analysis, we acknowledge that a crypto asset we sell to customers may currently be a security, based on the facts as they
exist today, or may in the future be found by the SEC or a federal court to be a security under the federal securities laws notwithstanding
our prior conclusion based on our analysis; and our prior conclusion, even if reasonable under the circumstances, would not constitute
a legal determination binding on regulators or the courts, and would not preclude legal or regulatory action based on the presence of
a security.
The classification of a crypto
asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale,
trading, and clearing of such assets. For example, a crypto asset that is a security in the United States may generally only be offered
or sold in the United States pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption
from registration. Persons that effect transactions in crypto assets that are securities in the United States may be subject to registration
with the SEC as a broker or dealer. Platforms that bring together purchasers and sellers to trade crypto assets
that are securities in the United States are generally subject to registration as national securities exchanges, or must qualify for an
exemption, such as by being operated by a registered broker-dealer as an alternative trading system, or ATS, in compliance with rules
for ATSs. Persons facilitating clearing and settlement of securities may be subject to registration with the SEC as a clearing agency.
If Bitcoin, Ether, Litecoin, and BCH or any other crypto asset we transacted in the past as listed above, is deemed to be a security under
any U.S. federal, state, or foreign jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences
for such supported crypto asset (if it is still being used in our transactions) or for our Company if it is determined that certain securities
laws were violated and we may be subject to regulatory scrutiny, investigation and penalties. Moreover, the networks on which such supported
crypto assets are utilized may be required to be regulated as securities intermediaries, and subject to applicable rules, which could
effectively render the network impracticable for its existing purposes. Further, it could draw negative publicity and a decline in the
general acceptance of the crypto asset. Also, it may make it difficult for such supported crypto asset to be traded, cleared, and custodied
as compared to other crypto assets that are not considered to be securities. Additionally, new laws, regulations, or interpretations may
result in litigation, regulatory investigations, and enforcement or other actions, including preventing or delaying us from offering certain
products or services, or could impact how we offer such products and services. Foreign jurisdictions may have similar regulations and
licensing, registration, and qualification requirements.
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**Any failure to obtain or maintain necessary
money transmission and virtual currency business activity registrations and licenses could adversely affect our operations.**
****
In the United States, we have
obtained licenses to operate as a money transmitter, or the equivalent, in the states where we understand such licenses or equivalent
are required to conduct our business. We also currently operate in states where we do not believe we are required, or have been informed
by the relevant jurisdiction that we are not required, to obtain money transmitter licenses or any other required licenses. This belief
is based on our analysis of the applicable laws and regulations and/or our communications with the regulators in the relevant jurisdiction.
We plan to apply for money transmitter or virtual currency licenses or their equivalents in additional jurisdictions as needed. As we
obtain additional licenses, we may be required to bear substantial costs to comply with the requirements of the additional states or jurisdictions.
If our licenses are not renewed, we are denied licenses in additional states or jurisdictions where we choose to apply for a license,
or jurisdictions that have previously not required a license require a license in the future, we could be forced to seek a license or
change our business practices.
Additionally, from time to
time, we are the subject to allegations from various U.S. states that our activities constitute those of a money transmitter, and allegations
that we failed to register as a money transmitter in those states. To date we have agreed to various consent orders and settlements with
such states, none of which represent material amounts of penalties, assessments or fees, to settle such claims. The outcome of such ongoing
and future allegations, complaints, claims and litigation cannot be predicted.
As a money services business
and a money transmitter, we are subject to a range of legal obligations and requirements including bonding, net worth maintenance, user
notice and disclosure, reporting, recordkeeping and cybersecurity requirements, and obligations that apply to the safeguarding of third-party
funds and crypto assets. In addition, the licensed entity within our corporate structure is subject to inspection and examination by the
state licensing agencies and certain actions involving that entity, such as changes in controlling equity holders, board members, and
senior management, may require regulatory approval. Further, similar to as discussed above, if we were found by these regulators to be
in violation of any applicable laws, rules, or regulations, we could be subject to fines, penalties, lawsuits, and enforcement actions,
additional compliance requirements, increased regulatory scrutiny of our business, restriction of our operations, or damage to our reputation
or brand. Regulatory requirements are constantly evolving, and we cannot predict whether we will be able to meet changes to existing regulations
or the introduction of new regulations without such compliance harming our business, financial condition, and operating results.
Certain jurisdictions have
enacted rules that require money transmitters, money services businesses, or virtual currency businesses to establish and maintain transaction
monitoring, filtering, scanning and cybersecurity. programs. Wherever we are subject to these rules, we are required to adopt business
practices that require additional expenditures and impact our operating results.
Additionally, if federal,
state, or international regulators were to take actions that limit or prohibit us or our business partners from continuing to operate
our business or their businesses as currently operated, whether by imposing additional requirements, compliance obligations or sanctions,
such actions could harm our business. Any change to our business practices that makes our service less attractive to users or prohibits
use of our services by residents of a particular jurisdiction could decrease our transaction volume and harm our business.
**Risk Factors Related
to Current and Future Regulations and Other Law Enforcement Actions**
****
**The regulations that govern our primary business
operations are in flux and could change in unpredictable ways that negatively affect our business operations, demand for our services,
or our financial position.**
Current regulations acknowledge
and allow for companies to sell bitcoin and other crypto assets in the United States and other countries where Athena operates. If regulations
change to disallow the sale of bitcoin or other crypto assets such a change could have a negative impact on revenues and adversely affect
an investment in our common stock. Current regulations require Know Your Customer (KYC) information be collected as part
of a Customer Information Program (CIP).
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The Company currently has
an Anti-Money-Laundering (AML) / Bank Secrecy Act (BSA) policy and Procedures Manual to comply with FinCEN
regulatory requirements regarding CIP and KYC. Athena employs a risk-based approach and a tiered system using a number of systems and
AML analysts as well as various compliance triggers associated with its software. For transactions up to $2,000 per day, in the states
and territories of the United States which do not currently restrict daily transaction limits (Tier 1) customers insert a phone number
and Athena utilizes an onboarding tool which provides a name and address associated with the phone number provided. If a customer wishes
to purchase greater than $2,000 a day (Tier 2), Athena requires a drivers license ID scan which captures name, birthdate, physical
address, and ID number. A customer cannot proceed at this level without complying with this step. If a customer wishes to use a passport,
at this level, the customer can contact Athena to validate the passport. If a customer purchases $3,000, the customer will also be required
to submit their social security number. Athena has other compliance triggers for similar information over the course of a customers
spending as well as photos taken of the customer at each transaction. Athena has defined procedures for enhanced due diligence procedures
based on a risk-based approach. These procedures utilize investigative software and customer question forms to obtain additional KYC and
source of funds information. Athena also uses a sophisticated tool to ensure that when the Company transmits Bitcoin, it is not sent to
a high risk or prohibited wallet. The tool will block any such transmissions. Finally, Athena utilizes a variety of anti-fraud measures
including various warnings and a pledge of ownership that the customer owns and controls the submitted wallet.
If regulations change and
require significantly more information to be collected from customers, this change may have a negative impact on customer behavior and
could adversely affect our business, financial condition and results of operations and ultimately any investment in our common stock.
**We are subject to an extensive and highly evolving
regulatory landscape and any adverse changes to, or our failure to comply with, any laws, rules, and regulations could adversely affect
our brand, reputation, business, operating results, and financial condition.**
****
Our business is subject to
extensive laws, rules, regulations, policies, orders, determinations, directives, and legal and regulatory interpretations and guidance
in the markets in which we operate. The scope of laws, rules, and regulations that can impact our business is expansive and includes certain
of the requirements that apply to financial services, money transmission, privacy protection, cybersecurity, electronic payments, securities
and commodities regulation, data governance, data protection, fraud detection, marketing. civil rights (including the Americans with Disabilities
Act, which generally requires, among other things, that our employees be accessible to individuals with disabilities), competition, bankruptcy,
tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing. These laws include bespoke cryptocurrency
and cryptocurrency laws that have been adopted in some jurisdictions that can impact cryptocurrency custody, exchange, and transfer, cross-border
and domestic crypto asset transmissions.
Many of these laws, rules
and regulations were adopted prior to the advent of the internet, mobile technologies, crypto assets and related technologies. As a result,
some applicable laws, rules and regulations may not contemplate or address unique issues associated with crypto assets or the digital
financial system, may be subject to significant uncertainty, and may vary widely across U.S. federal, state, and local and international
jurisdictions. These legal and regulatory regimes evolve frequently and may be modified, interpreted, and applied in an inconsistent manner
from one jurisdiction to another, and may conflict with one another. Moreover, the complexity and evolving nature of our business and
the significant uncertainty surrounding the regulation of cryptocurrencies and the digital financial system requires us to exercise our
judgment as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may
disagree with our conclusions. See also *We are subject to an extensive and rapidly evolving regulatory environment, and if a particular crypto asset we transact or transacted in is characterized as a security, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition*.
To the extent we have not
complied with such laws, rules, and regulations, we could be subject to significant fines, revocation of authorizations, registrations
or licenses, limitations on our products and services, whistleblower complaints, reputational harm, and other regulatory consequences,
each of which may be significant and could adversely affect our business, operating results, and financial condition.
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In addition to existing laws,
rules and regulations, various governmental and regulatory bodies, including legislative and executive bodies, in the U.S. and in other
jurisdictions may adopt new laws, rules, regulations and regulatory requirements. For example, we could become subject to laws, regulations
or other regulatory action imposing restrictions, disclosure requirements or limitations on the transaction fees that we are able to charge
our users for bitcoin transactions, including the markup at which we sell bitcoin to users and the separate flat transaction fee that
we charge. As a result, we may not be able to sell bitcoin at a profitable margin, which would adversely affect our revenue and financial
condition. Furthermore, new interpretations of existing laws, rules, and regulations may be issued by such bodies or the judiciary, which
may adversely impact the development of the digital financial system as a whole and our legal and regulatory status in particular by changing
how we operate our business, how our products and services are regulated, and what products or services we and our competitors can offer,
requiring changes to our compliance and risk mitigation measures, imposing new registration or licensing requirements, or imposing a total
ban on certain bitcoin transactions, as has occurred in certain jurisdictions in the past.
We are subject to ongoing
supervision, examination, oversight, and reviews and currently are, and expect in the future, to be subject to investigations and inquiries,
by U.S. federal and state regulators, and foreign financial service regulators. As a result of findings from these reviews and examinations,
regulators have, are, and may in the future require us to take certain actions, including amending, updating, or revising our compliance
policies and procedures from time to time, limiting the kinds of users that we provide services to, changing, terminating, or delaying
our registrations or licenses and the introduction of our existing or new product and services, and undertaking further external audits.
From time to time, we may receive examination reports citing violations of rules and regulations, inadequacies in existing compliance
programs, and requiring us to enhance certain practices with respect to our compliance program, including user due diligence, transaction
monitoring, training, and regulatory reporting and recordkeeping. Implementing appropriate measures to properly remediate these examination
findings may require us to incur significant costs, and if we fail to properly remediate any of these examination findings, we could face
civil litigation, significant fines, damage awards, forced removal of certain employees including members of our executive team, barring
of certain employees from participating in our business in whole or in part, revocation of existing authorizations, registrations or licenses,
limitations on existing and new products and services, reputational harm, negative impact to our existing relationships with regulators,
exposure to criminal liability, or other regulatory consequences. Further, we believe increasingly strict legal and regulatory requirements
and additional regulatory investigations and enforcement, any of which could occur or intensify, may continue to result in changes to
our business practices, as well as increased costs, and supervision and examination for ourselves and our service providers. Moreover,
new laws, rules, regulations, or interpretations may result in additional litigation, regulatory investigations, and enforcement or other
actions, including preventing or delaying us from offering certain products or services offered by our competitors or could impact how
we offer such products and services. Adverse changes to, or our failure to comply with, any laws, rules, and regulations have had, and
may continue to have, an adverse effect on our reputation and brand and our business, operating results, and financial condition.
**It may become illegal to acquire, own, hold,
sell, or use Bitcoin or other cryptocurrencies, participate in blockchains or utilize cryptocurrencies in other countries, which would
adversely affect us.**
Although currently the use
of crypto assets generally is not restricted in most countries, countries such as China and Russia have taken harsh regulatory actions
to curb the use of cryptocurrencies and may continue to take regulatory actions in the future that could severely restrict the right
to acquire, own, hold, sell or use cryptocurrencies or to exchange them for Fiat Currency. In September 2021, China instituted a blanket
ban on all cryptocurrency transactions and mining, including services provided by overseas cryptocurrency exchanges in mainland China,
effectively making all cryptocurrency-related activities illegal in China. In other nations, including Russia, it is illegal to accept
payment in cryptocurrency for consumer transactions, and banking institutions are barred from accepting deposits of Bitcoin or other
cryptocurrencies. In January 2022, the Central Bank of Russia called for a ban on crypto asset activities ranging from mining to trading.
Russia more recently plans to introduce a comprehensive crypto market regulatory framework by July 1, 2027, where qualified and unqualified
investors will be allowed to buy cryptocurrencies under different rules, with qualified investors facing mandatory risk testing but no
limits on most purchases. While our operations are currently limited to the U.S. and Latin America, such restrictions may adversely affect
our growth potential or us if the restrictions limit the large-scale use of cryptocurrency or if the use of cryptocurrency becomes confined
to certain regions globally. Such circumstances could have a material adverse effect on our business, prospects, operating results, and
financial condition.
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**The digital financial system is continually
being developed. As a result, governments and policymakers are still considering what a regulatory regime for cryptocurrencies should
look like. If we are unable to effectively react to future proposed legislation and regulation of cryptocurrencies or cryptocurrency businesses,
our business, operating results, and financial condition could be adversely affected.**
****
The digital financial system
is continually being developed and the new laws are being proposed and enacted. As a result, many policymakers are just beginning to consider
what a regulatory regime for cryptocurrency should look like and the elements that would serve as the foundation for such a regime. As
cryptocurrency has grown in both popularity and market size, various U.S. federal, state, and local and foreign governmental organizations,
consumer protection agencies, and public advocacy groups have been examining the operations of cryptocurrency networks, users and platforms,
with a focus on how cryptocurrencies can be used to launder the proceeds of illicit activities, fund criminal or terrorist enterprises,
and the safety and soundness of platforms and other service providers that hold cryptocurrencies for users. Many of these entities have
called for heightened regulatory oversight, and have proposed legislation and regulations, undertaken enforcement actions and/or issued
consumer advisories describing the risks posed by cryptocurrencies to users and investors. The impacts of such potential and proposed
heightened regulatory oversight are not yet known. For example, on November 20, 2023, the California Department of Financial Protection
and Innovation (DFPI) issued an invitation for comments on a potential rulemaking relating to two new California laws that
will impose sweeping obligations on companies engaged in virtual currency activities in California and with California residents. The
first law, Assembly Bill 39, prohibits people from engaging in digital financial asset business activity or holding themselves
out as being able to engage in digital financial asset business activity without meeting certain criteria and obtaining a license
from the DFPI, including compliance obligations and stable coin approvals among other guidelines. The second, Senate Bill 401, imposes
requirements on operators of digital financial asset transaction kiosks. The DFPI refers to the two bills collectively as the Digital
Financial Assets Law. The DFAL began taking effect on January 1, 2024, with covered persons required to be licensed, or to have submitted
a license application and be awaiting approval or denial of that application, on or before July 1, 2025.
Competitors, including traditional
financial services, have spent years cultivating professional relationships with relevant policymakers on behalf of their industry so
that those policymakers may understand that industry, the current legal landscape affecting that industry, and the specific policy proposals
that could be implemented to responsibly develop that industry. The lobbyists working for these competitors have similarly spent years
developing and working to implement strategies to advance these industries. Members of the digital financial system have started to engage
policymakers directly and with the help of external advisors and lobbyists, but this work is still in a relatively nascent stage. As a
result, new laws, rules, and regulations may be proposed and adopted in the U.S. and internationally, or existing laws, rules, and regulations
may be interpreted in new ways, that harm the digital financial system or digital asset businesses, which could adversely impact our business.
**We may be subject to liability under, or face business risks in
connection with, state cryptocurrency laws.**
****
May states have also begun
passing cryptocurrency kiosk laws, limiting the daily amount of cash that can be exchanged for cryptocurrencies, limiting the number of
new Bitcoin ATMs which can be placed into service, requiring notices be placed near Bitcoin ATMs relating to potential scam and fraud
risks, capping the amount of fees an Bitcoin ATM operator can charge, and in many cases, requiring the refund for fraudulent transactions
(some of which only apply to first time customers). Such laws may limit the amount of revenue our Bitcoin ATMs can generate, limit our
ability to expand the number of Bitcoin ATMs we operate, require us to spend significant amounts of money on signage or refunds, or otherwise
reduce the amount of revenue we generate from the operation of our Bitcoin ATMs.
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**Our obligations to comply with the laws, rules,
regulations, and policies of a variety of jurisdictions may increase and we may be subject to inquiries, investigations, and enforcement
actions by U.S. and non-U.S. regulators and governmental authorities, including those related to sanctions, export control, and anti-money
laundering.**
If we expand our activities
to other countries we do not currently operate in, we may become obligated to comply with additional laws, rules, regulations, policies,
and legal interpretations of both the jurisdictions in which we operate and those into which we offer products and services on a cross-border
basis. For instance, financial regulators outside the U.S. have in recent months significantly increased their scrutiny of digital asset
exchanges, such as by requiring digital asset exchanges operating in their local jurisdictions to be regulated and licensed under local
laws. Moreover, laws regulating financial services, the internet, mobile technologies, cryptocurrencies, and related technologies outside
of the U.S. are evolving, extensive and could impose different, more specific, or even conflicting obligations on us, as well as broader
liability. In addition, we are required to comply with laws, rules, and regulations related to economic sanctions and export controls
enforced by U.S. Department of Commerces Bureau of Industry and Security, and U.S. anti-money laundering and counterterrorist financing
laws, rules, and regulations enforced by FinCEN and certain state financial services regulators. U.S. sanctions and export control laws
and regulations generally restrict dealings by persons subject to U.S. jurisdiction with certain jurisdictions that are the target of
comprehensive embargoes, currently the Crimea Region, the Donetsk Peoples Republic of Ukraine, the Luhansk Peoples Republic
of Ukraine, Cuba, Iran, North Korea, and Syria, as well as with persons, entities, and governments identified on certain prohibited party
lists. Moreover, as a result of the Russian invasion of Ukraine, the U.S., the E.U., the United Kingdom, and other jurisdictions have
imposed wide-ranging sanctions on Russia and Belarus and persons and entities associated with Russia and Belarus. There can be no certainty
regarding whether such governments or other governments will impose additional sanctions, or other economic or military measures against
Russia or Belarus.
We have an Office of Foreign
Assets Control (OFAC) compliance program in place that includes monitoring of IP addresses to identify prohibited jurisdictions
and of blockchain addresses that have either been identified by OFAC as prohibited or that otherwise are believed by us to be associated
with prohibited persons or jurisdictions. Nonetheless, there can be no guarantee that our compliance program will prevent transactions
with particular persons or addresses or prevent every potential violation of OFAC sanctions, and our expansion into additional jurisdictions
may subject us to additional risks related to use of our services by sanctioned persons.
From time to time, we have
submitted voluntary disclosures to OFAC or responded to administrative subpoenas from OFAC. Certain of these voluntary self-disclosures
are currently under review by OFAC. To date, none of those proceedings has resulted in a monetary penalty or finding of violation. Any
present or future government inquiries relating to sanctions could result in negative consequences for us, including costs related to
government investigations, financial penalties, and harm to our reputation. The impact on us related to such matters could be substantial.
Although we have implemented controls and are working to implement additional controls and screening tools designed to prevent sanctions
violations, there is no guarantee that we will not inadvertently provide access to our products and services to sanctioned parties or
jurisdictions in the future.
Regulators worldwide frequently
study each others approaches to the regulation of the digital financial system. Consequently, developments in any jurisdiction
may influence other jurisdictions. New developments in one jurisdiction may be extended to additional services and other jurisdictions.
As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they may be replicated,
affecting our business in another place or involving another service. Conversely, if regulations diverge worldwide, we may face difficulty
adjusting our products, services, and other aspects of our business with the same effect. The complexity of U.S. federal and state and
international regulatory and enforcement regimes could result in a single event prompting numerous overlapping investigations and legal
and regulatory proceedings by multiple government authorities across different jurisdictions. Any of the foregoing could, individually
or in the aggregate, harm our reputation, damage our brands and business, and adversely affect our operating results and financial condition.
Due to the uncertain application of existing laws, rules, and regulations, it may be that, despite our regulatory and legal analysis concluding
that certain products and services are currently unregulated, such products or services may indeed be subject to financial regulation,
licensing, or authorization obligations that we have not obtained or with which we have not complied. As a result, we are at a heightened
risk of enforcement action, litigation, regulatory, and legal scrutiny which could lead to sanctions, cease and desist orders, or other
penalties and censures which could significantly and adversely affect our continued operations and financial condition.
**
**
**
**
| | 59 | | |
**
**Complex and evolving U.S. and international
laws, rules and regulation regarding privacy and data protection could result in claims, changes to our business practices, penalties,
increased cost of operations, or otherwise harm our business.**
**
We are subject to requirements
relating to data privacy and the collection, processing, storage, transfer, and use of data under U.S. federal, state and foreign laws.
For example, the U.S. Federal Trade Commission (FTC) routinely investigates the privacy practices of companies and has commenced enforcement
actions against many, resulting in multi-million-dollar settlements and multi-year agreements governing the settling companies
privacy practices. The California Consumer Protection Act, which became effective on January 1, 2020, imposes heightened data privacy
requirements on companies that collect information from California residents. If we are unable to meet any such requirements, we may be
subject to significant fines or penalties. As the number of jurisdictions enacting privacy and related laws increases and the scope of
these laws and enforcement efforts expands, we will increasingly become subject to new and varying requirements. Failure to comply with
existing or future data privacy laws, rules, regulations and requirements, including by reason of inadvertent disclosure of personal information,
could result in significant adverse consequences, including reputational harm, civil litigation, regulatory enforcement, costs of remediation,
increased expenses for security systems and personnel, and harm to our users. These consequences could materially adversely affect our
business, financial condition and results of operations.
In addition, we make information
available to certain U.S. federal and state agencies, as well as certain foreign, government agencies in connection with regulatory requirements
to assist in the prevention of money laundering and terrorist financing and pursuant to legal obligations and authorizations. In recent
years, we have experienced increasing data sharing requests by these agencies, particularly in connection with efforts to prevent terrorist
financing or reduce the risk of identity theft. During the same period, there has also been increased public attention to the corporate
use and disclosure of personal information, accompanied by legislation and regulations intended to strengthen data protection, information
security, and consumer privacy. These regulatory goals may conflict, and the law in these areas may not be consistent or settled. While
we believe that we are compliant with our regulatory responsibilities, the legal, political, and business environments in these areas
are rapidly changing, and subsequent legislation, regulation, litigation, court rulings or other events could expose us to increased program
costs, liability and reputational damage that could have a material adverse effect on our business, financial condition, and results of
operations.
**Future developments in tax laws or regulations
regarding the treatment and reporting of cryptocurrencies for U.S. and foreign tax purposes could adversely impact our tax expense and
liabilities, reporting obligations, liquidity, and business.**
****
Due to the new and evolving
nature of cryptocurrencies and the absence of comprehensive legal and tax guidance with respect to digital asset products and transactions,
many significant aspects of the U.S. and foreign tax treatment of transactions involving cryptocurrencies, such as the purchase and sale
of cryptocurrencies, are uncertain, and it is unclear whether, when and what guidance may be issued in the future on the treatment of
digital asset transactions for U.S. and foreign income tax purposes. In 2014, the IRS released Notice 2014-21, discussing certain aspects
of virtual currency for U.S. federal income tax purposes and, in particular, stating that such virtual currency (i) is property,
(ii) is not currency for purposes of the rules relating to foreign currency gain or loss, and (iii) may be held as a capital
asset. In 2019, the IRS released Revenue Ruling 2019-24 and a set of Frequently Asked Questions (which have been periodically
updated), that provide additional guidance, including guidance to the effect that, under certain circumstances, hard forks of digital
currencies are taxable events giving rise to ordinary income and guidance with respect to the determination of the tax basis of virtual
currency. However, this guidance does not address other significant aspects of the U.S. federal income tax treatment of cryptocurrencies
and related transactions.
| | 60 | | |
There continues to be uncertainty
with respect to the timing, character and amount of income inclusions for various digital asset transactions. Although we believe our
treatment of digital asset transactions for federal income tax purposes is consistent with existing guidance provided by the IRS and existing
U.S. federal income tax principles, because of the rapidly evolving nature of digital asset innovations and the increasing variety and
complexity of digital asset transactions and products, it is possible the IRS and various U.S. states may disagree with our treatment
of certain digital asset transactions for U.S. tax purposes, which could adversely affect our users and our business. Similar uncertainties
exist in the foreign markets in which we operate, affecting our non-U.S. user base, and these uncertainties and potential adverse interpretations
of tax law could affect our non-U.S. users and the vitality of our platforms outside of the U.S. There can be no assurance that the IRS,
the U.S. state revenue agencies or other foreign tax authorities, will not alter their respective positions with respect to cryptocurrencies
in the future or that a court would uphold the treatment set forth in existing guidance. It also is unclear what additional guidance may
be issued in the future on the treatment of existing digital asset transactions and future digital asset innovations for purposes of U.S.
tax or other foreign tax regulations. Any such alteration of existing IRS, U.S. state and foreign tax authority positions or additional
guidance regarding digital asset products and transactions could result in adverse tax consequences for holders of cryptocurrencies and
could have an adverse effect on the value of cryptocurrencies and the broader cryptocurrency markets. Future technological and operational
developments that may arise with respect to cryptocurrencies may increase the uncertainty with respect to the treatment of cryptocurrency
for U.S. and foreign tax purposes. The uncertainty regarding tax treatment of digital asset transactions impacts our users, and could
adversely impact our business, including if the volume of cryptocurrency transactions decreases due to an adverse tax effect.
**Sanctions could cause us to cease operations
in foreign countries or dealings with foreign citizens.**
Sanctions, such as those promulgated
by the U.S. Department of Treasury, could be brought against countries where the Company operates, or against citizens of certain countries
regardless of where they reside. Ceasing operations in such a country would have a negative impact on revenues and the Company may also
incur extraordinary costs which may adversely impact an investment in our common stock.
**Heightened scrutiny by regulators could be
detrimental to the operations of the Company or its brand image.**
Our existing operations and
any future operations or investments may become the subject of heightened scrutiny by regulators, stock exchanges and other authorities
in the United States or globally. As a result, we may be subject to significant direct and indirect interaction with public officials.
There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on our ability
to operate or invest in the United States or any other jurisdiction, in addition to those described herein. Further any negative connotations
directed at the Company by such public officials could be detrimental to the Companys brand image and adversely impact an investment
in our common stock.
**We or our assets may become subject to federal
and state asset forfeiture laws which could negatively impact our business operations or financial position.**
Violations of any federal
laws and regulations could result in significant fines, penalties, administrative sanctions, convictions, or settlements arising from
civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to,
seizure of assets, disgorgement of profits, cessation of business activities or divestiture.
As an entity that conducts
business in cash (physical currency), we are potentially subject to federal and state forfeiture laws (criminal and civil) that permit
the government to seize the proceeds of suspected criminal activity. Civil forfeiture laws could provide an alternative for the federal
government or any state (or local police force) that wants to discourage residents from conducting transactions with crypto asset related
businesses. Also, an individual can be required to forfeit property suspected to be the proceeds of a crime even if the individual is
not charged or convicted of a crime. Many law enforcement agencies consider large amounts of cash to be suspicious of criminal activity
and have been known to seize such property when discovered. Any seizure or forfeiture of the Companys assets, even if only temporary,
could disrupt its normal operations or financial position and negatively affect an investment in our common stock.
****
****
****
****
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****
**Regulators and payment processors have historically
taken actions relating to access to banking services, which could materially adversely affect our business.**
Actions by the U.S. Department
of Justice (the Justice Department), the Federal Deposit Insurance Corporation, (FDIC), and certain state
regulators beginning in 2013, referred to as Operation Choke Point, appear to have been intended to discourage banks and
payment processors from providing access to banking for certain businesses that are considered high-risk. This heightened regulatory scrutiny
by the Justice Department, the FDIC and other regulators has caused various banks and payment processors to cease doing business with
Bitcoin ATM companies or companies who do business with Bitcoin ATM companies, without consideration of the actual risk to the banks or
processors, simply to avoid heightened federal and state regulatory scrutiny. The operation was officially ended in August 2017; however,
future discouragement by the Justice Department, the FDIC, or the Office of the Comptroller of the Currency (OCC) could
cause the Company, or its service providers including locations where the Company places its fleet of Bitcoin ATMs, to have restricted
access to the U.S. financial system as provided by banks, payment providers, or other financial intermediaries, and that could have a
negative impact on the Companys operations, its ability to perform its contractual obligations, or its financial position.
****
**If the Company is unable to satisfy data protection,
security, privacy, and other government- and industry-specific requirements, its growth could be harmed.**
There are several data protections,
security, privacy, and other government and industry-specific requirements, including those that require companies to notify individuals
of data security incidents involving certain types of personal data, enacted across various jurisdictions globally. In addition, our agreements
to deliver software may have requirements for the protection of user data. Security compromises or cyberattacks could harm the Companys
reputation, erode market confidence in the effectiveness of its security measures and reliability of its endorsements, negatively impact
its ability to attract new clients, or cause clients to stop using the Companys services.
**The nature of our business requires the application
of complex financial accounting rules, and there is limited guidance from accounting standard setting bodies. If financial accounting
standards undergo significant changes, our operating results could be adversely affected.**
The accounting rules and regulations
that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board (the FASB),
the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. In addition to the United States, the
Company operates in several Latin American countries that may or may not offer similar accounting treatments to some of the Companys
transactions. This could have a significant effect on the ability of the Company to offer comparable results segmented by country in the
future. A change in these principles or interpretations could have a significant effect on our reported financial results and may even
affect the reporting of transactions completed before the announcement or effectiveness of a change. Recent actions and public comments
from the FASB and the SEC have focused on the integrity of financial reporting and internal controls. In addition, many companies
accounting policies are being subject to heightened scrutiny by regulators and the public.
On December 13, 2023, the
FASB issued ASU 2023-08, Intangibles Goodwill and Other Crypto Assets (Subtopic 350-60): Accounting for and Disclosure
of Crypto Assets, which addresses the accounting and disclosure requirements for certain crypto assets. The new guidance requires entities
to subsequently measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in each reporting period.
When adopting the standard, entities are required to record a cumulative-effect adjustment to retained earnings as of the beginning of
the annual period of adoption. Retrospective restatement would not be required or allowed for prior periods. For all entities, the ASUs
amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption
is permitted. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that
includes that interim period. The Company adopted this ASU as of January 1, 2025. There was no material impact on the financial statements
due to the Companys holding period of crypto assets being typically two days or less.
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**Our products and services may be negatively
characterized by consumer advocacy groups, the media or certain federal, state and local government of officials, and if those negative
characterizations become increasingly accepted by current or potential new users and/or our retail partners, or result in restrictions
or limitations on the fees we charge to users, our reputation could be significantly impacted, which when coupled with required modifications
to our fee model could result in decreased demand for our products and services and a corresponding decrease in our transaction volume,
all of which could materially and adversely impact our business.**
****
Certain media reports have
asserted that laws and regulations regarding cryptocurrencies and related transactions and activities should be broader and more restrictive.
In many cases, these media reports can focus on fees charged to users, which are often alleged to be higher than the fees typically charged
by banks or similar institutions, as well as marketing tactics, which are alleged to target socioeconomically vulnerable communities.
The fees and marketing strategies associated with our kiosks are from time to time characterized by consumer advocacy groups and media
reports as predatory or abusive without discussing the numerous benefits to users. If the negative characterization of our marketing strategies
and/or fee structure becomes increasingly accepted by current or potential new users of our ATMs, demand for our products and services
could decrease, which could have a material adverse effect on our business, results of operations and financial condition.
If we are unable to effectively
respond to such characterizations, or if there are modifications to our fee model, including as a result of changes in or the adoption
of any laws or regulations imposing restrictions or limitations on the markup at which we sell bitcoin to users, we may experience declines
in user loyalty and transactions, which could have a material adverse effect on our business, results of operations and financial condition.
Additionally, any actions by our competitors that are challenged by users, advocacy groups, the media or governmental agencies or entities
as being abusive or predatory, could result in our products and services being perceived as unlawful or inappropriate activities or business
practices, merely because we operate in the same general industries as such competitors. Such perception, whether or not accurate, could
have a material adverse effect on our business, results of operations and financial condition, and as a result, the value of our common
stock.
**Litigation or investigations involving us,
our agents or other contractual counterparties could result in material settlements, fines or penalties and may adversely affect our business,
financial condition and results of operations.**
****
From time to time we are subject
to allegations and complaints that individuals or entities have used our products and services for fraud-induced money transfers, as well
as certain money laundering activities, which may result in fines, penalties, judgments, settlements and litigation expenses. We also
are the subject from time to time of litigation related to our business (including as discussed under Legal Proceedings).
For example, we are from time to time subject to allegations from various U.S. states that our activities constitute those of a money
transmitter, and allegations that we failed to register as a money transmitter in those states. To date we have agreed to various consent
orders and settlements with such states, none of which represent material amounts of penalties, assessments or fees, to settle such claims.
The outcome of such ongoing and future allegations, complaints, claims and litigation cannot be predicted.
Regulatory and judicial proceedings
and potential adverse developments in connection with ongoing litigation may adversely affect our business, financial condition and results
of operations. There may also be adverse publicity associated with lawsuits, consents, and investigations that could decrease third-party
and consumer use and acceptance of our products and services. Additionally, our business may be the subject of class action lawsuits including
securities litigation, regulatory actions and investigations and other general litigation. The outcome of class action lawsuits, including
securities litigation, regulatory actions and investigations and other litigation is difficult to assess or quantify but may include substantial
fines and expenses, as well as the revocation of required authorizations, registrations or licenses or the loss of approved status, which
could have a material adverse effect on our business, financial position, and results of operations or users confidence in our
business. Plaintiffs or regulatory agencies in these lawsuits, actions or investigations may seek recovery of very large or indeterminate
amounts, and the magnitude of these actions may remain unknown for substantial periods of time. The cost to defend or settle future lawsuits
or investigations may be significant. In addition, improper activities, lawsuits or investigations involving third-parties may adversely
impact our business operations or reputation even if we are not directly involved. Any adverse outcome in these or other proceedings,
including any that may be asserted in the future, could harm our reputation, and have an adverse impact on our business, financial condition,
results of operations, cash flows, or prospects. We cannot assure you what the ultimate outcome of any particular dispute or legal proceeding
will be.
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**New regulation or legislation may impact our
business operations and financial results.**
The Gross Proceeds and Basis
Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions effective in September 2024, requires
brokers, including digital asset trading platforms, digital asset payment processors, and certain digital asset hosted wallets, to file
information returns, and furnish payee statements, on dispositions of digital assets effected for customers in certain sale or exchange
transactions. The impact of these regulations on businesses can be significant.
These regulations could increase
compliance costs, create operational challenges, cause our general and administrative costs to increase and potentially impact the profitability
of our businesses.
To comply with laws adopted
by the United States government or other United States or foreign regulatory bodies, we may be required to increase our expenditures and
hire additional personnel and additional outside legal, accounting andadvisory services, all of which may cause our general and
administrative and compliance costs to increase without an ability to pass through any increased expenses through higher prices considering
that other federal and state regulations may also place restrictions on volume, margin and pricing.
The Company is diligently
monitoring developments related to these regulations, but the ultimate outcome and the specific requirements that may be imposed remain
uncertain. The uncertainty surrounding the interpretation and enforcement of these regulations may create additional challenges
in our digital asset transactions and reporting practices as the regulatory landscape evolves.
**Risk Factors Related
to Intellectual Property**
****
**Our intellectual property rights are valuable,
and any inability to protect them could adversely impact our business, operating results, and financial condition.**
Our business depends in large
part on our proprietary technology and our brand. We rely on, and expect to continue to rely on, a combination of trademark, trade dress,
domain name, copyright, and trade secret and laws, as well as confidentiality and license agreements with our employees, contractors,
consultants, and third parties with whom we have relationships, to establish and protect our brand and other intellectual property rights.
However, our efforts to protect our intellectual property rights may not be sufficient or effective. Our proprietary technology and trade
secrets could be lost through misappropriation or breach of our confidentiality and license agreements, and any of our intellectual property
rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. There can be no assurance
that our intellectual property rights will be sufficient to protect against others offering products, services, or technologies that are
substantially like ours and that compete with our business.
**We may in the future be sued by third parties
for alleged infringement of their proprietary rights.**
In recent years, there has
been considerable patent, copyright, trademark, domain name, trade secret and other intellectual property development activity in the
crypto economy, as well as litigation, based on allegations of infringement or other violations of intellectual property, including by
large financial institutions. Furthermore, individuals and groups (collectively patent trolls) can purchase patents and
other intellectual property assets for the purpose of making claims of infringement to extract settlements from companies like ours. Our
use of third-party intellectual property rights also may be subject to claims of infringement or misappropriation. We cannot guarantee
that our internally developed or acquired technologies and content do not or will not infringe the intellectual property rights of others.
From time to time, our competitors or other third parties may claim that we are infringing upon or misappropriating their intellectual
property rights, and we may be found to be infringing upon such rights. Any claims or litigation could cause us to incur significant expenses
and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering
our products or services or using certain technologies, force us to implement expensive workarounds, or impose other unfavorable terms.
We expect that the occurrence of infringement claims is likely to grow as the market grows and matures. Accordingly, our exposure to damages
resulting from infringement claims could increase and this could further exhaust our financial and management resources. Further, during
any litigation, we may make announcements regarding the results of hearings and motions, and other interim developments. If securities
analysts and investors regard these announcements as negative, the market price of our common stock may decline. Even if intellectual
property claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve
them, could divert the resources of our management and require significant expenditures. Any of the foregoing could prevent us from competing
effectively and could have an adverse effect on our business, operating results, and financial condition and negatively affect an investment
in our common stock.
****
****
****
****
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****
**Risk Factors Related
to Our Employees and Other Service Providers**
****
**The loss of one or more of our key personnel,
or our failure to attract and retain other highly qualified personnel in the future, could adversely impact our business, operating results,
and financial position.**
We operate in a new industry
that is not widely understood and requires highly skilled and technical personnel. We believe that our future success is highly dependent
on the talents and contributions of our senior management team, members of our executive team, and other key employees across operations,
customer support, finance, and compliance. Our future success depends on our ability to attract, develop, motivate, and retain highly
qualified and skilled employees. Due to the nascent nature of the crypto asset industry, in particular the Bitcoin ATM market, the pool
of qualified talent is extremely limited, particularly with respect to executive talent, engineering, cross-border operations, risk management,
and financial regulatory expertise. We face intense competition for qualified individuals from numerous software, finance and other technology
companies. To attract and retain key personnel, we incur significant costs, including salaries, benefits and equity incentives. Even so,
these measures may not be enough to attract and retain the personnel we require to operate our business effectively. The loss of even
a few qualified employees, or an inability to attract, retain and motivate additional highly skilled employees required for the planned
expansion of our business could adversely impact our operating results and impair our ability to grow.
**In the event of employee or service provider
misconduct or error, our business may be adversely impacted.**
Employee or service provider
misconduct or error could subject us to legal liability, financial losses, and regulatory sanctions and could seriously harm our reputation
and negatively affect our business. Such misconduct could include engaging in improper or unauthorized transactions or activities, misappropriation
of funds, identity theft, misappropriation of information, failing to supervise other employees or service providers, and improperly using
confidential information. Employee or service provider errors, including mistakes in executing, recording, or processing transactions
for customers, could expose us to the risk of material losses even if the errors are detected. Although we have implemented processes
and procedures and provide training to our employees and service providers to reduce the likelihood of misconduct and error, these efforts
may not be successful. Moreover, the risk of employee or service provider error or misconduct may be even greater for novel products and
services. It is not always possible to deter misconduct, and the precautions we take to prevent and detect such activities may not be
effective in all cases. If we were found to have not met our regulatory oversight, compliance and other obligations, we could be subject
to regulatory sanctions, financial penalties, and restrictions on our activities for failure to properly identify, monitor and respond
to potentially problematic activity and seriously damage our reputation. Our employees, contractors, and agents could also commit errors
that subject us to financial claims for negligence, as well as regulatory actions, or result in financial liability. Further, allegations
by regulatory or criminal authorities of improper trading activities could affect our brand and reputation.
**Our officers, directors, employees, and large
shareholders may encounter potential conflicts of interests with respect to their positions or interests in certain crypto assets, projects,
entities, and other initiatives, which could adversely affect our business and reputation.**
Certain of our officers, directors,
and employees are involved with or active investors in certain digital asset-related businesses, such as cryptocurrency miners, as well
as active investors in digital asset projects themselves, and may make investment decisions that favor projects that they have personally
invested in. Our largest stockholders may also make investments in these digital asset projects. Similarly, certain of our directors,
officers, employees, and large stockholders may hold cryptocurrencies that we are considering supporting and may be more supportive of
such listing notwithstanding legal, regulatory, and other issues associated with such cryptocurrencies. While we have instituted policies
and procedures to limit and mitigate such risks, there is no assurance that such policies and procedures will be effective, or that we
will be able to manage such conflicts of interests adequately. If we fail to manage these conflicts of interests, or we receive unfavorable
media coverage with respect to actual or perceived conflicts of interest, our business may be harmed and the brand, reputation and credibility
of our company may be adversely affected.
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Additionally, we frequently
engage in a wide variety of transactions and maintain relationships with a significant number of other firms in the broad economy surrounding
Bitcoin, blockchain and other crypto assets. These transactions and relationships could create potential conflicts of interests in management
decisions that we make. For instance, certain officers, directors, and employees of the Company are active investors in crypto projects
themselves, and may make investment decisions that favor projects that they have personally invested in. Many of our large shareholders
also make investments in these crypto projects.
If we fail to manage these
conflicts of interests, our business may be harmed and the brand, reputation and credibility of our company may be adversely affected.
**We depend heavily on our senior management,
including our Chief Executive Officer. The ability of certain key employees to devote adequate time to us is critical to the success of
our business, and failure to do so may adversely affect our revenues and as a result could materially adversely affect our business, financial
condition and results of operations.**
We must retain the services
of our key employees and strategically recruit and hire new talented employees. Our future business and results of operations depend in
significant part upon the continued contributions of our senior management personnel, particularly our Chief Executive Officer, Matias
Goldenhrn. If we lose his services or if he fails to perform in his current position, or if we are not able to attract and retain
skilled personnel as needed, our business could suffer. Significant turnover in our senior management could significantly deplete our
institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key personnel in managing
our operations, product development, marketing and sales aspects of our business, any part of which could be harmed by turnover in the
future.
Moving forward, should the
services of Mr. Goldenhrn be lost for any reason, we will incur costs associated with recruiting replacements and any potential
delays in operations which this may cause. If we are unable to replace such individual with a suitably trained alternative individual(s),
we may be forced to scale back or curtail our business plan.
**Risks Associated
with Our Governing Documents and Nevada Law**
**Our Second Amended and Restated Articles of
Incorporation provide for indemnification of officers and directors at our expense, which may result in a major cost to us and hurt the
interests of our stockholders because corporate resources may be expended for the benefit of officers or directors.**
Our Second Amended and Restated
Articles of Incorporation provide for us, to the fullest extent permitted by the Nevada Revised Statutes (NRS) and other applicable law,
to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Company (and any other persons to
which the NRS permits the Company to provide indemnification).
Notwithstanding the above,
no director or officer may be indemnified for expenses incurred in defending any threatened, pending, or completed action, suit or proceeding
(including without limitation, an action, suit or proceeding by or in the right of the Company), whether civil, criminal, administrative
or investigative, that such director or officer incurred in his or her capacity as a stockholder.
These indemnification obligations
may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit
of officers or directors.
We have been advised that,
in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal
securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful
defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with our activities,
we will (unless in the reasonable opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate
jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and
may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares.
