10-K: Empery Digital Shifts to Bitcoin Treasury, Reports Major Losses

Empery Digital Inc. has pivoted to a digital asset treasury strategy, divesting its four-wheel vehicle business, but reported a substantial net loss of $150.1 million in 2025, largely due to unrealized Bitcoin losses.

Summary

• Empery Digital Inc. (formerly Volcon, Inc.) officially changed its name and Nasdaq ticker to EMPD on July 30, 2025, signaling a strategic shift to a digital asset treasury strategy.
• The company's primary goal is to optimize its capital structure to increase Bitcoin (BTC) per share, aiming to drive stockholder value through equity issuance at a premium to Net Asset Value (NAV) and common stock repurchases when trading below NAV.
• In July 2025, Empery Digital completed private placements, raising approximately $501.0 million in gross proceeds, including $28.0 million in Bitcoin, with net proceeds of $452.0 million used to acquire BTC and establish cryptocurrency treasury operations.
• As of March 25, 2026, the company held 3,359 BTC, with 2,891 BTC restricted as collateral for outstanding loan balances.
• The company has a share repurchase program, expanded to $200.0 million on February 2, 2026, and has repurchased 23,114,391 shares for $135.6 million through March 25, 2026, funded by borrowing arrangements and BTC sales.
• Empery Digital generated $2.0 million in income from trading Bitcoin derivatives (short-term put and call contracts) since the inception of its digital asset strategy through March 25, 2026.
• The company divested its Volcon brand and four-wheel vehicle business (HF1 UTV, MN1 Adventurer, MN1 Tradesman) to Venom-EV LLC in October 2025, in exchange for a non-dilutable 10% equity position in Venom's reorganized Delaware corporation.
• The company will concentrate on its two-wheel E-Bike business (Brat) and expand vehicle financing operations for golf carts and UTVs.
• Revenue for the year ended December 31, 2025, significantly decreased to $974,977 from $3,983,466 in 2024, with a gross margin of negative $362,618.
• Net loss for 2025 was $150,052,486, a substantial increase from $45,510,309 in 2024, primarily driven by a $122.7 million unrealized loss on digital assets.
• The company reported material weaknesses in internal control over financial reporting from its 2020 audit, which remain unremediated as of December 31, 2025, including inadequate segregation of duties and insufficient formal written policies.
• A stockholder rights plan was adopted on February 3, 2026, issuing one preferred share purchase right for each common stock share, exercisable if a person or group acquires 12.5% or more of outstanding common stock.
• On March 25, 2026, the company completed a registered direct offering, selling 2,558,422 common shares and pre-funded warrants for 2,079,797 shares, along with common stock warrants, raising $25.0 million in gross proceeds to reduce debt and for general corporate purposes.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with low sentiment due to the substantial net loss driven by significant unrealized Bitcoin losses, declining traditional business revenue, and persistent internal control weaknesses, despite strategic shifts and capital raising efforts.

Positives

• The company successfully raised approximately $501.0 million in gross proceeds from private placements in July 2025, including $28.0 million in Bitcoin.
• Net proceeds of $452.0 million from private placements were used to purchase Bitcoin and establish cryptocurrency treasury operations, aligning with the digital asset strategy.
• Empery Digital generated $2.0 million in income from trading Bitcoin derivatives (short-term put and call contracts) through March 25, 2026.
• The company has a share repurchase program, expanded to $200.0 million, and has actively repurchased 23,114,391 shares for $135.6 million through March 25, 2026, aiming to increase NAV per share.
• Divestiture of the four-wheel vehicle business to Venom-EV LLC is expected to reduce future product liability exposure.
• The company retains a non-dilutable 10% equity position in Venom's reorganized Delaware corporation and the right to appoint one director to Venom's board.
• Empery Digital plans to expand its vehicle financing operations for golf carts and UTVs to generate positive cash flow.
• The company regained and maintained compliance with Nasdaq listing rules regarding minimum bid price and publicly held shares as of November 14, 2025.

