10-K: USBC Pivots to Fintech, Digital Assets with Bitcoin Treasury

USBC, Inc. has completed a strategic pivot to digital financial technologies, including a Bitcoin treasury strategy and tokenized deposit offering, following a $125 million controlling-interest acquisition.

Summary

• Completed a strategic pivot from non-invasive diagnostics to digital financial technologies, including digital assets and banking solutions.
• Goldeneye 1995 LLC, an affiliate of new CEO Greg Kidd, acquired a controlling interest for $125 million, comprising 1,000 Bitcoin and $15 million in cash.
• Company name changed to USBC, Inc. and ticker symbol to USBC on the NYSE American.
• Primary focus is on developing the USBC tokenized deposit offering, a U.S. dollar-denominated tokenized representation of bank deposits on blockchain, embedded with digital identity.
• Entered into a collaboration with Uphold HQ Inc. and Vast Bank, N.A. for the tokenized deposit offering, with Vast Bank serving as the initial issuing bank.
• Implemented a Bitcoin treasury strategy to generate yield through option derivative contracts, managed by Hyrcanian Asset Management, LLC.
• Held approximately 1,003 Bitcoin with a carrying value of $115.0 million as of September 30, 2025.
• Reported a net loss of $22,123,000 for the year ended September 30, 2025, an increase from $16,582,000 in 2024.
• Research and development expenses decreased by $4,361,000 to $1,753,000 in 2025, primarily due to reduced focus on the legacy sensor business.
• Selling, general and administrative expenses increased by $7,185,000 to $16,294,000 in 2025, mainly due to non-cash stock-based compensation, severance, and legal/advisory fees.
• Other expense, net, increased by $2,891,000 to $4,250,000, driven by interest expense, debt settlement losses, and a decrease in the fair value of digital assets, partially offset by derivative income of $283,000.
• The fiscal year end was changed from September 30 to December 31, effective December 15, 2025.
• Kirk Chapman departed from his role as Chief Operating Officer on December 15, 2025.

Sentiment

Score: 4

Explanation: While the strategic pivot and significant capital infusion are positive, the company continues to incur substantial losses, faces significant market and regulatory risks in its new ventures, and has experienced a material decline in its Bitcoin treasury value post-fiscal year end. The unlaunched status of its core new product and ongoing compliance challenges also weigh on sentiment.

Positives

• Successfully completed a strategic pivot to high-growth digital financial technologies, including digital assets and banking solutions.
• Received a significant capital injection of $125 million, including 1,000 Bitcoin and $15 million cash, substantially strengthening the balance sheet.
• Established a Bitcoin treasury strategy aimed at generating yield and supporting future growth and expansion of new business lines.
• Formed a strategic partnership with Uphold and Vast Bank for the tokenized deposit offering, targeting unprecedented global retail access to U.S. dollar-denominated tokenized deposits.
• Eliminated all outstanding preferred equity and convertible debt, simplifying the capital structure and reducing financial obligations.
• Reduced research and development expenses in the legacy science division, allowing for greater focus and investment in financial technology initiatives.
• Generated $283,000 in other derivative income from the Bitcoin treasury trading strategy during the fiscal year.
• Management believes existing liquidity sources, including Bitcoin holdings, are sufficient to meet cash needs for at least the next 12 months.
• Implemented robust corporate governance policies for related-party transactions, ensuring arms-length negotiations and Board oversight.