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**Our board of directors can authorize the issuance
of preferred stock, which could diminish the rights of holders of our common stock and make a change of control of our company more
difficult even if it might benefit our stockholders.**
Our board of directors is
authorized to issue shares of preferred stock in one or more series and to fix the voting powers, preferences and other rights and limitations
of the preferred stock. Shares of preferred stock may be issued by our board of directors without stockholder approval, with voting powers
and such preferences and relative, participating, optional or other special rights and powers as determined by our board of directors,
which may be greater than the shares of common stock currently outstanding. As a result, shares of preferred stock may be issued by our
board of directors which cause the holders to have majority voting power over our shares, provide the holders of the preferred stock the
right to convert the shares of preferred stock they hold into shares of our common stock, which may cause substantial dilution to our
then common stock stockholders and/or have other rights and preferences greater than those of our common stock stockholders including
having a preference over our common stock with respect to dividends or distributions on liquidation or dissolution.
Investors should keep in mind
that the board of directors has the authority to issue additional shares of common stock and preferred stock, which could cause substantial
dilution to our existing stockholders. Additionally, the dilutive effect of any preferred stock which we may issue may be exacerbated
given the fact that such preferred stock may have voting rights and/or other rights or preferences which could provide the preferred stockholders
with substantial voting control over us and/or give those holders the power to prevent or cause a change in control, even if that change
in control might benefit our stockholders. As a result, the issuance of shares of common stock and/or preferred stock may cause the value
of our securities to decrease.
****
**Our Second Amended and Restated Articles of
Incorporation contain a specific provision that limits the liability of our directors and officers and requires us, under certain circumstances,
to indemnify officers, directors and employees.**
The limitation of monetary
liability against our directors, officers and employees under Nevada law and the existence of indemnification rights to them may result
in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.
**Anti-takeover provisions in our Second Amended
and Restated Articles of Incorporation and our Amended and Restated Bylaws, as well as provisions of Nevada law, might discourage, delay
or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our securities.**
Our Second Amended and Restated
Articles of Incorporation and Amended and Restated Bylaws, and Nevada law contain provisions that may discourage, delay or prevent a merger,
acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive
a premium for our securities. These provisions may also prevent or delay attempts by our stockholders to replace or remove our management.
Our corporate governance documents include provisions:
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the removal of directors only with the approval of shareholders holding at least two-thirds of the voting power of the issued and outstanding stock entitled to vote in the election of directors; | |
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authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; and | |
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limiting the liability of, and providing indemnification to, our directors and officers. | |
Any provision of our Second
Amended and Restated Articles of Incorporation or Amended and Restated Bylaws, or Nevada law that has the effect of delaying or deterring
a change in control could limit the opportunity for our shareholders to receive a premium for their shares of our common stock and could
also affect the price that some investors are willing to pay for our common stock. The existence of the foregoing provisions and anti-takeover
measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter
potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.
****
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**We will indemnify and
hold harmless our officers and directors to the maximum extent permitted by Nevada law.**
Our bylaws provide that we will indemnify and hold harmless our officers
and directors against claims arising from our activities, to the maximum extent permitted by Nevada law. In addition, if we are called
upon to perform under our indemnification agreements entered into with each one of our directors, then the portion of our assets expended
for such purpose would reduce the amount otherwise available for our business.
****
**Risks Related to SEC
Reporting and Public Company Status**
**We have identified material weaknesses in our
disclosure controls and procedures and internal control over financial reporting.If not remediated, our failure to establish and
maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements
in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse
effect on our financial condition and the trading price of our common stock.**
Maintaining effective internal
control over financial reporting and effective disclosure controls and procedures are necessary for us to produce reliable financial statements.
As of December 31, 2025, our Chief Executive Officer and Chief Financial Officer have determined that our disclosure controls and procedures
were not effective. Separately, in connection with the preparation of the Companys consolidated financial statements as of December
31, 2024, management identified material weaknesses in the Companys internal control over financial reporting.
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 the Companys annual or interim financial statements will not be prevented or detected on a timely
basis. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course
of performing their assigned functions, to prevent or detect misstatements on a timely basis.
As of December 31, 2024,
the material weakness in our internal control over financial reporting related to (i) the fact that the Company did not have formalized
system of internal control over financial reporting in place to ensure that risks are properly assessed, certain accounts are properly
reconciled, controls are properly designed and implemented and internal controls are properly monitored and functioning, and (ii) the
Companys reliance on IT systems and the use of service organizations to initiate, process, and record transactions, for which it
did not evaluate or test the respective control objectives and data provided by the service organizations, and did not maintain a sufficient
complement of formally documented general IT controls over access, segregation of duties, security, and change management. Management
has concluded that these material weaknesses arose because, the Company did not have the necessary business processes, personnel and related
internal controls necessary to satisfy the accounting and financial reporting requirements of a public company.
To address the material
weaknesses, the Company will need to add personnel as well as implement additional financial reporting processes and related internal
controls. Management intends to continue to take steps to remediate the material weaknesses described above through hiring additional
qualified accounting and financial reporting personnel, further enhancing the Companys accounting processes and risk assessment,
and by designing, implementing and monitoring the respective controls. Management will not be able to fully remediate these material weaknesses
until these steps have been completed and the controls have been operating effectively for a sufficient period of time. These remediation
measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects or
that the actions that management may take in the future will be sufficient to remediate the control deficiencies that led to the material
weaknesses in internal control over financial reporting or that they will prevent or detect potential future material weaknesses. The
Companys current controls and any new controls that management develops may become inadequate because of changes in conditions
in the business and weaknesses in disclosure controls and internal control over financial reporting may be discovered in the future. Any
failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm the
operating results or cause the Company to fail to meet the reporting obligations and may result in a restatement of the Companys
financial statements for prior periods.
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Maintaining effective disclosure
controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements
and the Company is committed to remediating its material weaknesses in such controls as promptly as possible. However, there can be no
assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future.
Any failure to remediate the material weaknesses, or the development of new material weaknesses in our internal control over financial
reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial
obligations, which in turn could have a material adverse effect on our financial condition and the trading price of our common stock,
and/or result in litigation against us or our management. In addition, even if we are successful in strengthening our controls and procedures,
those controls and procedures may not be adequate to prevent or identify irregularities or facilitate the fair presentation of our financial
statements or our periodic reports filed with the SEC.
**We are an emerging growth company and a smaller
reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to emerging growth companies or smaller reporting companies, this could make our securities less
attractive to investors and may make it more difficult to compare our performance with other public companies.**
We are an emerging
growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and, for as long as we continue to
be an emerging growth company, we currently take advantage of certain exemptions from various reporting requirements applicable
to other public companies but not to emerging growth companies, including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements (provided that we are not currently required to file proxy statements), and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved. We will remain an emerging growth until December 31, 2030, or until the earliest of (i) the
last day of the first fiscal year in which our annual gross revenues exceed $1.2357 billion, (ii) the date that we become a large
accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that
is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii)
the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three year period.
Additionally, we are a smaller
reporting company as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds
$250 million as of the prior December 31st, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the
market value of our ordinary shares held by non-affiliates exceeds $700 million as of the prior December 31st. To the extent we take advantage
of such reduced disclosure obligations, it may also make a comparison of our financial statements with other public companies difficult
or impossible.
After we are no longer an
emerging growth company, we expect to incur additional management time and cost to comply with the more stringent reporting
requirements applicable to companies that are deemed accelerated filers or large accelerated filers, including complying with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act. We cannot predict or estimate the number of additional costs we may
incur or the timing of such costs.
**Because we are not subject
to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against
interested director transactions, conflicts of interest and similar matters.**
The Sarbanes-Oxley Act of
2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market,
as a result of the Sarbanes-Oxley Act, require the implementation of various measures relating to corporate governance. These measures
are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those
exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions
and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required,
we have not yet adopted these measures.
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We do not currently have an independent audit or compensation committee.
As a result, directors have the ability, among other things, to determine each others level of compensation. Until we comply with
such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance
may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters
and investors may be reluctant to provide us with funds necessary to expand.
**Being a public company results in additional
expenses, diverts managements attention and could also adversely affect our ability to attract and retain qualified directors.**
As a public reporting company,
we are subject to the reporting requirements of the Exchange Act. These requirements generate significant accounting, legal and financial
compliance costs and make some activities more difficult, time-consuming or costly and may place significant strain on our personnel and
resources. The Exchange Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control
over financial reporting. In order to establish the requisite disclosure controls and procedures and internal control over financial reporting,
significant resources and management oversight are required.
As a result, managements
attention may be diverted from other business concerns, which could have an adverse and even material effect on our business, financial
condition and results of operations. These rules and regulations may also make it more difficult and expensive for us to obtain director
and officer liability insurance. If we are unable to obtain appropriate director and officer insurance, our ability to recruit and retain
qualified officers and directors, especially those directors who may be deemed independent, could be adversely impacted.
****
**We incur increased costs as a result of operating
as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities
and corporate governance practices.**
As a public company, we incur
significant legal, accounting, and other expenses that we did not incur as a private company, which we expect to further increase after
we are no longer an emerging growth company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection
Act, and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel
devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal
and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount
of additional costs we will incur as a public company or the specific timing of such costs.
**If our estimates or judgment relating to our
critical accounting policies prove to be incorrect, our operating results could be adversely affected.**
The preparation of financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe
to be reasonable under the circumstances, as provided in the section titled [Managements Discussion and Analysis of Financial Condition and Results of Operations](#k_012)-Critical Accounting Policies and Estimates. The results of these estimates form the basis for
making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily
apparent from other sources. Significant estimates and judgments involve the identification of performance obligations in revenue recognition,
evaluation of tax positions, and crypto assets we hold, among others. Our operating results may be adversely affected if our assumptions
change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations
of analysts and investors, resulting in a decline in the trading price of our common stock.
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**Risk Factors Related
to Ownership of Our Common Stock**
****
**The market price of our common stock has been
volatile in the past and may continue to be volatile and could decline significantly and rapidly.**
****
The market price of our common
stock has in the past been, and in the future may continue to be subject to wide fluctuations in response to factors beyond our control,
including:
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the number of shares of common stock publicly owned and available for trading; | |
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overall performance of the equity markets or publicly-listed financial services, cryptocurrency and technology companies; | |
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our actual or anticipated operating performance and the operating performance of our competitors; | |
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changes in the projected operational and financial results we provide to the public or our failure to meet those projections; | |
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failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet the estimates or the expectations of investors; | |
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any major change in our board of directors, management or key personnel; | |
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the highly volatile nature of the digital financial system and the prices of cryptocurrencies; | |
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rumors and market speculation involving the digital financial system or us or other companies in our industry; | |
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announcements by us or our competitors of significant innovations, new products, services, features, integrations or capabilities, acquisitions, strategic investments, partnerships, joint ventures, or capital commitments; and | |
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other events or factors, including those resulting from political instability, and acts of war, or terrorism, or responses to these events, including the current conflict in Ukraine. | |
In addition, broad market
and industry fluctuations, as well as general macroeconomic, political and market conditions such as recessions, interest rate changes
or international currency fluctuations, may negatively impact the market price of our common stock. In the past, companies that have experienced
volatility in the market price of their stock have been subject to securities class action litigation. Securities litigation against us
could result in substantial costs and divert our managements attention from other business concerns, which could harm our business.
**Because of the speculative nature of investment
risk, you may lose your entire investment.**
An investment in the Companys
securities carries a high degree of risk and should be considered as a speculative investment. The Company has a limited operating history,
has not paid dividends and is highly unlikely to pay dividends in the immediate or near future. The likelihood of success of the Company
must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with
the establishment of any business. An investment in the Companys securities may result in the loss of an investors entire
investment. Only potential investors who are experienced in high-risk investments and who can afford to lose their entire investment should
consider an investment in the Company.
**Future sales of our common stock, other securities
convertible into our common stock, or preferred stock could cause the market value of our common stock to decline and could result in
dilution of your shares.**
Our Board of Directors is authorized, without shareholder
approval, to cause us to issue additional shares of our common stock or to raise capital through the creation and issuance of preferred
stock, other debt securities convertible into common stock, options, warrants and other rights, on terms and for consideration as our
Board of Directors in its sole discretion may determine.
If our stockholders sell
substantial amounts of our common stock in the public market, the market price of our common stock could decrease significantly. The perception
in the public market that our stockholders might sell shares of our common stock could also depress the market price of our common stock.
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If our existing stockholders
sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common
stock could decline significantly.
We cannot predict the effect,
if any, of future sales of our common stock, or the availability of our common stock for future sales, on the value of our common stock.
Sales of substantial amounts of our common stock by large stockholders, or the perception that such sales could occur, may adversely affect
the market price of our common stock.
The market price for shares
of our common stock may drop significantly when such securities are sold in the public markets. A decline in the price of shares of our
common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities.
**Our founders, single major shareholder, and
director control, and may may exert substantial influence over us, and their interests may differ from those of other stockholders..**
Our founders, include Eric
Gravengaard, who beneficially owns 27.5% of our outstanding shares of common stock, and Tom Kerestes, who beneficially owns 10.5% of our
outstanding shares of common stock. Michael Komaransky is the single major shareholder who beneficially owns 37.1% of the Company.
By contrast, our directors
and executive officers as a group beneficially own approximately 1.5% of our outstanding common stock.
Our majority stockholders
may have interests, with respect to their common stock, that are different from other holders of our common stock and the concentration
of voting power held by our majority stockholders may have an adverse effect on the price of our common stock.
As a result of their substantial
ownership positions, these stockholders, acting individually, have significant influence over matters requiring stockholder approval and,
if they were to act together, would be able to control the outcome of substantially all matters submitted to our stockholders for approval.
Such matters may include the election and removal of directors, amendments to our certificate of incorporation and bylaws, approval of
mergers, consolidations or other business combinations, the sale of all or substantially all of our assets, and other significant corporate
transactions. The interests of these stockholders may differ from, or conflict with, the interests of our other stockholders.
Although these stockholders
are not currently party to any voting agreement or other arrangement and are not presently acting as a group within the
meaning of Section 13(d)(3) of the Exchange Act, they may decide to act together in the future. If they were to do so, they would likely
be able to effectively control our company and significantly influence our management and affairs. This concentration of ownership could
delay, deter or prevent a change in control, discourage potential acquirers from making an offer to purchase our company, or otherwise
adversely affect the market price of our common stock.
In addition, this concentration
of ownership may make our common stock less attractive to certain investors and could result in reduced trading liquidity or increased
volatility in the market price of our common stock.
**Our securities are Penny
Stocks that may make them less desirable or accessible by investors or potential investors.**
Rule 15g-9 under the Exchange
Act establishes the definition of a penny stock, for the purposes relevant to us, as any equity security that has a market
price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction
involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer must approve a persons account for transactions
in penny stocks; and (b) the broker or dealer must receive from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased.
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In order to approve a persons
account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives
of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person
has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must
also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market,
which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms
that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less
willing to execute transactions in securities subject to the penny stock rules. This may make it more difficult for investors
to dispose of our common stock and cause a decline in the market value of our common stock.
Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable
to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available
to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in penny stocks.
**Securities analysts may not cover, or continue
to cover, our common stock and this may have a negative impact on the market price of our securities.**
The trading market for our common stock depends,
in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control
over independent analysts (provided that we have engaged various non-independent analysts). We currently have no independent analysts
that cover our common stock, and if any analysts do cover our common stock, they may discontinue coverage of our common stock at any
time. Further, we may not be able to obtain additional research coverage by independent securities and industry analysts. If no independent
securities or industry analysts continue coverage of us, the trading price for our common stock could be negatively impacted. If one
or more of the analysts who cover us downgrades our common stock, changes their opinion of our shares or publishes inaccurate or unfavorable
research about our business, our stock price could decline. If one or more of these analysts ceases coverage of us or fails to publish
reports on us regularly, demand for our common stock could decrease and we could lose visibility in the financial markets, which could
cause our stock price and trading volume to decline.
****
**We have never paid dividends on our common
stock and have no plans to do so in the future.**
Holders of shares of our
common stock are entitled to receive such dividends as may be declared by our Board of Directors. To date, we have paid no cash dividends
on our shares of common stock, and we do not expect to pay cash dividends on our common stock in the foreseeable future. We intend to
retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our common stock
may have, will be in the form of appreciation, if any, in the market value of their shares of common stock.
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**The Company and its common stock may be negatively
affected if any of the Companys restricted securities are resold without registration or an available exemption from registration
requirements under the Securities Act.**
On March 17, 2022, the Company
learned that 1,000,000 shares of its restricted common stock owned by an existing shareholder were transferred by its transfer agent to
another party. Such shares were subsequently deposited by a new holder into Depository Trust Company and some portion of said shares (approximately
50%) have been sold on the trading market. Our stock certificates representing restricted shares of common stock carry a legend that states
that such shares have not been registered under the Securities Act, and may not be sold, transferred, or otherwise disposed unless,
in the opinion of counsel satisfactory to the issuer, the transfer qualifies for an exemption from or exemption to the registration provisions
thereof. The transfer took place without the Companys knowledge, approval or required authorization. The Company immediately
notified the relevant parties to cease any sales of such shares into the public market and has been assured by the new holder that no
shares will be sold pending the Companys ongoing investigation. The Company believes that even though it was an unusual event (and
the Company took immediate remedial steps to ensure that the resale of such shares was immediately ceased and prevented in the future,
including termination of its transfer agent), any future sale of restricted and unregistered securities without registration or an available
exemption can expose the Company and its common stock to the number of adverse consequences, including: (i) regulatory scrutiny, investigations,
enforcement or other actions, potentially preventing or delaying us from offering our shares or trading our stock, which could negatively
impact an investment in our common stock; (ii) decline or volatility of the market price of our common stock as a result of sales of a
material number of shares of our common stock in the thinly trading public market, or (iii) securities litigation targeting the Company
which could result in substantial costs and which could harm our business.
**Certain previously registered shares of our
common stock are required to be sold at fixed prices until such time as our common stock is quoted on the OTCQX, or the OTCQB, operated
by OTC Markets, or listed on any national securities exchange or automated interdealer quotation system, if ever, which may result in
our common stock not significantly increasing above those fixed prices and have other negative effects on our common stock.**
****
The Company has previously obtained effectiveness
of two resale registration statements on Form S-1, one which became effective on May 14, 2025, relating to the resale of 34.65 million
shares of common stock by the selling stockholders named therein (the May 2025 Registration Statement); and one which became
effective on July 2, 2025, relating to the resale of 473.87 million shares of common stock by the selling stockholders named therein
(the July 2025 Registration Statement). Until such time as our common stock is quoted on the OTCQB or OTCQX tiers of the
OTC Markets, or listed on a national securities exchange or an automated interdealer quotation system (including Nasdaq), if ever, selling
stockholders may only sell shares of our common stock under the May 2025 Registration Statement at a fixed price of $0.05 per share and
selling stockholders may only sell shares of our common stock under the July 2025 Registration Statement at a fixed price of $0.0493
per share. As a result, such selling stockholders will be unable to sell their shares at market prices above the fixed prices, which
could discourage sales activity and reduce overall trading volume in our stock.
This limitation may artificially cap the market price of our common stock and create
downward pressure on the trading price, particularly if market participants anticipate future selling activity at the fixed prices. Even
if our common stock is trading above the $0.05/$0.0493 fixed sales prices, the continued offering of shares at those prices could result
in the market price drifting back toward or remaining near the fixed price until such time as the restrictions are lifted, if ever. This
could adversely affect investor perception, limit price appreciation, and impair our ability to raise capital at more favorable valuations.
In addition, the presence
of a fixed-price offering could create disincentives for investor participation in the public market, reduce liquidity, and increase volatility.
There is also no assurance as to when or if our common stock will be quoted or listed on a higher-tier market, and the longer this restriction
remains in place, the greater the potential impact on the trading price and stability of our common stock.
**There is a significant liquidity risk associated
with an investment in our common stock.**
****
The shares of our common stock we may issue in the future
and the options, warrants and other convertible securities we may issue in the future may have an adverse effect on the market price
of our common stock and cause dilution to investors.
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We may issue shares of common
stock and warrants to purchase shares of common stock pursuant to private offerings and we may issue options to purchase shares of common
stock to our executive officers and employees pursuant to their employment agreements. The sale, or even the possibility of sale, of shares
pursuant to a separate offering or to executive officers and employees could have an adverse effect on the market price of our common
stock or on our ability to obtain future financing.
****
**Our Common Stock is subject to liquidity risks.**
Our Common Stock is quoted
on the OTC ID Tier of the OTC Markets under the symbol ABIT. The high and low sales prices of our common stock over the
prior 52 weeks was approximately $0.0945 and $0.0038, respectively. As of the date of this Report, our Common Stock is quoted on the OTC
ID, and it is not otherwise regularly quoted on any other over-the-counter market or exchange.
The OTC ID tier is a significantly
less liquid market than a national securities exchange such as the New York Stock Exchange or Nasdaq. Trading in securities quoted on
the OTC Markets is often limited and sporadic, with low daily trading volumes, significant price volatility, and wide bid-ask spreads.
As a result, stockholders may find it difficult to sell their shares at desired times or prices, or at all. Limited liquidity may also
contribute to substantial fluctuations in the market price of our Common Stock, which may not be related to our operating performance
or financial condition.
Because of these factors,
investors in our Common Stock may experience difficulty in reselling their shares and may incur substantial losses if they need to sell
their shares at a time when market demand is limited.
**General Risk Factors**
**We may engage in acquisitions, mergers, strategic
alliances, joint ventures, and divestures that could result in results that are different than expected.**
In the normal course of business,
we engage in discussions relating to acquisitions, equity investments, mergers, strategic alliances, joint ventures, and divestitures.
Such transactions are accompanied by a number of risks, including the use of significant amounts of cash, potentially dilutive issuances
of equity securities, incurrence of debt on potentially unfavorable terms, accruement of impairment expenses related to goodwill and amortization
expenses related to other intangible assets, the possibility that we overpay for an acquisition relative to the economic benefits that
we ultimately derive from such acquisition, and various potential difficulties involved in integrating acquired businesses into our operations.
****
**Global economic conditions could materially
adversely affect our business, results of operations, financial condition and growth.**
Adverse macroeconomic conditions,
including inflation, slower growth or recession, new or increased tariffs, changes to fiscal and monetary policy, tighter credit, higher
interest rates, high unemployment and currency fluctuations could materially adversely affect our operations, expenses, access to capital
and the market for our ATMs and/or Bitcoin in general. In addition, uncertainty about, or a decline in, global or regional economic conditions
could have a significant impact on our expected funding sources, suppliers and partners. A downturn in the economic environment could
also lead to limitations on our ability to issue new debt; reduced liquidity; and declines in the fair value of our financial instruments.
These and other economic factors could materially adversely affect our business, results of operations, financial condition and growth.
**Regulatory developments and government action
on climate change issues may drive medium-to-long term increases in our operational costs.**
Our business operations
and financial condition are subject to regulatory developments and government action on climate change. Governments across the world
are responding to climate change by adopting ambitious climate policies as public awareness of and concern about climate change continues
to grow. Government climate policies include the enactment of circular economy regulations, regulating greenhouse gas (GHG)
emissions, carbon pricing and increasing energy and fuel costs. Increased fuel and energy prices and taxes and pricing of GHG emissions
could make it more expensive for us to power our networks and operations and may also result in our being subject to carbon emission
taxation, which would drive medium-to-long term increases in our operational costs. In addition, there are initial capital costs that
we will have to incur as we transition towards the use of renewable energy across our operations.
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There could also be medium-to-long-term
increases in our operational costs due to changing levels of precipitation, increased severity and frequency of storms and other weather
events, extreme temperatures and rising sea levels, which could cause potential damage to vital infrastructure and utilities. Increased
risk of flooding to low-lying facilities and infrastructure due to longer-term increases in precipitation patterns could increase operating
costs to maintain and/or repair facilities and network equipment. Decreased precipitation and rising and extreme temperatures could generate
drought conditions that could create an increased burden to local power and water resources, which are required to operate our cooling
infrastructure. In addition, these climate change impacts could also result in drops in productivity or increased operational costs for
our vendors, which, in turn, may be passed on to us, which could harm our business, financial condition, results of operations, cash flows
or prospects.
**Our business could be adversely affected by
security threats, including cybersecurity threats.**
We face various security
threats, including cybersecurity threats to gain unauthorized access to our sensitive information, to seek initiation of unauthorized
fund transfers, or to render our information or systems unusable, and threats to the security of our facilities and infrastructure or
third-party facilities and infrastructure. The potential for such security threats subjects our operations to increased risks that could
have a material adverse effect on our business, financial condition and results of operations.
Our implementation of various
procedures and controls to monitor and mitigate such security threats and to increase security for our information, systems, facilities
and infrastructure may result in increased capital and operating costs. Moreover, there can be no assurance that such procedures and controls
will be sufficient to prevent security breaches from occurring. If any of these security breaches were to occur, they could lead to losses
of, or damage to, sensitive information or facilities, infrastructure and systems essential to our business and operations, as well as
data corruption, reputational damage, communication interruptions or other disruptions to our operations, which, in turn, could have a
material adverse effect on our business, financial position and results of operations.
****
**Changes in accounting principles and guidance,
or their interpretation, could result in unfavorable accounting charges or effects, including changes to our previously filed financial
statements, which could cause our stock price to decline.**
****
We prepare our consolidated
financial statements in accordance with U.S. GAAP. These principles are subject to interpretation by the SEC and various bodies formed
to interpret and create appropriate accounting principles and guidance. A change in these principles or guidance, or in their interpretations,
may have a significant effect on our reported results and retroactively affect previously reported results.
**
**Item 1B. Unresolved Staff Comments**
****
None.
**Item 1C. Cybersecurity**
****
**Cybersecurity Risk Management and Strategy**
****
Identifying, assessing,
and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation
S-K, is important to Athena Bitcoin. Among the risks we strive to address and mitigate are the disruption of our business operations and
the loss of personal and confidential data due to cybersecurity incidents, fraud, or extortion.
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We integrate the identification,
assessment, and management of cybersecurity risks into our overall risk management systems and processes. We detect and address such risks
from cybersecurity threats in several ways, including through third-party assessments, internal governance, risk and compliance, participation
in industry groups to obtain intel, IT audits, and IT security reviews. To protect against, detect, and respond to cybersecurity incidents,
we, among other things, leverage intrusion prevention and detection systems, perform penetration testing, conduct employee training, monitor
emerging laws and regulations related to data protection and information security, and implement appropriate changes to comply with the
identified emerging laws and regulations. To effectuate these processes, we regularly engage third-party auditors and advisors to assess
our cybersecurity programs and ensure compliance with applicable guidelines, standards, and industry best practices.
Senior management are responsible for implementing these security measures, as well as
being involved in all aspects of cybersecurity incident response and data breach management processes. Our incident management plan provides
a roadmap for responding to and categorizing incidents. Our IT and cybersecurity teams collaborate with other company stakeholders to
develop strategies for mitigating and responding to identified cybersecurity events.
Our cybersecurity threat
and risk management processes also involve assessing third-party risks. We maintain a Vendor Management Policy pursuant to which we assign
a risk rating and assess third-party risks by conducting cybersecurity due diligence on our vendors, suppliers, and other entities with
whom we do business. Due diligence includes, as appropriate, either requiring proof of security standard compliance or satisfactory responses
to our Vendor Assessment Security Questionnaire. We also evaluate the cyber practices of, and cybersecurity risks associated with, the
engagement of third-party service providers, including when we negotiate cybersecurity and data privacy contract terms, such as those
relating to information security and audit rights.
Although we constantly evaluate
cyber risks, we are unaware of any prior cybersecurity incidents that have materially affected or are reasonably likely to materially
affect us, including our business strategy, results of operations, or financial conditions.
**Item 2. Properties**
****
We lease approximately 5,075 square feet of space in Miami, Florida, located at 1 S.E. 3rd
Avenue, Miami, Florida 33131. Monthly lease payments for the Miami office are currently approximately $22,000, and the rental cost increases
yearly to approximately $25,500 through the end of the lease term, December 31, 2029. We also pay our portion of shared expenses of the
property.
The Company has short-term
storage, office, and warehousing contracts in Illinois and Florida for approximately 1,750 square feet. We also lease approximately 3,650
square feet of space in El Salvador with monthly lease payments of approximately $7 thousand.
We maintain international
offices or co-working facilities in Colombia and Argentina.
We believe we will be able
to obtain additional space on commercially reasonable terms.
**Item 3. Legal Proceedings**
On October 9,
2023, Arley Lozano-Jaramillo (Lozano), an individual, commenced proceedings against the Company by filing a complaint with
the 11th Judicial Circuit Court for Miami-Dade County, Florida (the Court) which named the Company as the defendant. Lozano,
either individually or through the entities controlled by him (XPay, Vakano Industries) entered into certain non-binding letters of intent
on July 13, 2021 and as of September 2021 (the second letter of intent was a draft and not signed by the parties) pursuant to which Lozano
was a seller of certain assets and technology related to XPay Wallet, intellectual property regarding the AthenaPay POS System, XPay
POS System and related technology (the XPay Assets) for the proposed purchase price of $3.0 million and 270,000,000 shares
of common stock of the Company (valued at $0.10 per share). The acquisition of the XPay Assets was subject to the execution of a definitive
acquisition agreement. No such agreement was finalized nor entered into by the parties. The Company made payments to Lozano for a total
amount of approximately $1.6 million and Lozano transferred the ownership of XPay Assets to the Company. Lozano alleges breach of contract,
promissory estoppel, unjust enrichment, fraud in the inducement and conversion. He asserts the claim for failure to compensate Lozano
pursuant to the terms of the purchase price provided in the non-binding letter of intent (and the unsigned draft letter of intent), which
includes the remaining amount of the purchase price ($1.4 million) and 270,000,000 shares of the Companys common stock. Lozano
did not offer any evidence of a signed and binding acquisition agreement. The claim also seeks an award for legal and other costs relating
to the proceeding.
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The Company disputes
the allegations and continues to vigorously defend against them. Accordingly, the Company filed with the Court on February 9, 2024, a
motion to dismiss Lozanos complaint. The Court granted the Companys motion in part and denied in part, dismissing two of
the five causes of action. The Company proceeded to file its counter-complaint against Plaintiff who presented his answer on October 6,
2024. The potential loss related to the identified claim is between $0 and $1.4 million and the issuance of 270,000,000 shares of common
stock valued at $27.0 million, the amount of damages that Lozano is seeking in the lawsuit. The additional costs mentioned in the claim
are not able to be estimated at this time. The Company does not believe that it is probable that liability has been incurred as of December
31, 2025 and December 31, 2024, related to this lawsuit. Currently, trial is scheduled for March 21, 2026.
On June 21, 2024,
Digital Access, LLC, a Michigan limited liability company (Digital Access) and two additional co-defendants, filed a complaint
against Athena before the US District Court for the Eastern District of Michigan. The complaint alleges tortious interference with business
relationships and business expectancy, statutory and common law conversions, and trespass to chattels and seeks injunctive relief. The
case was removed to the U.S. District Court for the Northern District of Indiana. Although the Company did not believe that there was
any merit to the allegations against it, a mutually acceptable settlement was reached by the parties that concluded the case. The parties
completed the agreement and its requirements. The corresponding court entered an Order of Dismissal on March 25, 2025.
On August 20, 2024,
Keon Jackson (Jackson), an individual, commenced what was entitled as a Class Action Complaint against Athena,
filed at the US District Court for the Northern District of Florida (the Court). The complaint alleges receipt of unwanted
telemarketing text messages in contravention to Federal and State statutes while seeking class certification status. The claim by Jackson
is for the award of the statutory amounts as established in the corresponding statutes. On June 18, 2025, the Court issued an Order Granting
Motion for Class Certification. Additionally, on July 16, 2025, the Court entered an Order granting in part and denying in part Jacksons
motion for summary judgment. The Court did grant Jacksons summary judgment under the Florida Telephone Solicitation Act (FTSA),
in 4,512 instances and where this statute establishes a penalty of $500 per instance. The Court did not adjudicate at that time if violations
occurred under the federal Telephone Consumer Protection Act of 1991 (TCPA), and such question will be decided in a trial
on the merits. However, on December 22, 2025 the parties signed a Settlement Terms Sheet with a structured settlement with a total payment
of $4.5 million which is currently subject to preliminary and final Court approval.
On September 9,
2024, S.M. on behalf of herself and all others (S.M.), an individual, filed a complaint that includes class action allegations,
against Athena, Genesis Coin, Inc., and two other defendants, filed at the Common Pleas Court at Cuyahoga County, Ohio. The complaint
against Company alleges negligence and violations to the Ohio Products Liability Act because of alleged elder financial scams involving
cryptocurrency and the operation of kiosks. S.M. alleges the need for implementing effective and sufficient checks and procedures both
at the kiosks and other internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams,
beyond what the Company already has in place. The claim by S.M. against Athena is for an undetermined amount of compensation (which cannot
exceed $5.0 million under the Class Action Fairness Act of 2005) as well as injunctive relief. The additional costs mentioned in the claim
are not able to be estimated at this time, if any would be applicable. On October 25, 2024, S.M. filed its First Amended Class Action
Complaint. But the case has been removed to the US District Court for the Northern District of Ohio, Eastern Division, where a motion
to dismiss remains pending a decision from the court.
The motion to dismiss
filed by Athena continues to be pending, and the parties await for this decision from the Court. There have been no new filings in the
case made by S.M. pertaining to any additional amendment to her complaint.
On November 25,
2024, Karen Carew on behalf of herself and all others (Carew), an individual, filed a complaint that includes class action
allegations, against Athena, its Chief Executive Officer, and other defendants, filed at the Superior Court of New Jersey Law Division,
Monmouth County (the State Court). The complaint against Athena alleges negligence and violations to various New Jersey
statutes such as possession of stolen property, Racketeer Influenced and Corrupt Organizations, negligence and consumer fraud. Carew alleges
the need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM kiosks and other internal procedures
in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond what already Athena has in place. The
claim by Carew against Athena is for an undetermined amount of compensation (which cannot exceed $5.0 million under the Class Action Fairness
Act of 2005) as well as injunctive relief.
| | 78 | | |
After removing
the case to Federal Court, the case got remanded to State Court as Carew filed an amended complaint removing all class action allegations
and becoming a sole plaintiff. Carew then filed a second amended complaint on July 16, 2025 at the State Court where she is still the
sole plaintiff. A motion to dismiss filed by Athena has been denied in part, for which the remaining causes of action persist. Athena
filed its pleadings on January 16, 2026.
The Company disputes
the claims and believes that the allegations are based on flawed legal theories and incorrect factual assumptions, and the Company intends
to vigorously defend itself against these claims and allegations including the possibility of asserting counterclaims against Carew. Although
the outcome of any litigation is inherently uncertain and may be materially adverse, based on current information, our management does
not expect this litigation to have a material adverse effect on our financial condition and results of operations.
On January 21,
2025, Girma Yilma on behalf of himself and all others (Yilma), filed a complaint that includes class action allegations,
against Athena, and two other retail establishments as defendants, filed at Colorados Arapahoe County District Court. The complaint
against the Company alleges negligence and violations to various Colorado statutes such as its consumer protection act, civil theft, unjust
enrichment, negligence and negligent design. As in the previous two cases filed by the same plaintiffs law firm, it alleges the
need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM kiosks and other internal procedures in order
to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond to what the Company already has in place. The
claim by Yilma against the Company is for an undetermined amount of compensation (which cannot exceed $5.0 million under the Class Action
Fairness Act of 2005) as well as injunctive relief.
Athena filed a
motion to compel arbitration on March 21, 2025. After the Court was fully briefed, the case was administratively closed and referred to
obligatory arbitration on August 13, 2025. Yilma initiated the arbitration proceedings under JAMS as established in Athenas Terms
of Service. In JAMS the parties reached a confidential settlement agreement, where the mutual considerations have been completed including
the termination of all proceedings with prejudice.
On January 31,
2025, Zamareeh Odoms (Odoms), an individual, through counsel sent an extrajudicial claim for $500 thousand against Athena.
The claim alleges lack of proper due diligence when recruiting or supervising an employee, agent or representative that caused damages
to his person for alleged insults and verbal aggressions made while in the common areas of the office building. However, the individual
involved that caused the alleged claims by Odoms is not an employee, agent or representative of the Company, the alleged actions were
not within the scope of any duties for Athena and Athena had no control over his employment, actions, or behavior because there is no
employment relationship. Therefore, the Companys assessment of this case at this time is there is no liability by Athena.
No actions have
been served upon Athena pertaining to any lawsuit that may have been filed by Odoms. However, the statute of limitation for a tort action
in the State of Florida is 2 years, if not properly tolled. Thus, Odoms still has at least a year to file any judicial claims against
Athena.
On February 6,
2025, Diane Reynolds on behalf of herself and all others (Reynolds), an individual, filed a complaint that includes class
action allegations, against Athena and another codefendant, filed at the Circuit County Court of Montgomery in Maryland. The complaint
was served upon Athena on March 24, 2025. The complaint against Athena alleges violations to Marylands Safe Act, negligence, product
liability because of defective design, and violation of the States Consumer Protection Act. Similar to the previous akin cases,
(i.e., the cases above of S.M. filed on September 9, 2024 and Girma Yilma filed on January 21, 2025) but using a different law firm this
time, Reynolds alleges the need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM kiosks and other
internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond what already Athena
has in place. The claim by Reynolds against Athena is for an undetermined amount of compensation (which cannot exceed $5.0 million under
the Class Action Fairness Act of 2005) as well as injunctive relief. The case was removed to the United States District Court for the
District of Maryland, where Athena filed a Motion to Dismiss on May 23, 2025, which is currently pending a decision by the Court.
| | 79 | | |
On February 26,
2025, the State of Iowa through its Attorney General (Iowa), filed separate complaints against Athena competitors Lux Vending,
LLC, Bitcoin Depot Operating, LLC (both Bitcoin Depot), and GPD Holdings LLC d/b/a CoinFlip (CoinFlip) (all
collectively Competitors). Iowa alleges violations to the States Consumer Fraud Act by the Competitors. Also, Iowa
further advises that they had subpoenaed fourteen (14) companies and that [t]he investigation into crypto ATM companies is ongoing.
In the complaints
against Competitors, it is requested by Iowa for civil penalties of up to $40 thousand per violation of the Consumer Fraud Act because
of any misrepresentation, deception or unfair practices. Additionally, it demands the reimbursement of funds of the full transaction to
defrauded victims, and a penalty of $5.0 million for each violation committed against an older individual. Although Athena believes that
its operations can be clearly distinguished, Athena has received multiple requests for information from Iowa in matters substantially
similar to those related to the complaints against Competitors.
Despite the pair
of requests for information and production of documents, Athena has not been served with, nor is it aware of any, civil action filed against
it by Iowa similar to those of the Competitors. Athena continues to cooperate with any information requests as appropriate.
On May 30, 2025,
Rachael Gnadinger, Madeline McCausland, and Joanne Nebus-Horning, on behalf of themselves and others similarly situated (collectively,
Gnadinger), filed a complaint that includes class action allegations, against Athena, its Chief Executive Officer, and other
defendants, filed at the Superior Court of New Jersey Law Division, Middlesex County. The complaint against Athena alleges negligence
and violations to various New Jersey statutes such as possession of stolen property, Racketeer Influenced and Corrupt Organizations, negligence
and consumer fraud. Gnadinger alleges the need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM
kiosks and other internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond
what Athena already has in place. The claim by Gnadinger against Athena is for an undetermined amount of compensation (which cannot exceed
$5.0 million under the Class Action Fairness Act of 2005) as well as injunctive relief. The additional costs mentioned in the claim are
not able to be estimated at this time, if any would be applicable. Athena has requested the removal of the case to the US District Court
for the District of New Jersey. However, Gnadinger has moved to request the case be remanded back to the State Court in a September 15,
2025 filing. Therefore, at this time, the parties continue to await the Federal Courts decision to remand or not the case to the
State Court. Once the decision is made, remanded or not, Athena will then move to request that two of the claimants be compelled to arbitrate
in accordance to the Terms of Service in effect at the time of their transactions.
On September 8,
2025, the District of Columbia (the District), through the Office of the Attorney General, filed a complaint against
Athena in the Superior Court of the District of Columbia Civil Division. Pursuant to the complaint, the District alleged that Athena
failed to disclose excessive fees and to protect consumers in violation of the Districts Consumer Protection Procedures Act (CPPA)
and Abuse, Neglect, and Financial Exploitation of Vulnerable Adults and the Elderly Act (the Financial Exploitation Act).
Specific causes of action include allegations of (1) deceptive trade practices in violation of the CCPA; (2) unfair trade practices in
violation of the CCPA; and (3) violations of the Financial Exploitation Act. The lawsuit seeks a declaratory judgment that Athena violated
the CPPA and Financial Exploitation Act; a permanent injunction enjoining Athena from violating the Financial Exploitation Act and CPPA,
and requiring Athena to (a) remove unconscionable contract terms, including its no-refunds policy, its cap on refunds, and its liability
limitation clauses; (b) fully disclose all transaction fees, including the actual percentage markup above the market rate, at the point
of sale before consumers insert cash; and (c) institute and implement adequate fraud prevention measures, including appropriate daily
and monthly transaction limits and effective fraud detection protocols; enjoin Athena from engaging in money transmissions in the District
of Columbia until Athena has required licenses; order Athena to pay damages and restitution for the entire transaction amounts it is
alleged to have collected in violation of the CPPA and Financial Exploitation Act; order Athena to pay damages and restitution, for all
undisclosed fees it collected within the District in violation of the CPPA and Financial Exploitation Act; award civil penalties of $10,000
for each violation of the Financial Exploitation Act; award civil penalties of $5,000 for each violation of the CPPA; and award the District
the costs of the action and reasonable attorneys fees. On October 31, 2025, Athena Bitcoin filed a motion to dismiss and is currently
awaiting the Courts decision after the matter has been fully briefed by all the parties involved and a hearing is scheduled for
March 17, 2026, for its oral arguments.
| | 80 | | |
On September 23,
2025, AML Software, Inc. (AML) filed a complaint against Athena, Taproot, PSBC, and Jordan Mirch, an individual, in the
United States District Court for the Southern District of Florida (Case 1:25-cv-24378). The complaint alleges, among other things, that
Athena and the other defendants misappropriated AMLs proprietary Bitcoin kiosk software source code. The claims asserted include
copyright infringement (against all defendants), contributory and vicarious infringement (against Taproot, PSBC and Mr. Mirch), vicarious
copyright infringement (against Mr. Mirch), misappropriation of trade secrets under the Defend Trade Secrets Act (against all defendants),
unfair competition (against Athena, Taproot and PSBC), and conversion (against all defendants). AML seeks injunctive relief, return or
destruction of all versions of the software code, damages including actual, statutory, and exemplary damages, disgorgement of profits,
attorneys fees, and costs. The complaint alleges that Athena knowingly obtained and used AMLs copyrighted source code through
transactions with other defendants and used it on approximately 2,800 Bitcoin kiosks. AML contends that Athena entered into agreements
with related entities and ultimately paid approximately $9 million for the kiosks and associated software, which AML claims improperly
included its proprietary source code.
At this stage,
Athena is unable to predict the outcome of this litigation or reasonably estimate the potential loss or range of loss, if any. The Company
intends to vigorously defend itself against these claims and allegations. As the case has just commenced, Athena has secured counsel in
accordance to the indemnity provisions of the agreement between itself and codefendant PSBC.
On November
6, 2025, plaintiff Chris Vaughan filed a putative nationwide class action complaint against Athena Bitcoin in the United States District
Court for the Southern District of Florida. The complaint names only Athena Bitcoin as defendant and asserts claims under the Florida
Deceptive and Unfair Trade Practices Act (FDUTPA), Fla. Stat. 501.201 et seq., and what plaintiff terms the
Florida Financial Exploitation of Vulnerable Adults Act, Fla. Stat. 825.103. Plaintiff alleges that Athena Bitcoin
operates Bitcoin ATMs (Kiosks) nationwide and has imposed excessive and insufficiently disclosed fees through fee-inclusive
exchange rates, misleading or incomplete disclosures, and unfair refund practices, including with respect to scam victims and vulnerable
consumers. The putative class consists of all persons in the United States who, during the applicable statute of limitations, used an
Athena kiosk to purchase cryptocurrency and were charged a Kiosk Fee. Plaintiff seeks injunctive relief, restitution, disgorgement,
damages, civil penalties, and attorneys fees and costs. As of the date of this letter, Athena Bitcoin has engaged counsel and
is moving to file an initial motion to dismiss the case. Still, at this early stage, Athena Bitcoin is unable to predict the outcome
or reasonably estimate the potential loss or range of loss, if any.