Negatives

• The company reported a significant net loss of $150,052,486 for the year ended December 31, 2025, compared to $45,510,309 in 2024.
• Unrealized loss on digital assets of $122.7 million represented 79.3% of operating expenses for the year ended December 31, 2025, significantly contributing to the net loss.
• Revenue from continuing operations decreased substantially to $974,977 in 2025 from $3,983,466 in 2024, resulting in a negative gross margin of $362,618.
• Material weaknesses in internal control over financial reporting identified in the 2020 audit remain unremediated as of December 31, 2025, including inadequate segregation of duties and insufficient formal written policies.
• The company has an accumulated deficit of $316.4 million as of December 31, 2025, and recurring losses raise substantial doubt about its ability to continue as a going concern without sufficient funding.
• Operating expenses increased significantly to $153.1 million in 2025 from $11.7 million in 2024, largely due to the unrealized loss on digital assets.
• The company's cash on hand and expected cash generation from operations and derivative trading are not expected to be sufficient to cover expenses during 2026, requiring reliance on equity/debt financings or Bitcoin sales.
• The company incurred a $3.2 million realized loss from selling 722 Bitcoin for $50.0 million between January 1, 2026, and March 25, 2026.
• The Super Sonic Distribution Agreement was terminated in September 2025 due to the company's failure to meet minimum purchase requirements for two consecutive months.

Risks

• Losses from operations could raise substantial doubt regarding the company's ability to continue as a going concern, requiring sufficient funding to finance operations.
• Unremediated material weaknesses in internal control over financial reporting could adversely affect the ability to accurately or timely report financial condition or results of operations.
• Operating results, revenues, and expenses may fluctuate significantly, particularly due to Bitcoin price volatility, impacting the market price of common stock.
• A significant decrease in the market value of Bitcoin holdings could adversely affect the ability to satisfy financial obligations or liquidity needs, potentially leading to margin calls and liquidation of collateralized Bitcoin.
• The company's business may not generate sufficient funds, and it may be unable to maintain sufficient cash reserves to continue share repurchases or pay amounts due under indebtedness.
• Bitcoin and other digital assets are novel and subject to significant legal, commercial, regulatory, and technical uncertainty, which could materially adversely affect financial position, operations, and prospects.
• Changes in regulatory interpretations could require registration as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns.
• The unregulated nature and lack of transparency of many digital asset trading venues may lead to greater fraud, security failures, or operational problems, affecting digital asset values.
• Indebtedness and liabilities could limit cash flow, expose the company to risks, and impair the ability to satisfy debt obligations.
• The concentration of Bitcoin holdings enhances risks, making the company more vulnerable to price declines than a diversified portfolio.
• Risks relating to the custody of digital assets, including security breaches, cyberattacks, loss or destruction of private keys, could result in loss of digital assets.
• The irreversibility of digital asset transactions exposes the company to risks of theft, loss, and human error, with limited legal recourse or insurance.
• Significant competition in the digital asset industry could adversely affect the company's business if it cannot compete effectively.
• The emergence or growth of other digital assets (e.g., stablecoins, CBDCs) could negatively impact Bitcoin's price and the company's securities.
• The availability of spot exchange-traded products for Bitcoin and other digital assets may adversely affect the market price of common stock and the ability to execute the Bitcoin strategy.
• The Bitcoin strategy exposes the company to risk of non-performance by counterparties (e.g., custodians, execution partners).
• Digital asset lending arrangements (if pursued) may expose the company to risks of borrower default, operational failures, and cybersecurity threats.
• Exposure to greater than anticipated tax liabilities, including potential corporate alternative minimum tax (CAMT) due to unrealized Bitcoin gains.
• Reliance on an international third-party manufacturer (PXID) for E-Bikes subjects the company to risks of product delivery delays, reduced control over costs and quality, and supply chain disruptions.
• Risks associated with foreign manufacturing, suppliers, and imports, including tariffs, trade policies, and geopolitical instability, could increase costs and delay supply.
• Inability of the third-party manufacturer to meet growing sales and delivery plans could harm the business.
• Increases in costs, disruption of supply, or shortage of materials (e.g., battery cells) could harm the business.
• Delays and complications in the design, manufacture, launch, and production ramp of vehicles could harm the brand and financial results.
• Failure of the Brat E-Bike or new E-Bikes to perform as expected could harm reputation and sales.
• Significant product repair and/or replacement due to product warranty claims or recalls could have a material adverse impact.
• Adverse determination in any significant product liability claim could materially adversely affect the business.
• Inability to successfully build out and maintain the dealer and international distributor network for E-Bikes could harm the business.
• Inability to improve existing products and develop new products that respond to customer needs and achieve market acceptance could negatively impact competitiveness.
• Failure to establish, maintain, and strengthen the new 'Empery Digital' brand could adversely affect customer acceptance.
• Limited history of financing inventory purchases and risk of default by parties to inventory financing agreements.
• Increased tariffs or a global trade war could increase product costs for customers and the company, impacting competitiveness and financial results.
• Need to defend against intellectual property infringement claims, which may be time-consuming and costly.
• Negative impact from cybersecurity attacks and evolving privacy laws, leading to substantial costs, data breaches, and reputational damage.
• Anti-takeover provisions in governing documents and the stockholder rights plan may discourage, delay, or prevent a change of control.
• Negative impact from stockholder activism, causing significant expense, hindering strategy execution, and impacting stock price.
• Ownership dilution if additional capital stock is issued to raise capital, purchase digital assets, repay debt, finance operations, or complete acquisitions.
• Stock price fluctuations could lead to significant investment loss, and potential for securities class action litigation.
• Failure to maintain compliance with Nasdaq listing requirements could lead to delisting, impacting liquidity and market price.