Negatives

• Reported a net loss of $22,123,000 for the year ended September 30, 2025, an increase of $5,541,000 from the $16,582,000 net loss in 2024.
• Selling, general and administrative expenses increased significantly by $7,185,000, primarily due to non-cash stock-based compensation ($4,450,000), severance ($530,000), and legal and advisory fees ($2,323,000).
• Other expense, net, increased by $2,891,000, driven by higher interest expense ($1,320,000), loss on debt settlements ($942,000), and a decrease in the fair value of digital assets ($823,000).
• The fair value of Bitcoin holdings declined significantly from $115,567 per Bitcoin at the time of acquisition (August 6, 2025) to $86,225 per Bitcoin as of December 15, 2025, resulting in a substantial unrealized loss.
• The tokenized deposit initiative has not yet launched and is subject to significant uncertainty, technical validation, and regulatory approvals, with a non-binding Memorandum of Understanding (MOU) still in place for key partnerships.
• The company is operating under an accepted plan with the NYSE American to regain compliance with listing standards, having previously received a notice of delisting proceedings for low bid price.
• A significant portion of tax attributes, approximately $74.1 million in net operating loss carryforwards, were deemed worthless due to a change in control in 2025.
• Recognized a deferred tax liability of $24,047,988 related to the unrealized gain on digital assets, reflecting the tax implications of the Bitcoin contribution.

Risks

• History of losses and no assurance of future profitability, with expected increases in costs for business growth and public company operations.
• Inability to keep pace with rapid digital asset industry changes and provide new, innovative products and services, potentially rendering current offerings obsolete.
• Need for additional capital, with no certainty that financing will be available on favorable terms or at all, potentially leading to dilution for stockholders.
• Failure of vendors to perform contractual agreements and the company's inability to effectively oversee vendor operations could adversely affect business continuity.
• Requirements of being a public company may strain resources, divert management's attention, and increase compliance costs.
• Failure to establish and maintain proper and effective internal control over financial reporting could impair the ability to produce accurate and timely financial statements.
• Controlled company status, where Greg Kidd beneficially owns a majority of voting power, may prevent minority stockholders from influencing significant corporate decisions and could lead to conflicts of interest.
• Significant dilution from recent recapitalization and potential future issuances, repricings, or sales of common stock could adversely affect the market price of shares.
• Risk of delisting from the NYSE American due to non-compliance with continued listing standards, leading to reduced liquidity and investor interest.
• Bitcoin price volatility and its correlation to the company's stock price could materially impact financial results and market value.
• Concentration of assets solely in Bitcoin limits diversification and magnifies exposure to Bitcoin-specific risks, including market-liquidity constraints.
• Counterparty, custody, and market-infrastructure risks, including contagion from broader industry failures, could result in loss of assets or access to Bitcoin holdings.
• Limited or unavailable insurance for digital-asset activities increases residual loss exposure for Bitcoin holdings.
• Regulatory and accounting developments, such as changes in digital asset classification or fair-value measurement, could increase compliance burdens, earnings volatility, or restrict the company's strategy.
• Yield-generation and derivative strategies are risky and relatively untested at public-company scale, exposing the company to leverage, counterparty default, and liquidity risk.
• Operational, technology, cybersecurity, and market-access risks could disrupt the execution of the Bitcoin treasury strategy, including loss of private keys or cyberattacks.
• The tokenized-deposit initiative has not yet launched and is subject to significant uncertainty, requiring technical validation and regulatory clearance.
• Inability to launch retail tokenized U.S. dollar deposits within anticipated timelines, or at all, if required regulatory, board, or banking-partner approvals are delayed or not obtained.
• Reliance on the continuing engagement, regulatory standing, and technical readiness of third-party partners (Vast Bank, Uphold) for the tokenized-deposit initiative.
• The legal and regulatory framework for tokenized deposits is unsettled and may impose obligations that make the initiative impractical or require fundamental redesign.
• Regulators may require banking partners to maintain traditional core-banking and general-ledger systems alongside blockchain infrastructure, increasing costs or limiting product design.
• Developing a tokenized-deposit platform exposes the company to significant development, operational, security, and technology risks, including smart-contract defects and scalability limitations.
• Reputational or regulatory issues affecting partners could harm the tokenized-deposit initiative, even if the company is not directly implicated.
• International access to tokenized deposits may be limited by sanctions, local-law restrictions, or bank-partner policies, reducing the addressable market.
• Potential conflicts of interest involving the banking partner (Vast Bank) due to shared control by the CEO and Vice Chair could create regulatory or governance risks.
• Success depends on retaining qualified management and technical personnel, with intense competition for talent in the fintech and digital-asset industries.
• Intellectual property challenges could impair the ability to protect or commercialize the legacy sensor technology.