We believe we have
strong arguments against these open claims and litigation matters and plan to defend ourselves vigorously in these matters.
In addition to
the above, from time to time, we are subject to allegations from various U.S. states that our activities constitute those of a money transmitter,
and allegations that we failed to register as a money transmitter in those states. To date we have agreed to various consent orders and
settlements with such states, none of which represent material amounts of penalties, assessments or fees, to settle such claims. The outcome
of such ongoing and future allegations, complaints, claims and litigation cannot be predicted.
Occasionally we
are involved in various claims, lawsuits, regulatory examinations, investigations and other legal matters arising, for the most part,
in the ordinary course of business. In making a determination regarding accruals, using available information, we evaluate the likelihood
of an unfavorable outcome in legal or regulatory proceedings, to which we are a party, and we record a loss contingency when it is probable
a liability has been incurred, and the amount of the loss can be reasonably estimated. Where we determine an unfavorable outcome is not
probable or reasonably estimable, we do not accrue for any potential litigation loss. These subjective determinations are based on the
status of such legal or regulatory proceedings, the merits of our defenses and consultation with legal counsel. Actual outcomes of these
legal and regulatory proceedings may materially differ from our current estimates.
**Item 4. Mine Safety Disclosures**
****
Not applicable.
| | 81 | | |
**PART II**
****
**Item 5. Market for Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities**
****
**Market Information for Common Stock**
****
****
Our common stock is currently
quoted on the OTCID Market operated by OTC Markets Group, Inc. under the symbol ABIT. The sale prices of our common stock
on the OTCID Market are insignificant and therefore, do not represent a reliable indication of the fair market value of these shares.
The following table sets forth the high and low closing-bid quotations for our common stock as reported on the OTC Pink Market for the
periods indicated. These quotations reflect inter-dealer prices, without retail mark up, mark down or commission and may not necessarily
represent actual transactions. The OTC Markets Quotation System is a quotation service that displays real-time quotes, last-sale prices
and volume information in over-the-counter equity securities. The market is limited for our stock and any prices quoted may not be a reliable
indication of the value of our shares of common stock.
|
For the year ended December 31, 2024 |
|
|
High |
|
|
|
Low |
| |
|
First Quarter |
|
|
$ |
0.340 |
|
|
|
$ |
0.0801 |
| |
|
Second Quarter |
|
|
$ |
0.151 |
|
|
|
$ |
0.0676 |
| |
|
Third Quarter |
|
|
$ |
0.080 |
|
|
|
$ |
0.0363 |
| |
|
Fourth Quarter |
|
|
$ |
0.264 |
|
|
|
$ |
0.0208 |
| |
|
For the year ended December 31, 2025 |
|
|
High |
|
|
|
Low |
| |
|
First Quarter |
|
|
$ |
0.105 |
|
|
|
$ |
0.0225 |
| |
|
Second Quarter |
|
|
$ |
0.075 |
|
|
|
$ |
0.0300 |
| |
|
Third Quarter |
|
|
$ |
0.065 |
|
|
|
$ |
0.0121 |
| |
|
Fourth Quarter |
|
|
$ |
0.038 |
|
|
|
$ |
0.0067 |
| |
****
**Holders of Record**
As of March 6, 2026, we
had 4,095,009,545 shares of our common stock issued and outstanding held by approximately 185 shareholders of record. The actual number
of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but
whose shares are held in street name by brokers or held by other nominees.
**Dividends**
We have not paid, nor declared
any cash dividends since our inception and do not intend to declare or pay any such dividends in the foreseeable future as we intend to
retain any earnings for use in our business. Any future determination to pay dividends will be at the discretion of our Board of Directors,
subject to limitations imposed by state law.
Prior to November 24, 2025,
the terms of the Senior Secured Loan Agreement related to the Amended and Restated Convertible Debenture dated May 15, 2023 precluded
us from paying dividends without the written consent of KGPLA, until such time as our $3.0 million Secured Convertible Debenture is paid
in full. As of November 24, 2025, the debenture was paid in full.
Securities Authorized for Issuance Under Equity Compensation
Plans
****
For certain information concerning
securities authorized for issuance under our equity compensation plan, see Item 12 Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters.
Recent Sales of Unregistered Securities; Use of Proceeds
From Registered Securities
None.
Issuer Purchases of Equity Securities
****
None
| | 82 | | |
**Item 6.**
****
[Reserved]
**Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations**
****
**Forward-looking statements**
The following discussion
of the Companys historical performance and financial condition should be read together with the consolidated financial statements
and related notes in [Item 8. Financial Statements and Supplemental Data](#k_014) of this Report. This discussion contains forward-looking
statements based on the views and beliefs of our management, as well as assumptions and estimates made by our management. These statements
by their nature are subject to risks and uncertainties, and are influenced by various factors. As a consequence, actual results may differ
materially from those in the forward-looking statements. See [Item 1A. Risk Factors](#k_003) of this Report for the discussion of
risk factors and see Cautionary Statement Regarding Forward-Looking Statements for information on the forward-looking statements
included below.
**Summary of Information Contained in Managements
Discussion and Analysis of Financial Condition and Results of Operations**
Our Managements Discussion
and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying audited financial
statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized
as follows:
|
|
|
Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of MD&A. | |
|
|
|
Results of Operations. An analysis of our financial results comparing the twelve-month periods ended December 31, 2025 and 2024. | |
|
|
|
Liquidity and Capital Resources. An analysis of changes in our consolidated balance sheets and cash flows and discussion of our financial condition. | |
|
|
|
Critical Accounting Policies and Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. | |
**Overview**
****
Our mission is to connect
the worlds cash to the new global digital financial system. We believe that providing the world with access to crypto assets will
help transform the international financial order by providing the unbanked and billions of others in the world with a connection to a
new global digital financial system that is more accessible, efficient and transparent than the legacy financial system.
| | 83 | | |
Athena Bitcoin ATMs and Athena Plus
In order to achieve our mission,
we are focused on developing, owning, and operating a global network of Athena-branded Bitcoin ATM machines, which are free standing kiosks
that permit customers to buy or sell crypto assets in exchange for cash (banknotes) issued by sovereign governments - often referred to
as fiat currencies. We utilize purchasing algorithms and other proprietary systems to manage crypto assets to ensure that we are able
to meet consumer demand for crypto assets.
We have become one of the
largest Bitcoin ATM operators in the United States and Latin America by installing ATMs in strategic locations that seek to maximize the
ability to provide crypto assets to customers. These locations include convenience stores, shopping centers, and other easily accessible
locations in urban, suburban and rural locations. Our network presently includes Athena Bitcoin ATMs in 33 U.S. states, the U.S. territory
of Puerto Rico and four countries in Latin America. See table below for our ATM breakdown by country and type, as of December 31, 2025.
**ATMs BY COUNTRY AND TYPE**
|
Country |
Number of Athena Bitcoin ATMs
(as of December 31, 2025) |
Type of Fiat Currency | |
|
|
Total |
Two-Way |
| |
|
United States |
2,903* |
- |
U.S. Dollar | |
|
El Salvador |
27 |
24 |
U.S. Dollar | |
|
Argentina |
6 |
6 |
Argentine peso | |
|
Colombia |
15 |
15 |
Colombian peso | |
|
Mexico |
2 |
2 |
Mexican peso | |
|
Total |
2,953 |
47 |
| |
*Excludes Chivo-branded Bitcoin ATMs which the
Company operates on behalf of the Government of El Salvador for Chivo as white-label service.
Customers can purchase as
little as $1 of Bitcoin but normally choose between $100 and $1,000 using Athena Bitcoin ATMs. The typical ATM that the Company operates
is about 5-feet tall and features a large touchscreen for customer interaction. The customer typically needs to have a wallet application
on their smart phone to buy or sell Bitcoin on our Bitcoin ATM. To initiate the transaction, the customer will follow the steps prompted
on the screen. When a customer is buying Bitcoin, the machine will require the customer to insert paper Fiat Currency since our Bitcoin
ATMs do not accept debit or credit cards. When the transaction is complete, a receipt will print showing exactly how many crypto assets
have been bought and the receiving address. The Companys Bitcoin ATMs do not contain the crypto assets private key. The
Company sells Bitcoin from cloud-based wallets in each country, enabling real-time supply of crypto assets to its customers.
We offer Bitcoin for sale
at all of our Bitcoin ATM machines. For the years ended December 31, 2025 and 2024, we completed 213,683 and 185,789 transactions in
Bitcoin through our Bitcoin ATMs, respectively.
| | 84 | | |
The Company buys most of its
crypto assets through automated purchases on crypto exchanges and with digital assets trading firms based on algorithms the Company has
developed for balancing its holdings with anticipated demand. The Company is also active in the over-the-counter dealer market and has
bilateral relationships with several large crypto asset trading desks. We replenish our supply of Bitcoin, multiple times daily as needed,
and hold Bitcoin in our wallet to sell to users of our Bitcoin ATMs. On average, we sell our holdings of Bitcoin within 2 days of purchase.
We only transact in Bitcoin at our machines. We strive to keep holding periods short to reduce the effect of changes in Bitcoin/U.S. Dollar
exchange rates on our business and to maximize our working capital. We do not invest or have long term holdings of any crypto currency.
We charge a fee for Bitcoin
transactions through our Athena Bitcoin ATM, equal to the prevailing price at U.S.- based exchanges plus a markup that typically ranges
between 13% and 28%. The prices shown to customers on our Bitcoin ATM are inclusive of this price spread and are calculated by multiplying
the prevailing price level of crypto asset by one plus the markup. The markup varies by location. It is determined by a proprietary method
that is maintained as a trade secret. Our revenues associated with our ATM transactions are recognized at the time when the crypto asset
is delivered to the customers wallet.
For the years ended December
31, 2025, and 2024, the average markup on Bitcoin sold was 24% and 22%, respectively.
We offer bitcoin for sale
at all of our Bitcoin ATM machines. We also buy bitcoin at some of our Bitcoin ATM machines (also known as two-way ATMs). The cash withdrawal
limit from our two-way Bitcoin ATMs is $2,000 per transaction (maximum of $1,000 in California). We replenish or withdraw fiat currencies
at our Bitcoin ATMs twice a week or depending on usage, using bonded security companies.
Between January 1, 2022, and
December 31, 2025, Bitcoins price exhibited significant fluctuations. In early 2022, Bitcoins price was around $47,459 by
the end of March, before declining to approximately $29,000 by May 11, 2022. The downward trend continued, with the price falling below
$23,000 in June 2022. By the end of 2022, Bitcoins price was under $20,000. In 2023, Bitcoins price rose consistently, ending
the year at $42,258. In 2024, Bitcoins price continued to rise, reaching a then all-time high of $106,147 on December 17, 2024.
By December 31, 2024, the price was approximately $93,425. As of February 20, 2026, the price of Bitcoin was $67,711 and as of December
31, 2025, the price of Bitcoin was $87,711. On August 14, 2025, Bitcoin reached an all-time high price of $124,457. Refer below for a
graph from statista.com of the price of bitcoin from January 1, 2022 through December 31, 2025. This shows the fluctuations of the price
of bitcoin over time.
| | 85 | | |
**BITCOIN PRICE**
*
*Through February 1, 2026
Bitcoin closing prices every
3 months from January 1, 2022 through February 1, 2026. Data source: Stooq Bitcoin historical quarterly data.
We believe that we are in
the early stages of the new digital financial order system and that as crypto asset use cases expand and there is more worldwide adoption,
the fluctuations in volume and price will decrease. Our focus is on prioritizing growth, especially in geographic areas where consumers
are restricted from accessing the global financial system.
| | 86 | | |
The Company has been active
in increasing its geographic presence by expanding its Athena Bitcoin ATM Fleet. Refer below for a chart showing the active Athena Bitcoin
ATMs from December 31, 2017, through December 31, 2025.
**TOTAL ACTIVE ATMS OVER TIME**
****
****
**Number of Bitcoin ATMs by Year**
|
Year |
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 | |
|
# of Bitcoin ATMs |
65 |
64 |
59 |
137 |
392 |
445 |
1,829 |
3,111 |
2,953 | |
| | 87 | | |
****
ATMs, by location, are presented below
as of December 31, 2025.
**ATMs BY LOCATION**
****
|
Country |
Number of Athena Bitcoin ATMs
(as of December 31, 2025) |
Type of Fiat Currency | |
|
Total |
Two-Way | |
|
United States |
2,903* |
- |
U.S. Dollar | |
|
El Salvador |
27 |
24 |
U.S. Dollar | |
|
Argentina |
6 |
6 |
Argentine peso | |
|
Colombia |
15 |
15 |
Colombian peso | |
|
Mexico |
2 |
2 |
Mexican peso | |
|
TOTAL |
2,953 |
47 |
| |
****
*Excludes Chivo-branded ATMs which the Company
operates on behalf of the Government of El Salvador for Chivo as white-label service.
Athena Plus (Over-The-Counter or OTC)
The Company also offers personalized
services (Athena Plus) for the purpose of selling and buying crypto assets. Our Athena Plus service allows us to assist
crypto asset buyers and sellers who wish to use their bank accounts. Through Athena Plus, we also generate revenue by selling Bitcoin
directly to institutional traders, individuals and organizations. These transactions are typically completed telephonically for amounts
that exceed $10,000 U.S. Dollars. The Company utilizes Bitcoin on hand and additional purchases, if necessary, to provide Bitcoin for
the transaction. We charge a fee for Bitcoin transactions equal to the prevailing price at U.S.-based exchanges plus a markup.
White-label Service
The Company, as part of its
strategy to expand globally, began working with the Government of El Salvador in late June 2021 to support the implementation of its Bitcoin
Law. Six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin
is no longerconsidered currency, or legal tender. Another change makes using bitcoin entirely voluntary.
Previously, the law mandated that businesses accept bitcoin for any goods or services they provided. Additionally, Bitcoin can no longer
be used to pay taxes or settle government debts. These changes are not expected to harm our operations because our Bitcoin ATM services
in El Salvador do not depend on compulsory Bitcoin usage; rather, they cater to organic consumer demand. We believe demand for Bitcoin
transactions will continue to be driven by individuals who choose to use Bitcoin. Our role as an ATM operator for Chivo remains unchanged
whereby we continue to manage the Bitcoin ATMs on the governments behalf under our fixed-fee service arrangement.
The government is also stepping
back from its involvement in Chivo Wallet, the state-backed digital wallet, by either transferring it to private sector management or
terminating the program, as part of the countrys agreement with the International Monetary Fund. We believe this development may
open opportunities for private companies (including the Company) to fill any service gaps left by the governments reduced role.
We have assessed the impact of the legislative changes and the Chivo transition, and do not foresee a negative impact on our business,
in part because our existing ATM operations and customer base in El Salvador are expected to continue without disruption. There is no
assurance that our assessment may not change depending on any future legal, political or economic changes in El Salvador.
| | 88 | | |
We operate Bitcoin ATMs on
behalf of the Government of El Salvador. These Bitcoin ATMs are owned by the Company. This white-label service is comprised of installing
the machines for the customer and ensuring that the machines are operating in a way that they can be used by the Government of El Salvador
and their users. To achieve this, the Company is responsible for loading and unloading cash, setting up the network, performing repairs
and maintenance and other responsibilities to ensure that the machines are operating as intended. We charge a fixed monthly fee to operate
these ATMs, as well as an additional fixed price for specific services that are required. The additional fixed price for specific services
required is less than 1% of total revenue earned for the fixed monthly fee. The fixed price covers Athenas cost plus a reasonable
profit margin. The Companycharges a separate fixed fee for installation of the Bitcoin ATM as determined by the contract. The Company
also charges a fixed fee each month for operating the Bitcoin ATM. The Company does not sell crypto assets directly to the users of the
Bitcoin ATM.
When a user purchases Bitcoin
from a Chivo-branded Bitcoin ATM, the ATM delivers the Bitcoin to the address selected by the user. This may be a Chivo wallet or any
other wallet address, including a non-custodial wallet.
|
|
|
Holder of Private Keys: If the user chooses to receive the Bitcoin in a Chivo wallet, then the Government of El Salvador (through the Chivo wallet system) retains custody of the private keys associated with that wallet. The Chivo wallet is a custodial wallet, meaning the end user does not have direct access to the private keys. In that scenario, the Government (or its designated Chivo wallet operator) has control over the crypto assets after delivery. | |
However, users are not required
to use a Chivo wallet. If the user inputs a non-custodial wallet address, the Bitcoin is delivered directly to that wallet, and the user
retains sole control of the associated private keys.In all cases, regardless of the destination address, the Company never holds
or has access to the private keys for Bitcoin purchased by users at the ATMs. Our role is strictly limited to operating the ATM infrastructure
and facilitating the transaction; we do not have custody or manage digital assets on behalf of users.
****
|
|
|
Method of Key Storage (Chivo Wallets): For transactions involving delivery to Chivo wallets, whereby the Company is not the custodian and does not have access to the Chivo wallet infrastructure, it is our understanding that the Government of El Salvador uses a combination of hot wallets (for real-time liquidity and immediate delivery) and potentially cold or multi-signature storage for operational security. Because transactions through Chivo ATMs require near-instantaneous delivery, the Chivo system maintains hot wallet liquidity to fulfill those transactions. The Company does not oversee or participate in the management of these storage practices. | |
The Government of El Salvador
has title to the private keys to the crypto assets. However, the Company acts as the custodian for the cash in the ATM machine as well
as cash that is in-transit.
In 2021 and 2022, we installed
a total of 200 Chivo Bitcoin ATMs in El Salvador, 10 Chivo Bitcoin ATMs at El Salvador consulates in the U.S. and 45 Chivo Bitcoin ATMs
in other U.S. locations. The Company has not installed any new white-label ATMs in fiscal years 2024, 2025 or during 2026 to date. The
Company provided no services related to the Chivo ecosystem in fiscal years 2024, 2025 or during 2026 to date.
Ancillary
The Company engages in services
as part of its mission to bring the new digital financial system to the world. This includes the sale of point-of-sale terminals (POS
Terminals) and developing and supporting crypto ecosystems. In 2021, the Company agreed to develop the Chivo Ecosystem for El Salvador.
The Chivo Ecosystem acts as the interface to El Salvadors Bitcoin Digital Wallet for El Salvador and its users. The Companys
contract to develop the Chivo Ecosystem ended December 31, 2021.
| | 89 | | |
The Company, due to contingencies
related to not having title of the intellectual property in 2021 that serves as the foundation of the Chivo Ecosystem, did not recognize
revenue in 2021. The contingency was lifted in 2022 when the Company obtained the right to use the intellectual property. The Company
recognized revenue related to the development of the Chivo Ecosystem when the contingency was lifted. The Company anticipates no further
revenue related to the Chivo intellectual property and ecosystem.
**Key Performance Indicators and Non-GAAP
Financial Measure and Trends**
Athena Bitcoin ATMs*
**
The number of Athena Bitcoin
ATMs decreased from 3,111 to 2,953 or 5% from December 31, 2024 to December 31, 2025.
*Transactions*
Median ATM transaction size
for Bitcoin decreased from $150 to $105, or 30% while the number of transactions increased from 185,789 to 213,683, or 13% during the
twelve months ended December 31, 2024 and 2025, respectively.
Median OTC transaction size
for all crypto assets decreased from $40,661 to $12,290 or 70% while the number of transactions increased from 83 to 288 or 247% during
the twelve months ended December 31, 2024 and 2025, respectively.
*Adjusted EBITDA*
We use Adjusted EBITDA as a non-GAAP financial measure. We define
Adjusted EBITDA as net earnings attributable to Athena Bitcoin Global stockholders plus the following items: interest expense, fees on
virtual vault services; income tax expense (benefit); one-time expenses (loss on extinguishment of debt and credit loss); and depreciation
and amortization. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies
because not all companies calculate this measure in the same fashion. You should review the reconciliation of net income to Adjusted
EBITDA below and not rely on any single financial measure to evaluate our business. The Company believes that Adjusted EBITDA is a more
relevant supplemental measure of performance than other GAAP performance measures. Adjusted EBITDA is a supplemental measure of our performance
that is neither required by, nor presented in accordance with, GAAP. Management presents the non-GAAP financial measure of Adjusted EBITDA
because it considers this to be an important supplemental measure of performance. Management believes that this non-GAAP financial measure
provides additional insight for analysts and investors evaluating the Companys financial and operational performance by providing
a consistent basis of comparison across periods.
**ADJUSTED EBITDA**
*(in thousands)*
****
|
| |
Year Ended
December 31, 2025 | | |
Year Ended
December 31, 2024 | | |
|
| |
| | |
|
Net (loss) income | |
$ | (6,034 | ) | |
$ | 10,284 | | |
|
Adjusted to exclude the following: | |
| | | |
| | | |
|
Interest expense | |
| 745 | | |
| 1,884 | | |
|
Fees on virtual vault services | |
| 1,580 | | |
| 2,059 | | |
|
Income tax (benefit) expense | |
| (655 | ) | |
| 4,733 | | |
|
One-time expenses | |
| | | |
| | | |
|
Loss on extinguishment of debt | |
| 5,283 | | |
| | | |
|
Credit loss | |
| | | |
| 798 | | |
|
Depreciation and amortization | |
| 9,506 | | |
| 5,173 | | |
|
Adjusted EBITDA | |
$ | 10,425 | | |
$ | 24,931 | | |
| | 90 | | |
**Key Factors Affecting Our
Performance**
The performance of our business
operations has been and will continue to be affected by a number of factors, including;
|
|
|
The price and volatility of crypto assets | |
|
|
|
Adoption of crypto assets as a medium of exchange by merchants and their trading partners | |
|
|
|
Adoption of crypto assets as a store of value by investors | |
|
|
|
That total number of Bitcoin ATMs could reach a saturation in the markets where the Company operates, and the demand, as measured on a per Bitcoin ATM basis, would decrease | |
|
|
|
Investments made by the Company, including in new technologies and strategic acquisitions | |
|
|
|
The ability to determine the transaction fee for Bitcoin ATM transactions | |
|
|
|
The Companys product and service offerings, including potentially increasing its
white-label service offerings. | |
|
|
|
Regulations in U.S. and international market | |
|
|
|
Access to supply of new Bitcoin ATM machines from third-party manufacturers | |
**Components of Results of Operations**
****
*Consolidated Balance Sheets*
****
**Cash and Cash Equivalents**
****
The Company considers
all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents
include cash maintained at various financial institutions, cash in transit, and cash in Bitcoin ATMs owned and leased by the Company.
The Company maintains cash
balances at various financial institutions. Accounts at these institutions are secured by the Federal Deposit Insurance Corporation (FDIC)
up to $250,000 per institution. The Company has deposits in excess of the FDIC-insured limit. The Company has not experienced any losses
in such accounts and believes that it is not exposed to significant credit risk due to the financial position of the depository institutions,
third-party crypto exchanges or investment vehicles in which those deposits are held. The Company has significant cash in Bitcoin ATMs,
held on various third-party crypto exchanges and in transit with cash logistic providers. Cash in transit consists of cash that is picked
up by armored truck companies from the Companys Bitcoin ATMs but not yet deposited in the Companys bank accounts. Management
evaluates cash in transit based on outstanding cash deposits on cash picked up by the armored truck companies, historical cash deposits
and cash that is lost during transit, which is immaterial. The armored truck companies maintain insurance over theft and losses.
**Crypto assets held**
The Companys crypto assets are Bitcoin and Stablecoins and they are considered indefinite-lived
intangible assets and are initially measured at cost and are not amortized. As intangible assets, Bitcoin and Tether held are initially
recorded at cost. However, effective as of January 1, 2025, the Company began measuring crypto assets held at their fair value. The Company
determines the fair value of its Bitcoin based on quoted (unadjusted) prices on CoinMarketCap.
The Company purchases Bitcoin,
which is held in the Companys hot wallets, on a just-in-time basis to facilitate sales to customers and mitigate exposure to volatility
in Bitcoin prices. As of July 19, 2023, the Company only transacts in Bitcoin at its Bitcoin ATMs in exchange for cash, on a predetermined
markup at the time of the transaction. However, there may be multiple days between the purchase of the Bitcoin and the sale of the Bitcoin.
When Bitcoin is sold to customers, the Company relieves the adjusted cost basis of the crypto asset, net of impairments/unrealized gains
and losses, on a first-in, first-out basis within cost of revenue.
| | 91 | | |
**Property and equipment**
Property and equipment is
mostly composed of ATM equipment which is depreciated over a three year period.
****
*Consolidated Statements of Operations and
Comprehensive Income (Loss)*
**Revenue**
*Athena Bitcoin ATM*
We generate the majority of
our revenue from the sale of bitcoin through our network of ATM machines. The Company generated 97% and 96% of its revenue from Bitcoin
ATM sales for the years ended December 31, 2025 and 2024, respectively. The Company recognizes revenue at the point in time when the customer
receives the crypto asset. The revenue recognized is the gross transaction amount of crypto assets sold. Revenue is primarily correlated
with transaction volume.
*Athena Plus*
We generate revenue from selling
crypto assets to institutional traders and organizations. These are typically done via the phone. The Company generated 2% and 2% of its
revenue from Athena Plus for the years ended December 31, 2025 and 2024, respectively. The Company recognizes revenue at the point in
time when the customers receive the crypto asset. The revenue recognized is the gross transaction amount of crypto assets sold. Revenue
is primarily correlated with transaction volume.
*White-label Service*
We generate revenue by installing
and operating Bitcoin ATMs on behalf of third parties. Operating responsibilities include providing the ATMs, loading and unloading cash,
setting up the network, repairs and maintenance, and software upgrades, if necessary. The Company generated 1% and 2% of its revenue from
white-label service for the years ended December 31, 2025 and 2024, respectively. We charge a fixed monthly service fee to operate these
machines. We also charge customers an additional fixed price for certain services, which is an insignificant part of the total revenue
for white-label service (less than 1%). The Company does not sell crypto assets to these customers. The Company recognizes the monthly
service fee over the term of the service contract.
The Company permits the customer
to terminate the white-label service contract for specific ATMs as well as in total at any point during the contractual term for no penalty.
As a result, the contracts for each ATM are considered month to month.
*Ancillary*
**
The Company is actively engaged
in looking into other revenue streams that may aid our mission to connect the world with the new global digital financial system. We have
engaged in projects such as developing software that may help customers manage their crypto assets as well as selling POS Terminals to
customers.
Through December 31, 2025,
the ancillary revenue stream has been sporadic and immaterial. The Company generated less than 1% of its revenue from these other revenue
streams for the years ended December 31, 2025 and 2024.
| | 92 | | |
**Cost of Revenues**
Cost of revenues consists
primarily of expenses related to the acquisition of crypto assets (including the costs to purchase crypto assets from users in our ATMs
and from third-party exchanges). The acquired crypto asset is recorded at cost of acquisition, i.e., it is inclusive of any surcharge
or markdown. The Company commonly acquires crypto assets through third-party dealers and exchanges, as well as purchasing crypto assets
from customers through our two-way ATMs. The Company assigns the costs of crypto assets sold in its revenue transactions on a first-in,
first-out basis.
The crypto assets acquired
are initially measured at cost and subsequently measured at fair value, with changes in fair value recorded in net income in each reporting
period. The change in fair value is reflected in cost of revenues in the consolidated statement of operations and comprehensive income.
The Company, through its proprietary knowledge rarely holds crypto assets for more than 2 days, reducing this risk.
Additionally, cost of revenues
includes the cost of installing the Bitcoin ATMs, the costs of operating the Bitcoin ATMs from which crypto assets are sold (including
the associated rent expense, related incentives, Bitcoin ATM cash losses, software licensing fees for the ATMs, depreciation, general
liability insurance, and utilities), fees paid to service the Bitcoin ATM machines and transport cash to the banks, and outsourced customer
support staff for white-label services.
**Operating Expenses**
****
The Companys expenses
consist of general and administrative, sales and marketing, technology and development and other operating expenses.
*General and Administrative*
General and administrative
expenses consist primarily of staff salaries and other staff-related costs (for everyone at Athena except for the technology & development
team and the marketing team), personnel in executive, commercial, finance, accounting, legal, and investor relations.
Other significant general
and administrative costs include costs relating to facilities and overhead costs, legal fees relating to corporate matters, litigation,
SEC filings, insurance, investor relations costs, fees for accounting and consulting services, and other general and administrative costs.
General and administrative costs are expensed as incurred, and we accrue amounts for services provided by third parties related to the
above expenses by monitoring the status of services provided and receiving estimates from our service providers and adjusting our accruals
as actual costs become known.
It is expected that the general
and administrative expenses will increase over the next several years to support our expanding activities, potential commercialization
of other product and service candidates and the increased costs of operating as a public company. These increases are anticipated to include
increased costs related to the hiring of additional personnel, developing commercial infrastructure, fees to outside consultants, lawyers
and accountants, and increased costs associated with being a public company, as well as expenses related to services associated with maintaining
compliance with SEC requirements, insurance and investor relations costs.
*Sales and Marketing*
Sales and marketing consist
principally of the marketing staff and marketing management salaries and other staff-related costs.
Other significant sales and
marketing expenses include costs relating to the website and trade shows.
| | 93 | | |
It is expected that the sales
and marketing expenses will increase over the next several years to support our expanding activities, and potential commercialization
of other products and services. These increases are expected to include increased costs related to the hiring of additional personnel
and increased participation in trade shows.
*Technology and Development*
Technology and development
costs are expenses incurred to develop the Companys other revenue streams, primarily software.
It is expected that the technology
and development expenses will increase over the next several years to support our expanding activities and the commercialization of other
products and services. These increases are anticipated to include increased costs related to the hiring of additional personnel, developing
commercial infrastructure and the need for additional servers.
*Other Operating Expenses*
Other operating expenses consists
of fees related to immigration of employees and other employee transition expenses.
**Interest Expense**
Interest expense consists
of interest expense and includes amortization of debt discount and issuance costs.
**Fees on Virtual Vault Services**
****
Virtual Vault is a term used
in the Armored Car and Cash Transport industry to define a service provided by armored car services for assets considered property of
the bank when the bank does not have a physical vault or location in a given state or location. The fees for virtual vault services included
in the accompanying consolidated statement of operations and comprehensive income are for a currency availability service provided to
the Company by its bank for making funds held in a virtual vault immediately available to the Company. Neither the term nor the service
is related to virtual currency or crypto assets.
**Other (Income) Expense**
This includes foreign currency
transaction gain/loss and penalties as applicable.
**Income Tax Expense**
The Company was taxed as a
partnership for U.S. federal and state income tax purposes for tax years prior to 2020. There is no provision for income taxes for those
years.
For periods after 2020 income
taxes are accounted for under an asset and liability approach. This process involves calculating the temporary and permanent differences
between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The temporary differences result in deferred tax assets and liabilities, which are recorded on the consolidated balance sheets in accordance
with FASB ASC 740, Income Taxes (ASC 740), which established financial accounting and reporting standards for the effect
of income taxes. The likelihood that its deferred tax assets will be recovered from future taxable income must be assessed and, to the
extent that recovery is not likely, a valuation allowance is established. Changes in the valuation allowance in a period are recorded
through the income tax provision in the consolidated statements of operations and comprehensive income (loss).
| | 94 | | |
The Company accrues liabilities
for uncertain tax positions that are not, more likely than not, to be sustained upon examination as of December 31, 2025 and 2024. Interest
and penalties related to uncertain tax positions are recorded in accrued liabilities in the accompanying consolidated balance sheets.
The Company had no unrecognized tax benefits as of December 31, 2025 and 2024, that if recognized, would affect its annual effective tax
rate.
**Results of Operations**
****
The majority of the numbers
presented below are rounded numbers and should be considered as approximate.
**Comparison of the Years Ended December 31, 2025 and 2024**
****
The table below sets forth,
for the periods presented, certain historical financial information.
**
|
| |
For the years ended | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
$ Change | | |
% Change | | |
|
| |
(in thousands) | | |
| | |
|
| |
| | |
| | |
| | |
| | |
|
Revenues | |
$ | 234,597 | | |
$ | 285,391 | | |
$ | (50,794 | ) | |
| (18 | %) | |
|
Cost of revenues | |
| 209,759 | | |
| 247,391 | | |
| (37,632 | ) | |
| (15 | %) | |
|
Gross profit | |
| 24,838 | | |
| 38,000 | | |
| (13,162 | ) | |
| (35 | %) | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Operating expenses: | |
| | | |
| | | |
| | | |
| | | |
|
Technology and development | |
| 1,553 | | |
| 1,351 | | |
| 202 | | |
| 15 | % | |
|
General and administrative | |
| 16,399 | | |
| 10,513 | | |
| 5,886 | | |
| 56 | % | |
|
Sales and marketing | |
| 1,573 | | |
| 1,898 | | |
| (325 | ) | |
| (17 | %) | |
|
Credit loss expense | |
| | | |
| 798 | | |
| (798 | ) | |
| (100 | %) | |
|
Litigation expense | |
| 3,460 | | |
| 3,000 | | |
| 460 | | |
| 15 | % | |
|
Other operating expense | |
| 836 | | |
| 1,149 | | |
| (313 | ) | |
| (27 | %) | |
|
Total operating expenses | |
| 23,821 | | |
| 18,709 | | |
| 5,112 | | |
| 27 | % | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Income from operations | |
| 1,017 | | |
| 19,291 | | |
| (18,274 | ) | |
| (95 | %) | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Interest expense | |
| 745 | | |
| 1,884 | | |
| (1,139 | ) | |
| (60 | %) | |
|
Fees on virtual vault services | |
| 1,580 | | |
| 2,059 | | |
| (479 | ) | |
| (23 | %) | |
|
Loss on extinguishment of debt | |
| 5,283 | | |
| | | |
| 5,283 | | |
| 100 | % | |
|
Other expense | |
| 98 | | |
| 331 | | |
| (233 | ) | |
| (70 | %) | |
|
(Loss) income before income taxes | |
| (6,689 | ) | |
| 15,017 | | |
| (21,706 | ) | |
| (145 | %) | |
|
Income tax (benefit) expense | |
| (655 | ) | |
| 4,733 | ) | |
| (5,388 | ) | |
| (114 | %) | |
|
Net (loss) income | |
$ | (6,034 | ) | |
$ | 10,284 | | |
$ | (16,318 | ) | |
| (159 | %) | |
|
Basic (loss) earnings per share | |
$ | (0.00147 | ) | |
$ | 0.00251 | | |
$ | (0.00398 | ) | |
| (159 | %) | |
|
Diluted (loss) earnings per share | |
$ | (0.00147 | ) | |
$ | 0.00236 | | |
$ | (0.00383 | ) | |
| (162 | %) | |
|
Weighted average shares outstanding Basic | |
| 4,095,009,545 | | |
| 4,094,816,668 | | |
| 192,877 | | |
| | | |
|
Weighted average shares outstanding Diluted | |
| 4,095,009,545 | | |
| 4,466,443,337 | | |
| (371,433,792 | ) | |
| (8 | %) | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Comprehensive (loss) income | |
| | | |
| | | |
| | | |
| | | |
|
Net (loss) income | |
$ | (6,034 | ) | |
$ | 10,284 | | |
$ | (16,318 | ) | |
| (159 | %) | |
|
Foreign currency translation adjustment, net of tax | |
| (29 | ) | |
| 14 | | |
| (43 | ) | |
| (307 | %) | |
|
Comprehensive (loss) income | |
$ | (6,063 | ) | |
$ | 10,298 | | |
$ | (16,361 | ) | |
| (159 | %) | |
| | 95 | | |
**Revenues**
**
|
| |
Years Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
$ Change | | |
% Change | | |
|
| |
(in thousands) | | |
| | |
|
Revenue by stream | |
| | | |
| | | |
| | | |
| | | |
|
Athena Bitcoin ATM | |
$ | 226,475 | | |
$ | 274,954 | | |
$ | (48,479 | ) | |
| (18 | %) | |
|
Athena Plus (OTC) | |
| 4,336 | | |
| 4,977 | | |
| (641 | ) | |
| (13 | %) | |
|
White-label Service | |
| 2,790 | | |
| 4,845 | | |
| (2,055 | ) | |
| (42 | %) | |
|
Ancillary and other | |
| 996 | | |
| 615 | | |
| 381 | | |
| 62 | % | |
|
Total Revenue | |
$ | 234,597 | | |
$ | 285,391 | | |
$ | (50,794 | ) | |
| (18 | %) | |
*Athena Bitcoin ATM Revenue (in thousands except number of Bitcoin
ATMs)*
Athena Bitcoin ATM revenue
decreased $48,479, or 18% from $274,954 to $226,475 during the years ended December 31, 2024 to December 31, 2025, respectively. The
decline in revenue is primarily due to decrease of the size of individual transactions, despite an increase in overall transaction volume,
driven by economic factors and market volatility. Median transaction size for all crypto assets decreased from $150 to $105, or 30% and
the average markup for Bitcoin increased from 22% to 24% during the years ended December 31, 2024 to December 31, 2025, respectively.
The number of Bitcoin ATMs decreased from 3,111 to 2,953, or 5% from December 31, 2024 to December 31, 2025, respectively. The number
of Bitcoin ATM transactions increased from 185,789 to 213,683 or 15% for the year ended December 31, 2024, compared to the year ended
December 31, 2025, respectively.
**
*Athena Plus (in thousands except number of sales transactions)*
Athena Plus revenue decreased
$641 or 13% from $4,977 to $4,336 for the years ended December 31, 2024 compared to the year ended December 31, 2025, respectively. Median
transaction size for all crypto assets decreased from $40,661 to $12,290 or 70% and the number of sales transactions increased from 83
to 228, or 175% over the same periods. Athena Plus revenue is dependent on the demands of certain institutional traders, which vary period
to period.
*White-Label Service (in thousands)*
White-Label Service revenue
decreased $2,055 or 42% from $4,845 to $2,790 for the year ended December 31, 2024, compared to the year ended December 31, 2025, respectively.
This decrease was driven by a decrease in monthly service fees of the contract during the last quarter ended December 31, 2024.
*Ancillary (in thousands)*
Ancillary revenue increased
$381 or 62% from $615 to $996 from the year ended December 31, 2024 to the year ended December 31, 2025, respectively. This increase is
primarily due to the Company recognizing revenues related to transaction fees charged to affiliates. Ancillary revenue also includes non-recurring
revenue that is dependent on one-time projects to help develop the crypto ecosystem. As such, the Company anticipates that there may be
significant fluctuations in ancillary revenue recognized each period.
****
****
****
****
| | 96 | | |
****
**Cost of Revenues and Gross Profit***(in
thousands except number of Bitcoin ATMs)*
Cost of revenues consists
primarily of expenses related to the acquisition of Bitcoin; including the costs to purchase Bitcoin from users of the Companys
Bitcoin ATMs and from third-party exchanges which are assigned on a first-in, first-out basis, and cost of revenues includes the costs
of operating the Bitcoin ATMs from which Bitcoin are sold (including the associated rent expense, related incentives, Bitcoin ATM cash
losses, software licensing fees for the ATMs, depreciation, insurance, and utilities), crypto asset (subject to impairment in 2024 and
changed to valuation at fair value in 2025) and fees paid to service the ATMs and the transport of cash to the banks. For the years ended
December 31, 2025 and 2024, the costs related to the acquisition of Bitcoin sold were $173,834 and $214,723, respectively. Impairment
of crypto assets held for the year ended December 31, 2025 and 2024 was $0 and $1,779, respectively. The increase in cost related to acquisition
of Bitcoin sold was primarily a result of the increased transactions of Bitcoin. For the year ended December 31, 2025, and 2024, the costs
of operating the Bitcoin ATMs were $14.387 and $13,643, respectively. The increase in operating costs was primarily driven by higher servicing
and cash logistics costs, including increased cash pickup schedules at higher-volume locations, partially offset by a decrease in the
number of ATMs installed during the year, which decreased from 3,111 to 2,953, or 5% from the year ended December 31, 2024 to the year
ended December 31, 2025, respectively.
Gross profit decreased $13,162
or 35% and gross profit percentage decreased from 13% to 11%, primarily due to decrease in the revenue transaction size for the year,
for the year ended December 31, 2025, compared to the year ended December 31, 2024, respectively.
**Operating Expenses***(in thousands)*
****
Total operating expenses increased
$5,112 or 27% from the year ended December 31, 2024 to the year ended December 31, 2025. A breakdown of total operating expenses are shown
below.
**OPERATING EXPENSES**
|
| |
Year Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
$ Change | | |
% Change | | |
|
| |
| | |
| | |
|
Technology and development | |
$ | 1,553 | | |
$ | 1,351 | | |
$ | 202 | | |
| 15 | % | |
|
General and administrative | |
| 16,399 | | |
| 10,513 | | |
| 5,886 | | |
| 56 | % | |
|
Sales and marketing | |
| 1,573 | | |
| 1,898 | | |
| (325 | ) | |
| (17 | %) | |
|
Credit loss | |
| | | |
| 798 | | |
| (798 | ) | |
| (100 | %) | |
|
Litigation expense | |
| 3,460 | | |
| 3,000 | | |
| 460 | | |
| 15 | % | |
|
Other operating | |
| 836 | | |
| 1,149 | | |
| (313 | ) | |
| (27 | %) | |
|
| |
$ | 23,821 | | |
$ | 18,709 | | |
$ | 5,112 | | |
| 27 | % | |
Technology and development
expenses increased by $202 or 15% from $1,351 to $1,553 from the year ended December 31, 2024 to the year ended December 31, 2025, respectively,
mostly due to development of potential new products and an increase in overhead to support the global expansion of the Athena Bitcoin
ATMs.
General and administrative
expenses increased by $5,886 or 56%, from $10,513 to $16,399 from the year ended December 31, 2024 to the year ended December 31, 2025,
respectively, due mostly to increase in litigation fees along with salaries and benefits to employees.
| | 97 | | |
Sales and marketing expenses
decreased by $325 or 17% from $1,898 to $1,573 from the year ended December 31, 2024 to the year ended December 31, 2025, respectively,
due to an decrease in branding, marketing and sales infrastructure and a decrease in marketing and sales personnel, as we have
pivoted employees to lower cost environment locations in Latin America, in particular El Salvador.
Credit loss in 2024 of $798
represents the write-off of the receivable from Chivo which was included in the financial settlement of June 2024 whereby all accounts
owed between Chivo and the Company, were written off as part of the settlement (see Contracts with Chivo, Sociedad Annima de Capital Variable of
El Salvador).
Litigation expense increased
by $460 or 15% from $3,000 to $3,460 from the year ended December 31, 2024 to the year ended December 31, 2025, respectively, mostly due
to the Companys accrual for the exposure to litigations (see [Legal Proceedings](#k_007)).
**Interest and Fees** *(in thousands)*
**INTEREST AND FEES**
|
| |
Year Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
$ Change | | |
% Change | | |
|
| |
| | |
| | |
|
Interest expense | |
$ | 745 | | |
$ | 1,884 | | |
$ | (1,139 | ) | |
| (60 | %) | |
|
Fees for virtual vault services | |
| 1,580 | | |
| 2,059 | | |
| (479 | ) | |
| (23 | %) | |
Interest expense decreased
$1,139 or 60% from $1,884 to $745 from year-ended December 31, 2024 to year-ended December 31, 2025, respectively, due mostly to a reduction
of interest-bearing debt.
Fees for virtual vault services
decreased $479 or 23% from $2,059 to $1,580 from year-ended December 31, 2024 to year-ended December 31, 2025, respectively primarily
due mostly to the Companys decrease use of its bank currency availability service which makes funds held in a virtual vault immediately
available to the Company.
**Loss on extinguishment of debt***(in thousands)*
****
During the twelve months
ended December 31, 2025, the Company recorded a loss due to the extinguishment of debt of $5,283 related to the termination and settlement
of all outstanding obligations under the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement, the Location Referral
Agreement, the Client Services Agreement, and the Development Services Agreement. The loss included the extinguishment of the debt of
$4,602 and $681 of unamortized imputed interest, both of which are included in loss on extinguishment of debt expense in the consolidated
statements of operations and comprehensive income (loss).