Future Outlook

Empery Digital expects sales to decrease in 2026 due to the divestiture of its four-wheel products and discontinuing the Grunt EVO motorcycle, as it transitions to financing inventory purchases. The company anticipates product development costs related to employee costs to decrease due to lower headcount, partially offset by increased prototype costs for new E-Bike products. General and administrative expenses are expected to decrease in 2026 compared to 2025, as one-time costs related to the digital asset strategy establishment are not expected to recur, and insurance costs are projected to decrease. However, legal and professional fees are expected to increase in fiscal year 2026 due to corporate governance and stockholder engagement matters. The company plans to launch new two-wheel products in European markets in the second half of 2026 and will continue to evaluate other potential two-wheel product offerings. Management anticipates that cash on hand, cash from operations, derivative trading premiums, available credit facility borrowings, and Bitcoin sales will be sufficient to fund planned operations and repay borrowings beyond one year from the financial statement issuance date.

Management Comments

• Management anticipates that cash on hand as of December 31, 2025, plus cash expected to be generated from operations and premium from derivative trading, cash available from borrowings available on our credit facility and the cash received from the sale of Bitcoin will be sufficient to fund planned operations and repay borrowings due beyond one year.
• We view our BTC as long-term holdings, although there are no restrictions on selling BTC that is not held as collateral by our lenders.
• We expect that we will complete additional financing transactions for Venom under the Venom Supply Agreement and we are actively in discussions for the opportunity to fund inventory purchases with other companies that sell golf carts and UTVs.
• The Company expects that this agreement (Venom APA) will reduce Empery Digital's future product liability exposure by transferring ownership of Volcon's four-wheel vehicle business to Venom.
• The Company also plans to expand its vehicle financing operations for golf carts and UTVs to generate positive cash flow by leveraging the spread between the Company's cost of capital and interest income from vehicle financing.
• We expect our sales to decrease due to the sale of our four-wheel products to Venom, discontinuing the Grunt EVO motorcycle and our transition to financing inventory purchases for other golf cart and four-wheel product companies.
• We expect cost of goods sold to decrease due to lower revenue from product sales.
• We expect sales expenses to decrease as we transition away from selling four-wheeled products to financing inventory purchases. We expect marketing expenses to remain consistent as we develop the Empery Digital brand and increase awareness of our digital asset strategy.
• We expect product development costs related to employee costs to decrease due to lower headcount as fewer products are in development compared to 2025, partially offset by an increase for product prototype costs for purchases of samples of new E-Bike products being considered for sale.
• We expect general and administrative expenses to decrease when compared to 2025 as we have substantially established our digital asset strategy and do not expect to incur certain one-time costs.
• We anticipate an increase in legal and professional fees in fiscal year 2026 due to certain corporate governance and stockholder engagement matters, including fees associated with stockholder activist matters.