Future Outlook

The company anticipates continued operating losses in the near term but expects future operating revenues to be primarily generated from financial technology network services, such as the tokenized deposit offering. Management believes that potential revenue opportunities and a strengthened capital structure provide the flexibility to pursue digital-asset and financial-technology initiatives. The company's future results will be heavily influenced by its ability to secure additional financing, manage digital-asset market volatility, successfully integrate banking partners, and navigate evolving regulatory developments. A structured pilot program for the tokenized deposit offering is planned, with the retail launch date to be scheduled after its conclusion and subject to requisite approvals. The company also expects significant ongoing investment in platform security, cryptographic protocols, regulatory adaptability, and cross-chain deployment tools. Management is actively evaluating a potential divestiture of the legacy non-invasive sensor business to enhance strategic focus and shareholder value. The fiscal year end has been changed to December 31, effective December 15, 2025, and an evergreen provision in the equity incentive plan will allow for annual increases in share reserves through 2030.

Management Comments

• "USBC, Inc. is a publicly traded, multi-disciplinary technology company that we believe is an industry-leading innovator in digital financial technologies."
• "With a focus on inclusion, innovation, and risk management, USBC is dedicated to creating long-term shareholder value in a rapidly evolving financial landscape."
• "Our corporate evolution reflects a strategic pivot to the further development of a financial-technology platform and establishment of a digital asset treasury reserve while continuing to maintain technology capabilities from our legacy sensor business."
• "We currently intend to maintain Bitcoin as the sole asset in our corporate treasury going forward and we do not currently intend to make any future purchases of Bitcoin."
• "Management believes existing liquidity is sufficient for at least 12 months after issuance of these financial statements."
• "Although we expect our operating losses to continue in the near term, we believe our potential revenue opportunities and strengthened capital structure have the potential to provide us with the flexibility to pursue our digital-asset and financial-technology initiatives."
• "Management is actively evaluating whether a divestiture of the legacy non-invasive sensor business could enhance our strategic focus, margin profile and longer-term shareholder value."
• "The Board continues to believe in value creation rather than value transfer and views option repricings as consistent with its approach of orienting long-term incentives toward stock options as the primary tool to minimize incremental dilution for stockholders, facilitate employee and director retention as USBC pursues its business strategy, to maintain the retention value of eligible awards, and provide eligible participants with a more realistic incentive to drive stockholder value creation, thereby supporting USBCs continued focus on stock price recovery and growth."
• "The Company currently has no plans to sell its Bitcoin holdings; however, it will continue to monitor market conditions and its liquidity needs."

Industry Context

The company operates in a highly competitive and rapidly evolving environment at the intersection of traditional finance and digital assets. The market for tokenized banking services is projected to experience rapid growth, with major financial institutions like Citigroup and JPMorgan Chase already piloting their own tokenized deposit and payment networks, primarily for institutional clients. The total supply of fiat-backed stablecoins was estimated at approximately $300 billion as of October 2025, indicating a significant market opportunity. The recent passage of the GENIUS Act of 2025, establishing a legal framework for payment stablecoins, is expected to further expand the competitive landscape. The company aims to differentiate itself by focusing on direct consumer access and integrating robust digital identity and compliance frameworks, addressing a noted friction point in broader digital asset adoption. Bitcoin's increasing illiquidity among long-term holders and institutional players, coupled with estimates of permanently unrecoverable coins, contributes to its price volatility and structural scarcity effect.