**Income Tax Benefit (Expense)** *(in thousands)*
****
Income tax expense decreased
$5,388 or 114% from $4,733 tax expense to $655 tax benefit from year-ended December 31, 2024 to year-ended December 31, 2025, respectively.
The decrease in income tax expense is mainly due to a decrease in income before income taxes, which decreased from income of $15,017 to
a loss of ($6,689) from the years ended December 31, 2024 to December 31, 2025, respectively.
| | 98 | | |
**Liquidity and Capital Resources***(in
thousands)*
As
of December 31, 2025, and 2024, we had cash balances of $11,376 and $17,506, respectively. The Company also had working capital deficits
of $9,235 and $2,506, respectively, largely due to operating lease liabilities, current portion of $8,751 and $9,627 as of December 31,
2025, and 2024, respectively.
Our Bitcoin ATM business has
two significant components of working capital holdings of crypto assets and cash holdings in the machines and in transit, i.e.,
once it has been removed from the machines and it is the process of being counted and credited to our account with the appropriate banking
institution. We must buy our holdings in cash and do not get a credit from our counterparties. On average, we hold 2 days of anticipated
sales of Bitcoin at our Bitcoin ATM machines. We strive to keep this period short to reduce the effect of changes in Bitcoin /U.S. Dollar
exchange rates on our business and to minimize our working capital. Our cash logistics contractors restock or remove cash from our machines
periodically, the frequency of this service determined by a host of operational considerations like historical trend of sales, current
levels of cash in the machines, route considerations, public holidays, and incremental cost of each removal etc. We employ a data driven
strategy based on factors we have learned over the years to reduce the amount of cash deployed. It currently takes anywhere from 3 to
7 days from the time the cash is picked up from the Bitcoin ATM machines to be credited to our account. An increase in the amount of days
when the cash is credited to our account, would impact our ability to restock our holdings of Bitcoin in a timely manner which could create
a situation where there are insufficient amounts of Bitcoin to fulfill customer orders.
The Company, given how actively
we manage our cash logistics, and how we prioritize and leverage cash pick up based on proprietary operating algorithms and practices,
is able to finance and perform its daily operating activities and manage liquidity, while also maintaining the noted levels of cash in
the Bitcoin ATM machines. For the twelve months ended December 31, 2025, the average cash balance was $2.434 per machine in the United
States. For the twelve months ended December 31, 2024, the average cash balance was $2.225 per machine in the United States. For newly
installed Bitcoin ATMs, it may take weeks before the Bitcoin ATMs reach normal operating activity, resulting in a reduction of cash in
these machines compared to normal operating Bitcoin ATMs. The Company generally has minimum cash of $2.5 in each dispenser in two-way
Bitcoin ATM machines in order to have sufficient cash to operate them. The remaining cash is withdrawn from the machine in order to fund
the Companys operations.
Our Athena Plus (phone sales)
has a lower level of capital required since we only function on days other market participants and banks and our trades are cash settled
every day. The Company does not separately hold Bitcoin earmarked for Bitcoin ATM sales as opposed to phone sales and the Company holds
approximately 2 days worth of bitcoin needed for transactions at its Bitcoin ATMs. We strive to minimize the amount of working
capital deployed for better financial results.
Our financing needs are influenced
by our level of businessoperations and generally increase with higher levels of revenue. We strive to minimize the amount of financing
requested to assist with operating the business.
Our material cash requirements
and time periods of such requirements from known contractual and other obligations amount to, in the aggregate, approximately $33,398
for 2026 and $20,757 for the years 2027 through 2030 which we expect will be met through our ongoing operations.However, our operating
plans may change, and we may need additional funds to meet operational needs and capital requirements for redeploying ATM equipment and
pursuing other initiatives.
Our
consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going
concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets
and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values.
The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.
| | 99 | | |
**Going Concern and Management Liquidity Plans***(in thousands)*
As
of December 31, 2025, we had an accumulated deficit of $497 and a working capital deficit of $9,235, and for the twelve months ended December
31, 2025, net loss of $6,034 and cash provided by operating activities of $12,618. The accompanying consolidated financial statements
have been prepared assuming the Company will continue as a going concern. The Company is self-funded and generates sufficient cash to
fund its global operations through its operations.
The
accompanying consolidated financial statements have been prepared in accordance with GAAP on a going concern basis, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the consolidated financial
statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
Additionally,
wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe
that the non-cash consideration will consist of restricted shares of our common stock, preferred stock or warrants to purchase shares
of our common stock. Our Board of Directors has authority, without action or vote of the shareholders to issue all or part of the authorized
but unissued shares of common stock, preferred stock or warrants to purchase such shares of common stock. In addition, we may attempt
to raise capital by selling shares of our common stock, possibly at a discount to market in the future. These actions will result in
dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material.
Such issuances may also serve to enhance existing managements ability to maintain control of us, because the shares may be issued
to parties or entities committed to supporting existing management.
**Recent Financing Transactions***(in
thousands)*
**
*Equipment notes payable*
**
On September 19, 2024, Athena
Bitcoin and Taproot Acquisition Enterprises, LLC, a Delaware limited liability company (Taproot), entered into an Omnibus
Equipment Refinancing Agreement providing for the refinance of Athena Bitcoins debt obligations previously incurred in connection
with the purchase of Bitcoin ATMs pursuant to the previously entered into equipment financing agreements for the purchase of the equipment
by Athena Bitcoin from Taproot. The parties agreed that the total outstanding balance of $2,120 would be paid by one inception payment
of $1,158 upon the execution of the agreement and followed by weekly payments of $20 for a period of 48 weeks. The Omnibus Equipment Refinancing
Agreement also contains representations and warranties of both parties with respect to clear and marketable title of the equipment and
provides provisions addressing an event of default by Athena Bitcoin as a purchaser of the equipment. As of December 31, 2025, the outstanding
principal was $0 because on September 4, 2025, Athena Bitcoin entered into a Release and Termination Agreement with Taproot and the Taproot
Parties to terminate and settle all outstanding obligations under several prior arrangements, including the Equipment Financing Agreements,
the Omnibus Equipment Refinancing Agreement, the Location Referral Agreement, the Client Services Agreement, and the Development Services
Agreement (see *Short-term debt* below).
On October 30, 2024, Athena
Bitcoin entered into an Equipment Financing Agreement with Taproot (the Financing Agreement) to purchase certain Bitcoin
ATMs listed in the Financing Agreement. The Financing Agreement amends and supersedes previous equipment purchase agreements between the
parties. Under the Financing Agreement, Athena Bitcoin will acquire from Taproot installed Bitcoin ATMs or additional Bitcoin ATMs at
the price per Bitcoin ATM set forth in the Equipment Agreement. The downpayment was to be paid in 4 installments with the first payment
due and paid by Athena Bitcoin as of October 31, 2024, and the last payment was due by January 31, 2025; which last payment was made on
January 27, 2025.
| | 100 | | |
In addition, Athena Bitcoin
agreed to pay a fee equal to 0.8% of the revenue (to be paid weekly) derived from the sale of Bitcoin in each Bitcoin ATM location until
the expiration of the term of the Financing Agreement (36 months) or until full payment of total purchase price for the equipment subject
to certain additional limitations. The Financing Agreement also provides the provisions addressing the event of default by either Taproot
or Athena Bitcoin, and respective available remedies. Certain property on which the equipment units are located is subject to merchant
agreements (as listed in the Financing Agreement), and the Financing Agreement provides for assignment and assumption of merchant agreements
and leases, as may be applicable. Furthermore, Taproot is to maintain a first priority interest on the Bitcoin ATMs until fully paid for.
In connection therewith, Athena Bitcoin, Taproot and KGPLA Holdings LLC, an entity in which Mike Komaransky, a former director and principal
shareholder of Athena Bitcoin has a controlling interest and whose Chief Investment Officer
is Huaxing Jason Lu, our director, entered into a First Amendment to the Intercreditor Agreement dated as of October 23,
2024, pursuant to which KGPLA agreed to the subordination of its first priority security position on collateral of Athena Bitcoin to Taproot.
As of December 31, 2025, the outstanding principal was $0 because on September 4, 2025, Athena Bitcoin entered into a Release and Termination
Agreement with Taproot and the Taproot Parties to terminate and settle all outstanding obligations under several prior arrangements, including
the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement, the Location Referral Agreement, the Client Services
Agreement, and the Development Services Agreement (see *Short-term debt* below).
*Short-term debt*
**
On February 26, 2024, the
Company entered into a financing agreement for $170 with National Partners PFco LLC to pay the insurance premium on its directors
and officers insurance with an annual percentage rate of 8.45% per annum repayable in ten monthly installments beginning March
14, 2024. On October 11, 2024, the Company increased its coverage for the same policy and entered into an additional financing agreement
for $170 with an annual percentage rate of 7.95%, repayable in ten monthly installments beginning November 11, 2024. As of December 31,
2025 and 2024, the outstanding principal was $0 and $140, respectively.
On December 19, 2024, the
Company entered into financing agreements for $116 with National Partners PFco LLC., to pay the insurance premium on its commercial liability
insurance with an annual interest rate of 7.95% per annum, repayable in eight monthly installments beginning January 11, 2025. As of December
31, 2025, and 2024, the outstanding principal was $0 and $116, respectively.
On May 30, 2025, the Company
entered into financing agreements for $280 with E.T.I. Financial Corporation, to pay the insurance premium on its cyber, crime and employment
practices liability insurance with an annual interest rate of 9.51% per annum, repayable in ten monthly installments beginning June 14,
2025. As of December 31, 2025, the outstanding principal was $88.
On September 4, 2025, the
Company entered into a Release and Termination Agreement with Taproot and the Taproot Parties to terminate and settle all outstanding
obligations under several prior arrangements, including the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement,
the Location Referral Agreement, the Client Services Agreement, and the Development Services Agreement. Under the terms of the Release
and Termination Agreement, the Company agreed to pay the Taproot Parties an aggregate Termination Payment of $9,000, consisting of an
upfront payment of $3,000 upon execution of the agreement and weekly installments of $115.4 over 52 weeks. Upon payment in full, all security
interests, liens, and other encumbrances under the prior agreements will be released, and all outstanding obligations between the parties
will be deemed satisfied and discharged.
**
At the date of settlement,
the carrying amount of the debt obligation under the Equipment Financing Agreement was $4,300. The Company also recorded the following
items associated with the extinguishment of debt:
**
|
|
a) |
$3,200, related to the Equipment Financing Agreement and 2024 Financing Royalty Buy-Out, representing the lump-sum buy-out of a 0.5% vendor participation obligation. | |
|
|
b) |
$300, related to the Location Referral Agreement and Location Agreement Buy-Out, representing the lump-sum buy-out of a referral revenue share obligation. | |
|
|
c) |
$1,100, recorded as a settlement premium, representing the excess of the total settlement consideration over the carrying amount of the extinguished obligations. | |
| | 101 | | |
During the twelve months
ended December 31, 2025, the Company recorded a loss due to the extinguishment of debt of $5,283 related to the termination and settlement
of all outstanding obligations under the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement, the Location Referral
Agreement, the Client Services Agreement, and the Development Services Agreement. The loss included the extinguishment of the debt of
$4,602 and $681 of unamortized imputed interest, both of which are included in loss on extinguishment of debt expense in the consolidated
statements of operations and comprehensive income (loss).
As of December 31, 2025, and
2024, the outstanding principal of the Release and Termination Agreement was $4,000 and $0, respectively, which was included in short-term
debt in the consolidated balance sheets.
On October 9, 2025, the Company
entered into insurance premium financing agreements for $223 (gross premium in the amount of $284 less $61 deposit) with E.T.I. Financial
Corporation, to pay the insurance premium on its directors and officers insurance with an annual interest rate of 9.51%
per annum, repayable in ten monthly installments beginning November 11, 2025. As of December 31, 2025, the outstanding principal was $180.
On December 30, 2025, the
Company entered into insurance premium financing agreements for $59 (gross premium in the amount of $74 less $15 deposit) with E.T.I.
Financial Corporation, to pay the insurance premium on its commercial general liability insurance with an annual interest rate of 12.06%
per annum, repayable in ten monthly installments beginning February 1, 2026. As of December 31, 2025, the outstanding principal was $59.
*Note payable, Related*-*Party*
On May 15, 2023, the Company
entered into a Senior Secured Loan Agreement, as amended (the Loan Agreement) and Senior Secured Revolving Credit Promissory
Note (the Revolving Credit Note) with KGPLA, an entity in which Michael Komaransky, a former director and 40.8% beneficial
owner of the Company has a controlling interest and serves as Manager of such entity, and whose Chief Investment Officer is Huaxing Jason
Lu, our director.. The Revolving Credit Note allowed the Company to borrow up to $4,000 for the operations of its New Bitcoin ATM Machines,
as defined in the Loan Agreement, with a maturity date of May 15, 2024. Revenue share fees for this agreement were calculated based on
a percentage of the gross daily receipts generated from these machines and were recorded as part of interest expense in the consolidated
statements of operations and comprehensive income (loss). In connection with the above loan transaction and issuance of Revolving Credit
Note, the Company granted KGPLA a first priority lien and security interest in and to all of the Companys assets, except for property
previously pledged to Banco Hipotecario, which has since been repaid in full, and with respect to such assets, the Company granted KGPLA
a second priority lien. On March 28, 2024, the Company repaid the principal amount of $4,000 (together fees due) on the Senior Secured
Revolving Credit Promissory Note due with KGPLA. The debt was settled in full in accordance with the terms outlined in the Revolving
Credit Note and was funded using cash reserves generated from the Companys operating activities. The early payoff of this debt
resulted in the elimination of revenue share fees. As of December 31, 2025, and 2024, the outstanding principal was $0.
*Convertible debt, related*-*party*
On January 31, 2020, the Company
entered into a Secured Convertible Debenture agreement with KGPLA. The Secured Convertible Debenture provided for a principal amount of
$3,000, with a maturity date of January 31, 2025, which was extended to January 31, 2026. Interest as defined by the agreement is 8% per
annum. The Secured Convertible Debenture is convertible into shares of the Companys common stock at a conversion price equal to
$0.012 per share or, if lower, a price determined by specified formulas depending on the type of conversion event: (a) upon the next sale
(or series of related sales) by the Company of additional equity securities under an exemption from registration available under the rules
promulgated under the Securities Act, from which the Company receives gross proceeds of not less than $3,000; provided that, for clarification,
this is not meant to include any actions or listing for trading on the OTC Markets, the conversion price will be the lesser of (i) the
lowest per share purchase price of the equity securities issued in such financing, reduced by a 20% discount, or (ii) the price per share
equal to a valuation cap of $70,282, divided by the Companys fully diluted capitalization immediately prior to the financing; (b)
in the event of our first underwritten public offering of common stock under the Securities Act whereby the our common stock is listed
or admitted for trading on a national stock exchange in the United States, as reported on the principal national security exchange or
quotation system on which such security is quoted or listed, the conversion price will be the lesser of (i) the lowest per share purchase
price of equity securities issued in the IPO, reduced by a 20% discount, or (ii) 90% of the quotient obtained by dividing the Valuation
Cap by the fully diluted capitalization immediately prior to the IPO; (c) in connection with a corporate transaction, including certain
mergers, consolidations, changes of control or sales of substantially all assets, the conversion price will equal the Valuation Cap divided
by the fully diluted capitalization immediately prior to such transaction; and (d) for conversions occurring at or after maturity or at
the option of the investor at any time, the conversion price will also equal the valuation cap divided by the fully diluted capitalization
immediately prior to such conversion.
| | 102 | | |
Conversions may be made at
any time at the option of KGPLA and are generally mandatory upon the closing of a Next Equity Financing or IPO, with principal and accrued
but unpaid interest converted into shares of common stock at the applicable conversion price and issued on the same terms as the securities
sold in the transaction. In the event of a corporate transaction prior to repayment or other conversion, each holder may elect to receive
either (i) repayment equal to all accrued and unpaid interest plus two times the outstanding principal balance, or (ii) shares of common
stock issuable upon conversion of the Secured Convertible Debentures based on the applicable conversion price. After the maturity date,
or at any time prior to maturity at the option of the investor, a debenture may be converted into shares of common stock at the conversion
price then in effect. Interest accrued through the conversion date must be paid in cash, and fractional shares will not be issued but
instead rounded down to the nearest whole share.
The Company is required to
reserve sufficient authorized shares of common stock to permit conversion of the debentures. If authorized shares are insufficient, the
Companys board must promptly call a stockholders meeting or seek written consent to approve an increase in authorized common
stock. Prepayment of the debentures is prohibited without the prior written consent of KGPLA.
The Secured Convertible Debenture
was amended and restated as of May 15, 2023, and became a secured, and not general unsecured, obligation of the Company, on par with the
notes issued pursuant to the Senior Secured Loan Agreement entered into as of the same date.
The loan agreement imposed
a number of restrictive covenants on the Company and its subsidiaries for so long as any obligations remain outstanding. Without the KGPLAs
consent, the Company may not incur additional debt other than debt under the loan documents, certain existing debt (including the Secured
Convertible Debenture and debt owed to Banco Hipotecario), certain debt owed to Taproot or unsecured debt incurred after the closing.
The Company is also restricted from granting liens on its assets, except for liens under the loan documents, liens in favor of Banco Hipotecario
existing on the closing date, or certain permitted tax liens. The Company and its subsidiaries may not merge, consolidate, liquidate,
or dissolve except in limited circumstances, and may not engage in businesses other than those conducted on the effective date or reasonably
related thereto. The Company is prohibited from disposing of collateral, making voluntary prepayments or amendments with respect to subordinated
debt (other than repayment of the specified Secured Convertible Debenture), or declaring or paying dividends or other cash distributions
on its equity. In addition, the Company may not amend or modify material contracts in a manner adverse to KGPLA without KGPLAs
consent. Material contracts are generally those with consideration of $50or more, or otherwise material to the Companys business,
operations, financial condition, or prospects.
The Company is required to
make mandatory prepayments of the Secured Convertible Debenture in the event (a) we or any subsidiary incurs debt not otherwise permitted
under the agreement (in an amount equal to 100% of the net cash proceeds of the debt incurred); (b) in the event we receive any cash not
in the ordinary course of business (in an amount equal to 100% of such cash received); and (c) in the event KGPLA does not consent, we
must use 100% of the net cash proceeds we receive from a change of control, any asset sale, or the sale of material assets of the Company
to repay the Secured Convertible Debentures.
On November 24, 2025, the
Company voluntarily repaid in full the outstanding balance of approximately $3 million plus accrued interest of $36 owed to KGPLA for
a total payment of $3,036, under that certain Amended and Restated Secured Convertible Debenture entered into with KGPLA on May 15, 2023,
as amended from time to time (the Convertible Debenture). In connection with the repayment of all amounts owed pursuant
to the Convertible Debenture, the obligations and commitments owed by the Company to KGPLA under the (a) Convertible Debenture, (b) a
Senior Secured Loan Agreement entered into between KGPLA (and certain other borrowers named therein) and the Company dated May 15, 2023,
and (c) a Security Agreement dated May 15, 2023, between KGPLA and the Company, each as amended from time to time, were terminated and
all collateral associated therewith is required to be released by KGPLA. The voluntary prepayment was made using cash on hand and the
Company did not incur any prepayment penalties in connection with the repayment.
Separate from the repaid Loan Agreement and the Revolving
Credit Note with KGPLA (discussed above in *Note payable, Related*-*Party)*, the Secured Convertible Debenture
with KGPLA (discussed in, *Convertible debt, related-party*) of January 31, 2020 (as amended and restated May 15, 2023) remained
outstanding at December 31, 2024 and was voluntarily repaid in full on November 24, 2025, as noted above.
As of December 31, 2025, and
2024, the outstanding principal amount of the debenture was $0 and $3,000, respectively.
| | 103 | | |
**Cash Flows***(in thousands)*
*Twelve months ended December 31, 2025, compared
to the twelve months ended December 31, 2024*
The following summarizes our
cash flow for the year ended December 31, 2025 and 2024:
|
| |
Years Ended December 31, | | |
| | |
|
| |
2025 | | |
2024 | | |
$ Change | | |
% Change | | |
|
| |
| | |
| | |
| | |
| | |
|
Net cash provided by operating activities | |
$ | 12,618 | | |
$ | 17,676 | | |
$ | (5,058 | ) | |
| (29 | %) | |
|
Net cash used in investing activities | |
| (3,974 | ) | |
| (9,812 | ) | |
| 5,838 | | |
| (59 | %) | |
|
Net cash used in financing activities | |
| (11,077 | ) | |
| (8,610 | ) | |
| (2,467 | ) | |
| 29 | % | |
|
Effect of exchange rate changed | |
| (29 | ) | |
| 14 | | |
| (43 | ) | |
| (307 | %) | |
|
Net decrease in cash and cash equivalents | |
| (2,462 | ) | |
| (732 | ) | |
| (1,730 | ) | |
| 236 | % | |
|
Cash and cash equivalents, beginning of period | |
| 17,628 | | |
| 18,360 | | |
| (732 | ) | |
| (4 | %) | |
|
Cash and cash equivalents, end of period | |
$ | 15,166 | | |
$ | 17,628 | | |
$ | (2,462 | ) | |
| (14 | %) | |
Our operating activities provided
$12,618 in cash for the twelve months ended December 31, 2025 compared to $17,676 for the twelve months ended December 31, 2024, representing
a decrease in cash provided by operating activities of $5,058. The changes in sources of cash from operating activities for the twelve
months ended December 31, 2025 are comprised primarily of net loss of $6,034, depreciation and amortization of $9,506, loss on extinguishment
of debt of $5,283, accounts payable and other liabilities of $10,544, Bitcoin payments for expenses of $616 and unrealized loss of crypto
assets held of $112. The additional sources were offset by uses in cash comprised primarily of crypto assets held of $1,698, accounts
receivable of $2,742, Bitcoin received from independent Bitcoin ATM operators of $1,350 and prepaid expense and other assets of $1,173.
Our operating activities for
the twelve months ended December 31, 2024, are comprised primarily of net income of $10,284, accounts payable and other liabilities of
$7,694, depreciation and amortization of $5,173, Bitcoin payments for expenses of $3,680, and impairment of crypto assets held of $1,779.
The additional sources were offset by uses in cash comprised primarily of crypto assets held of $8,335, prepaid expenses and other assets
of $2,292, and accounts receivable of $1,512.
Our investing activities used
$3,974 and $9,812 in cash for the year ended December 31, 2025, and 2024, for purchases of property and equipment of $1,470 and $6,775
and purchase of capitalized software of $2,504 and $3,037, respectively.
Our financing activities used
$11,077 and $8,610 in cash for the year ended December 31, 2025, and 2024, respectively, primarily due to repayment of debt of $3,648
and $4,841, payments in reductions of financing leases of $0 and $1,150 and payments in reduction of equipment notes payable of $8,150
and $3,132, respectively.
**Critical Accounting Policies and Estimates**
****
Our consolidated financial
statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these consolidated financial statements
requires management to make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses.
We continually evaluate the accounting policies and estimates used to prepare the consolidated financial statements. The estimates are
based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results
could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are
deemed critical to our results of operations or financial position. Our critical accounting estimates are more fully discussed in Note
1 to our audited consolidated financial statements contained herein.
| | 104 | | |
Revenue Recognition
The Company derives its recurring
revenues primarily from three sources: (i) sale of crypto assets at Bitcoin ATMs (both Athena ATMs and White-label ATMs such as those
in El Salvador), (ii) customized investor trading services for the sale or purchase of crypto assets through the Companys Athena
Plus desk (referred to as over-the-counter or OTC), and (iii) Athena Pay which is a payment processor application
(app); that allows retailers to create QR codes with the specific amount to be charged to customers in Bitcoin. The Company
also generates revenue from ancillary items, such as sale of intellectual property and maintenance of software.
Under FASB Accounting
Standards Codification (ASC) 606, Revenue from Contracts with Customer, (FASB ASC 606) the Company recognizes revenue at
the point of sale or over time of the service period for these products or services to the Companys customers, in an amount that
reflects the consideration the Company expects to be entitled to in exchange for those products or services. Pursuant to FASB ASC 606,
the Company recognizes revenue by applying the following steps:
|
|
|
Identification of the contract, or contracts, with a customer. | |
|
|
|
Identification of the performance obligations in the contract. | |
|
|
|
Determination of the transaction price. | |
|
|
|
Allocation of the transaction price to the performance obligations in the contract. | |
|
|
|
Recognition of revenue when, or as, the Company satisfies a performance obligation. | |
The Company recognizes revenue
when the performance obligations identified under the terms of contracts with its customers are satisfied.
Judgment is required in determining
whether we are the principal or the agent in transactions between customers. We evaluate the presentation of revenue on a gross or net
basis based primarily on inventory risk (are we at risk for potential fluctuations of the crypto asset price) and whether we control the
crypto asset provided before it is transferred to the customer or whether we act as an agent by arranging for others to provide the crypto
asset to the customer. The Company determined it acts as the principal in each of its revenue streams. The Company enters into contracts
that may include multiple performance obligations. The Company identifies the promises in the contract and assigns them to their appropriate
performance obligation. These performance obligations may be part of a different revenue source and are listed separately below.
**Athena ATM & White-label Service**
**
*Athena Bitcoin ATM*
The Company requires all users
of Athena Bitcoin ATMs to agree to the Bitcoin ATM Terms of Service which stipulate the terms and conditions of the transaction. The user,
by inserting sovereign currency (known as fiat) and confirming that they agree to the transaction, is agreeing to the contract that governs
the transaction.
The Company has
a single performance obligation to provide a specific quantity of Bitcoin to the customers crypto wallet in exchange for fiat.
The Company utilizes a mark-up for crypto assets sold to the customer. Athena ATMs permit customers to purchase as little as one US dollar
of Bitcoin, and it records the gross cash received from the customer as the transaction price.
Revenue is recognized at the
point in time when the Bitcoin is delivered to the customers crypto wallet. Delivery to the customers crypto wallet is governed
by the Bitcoins blockchain and typically occurs in less than an hour from when the Bitcoin is purchased.
| | 105 | | |
*White-label Service*
In this revenue stream, client
refers to the entity contracting with the Company while customer refers to the person using the White-label Bitcoin ATM.
The Company entered into multiple contracts that govern the white-label service for Bitcoin ATMs located in El Salvador and in the United
States. The contracts permit the clients to terminate the contract at any point or to adjust the number of Bitcoin ATMs that are in use
without a substantive penalty.
The Company operates White-label
Bitcoin ATMs on behalf of the clients and the installation of the Bitcoin ATMs is performed by a third-party which is chosen by the White-label
Bitcoin ATM client.
The operations, on behalf
of the White-label client, include cash logistics services, and testing the Bitcoin ATMs. The Company charges a fixed fee each month for
operating the Bitcoin ATMs.
The Company leases Company-owned
Bitcoin ATMs to its clients. The Company elected the expedient in FASB ASC 842, Leases (ASC 842), which permits combining
the lease and non-lease components together if the lease component has the same timing and pattern of transfer as the non-lease component
and the lease component is an operating lease. Both of these conditions are met (for a more detailed discussion see*Leases*within
NOTE 1 of the consolidated financial statements included herein).
The Company is considered
the principal, as it controls any third-party good or service before it is transferred to the client.
For operating the White-label
ATM, revenue is recognized straight line over the requisite service period.
*Athena Plus (Over-The-Counter or OTC)*
The Company requires all users
of Athena Plus (a.k.a. Over-The-Counter or OTC) to agree to the Athena Plus Terms of Service. The Athena Plus
Terms of Service stipulate the terms and conditions of the transaction. The user, by wiring fiat to the Companys bank account,
is agreeing to the contract that governs the transaction.
The Company provides a specific
quantity of Bitcoin to the customers crypto wallet. The Company utilizes a mark-up for crypto assets sold to the customer. The
minimum transaction is $10 thousand (or equivalent value of local currency). The Company records the gross cash received from the customer
as the transaction price for the transaction.
Revenue is recognized at the
point in time when the Bitcoin is delivered to the customers crypto wallet. Delivery to the customers crypto wallet is governed
by the Bitcoins blockchain and typically occurs in less than an hour from when the Bitcoin is purchased.
**
*Athena Pay*
**
The Company requires all retailers
who are using Athena Pay to execute the Athena Pay contract which stipulates the terms and conditions of the transactions. As a payment
processor, the Company recognizes a processing fee of approximately 2.5% (average) of the transaction amount, when the transaction occurs
(i.e., when the retailer generates the QR code with the specific amount to be charged to the customers in Bitcoin and the transaction
is completed).
Revenue is recognized at the
point in time when the Bitcoin is delivered to the retailers crypto wallet. Delivery to the retailers crypto wallet is governed
by the Bitcoins blockchain and typically occurs in less than an hour from when the transaction is completed.
| | 106 | | |
Expenses Paid in Bitcoin
The Company enters into agreements
with certain vendors and service providers that provide us with the option to settle their invoices in crypto assets. The amount due is
fixed and is denominated in USD. There are no payment terms that include conversion options, variable settlement features, or alternative
settlement provisions contingent upon future events or market price fluctuations that could potentially give rise to embedded derivatives.
The Company considers the
guidance in FASB ASC 350, FASB ASC 606, FASB ASC 610, and FASB ASC 845 when it evaluates the derecognition of its crypto assets paid to
vendors in lieu of cash payments. In these transactions, we have been invoiced by a vendor and given the option to pay in USD or crypto
assets, typically Bitcoin. The amount of Bitcoin is determined by the market wide and easily determined price in accordance with the guidance
of FASB ASC 820, Fair Value Measurement. The Company records as an expense the USD value of the invoice and then considers the above references
to determine the proper way to derecognize the intangible long-lived asset used as payment.
We consider the scoping exceptions
for each of those topics and conclude that that the scope of 610-20 most closely matched the facts of the transactions. ASC 610-20-15-2
states nonfinancial assets within the scope of this Subtopic include intangible assets, which is how the Company treats
crypto assets.
We evaluated two possibilities
to exclude these transactions from the scope of FASB ASC 845, Nonmonetary Transactions. The relevant exceptions to the scope of that Topic
are as follows:
1. The transfer of goods or
services in a contract with a customer within the scope of ASC 606 in exchange for noncash consideration (ASC 845-10-15-4(j))
2. The transfer of a nonfinancial
asset within the scope of ASC 610-20 in exchange for noncash consideration (ASC 845-10-15- 4(k))
For these transactions, our
usage of the crypto asset is as a payment instrument to a vendor, therefore our interpretation of (1) above is for ASC 606 not to apply.
We interpret (2) above to apply when the Company pays a vendor (who is not a customer) with a crypto asset (nonfinancial asset) in lieu
of paying that same vendor with Fiat Currency (USD). Therefore, we account for the derecognition of the crypto assets, in these transactions,
under the guidance of ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets. This is the same guidance as in ASC
350-10-40-1, Transfer or Sale of Intangible Assets.
ASC 610-20-15-2 explicitly
states the scope to include intangible assets. We treat crypto assets as intangible assets. We then apply the general principle of ASC
610-32-2 for recognizing the gain or loss for the difference between the amount of goods or services we receive (fair market value, per
ASC 820 Level 2) and the cost of acquiring the crypto asset.
We record invoices from vendors
in the appropriate expense category, in the correct time period in which services were provided, in USD and for vendors who elect to be
paid in crypto assets, we transfer the crypto assets at market value at the time of transfer in line with ASC 820, Fair Value Measurement.
We then recognize as a gain or loss, the difference between the current carrying value of the crypto asset, and its market value to cost
of revenues in the consolidated statements of operations and comprehensive income (loss).
| | 107 | | |
Income Taxes
Income taxes are accounted
for under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying
amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences
result in deferred tax assets and liabilities, which are recorded on the consolidated balance sheets in accordance with FASB ASC 740,
Income Taxes (ASC 740), which established financial accounting and reporting standards for the effect of income taxes. The
likelihood that its deferred tax assets will be recovered from future taxable income must be assessed and, to the extent that recovery
is not likely, a valuation allowance is established. Changes in the valuation allowance in a period are recorded through the income tax
provision in the consolidated statements of operations and comprehensive income (loss).
The Company recognizes interest
and penalties related to uncertain tax benefits on the income tax expense line in the accompanying consolidated statements of operations
and comprehensive income (loss). Accrued interest and penalties are included on the related tax liability line in the consolidated balance
sheets.
ASC 740-10 clarifies the accounting
for uncertainty in income taxes recognized in an entitys consolidated financial statements and prescribes a recognition threshold and
measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10,
the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not
to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than
a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition. As a result of the implementation of ASC 740-10, the Company does not have
a liability for unrecognized income tax benefits.
Commitments and Contingencies
We assess legal contingencies
in accordance with ASC 450*Contingencies* and determines whether a legal contingency is probable, reasonably possible or remote.
When contingencies become probable and can be reasonably estimated, we record an estimate of the probable loss. When contingencies are
considered probable or reasonably possible but cannot be reasonably estimated, we disclose the contingency when the probable or reasonably
possible loss could be material.
*Litigation*
**
From time to time in the
regular course of our business, we are involved in various lawsuits, claims, investigations and other legal matters. Except as noted
under [Legal Proceedings](#k_007) herein, there are no material legal proceedings pending or known by us to be contemplated to which
we are a party or to which any of our property is subject to.
We believe that adequate provisions
for resolution of all contingencies, claims and pending litigation have been made for probable losses that are reasonably estimable. These
contingencies are subject to significant uncertainties and we are unable to estimate the amount or range of loss, if any, in excess of
amounts accrued. We do not believe that the ultimate outcome of these actions will have a material adverse effect on our financial condition
but could have a material adverse effect on our results of operations, cash flows or liquidity in a given quarter or year.
Off-Balance Sheet Arrangements
In the normal course of business, the
Companys contract with the government of El Salvador for the operation of the Chivo branded ATMs obligates the Company to assume
the risk of loss for funds used in the operation of the Chivo branded ATMs while those funds are in transit. The Company has contracted
with licensed and insured cash logistics companies to securely transport these funds. The logistics companies insurance covers
in full the value of the funds in transit however, in the event of a loss or destruction of the funds in transit, the Company could encounter
a timing delay between insurance payment for lost funds and the date of actual loss. The amount of funds in transit varies based on multiple
factors including but not limited to economic activity, seasonality, holiday and bank closure calendars. The amount of funds in transit
as of December 31, 2025 and 2024, were $6.4 million and $4.7 million, respectively.
| | 108 | | |
Recently Issued Accounting Standards
**
*Accounting Pronouncement Adopted*
**
In December 2023, the FASB
issued ASU 2023-08 IntangiblesGoodwill and OtherCrypto Assets (Subtopic 350-60) Accounting for and Disclosure of Crypto
Assets. ASU 2023-08 will require entities to measure crypto assets that meet the scope criteria at fair value and to reflect changes
in fair value in net income each reporting period. The amendments in ASU 2023-08 will also require entities to present crypto assets measured
at fair value separately from other intangible assets on the balance sheet and changes in the fair value measurement of crypto assets
separately from changes in the carrying amounts of other intangible assets on the income statement. The amendments in the ASU are effective
for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption
is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). The Company
adopted this standard and applied the disclosure requirements on a prospective basis effective for the year ended December 31, 2025.
In December 2023, the FASB
issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires companies to break out their income
tax expense, income tax rate reconciliation and income tax payments made in more detail. For public companies, the requirements will become
effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The
Company adopted this standard retrospectively.
*Accounting Pronouncement Pending Adoption*
**
In October 2023, the FASB
issued ASU 2023-06 Disclosure Improvements: Codification Amendments in Response to the SECs Disclosures Update and Simplification
Initiative. The guidance amends certain disclosure and presentation requirements related to the statement of cash flows, accounting
changes and error corrections, earnings per share, interim reporting, commitments, debt, equity, derivatives, transfers and services and
various industry specific guidance. For entities subject to the SECs existing disclosure requirements, the effective date for each amendment
will be the date on which the SECs removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However,
if by June 30, 2027, the SEC has not removed the existing disclosure requirements, the amendments will not become effective. Early adoption
is not permitted. The Company is in the process of assessing the overall impact of adopting this guidance on its disclosures.
In November 2024, the FASB
issued ASU 2024-03. Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).
The ASU requires expanded disclosures and disaggregation of certain expenses included within the income statement. The amendments become
effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with
early adoption permitted. The Company is still assessing the impact of this guidance on its consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk
We are a smaller reporting
company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
| | 109 | | |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
**ATHENA BITCOIN GLOBAL AND SUBSIDIARIES**
**TABLE OF CONTENTS TO FINANCIAL STATEMENTS**
|
| |
| Page | | |
|
Report of Independent Registered Public Accounting Firm (PCAOB ID #3968) | |
| F-1 | | |
|
Consolidated Balance Sheets | |
| F-2 | | |
|
Consolidated Statements of Operations and Comprehensive Income (Loss) | |
| F-3 | | |
|
Consolidated Statements of Cash Flows | |
| F-4 | | |
|
Consolidated Statements of Stockholders Equity | |
| F-6 | | |
|
Notes to Consolidated Financial Statements | |
| F-7 | | |
****
| | 110 | | |
**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM**
To the Board of Directors and Stockholders of
Athena Bitcoin Global and Subsidiaries
**Opinion on the Consolidated Financial Statements**
We have audited the accompanying consolidated
balance sheets of Athena Bitcoin Global and Subsidiaries (the Company) as of December 31, 2025 and 2024, and the related
consolidated statements of operations and comprehensive income (loss), stockholders equity, and cash flows for each of the years
ended December 31, 2025 and 2024, and the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
**Basis for Opinion**
These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on the Companys consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide
a reasonable basis for our opinion.
****
/s/ FGMK, LLC
We have served as the Companys auditor since 2024.