Industry Context

StockSavvy.ai notes that Empery Digital's pivot to a digital asset treasury strategy aligns with a growing trend among public companies to hold Bitcoin as a treasury reserve asset, as highlighted by the CNBC article mentioning approximately 190 public companies employing such strategies. However, the significant unrealized losses on digital assets and high volatility experienced by Empery Digital underscore the inherent risks of this strategy, particularly for companies with limited operational cash flow to offset market fluctuations. The divestiture of its four-wheel EV business and focus on E-Bikes positions Empery Digital in a highly competitive, innovation-driven market with numerous established players like Super 73, requiring strong brand recognition and cost control. The company's move into inventory financing for other golf cart and UTV companies represents a diversification attempt within the broader powersports and light electric vehicle sector, seeking to leverage its cost of capital.

Comparison to Industry Standards

• Empery Digital's digital asset treasury strategy, aiming to increase BTC per share, is comparable to companies like MicroStrategy, which has aggressively accumulated Bitcoin as a primary treasury reserve asset. However, Empery Digital's significant unrealized losses ($122.7 million in 2025) and reliance on debt/equity for funding highlight a potentially higher risk profile compared to more established Bitcoin holders with stronger underlying operational cash flows.
• The E-Bike market, where Empery Digital's Brat competes, is highly fragmented and competitive, with numerous players such as Super 73, Rad Power Bikes, and Aventon. Empery Digital's revenue of $974,977 from E-Bikes and accessories in 2025 is significantly lower than leading E-Bike brands, indicating a smaller market presence and potentially less competitive pricing or marketing resources.
• The company's gross margin turning negative in 2025 ($-362,618) is a stark contrast to industry standards for manufacturing and retail, where positive gross margins are essential for sustainable operations. This suggests severe pricing pressure, high production costs, or inventory write-downs.
• The unremediated material weaknesses in internal control over financial reporting, identified since 2020, fall below best practices for public companies and could raise concerns for investors and regulators regarding financial reporting reliability, unlike well-governed industry peers.
• The adoption of a stockholder rights plan (poison pill) is a defensive corporate governance measure, often seen in companies facing potential hostile takeovers or activist investor pressure, which can be viewed differently by investors compared to companies with more open governance structures.

Management Changes

Corporate Governance

Legal Proceedings

• The company may from time to time become subject to claims, arbitrations, individual and class action lawsuits with respect to a variety of matters, including employment, consumer protection, advertising, and securities.
• The company may also become subject to government and regulatory investigations, inquiries, actions, or requests, other proceedings, and enforcement actions alleging violations of laws, rules, and regulations, both foreign and domestic.

Related Party Transactions

• **Gemini NuStar, LLC (Gemini) and Gemini Trust Company, LLC (Gemini Trust)**: On July 13, 2025, the company entered into a Strategic Digital Assets Services Agreement with Gemini for non-discretionary execution and digital asset-related informational services. Concurrently, a Custodial Services Agreement was signed with Gemini Trust for custody services of digital asset holdings, incurring $687,531 in custodial fees for 2025. Mr. Rohan Chauhan, a former Director of Strategy at Gemini, is a member of Empery Digital's board.
• **Board of Directors**: On July 17, 2025, in connection with the Private Placements, the four existing independent board members received an aggregate cash payment of $600,000 and a grant of 10,000 stock options each. These board members collectively purchased 60,000 shares of common stock for $600,000 in the Private Placements. New directors (Messrs. Read, Homer, Chauhan, Lane) were appointed, receiving annual fees and stock option grants.
• **Empery Asset Management LP (EAM)**: Ryan Lane, Co-CEO and Chairman, is a founder and principal of EAM, an investor in the company. Mr. Lane purchased 100,000 shares for $1.0 million, and EAM-controlled funds purchased 2,500,000 shares for $25.0 million in the Private Placements. As of December 31, 2025, EAM-controlled funds own 2,930,345 shares and various warrants.
• **ThankYou Studios**: In March 2025, the company entered into a consulting agreement with ThankYou Studios, an entity owned by Orn Olason (a board member), for marketing and brand assessment services totaling $45,000.
• **John Kim (Co-CEO)**: Signed a new employment agreement on July 17, 2025, with an annual salary of $225,000 and a $225,000 signing bonus. Granted 1,494,010 stock options and purchased 22,500 shares for $225,000 in the Private Placements. Modified previously granted stock options to increase exercise price.
• **Greg Endo (CFO)**: Signed a new employment agreement on July 17, 2025, with an annual salary of $300,000 and a $150,000 signing bonus. Granted 747,005 stock options and purchased 20,000 shares for $200,000 in the Private Placements. Modified previously granted stock options to increase exercise price.
• **Timothy Silver (COO) and Brett Director (VP Legal)**: Appointed on July 17, 2025, with annual salaries of $150,000 and $200,000, respectively. Granted inducement stock options (597,604 and 298,802, respectively). Both are also employees of EAM. Mr. Silver purchased 2,500 shares for $25,000, and Mr. Director purchased 10,000 shares for $100,000 in the Private Placements.
• **Highbridge Consultants, LLC**: On July 11, 2025, the company entered into a termination agreement with Highbridge (an entity controlled by co-founder Mr. Adrian James), paying a $2.0 million termination fee to release obligations, including potential market capitalization milestone payments.