Comparison to Industry Standards

• Unlike stablecoins, USBC's offering is a tokenized representation of a bank deposit, not a newly-created digital asset backed by reserves, positioning it within regulated banking frameworks.
• USBC aims to be the first to provide direct access to end users for tokenized deposits, differentiating itself from existing tokenized deposit products that are primarily institutional-focused.
• The platform is designed to comply with existing banking regulations and leverage FDIC insurance eligibility, which industry pilots have identified as a key advantage over stablecoins not subject to similar prudential frameworks.
• While major financial institutions like Citigroup (Citi Token Services) and JPMorgan Chase (Onyx/Kinexys) have launched proprietary deposit-token systems, these are primarily oriented toward institutional clients and backend settlement infrastructure, whereas USBC focuses on retail users.
• USBC's platform will feature built-in digital identity and compliance frameworks, which it believes many competitors, especially in the crypto sector, do not offer, addressing a known industry pain point regarding robust on-chain identity solutions.
• The company's emphasis on compliance and asset quality is a conscious differentiator from many Decentralized Finance (DeFi) schemes, which often lack regulatory assurances.

Management Changes

Corporate Governance

Legal Proceedings

• Currently not aware of any legal proceedings or claims that are believed to have a material adverse effect on the business, financial condition, or operating results.

Related Party Transactions

• Goldeneye 1995 LLC (solely owned and managed by CEO Robert Gregory Kidd) acquired 357.8 million shares of common stock for 1,000 Bitcoin and $15 million in cash (total value approximately $125 million) on August 6, 2025. Goldeneye beneficially owns approximately 71.5% of the company's common stock on a fully diluted basis as of November 30, 2025.
• Goldeneye 1995 LLC provided short-term bridge funding of $210,000 via a promissory note on July 28, 2025, which was repaid on August 11, 2025.
• Linda Jenkinson (Vice Chair) also serves as CEO and Chair of Vast Holdings, Inc., the holding company for Vast Bank, N.A. CEO Robert Gregory Kidd personally invested $53 million into Vast Holdings, Inc. in 2024. A strategic partnership with Vast Bank and Uphold for the tokenized deposit initiative was announced on October 23, 2025. Terms were negotiated at arms length and reviewed by disinterested Board members; no payments were made to or received from Vast Bank in fiscal years 2024 or 2025.
• J3E2A2Z LP (an entity controlled by former CEO Ronald P. Erickson) had due dates on two Convertible Promissory Notes extended to September 30, 2025, with an increased interest rate from 6% to 8% on October 22, 2024. Warrant exercise dates were also extended to January 31, 2026, on January 30, 2024. On June 2, 2025, $1.18 million of principal from these notes was exchanged for 16,916 shares of Series H Convertible Preferred Stock. On August 6, 2025, the Series H Preferred Stock was redeemed for $654,276 cash and 2.0 million common shares.
• Clayton A. Struve (a significant shareholder prior to the Goldeneye investment) had an Extension of Warrant Agreement signed on March 19, 2024, extending 12,500 warrants to March 19, 2026. An additional Extension of Warrant Agreement was signed on December 17, 2024, extending four legacy warrant issuances from 2025 to 2030. On August 6, 2025, his Series C and D Convertible Preferred Stock were redeemed for 8.3 million common shares, and his convertible debt was converted for $75,000 cash and 3.3 million common shares.
• Peter J. Conley (former CFO) was granted options to purchase 75,025 shares at $10.00 per share on October 10, 2023. He was issued 50,000 shares of common stock on May 5, 2025, and 107,500 shares on August 6, 2025. He received a severance payment of $400,000 in August 2025 upon termination of his employment.
• John Cronin (former director, former Interim CTO) is Chairman and CEO of ipCapital Group, Inc., which received $239,000 in professional-service fees in fiscal year 2025 and $390,000 in fiscal year 2024. No ongoing consulting or advisory agreements were in effect as of September 30, 2025.
• During fiscal year 2025, an aggregate of 150,000 shares of common stock were issued to six directors for board service, valued at $0.44 per share. In fiscal year 2024, 11,337 shares of common stock were issued to six directors for board service, and options to purchase 95,245 shares were granted at an average exercise price of $16.58 per share.
• Stock options granted on August 6, 2025, to Vice Chair Linda Jenkinson and non-CEO NEOs Kitty Payne and Kirk Chapman were repriced on October 7, 2025, reducing the exercise price from $2.45 to $1.10 per share. Additional stock options were granted to them on October 7, 2025.