Chicago, Illinois
March 6, 2026
****
****
| | F-1 | | |
ATHENA BITCOIN GLOBAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
*(in thousands, except number of shares)*
**
|
| |
| | |
| | |
|
| |
December 31, | | |
December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Assets | |
| | | |
| | | |
|
Current assets: | |
| | | |
| | | |
|
Cash and cash equivalents, net | |
$ | 11,379 | | |
$ | 17,506 | | |
|
Restricted cash held for customers | |
| 3,787 | | |
| 122 | | |
|
Crypto assets held, net | |
| 945 | | |
| 1,241 | | |
|
Accounts receivable, net | |
| 4,081 | | |
| 1,339 | | |
|
Prepaid expenses and other current assets | |
| 3,971 | | |
| 2,702 | | |
|
Total current assets | |
| 24,163 | | |
| 22,910 | | |
|
| |
| | | |
| | | |
|
Property and equipment, net | |
| 12,267 | | |
| 16,245 | | |
|
Software development, net | |
| 3,984 | | |
| 5,239 | | |
|
Right of use assets operating leases | |
| 28,982 | | |
| 33,613 | | |
|
Other noncurrent assets | |
| 69 | | |
| 26 | | |
|
Total assets | |
$ | 69,465 | | |
$ | 78,033 | | |
|
| |
| | | |
| | | |
|
Liabilities and stockholders equity | |
| | | |
| | | |
|
Current liabilities: | |
| | | |
| | | |
|
Accounts payable and accrued expenses | |
$ | 15,867 | | |
$ | 11,133 | | |
|
Accounts payable, related-party | |
| 255 | | |
| 818 | | |
|
Liability for cash held for customers | |
| 3,787 | | |
| 122 | | |
|
Operating lease liabilities, current portion | |
| 8,751 | | |
| 9,627 | | |
|
Equipment notes payable, current portion | |
| | | |
| 3,084 | | |
|
Short-term debt | |
| 4,365 | | |
| 256 | | |
|
Other current liabilities | |
| 373 | | |
| 376 | | |
|
Total current liabilities | |
$ | 33,398 | | |
$ | 25,416 | | |
|
| |
| | | |
| | | |
|
Long-term liabilities: |
|
|
|
|
|
|
|
| |
|
Operating lease liabilities, net of current portion |
|
$ |
20,369 |
|
|
$ |
23,986 |
| |
|
Equipment notes payable, net of current portion |
|
|
|
|
|
|
3,344 |
| |
|
Deferred tax liabilities, net |
|
|
388 |
|
|
|
914 |
| |
|
Convertible debt, related-party |
|
|
|
|
|
|
3,000 |
| |
|
Total long-term liabilities |
|
|
20,757 |
|
|
|
31,244 |
| |
|
Total liabilities |
|
|
54,155 |
|
|
|
56,660 |
| |
|
|
|
|
|
|
|
|
|
| |
|
Commitments and contingencies (Note 15) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
Stockholders equity: |
|
|
|
|
|
|
|
| |
|
Preferred stock, $0.001 par value 5,000,000,000 shares authorized; No shares issued and outstanding as of December 31, 2025, and 2024. |
|
|
|
|
|
|
|
| |
|
Common stock, $0.001 par value 10,000,000,000 shares authorized; 4,095,009,545 shares issued and outstanding as of December 31, 2025, and 2024. |
|
|
4,095 |
|
|
|
4,095 |
| |
|
Additional paid in capital |
|
|
11,982 |
|
|
|
11,982 |
| |
|
Accumulated (deficit) income |
|
|
(497 |
) |
|
|
5,537 |
| |
|
Accumulated other comprehensive loss |
|
|
(270 |
) |
|
|
(241 |
) | |
|
Total stockholders equity |
|
|
15,310 |
|
|
|
21,373 |
| |
|
Total liabilities and stockholders equity |
|
$ |
69,465 |
|
|
$ |
78,033 |
| |
**
*See accompanying notes to consolidated financial
statements.*
| | F-2 | | |
ATHENA BITCOIN GLOBAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
*(in thousands, except share and per share amounts)*
|
| |
| | |
| | |
|
| |
For the years ended | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Revenues | |
$ | 234,597 | | |
$ | 285,391 | | |
|
Cost of revenues | |
| 209,759 | | |
| 247,391 | | |
|
Gross profit | |
| 24,838 | | |
| 38,000 | | |
|
| |
| | | |
| | | |
|
Operating expenses: | |
| | | |
| | | |
|
Technology and development | |
| 1,553 | | |
| 1,351 | | |
|
General and administrative | |
| 16,399 | | |
| 10,513 | | |
|
Sales and marketing | |
| 1,573 | | |
| 1,898 | | |
|
Credit loss expense | |
| | | |
| 798 | | |
|
Litigation expense | |
| 3,460 | | |
| 3,000 | | |
|
Other operating expense | |
| 836 | | |
| 1,149 | | |
|
Total operating expenses | |
| 23,821 | | |
| 18,709 | | |
|
| |
| | | |
| | | |
|
Income from operations | |
| 1,017 | | |
| 19,291 | | |
|
| |
| | | |
| | | |
|
Interest expense | |
| 745 | | |
| 1,884 | | |
|
Fees on virtual vault services | |
| 1,580 | | |
| 2,059 | | |
|
Loss on extinguishment of debt | |
| 5,283 | | |
| | | |
|
Other expense | |
| 98 | | |
| 331 | | |
|
(Loss) income before income taxes | |
| (6,689 | ) | |
| 15,017 | | |
|
Income tax (benefit) expense | |
| (655 | ) | |
| 4,733 | | |
|
Net (loss) income | |
$ | (6,034 | ) | |
$ | 10,284 | | |
|
Basic (loss) earnings per share | |
$ | (0.00147 | ) | |
$ | 0.00251 | | |
|
Diluted (loss) earnings per share | |
$ | (0.00147 | ) | |
$ | 0.00236 | | |
|
Weighted average shares outstanding - Basic | |
| 4,095,009,545 | | |
| 4,094,816,668 | | |
|
Weighted average shares outstanding - Diluted | |
| 4,095,009,545 | | |
| 4,466,443,337 | | |
|
| |
| | | |
| | | |
|
Comprehensive (loss) income | |
| | | |
| | | |
|
Net (loss) income | |
$ | (6,034 | ) | |
$ | 10,284 | | |
|
Foreign currency translation adjustment, net of tax | |
| (29 | ) | |
| 14 | | |
|
Comprehensive (loss) income | |
$ | (6,063 | ) | |
$ | 10,298 | | |
*See accompanying notes to consolidated financial
statements.*
| | F-3 | | |
ATHENA BITCOIN GLOBAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
*(in thousands)*
|
| |
| | |
| | |
|
| |
For the years ended | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Operating activities | |
| | | |
| | | |
|
Net (loss) income | |
$ | (6,034 | ) | |
$ | 10,284 | | |
|
| |
| | | |
| | | |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |
| | | |
| | | |
|
Depreciation and amortization | |
| 9,506 | | |
| 5,173 | | |
|
Unrealized loss of crypto assets held | |
| 112 | | |
| | | |
|
Impairment of crypto assets held | |
| | | |
| 1,779 | | |
|
Credit loss expense | |
| | | |
| 798 | | |
|
Realized loss on crypto assets, net | |
| 17 | | |
| 22 | | |
|
Bitcoin payments for expenses | |
| 616 | | |
| 3,680 | | |
|
Bitcoin received from independent Bitcoin ATM operators [affiliates program] | |
| (1,350 | ) | |
| | | |
|
Loss on disposal of property and equipment | |
| 63 | | |
| | | |
|
Non-cash loss on extinguishment of debt | |
| 5,283 | | |
| | | |
|
Deferred income tax | |
| (526 | ) | |
| 518 | | |
|
| |
| | | |
| | | |
|
Changes in operating assets and liabilities: | |
| | | |
| | | |
|
Crypto assets held | |
| (1,698 | ) | |
| (8,335 | ) | |
|
Accounts receivable | |
| (2,742 | ) | |
| (1,512 | ) | |
|
Prepaid expenses and other assets | |
| (1,173 | ) | |
| (2,292 | ) | |
|
Liability for cash held for customers | |
| 3,665 | | |
| (133 | ) | |
|
Accounts payable and other liabilities | |
| 6,879 | | |
| 7,694 | | |
|
Net cash provided by operating activities | |
| 12,618 | | |
| 17,676 | | |
|
| |
| | | |
| | | |
|
Investing activities | |
| | | |
| | | |
|
Purchases of property and equipment | |
| (1,470 | ) | |
| (6,775 | ) | |
|
Capitalized software | |
| (2,504 | ) | |
| (3,037 | ) | |
|
Net cash used in investing activities | |
| (3,974 | ) | |
| (9,812 | ) | |
|
| |
| | | |
| | | |
|
Financing activities: | |
| | | |
| | | |
|
Proceeds from debt | |
| 721 | | |
| 456 | | |
|
Repayment of debt | |
| (3,648 | ) | |
| (4,841 | ) | |
|
Payments in reduction of financing leases | |
| | | |
| (1,150 | ) | |
|
Payments in reduction of equipment notes payable | |
| (8,150 | ) | |
| (3,132 | ) | |
|
Proceeds from issuance of stock | |
| | | |
| 57 | | |
|
Net cash used in financing activities | |
| (11,077 | ) | |
| (8,610 | ) | |
|
| |
| | | |
| | | |
|
Effect of exchange rate changed on cash and cash equivalents | |
| (29 | ) | |
| 14 | | |
|
Net decrease in cash and cash equivalents | |
| (2,462 | ) | |
| (732 | ) | |
|
Cash, cash equivalents and restricted cash, beginning of period | |
| 17,628 | | |
| 18,360 | | |
|
Cash, cash equivalents and restricted cash, end of period | |
$ | 15,166 | | |
$ | 17,628 | | |
| | F-4 | | |
ATHENA BITCOIN GLOBAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
*(in thousands)*
|
| |
For the years ended | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
| |
| | |
| | |
|
Cash, cash equivalents, and restricted cash consisted of the following: | |
| | | |
| | | |
|
Cash and cash equivalents | |
$ | 11,379 | | |
$ | 17,506 | | |
|
Restricted cash held for customers | |
| 3,787 | | |
| 122 | | |
|
Total cash, cash equivalents and restricted cash | |
$ | 15,166 | | |
$ | 17,628 | | |
|
| |
| | | |
| | | |
|
Supplemental disclosure of cash flow information: | |
| | | |
| | | |
|
Cash paid for interest | |
$ | 810 | | |
$ | 711 | | |
|
Leased assets obtained in exchange for operating lease liabilities | |
$ | 9,656 | | |
$ | 17,797 | | |
|
Leased assets obtained due to remeasurement of lease term | |
$ | | | |
$ | 6,115 | | |
|
| |
| | | |
| | | |
|
Supplemental schedule of non-cash investing and financing activities: | |
| | | |
| | | |
|
Property and equipment purchased in accounts payable | |
$ | 12 | | |
$ | 73 | | |
|
Software development purchased in accounts payable | |
$ | | | |
$ | 2,499 | | |
|
Short-term debt replacing equipment financing | |
$ | 9,000 | | |
$ | | | |
|
Accounts payable refinanced with equipment notes payable | |
$ | | | |
$ | 2,500 | | |
|
Purchase of property and equipment under finance lease | |
$ | | | |
$ | 693 | | |
|
Purchase of property and equipment financed with equipment notes payable | |
$ | | | |
$ | 9,778 | | |
|
Imputed interest on property and equipment financed with equipment notes payable | |
$ | | | |
$ | 1,585 | | |
|
Bitcoin used to buy property and equipment | |
$ | 2,430 | | |
$ | 181 | | |
|
Bitcoin used to pay interest | |
$ | | | |
$ | 1,037 | | |
|
Bitcoin and Stablecoin used for other payments | |
$ | 170 | | |
$ | 1,853 | | |
*See accompanying notes to consolidated financial
statements.*
| | F-5 | | |
ATHENA BITCOIN GLOBAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY
*(in thousands, except number of shares)*
|
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
| |
Common Stock | | |
Additional
Paid-in | | |
Accumulated Income | | |
Accumulated Other Comprehensive | | |
| | |
|
| |
Shares | | |
Amount | | |
Capital | | |
(Deficit) | | |
Loss | | |
Total | | |
|
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
Balance, December31, 2023 | |
| 4,094,459,545 | | |
$ | 4,094 | | |
$ | 11,926 | | |
$ | (4,747 | ) | |
$ | (255 | ) | |
$ | 11,018 | | |
|
Net income | |
| | | |
| | | |
| | | |
| 10,284 | | |
| | | |
| 10,284 | | |
|
Foreign currency translation adjustment | |
| | | |
| | | |
| | | |
| | | |
| 14 | | |
| 14 | | |
|
Issuance of stocks | |
| 550,000 | | |
| 1 | | |
| 56 | | |
| | | |
| | | |
| 57 | | |
|
Balance, December 31, 2024 | |
| 4,095,009,545 | | |
$ | 4,095 | | |
$ | 11,982 | | |
$ | 5,537 | | |
$ | (241 | ) | |
$ | 21,373 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Net loss | |
| | | |
| | | |
| | | |
| (6,034 | ) | |
| | | |
| (6,034 | ) | |
|
Foreign currency translation adjustment | |
| | | |
| | | |
| | | |
| | | |
| (29 | ) | |
| (29 | ) | |
|
Balance, December31, 2025 | |
| 4,095,009,545 | | |
$ | 4,095 | | |
$ | 11,982 | | |
$ | (497 | ) | |
$ | (270 | ) | |
$ | 15,310 | | |
*See accompanying notes to consolidated financial
statements.*
| | F-6 | | |
ATHENA BITCOIN GLOBAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
*(in thousands, except number of shares)*
**NOTE 1. NATURE OF BUSINESS AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
**Nature of Business**
****
Athena Bitcoin Global (f.k.a. GamePlan, Inc.),
a Nevada corporation, and its wholly-owned subsidiary, Athena Bitcoin, Inc., a Delaware corporation (together referred to as Athena
Global or the Company) is a provider of various crypto asset transaction platforms, including the operation of automated
teller machines (ATMs) and personalized services (Athena Plus) for the purpose of selling and buying crypto
assets, white-label operations and payment services. The Companys network of Athena Bitcoin ATMs (Athena ATMs) is
active in thirty-three states and the territory of Puerto Rico in the United States, and 4 countries in Central and South America as of
December 31, 2025. The Company places its machines in convenience stores, shopping centers, and other easily accessible locations.
Athena Bitcoin Global was incorporated in the
state of Nevada in 1991 under the name GamePlan, Inc. for the sole purpose of merging with Sunbeam Solar, Inc., a Utah corporation,
which merger occurred as of December 31, 1991. The Articles of Merger were filed in the state of Nevada pursuant to which the Company
was the surviving entity following the merger. The Company has changed its name to Athena Bitcoin Global from GamePlan, Inc. in a filing
with the Secretary of State of the State of Nevada effective as of April 15, 2021.
On January 14, 2020, Athena Bitcoin Global entered
into a Share Exchange Agreement (the Agreement), between the Company, Athena Bitcoin, Inc., a Delaware corporation (Athena)
founded in 2015, and certain shareholders of Athena Bitcoin, Inc. The Agreement provided for the reorganization of Athena Bitcoin, Inc.,
with and into Athena Bitcoin Global, resulting in Athena becoming a wholly-owned subsidiary of the Company upon the closing of the transaction.
The Agreement was for the exchange of 100% of the outstanding Common Stock of Athena, for 3,593,644,680 shares of the Companys
common stock (an exchange rate of 1,244.69 shares of the Companys stock for each share of Athena stock). The closing of the transaction
occurred as of January 30, 2020.
As the result of this transaction, the former
shareholders of Athena acquired the majority (88%) of the voting rights of the Company and Athena had control of the Companys board
of directors. Also, the senior management of Athena became the management of the combined entity. Therefore, the Company determined that
the Share Exchange Agreement was a reverse acquisition as defined in Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) 805-10-55-12, and Athena is considered the accounting acquirer pursuant to FASB ASC 805-40-45-2.
Accordingly, the historical financial statements prior to the Share Exchange Agreement are those of Athena, except that the historical
equity of the Company has been retroactively restated to reflect the number of shares received in the business combination at the exchange
rate of 1,244.69 shares of the Companys common stock for each share of Athena common stock. All share and per share information
included in these consolidated financial statements have been adjusted to reflect the 1,244.69 to 1 share conversion.
Athena Bitcoin Global has 4,095,009,545 shares
issued and outstanding as of December 31, 2025, and 2024, and authorized capital of 10,000,000,000 shares as of December 31, 2025, and
2024.
| | F-7 | | |
**Principles of Consolidation**
****
The accompanying consolidated financial statements
include the accounts of Athena Bitcoin Global, Athena Bitcoin, Inc. and its wholly owned subsidiaries, Athena Bitcoin S. de C.V., incorporated
in Mexico; Athena Holdings Colombia SAS, incorporated in Colombia; Athena Holding Company S.R.L, incorporated in Argentina; Athena Holdings
of PR LLC, incorporated in Puerto Rico; Athena Holdings El Salvador, S.A. de C.V., incorporated in El Salvador; and Athena Business Holdings
Panama S.A. incorporated in Panama. All significant intercompany account balances and transactions have been eliminated in consolidation.
A summary of the Companys significant
accounting policies is as follows:
**Basis of Presentation**
****
The accompanying consolidated financial statements
have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States
of America (U.S. GAAP).
**Use of Estimates**
****
The preparation of the consolidated financial
statements, in accordance with U.S. GAAP, requires management to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Significant estimates
and assumptions made by management are used for, but not limited to, present value of lease liabilities and right-of-use assets, contingencies,
valuation of current and deferred income taxes and impairment assessment for long-lived assets. These estimates are based on historical
data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other
sources.
**Revenue Recognition**
The Company derives its recurring revenues primarily
from three sources: (i) sale of crypto assets at Bitcoin ATMs (both Athena ATMs and White-label ATMs such as those in El Salvador), (ii)
customized investor trading services for the sale or purchase of crypto assets through the Companys Athena Plus desk (referred
to as over-the-counter or OTC) and (iii) Athena Pay which is a payment processor application (app);
that allows retailers to create QR codes with the specific amount to be charged to customers in Bitcoin. The Company also generates revenue
from ancillary items, such as sale of intellectual property and maintenance of software.
Under FASB ASC 606, Revenue from Contracts
with Customers (FASB ASC 606), the Company recognizes revenue at the point of sale or over time of the service period
for these products or services to the Companys customers, in an amount that reflects the consideration the Company expects to
be entitled to in exchange for those products or services. Pursuant to FASB ASC 606, the Company recognizes revenue by applying the
following steps:
|
|
|
Identification of the contract, or contracts, with a customer | |
|
|
|
Identification of the performance obligations in the contract | |
|
|
|
Determination of the transaction price | |
|
|
|
Allocation of the transaction price to the performance obligations in the contract | |
|
|
|
Recognition of revenue when, or as, the Company satisfies a performance obligation. | |
The Company recognizes revenue when performance
obligations identified under the terms of contracts with its customers are satisfied.
| | F-8 | | |
Judgment is required in determining whether we
are the principal or the agent in transactions between customers. We evaluate the presentation of revenue on a gross or net basis based
primarily on inventory risk (are we at risk for potentially fluctuations of the crypto asset price) and whether we control the crypto
asset provided before it is transferred to the customer or whether we act as an agent by arranging for others to provide the crypto asset
to the customer. The Company determined it acts as the principal in each of its revenue streams. The Company enters into contracts that
may include multiple performance obligations. The Company identifies the promises in the contract and assigns them to their appropriate
performance obligation. These performance obligations may be part of a different revenue source and are listed separately below.
**Athena ATM & White-label Service**
*Athena ATM*
The Company requires all users of the Athena ATM
to agree to ATM Terms of Service which stipulate the terms and conditions of the transaction. The user, by inserting sovereign currency
(known as fiat) and confirming that they agree to the transaction, is agreeing to the contract that governs the transaction.
The Company has
a single performance obligation to provide a specific quantity of a Bitcoin to the customers crypto wallet in exchange for fiat.
The Company utilizes a mark-up for crypto assets sold to the customer. Athena ATMs permit customers to purchase as little as one US dollar
of Bitcoin, and it records the gross cash received from the customer as the transaction price.
Revenue is recognized at the point in time when
the Bitcoin is delivered to the customers crypto wallet. Delivery to the customers crypto wallet is governed by the Bitcoins
blockchain and typically occurs in less than an hour from when the Bitcoin is purchased.
*White-label Service*
In this revenue stream, client
refers to the entity contracting with the Company while customer refers to the person using the White-label ATM. The Company
entered into multiple contracts that govern the white-label service for ATMs located in El Salvador and in the United States. The contracts
permit the clients to terminate the contract at any point or to adjust the number of ATMs that are in use without a substantive penalty.
The Company operates White-label ATMs on behalf
of the clients and the installation of the ATMs is performed by a third-party which is chosen by the White-label ATM client.
The operations, on behalf of the White-label client,
includes cash logistics services, and testing the ATMs. The Company charges a fixed fee each month for operating the ATMs.
The Company leases Company-owned ATMs to its clients.
The Company elected the expedient in FASB ASC 842, Leases (ASC 842), which permits combining the lease and non-lease components
together if the lease component has the same timing and pattern of transfer as the non-lease component and the lease component is an operating
lease. Both of these conditions are met (for a more detailed discussion see *Leases* within NOTE 1 below.
The Company is considered the principal, as it
controls any third-party good or service before it is transferred to the client.
For operating the White-label ATM, revenue is
recognized straight line over the requisite service period.
| | F-9 | | |
*Athena Plus (Over-The-Counter or OTC)*
The Company requires all users of Athena Plus
(a.k.a. Over-The-Counter or OTC) to agree to Athena Plus Terms of Service. The Athena Plus Terms of Service
stipulate the terms and conditions of the transaction. The user, by wiring fiat to the Companys bank account, is agreeing to the
contract that governs the transaction.
The Company provides a specific quantity of a
Bitcoin to the customers crypto wallet. The Company utilizes a mark-up for crypto assets sold to the customer. The minimum transaction
is $10 (or equivalent value of local currency). The Company records the gross cash received from the customer as the transaction price
for the transaction.
Revenue is recognized at the point in time when
the Bitcoin is delivered to the customers crypto wallet. Delivery to the customers crypto wallet is governed by the Bitcoins
blockchain and typically occurs in less than an hour from when the Bitcoin is purchased.
*Athena Pay*
**
The Company requires all retailers who are using
Athena Pay to execute the Athena Pay contract which stipulates the terms and conditions of the transactions. As a payment processor, the
Company recognizes a processing fee of approximately 2.5% (average) of the transaction amount, when the transaction occurs (i.e., when
the retailer generates the QR code with the specific amount to be charged to the customers in Bitcoin and the transaction is completed).
Revenue is recognized at the point in time when
the Bitcoin is delivered to the retailers crypto wallet. Delivery to the retailers crypto wallet is governed by the Bitcoins
blockchain and typically occurs in less than an hour from when the transaction is completed.
****
**Cost of Revenues**
****
Cost of revenues consists primarily of expenses
related to the acquisition of Bitcoin; including the costs to purchase Bitcoin from users of the Companys ATMs and from third-party
exchanges which are assigned on a first-in, first-out basis, and cost of revenues includes the costs of operating the ATMs from which
Bitcoin are sold (including the associated rent expense, related incentives, ATM cash losses, software licensing fees for the ATMs, depreciation,
insurance, and utilities), crypto asset valuation gain or loss and fees paid to service the ATMs
and the transport of cash to the banks.
**Cash and Cash Equivalents**
****
The Company considers
all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents
include cash maintained at various financial institutions, cash in transit, and cash in ATMs owned and leased by the Company.
The Company maintains cash balances at various
financial institutions. Accounts at these institutions are secured by the Federal Deposit Insurance Corporation (FDIC) up to $250 per
institution. The Company has deposits in excess of the FDIC-insured limit. The Company has not experienced any losses in such accounts
and believes that it is not exposed to significant credit risk due to the financial position of the depository institutions, third-party
crypto exchanges or investment vehicles in which those deposits are held. The Company has significant cash in ATMs, held on various third-party
crypto exchanges and in transit with cash logistic providers. Management evaluates cash in transit based on outstanding cash deposits
on cash picked up by the armored truck companies, historical cash deposits and cash that is lost during transit, which is immaterial.
The armored truck companies maintain insurance over theft and losses.
| | F-10 | | |
Cash in transit consists of cash that is picked
up by armored truck companies from the Companys ATMs but not yet deposited in the Companys bank accounts. As of December
31, 2025 and 2024, the Company had cash in transit of $2,333 and $5,491, respectively net of an allowance for cash lost in transit of
$272 and $1,296, respectively. The Company recognized $679 and $1,096 of cash losses for cash in transit which are included in other operating
expense in the consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2025 and 2024, respectively.
**Restricted Cash Held for Customers**
****
Restricted cash held for customers consists of
money on hand received from customers of the White-label clients for replenishment of ATMs.
****
**Accounts Receivable**
****
Accounts receivables are unconditional, uncollateralized
customer obligations and are stated at the amount the Company expects to collect. The carrying amount of accounts receivable is reduced
by an allowance for credit losses. The Companys allowance for credit losses represents the estimate of expected credit losses related
to accounts receivable. To estimate the allowance for credit losses, the Company leverages information on historical losses, asset-specific
risk characteristics, current conditions and reasonable and supportable forecast of future conditions. Account balances are written off
against the allowance when the Company deems the amount is uncollectable.
The Company measures collectability of its accounts
receivables using the current expected credit loss (CECL) method. The measurement of CECL applies to all financial assets
measured at amortized cost, including receivables for revenue. The Company recognized no allowance for credit losses as of December 31,
2025, and 2024. During the years ended December 31, 2025, and 2024, there was credit loss expense of $0 and $798, respectively.
**Software Development Costs**
The Company capitalizes internal software development
costs subsequent to establishing technological feasibility of a software application in accordance with guidelines established by FASB
ASC 350-40 *Internal-Use Software Accounting, Capitalization*. Costs are capitalized once the project is defined, funding
is committed, and it is confirmed the software will be used for its intended use. Capitalization of these costs concludes once the project
is substantially complete and the software is ready for its intended purpose.
Capitalized software consists of costs related
to the design, coding, testing and documentation of software, as well as salaries and compensation costs for employees, fees paid to third-party
consultants who are directly involved in development efforts, and costs incurred for upgrades and enhancements to add functionality of
the software. Other costs that do not meet the capitalization criteria are expensed as incurred. The criteria for capitalization include
the completion of the preliminary project stage, demonstration of feasibility of the project and the ability to reliably estimate future
economic benefits. Capitalized software is subject to periodic impairment tests to ensure that the carrying value of the asset is not
overstated. If an impairment is identified, the carrying value of the capitalized software will be reduced to its recoverable amount.
Software development is amortized over its estimated useful life of five years.
In accordance with FASB ASC 350-30-65 Goodwill
and Other Intangible Assets, the Company assesses the impairment of identifiable intangible assets whenever events or changes
in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important, which could trigger
an impairment review include the following:
|
|
1. |
Significant underperformance compared to historical or projected future operating results; | |
|
|
2. |
Significant changes in the manner or use of the acquired assets or the strategy for the overall business; and | |
|
|
3. |
Significant negative industry or economic trends. | |
| | F-11 | | |
When the Company determines that the carrying
value of an intangible asset may not be recoverable based upon the existence of one or more of the above indicators of impairment and
the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge.
The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to
be commensurate with the risk inherent to the current business model. Significant management judgment is required in determining whether
an indicator of impairment exists and in projecting cash flows.
There was no impairment for the years ended December
31, 2025, and 2024, as discussed in **NOTE 6. SOFTWARE DEVELOPMENT, NET**.
****
**Leases**
****
The Company determines if an arrangement is a
lease at inception. The Company determines if an arrangement is a lease, or contains a lease, primarily by determining if the arrangement
conveys to the Company the right to control or use an identified asset. The Company classifies its arrangements for ATM retail spaces
as operating leases. The Company has classified certain arrangements for ATMs as finance leases. The Company does not have any significant
arrangements where it is the lessor.
The Company elected to separate lease and non-lease
components for arrangements where the Company is a lessee. The Company determined the relative standalone price of the separate lease
components and non-lease components by utilizing observable information to estimate the standalone price of each component. The Company
allocated the consideration on a relative standalone price basis to the separate lease components and the non-lease components of the
contract.
Leases with an initial lease term of 12 months
or less are not recorded on the consolidated balance sheets. Operating lease expense is recognized on a straight-line basis over the lease
term.
Operating and
finance lease right of use (ROU) assets and operating and finance lease liabilities are recognized based on the present
value of the future minimum lease payments over the lease term at commencement date. The right of use assets is shown net of subsequent
amortization. The Companys leases do not contain material residual value guarantees or material restrictive covenants. For purposes of
calculating lease obligations, the Companys lease terms may include options to extend or terminate the lease when it is reasonably certain
that the Company will exercise such option. The discount rate used to measure the Companys lease obligation is its incremental
borrowing rate at lease commencement. ROU assets represent the Companys right to use an underlying asset for the lease term and
lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease expense for lease payments is
recognized on a straight-line basis over the lease term while finance lease ROU assets are amortized on a straight-line basis and interest
expense is recorded over the lease term based on the incremental borrowing rate and the amount of lease liability outstanding during each
month.
The operating
and finance lease assets also include any initial direct costs and lease payments made prior to lease commencement and excludes lease
incentives incurred.
**Concentration of Credit Risk**
****
The Companys revenues, other than White-label
services discussed below (as well as in *Revenue Recognition Athena ATMs in NOTE 1)*, are generated primarily from ATM sales
to customers. As the Company collects all amounts from these customers and holds $0 in accounts receivable from its ATM or Athena Plus
(Over-the-Counter) customers, there is no credit risk associated with customer concentration for these customers.
****
| | F-12 | | |
The Company has revenues from White-label services
in El Salvador and ancillary sales to customers where it provides services on customary credit terms, typically Net 30 or Net 60. As of
December 31, 2025, and 2024, one customer, Chivo, Sociedad Annima de Capital Variable, represented substantially all of the Companys
total accounts receivable balance.
No single customer is responsible for over 10%
of revenue for the years ended December 31, 2025, and 2024.
****
**Property and Equipment, Net**
****
Property and equipment are stated at cost, net of accumulated depreciation.
Equipment is depreciated over the estimated useful lives of the assets. Repairs and maintenance costs are expensed as incurred.
Following are the estimated useful lives by type:
|
Schedule of estimated useful lives |
| |
|
Description |
Estimated Useful Life | |
|
Computer equipment |
Three years | |
|
ATM equipment |
Three years | |
|
Office equipment |
Three to Six years | |
**Impairment of Long-Lived Assets**
The Company reviews its long-lived assets for
impairment in accordance with FASB ASC 360 Property, Plant and Equipment whenever events or changes in circumstances have indicated
that an asset may not be recoverable. Management has determined there was no impairment of long-lived assets as of December 31, 2025,
and 2024.
**Crypto Assets Held, Net**
The Companys crypto assets are Bitcoin
and Stablecoin and they are considered indefinite-lived intangible assets assets effective January 1, 2025, the Company began measuring
crypto assets held at fair value. The Company determines the fair value of its Bitcoin and Stablecoin based on quoted (unadjusted) prices
on CoinMarketCap.
The Company purchases Bitcoin, which is held in
the Companys hot wallets, on a just-in-time basis to facilitate sales to customers and mitigate exposure to volatility in Bitcoin
prices. The Company only transacts in Bitcoin at its ATMs in exchange for cash, on a predetermined markup at the time of the transaction.
However, there may be multiple days between the purchase of the Bitcoin and the sale of the Bitcoin. When Bitcoin is sold to customers,
the Company recognizes the market value of the crypto asset within cost of revenue.
Through the year ended December 31, 2024, the
Company assigned cost to transactions on a first-in, first-out basis. Gains on such assets were not recorded or recognized until their
final disposition. For the year ended December 31, 2024, the Company had impairment charges related to Bitcoin held of $1,779.
****
**Expenses Paid in Bitcoin**
The Company enters into agreements with certain
vendors and service providers that provide us with the option to settle their invoices in Bitcoin. The amount due is fixed and is denominated
in USD. There are no payment terms that include conversion options, variable settlement features, or alternative settlement provisions
contingent upon future events or market price fluctuations that could potentially give rise to embedded derivatives.
| | F-13 | | |
The Company considers the guidance in FASB ASC
350, FASB ASC 606, FASB ASC 610, and FASB ASC 845 when it evaluates the derecognition of its Bitcoin paid to vendors in lieu of cash payments.
In these transactions, the Company has been invoiced by a vendor and given the option to pay in USD or Bitcoin. The amount of Bitcoin
is determined by the market price in accordance with the guidance of FASB ASC 820. The Company records as an expense the USD value of
the invoice and then considers the above references to determine the proper way to derecognize the indefinite-lived intangible assets
used as payment.
The Company records invoices from vendors in USD
and for vendors who elect to be paid in Bitcoin, the Company transfers Bitcoin at market value at the time of transfer in line with ASC
820, Fair Value Measurement. The Company then recognizes as a gain or loss, the difference between the current carrying value of Bitcoin
and its value at the time of transfer to cost of revenues in the consolidated statements of operations and comprehensive income (loss).
****
The Company had losses related to the derecognition
of Bitcoin of $17 and $22 for the years ended December 31, 2025, and 2024, respectively.
****
**Foreign Currency**
The functional currency of the Companys
foreign operations is generally the local currency. For these foreign entities, the Company translates their financial statements into
U.S. dollars using average exchange rates for the period for income statement amounts and using end-of-period exchange rates for assets
and liabilities. The Company records these translation adjustments in accumulated other comprehensive income (loss), a separate component
of equity, in the Companys consolidated balance sheets. The Company has foreign currency translation gains adjustments of ($29)
and $14 during the years ended December 31, 2025, and 2024, respectively.
The Company records exchange gains and losses
resulting from the conversion of transaction currency to functional currency as a component of other income (expense).
The amount of taxes allocated to translation adjustments
was immaterial for the years ended December 31, 2025, and 2024.
**Stock-Based Compensation Expense**
Stock-based compensation expense is recorded as
a result of stock options, restricted stock units and restricted stock granted in return for services rendered. The stock-based payment
arrangements with employees were accounted for under ASU 718, Compensation - Stock Compensation.
The Company accounts for stock-based compensation
for all stock-based awards made to employees and directors, including employee stock options and non-vested stock awards, based on the
fair values on the dates they are granted. The Company records the fair value of awards expected to vest as compensation expense on a
straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
The Company uses the Black-Scholes option pricing
model for determining the estimated fair value for stock-based awards. The Black-Scholes option pricing model requires the use of highly
subjective and complex assumptions, which determines the fair value of stock-based awards, including the options expected term, expected
volatility of the underlying stock, risk-free rate, and expected dividends. The expected volatility is based on the average historical
volatility of certain comparable publicly traded companies within the Companys industry. The expected term assumptions are based
on the simplified method, due to insufficient historical exercise data and the limited period of time that the Companys equity
securities have been available for issuance. The risk-free interest rates are based on the U.S. Treasury yield in effect at the time of
grant. The Company does not expect to pay dividends on common stock in the foreseeable future; therefore, it estimated the dividend yield
to be 0%.
For a more detailed discussion of
stock-based compensation, see **NOTE 10. STOCK-BASED COMPENSATION.**
No stock-based compensation was recognized during
the years ended December 31, 2025 and 2024, respectively.
| | F-14 | | |
**Warrants to Purchase Common Stock**
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrants specific terms and applicable authoritative guidance
in the FASB ASC 480, Distinguishing Liabilities from Equity (ASC 480), and FASB ASC 815, Derivatives and Hedging (ASC
815). Managements assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480,
whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to the Companys own common stock and whether the warrant
holders could potentially require net cash settlement in a circumstance outside of the Companys control, among other
conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant
issuance and as of each subsequent quarterly period-end date while the warrants are outstanding.
For issued or modified warrants that meet all
of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the time of issuance. For
issued or modified warrants that do not meet all the criteria for equity classification, they are recorded at their initial fair value
on the date of issuance and subject to remeasurement each balance sheet date with changes in the estimated fair value of the warrants
to be recognized as a non-cash gain or loss in the consolidated statements of operations and comprehensive income (loss).
**Income Taxes**
Income taxes are accounted for under an asset
and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result
in deferred tax assets and liabilities, which are recorded on the consolidated balance sheets in accordance with FASB ASC 740, Income
Taxes (ASC 740), which established financial accounting and reporting standards for the effect of income taxes. The likelihood
that its deferred tax assets will be recovered from future taxable income must be assessed and, to the extent that recovery is not likely,
a valuation allowance is established. Changes in the valuation allowance in a period are recorded through the income tax provision in
the consolidated statements of operations and comprehensive income (loss).
The Company recognizes interest and penalties
related to uncertain tax benefits on the income tax expense line in the accompanying consolidated statements of operations and comprehensive
income (loss). Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheets.
ASC 740-10 clarifies the accounting for uncertainty
in income taxes recognized in an entitys consolidated financial statements and prescribes a recognition threshold and measurement
attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10, the impact
of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to
be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than
a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition. As a result of the implementation of ASC 740-10, the Company does not have
a liability for unrecognized income tax benefits.****
****
**Segment Reporting**
Operating segments are defined as components of
an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (the
CODM) in deciding how to allocate resources to an individual segment and in assessing performance. The Companys Chief
Executive Officer is the Companys CODM. The CODM reviews financial information presented on a global consolidated basis for purposes
of making operating decisions, allocating resources, and evaluating financial performance. While the Company does have revenue from multiple
products and geographies, no measures of profitability by product or geography are available, so discrete financial information is not
available for each such component. As such, the Company has determined that it operates as one operating segment and one reportable segment.
| | F-15 | | |
**(Loss) Earnings per share**
Basic (loss) earnings per share is calculated
by dividing net income by the number of weighted average common shares outstanding for the applicable period, excluding the shares exercised
from the proceeds of the non-recourse loan. Diluted (loss) earnings per share is calculated by dividing net income available to common
stockholders by the weighted average shares outstanding. Potentially dilutive shares, which are based on the weighted average shares of
common stock underlying outstanding stock-based awards, warrants and convertible senior notes using the treasury stock method or the if-converted
method, as applicable, are included when calculating diluted net income per share of common stock attributable to common stockholders
when their effect is dilutive.
The dilutive effect of outstanding stock options
and warrants is reflected in diluted earnings per share by application of the treasury stock method. The dilutive effect of outstanding
convertible securities is reflected in diluted earnings per share by application of the if-converted method.
The following is a reconciliation of basic and
diluted (loss) earnings per common share for the years ended December 31, 2025 and 2024:
|
Schedule of reconciliation of basic and
diluted earnings per common share | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Basic (loss) net earnings per share: | |
| | | |
| | | |
|
Numerator | |
| | | |
| | | |
|
Net (loss) income | |
$ | (6,034 | ) | |
$ | 10,284 | | |
|
Denominator | |
| | | |
| | | |
|
Weighted-average shares of common stock used to compute net (loss) earnings per share attributable to common stockholders, basic | |
| 4,095,009,545 | | |
| 4,094,816,668 | | |
|
Net (loss) earnings per share attributable to common stockholders, basic | |
$ | (0.00147 | ) | |
$ | 0.00251 | | |
|
| |
| | | |
| | | |
|
Diluted net earnings per share: | |
| | | |
| | | |
|
Numerator | |
| | | |
| | | |
|
Net (loss) income, basic | |
$ | (6,034 | ) | |
$ | 10,284 | | |
|
Add: Interest expense on convertible debt | |
| | | |
| 240 | | |
|
Net (loss) income, diluted | |
$ | (6,034 | ) | |
$ | 10,524 | | |
|
Denominator | |
| | | |
| | | |
|
Weighted-average shares of common stock used to compute net (loss) earnings per share attributable to common stockholders, basic | |
| 4,095,009,545 | | |
| 4,094,816,668 | | |
|
Weighted-average effect of potentially dilutive securities: convertible debt | |
| | | |
| 250,000,000 | | |
|
Unexercised warrants | |
| | | |
| 121,626,669 | | |
|
Weighted-average shares of common stock used to compute net (loss) earnings per share attributable to common stockholders, diluted | |
| 4,095,009,545 | | |
| 4,466,443,337 | | |
|
Net (loss) earnings per share attributable to common stockholders, diluted | |
$ | (0.00147 | ) | |
$ | 0.00236 | | |
There were no anti-dilutive securities for years ended December 31,
2025 and 2024.
| | F-16 | | |
**Recently Adopted and Issued Accounting Pronouncements**
****
The Company adopted ASU 2023-07, Segment Reporting
(Topic 280): Improvements to Reportable Segment Disclosures, effective December 31, 2024. The adoption did not have a material impact
on the consolidated financial statements.
On December 13, 2023, the FASB issued ASU 2023-08,
Intangibles Goodwill and Other Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which
requires entities to subsequently measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in
each reporting period. For all entities, the ASUs amendments are effective for fiscal years beginning after December 15, 2024,
including interim periods within those years. There was no material impact on the consolidated financial statements as a result of the
adoption of this guidance.
In December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories in the effective tax
rate reconciliation and additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 is effective for
annual periods beginning after December 15, 2024. Early adoption is permitted. Adoption of the standard only impacts the income tax disclosures
and there has been no material impact to the consolidated financial statements as a result of the adoption of this guidance.
In January 2025 the SEC issued Staff Accounting
Bulletin No. 122, (SAB 122), which rescinds the interpretative guidance included in SAB 121 Accounting for obligations to safeguard
crypto-assets an entity holds for platform users. The new guidance is effective for annual periods beginning after December 15,
2024, and is required to be applied retrospectively to all prior periods with early adoption being permitted. The Company early adopted
SAB 122 as of December 31, 2024. There was no material impact on the consolidated financial statements as a result of the adoption of
this guidance.
**Accounting Pronouncement Pending Adoption**
In October 2023, the FASB issued ASU 2023-06 "Disclosure
Improvements: Codification Amendments in Response to the SECs Disclosures Update and Simplification Initiative". The guidance amends
certain disclosure and presentation requirements related to the statement of cash flows, accounting changes and error corrections, earnings
per share, interim reporting, commitments, debt, equity, derivatives, transfers and services and various industry specific guidance. For
entities subject to the SECs existing disclosure requirements, the effective date for each amendment will be the date on which the SECs
removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has
not removed the existing disclosure requirements, the amendments will not become effective. Early adoption is not permitted. The Company
is in the process of assessing the overall impact of adopting this guidance on its disclosures.
In November 2024, the FASB issued ASU 2024-03.
"Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)". The ASU requires
expanded disclosures and disaggregation of certain expenses included within the income statement. The amendments become effective for
annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption
permitted. The Company is still assessing the impacts of this guidance on its consolidated financial statements.
**Recently Issued Accounting Pronouncements**
Management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Companys consolidated
financial statements.
| | F-17 | | |
**Fair Value of Financial Statements**
ASC 820, Fair Value
Measurement, establishes a three-level valuation hierarchy for disclosure of fair value measurements. Under the FASBs authoritative
guidance on fair value measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods,
including the market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market
participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to
the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company utilizes
valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability
of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value
hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets
and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
|
|
Level 1: |
Quoted prices for identical assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. | |
|
|
Level 2: |
Observable inputs other than Level1, including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data. Level2 also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data. | |
|
|
Level 3: |
Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs for nonbinding single-dealer quotes not corroborated by observable market data. | |
The Company has various processes and controls
in place to ensure that fair value is reasonably estimated. A model validation policy governs the use and control of valuation models
used to estimate fair value. This policy requires review and approval of models, and periodic re-assessments of models to ensure that
they are continuing to perform as designed. The Company performs due diligence procedures over third-party pricing service providers in
order to support their use in the valuation process. Where market information is not available to support internal valuations, independent
reviews of the valuations are performed, and any material exposures are escalated through a management review process.
While the Company believes its valuation methods
are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair
value of certain financial instruments could result in a different estimate of fair value at the reporting date. To the extent that the
valuation method is based on models or inputs that are less observable or unobservable in the market, the determination of fair value
requires more judgment. The degree of judgment exercised in determining fair value is greatest for the financial instruments categorized
in Level 3.
In certain cases, the inputs used to measure fair
value may fall into different levels of the fair value hierarchy. In such cases, the financial instruments level within the fair
value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Companys assessment
of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific
to the financial instrument.
During the years ended December 31, 2025, and
2024, there were no changes to the Companys valuation techniques that had, or are expected to have, a material impact on its consolidated
balance sheets or consolidated statements of operations and comprehensive income (loss).
The Company did not make any transfers between
the levels of the fair value hierarchy during the years ended December 31, 2025, and 2024.
The carrying amounts for cash equivalents, restricted
cash, accounts receivable, accounts payable, other current liabilities, short-term debt, convertible debt related-party and equipment
notes payable approximate fair value.
| | F-18 | | |
**NOTE 2. REVENUE**
The table below presents revenue of the Company
disaggregated by revenue source for the years ended:
|
Schedule of disaggregated by revenue source | |
| | | |
| | | |
|
| |
December 31,
2025 | | |
December 31, 2024 | | |
|
Bitcoin ATMs (Athena and White-label) | |
$ | 229,265 | | |
$ | 279,799 | | |
|
Athena Plus (OTC) | |
| 4,336 | | |
| 4,977 | | |
|
Athena Pay, ancillary and other | |
| 996 | | |
| 615 | | |
|
| |
$ | 234,597 | | |
$ | 285,391 | | |
The Company recognized $ 226,475 and $274,954
of revenues related to Athena ATMs, and $ 2,790 and $4,845 in revenues related to operating the White-labeled ATMs for years ended December
31, 2025 and 2024, respectively.
The table below presents revenues by geographic
territories based on sales location for the years ended:
|
Schedule of revenues by geographic location | |
| | | |
| | | |
|
| |
December 31,
2025 | | |
December 31, 2024 | | |
|
Revenue | |
| | | |
| | | |
|
United States | |
$ | 226,347 | | |
$ | 276,056 | | |
|
El Salvador | |
| 7,972 | | |
| 9,012 | | |
|
Argentina, Colombia & Mexico | |
| 278 | | |
| 323 | | |
|
| |
$ | 234,597 | | |
$ | 285,391 | | |
**Contracts with Chivo, Sociedad Annima de Capital Variable
of El Salvador**
In the third quarter of 2021, the Company installed
and began operating:
|
i. | 200 white-labeled ATMs in El Salvador, | |
|
ii. | 10 white-labeled ATMs at El Salvador consulates in the U.S., | |
|
iii. | 45 white-labeled ATMs in other U.S. locations, and | |
|
iv. | sold 950 point-of-sale (POS) terminals for local businesses in El Salvador to process transactions (under
Athena Pay) in Bitcoin to the Ministerio de Hacienda (Department
of Treasury) of El Salvador (GOES). | |
Additionally, the Company contracted to
|
i. | the sale of software, | |
|
ii. | develop a Bitcoin platform designed to support a GOES branded digital wallet, and | |
|
iii. | maintain the GOES digital wallet. | |
| | F-19 | | |
As of October 5, 2022, effective July 1,
2022 and expiring on July 30, 2024, the Company and Chivo, Sociedad Annima de Capital Variable, a wholly owned private company
of the Government of El Salvador ("CHIVO") signed a Master Services Agreement (MSA) and a Service Level Agreement
(SLA) which replaced the existing Master Services Agreement, Contracts and Athena Service Addendums 1 and 2 with the Department
of Treasury of El Salvador. The MSA and SLA include the same services, performance obligations, pricing and terms outlined in the
original Master Services Agreement, Contracts and Addendums. In conjunction with the new MSA and SLA, the Company and CHIVO completed
a financial settlement agreement secured by certain assets to reconcile reporting, and settle the balances owed between the parties. The
settlement was completed as of April 2023 upon full satisfaction of all obligations thereunder. On December 20, 2024, a new three-year
MSA and SLA with Chivo was signed effective December 1, 2024.
Effective June 30, 2024, a settlement agreement
was entered into between Chivo and the Company whereby amounts owed to Chivo of $5,200 for amounts retained by the Company were netted
against fees that Chivo owed the Company of $4,418; the net of which amounts to a payable to Chivo of $782 in addition to a receivable
from Chivo of $798 for other fees. As part of the settlement agreement, the receivables and payables between the Company and Chivo were
written off in exchange for (i) a new three-year agreement with Athena SV charging reduced rates going forward and (ii) Athena SV would
make available to Chivo a credit facility of $600 for Chivos use at any time. However, the conditions of the credit facility were:
|
a) | that the cash is the property of Athena SV, | |
|
b) | Chivo would need to deposit the amount of funds they needed in Athena SVs bank account (resulting
in a pre-funded credit facility) and Athena would release the funds to Chivo from the ATM pick-ups, and | |
|
c) | the credit facility has a monthly fee of 0.487% of the credit facility amount (i.e., $600). | |
The funds owed to Chivo were $0 as of December
31, 2025, and 2024.