Stakeholder Impact

• **Shareholders**: Significant dilution from recent equity offerings (Private Placements, ATM program, March 2026 offering). Potential for increased value if the Bitcoin strategy is successful and NAV per share increases, but also high risk due to Bitcoin price volatility and substantial unrealized losses. The stockholder rights plan aims to protect against hostile takeovers but could also limit acquisition premiums. Unremediated internal control weaknesses pose a risk to financial reporting reliability.
• **Employees**: New executive appointments and stock option grants are intended to incentivize management. However, headcount reductions in product development and the shift away from four-wheel products may impact certain employee roles. The company emphasizes competitive benefits and a strong culture.
• **Customers**: The divestiture of four-wheel products means existing customers for those lines will transition to Venom, with Empery Digital providing ongoing warranty support. The focus on E-Bikes and new product launches aims to serve two-wheel customers, but reliance on a single international manufacturer poses supply and quality risks.
• **Suppliers**: The company's reliance on a single international third-party manufacturer (PXID) for E-Bikes creates concentration risk. Termination of the Super Sonic Distribution Agreement and settlement with GLV indicate past issues with supplier relationships and minimum purchase requirements. New tariffs could increase costs for both the company and its inventory financing customers.
• **Creditors**: The company has incurred significant indebtedness ($95.0 million outstanding as of March 25, 2026), collateralized by Bitcoin. Bitcoin price volatility poses a risk of margin calls and potential liquidation of collateral, which could impact the company's ability to satisfy its obligations. The recent capital raise aims to reduce some of this debt.

Next Steps

• Launch new two-wheel products in European markets in the second half of 2026.
• Continue to evaluate other potential two-wheel product offerings in 2026.
• Expand vehicle financing operations for golf carts and UTVs.
• Actively work with real estate broker and landlord to sublease underutilized facilities in Round Rock, Texas, and not renew leases expiring in August 2026.
• Obtain stockholder approval for the 2025 Stock Plan and shares to be issued under it at the 2026 annual meeting of stockholders.
• Venom to complete its corporate reorganization within six months, or Empery Digital has the option to repurchase the Volcon IP for a nominal amount.
• Repay the $50.0 million Repo Facility and draw down approximately $10.0 million on the MLA using proceeds from the March 2026 offering and cash on hand.

Key Dates

Recommendation

Empery Digital Inc. is undergoing a significant strategic transformation, pivoting from an electric powersports manufacturer to a digital asset treasury company with a focus on Bitcoin. While the company has successfully raised substantial capital and initiated share repurchases, the financial results for 2025 show a massive net loss primarily driven by unrealized losses on its Bitcoin holdings, highlighting extreme volatility and risk. The traditional vehicle business is being scaled back, and the E-Bike segment is small and faces intense competition. Unremediated material weaknesses in internal controls are a serious concern. The recent capital raise and debt reduction are positive steps for liquidity, but the core strategy remains highly speculative due to Bitcoin's inherent volatility and regulatory uncertainty. Investors should 'hold' to observe the execution of the new digital asset strategy, the effectiveness of cost reduction efforts, and the remediation of internal control issues. A 'buy' recommendation would be premature given the significant financial losses and high-risk profile, while a 'sell' might overlook the potential upside if the Bitcoin strategy proves successful and market conditions improve.

Keywords

Bitcoin, Digital Asset Treasury, Cryptocurrency, SEC Filing, 10-K, Empery Digital, EMPD, E-Bike, Electric Vehicles, Share Repurchase, Corporate Governance, Risk Factors, Financial Performance, Nasdaq, Stockholder Rights Plan, Unrealized Loss, Internal Controls, Debt Financing, Private Placement, Asset Sale, Volcon