Stakeholder Impact

• Shareholders: Potential for long-term value creation from the strategic pivot to fintech and digital assets, but also face risks of dilution from future equity issuances, exposure to Bitcoin price volatility, and reduced protections due to the 'controlled company' status. No cash dividends are anticipated in the foreseeable future.
• Employees: The company's equity incentive plan aims to align employee interests with long-term shareholder value. There is a focus on recruiting and retaining professionals with expertise in blockchain, cybersecurity, and compliance for the new business direction. Employees in the legacy Science Division may face uncertainty regarding the potential divestiture of that business.
• Future Customers: The USBC tokenized deposit offering is designed to provide benefits such as 24/7 digital U.S. dollar access, instant transactions, global reach, and eligibility for FDIC insurance (for underlying deposits) and Reg E protections. Users will be required to build a verified digital identity to access and transact on the network.
• Banking Partners (e.g., Vast Bank): Opportunity to leverage USBC's platform to offer tokenized deposit products, potentially expanding their services. However, these partnerships are subject to increased regulatory scrutiny and potential conflicts of interest due to shared control by key management personnel.
• Distribution Partners (e.g., Uphold): Opportunity to integrate USBC's tokenization platform to expand their services and leverage their existing customer bases for the distribution of tokenized deposits.
• Regulators: The company's pivot into digital assets and fintech solutions places it within a rapidly evolving and highly scrutinized regulatory environment. The company is investing significantly in compliance to meet federal and state requirements, which could lead to increased oversight and potential delays in product rollout.

Next Steps

• Complete development of the USBC tokenized deposit offering and related digital financial infrastructure.
• Finalize technical and regulatory readiness for the USBC tokenized deposit offering.
• Negotiate terms of a definitive strategic partnership agreement with Vast Bank and Uphold.
• Conduct a structured pilot program to evaluate the USBC tokenized deposit offering with a limited group of internal users.
• Schedule the targeted retail launch date for the tokenized deposit offering after the pilot program concludes and subject to requisite regulatory, board, and bank partner approvals.
• Continue to monitor regulatory changes closely and make significant investments in legal, compliance, product, and engineering teams.
• Actively evaluate whether a divestiture of the legacy non-invasive sensor business could enhance strategic focus, margin profile, and longer-term shareholder value.
• File a transition report on Form 10-K for the period from October 1, 2025, to December 31, 2025, following the change in fiscal year end.
• Maintain ongoing compliance with NYSE American listing requirements to avoid delisting.
• Continue to monitor market conditions and liquidity needs regarding Bitcoin holdings.

Key Dates

Recommendation

The company has undergone a significant strategic transformation, pivoting to a high-potential but highly volatile and regulated sector. While the substantial capital infusion and new partnerships provide a foundation, the company faces considerable execution risks, regulatory uncertainties, and continued operating losses. The material decline in Bitcoin's fair value post-fiscal year end, a core treasury asset, adds to financial instability. Investors should monitor progress on the tokenized deposit offering, regulatory compliance, and financial performance closely before considering further investment, as the long-term viability of the new business model is still unproven. The 'controlled company' status and potential for dilution also warrant caution.

Keywords

Fintech, Digital Assets, Bitcoin Treasury, Tokenized Deposits, Blockchain, SEC Filing, USBC, Cryptocurrency, Financial Services, Corporate Governance, Risk Management, Strategic Pivot, NYSE American, Uphold, Vast Bank