****
**NOTE 3. ACCOUNTS RECEIVABLE, NET**
****
Accounts receivable consisted of the following
as of December 31, 2025, and 2024:
|
Schedule of accounts receivable | |
| | | |
| | | |
|
| |
December 31,
2025 | | |
December 31,
2024 | | |
|
White-label fee receivable | |
$ | 4,075 | | |
$ | 716 | | |
|
Athena Plus (OTC) | |
| | | |
| 600 | | |
|
Others | |
| 6 | | |
| 23 | | |
|
| |
$ | 4,081 | | |
$ | 1,339 | | |
**NOTE 4. CRYPTO ASSETS HELD, NET**
**
The Company held the following crypto assets as of December 31, 2025
and 2024:
|
Schedule of crypto assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
| |
Qty (1) | | |
Average Rate | | |
Amount | | |
Qty (1) | | |
Average Rate | | |
Amount | | |
|
Bitcoin | |
| 9 | | |
$ | 88,000 | | |
$ | 790 | | |
| 11 | | |
$ | 93,000 | | |
$ | 1,051 | | |
|
Stablecoins | |
| 155 | | |
| 1 | | |
| 155 | | |
| 190 | | |
| 1 | | |
| 190 | | |
|
| |
| | | |
| | | |
$ | 945 | | |
| | | |
| | | |
$ | 1,241 | | |
|
(1) |
Rounded off to the nearest whole number | |
| | F-20 | | |
The table below shows the roll-forward of quantity and costs of various
crypto assets traded by the Company.
|
Schedule of roll-forward of quantity and costs | |
| | | |
| | | |
| | | |
| | | |
|
| |
Bitcoin | | |
Tether (USDt) | | |
|
| |
Qty(1) | | |
Cost | | |
Qty(1) | | |
Cost | | |
|
January 1, 2024 | |
| 9 | | |
$ | 399 | | |
| 22 | | |
$ | 22 | | |
|
Purchases | |
| 3,540 | | |
| 220,488 | | |
| 2,548 | | |
| 2,548 | | |
|
Cost of sales | |
| (3,423 | ) | |
| (212,343 | ) | |
| (2,380 | ) | |
| (2,380 | ) | |
|
Impairment on crypto assets | |
| | | |
| (1,779 | ) | |
| | | |
| | | |
|
Crypto assets used for expenses | |
| (83 | ) | |
| (3,680 | ) | |
| | | |
| | | |
|
Crypto assets used for capital expenditure | |
| (4 | ) | |
| (181 | ) | |
| | | |
| | | |
|
Crypto assets used for other payments | |
| (28 | ) | |
| (1,853 | ) | |
| | | |
| | | |
|
December 31, 2024 | |
| 11 | | |
$ | 1,051 | | |
| 190 | | |
$ | 190 | | |
|
| |
Bitcoin | | |
Stablecoins (2) | | |
|
| |
Qty(1) | | |
Cost | | |
Qty(1) | | |
Cost | | |
|
January 1, 2025 | |
| 11 | | |
$ | 1,051 | | |
| 190 | | |
$ | 190 | | |
|
Purchases | |
| 1,714 | | |
| 171,413 | | |
| 4,102 | | |
| 4,102 | | |
|
Cost of sales | |
| (1,698 | ) | |
| (169,696 | ) | |
| (4,137 | ) | |
| (4,137 | ) | |
|
Unrealized loss on crypto assets | |
| | | |
| (112 | ) | |
| | | |
| | | |
|
Bitcoin received for independent Bitcoin ATM operators [affiliates program] | |
| 14 | | |
| 1,350 | | |
| | | |
| | | |
|
Crypto assets used for expenses | |
| (6 | ) | |
| (616 | ) | |
| | | |
| | | |
|
Crypto assets used for capital expenditure | |
| (25 | ) | |
| (2,430 | ) | |
| | | |
| | | |
|
Crypto assets used for other payments | |
| (1 | ) | |
| (170 | ) | |
| | | |
| | | |
|
December 31, 2025 | |
| 9 | | |
$ | 790 | | |
| 155 | | |
$ | 155 | | |
|
(1) |
Rounded off to the nearest whole number | |
|
(2) |
in 2025 the company held USDT and USDC | |
****
****
****
| | F-21 | | |
****
**NOTE 5. PROPERTY AND EQUIPMENT, NET**
Property and equipment, net consisted of the
following as of December 31, 2025, and 2024:
|
Schedule of property and equipment, net | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
ATM Equipment | |
$ | 26,705 | | |
$ | 23,271 | | |
|
Computer equipment | |
| 920 | | |
| 799 | | |
|
Office equipment | |
| 200 | | |
| 186 | | |
|
| |
| 27,825 | | |
| 24,256 | | |
|
Less accumulated depreciation | |
| 15,558 | | |
| 8,011 | | |
|
Total property and equipment | |
$ | 12,267 | | |
$ | 16,245 | | |
Depreciation expense for the years ended December
31, 2025, and 2024 was $7,802 and $4,096, respectively.
**NOTE 6. SOFTWARE DEVELOPMENT, NET**
During the second quarter of 2024, the Company
entered into a Development Services Agreement with PSBC, LLC, a third-party Delaware corporation, for a software platform to use in connection
with the operation of Bitcoin ATMs. The Company implemented and began to use the software platform in June 2024.
On May 14, 2025, the Company entered into a Second
Amendment to the Development Services Agreement with PSBC, LLC, pursuant to which PSBC, LLC agreed to provide support services through
November 14, 2025, and we agreed to pay PSBC, LLC, $50 thousand per month beginning on May 14, 2025. The balance of this Development Services
Agreement was settled with the September 4, 2025 Release and Termination Agreement with Taproot Acquisition Enterprises, LLC, a Delaware
limited liability company (Taproot), and its affiliated entities which terminated and settled all outstanding obligations
under several prior arrangements, including this Development Services Agreement (please refer to **NOTE 9. NOTES PAYABLE ***Short-term
debt* for detailed descriptions).
The Companys capitalized software development
cost, net of accumulated amortization, was $3,984
and $5,239 for the
years ended December 31, 2025, and 2024. There was no
impairment for the years ended December 31, 2025, and 2024. Amortization expense for the years ended December 31, 2025 and 2024, was
$1,259 and $814,
respectively.
|
Schedule of capitalized software development
cost | |
| | |
| | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Capitalized software | |
$ | 6,331 | | |
$ | 6,327 | | |
|
Less accumulated amortization | |
| 2,347 | | |
| 1,088 | | |
|
Total capitalized software | |
$ | 3,984 | | |
$ | 5,239 | | |
| | F-22 | | |
**NOTE 7. PREPAID EXPENSES AND OTHER CURRENT
ASSETS**
Prepaid expenses and other current assets ae
mostly composed of prepayment to the Companys taxes, rent, insurance and security deposits. The components of prepaid expenses
and other current assets were as follows:
|
Schedule of other prepaid and other current assets | |
| | |
| | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Prepaid expenses and other current assets: | |
| | | |
| | | |
|
Prepaid expenses | |
$ | 931 | | |
$ | 818 | | |
|
Prepaid taxes | |
| 3,029 | | |
| 1,865 | | |
|
Other | |
| 11 | | |
| 19 | | |
|
Total prepaid expenses and other current assets | |
$ | 3,971 | | |
$ | 2,702 | | |
****
**NOTE 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES**
Accounts payable and accrued expenses consisted
of the following as of December 31, 2025, and 2024:
|
Schedule of accounts payable and accrued expenses | |
| | |
| | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Accounts payable and accrued expenses: | |
| | | |
| | | |
|
Accounts payable | |
$ | 1,349 | | |
$ | 4,753 | | |
|
Accrued expenses | |
| 14,518 | | |
| 6,309 | | |
|
Interest payable | |
| | | |
| 71 | | |
|
Total accounts payable and accrued expenses | |
$ | 15,867 | | |
$ | 11,133 | | |
****
**NOTE 9. NOTES PAYABLE**
*Equipment notes payable*
**
On September 22, 2021, the Company entered into
a borrowing arrangement with Banco Hipotecario secured against the Companys assets in El Salvador. The promissory note provided
for a principal amount of $1,500, with a final maturity date of 36 months after disbursal with equal monthly installment payments of $47
with a moratorium of 2 months. Interest as defined in the loan arrangement is 7.5% per annum. As of December 31, 2025, and 2024, the outstanding
principal was $0 and $0, respectively.
On September 19, 2024, the Company and Taproot
Acquisition Enterprises, LLC, a Delaware limited liability company (Taproot), entered into that certain Omnibus Equipment
Refinancing Agreement providing for the refinance of the Companys debt obligations previously incurred in connection with the purchase
of Bitcoin ATMs pursuant to the previously entered into equipment financing agreements for the purchase of the Equipment by the Company
from Taproot. The parties agreed that the total outstanding balance of $2,120 would be paid by one inception payment of $1,158 upon
the execution of the agreement and followed by weekly payments of $20 for a period of 48 weeks. The Omnibus Equipment Refinancing Agreement
also contains the representations and warranties of both parties with respect to clear and marketable title of the Equipment and provides
provisions addressing an event of default by the Company as a purchaser of the Equipment. As of December 31, 2025, and 2024, the outstanding
principal was $0 and $643, respectively.
| | F-23 | | |
On October 30, 2024, the Company entered with
Taproot, into an Equipment Financing Agreement (the Agreement) to purchase certain Bitcoin ATMs listed in the Agreement.
The Agreement amends and supersedes the previous equipment purchase agreements between the parties. Under the Agreement, the Company will
acquire from Taproot installed Bitcoin ATMs or additional Bitcoin ATMs at the price per Bitcoin ATM set forth in the Agreement. The downpayment
shall be paid in 4 installments with the first payment due and paid by the Company as of October 31, 2024, and the last payment to be
made by January 31, 2025; however, the last payment was made on January 27, 2025. As of December 31, 2025, and 2024, the outstanding principal
was $0 and $5,785, respectively.
In addition, the Company shall pay certain percentage
fee (0.8%) of the revenue (to be paid weekly) derived from the sale of Bitcoin in each Bitcoin ATM location until the expiration of the
term of the Agreement (36 months) or until full payment of total purchase price for the Equipment subject to certain additional limitations.
The Agreement also provides the provisions addressing the event of default by either Taproot or the Company, and respective available
remedies. Certain property on which the Equipment units are located are subject to merchant agreements (as listed in the Agreement),
The Agreement provides for assignment and assumption of merchant agreements and leases, as may be applicable. Furthermore, Taproot desires
to maintain a first priority interest on the Bitcoin ATMs until it is fully paid for. In connection therewith, the Company, Taproot and
KGPLA Holdings LLC (KGPLA) entered into the First Amendment to the Intercreditor Agreement dated as of October 23, 2024,
pursuant to which, KGPLA agreed to the subordination of its first priority security position on collateral of the Company to Taproot.
As of December 31, 2025, and 2024, the outstanding principal balance was $0
and $5.8
million, respectively. As described below (*Short-term debt*), on September 4, 2025, all outstanding obligations with Taproot, and
its affiliated entities (the Taproot Parties) were terminated and replaced with a Release and Termination Agreement; therefore,
as of December 31, 2025, the principal outstanding balance of the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement,
the Location Referral Agreement, the Client Services Agreement, and the Development Services Agreement was $0.
See table below for balances of the aforementioned loans as of December 31, 2025, and 2024.
|
Schedule of long-term debt reconciliation | |
| | |
| | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Long-term Debt Reconciliation | |
| | | |
| | | |
|
Taproot Omnibus Equipment Refinancing Agreement | |
$ | | | |
$ | 643 | | |
|
Taproot Equipment Financing Agreement | |
| | | |
| 5,785 | | |
|
Total Equipment notes payable | |
| | | |
| 6,428 | | |
|
Less: Equipment notes payable, current portion | |
| | | |
| (3,084 | ) | |
|
Equipment notes payable, net of current portion | |
$ | | | |
$ | 3,344 | | |
*Short-term debt*
In December 2023, the Company entered into financing
agreements with Capital Premium Financing, Inc. to pay the insurance premium on its commercial liability insurance. The annual interest
rate was 20.53% per annum, repayable in nine monthly installments beginning February 1, 2024. As of December 31, 2025, and 2024, the outstanding
principal was $0.
On February 26, 2024, the Company entered into
a financing agreement for $170 with National Partners PFco LLC to pay the insurance premium on its directors and officers
insurance with an annual percentage rate of 8.45% per annum repayable in ten monthly installments beginning March 14, 2024. On October
11, 2024, the Company increased its coverage for the same policy and entered into an additional financing agreement for $170 with annual
percentage rate of 7.95% repayable in ten monthly installments beginning November 11, 2024. As of December 31, 2025, and 2024, the outstanding
principal was $0 and $140, respectively.
On December 19, 2024, the Company entered into
financing agreements for $116 with National Partners PFco LLC to pay the insurance premium on its commercial liability insurance with
an annual interest rate of 7.95% per annum, repayable in eight monthly installments beginning January 11, 2025. As of December 31, 2025,
and 2024, the outstanding principal was $0 and $116, respectively.
| | F-24 | | |
On May 30, 2025, the Company entered into insurance
premium financing agreements for $280 (gross premium in the amount of $353 less $73 deposit) with E.T.I. Financial Corporation, to pay
the insurance premium on its cyber, crime and employment practices liability insurance with an annual interest rate of 9.51% per annum,
repayable in ten monthly installments beginning June 14, 2025. As of December 31, 2025, the outstanding principal was $88.
On September 4, 2025, the Company entered into
a Release and Termination Agreement with Taproot and the Taproot Parties to terminate and settle all outstanding obligations under several
prior arrangements, including the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement, the Location Referral Agreement,
the Client Services Agreement, and the Development Services Agreement. Under the terms of the Release and Termination Agreement, the Company
agreed to pay the Taproot Parties an aggregate Termination Payment of $9,000, consisting of an upfront payment of $3,000 upon execution
of the agreement and weekly installments of $115.4 thousand over 52 weeks. Upon payment in full, all security interests, liens, and other
encumbrances under the prior agreements will be released, and all outstanding obligations between the parties will be deemed satisfied
and discharged.
**
At the date of settlement, the carrying amount
of the debt obligation under the Equipment Financing Agreement was $4,300. The Company also recorded the following items associated with
the extinguishment of debt:
**
|
|
a) |
$3,200, related to the Equipment Financing Agreement and 2024 Financing Royalty Buy-Out, representing the lump-sum buy-out of a 0.5% vendor participation obligation. | |
|
|
b) |
$300, related to the Location Referral Agreement and Location Agreement Buy-Out, representing the lump-sum buy-out of a referral revenue share obligation. | |
|
|
c) |
$1,100, recorded as a settlement premium, representing the excess of the total settlement consideration over the carrying amount of the extinguished obligations. | |
During the twelve months ended December 31, 2025,
the Company recorded a loss due to the extinguishment of debt of $5,283 related to the termination and settlement of all outstanding obligations
under the Equipment Financing Agreements, the Omnibus Equipment Refinancing Agreement, the Location Referral Agreement, the Client Services
Agreement, and the Development Services Agreement. The loss included the extinguishment of the debt of $4,602 and $681 of unamortized
imputed interest, both of which are included in loss on extinguishment of debt expense in the consolidated statements of operations and
comprehensive income (loss).
As of December 31, 2025, and 2024, the outstanding
principal of the Release and Termination Agreement was $4,000 and $0, respectively, which was included in short-term debt in the consolidated
balance sheets.
On October 9, 2025, the Company entered into insurance
premium financing agreements for $223 (gross premium in the amount of $284 less $61 deposit) with E.T.I. Financial Corporation, to pay
the insurance premium on its directors and officers insurance with an annual interest rate of 9.51% per annum, repayable
in ten monthly installments beginning November 11, 2025. As of December 31, 2025, the outstanding principal was $180 thousand.
On December 30, 2025, the Company entered into
insurance premium financing agreements for $59 (gross premium in the amount of $74 less $15 deposit) with E.T.I. Financial Corporation,
to pay the insurance premium on its commercial general liability insurance with an annual interest rate of 12.06% per annum, repayable
in ten monthly installments beginning February 1, 2026. As of December 31, 2025, the outstanding principal was $59.
**
**
**
**
| | F-25 | | |
**
*Note payable, Related*-*Party*
As of May 15, 2023, the Company entered into
a certain Senior Secured Loan Agreement, as amended (the Loan Agreement) and Senior Secured Revolving Credit
Promissory Note (the Revolving Credit Note) with KGPLA Holdings LLC (KGPLA), an entity in which Michael
Komaransky, a former director and 40.8% beneficial owner of the Company has a controlling interest and serves as Manager of such
entity, and whose Chief Investment Officer is Huaxing Jason Lu, our director. The Revolving Credit Note allowed the
Company to borrow up to $4,000
for the operations of its New Bitcoin ATM Machines, as defined in the Loan Agreement, with a maturity date of May
15, 2024. Revenue share fees for this agreement were calculated based on a percentage of the gross daily receipts generated
from these machines and were recorded as part of interest expense in the consolidated statements of operations and comprehensive
income. In connection with the above loan transaction and issuance of Revolving Credit Note, the Company granted KGPLA a first
priority lien and security interest in and to all of the Companys assets, except for property previously pledged to Banco
Hipotecario (see above), and with respect to such assets, the Company granted the KGPLA a second priority lien. The Company repaid
the principal amount of $4,000
(together with any fees) on the Senior Secured Revolving Credit Promissory Note due May 15, 2024, with KGPLA, as of March 28, 2024.
The debt was settled in full in accordance with the terms outlined in the Revolving Credit Note and was funded using cash reserves
generated from the Companys operating activities. The early payoff of this debt resulted in the elimination of revenue share
fees. As of December 31, 2025, and 2024, the outstanding principal was $0
and $0,
respectively.
*Convertible debt, related*-*party*
On January 31, 2020, the Company entered into
a convertible debenture agreement with KGPLA LLC. The convertible debenture provided for a principal amount of $3,000,
with a maturity date of January 31, 2025, which was extended to January
31, 2026. Interest as defined by the agreement is 8%
per annum. KGPLA has the option to convert the outstanding principal and accrued interest balance into common stock of the Company at
the lower of $0.012 per share or 20% discount to the next major financing or change in control. The convertible debenture was amended
and restated as of May 15, 2023, and became a secured, and not general unsecured, obligation of the Company, on par with the notes issued
pursuant to the Senior Secured Loan Agreement entered into as of the same date. On November 24, 2025, the Company voluntarily repaid
in full the outstanding balance of approximately $3
million plus accrued interest of $36
owed to KGPLA for a total payment of $3.036 million. As of December 31, 2025, and 2024, the outstanding principal debenture amount of
$0
and $3,000,
respectively.
Separate from the repaid Loan Agreement and the Revolving Credit Note with KGPLA (discussed above in *Note payable,
Related*-*Party)*, the Secured Convertible Debenture with KGPLA (discussed in, *Convertible debt, related-party*)
of January 31, 2020 (as amended and restated May 15, 2023) remained outstanding at December 31, 2024 and was voluntarily repaid in full
on November 24, 2025, as noted above.
**
Maturities on the Companys notes payable
are as follows:
|
Schedule of maturities notes payable | |
| | | |
|
2026 | |
$ | 4,365 | | |
|
Total payments on notes payable | |
$ | 4,365 | | |
**NOTE 10. STOCK-BASED COMPENSATION**
****
**Stock Option Plan**
****
The Company has a 2021 Equity Incentive Plan
(the 2021 Plan) with 98
million shares of common stock available to be awarded to eligible employees, directors, and consultants in the form of stock
options, restricted stock, other awards, and any combination of the foregoing. 2
million shares have been awarded under the 2021 Plan as of the date of these consolidated financial statements for consulting
services. As of December 31, 2025, and 2024, there were no
options outstanding under the plan.
| | F-26 | | |
The Companys Board of Directors and its
majority shareholders approved the 2025 Equity Compensation Plan (the 2025 Plan) effective as of July 7, 2025. The 2025
Plan authorized the granting of up to 409,500,955 shares of common stock to eligible employees, directors, and consultants in the form
of stock options, restricted stock, restricted stock units (RSUs), other awards, and any combination of the foregoing. No
securities have been issued under the 2025 Plan as of the date of these consolidated financial statements.
**Non-recourse loans**
In January 2020, the Company allowed its employees
with vested stock options to exercise with the use of a non-recourse loan agreement for the issuance of 119,139,461 shares of common stock.
These loan agreements originally had a maturity date of 48 months from the date of exercise, which was extended by one year in December
2023 to 60 months. An increase of $35 to additional paid in capital was recorded as a result of this modification. The loans carry an
interest rate of 1.69%. The loans are required to be consistent with the accounting for stock options, with the exercise price of the
stock option being the principal and interest due on the loan.
The fair value of the non-recourse loans as of
the grant date (January 15, 2020) was determined using the Black-Scholes option pricing model. The following assumptions were used in
estimating the fair value of the non-recourse loans:
|
Schedule of assumptions
estimating the fair value | |
| | | |
|
Stock price | |
$ | 0.03 | | |
|
Exercise price | |
$ | 0.01 | | |
|
Expected life (years) | |
| 4.0 | | |
|
Expected volatility | |
| 78.3 | % | |
|
Annual dividend yield | |
| 0.0 | % | |
|
Discount rate | |
| 0.0 | % | |
The Company elected, in accordance with FASB ASC 718, to deduct the
increase in the exercise price (interest) from the risk-free interest rate, resulting in no discount rate.
The original fair value of the awards was $3,236, which was expensed
in 2020.
As of December 31, 2024, the Company cancelled
these non-recourse loans in favor of the employees and the balance of the non-recourse loans as of December 31, 2025, and 2024, was $0.
No shares of the Companys common stock,
options to purchase shares of the Companys common stock or restricted stock units of the Company have been issued during the years
ended December 31, 2025, and 2024.
**NOTE 11. WARRANTS**
****
In 2017 Athena Bitcoin, Inc. issued warrants to
purchase 202,350 shares of Athena Bitcoin, Inc.s common stock for $14,005. The warrants provide for a right to purchase common
stock in Athena Bitcoin, Inc., priced at $2.00 to $3.00 per share, at an average exercise price of $2.49 per share. The warrants were
classified as equity. In January 2020, warrants to purchase 102,350 shares of Athena Bitcoin, Inc. common stock at an average exercise
price of $2.00 per share were exercised.
The unexercised
warrants to purchase 100,000 shares of Athena Bitcoin, Inc. common stock, at an exercise price of $3.00 per share, remained outstanding
as of December 31, 2024 and expired on May 30, 2025.****
| | F-27 | | |
**NOTE 12. RELATED PARTY TRANSACTIONS**
Aside from the transactions discussed in **NOTE
9. NOTES PAYABLE** to these consolidated financial statements, the Company carries a payables balance to Red Leaf Opportunities Fund
LP, an entity in which the Companys principal shareholder, former director and former Chief Executive Officer has a controlling
interest in the General Partner, Red Leaf Advisors LLC, for previous purchases of crypto assets. The Company carries a payables balance
to Red Leaf Advisors, an entity in which Eric Gravengaard, our former CEO and former director, has controlling interest for previous purchases
of crypto assets. On or about April 9, 2025, the Company was notified of a Turnover Order dated April 2, 2025, in the amount
of $341 for the benefit of Judgment Creditor, SDY Trust, of funds in its possession belonging to Red Leaf Advisors. The Company is a non-party
third party on these proceedings. On September 5, 2025, the Company disbursed $341 to SDY Trust resulting in a balance due to Red Leaf
Advisors of $66. The outstanding balance due to Red Leaf Opportunities Fund LP as of December 31, 2025, and 2024, was $66 and $407,
respectively, and is recorded in accounts payable, related-party in the consolidated balance sheets.
The Company incurred cash logistics services of
$6,537 and $5,156 for the years ended December 31, 2025, and 2024, respectively with Move On Security LLC. Mr. Matias Goldenhrn,
the Chief Executive Officer and director of the Company, has a 50% interest in Move On Security LLC. Included in the balance of accounts
payable, related-party are the amounts due to Move On Security, LLC of $112 and $246 as of December 31, 2025, and 2024, respectively.
On February 7, 2024, the Company entered into
a service agreement with Move On Tech Service, LLC to provide ATM services for the Companys ATM operations in various states. Move
On Tech Service, LLC is responsible for ATM management, periodic ATM maintenance, installation, and deinstallation. Mr. Matias Goldenhrn,
the Chief Executive Officer and director of the Company, has a 50% interest in Move On Tech Service, LLC. During the years ended December
31, 2025, and 2024, the Company incurred $4,955 and $3,858 in services with Move On Tech Service, LLC. Included in the balance of accounts
payable, related-party are the amounts due to Move On Tech Service, LLC of $77 and $165 as of December 31, 2025, and 2024, respectively.
**NOTE 13. FEES ON VIRTUAL VAULT SERVICES**
****
*Virtual Vault* is a term used in the Armored
Car and Cash Transport industry to define a service provided by armored car services for assets considered property of the bank when the
bank does not have a physical vault or location in a given state or location. The Fees for virtual vault services included in the Companys
consolidated statements of operations and comprehensive income are for a currency availability service provided to the Company by its
bank for making funds held in a virtual vault immediately available to the Company. Neither the term nor the service is related to virtual
currency or crypto assets.
Fees on Virtual Vault Services for the years ended
December 31, 2025, and 2024, were $1,580 and $2,059, respectively.
****
**NOTE 14. INCOME TAXES**
(Loss) income before income taxes
for the years ended December 31, 2025, and 2024, was attributable to the following regions:
|
Schedule of (loss) income before income taxes | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Domestic | |
$ | (7,426 | ) | |
$ | 14,927 | | |
|
Foreign | |
| 737 | | |
| 90 | | |
|
Total (loss) income before income taxes | |
$ | (6,689 | ) | |
$ | 15,017 | | |
| | F-28 | | |
(Benefit) provision for income taxes for the years ended December
31, 2025, and 2024, consisted of the following:
|
Schedule of (benefit) provision for income taxes |
|
|
|
|
|
|
|
| |
|
|
|
December 31,
2025 |
|
|
December 31,
2024 |
| |
|
Current: |
|
|
|
|
|
|
|
| |
|
Federal tax on income |
|
$ |
(772 |
) |
|
$ |
2,230 |
| |
|
State and local, net of federal benefit |
|
|
186 |
|
|
|
997 |
| |
|
Foreign |
|
|
457 |
|
|
|
988 |
| |
|
Total current |
|
|
(129 |
) |
|
|
4,215 |
| |
|
Deferred: |
|
|
|
|
|
|
|
| |
|
Federal tax on income |
|
|
199 |
|
|
|
838 |
| |
|
State and local, net of federal benefit |
|
|
(725 |
) |
|
|
(320 |
) | |
|
Total deferred |
|
|
(526 |
) |
|
|
518 |
| |
|
Total (benefit) provision for income taxes |
|
$ |
(655 |
) |
|
$ |
4,733 |
| |
****
The following presents a reconciliation of the
income tax provision based on the U.S. Federal statutory tax rate to the total effective tax rate:
|
Schedule of reconciliation of the
income tax provision based on the U.S Federal statutory tax rate | |
| | | |
| | | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
| |
Amount | | |
% | | |
Amount | | |
% | | |
|
U.S. federal statutory rate | |
$ | (1,405 | ) | |
| 21.0 | % | |
$ | 3,154 | | |
| 21.0 | % | |
|
State income tax, net of federal benefit | |
| | | |
| | | |
| | | |
| | | |
|
California | |
| (50 | ) | |
| 0.8 | | |
| 33 | | |
| 0.2 | | |
|
Florida | |
| (101 | ) | |
| 1.5 | | |
| 65 | | |
| 0.4 | | |
|
Georgia | |
| (46 | ) | |
| 0.7 | | |
| | | |
| | | |
|
Illinois | |
| (79 | ) | |
| 1.2 | | |
| 45 | | |
| 0.3 | | |
|
New Jersey | |
| (43 | ) | |
| 0.6 | | |
| 33 | | |
| 0.2 | | |
|
Pennsylvania | |
| (54 | ) | |
| 0.8 | | |
| | | |
| | | |
|
Texas | |
| 150 | | |
| (2.2 | ) | |
| 60 | | |
| 0.4 | | |
|
Others | |
| (355 | ) | |
| 5.3 | | |
| 230 | | |
| 1.5 | | |
|
Foreign tax effects: | |
| | | |
| | | |
| | | |
| | | |
|
El Salvador | |
| | | |
| | | |
| | | |
| | | |
|
Statutory tax rate difference between El Salvador and U.S. | |
| 95 | | |
| (1.4 | ) | |
| 28 | | |
| 0.2 | | |
|
Other | |
| 141 | | |
| (2.1 | ) | |
| 118 | | |
| 0.8 | | |
|
Other foreign | |
| | | |
| | | |
| | | |
| | | |
|
Statutory tax rate difference between other foreign and U.S. | |
| (23 | ) | |
| 0.4 | | |
| (18 | ) | |
| (0.1 | ) | |
|
Other | |
| 90 | | |
| (1.3 | ) | |
| 64 | | |
| 0.4 | | |
|
Change in valuation allowance | |
| 1,063 | | |
| (15.8 | ) | |
| 967 | | |
| 6.4 | | |
|
Tax credits Foreign tax credits | |
| | | |
| | | |
| (776 | ) | |
| (5.2 | ) | |
|
Non-taxable or non-deductible items | |
| 101 | | |
| (1.5 | ) | |
| 51 | | |
| 0.3 | | |
|
Other adjustments return to provision | |
| (116 | ) | |
| 1.7 | | |
| | | |
| | | |
|
Other adjustments amended returns | |
| (23 | ) | |
| 0.3 | | |
| | | |
| | | |
|
Other adjustments withholding taxes | |
| | | |
| | | |
| 776 | | |
| 5.2 | | |
|
Other adjustments - Other | |
| | | |
| | | |
| (97 | ) | |
| (0.5 | ) | |
|
| |
$ | (655 | ) | |
| 9.8 | % | |
$ | 4,733 | | |
| 31.5 | % | |
The Companys effective tax rate
(ETR) for the years ended December 31, 2025, and 2024, was 9.8%
and 31.5%,
respectively. The ETR for the year ended December 31, 2025 of 9.8%
was due primarily to the recording of a valuation allowance on deferred tax assets, partially offset by state income tax expense and
prior year true-ups, while the ETR for the year ended December 31, 2024, of 31.5%,
(which was higher than the U.S. statutory rate of 21.0%)
was due primarily to (i) foreign income tax expense (ii) state income tax expense, and (iii) valuation allowance on foreign tax
credit deferred tax assets.
| | F-29 | | |
Deferred income taxes reflect the net tax effect
of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for
income tax purposes. The tax effects of the temporary differences and carryforwards that give rise to deferred tax assets and deferred
tax liabilities consist of:
|
Schedule of deferred tax assets and deferred
tax liabilities | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Deferred tax asset: | |
| | | |
| | | |
|
Foreign tax credit | |
$ | 1,645 | | |
$ | 2,346 | | |
|
Net operating loss carryforward | |
| 329 | | |
| 2 | | |
|
Lease liability | |
| 7,322 | | |
| 8,595 | | |
|
Other | |
| 2,526 | | |
| 1,099 | | |
|
Gross deferred tax assets | |
| 11,822 | | |
| 12,042 | | |
|
| |
| | | |
| | | |
|
Deferred tax liability: | |
| | | |
| | | |
|
Depreciation and amortization | |
| (1,483 | ) | |
| (2,015 | ) | |
|
Right to use asset | |
| (7,318 | ) | |
| (8,595 | ) | |
|
Gross deferred tax liability | |
| (8,801 | ) | |
| (10,610 | ) | |
|
| |
| | | |
| | | |
|
Less: valuation allowance | |
| (3,409 | ) | |
| (2,346 | ) | |
|
| |
| | | |
| | | |
|
Total net deferred tax liabilities | |
$ | (388 | ) | |
$ | (914 | ) | |
****
A valuation allowance
of $3,409 and $2,346 was recorded against the Companys net deferred tax asset balance as of December 31, 2025, and 2024, respectively.
As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization
of deferred tax assets. On the basis of this evaluation, a portion of the deferred tax asset in 2025 is not more likely not to be realized.
The valuation allowance included allowances related to foreign tax credits and other various accruals. As of December 31, 2025, and 2024,
the Company has no federal loss carryforwards available to offset federal taxable income, and state loss carryforwards available to offset
future state taxable income in the amounts of $7,293 and $74, respectively. As of December 31, 2025, and 2024, the Company also has carryforwards
available for credits from taxes paid in foreign jurisdictions of $1,645 and $2,346, respectively.
The following table represents the change in valuation allowance:
|
Schedule of change in valuation allowance | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Valuation allowance beginning of period | |
$ | 2,346 | | |
$ | 1,379 | | |
|
Allowance taken | |
| 1,063 | | |
| 967 | | |
|
Valuation allowance end of period | |
$ | 3,409 | | |
$ | 2,346 | | |
| | F-30 | | |
Net cash paid
for income taxes consisted of the following:
|
Schedule of net cash paid
for income taxes | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Federal | |
$ | 602 | | |
$ | 3,853 | | |
|
Aggregates state and local jurisdictions | |
| 251 | | |
| 278 | | |
|
Disaggregate state and local jurisdictions: | |
| | | |
| | | |
|
Texas | |
| 150 | | |
| | | |
|
Maryland | |
| 50 | | |
| 15 | | |
|
Arkansas | |
| 60 | | |
| | | |
|
Massachusetts | |
| 45 | | |
| | | |
|
Pennsylvania | |
| 20 | | |
| 78 | | |
|
Arizona | |
| 21 | | |
| 42 | | |
|
Florida | |
| | | |
| 402 | | |
|
New Jersey | |
| 10 | | |
| 160 | | |
|
Illinois | |
| | | |
| 155 | | |
|
Minnesota | |
| | | |
| 120 | | |
|
Foreign | |
| 622 | | |
| 1,077 | | |
|
Net cash paid for income taxes | |
$ | 1,831 | | |
$ | 6,180 | | |
The Company is unaware of any uncertain tax positions that could result
in significant additional payments, accruals, or other material deviation in this estimate over the next year.
Activity related to the Companys uncertain tax positions consisted
of the following:
|
Schedule of uncertain tax positions consisted | |
| | | |
| | | |
|
| |
| December 31, 2025 | | |
| December 31, 2024 | | |
|
| |
| (in thousands) | | |
|
Balance, beginning of year | |
$ | | | |
$ | | | |
|
Increase to tax positions taken during the current year | |
| | | |
| | | |
|
Decrease to tax positions taken during the prior year | |
| | | |
| | | |
|
Balance, end of year | |
$ | | | |
$ | | | |
Major tax jurisdictions are the United States
and El Salvador. All of the tax years will remain open three and four years for examination by the Federal and state tax authorities,
respectively, from the date of filling of the income tax returns. There are no tax audits in process with any tax authority.
| | F-31 | | |
**NOTE 15 - COMMITMENTS AND CONTINGENCIES**
****
The Company, from time to time, might have claims
against it incidental to the Companys business including but not limited to tax demands and penalties. While the outcome of any
of these matters cannot be predicted with certainty, management does not believe that the outcome will have a material adverse effect
on the accompanying consolidated financial statements.
*Employee Bonuses*
**
As of December 31, 2025, and 2024, the Company
accrued $2,900 and $2,100, respectively, of bonuses to employees and management of the Company and were included in accounts payable and
accrued expenses. The bonuses are based on the Companys performance objectives that were achieved during the respective years.
The bonuses, for the year ended December 31, 2025, have not been paid yet. The bonuses, for the year ended December 31, 2024, were paid
on March 14, 2025. Performance bonuses are based on managements periodic review and the amounts are accrued monthly.
****
*Legal Matters*
****
On October 9, 2023,
Arley Lozano-Jaramillo (Lozano), an individual, commenced proceedings against the Company by filing a complaint with the
11th Judicial Circuit Court for Miami-Dade County, Florida (the Court) which named the Company as the defendant. Lozano,
either individually or through the entities controlled by him (XPay, Vakano Industries) entered into certain non-binding letters of intent
on July 13, 2021 and as of September 2021 (the second letter of intent was a draft and not signed by the parties) pursuant to which Lozano
was a seller of certain assets and technology related to XPay Wallet, intellectual property regarding the AthenaPay POS System, XPay POS
System and related technology (the XPay Assets) for the proposed purchase price of $3,000 and 270,000,000 shares of common
stock of the Company (valued at $0.10 per share). The acquisition of the XPay Assets was subject to the execution of a definitive acquisition
agreement. No such agreement was finalized nor entered into by the parties. The Company made payments to Lozano for a total amount of
approximately $1,600 and Lozano transferred the ownership of XPay Assets to the Company. Lozano alleges breach of contract, promissory
estoppel, unjust enrichment, fraud in the inducement and conversion. He asserts the claim for failure to compensate Lozano pursuant to
the terms of the purchase price provided in the non-binding letter of intent (and the unsigned draft letter of intent), which includes
the remaining amount of the purchase price ($1,400) and 270,000,000 shares of the Companys common stock. Lozano did not offer any
evidence of a signed and binding acquisition agreement. The claim also seeks an award for legal and other costs relating to the proceeding.
The Company disputes
the allegations and continues to vigorously defend against them. Accordingly, the Company filed with the Court on February 9, 2024, a
motion to dismiss Lozanos complaint. The Court granted the Companys motion in part and denied in part, dismissing two of
the five causes of action. The Company proceeded to file its counter-complaint against Plaintiff who presented his answer on October 6,
2024. The potential loss related to the identified claim is between $0 and $1,400 and the issuance of 270,000,000 shares of common stock
valued at $27,000, the amount of damages that Lozano is seeking in the lawsuit. The additional costs mentioned in the claim are not able
to be estimated at this time. The Company does not believe that it is probable that liability has been incurred December 31, 2025 and
December 31, 2024, related to this lawsuit. Currently, trial is scheduled for March 21, 2026.
On June 21, 2024,
Digital Access, LLC, a Michigan limited liability company (Digital Access) and two additional co-defendants, filed a complaint
against Athena before the US District Court for the Eastern District of Michigan. The complaint alleges tortious interference with business
relationships and business expectancy, statutory and common law conversions, and trespass to chattels and seeks injunctive relief. The
case was removed to the U.S. District Court for the Northern District of Indiana. Although the Company did not believe that there was
any merit to the allegations against it, a mutually acceptable settlement was reached by the parties that concluded the case. The parties
completed the agreement and its requirements. The corresponding court entered an Order of Dismissal on March 25, 2025.
| | F-32 | | |
On August 20, 2024, Keon Jackson (Jackson),
an individual, commenced what was entitled as a Class Action Complaint against Athena, filed at the US District Court for
the Northern District of Florida (the Court). The complaint alleges receipt of unwanted telemarketing text messages in contravention
to Federal and State statutes while seeking class certification status. The claim by Jackson is for the award of the statutory amounts
as established in the corresponding statutes. On June 18, 2025, the Court issued an Order Granting Motion for Class Certification. Additionally,
on July 16, 2025, the Court entered an Order granting in part and denying in part Jacksons motion for summary judgment. The Court
did grant Jacksons summary judgment under the Florida Telephone Solicitation Act (FTSA), in 4,512 instances and where
this statute establishes a penalty of $500 per instance. The Court did not adjudicate at that time if violations occurred under the federal
Telephone Consumer Protection Act of 1991 (TCPA), and such question will be decided in a trial on the merits. However, on
December 22, 2025 the parties signed a Settlement Terms Sheet with a structured settlement with a total payment of $4,500 which is currently
subject to preliminary and final Court approval.
On September 9,
2024, S.M. on behalf of herself and all others (S.M.), an individual, filed a complaint that includes class action allegations,
against Athena, Genesis Coin, Inc., and two other defendants, filed at the Common Pleas Court at Cuyahoga County, Ohio. The complaint
against Company alleges negligence and violations to the Ohio Products Liability Act because of alleged elder financial scams involving
cryptocurrency and the operation of kiosks. S.M. alleges the need for implementing effective and sufficient checks and procedures both
at the kiosks and other internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams,
beyond what the Company already has in place. The claim by S.M. against Athena is for an undetermined amount of compensation (which cannot
exceed $5,000 under the Class Action Fairness Act of 2005) as well as injunctive relief. The additional costs mentioned in the claim are
not able to be estimated at this time, if any would be applicable. On October 25, 2024, S.M. filed its First Amended Class Action Complaint.
But the case has been removed to the US District Court for the Northern District of Ohio, Eastern Division, where a motion to dismiss
remains pending a decision from the court.
The motion to dismiss
filed by Athena continues to be pending, and the parties await for this decision from the Court. There have been no new filings in the
case made by S.M. pertaining to any additional amendment to her complaint.
On November 25,
2024, Karen Carew on behalf of herself and all others (Carew), an individual, filed a complaint that includes class action
allegations, against Athena, its Chief Executive Officer, and other defendants, filed at the Superior Court of New Jersey Law Division,
Monmouth County (the State Court). The complaint against Athena alleges negligence and violations to various New Jersey
statutes such as possession of stolen property, Racketeer Influenced and Corrupt Organizations, negligence and consumer fraud. Carew alleges
the need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM kiosks and other internal procedures
in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond what already Athena has in place. The
claim by Carew against Athena is for an undetermined amount of compensation (which cannot exceed $5,000 under the Class Action Fairness
Act of 2005) as well as injunctive relief.
After removing
the case to Federal Court, the case got remanded to State Court as Carew filed an amended complaint removing all class action allegations,
and becoming a sole plaintiff. Carew then filed a second amended complaint on July 16, 2025 at the State Court where she is still the
sole plaintiff. A motion to dismiss filed by Athena has been denied in part, for which the remaining causes of action persist. Athena
filed its pleadings on January 16, 2026.
The Company disputes
the claims and believes that the allegations are based on flawed legal theories and incorrect factual assumptions, and the Company intends
to vigorously defend itself against these claims and allegations including the possibility of asserting counterclaims against Carew. Although the outcome of any litigation is inherently uncertain and may be materially adverse, based
on current information, our management does not expect this litigation to have a material adverse effect on our financial condition and
results of operations.
| | F-33 | | |
On January 21,
2025, Girma Yilma on behalf of himself and all others (Yilma), an individual, filed a complaint that includes class action
allegations, against Athena, and two other retail establishments as defendants, filed at Colorados Arapahoe County District Court.
The complaint against the Company alleges negligence and violations to various Colorado statutes such as its consumer protection act,
civil theft, unjust enrichment, negligence and negligent design. As in the previous two cases filed by the same plaintiffs law
firm, it alleges the need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM kiosks and other internal
procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond to what the Company already
has in place. The claim by Yilma against the Company is for an undetermined amount of compensation (which cannot exceed $5,000 under the
Class Action Fairness Act of 2005) as well as injunctive relief.
Athena filed a
motion to compel arbitration on March 21, 2025. After the Court was fully briefed, the case was administratively closed and referred to
obligatory arbitration on August 13, 2025. Yilma initiated the arbitration proceedings under JAMS as established in Athenas Terms
of Service. In JAMS the parties reached a confidential settlement agreement, where the mutual considerations have been completed including
the termination of all proceedings with prejudice.
On January 31,
2025, Zamareeh Odoms (Odoms), an individual, through counsel sent an extrajudicial claim for $500 against Athena. The claim
alleges lack of proper due diligence when recruiting or supervising an employee, agent or representative that caused damages to his person
for alleged insults and verbal aggressions made while in the common areas of the office building. However, the individual involved that
caused the alleged claims by Odoms is not an employee, agent or representative of the Company, the alleged actions were not within the
scope of any duties for Athena and Athena had no control over his employment, actions, or behavior because there is no employment relationship.
Therefore, the Companys assessment of this case at this time is there is no liability by Athena.
No actions have
been served upon Athena pertaining to any lawsuit that may have been filed by Odoms. However, the statute of limitation for a tort action
in the State of Florida is 2 years, if not properly tolled. Thus, Odoms still has at least a year to file any judicial claims against
Athena.
On February 6,
2025, Diane Reynolds on behalf of herself and all others (Reynolds), an individual, filed a complaint that includes class
action allegations, against Athena and another codefendant, filed at the Circuit County Court of Montgomery in Maryland. The complaint
was served upon Athena on March 24, 2025. The complaint against Athena alleges violations to Marylands Safe Act, negligence, product
liability because of defective design, and violation of the States Consumer Protection Act. Similar to the previous akin cases,
(i.e., the cases above of S.M. filed on September 9, 2024 and Girma Yilma filed on January 21, 2025) but using a different law firm this
time, Reynolds alleges the need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM kiosks and other
internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond what already Athena
has in place. The claim by Reynolds against Athena is for an undetermined amount of compensation (which cannot exceed $5,000 under the
Class Action Fairness Act of 2005) as well as injunctive relief. The case was removed to the United States District Court for the District
of Maryland, where Athena filed a Motion to Dismiss on May 23 2025, which is currently pending a decision by the Court.
On February 26,
2025, the State of Iowa through its Attorney General (Iowa), filed separate complaints against Athena competitors Lux Vending,
LLC, Bitcoin Depot Operating, LLC (both Bitcoin Depot), and GPD Holdings LLC d/b/a CoinFlip (CoinFlip) (all
collectively Competitors). Iowa alleges violations to the States Consumer Fraud Act by the Competitors. Also, Iowa
further advises that they had subpoenaed fourteen (14) companies and that [t]he investigation into crypto ATM companies is ongoing.
In the complaints
against Competitors, it is requested by Iowa for civil penalties of up to $40 per violation of the Consumer Fraud Act because of any misrepresentation,
deception or unfair practices. Additionally, it demands the reimbursement of funds of the full transaction to defrauded victims, and a
penalty of $5,000 for each violation committed against an older individual. Although Athena believes that its operations can be clearly
distinguished, Athena has received multiple requests for information from Iowa in matters substantially similar to those related to the
complaints against Competitors.
| | F-34 | | |
Despite the pair of requests for information
and production of documents, Athena has not been served with, nor is it aware of any, civil action filed against it by Iowa similar to
those of the Competitors. Athena continues to cooperate with any information requests as appropriate.
On May 30, 2025,
Rachael Gnadinger, Madeline McCausland, and Joanne Nebus-Horning, on behalf of themselves and others similarly situated (collectively,
Gnadinger), filed a complaint that includes class action allegations, against Athena, its Chief Executive Officer, and other
defendants, filed at the Superior Court of New Jersey Law Division, Middlesex County. The complaint against Athena alleges negligence
and violations to various New Jersey statutes such as possession of stolen property, Racketeer Influenced and Corrupt Organizations, negligence
and consumer fraud. Gnadinger alleges the need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM
kiosks and other internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond
what Athena already has in place. The claim by Gnadinger against Athena is for an undetermined amount of compensation (which cannot exceed
$5,000 under the Class Action Fairness Act of 2005) as well as injunctive relief. The additional costs mentioned in the claim are not
able to be estimated at this time, if any would be applicable. Athena has requested the removal of the case to the US District Court for
the District of New Jersey. However, Gnadinger has moved to request the case be remanded back to the State Court in a September 15, 2025
filing. Therefore, at this time, the parties continue to await the Federal Courts decision to remand or not the case to the State
Court. Once the decision is made, remanded or not, Athena will then move to request that two of the claimants be compelled to arbitrate
in accordance to the Terms of Service in effect at the time of their transactions.
On September 8,
2025, the District of Columbia (the District), through the Office of the Attorney General, filed a complaint against
Athena in the Superior Court of the District of Columbia Civil Division. Pursuant to the complaint, the District alleged that Athena failed
to disclose excessive fees and to protect consumers in violation of the Districts Consumer Protection Procedures Act (CPPA)
and Abuse, Neglect, and Financial Exploitation of Vulnerable Adults and the Elderly Act (the Financial Exploitation Act).
Specific causes of action include allegations of (1) deceptive trade practices in violation of the CCPA; (2) unfair trade practices in
violation of the CCPA; and (3) violations of the Financial Exploitation Act. The lawsuit seeks a declaratory judgment that Athena violated
the CPPA and Financial Exploitation Act; a permanent injunction enjoining Athena from violating the Financial Exploitation Act and CPPA,
and requiring Athena to (a) remove unconscionable contract terms, including its no-refunds policy, its cap on refunds, and its liability
limitation clauses; (b) fully disclose all transaction fees, including the actual percentage markup above the market rate, at the point
of sale before consumers insert cash; and (c) institute and implement adequate fraud prevention measures, including appropriate daily
and monthly transaction limits and effective fraud detection protocols; enjoin Athena from engaging in money transmissions in the District
of Columbia until Athena has required licenses; order Athena to pay damages and restitution for the entire transaction amounts it is alleged
to have collected in violation of the CPPA and Financial Exploitation Act; order Athena to pay damages and restitution, for all undisclosed
fees it collected within the District in violation of the CPPA and Financial Exploitation Act; award civil penalties of $10 for each violation
of the Financial Exploitation Act; award civil penalties of $5 for each violation of the CPPA; and award the District the costs of the
action and reasonable attorneys fees. On October 31, 2025, ABI filed a motion to dismiss and is currently awaiting the Courts
decision after the matter has been fully briefed by all the parties involved and a hearing is scheduled for March 17, 2026, for its oral
arguments.
On September 23,
2025, AML Software, Inc. (AML) filed a complaint against Athena, Taproot, PSBC, and Jordan Mirch, an individual, in the
United States District Court for the Southern District of Florida (Case 1:25-cv-24378). The complaint alleges, among other things, that
Athena and the other defendants misappropriated AMLs proprietary Bitcoin kiosk software source code. The claims asserted include
copyright infringement (against all defendants), contributory and vicarious infringement (against Taproot, PSBC and Mr. Mirch), vicarious
copyright infringement (against Mr. Mirch), misappropriation of trade secrets under the Defend Trade Secrets Act (against all defendants),
unfair competition (against Athena, Taproot and PSBC), and conversion (against all defendants). AML seeks injunctive relief, return or
destruction of all versions of the software code, damages including actual, statutory, and exemplary damages, disgorgement of profits,
attorneys fees, and costs. The complaint alleges that Athena knowingly obtained and used AMLs copyrighted source code through
transactions with other defendants and used it on approximately 2,800 Bitcoin kiosks. AML contends that Athena entered into agreements
with related entities and ultimately paid approximately $9,000 for the kiosks and associated software, which AML claims improperly included
its proprietary source code.
| | F-35 | | |
At this stage,
Athena is unable to predict the outcome of this litigation or reasonably estimate the potential loss or range of loss, if any. The Company
intends to vigorously defend itself against these claims and allegations. As the case has just commenced, Athena has secured counsel in
accordance to the indemnity provisions of the agreement between itself and codefendant PSBC.
On November 6,
2025, plaintiff Chris Vaughan filed a putative nationwide class action complaint against ABI in the United States District Court for the
Southern District of Florida. The complaint names only ABI as defendant and asserts claims under the Florida Deceptive and Unfair Trade
Practices Act (FDUTPA), Fla. Stat. 501.201 et seq., and what plaintiff terms the Florida Financial Exploitation
of Vulnerable Adults Act, Fla. Stat. 825.103. Plaintiff alleges that ABI operates Bitcoin ATMs (Kiosks) nationwide
and has imposed excessive and insufficiently disclosed fees through fee-inclusive exchange rates, misleading or incomplete disclosures,
and unfair refund practices, including with respect to scam victims and vulnerable consumers. The putative class consists of all persons
in the United States who, during the applicable statute of limitations, used an Athena kiosk to purchase cryptocurrency and were charged
a Kiosk Fee. Plaintiff seeks injunctive relief, restitution, disgorgement, damages, civil penalties, and attorneys
fees and costs. As of the date of this letter, ABI has engaged counsel and is moving to file an initial motion to dismiss the case. Still,
at this early stage, ABI is unable to predict the outcome or reasonably estimate the potential loss or range of loss, if any.
We believe we have
strong arguments against these open claims and litigation matters and plan to defend ourselves vigorously in these matters.
In addition to
the above, from time to time, we are subject to allegations from various U.S. states that our activities constitute those of a money transmitter,
and allegations that we failed to register as a money transmitter in those states. To date we have agreed to various consent orders and
settlements with such states, none of which represent material amounts of penalties, assessments or fees, to settle such claims. The outcome
of such ongoing and future allegations, complaints, claims and litigation cannot be predicted.
Occasionally we
are involved in various claims, lawsuits, regulatory examinations, investigations and other legal matters arising, for the most part,
in the ordinary course of business. In making a determination regarding accruals, using available information, we evaluate the likelihood
of an unfavorable outcome in legal or regulatory proceedings, to which we are a party, and we record a loss contingency when it is probable
a liability has been incurred, and the amount of the loss can be reasonably estimated. Where we determine an unfavorable outcome is not
probable or reasonably estimable, we do not accrue for any potential litigation loss. These subjective determinations are based on the
status of such legal or regulatory proceedings, the merits of our defenses and consultation with legal counsel. Actual outcomes of these
legal and regulatory proceedings may materially differ from our current estimates.
*Operating Leases*
The Company has entered into certain leases primarily
for ATM retail spaces and ATM machines. Operating lease expense is recognized in continuing operations by amortizing the amount recorded
as an asset on a straight-line basis over the lease term. The operating lease expense is presented consistently with cost of revenues
in the consolidated statements of operations and comprehensive income (loss). In determining lease asset values, the Company considers
fixed and variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination, or purchase
options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.
Balance sheet information, as of December 31,
2025, and 2024, related to operating right-of-use assets and lease liabilities consisted of the following:
|
Schedule of lease liabilities | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Right-of-use assets operating leases | |
$ | 28,982 | | |
$ | 33,613 | | |
|
| |
| | | |
| | | |
|
Operating lease liabilities, current portion | |
| 8,751 | | |
| 9,627 | | |
|
Operating lease liabilities, net of current portion | |
| 20,369 | | |
| 23,986 | | |
|
Total operating lease liabilities | |
$ | 29,120 | | |
$ | 33,613 | | |
| | F-36 | | |
Other supplemental information related to operating
leases was as follows:
|
Schedule of other supplemental information | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Weighted-average remaining lease term (in years) | |
| 3.26 | | |
| 3.50 | | |
|
Weighted-average discount rate | |
| 15 | % | |
| 15 | % | |
|
| |
| | | |
| | | |
|
Cash paid for amounts included in the measurement of lease liabilities: | |
| | | |
| | | |
|
Operating cash flows from operating leases | |
$ | 14,009 | | |
$ | 11,367 | | |
The discount rates used in measuring the lease
liabilities was based on the Companys incremental borrowing rate.
As of December 31, 2025, the Companys operating
leases have remaining lease terms of up to 5 years, some of which include optional renewals or terminations, which are considered in the
Companys assessments when such options are reasonably certain to be exercised. Any variable payments related to the lease will
be recorded as lease expense when and as incurred. Variable payments are not based on an index or rate and relate to common area maintenance
or ATM relocation expenses. As of December 31, 2025, the operating leases that have been contracted for but have not yet commenced are
immaterial.
The operating lease cost are composed of the
following:
|
Schedule of operating lease cost | |
| | | |
| | | |
|
| |
December 31, 2025 | | |
December 31, 2024 | | |
|
Operating lease cost | |
$ | 14,009 | | |
$ | 11,367 | | |
|
Short term lease cost | |
| 777 | | |
| 1,675 | | |
|
Variable lease cost | |
| 2,462 | | |
| 856 | | |
|
Total lease cost | |
$ | 17,284 | | |
$ | 13,898 | | |
The future lessee lease payments of noncancelable
operating leases as of December 31, 2025 are as follows:
|
Schedule of reconciliation of future lessee lease payments | |
| | | |
|
| |
Operating Leases | | |
|
2026 | |
$ | 12,506 | | |
|
2027 | |
| 10,687 | | |
|
2028 | |
| 8,496 | | |
|
2029 | |
| 4,002 | | |
|
2030 | |
| 1,497 | | |
|
Thereafter | |
| | | |
|
Total lease payments | |
| 37,188 | | |
|
Less: Imputed interest | |
| 8,068 | | |
|
Present value of lease liabilities | |
$ | 29,120 | | |
**
**
**
**
| | F-37 | | |
**
**NOTE 16. OFF-BALANCE SHEET ARRANGEMENTS**
In the normal course of business,
the Companys contract with the government of El Salvador for the operation of the Chivo branded ATMs obligates the Company to assume
the risk of loss for funds used in the operation of the Chivo branded ATMs while those funds are in transit. The Company has contracted
with licensed and insured cash logistics companies to securely transport these funds. The logistics companies insurance covers
in full the value of the funds in transit however, in the event of a loss or destruction of the funds in transit, the Company could encounter
a timing delay between insurance payment for lost funds and the date of actual loss. The amount of funds in transit varies based on multiple
factors including but not limited to economic activity, seasonality, holiday and bank closure calendars. The amount of funds in transit
as of December 31, 2025 and 2024, were $6,400 and $4,679, respectively.
****
**NOTE 17. SUBSEQUENT EVENTS**
The Company has evaluated subsequent events after
the balance sheet date of December 31, 2025, through March 6, 2026, the date on which these consolidated financial statements were available
to be issued.
| | F-38 | | |
**Item 9. Changes in and Disagreements
With Accountants on Accounting and Financial Disclosure.**
****
**Change in Independent Registered
Public Accounting Firm**
On September 13, 2024, the
Company engaged FGMK, LLC (FGMK), as its independent registered accounting firm to replace BF Borgers CPA PCs
(BF Borgers). The decision to change independent registered public accounting firms was made by the Board of Directors
of the Company.
During the years ended December
31, 2022 and December31, 2021, and the subsequent period through the engagement of FGMK, the Company did not consult with FGMK with
respect to either (i)the application of accounting principles to a specified transaction, either completed or proposed; or the type
of audit opinion that might be rendered on the Companys financial statements, and no written report or oral advice was provided
to the Company by FGMK that FGMK concluded was an important factor considered by the Company in reaching a decision as to an accounting,
auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is described in
Item304(a)(1)(iv) of Regulation S-K under the Exchange Act and the related instructions to Item304 of Regulation S-K under
the Exchange Act, or a reportable event, as that term is defined in Item304(a)(1)(v) of Regulation S-K under the Exchange Act.
Effective May 6, 2024, the
Company dismissed BF Borgers as its independent registered public accounting firm, which dismissal was approved by the Board of Directors
of the Company.
BF Borgers audit reports
on the Companys consolidated financial statements as of and for the fiscal years ended December31, 2022 and December31,
2021 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to audit scope or accounting
principles.
BF Borgers audit opinion
on the Companys consolidated financial statements as of and for the fiscal years ended December31, 2022 and December31,
2021 did contain a modification indicating that the Companys historical operating losses raise substantial doubt about its ability
to continue as a going concern.
During the fiscal years ended
December31, 2022 and 2021, and the subsequent interim period through the date of the dismissal of BF Borgers, there were no disagreements,
as that term is defined in Item304(a)(1)(iv) of Regulation S-K, between the Company and BF Borgers on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to BF Borgers
satisfaction, would have caused BF Borgers to make reference to such disagreements in its audit reports. During the fiscal years ended
December31, 2022 and 2021, and the subsequent interim period through the date BF Borgers was dismissed, there were no reportable
events within the meaning of Item304(a)(1)(v) of Regulation S-K.
The SEC has advised that,
in lieu of obtaining a letter from BF Borgers stating whether or not it agrees with the statements herein, the Company may indicate that
BF Borgers is not currently permitted to appear or practice before the SEC for reasons described in the SECs Order Instituting
Public Administrative and Cease-and-Desist Proceedings Pursuant to Section8A of the Securities Act, Sections4C and 21C of
the Securities Exchange Act of 1934 and Rule102(e) of the Commissions Rules of Practice, Making Findings, and Imposing Remedial
Sanctions and a Cease-and-Desist Order, dated May3, 2024.
| | 111 | | |
**Item 9A. Controls and Procedures.**
**Evaluation of Disclosure Controls
and Procedures**
With the participation
of the Companys principal executive officer and principal financial officer, management evaluated the effectiveness of the Companys
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the Exchange Act)), as of December 31, 2025. Based on their evaluation, the Companys principal executive officer
and principal financial officer concluded that the Companys disclosure controls and procedures were effective as of December 31,
2025.
The Companys
disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company in the reports
it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is accumulated and communicated to the Companys management, including its principal executive and principal financial officers,
to allow timely decisions regarding required disclosures.
Managements Report on Internal
Control Over Financial Reporting
****
We are responsible for establishing
and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
Maintaining effective internal control over financial reporting are necessary for us to produce reliable financial statements for external
purposes in accordance with generally accepted accounting principles. Under the supervision and with the participation of our management,
including the Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial
reporting based on the framework in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Based upon that evaluation, management has concluded that our internal control over financial reporting
were not effective as of December 31, 2025.
Material Weaknesses in Internal
Control Over Financial Reporting
In connection with
the preparation of the Companys consolidated financial statements as of December 31, 2025, management identified material weaknesses
in its internal control over financial reporting. 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 the Companys annual or interim
financial statements will not be prevented or detected on a timely basis. A control deficiency exists when the design or operation of
a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements
on a timely basis.
As of December
31, 2025, the material weakness in our internal control over financial reporting related to (i) the fact that the Company did not have
formalized system of internal control over financial reporting in place to ensure that risks are properly assessed, certain accounts are
properly reconciled, controls are properly designed and implemented and internal controls are properly monitored and functioning, and
(ii) the Companys reliance on IT systems and the use of service organizations to initiate, process, and record transactions, for
which it did not evaluate or test the respective control objectives and data provided by the service organizations, and did not maintain
a sufficient complement of formally documented general IT controls over access, segregation of duties, security, and change management.
Management has concluded that these material weaknesses arose because, the Company did not have the necessary business processes, personnel
and related internal controls necessary to satisfy the accounting and financial reporting requirements of a public company.
| | 112 | | |
To address the
material weaknesses, the Company will need to add personnel as well as implement additional financial reporting processes and related
internal controls. Management intends to continue to take steps to remediate the material weaknesses described above through hiring additional
qualified accounting and financial reporting personnel, further enhancing the Companys accounting processes and risk assessment,
and by designing, implementing and monitoring the respective controls. Management will not be able to fully remediate these material weaknesses
until these steps have been completed and the controls have been operating effectively for a sufficient period of time. These remediation
measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects or
that the actions that management may take in the future will be sufficient to remediate the control deficiencies that led to the material
weaknesses in internal control over financial reporting or that they will prevent or detect potential future material weaknesses. The
Companys current controls and any new controls that management develops may become inadequate because of changes in conditions
in the business and weaknesses in disclosure controls and internal control over financial reporting may be discovered in the future. Any
failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm the
operating results or cause the Company to fail to meet the reporting obligations and may result in a restatement of the Companys
financial statements for prior periods.
Maintaining effective
disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial
statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible. However, there
can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the
future. Any failure to remediate the material weaknesses, or the development of new material weaknesses in our internal control over financial
reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial
obligations, which in turn could have a material adverse effect on our financial condition and the trading price of our common stock,
and/or result in litigation against us or our management.
Notwithstanding
the above identified material weaknesses, management believes the Consolidated Financial Statements as included in Part II of this Annual
Report on Form 10-K fairly represent, in all material respects, the Companys financial condition, results of operations and cash flows
as of and for the periods presented in accordance with generally accepted accounting principles in the United States.
The Companys
independent registered public accounting firm is not required to attest to the effectiveness of the internal control over financial reporting
until after the Company is no longer an emerging growth company as defined in the JOBS Act. At such time, the Companys
independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which
the internal control over financial reporting is documented, designed or operating. Any failure to implement and maintain effective internal
control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered
public accounting firm attestation reports regarding the effectiveness of the internal control over financial reporting required to be
included in Athena Bitcoins periodic reports that are filed with the SEC. Ineffective disclosure controls and procedures and internal
control over financial reporting could also cause investors to lose confidence in Athena Bitcoins reported financial and other
information, which would likely have a negative effect on the trading price of the common stock.
Changes in Internal Control Over
Financial Reporting
There was no change in the
Companys internal control over financial reporting that occurred during the quarter ended December 31, 2025, that has materially
affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
**Limitations on the Effectiveness of
Controls**
In designing and evaluating
the 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 its judgment in evaluating
the benefits of possible controls and procedures relative to their costs.
| | 113 | | |
Item
9B. Other Information.
During the three months ended
December 31, 2025, none of our directors or officers (as such term is defined in Rule 16(a)-1(f) under the Exchange Act)
adopted or terminated
a Rule 10b5-1 trading agreement or non-Rule 10b5-1 trading arrangement (each as defined in Item 408(a) and
(c) of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections.
****
Not Applicable
| | 114 | | |
PART III
****
Item 10. Directors, Executive Officers and Corporate
Governance.
Directors and Executive Officers
The following table sets forth
certain information regarding our directors and executive officers as of March 6, 2026.
|
Name |
|
Age |
|
Position(s) |
|
DIRECTOR SINCE | |
|
Executive Officers |
|
|
|
|
|
| |
|
Matias Goldenhrn |
|
49 |
|
Chief Executive Officer & Director |
|
August 2022 | |
|
Carlos Carreo |
|
64 |
|
Chief Operating Officer & Director |
|
January 2023 | |
|
Omar Jimenez |
|
64 |
|
Chief Financial Officer & Director |
|
December 2024 | |
|
|
|
|
|
|
|
| |
|
Non-Employee Directors |
|
|
|
|
|
| |
|
Huaxing Jason Lu |
|
38 |
|
Director |
|
December 2024 | |
|
Renata Szkoda |
|
49 |
|
Director |
|
December 2024 | |
The following is a biographical
summary of the experience of our directors and executive officers. Each director of the Company serves for a term of one year or until
the successor is elected at the Companys annual shareholders meeting and is qualified, subject to removal by the Companys
shareholders. Each executive officer serves at the discretion of the Board of Directors and holds office until the officers successor
is duly elected and qualified, or until the officers earlier resignation or removal.
**Matias Goldenhrn**has
been the CEO and Director of the Company since August 2022, He had previously served five years as the Companys Director
Latin America prior to his appointment as CEO and Director. Mr. Goldenhrn has over 20 years of management experience working with
Fortune 500 companies including Walmart, Starbucks, Microsoft and Yum Brands! with specializations in the development of Latin American
and Caribbean markets. His entrepreneurial success stems from his founding of Swift Trust a financial technology brand. Mr. Goldenhrns
strengths include planning and implementing growth strategies, development of multi-national footprint expansions and a record of business
development strategies and executions that reflect high yield, year-to-year growth. As a global business leader, he has managed teams
near and far, reporting to both corporate officers and regional country directors. He is fully bilingual and has attended business school
between 1995 to 1999 at Pontifica Universidad Catlica Argentina Santa Maria de los Buenos Aires. The Company believes
that Mr. Goldenhrn is highly qualified to serve as Chief Executive Officer and on the Companys Board because of his business
acumen.
**Carlos Carreo**has
been a Director of the Company since January 2023 and Chief Operating Officer of the Company since August 2024. Mr. Carreo served as
the Companys Chief of Staff from August 2023 to August 2024, when he was appointed as Chief Operating Officer. Mr. Carreo served
as a consultant to the Company from March 2023 until his appointment to the position of Chief of Staff of the Company. Mr. Carreo served
from August 2021 until July 2022, as the Global Head of Financial Crime Compliance for Insigneo Financial Group in Miami, a global broker
dealer, developing framework, control structure and governance, and managing five legal entities in Latin America and in the United States.
From August 2017 until April 2021, Mr. Carreo was a Managing Director, Chief Compliance Officer, Director of regulatory compliance, Anti-Money-Laundering
compliance and governance for Latin America with a global bank of HSBC based out of Mexico City. Mr. Carreo has over 25 years of compliance,
risk management, governance and business development experience working with global banks and financial institutions, including IPB CitiBank,
Banco Atlantico International, SunTrust Bank, Barclays, Banco Industrial de Venezuela, and Kroll. He is bilingual and attended the University
of Central Florida. The Company believes that Mr. Carreo is highly qualified to serve as Chief Operating Officer and on the Companys
Board because of his valuable experience in corporate governance, business development, financial and global risk management and compliance.
| | 115 | | |
**Omar Jimenez**has
served as the Companys Chief Financial Officer since January 2025 and a Director since December 2024. Mr Jimenez, has held a variety
of senior financial management positions during his career. Most recently, from March 2024 through December 2024, Mr. Jimenez served as
a Board member, chairman of Audit Committee, Chief Financial Officer and Secretary of 180 Life Sciences Corp. (ATNF:NASDAQ), a clinical
stage biotechnology company focused on the development of therapeutics in chronic pain, inflammation, fibrosis, and other inflammatory
diseases. The Company recently pivoted business objectives and entered into online casinos and gaming operations using blockchain technology
through asset acquisitions. From April 2021 until September 2024, Mr. Jimenez served as the Chief Financial Officer (Principal Financial/Accounting
Officer) and Chief Compliance Officer of Golden Matrix Group, Inc. (GMGI:NASDAQ), an established business-to-business and business-to-consumer
gaming technology company operating across multiple international markets. From February 2020 until April 2021, Mr. Jimenez served as
the Chief Financial Officer and Chief Operating Officer of Alfadan, Inc. a pre-startup that will provide a series of marine specific engines.
From September 2016 to January 2020 and from January 2016 to January 2020, Mr. Jimenez served as the Treasurer and Secretary and Chief
Financial Officer and Chief Operating Officer, respectively, of Monaker Group, Inc. (MKGI:NASDAQ), a travel services company. Mr. Jimenez
also served as a member of the Board of Directors of Monaker Group, Inc. from January 2017 to August 2019. From May 2009 to January 2016,
he served as the founder of MARMEL International, Inc., a company that provides accounting and consulting services. In addition, from
June 2004 to May 2009, he served as President and Chief Financial Officer at American Leisure Holdings, Inc. (AMLH:NASDAQ & ALG:AIM),
focusing on leisure and business travel, hospitality & hotels, call centers and real estate development. Mr. Jimenez is a Certified
Public Accountant (CPA), Chartered Global Management Accountant (CGMA), Chartered Property Casualty Underwriter (CPCU), a Member of the
AICPA and FICPA. Mr. Jimenez holds a B.B.A in Accounting and a B.B.A in Finance from the University of Miami and an M.B.A from Florida
International University. The Company believes that Mr. Jimenez is highly qualified to serve as Chief Financial Officer and on the Companys
Board because of his financial background and business acumen.
**Huaxing Jason
Lu** has been a Director of the Company since December 2024, previously serving as a Director of the Company from March 2020 until January
2023. Mr. Lu has been a managing director at Komodo Bay Capital and Chief Investment Officer of KGPLA,
since May 2020. Prior to joining Komodo Bay Capital, he was a trader at 4170 Trading from February 2018 until May 2020, where he started
and ran the cryptocurrency focused subsidiary, Grapefruit Trading. From March 2017 until February 2018, Mr. Lu worked in numerous other
trading roles at Old Mission Capital, and prior to 2017, at MSR Investments (2011-2017). Mr. Lu graduated from the University of Illinois
Urbana-Champaign in 2008 with a dual degree in Electrical Engineering and Economics. The Company believes that Mr. Lu is highly qualified
to serve on the Companys Board because of his business acumen.
**Renata Szkoda**has
been a Director of the Company since December 2024. Ms. Szkoda has served as the Chief Financial Officer of Scout Group LLC, a global
proprietary trading firm that leverages advanced technology, deep market expertise, and quantitative research to capitalize on opportunities
across financial markets, since May 2025. Ms. Szokda is also expected to become a member of the Board of Directors of Meshflow Acquisition
Corp., a Special Purpose Acquisition Company, upon the effectiveness of its Registration Statement on Form S-1. Previously, Ms. Szkoda
served as Chief Financial Officer of INX Digital Company, Inc.(INX)(OTCKMKTS:INXDF), the owner of digital asset trading
platforms, from May 2022 until May 2024. Prior to joining INX, she was a director of finance for Galaxy Digital, the financial services
and investment management firm offering institutional-grade products and services in digital assets, from November 2020 to May 2022. From
July 2014 to May 2022, Ms. Szkoda served as Chief Financial Officer and Chief Operating Officer of Blue Fire Capital, LLC. She had previously
held various financial and accounting positions. Ms. Szkoda is a seasoned financial executive who offers extensive experience in regulated
capital markets and a strong record of achievement in building financial infrastructure and enabling business expansion via financial
solutions and delivering results with laser focus on financial performance. She currently serves as chair of the Global Digital Asset
& Cryptocurrency Association, a global self-regulatory association for the digital assets and cryptocurrency industry which she co-founded.
Ms. Szkoda graduated from the University of Illinois at Chicago in 1999 with a degree in Accounting (B.S.). The Company believes that
Ms. Szkoda is highly qualified to serve on the Companys Board because of her financial background and business acumen.
| | 116 | | |
**Family Relationships**
There are no family relationships
among any of our executive officers or directors.
**Board Structure**
Our business and affairs are
managed under the direction of our Board, which currently consists of five members. Each of our current directors will continue to serve
until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. The Board will stand
for election at each annual meeting of stockholders. Each director will hold office for a one-year term and until the election and qualification
of his or her successor. The authorized number of directors is set in our bylaws and can be determined from time to time solely by resolution
of the Board.
We face a number of risks,
including those described under the section titled [Risk Factors](#k_003) included elsewhere in this Report. Our Board of Directors
believes that risk management is an important part of establishing, updating, and executing on the Companys business strategy.
Our Board, as a whole and at the committee level, has oversight responsibility relating to risks that could affect the corporate strategy,
business objectives, compliance, operations and the financial condition and performance of the Company. Our Board focuses its oversight
on the most significant risks facing the Company and, on its processes, to identify, prioritize, assess, manage, and mitigate those risks.
While our Board has an oversight role, management is principally tasked with direct responsibility for management and assessment of risks
and the implementation of processes and controls to mitigate their effects on the Company.
**Risk Oversight**
Effective risk oversight
is an important priority of the Board of Directors. Because risks are considered in virtually every business decision, the Board of Directors
discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors approach to
risk oversight includes understanding the critical risks in our business and strategy, evaluating our risk management processes, allocating
responsibilities for risk oversight among the full Board of Directors, and fostering an appropriate culture of integrity and compliance
with legal responsibilities.
**Board Committees**
We do not currently have any committees of the
Board.
**Meetings of the Board of Directors and Annual
Meeting**
During the fiscal year that
ended on December 31, 2025, the Board held 4 meetings and took various other actions via the unanimous written consent of the Board of
Directors and the various committees described above. All directors attended at least 75% of the Board of Directors meetings during
fiscal year 2025.The Company did not hold an annual meeting in 2025 or 2024. The Company does not have a policy regarding director
attendance at annual meetings.
**Stockholder Communications with the Board**
A stockholder who wishes
to communicate with our Board of Directors may do so by directing a written request addressed to our Chief Executive Officer, Chief Financial
Officer and/or Secretary, at 1 SE 3rd Avenue Suite 2740, Miami, Florida 33131, who upon receipt of any communication other than one that
is clearly marked Confidential, will note the date the communication was received, open the communication, make a
copy of it for our files and promptly forward the communication to the director(s) to whom it is addressed. Upon receipt of any communication
that is clearly marked Confidential, our Secretary will not open the communication, but will note the date the communication
was received and promptly forward the communication to the director(s) to whom it is addressed.
| | 117 | | |
**Policy on Equity Ownership**
The Company does not have
a policy on equity ownership at this time.
**Insider Trading / Anti-Hedging Policies**
The Company has not yet adopted
formal written insider trading policies and procedures governing the purchase, sale or other disposition of the Companys securities
by its directors, officers or employees, or by the Company itself, that are reasonably designed to promote compliance with applicable
insider trading laws, rules and regulations and any applicable listing standards.
The Company currently has
a centralized management structure consisting of a small number of executive officers and directors. Other than the Companys Chief
Executive Officer, Matias Goldenhrn, the Company has no other officers or employees who hold equity securities of the Company. Trading
in the Companys securities has historically been limited.
In light of the Companys
concentrated ownership structure and limited trading activity, the Company has not to date adopted a formal written insider trading policy.
Notwithstanding the absence of a formal policy, the Company and its Chief Executive Officer, other executive officers and directors, are
aware of and comply with applicable federal and state securities laws relating to insider trading.
The Company expects to adopt
formal insider trading policies and procedures designed to promote compliance with applicable insider trading laws and regulations in
the near future.
**Policy on Timing of Equity Award Grants**
The Board has not established
policies and practices (whether written or otherwise) regarding the timing of option grants or other awards in relation to the release
of material nonpublic information (MNPI) and do not take MNPI into account when determining the timing and terms of
stock option or other equity awards to executive officers. The Company does not time the disclosure of MNPI, whether positive or
negative, for the purpose of affecting the value of executive compensation.
**Code of Ethics**
Our Board has adopted a Code
of Ethics that applies to all of our employees, including our Chief Executive Officer and Chief Financial Officer. The Code of Ethics
provides written standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including
the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate,
timely and understandable disclosure and compliance with laws, rules and regulations, including insider trading, corporate opportunities
and whistleblowing or the prompt reporting of illegal or unethical behavior. We will provide a copy, without charge, to anyone that requests
a copy of our Code of Ethics in writing by contacting us at our address provided in this Report. We intend to disclose any amendments
to our Code of Ethics and any waivers with respect to our Code of Ethics granted to our principal executive officer, our principal financial
officer, or any of our other employees performing similar functions in a Current Report on Form 8-K.
**Involvement in Certain Legal Proceedings**
Except as otherwise disclosed
below in paragraph (a), none of our directors and executive officers has been involved in any of the following events during the past
ten years: (a) any petition under the federal bankruptcy laws or any state insolvency laws filed by or against, or an appointment
of a receiver, fiscal agent or similar officer by a court for the business or property of such person, or any partnership in which such
person was a general partner at or within two years before the time of such filing, or any corporation or business association of which
such person was an executive officer at or within two years before the time of such filing, except that Mr. Goldenhrn filed for
personal bankruptcy through the filing of a Chapter 7 bankruptcy petition in 2019 and the bankruptcy was discharged in 2020. (b)any conviction
in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (c)being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining such person from, or otherwise limiting, the following activities: (i) acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person
regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association
or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; engaging in any type of business
practice; or (iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with
any violation of federal or state securities laws or federal commodities laws; (d)being the subject of any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more
than 60 days the right of such person to engage in any activity described in paragraph (c)(i) above, or to be associated with persons
engaged in any such activity; (e)being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission
to have violated a federal or state securities or commodities law, and the judgment in such civil action or finding by the Securities
and Exchange Commission has not been reversed, suspended, or vacated; (f) being found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil
action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; (g)being
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed,
suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii)
any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or
prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (h)being
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization
(as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members
or persons associated with a member.
| | 118 | | |
**Indemnification Agreements**
We have entered into indemnification
agreements with each of our directors. The indemnification agreements have been effective since the beginning of the term of each respective
director and require us to indemnify these individuals to the fullest extent permitted by Nevada law.
**Potential Conflicts of Interest**
Certain of our officers,
directors, and employees are involved with or active investors in certain digital asset-related businesses, such as cryptocurrency miners,
as well as active investors in digital asset projects themselves, and may make investment decisions that favor projects that they have
personally invested in. Our largest stockholders may also make investments in these digital asset projects. Similarly, certain of our
directors, officers, employees, and large stockholders may hold cryptocurrencies that we are considering supporting and may be more supportive
of such listing notwithstanding legal, regulatory, and other issues associated with such cryptocurrencies. While we have instituted policies
and procedures to limit and mitigate such risks, there is no assurance that such policies and procedures will be effective, or that we
will be able to manage such conflicts of interests adequately. If we fail to manage these conflicts of interests, or we receive unfavorable
media coverage with respect to actual or perceived conflicts of interest, our business may be harmed and the brand, reputation and credibility
of our company may be adversely affected.
Additionally, we frequently
engage in a wide variety of transactions and maintain relationships with a significant number of other firms in the broad economy surrounding
Bitcoin, blockchain and other crypto assets. These transactions and relationships could create potential conflicts of interest in management
decisions that we make. For instance, certain officers, directors, and employees of the Company are active investors in crypto projects
themselves, and may make investment decisions that favor projects that they have personally invested in. Many of our large shareholders
also make investments in these crypto projects.
If we fail to manage these
conflicts of interest, our business may be harmed and the brand, reputation and credibility of our company may be adversely affected.
| | 119 | | |
Item 11. Executive Compensation.
****
**Summary Compensation Table**
The following table sets forth,
for the fiscal years of 2024 and 2025, information regarding each element of all compensation awarded to, earned by or paid to Matias
Goldenhrn, our Chief Executive Officer (since August 4, 2022), Tina Gregory, our Chief Financial Officer (August 24, 2022 to May
27, 2024), Eyal Segal, our Interim Chief Financial Officer (May 2024 to January 2025), Omar Jimenez, our Chief Financial Officer (since
January 15, 2025) and Carlos Carreo, our Chief Operating Officer (since August, 2023), our named executive officers (collectively, the
Named Executive Officers or NEOs). No other executive officers or directors received annual compensation in
excess of $100,000 during the last two fiscal years.
****
|
Name and Principal
Position |
|
Year |
|
Salary |
|
Bonus |
|
Stock |
|
Option |
|
Non-
Equity |
|
Nonqualified |
|
|
All Other |
|
Total |
| |
|
|
|
|
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
|
($) |
|
($) |
| |
|
Matias Goldenhrn(1) |
|
2025 |
|
437,988 |
|
875,000 |
|
|
|
|
|
|
|
|
|
|
|
|
1,312,988 |
| |
|
Chief Executive Officer |
|
2024 |
|
401,028 |
|
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
901,028 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Omar Jimenez (2) |
|
2025 |
|
288,814 |
|
75,500 |
|
|
|
|
|
|
|
|
|
|
|
|
364,314 |
| |
|
Chief Financial Officer |
|
2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Carlos Carreo(3) |
|
2025 |
|
329,867 |
|
390,500 |
|
|
|
|
|
|
|
|
|
|
|
|
720,367 |
| |
|
Chief Operating Officer
Chief of Staff |
|
2024 |
|
259,167 |
|
86,250 |
|
|
|
|
|
|
|
|
|
|
|
|
350,417 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Tina Gregory(4) |
|
2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,000 |
|
33,000 |
| |
|
Former Chief Financial Officer |
|
2024 |
|
100,517 |
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
200,517 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Eyal Segal |
|
2025 |
|
71,397 |
|
|
|
|
|
|
|
|
|
|
|
|
47,917 |
|
119,314 |
| |
|
Former Interim Chief Financial Officer |
|
2024 |
|
150,643 |
|
|
|
|
|
|
|
|
|
|
|
|
74,876 |
|
225,519 |
| |
|
(1) |
For the year 2025, the bonus of $875,000 represents
the sum of the $750,000bonus that was accrued and awarded to our CEO for fiscal year 2024, and paid in March 2025, and $125,000
deferred bonus that was accrued and awarded to our CEO for fiscal year 2023, and paid in March 2025, excludes 43,564,230 shares of common
stock agreed to be issued to Mr. Goldenhrn in fiscal 2021 in consideration for services provided as the Director of Latin America
of the Company, which have not been issued as of December 31, 2025; and further excludes 15,000,000 shares agreed to be awarded to Mr.
Goldenhrn as equity compensation in fiscal year 2022 for his services as the CEO of the Company, which shares have not been issued
as of December 31, 2025.
For the year 2024, the bonus of $500,000 represents
the bonus that was accrued and awarded to our CEO for fiscal year 2023, and paid in March 2024; excludes 43,564,230 shares of common stock
agreed to be issued to Mr. Goldenhrn in fiscal 2021 in consideration for services provided as the Director of Latin America of the
Company, which have not been issued as of December 31, 2025; and further excludes 15,000,000 shares agreed to be awarded to Mr. Goldenhrn
as equity compensation in fiscal year 2022 for his services as the CEO of the Company, which shares have not been issued as of December
31, 2025.
| |
|
|
|
(2) |
Mr. Jimenez as the Companys Chief Financial Officer, became the Companys employee as of January 15, 2025. | |
|
|
| |
|
(3) |
For the year 2025, the bonus of $390,500 represents
the amount that was accrued and awarded to our COO for fiscal year 2024 and paid in March 2025.
For the year 2024, includes $86,250 bonus accrued
and awarded in fiscal year 2023 and paid in March 2024. | |
|
|
| |
|
(4) |
Ms. Gregory as the Companys Chief Financial Officer, became the Companys employee as of October 1, 2023 pursuant to the terms of the Offer Letter dated as of October 1, 2023. Includes $100,000 of bonus accrued and awarded in fiscal year 2023 and paid in March 2024. Ms. Gregory resigned as the Companys Chief Financial Officer effective May 27, 2024, and her resignation was accepted by the Companys Board of Directors. | |
| | 120 | | |
**Employee Bonuses**
**
As of December 31, 2025,
and 2024, the Company accrued $2.9 million and $2.1 million, respectively, of bonuses to employees and management of the Company and
were included in accounts payable and accrued expenses. The bonuses are based on the Companys performance objectives that
were achieved during the respective years. The bonuses, for the year ended December 31, 2025, have not been paid or allocated to the
employees yet. The bonuses, for the year ended December 31, 2024, were paid on March 14, 2025. Performance bonuses are based on
managements periodic review and the amounts are accrued monthly.
**Outstanding Equity Awards at 2025 Fiscal-Year
End**
The Company: (i) did not grant
any stock options to its executive officers or directors during the year ended December 31, 2025; (ii) did not have any outstanding equity
awards as of December 31, 2025, except as discussed below; and (iii) had no options exercised by its Named Executive Officers during the
year ended December 31, 2025.
There are no outstanding options as of December
31, 2025.
**Compensation of Directors**
**Summary Director Compensation Table**
The following table provides
information regarding all compensation awarded to, earned by or paid to each person who served as a non-executive director of the Company
during the year ended December 31, 2025. Other than as set forth in the table and described more fully below, the Company did not pay
any fees, make any equity or non-equity awards, or pay any other compensation, to its non-employee directors. All compensation paid to
its employee directors is set forth in the tables summarizing executive officer compensation above.
|
Name | |
Fees Earned or paid in cash | | |
Stock Awards | | |
Option Awards | | |
All Other Compensation | | |
Total | | |
|
| |
| | |
| | |
| | |
| | |
| | |
|
Renata Szkoda | |
$ | 25,000 | | |
$ | | | |
$ | | | |
$ | | | |
$ | 25,000 | | |
|
Huaxing Jason Lu | |
$ | 25,000 | | |
$ | | | |
$ | | | |
$ | | | |
$ | 25,000 | | |
The table above does not include
the amount of any expense reimbursements paid to the above directors. No directors received any Non-Equity Incentive Plan Compensation,
Change in Pension Value and Nonqualified Deferred Compensation Earnings during the period presented. Does not include perquisites and
other personal benefits, or property, unless the aggregate amount of such compensation is more than $10,000.
We reimburse directors for
their reasonable out-of-pocket expenses, including travel, food, and lodging, incurred in attending meetings of our Board and/or its committees.
Independent directors receive a quarterly stipend of $6,250.
**Consulting Agreements and Offer Letters with
Officers and Directors**
****
The Companys operating
subsidiary, Athena Bitcoin, Inc. entered into an Independent Contractor Agreement as of January 1, 2022, with Antonio Valiente for certain
legal services, primarily related to, but not limited to, managing the legal and regulatory requirements for the Companys global
operations as Athena Bitcoins Deputy General Counsel. Mr. Valientes agreement provided for a monthly compensation of $8,500
for 20 hours of work per week (increased to $18,056 per month from October 2023 through March 31, 2025 and reverted back, as of April
1, 2025, to $8,500 for 20 hours of work per week). The Agreement can be terminated at any time by either party with two weeks notice.
The agreement contains customary confidentiality requirements binding Mr. Valiente.
| | 121 | | |
Carlos Carreo entered into
a Consulting Agreement with the Company as of March 15, 2023 to provide certain advisory and consulting compliance services with respect
to the Companys business operations. Mr. Carreo was compensated based on an hourly fee of $200 per hour. The agreement contains
customary confidentiality and intellectual property requirements binding Mr. Carreo. The Agreement was terminated in July 2023 upon Mr.
Carreos appointment as the Companys Chief of Staff. There are currently no agreements between Mr. Carreo and the Company.
Separately, the Company entered into an Offer Letter with Mr. Carreo on August 15, 2023. Pursuant to the Offer Letter Mr. Carreo was
offered and he accepted employment as Chief of Staff of the Company, reporting to Matias Goldenhrn, CEO. Mr. Carreos compensation
as provided in the Offer Letter was an annual salary of $230,000, plus a target discretionary yearly bonus, based on the Companys
performance and Mr. Carreos individual performance. The amounts of such bonuses, if awarded, will be at the sole discretion of
the Company as determined by its Board of Directors. In addition, the Offer Letter stipulates that the Company may need to change his
assignments, positions, and compensation levels to meet changing business needs and conditions. On August 14, 2024, Mr. Carreo was promoted
to Chief Operating Officer.
Mr. Omar Jimenez is party
to an Offer Letter dated December 11, 2024 with the Company. Pursuant to the Offer Letter, Mr. Jimenez was offered employment as Chief
Financial Officer of the Company reporting to Matias Goldenhrn, CEO. Mr. Jimenezs compensation was set at an annual salary
of $300,000 plus a discretionary bonus, based on the Companys performance and Mr. Jimenezs individual performance, with
a target of 50% of his base salary. The amounts of such bonuses, if awarded, will be at the sole discretion of the Company and are not
guaranteed. The terms, conditions, and payment of such bonuses will be communicated by the Company and are subject to applicable taxes
and deductions. In addition, the Company agreed to grant Mr. Jimenez Options to purchase 10 million shares of common stock of the Company,
vesting in equal annual installments over three years from his start date, provided he remains employed with the Company, which options
have not been granted to date.
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters.
The following table sets forth
certain information regarding the beneficial ownership of our capital stock outstanding as of February 15, 2026, by:
|
|
|
each person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares of common stock; | |
|
|
|
each of our directors; | |
|
|
|
each of our named executive officers; and | |
|
|
|
all of our directors and named executive officers as a group. | |
The column titled Percent
Owned is based on a total of 4,095,009,545 shares of our common stock outstanding as of December 31, 2025.
Information with respect to
beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. We have determined
beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons
who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules attribute beneficial
ownership of securities as of a particular date to persons who hold options or warrants to purchase shares of common stock and that are
exercisable within 60 days of such date. These shares are deemed to be outstanding and beneficially owned by the person holding those
options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for
the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified
in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable
community property laws.
| | 122 | | |
Except as otherwise noted
below, the address for each person or entity listed in the table is c/o Athena Bitcoin Global, 1 SE 3rd Avenue, Suite 2740,
Miami, Florida 33131.
|
Name of Beneficial Owner |
|
Number of
shares
beneficially
owned |
|
|
Percent Owned |
| |
|
|
|
|
|
|
|
| |
|
Directors and Named Executive Officers |
|
|
|
|
|
|
|
| |
|
Matias Goldenhrn, CEO & Director |
|
|
62,920,653 |
(1) |
|
|
1.5 |
% | |
|
Carlos Carreo, COO & Director |
|
|
|
|
|
|
|
| |
|
Omar Jimenez, CFO & Director |
|
|
|
|
|
|
|
| |
|
Huaxing Jason Lu, Director |
|
|
|
|
|
|
|
| |
|
Renata Szkoda, Director |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
All Named Executive Officers and Directors as a Group (5 persons) |
|
|
62,920,653 |
|
|
|
1.5 |
% | |
|
|
|
|
|
|
|
|
|
| |
|
5% Stockholders |
|
|
|
|
|
|
|
| |
|
Michael Komaransky (2) |
|
|
1,521,141,192 |
|
|
|
37.1 |
% | |
|
Eric Gravengaard (3) |
|
|
1,126,484,100 |
|
|
|
27.5 |
% | |
|
Tom Kerestes (4) |
|
|
429,494,749 |
|
|
|
10.5 |
% | |
___________________
|
(1) |
Includes the award of 43,564,230 shares of common stock
agreed to be made to Mr. Goldenhrn in fiscal 2021 in consideration for services rendered as the Director of Latin America
which have not been issued; and 15,000,000 shares agreed to be awarded to Mr. Goldenhrn as equity compensation in fiscal year
2022 for his services as the CEO of the Company, which shares have not been issued as of December 31, 2025, but which shares are
issuable to Mr. Goldenhrn at any time upon his request, and which shares he is therefore deemed to beneficially own in
accordance with applicable SEC rules. | |
|
(2) |
Consists of: 1,521,141,192 shares of common stock held of record by Athena Equity LLC, an entity beneficially owned and controlled by Mr. Komaransky, and whose Chief Investment Officer is Huaxing Jason Lu, our director. | |
|
(3) |
Consists of: (i) 863,960,473 shares of common stock held of record by Eric Gravengaard, as Trustee of the Eric L. Gravengaard Trust of 2011 (the Trust), which shares Eric Gravengaard is deemed to beneficially own due to his position as trustee of the Trust and (ii) 262,523,604 shares of common stock held of record by Eric Gravengaard and does not reflect the ongoing transfer of 262,523,604 shares of common stock from Mr. Gravengaard to Liberty Digital Holdings, LLC. which has not been completed as of December 31, 2025, which transfer is required pursuant to the terms of a court order relating to an ongoing legal matter between Mr. Gravengaard and Liberty Digital Holdings LLC. Mr. Gravengaard resigned as the Companys CEO on August 4, 2022. Address: 701 Foxdale Ave, Winnetka, IL 60093. | |
|
(4) |
Consists of: (i) 191,454,966 shares of common stock held of record by Swingbridge Crypto I LLC; (ii) 50,271,880 shares of common stock held of record by Swingbridge Crypto II LLC; (iii) and 187,767,903 shares of common stock held of record by Swingbridge Crypto III LLC. Swingbridge LLC is the manager of Swingbridge Crypto I LLC, Swingbridge Crypto II LLC and Swingbridge Crypto III LLC and Tom Kerestes is the manager of Swingbridge LLC together with Rob Levy. Mr. Kerestes is one of the beneficial owners of Swingbridge LLC, an entity that is a manager of the three Swingbridge Crypto LLCs that hold the shares of the Companys common stock, as set forth herein above. | |
****
| | 123 | | |
**Change of Control**
The Company is not aware of
any arrangements which may at a subsequent date result in a change of control of the Company.
**Equity Compensation Plan Information**
The following table sets forth
information, as of December 31, 2025, with respect to our compensation plans under which common stock is authorized for issuance.
|
Plan Category | |
Number of securities to be issued upon exercise of outstanding options, warrants and rights (A) | | |
Weighted-average exercise price of outstanding options, warrants and rights (B) | | |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in Column A) (C) | | |
|
Equity compensation plans approved by stockholders | |
| 2,000,000 | (1) | |
$ | | | |
| 98,000,000 | | |
|
Equity compensation plans not approved by stockholders | |
| | | |
| | | |
| | | |
|
Total | |
| 2,000,000 | (1) | |
$ | | | |
| 98,000,000 | | |
(1) 2,000,000 shares of common stock issuable
upon the settlement of certain outstanding RSUS.
*Athena Bitcoin, Inc. 2016 Equity Incentive Plan*
Athena Bitcoins directors
and shareholders have adopted the Athena Bitcoin, Inc. 2016 Equity Compensation Plan effective as of October 1, 2015, which plan was amended
and restated on January 29, 2020 (the 2016 Plan).
The 2016 Plan provides an
opportunity for any employee (or in some cases directors) of Athena Bitcoin, subject to limitations provided by federal or state securities
laws, to receive (a) incentive stock options, and (b) non-qualified stock options. No shares of common stock are available for the grant
of awards under the 2016 Plan.
*Athena Bitcoin Global 2021 Equity Compensation
Plan*
In October 2021, the Companys
Board of Directors and its majority shareholders approved the Companys 2021 Equity Compensation Plan (the 2021 Plan)
providing for up to 100 million awards of shares of the Companys common stock.
Awards under the 2021 Plan
can be made to employees, directors or consultants, subject to applicable law, in the form of nonstatutory stock options, stock appreciation
rights, restricted stock, and restricted stock units and can also be made to employees in the form of incentive stock options.
| | 124 | | |
*Athena Bitcoin Global 2025 Equity Incentive
Plan*
On July 2, 2025, the Companys
Board of Directors approved the Companys 2025 Equity Incentive Plan (the 2025 Plan), which was approved and ratified
by the stockholders of the Company on July 7, 2025.
The 2025 Plan provides for
the grant of awards to eligible employees, directors, and consultants in the form of stock options, restricted stock, restricted stock
units (RSUs), other awards, and any combination of the foregoing. In making such determinations, the Board of Directors
(the Board) or Compensation Committee may take into account the nature of the services rendered by such person, his or her
present and potential contribution to the Companys success, and such other factors as the Board or Compensation Committee, in its
discretion shall deem relevant.
Subject to adjustment in connection
with the payment of a stock dividend, a stock split or subdivision or combination of the shares of common stock, or a reorganization or
reclassification of the Companys common stock, the aggregate number of shares of common stock which may be issued pursuant to awards
under the 2025 Plan is 409,500,955.
****
Item 13. Certain Relationships and Related Transactions,
and Director Independence.
****
Except as referenced below
or otherwise disclosed above under Item 11. Executive Compensation, which information is incorporated by reference in this
Item 13,, there were no transactions during the years ended December 31, 2025, or 2024, to which we were a party, including transactions
in which the amount involved in the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for
the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of
more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect
material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described
elsewhere in this registration statement. We believe the terms obtained or consideration that we paid or received, as applicable, in connection
with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable,
in arms-length transactions.
On January 31, 2020, the Company
entered into a securities purchase agreement for Convertible Debenture with KGPLA Holdings LLC (the Lead Investor), an entity
in which Mike Komaransky, a former director and 40.8% beneficial owner of the Company has a controlling interest and
is Manager of such entity, and whose Chief Investment Officer is Huaxing Jason Lu, our director. The Secured Convertible
Debenture provided for a principal amount of $3 million, with a maturity date of January 31, 2025, which was extended to January 31, 2026.
Interest as defined in the securities purchase agreement is 8% per annum. The Secured Convertible Debenture was convertible into shares
of the Companys common stock at a conversion price equal to $0.012 per share or, if lower, a price determined by specified formulas
depending on the type of conversion event: (a) upon the next sale (or series of related sales) by the Company of additional equity securities
under an exemption from registration available under the rules promulgated under the Securities Act, from which the Company receives gross
proceeds of not less than $3 million (the Next Equity Financing); provided that, for clarification, this is not meant to
include any actions or listing for trading on the OTC Markets, the conversion price will be the lesser of (i) the lowest per share purchase
price of the equity securities issued in such financing, reduced by a 20% discount, or (ii) the price per share equal to a valuation cap
of $70,282,176 (the Valuation Cap), divided by the Companys fully diluted capitalization immediately prior to the
financing; (b) in the event of our first underwritten public offering of common stock under the Securities Act whereby the our common
stock is listed or admitted for trading on a national stock exchange in the United States, as reported on the principal national security
exchange or quotation system on which such security is quoted or listed (IPO), the conversion price will be the lesser of
(i) the lowest per share purchase price of equity securities issued in the IPO, reduced by a 20% discount, or (ii) 90% of the quotient
obtained by dividing the Valuation Cap by the fully diluted capitalization immediately prior to the IPO; (c) in connection with a corporate
transaction, including certain mergers, consolidations, changes of control or sales of substantially all assets, the conversion price
will equal the Valuation Cap divided by the fully diluted capitalization immediately prior to such transaction; and (d) for conversions
occurring at or after maturity or at the option of the investor at any time, the conversion price will also equal the valuation cap divided
by the fully diluted capitalization immediately prior to such conversion. Fully diluted capitalization includes all outstanding
shares of capital stock on an as-converted basis and reserved equity incentive shares, but excludes certain debt instruments with an aggregate
face value of $500,000 or less, specified Secured Convertible Debenture and SAFEs or SAFTs of up to $500,000.
| | 125 | | |
On November 24, 2025, the
Company voluntarily repaid in full the outstanding balance of approximately $3 million plus accrued interest of $36thousand owed to KGPLA
under the Secured Convertible Debenture for a total payment of $3.036 million. In connection with the repayment of all amounts owed pursuant
to the Secured Convertible Debenture, the obligations and commitments owed by the Company to KGPLA under the (a) Secured Convertible Debenture,
(b) a Senior Secured Loan Agreement entered into between KGPLA (and certain other borrowers named therein) and the Company dated May 15,
2023, and (c) a Security Agreement dated May 15, 2023, between KGPLA and the Company, each as amended from time to time, were terminated
and all collateral associated therewith is required to be released by KGPLA. The voluntary prepayment was made using cash on hand and
the Company did not incur any prepayment penalties in connection with the repayment.
As of December 31, 2025, and
2024, the outstanding principal amount of the Secured Convertible Debenture was $0 and $3 million, respectively.
The Secured Convertible Debenture
is described in greater detail above under *Managements Discussion and Analysis of Financial Condition and Results of Operations-Recent Financing Transactions- Convertible debt, related-party*.
As of May 15, 2023, the Company
entered into a certain Senior Secured Loan Agreement, as amended (the Loan Agreement) and Senior Secured Revolving Credit
Promissory Note (the Revolving Credit Note) with KGPLA. The Revolving Credit Note allows the Company to borrow up to $4,000
for the operations of its New Bitcoin ATMs, as defined in the Loan Agreement, with a maturity date of May 15, 2024. Fees for these borrowings
are calculated based on a percentage of the gross daily receipts generated from these machines and are recorded as part of Cost of Revenue
in the Consolidated Statements of Operations and Comprehensive Income (Loss) . As of December 31, 2023 the outstanding principal of the
Revolving Credit Note was $4 million. In connection with the above loan transaction and issuance of Revolving Credit Note, the Company
granted KGPLA a first priority lien and security interest in and to all of the Companys assets, except for property previously
pledged to Banco Hipotecario, and with respect to such assets, the Company granted the Lender a second priority lien. The principal of
$4 million together with applicable fees was repaid in full as of March 28, 2024.
Eric Gravengaard, a greater
than 10% shareholder of the Company and former director, agreed to be a personal guarantor (as the Companys more than 10% shareholder)
in connection with the Companys grant of certain business licenses. Mr. Gravengaard received $10 thousand (through December 31,
2025) for providing his personal guaranty in 2022 and $5 thousand in 2023, $0 in 2024 and $0 in 2025.
The Company carries a payables
balance to Red Leaf Advisors, an entity in which Eric Gravengaard, our former CEO and former director, has controlling interest for previous
purchases of crypto assets. The outstanding balance due to Red Leaf Advisors was $66 thousand and $407 thousand as of December 31, 2025,
and 2024, and is recorded in accounts payable, related party in the Consolidated Balance Sheets. On or about April 9, 2025, the Company
was notified of a Turnover Order dated April 2, 2025, in the amount of $341 thousand for the benefit of Judgment Creditor,
SDY Trust, of funds in its possession belonging to Red Leaf Advisors. The Company is a non-party third party on these proceedings. A Motion
to Vacate the Turnover Order was filed as the amount in question is a $407 thousand liability on the balance sheet of the Company. However,
in order to avoid further legal expenses, On September 5, 2025, the Company disbursed $341,000 to SDY Trust resulting in a balance due
to Red Leaf Advisors of $66 thousand.
The Company incurred cash
logistics services of $6.537 million and $5.156 million for the years ended December 31, 2025, and 2024, respectively with Move On Security
LLC.. Mr. Matias Goldenhrn, the Chief Executive Officer and director of the Company, has a 50% interest in Move On Security LLC.
Included in the balance of accounts payable, related-party are the amounts due to Move On Security, LLC of $112 thousand and $246 thousand
as of December 31, 2025, and 2024, respectively.
| | 126 | | |
On February 7, 2024, the Company
entered into a service agreement with Move On Tech Service, LLC to provide ATM services for the Companys ATM operations in various
states. Move On Tech Service, LLC is responsible for ATM management, periodic ATM maintenance, installation, and deinstallation. Mr. Matias
Goldenhrn, the Chief Executive Officer and director of the Company, has a 50% interest in Move On Tech Service, LLC. During the
years ended December 31, 2025, and 2024, the Company incurred $4.955 million and $3.858 million in services with Move On Tech Service,
LLC. Included in the balance of accounts payable, related-party are the amounts due to Move On Tech Service, LLC of $77 thousand and $165
thousand as of December 31, 2025, and 2024, respectively.
**Registration Rights**
We are party to an Investors
Rights Agreement dated as of January 31, 2020, as amended as of February 14, 2025 which was entered into in connection with the Companys
issuance of 8% Convertible Debentures with the Lead Investor and the Key Holder, defined below, and in the Investors Rights Agreement,
which grants them certain registration rights with respect to our common stock, as discussed below.
*Demand Registration Rights*
At any time beginning after
the earlier of one hundred eighty (180) days after the effective date of a registration statement for the Companys first underwritten
public offering of its common stock or five (5) years after the date of the Investors Rights Agreement, the holders of 30% or more
of the registrable securities then outstanding (or a lesser percent if the anticipated aggregate offering price, net of underwriting discounts
and commissions would exceed $15 million) may make a written request that we register all or a portion of their shares, subject to certain
specified exceptions. The holders of shares having registration rights are entitled to written notice from the Company. We will prepare
and file a registration statement as requested, unless, in the good faith judgment of our Board, such registration would be seriously
detrimental to the Company and its stockholders and filing should be deferred. We are not obligated to effect more than two of these registrations
within any 12-month period or if the holders proposed registered securities may be immediately registered on Form S-3.
If at any time after the earlier
of (i) five (5) years after the date of the Investors Rights Agreement or (ii) one hundred eighty (180) days after the effective
date of a registration statement for the Companys first underwritten public offering of its common stock, the Company receives
a request from either the Lead Investor or holders of thirty percent (30%) of the registrable securities then outstanding that the Company
file a Form S-1 registration statement with respect to at least thirty percent (30%) of the registrable securities then outstanding (or
a lesser percent if the anticipated aggregate offering price, net of selling expenses, would exceed $15 million), then the Company shall
(x) within ten (10) days after the date such request is given, give a demand notice to all holders other than the initiating holders;
and (y) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the initiating holders,
file a Form S-1 registration statement under the Securities Act covering all registrable securities that the initiating holders requested
to be registered and any additional registrable securities requested to be included in such registration by any other holders, as specified
by notice given by each such holder to the Company.
Notwithstanding the above,
the Company may delay a requested registration for up to 90 days if its Chief Executive Officer certifies that, in the Board of Directors
good faith judgment, allowing the registration to proceed or remain effective would materially harm the Company or its stockholders. Such
harm may arise from materially interfering with a major acquisition, corporate reorganization, or similar transaction; prematurely disclosing
material confidential information; or preventing compliance with Securities Act or Exchange Act requirements. This deferral right can
be invoked only once per twelve-month period, and during the 90-day deferral, the Company may not register securities for itself or others,
except for Excluded Registrations.
The agreement also restricts
the Company from granting subsequent registration rights without the prior written consent of holders of at least 25% of the then-outstanding
registrable securities. Specifically, the Company may not enter into any agreement with other holders or prospective holders of its securities
that would allow them to include securities in a registration if doing so would reduce the amount of registrable securities held by existing
holders included in such registration, or that would give them the right to demand registration of their securities.
| | 127 | | |
*Form S-3 Registration Rights*
At any time after we are qualified
to file a registration statement on Form S-3, if ever and subject to limitations and conditions, the holders of 35% or more of the registrable
securities then outstanding are entitled to written notice of such registration and may make a written request that we prepare and file
a registration statement on Form S-3 under the Securities Act covering their shares, so long as the aggregate price to the public, net
of the underwriters discounts and commissions, is at least $5,000,000. We will prepare and file the Form S-3 registration as requested,
unless, in the good faith judgment of our Board of Directors, such registration would be seriously detrimental to the Company and its
stockholders and filing should be deferred. We may defer only once in any 12-month period, and such deferral shall not exceed 90 days
after receipt of the request. In addition, we are not obligated to prepare or file any of these registration statements (i)within
180 days after the effective date of a registration statement pursuant to demand or piggyback registration rights or (ii)if two
of these registrations have been completed within any 12-month period.
In accordance with the Investors
Rights Agreement, the Company delivered the required notice of a proposed filing in a timely manner, of the Companys initial registration
statement on Form S-1 and the holders elected not to include in the registration statement any of the common stock issuable upon the conversion
of their respective Convertible Debentures.
*Piggyback Registration Rights*
In addition to the above,
if the Company plans to register any of its securities for a public offering solely for cash (excluding (i) a registration relating to
the sale or grant of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, equity incentive
or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially
the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities;
or (iv) a registration in which the only common stock being registered is common stock issuable upon conversion of debt securities that
are also being registered), it must promptly notify the counterparties to the Investors Rights Agreement. Holders then have twenty
(20) days to request that their registrable securities be included, and the Company must register those securities if so requested. The
Company may terminate or withdraw any registration before it becomes effective, regardless of holder participation, and the Company will
bear all expenses of a withdrawn registration, excluding selling expenses.
*Termination of Rights*
The right of any counterparty
to the Investors Rights Agreement to request registration or inclusion of registrable securities in any registration statement
as described therein terminates upon the earlier of (a) such time after consummation of an initial public offering as Rule 144 or another
similar exemption under the Securities Act is available for the sale of all of such holders shares without limitation during a
three- month period without registration; or (b) the tenth (10th) anniversary of the date of the Investors Rights Agreement.
**Right of First Refusal and Co-Sale Agreement**
In connection with the offering
of the 8% Convertible Debentures, Eric Gravengaard, the Companys, then current director and principal shareholder (the Key
Holder), and investors in the 8% Convertible Debentures (the Investors), entered with the Company into a Right of
First Refusal and Co-Sale Agreement dated as of January 31, 2020 (the RFR Agreement), pursuant to which the Key Holder granted
to the Company the right of first refusal to purchase all or any portion of common stock that the Key Holder proposes to transfer, at
the same price and terms as offered to the proposed transferee. The right of first refusal is subject to certain notice requirements and
applicable purchase terms. The Key Holder also agreed to grant to the Investors, secondary refusal right to purchase all or any portion
of the common stock proposed to be transferred by the Key Holder that has not been purchased by the Company pursuant to the right of first
refusal. The grant of the secondary refusal right is subject to certain notice requirements and additional purchase terms as set forth
in the RFR Agreement. The agreement remains in place until the date of the final prospectus relating to the Companys initial public
offering a. The shares of common stock held by Mr. Gravengaard are restricted from being transferred, except pursuant to the terms of
the RFR Agreement while that remains in place.
| | 128 | | |
**Indemnification Agreements**
We have entered into indemnification
agreements with each of our current directors. The indemnification agreements, our Amended Articles, and our restated bylaws, require
us to indemnify our Directors to the fullest extent not prohibited by Nevada law. Subject to certain limitations, our restated bylaws
also require us to advance expenses incurred by our directors and officers.
**Conflicts of Interest and Policy Regarding
Transactions with Related Persons**
****
We do not have a formal, written
policy for the review, approval or ratification of transactions between us and any director or executive officer, nominee for director,
5% stockholder or member of the immediate family of any such person that are required to be disclosed under Item 404(a) of Regulation
S-K. However, our policy is that any activities, investments or associations of a director or officer that create, or would appear to
create, a conflict between the personal interests of such person and our interests must be reviewed by our Board of Directors and determined
in accordance with the applicable provisions of Nevada law, and specifically pursuant to Section 78.140 of the Nevada Revised Statutes,
which provides restrictions on transactions involving interested directors or officers, including requirement of full disclosure of such
interest to the Board of Directors, abstention from voting on the matter involving conflict of interest and the determination of the fairness
of the transaction.
*Director Independence*
Our Board of Directors has
determined that Huaxing Jason Lu and Renata Szkoda are independent directors as defined in the Nasdaq
listing standards and applicable SEC rules. In assessing director independence, the Board considers, among other matters, the nature and
extent of any business relationships, including transactions conducted, between the Company and each director and between the Company
and any organization for which one of our directors is a director or executive officer or with which one of our directors is otherwise
affiliated.
Item 14. Principal Accountant Fees and Services.
****
Our independent registered
public accounting firm is FGMK, LLC, Chicago, IL Auditor Firm ID:3968 (FGMK)who have audited our financial statements for
the years ended December 31, 2025, and 2024.
The following table represents
aggregate fees billed to the Company for the fiscal years ended December 31, 2025 and 2024 by FGMK. FGMK has served as the Companys
independent registered public accounting firm since 2024. See [Item 9 - *Change in Independent Registered Public Accounting Firm*](#k_022).
|
FGMK | |
Year Ended December 31, 2025 | | |
Year Ended December 31, 2024 | | |
|
| |
(in thousands) | | |
(in thousands) | | |
|
Audit fees | |
$ | 422.5 | | |
$ | 300.0 | | |
|
Audit related fees | |
| 25.5 | | |
| | | |
|
Tax fees | |
| 159.0 | | |
| 4.8 | | |
|
Total | |
$ | 607.0 | | |
$ | 304.8 | | |
Audit fees consist of amounts for professional services
rendered for the audit of our year-end financial statements and services normally provided in connection with statutory and regulatory
filings or engagements including comfort letters, consents and other services related to SEC matters.
*Audit-Related Fees*. Audit-related services consist
of amounts for assurance and related services that are reasonably related to performance of the audit or review of our financial statements
and are not reported under Audit Fees. These services include attest services that are not required by statute or regulation
and consultations concerning financial accounting and reporting standards.
*Tax Fees*. The aggregate amount of fees for tax
planning, tax advice and tax compliance for the years ended December 31, 2025, and 2024 totaled $159 thousand and $4.8 thousand, respectively.
*All Other Fees*. We did not incur fees for any other
services for both the year ended December 31, 2025 and 2024.
| | 129 | | |
**PART IV**
Item 15. Exhibits and Financial Statement Schedules.
(1) Financial Statements
|
|
Page | |
|
Index to Financial Statements | |
|
Report of Independent Registered Public Accounting Firm(ID #3968) |
F-2 | |
|
Consolidated Balance Sheets |
F-3 | |
|
Consolidated Statements of Operations and Comprehensive Income |
F-4 | |
|
Consolidated Statements of Shareholders Equity |
F-5 | |
|
Consolidated Statements of Cash Flows |
F-6 | |
|
Notes to Consolidated Financial Statements |
F-7 | |
(2) Financial Statement Schedules:
All financial statement schedules have been omitted, since
the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the
information required is included in the consolidated financial statements and notes thereto included in this Form 10-K
|
|
|
|
|
|
|
Incorporated by Reference | |
|
Exhibit
Number |
|
Description of Exhibit |
|
Filed or
Furnished Herewith |
|
Form |
|
Exhibit |
|
Filing
Date |
|
File No. | |
|
2.1 |
|
Articles of Merger of GamePlan, Inc., as filed on December 31, 1991 |
|
|
|
Form 10 |
|
3.3(i) |
|
9/23/1999 |
|
000-27435 | |
|
2.2 |
|
Share Exchange Agreement dated January 14, 2020 by and among GamePlan, Inc., Athena Bitcoin, Inc. and certain of its shareholders |
|
|
|
S-1 |
|
2.3 |
|
2/10/2022 |
|
333-262629 | |
|
3.1 |
|
Articles of Incorporation for GamePlan Inc., a Nevada corporation, as filed on December 26, 1991 |
|
|
|
Form 10 |
|
3.1 |
|
9/23/1999 |
|
000-27435 | |
|
3.2 |
|
Articles of Amendment to the Articles of Incorporation filed on December 30, 1993 |
|
|
|
Form 10 |
|
3.3(i)(i) |
|
9/23/1999 |
|
000-27435 | |
|
3.3 |
* |
Amendment to the Articles of Incorporation dated October 12, 2018 |
|
X |
|
|
|
|
|
|
|
| |
|
3.4 |
* |
Amendment to the Articles of Incorporation of GamePlan, Inc. filed on January 22, 2020 |
|
X |
|
|
|
|
|
|
|
| |
|
3.5 |
* |
Amended and Restated Articles of Incorporation of GamePlan, Inc. filed on May 13, 2020 |
|
X |
|
|
|
|
|
|
|
| |
|
3.6 |
* |
Amendment to the Articles of Incorporation of GamePlan, Inc. filed on April 6, 2021 |
|
X |
|
|
|
|
|
|
|
| |
|
3.7 |
|
Second Amended and Restated Articles of Incorporation filed on January 11, 2023 |
|
|
|
S-1/A |
|
3.6 |
|
11/13/2023 |
|
333-262629 | |
|
3.8 |
|
Amended and Restated Bylaws adopted as of November 4, 2022 |
|
|
|
S-1/A |
|
3.11 |
|
11/13/2023 |
|
333-262629 | |
|
4.1 |
|
Form of common stock certificate of the registrant. |
|
|
|
S-1/A |
|
4.1 |
|
3/17/2022 |
|
333-262629 | |
|
4.2 |
|
Form of Amended and Restated Convertible Debenture dated as of May 15, 2023 |
|
|
|
S-1/A |
|
4.6 |
|
11/13/2023 |
|
333-262629 | |
|
4.3 |
|
Restricted Stock Unit Agreement with Shaun Overton dated February 28, 2023 |
|
|
|
S-1/A |
|
4.7 |
|
11/13/2023 |
|
333-262629 | |
|
10.1 |
|
Second Amendment to Development Services Agreement between Athena Bitcoin, Inc. and PSBC, LLC |
|
|
|
10-Q |
|
10.1 |
|
6/2/2025 |
|
333-262629 | |
| | 130 | | |
|
|
|
|
|
|
|
Incorporated by Reference | |
|
Exhibit
Number |
|
Description of Exhibit |
|
Filed or
Furnished Herewith |
|
Form |
|
Exhibit |
|
Filing
Date |
|
File No. | |
|
10.2 |
# |
Form of Indemnification Agreement between the Company and its officers and directors |
|
|
|
S-1 |
|
10.4 |
|
6/24/2025 |
|
333-288284 | |
|
10.3 |
#* |
Athena Bitcoin, Inc. 2016 Equity Incentive Plan |
|
X |
|
|
|
|
|
|
|
| |
|
10.4 |
# |
Athena Bitcoin Global 2021 Equity Compensation Plan |
|
|
|
S-1/A |
|
10.35 |
|
2/10/2022 |
|
333-262629 | |
|
10.5 |
* |
Loan Structuring and Related Amendments Agreement |
|
X |
|
|
|
|
|
|
|
| |
|
10.6 |
* |
First Amendment to Loan Agreement and Michael Komaransky dated August 22, 2018 |
|
X |
|
|
|
|
|
|
|
| |
|
10.7 |
* |
First Amendment to Securities Purchase Agreement dated January 31, 2020 |
|
X |
|
|
|
|
|
|
|
| |
|
10.8 |
* |
Security Agreement with Michael Komaransky |
|
X |
|
|
|
|
|
|
|
| |
|
10.9 |
|
Master Services Agreement with Treasury of El Salvador dated August 20, 2021 |
|
|
|
S-1/A |
|
10.24 |
|
6/24/2022 |
|
000-27435 | |
|
10.10 |
|
Contract No 51/2021 with Treasury of El Salvador |
|
|
|
S-1/A |
|
10.25 |
|
6/24/2022 |
|
000-27435 | |
|
10.11 |
|
Contract No 56/2021 with Treasury of El Salvador |
|
|
|
S-1/A |
|
10.26 |
|
6/24/2022 |
|
000-27435 | |
|
10.12 |
|
Promissory Note from Banco Hipotecario dated December 15, 2021 |
|
|
|
S-1/A |
|
10.32 |
|
3/17/2022 |
|
000-27435 | |
|
10.13 |
|
Athena Service Addendum 1 and 2 |
|
|
|
S-1/A |
|
10.27 |
|
6/24/2022 |
|
000-27435 | |
|
10.14 |
* |
Genesis Coin, Inc. Purchase and Sale Agreement dated October 1, 2015 |
|
X |
|
|
|
|
|
|
|
| |
|
10.15 |
* |
Genesis Coin, Inc. oral agreement with Athena Bitcoin, Inc. |
|
X |
|
|
|
|
|
|
|
| |
|
10.16 |
|
Letter of Intent with XPay dated July 13, 2021 |
|
|
|
S-1/A |
|
10.31 |
|
3/17/2022 |
|
333-262629 | |
|
10.17 |
|
Cryptocurrency Purchase & Sale Agreement with Galaxy Digital Trading Cayman LLC, dated January 23, 2021 |
|
|
|
S-1/A |
|
10.33 |
|
2/10/2022 |
|
333-262629 | |
|
10.18 |
|
Oral Contract by and between AdvisoryFX LLC and Athena Bitcoin |
|
|
|
S-1/A |
|
10.34 |
|
2/10/2022 |
|
333-262629 | |
|
10.19 |
|
ATM Terms of Service |
|
|
|
S-1/A |
|
5.16 |
|
2/10/2022 |
|
333-262629 | |
|
10.20 |
|
Athena Crypto Exchange FAQ and Terms of Service |
|
|
|
S-1/A |
|
10.34 |
|
2/10/2022 |
|
333-262629 | |
|
10.21 |
# |
Independent Contractor Agreement with Antonio Valiente dated January 1, 2022 |
|
|
|
S-1/A |
|
10.39 |
|
11/13/2023 |
|
333-262629 | |
|
10.22 |
# |
Consulting Agreement with Carlos Carreo dated March 15, 2023 |
|
|
|
S-1/A |
|
10.4 |
|
11/13/2023 |
|
333-262629 | |
|
10.23 |
|
Equipment Sublease Agreement dated April 13, 2023 |
|
|
|
S-1/A |
|
10.41 |
|
11/13/2023 |
|
333-262629 | |
|
10.24 |
|
Equipment Financing Agreement dated November 2, 2023 |
|
|
|
S-1/A |
|
10.42 |
|
11/13/2023 |
|
333-262629 | |
|
10.25 |
|
Equipment Financing Agreement dated December 31, 2023 |
|
|
|
S-1/A |
|
10.43 |
|
2/11/2025 |
|
333-262629 | |
|
10.26 |
|
Equipment Financing Agreement dated February 22, 2024 |
|
|
|
S-1/A |
|
10.44 |
|
2/11/2025 |
|
333-262629 | |
|
10.27 |
|
Special Power of Attorney dated as of May 18, 2023 |
|
|
|
S-1/A |
|
10.43 |
|
1/12/2024 |
|
333-262629 | |
|
10.28 |
|
Schedule to UCC Financing Statement dated as of May 18, 2023 |
|
|
|
S-1/A |
|
10.44 |
|
1/12/2024 |
|
333-262629 | |
|
10.29 |
|
Schedule to UCC Financing Statement dated as of May 18, 2023 |
|
|
|
S-1/A |
|
10.45 |
|
1/12/2024 |
|
333-262629 | |
|
10.30 |
|
Master Services Agreement executed as of October 5, 2022 and effective as of July 1, 2022 |
|
|
|
S-1/A |
|
10.48 |
|
2/11/2025 |
|
333-262629 | |
|
10.31 |
|
Service Level Agreement executed as of October 5, 2022 and effective as of July 1, 2022 |
|
|
|
S-1/A |
|
10.49 |
|
2/11/2025 |
|
333-262629 | |
|
10.32 |
|
Security Agreement dated August 4, 2022 |
|
|
|
S-1/A |
|
10.46 |
|
11/13/2023 |
|
333-262629 | |
|
10.33 |
|
First Amendment to Security Agreement dated January 17, 2023 |
|
|
|
S-1/A |
|
10.47 |
|
11/13/2023 |
|
333-262629 | |
| | 131 | | |
|
|
|
|
|
|
|
Incorporated by Reference | |
|
Exhibit
Number |
|
Description of Exhibit |
|
Filed or
Furnished Herewith |
|
Form |
|
Exhibit |
|
Filing
Date |
|
File No. | |
|
10.34 |
|
Secured Promissory Note dated August 4, 2022 |
|
|
|
S-1/A |
|
10.48 |
|
11/13/2023 |
|
333-262629 | |
|
10.35 |
|
First Amendment to Secured Promissory Note dated January 17, 2023 |
|
|
|
S-1/A |
|
10.49 |
|
11/13/2023 |
|
333-262629 | |
|
10.36 |
|
Senior Secured Revolving Credit Promissory Note dated May 15, 2023 |
|
|
|
S-1/A |
|
10.5 |
|
11/13/2023 |
|
333-262629 | |
|
10.37 |
|
Senior Secured Loan Agreement dated May 15, 2023 |
|
|
|
S-1/A |
|
10.51 |
|
11/13/2023 |
|
333-262629 | |
|
10.38 |
|
First Amendment to Senior Secured Loan Agreement dated June 6, 2023 |
|
|
|
S-1/A |
|
10.52 |
|
11/13/2023 |
|
333-262629 | |
|
10.39 |
|
Second Amendment to Senior Secured Loan Agreement dated July 27, 2023 |
|
|
|
S-1/A |
|
10.53 |
|
11/13/2023 |
|
333-262629 | |
|
10.40 |
|
Third Amendment to Senior Secured Loan Agreement dated October 16, 2023 |
|
|
|
S-1/A |
|
10.54 |
|
11/13/2023 |
|
333-262629 | |
|
10.41 |
|
Security Agreement dated May 15, 2023 |
|
|
|
S-1/A |
|
10.55 |
|
11/13/2023 |
|
333-262629 | |
|
10.42 |
|
Intercreditor Letter Agreement dated as of November 1, 2023 |
|
|
|
S-1/A |
|
10.56 |
|
11/13/2023 |
|
333-262629 | |
|
10.43 |
|
Termination Agreement dated November 4, 2022 |
|
|
|
S-1/A |
|
10.57 |
|
11/13/2023 |
|
333-262629 | |
|
10.44 |
|
Term Loan Note dated May 15, 2023 |
|
|
|
S-1/A |
|
10.58 |
|
11/13/2023 |
|
333-262629 | |
|
10.45 |
|
Unconditional Guaranty dated as of May 15, 2023 |
|
|
|
S-1/A |
|
10.59 |
|
11/13/2023 |
|
333-262629 | |
|
10.46 |
|
Payoff Letter with Consolidated Futures Trading, LLC dated May 15, 2023 |
|
|
|
S-1/A |
|
10.6 |
|
11/13/2023 |
|
333-262629 | |
|
10.47 |
|
Currency-In-Transit Control Agreement with Brinks, U.S. dated as of May 15, 2023 |
|
|
|
S-1/A |
|
10.65 |
|
1/12/2024 |
|
333-262629 | |
|
10.48 |
|
Currency-In-Transit Control Agreement with Garda CL SOUTHWEST INC., dated as of May 1, 2023 |
|
|
|
S-1/A |
|
10.66 |
|
1/12/2024 |
|
333-262629 | |
|
10.49 |
|
Currency-In-Transit Control Agreement with Thillens Inc., dated as of May 15, 2023 |
|
|
|
S-1/A |
|
10.67 |
|
1/12/2024 |
|
333-262629 | |
|
10.50 |
|
Currency-In-Transit Control Agreement with Move on Security LLC, dated as of May 15, 2023 |
|
|
|
S-1/A |
|
10.68 |
|
1/12/2024 |
|
333-262629 | |
|
10.51 |
|
Acknowledgment Agreement dated March 29, 2024 |
|
|
|
S-1/A |
|
10.7 |
|
2/11/2025 |
|
333-262629 | |
|
10.52 |
|
Taproot Omnibus Agreement dated as of September 19, 2024 |
|
|
|
S-1/A |
|
10.72 |
|
2/11/2025 |
|
333-262629 | |
|
10.53 |
|
PSBC, LLC Agreement dated June 19, 2024 |
|
|
|
S-1/A |
|
10.73 |
|
2/11/2025 |
|
333-262629 | |
|
10.54 |
|
Taproot Equipment Purchase Agreement and Amendment to Intercreditor Agreement dated October 30, 2024 |
|
|
|
S-1/A |
|
10.74 |
|
2/11/2025 |
|
333-262629 | |
|
10.55 |
|
Chivo Extension dated August 5, 2024 and effective as of July 31, 2024 |
|
|
|
S-1/A |
|
10.75 |
|
2/11/2025 |
|
333-262629 | |
|
10.56 |
|
Master Services Agreement executed as of December 20, 2024 and effective as of December 1, 2024 |
|
|
|
S-1/A |
|
10.76 |
|
2/11/2025 |
|
333-262629 | |
|
10.57 |
|
Service Level Agreement executed as of December 20, 2024 and effective as of December 1, 2024 |
|
|
|
S-1/A |
|
10.77 |
|
2/11/2025 |
|
333-262629 | |
|
10.58 |
|
Chivo Settlement Agreement |
|
|
|
S-1/A |
|
10.78 |
|
2/11/2025 |
|
333-262629 | |
|
10.59 |
|
BitGo Trust Company, Inc. Custodial Services Agreement dated August 1, 2023 |
|
|
|
S-1/A |
|
10.79 |
|
4/10/2025 |
|
333-262629 | |
|
10.60 |
|
PSBC, LLC First Amendment to Development Services Agreement dated July 25, 2024 |
|
|
|
S-1/A |
|
10.8 |
|
4/10/2025 |
|
333-262629 | |
|
10.61 |
|
Second Amendment to Development Services Agreement between Athena Bitcoin, Inc. and PSBC, LLC |
|
|
|
10-Q |
|
10.1 |
|
6/2/2025 |
|
333-262629 | |
|
10.62 |
* |
Amended and Restated Secured Convertible Debenture dated May 15, 2023 |
|
X |
|
|
|
|
|
|
|
| |
|
10.63 |
# |
Athena Bitcoin Global 2025 Equity Incentive Plan |
|
|
|
8-K |
|
10.1 |
|
7/10/2025 |
|
333-262629 | |
|
10.64 |
* |
October 30, 2024, Equipment Financing Agreement between Athena Bitcoin, Inc. and Taproot Acquisition Enterprises, LLC |
|
X |
|
|
|
|
|
|
|
| |
|
10.65 |
*# |
August 15, 2023 Offer Letter between Athena Bitcoin Global and Carlos Carreo |
|
X |
|
|
|
|
|
|
|
| |
|
10.66 |
*# |
December 13, 2024 Offer Letter between Athena Bitcoin Global and Omar Jimenez |
|
X |
|
|
|
|
|
|
|
| |
|
10.67 |
|
Release and Termination Agreement dated September 4, 2025, by and between Athena Bitcoin, Inc., Taproot Acquisition Enterprises, LLC, William Mgt LLC, BTML, LLC and PSBC, LLC |
|
|
|
8-K |
|
10.1 |
|
9/10/2025 |
|
333-262629 | |
|
21.1 |
* |
List of subsidiaries |
|
X |
|
|
|
|
|
|
|
| |
| 132 | | |
|
|
|
|
|
|
|
Incorporated by Reference | |
|
Exhibit
Number |
|
Description of Exhibit |
|
Filed or
Furnished Herewith |
|
Form |
|
Exhibit |
|
Filing
Date |
|
File No. | |
|
31.1 |
* |
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
|
X |
|
|
|
|
|
|
|
| |
|
31.2 |
* |
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
|
X |
|
|
|
|
|
|
|
| |
|
32.1 |
** |
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act |
|
X |
|
|
|
|
|
|
|
| |
|
32.2 |
** |
Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act |
|
X |
|
|
|
|
|
|
|
| |
|
101.INS |
* |
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document* |
|
X |
|
|
|
|
|
|
|
| |
|
101.SCH |
* |
Inline XBRL Taxonomy Extension Schema Document |
|
X |
|
|
|
|
|
|
|
| |
|
101.CAL |
* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
X |
|
|
|
|
|
|
|
| |
|
101.DEF |
* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
X |
|
|
|
|
|
|
|
| |
|
101.LAB |
* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
X |
|
|
|
|
|
|
|
| |
|
101.PRE |
* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
X |
|
|
|
|
|
|
|
| |
|
104 |
* |
Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set |
|
X |
|
|
|
|
|
|
|
| |
**____________________**
|
* |
Filed herewith | |
|
** |
Furnished herewith. | |
|
# |
Indicates management contract or compensatory plan or arrangement. | |
|
|
Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets ([***]) because the identified confidential portions (i) are not material and (ii) the Company customarily and actually treats that information as private or confidential. | |
|
|
Certain schedules, annexes and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Commission upon request; provided, however that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, for any schedule or exhibit so furnished. | |
|
|
These reports were incorrectly assigned File No. 000-27435 instead of File No. 333-262629 by the SEC and the Company has contacted the SEC about the error. | |
Item 16. Form 10-K Summary.
None.
| | 133 | | |
SIGNATURES
****
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized
|
Date: March 6, 2026 |
By: |
/s/ Matias Goldenhrn | |
|
|
Name: |
Matias Goldenhrn | |
|
|
Title: |
President and Chief Executive Officer (Principal Executive Officer) | |
|
|
|
| |
|
|
|
| |
|
Date: March 6, 2026 |
By: |
/s/ Omar Jimenez | |
|
|
Name: |
Omar Jimenez | |
|
|
Title: |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |
**
Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
|
Signature |
|
Title |
|
Date | |
|
|
|
|
|
| |
|
/s/ Matias Goldenhrn |
|
Chief Executive Officer and Director |
|
March 6, 2026 | |
|
Matias Goldenhrn |
|
(Principal Executive Officer) |
|
| |
|
|
|
|
|
| |
|
/s/ Omar Jimenez |
|
Chief Financial Officer and Director |
|
March 6, 2026 | |
|
Omar Jimenez |
|
(Principal Financial and Accounting Officer) |
|
| |
|
|
|
|
|
| |
|
/s/ Carlos Carreo |
|
Chief Operating Officer and Director |
|
March 6, 2026 | |
|
Carlos Carreo |
|
|
|
| |
|
|
|
|
|
| |
|
/s/ Huaxing Jason Lu |
|
Director |
|
March 6, 2026 | |
|
Huaxing Jason Lu |
|
|
|
| |
|
|
|
|
|
| |
|
/s/ Renata Szkoda |
|
Director |
|
March 6, 2026 | |
|
Renata Szkoda |
|
|
|
| |
**
**
| | 134 | | |