Empery Digital Inc. (EMPD) - 10-Q Summary for Period Ended June 30, 2026
Business Context and Reporting Period
This Quarterly Report on Form 10-Q covers the period ended June 30, 2026. Empery Digital Inc. (formerly Volcon, Inc.) has pivoted from an electric powersports manufacturer to a digital asset treasury company focused on Bitcoin (BTC) accumulation, while maintaining a reduced two-wheeled vehicle business and inventory financing operations. The company is classified as a Smaller Reporting Company and an Emerging Growth Company. It operates as a single segment, with corporate costs primarily driven by its Bitcoin strategy and legal matters.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
|---|---|---|
| Revenue | $305,721 | $652,505 |
| Net Loss | $(128,437,982) | $(6,360,327) |
| Loss Per Share (Basic & Diluted) | $(4.21) | $(14.88) |
| Cash and Cash Equivalents | $3,589,598 | $2,298,573 (Beginning of 2025 period) |
| Total Digital Assets (BTC) | $170,644,038 | $356,975,383 (Beginning of 2026) |
| Long-Term Debt | $54,960,747 | $49,945,046 |
| Stockholders' Equity | $113,390,575 | $269,214,217 (Dec 31, 2025) |
Note: Revenue consists primarily of financing income ($176,025) and sales of E-bikes/accessories. The company reported a negative gross margin of $(5,106) for the six-month period.
Material Changes vs. Prior Period
- Significant Net Loss Increase: Net loss increased from $6.4 million in the prior year period to $128.4 million. This is primarily driven by a $106.3 million unrealized loss on digital assets (Bitcoin) and $10.9 million in legal fees related to a stockholder litigation matter.
- Revenue Decline: Revenue decreased 53% year-over-year due to the divestiture of the four-wheel product line (Volcon brand) to Venom EV, LLC, which is now reported as discontinued operations.
- Balance Sheet Contraction: Total assets decreased from $372.4 million (Dec 31, 2025) to $179.5 million (June 30, 2026). This reflects the sale of Bitcoin (proceeds of $80.1 million used for debt repayment and operations) and the recognition of fair value losses on remaining holdings.
- Debt Restructuring: The company repaid a $50 million term loan in March 2026 using proceeds from Bitcoin sales and equity offerings. As of June 30, 2026, $55 million remains outstanding under a delayed draw term loan facility, secured by 1,539 BTC.
- Share Repurchases: The company repurchased 12.5 million shares for approximately $54 million during the six-month period, funded by debt and Bitcoin sales.
Guidance, Outlook, and Risks
- Strategic Pivot: Management continues to execute a digital asset treasury strategy, aiming to increase BTC per share. They plan to issue equity when trading above Net Asset Value (NAV) and repurchase shares when trading below NAV.
- Data Center Investments: The company has entered a strategic partnership with Hunt Properties via EMHU LLC (25% ownership) to acquire a Midwest property for conversion into an AI data center. A further capital commitment of $62.1 million is contingent on the closing of this acquisition. Additionally, the company invested $20 million in Cardinal Data Power Inc. (CDP) in July 2026.
- Legal Contingency: A stockholder filed a complaint in the Delaware Court of Chancery regarding the rejection of director nominees and the March 2026 equity offering. The trial concluded in August 2026, with a verdict pending. Legal fees incurred to date total $7.8 million, with potential insurance reimbursement above a $5 million deductible.
- Inventory Financing Risk: The company has reserved $2.1 million for financing receivables owed by Venom EV, which informed the company in July 2026 of its inability to repay financed inventory amounts.
- Controls and Procedures: Management concluded that disclosure controls and procedures were not effective as of June 30, 2026, citing missed filings and lack of remediated controls.
Investor Verification Checklist
- Bitcoin Valuation: Verify the fair value of the remaining 2,914 BTC holdings ($170.6 million) against current market prices, noting that 1,539 BTC are restricted as collateral.
- Litigation Outcome: Monitor the verdict of the Delaware Court of Chancery case regarding the stockholder nomination dispute and the potential impact on the March 2026 equity offering.
- Debt Covenants: Review the collateral requirements for the $55 million outstanding loan, specifically the "Liquidation Level" (143% of borrowings) and the risk of forced liquidation if Bitcoin prices decline further.
- EMHU Closing: Confirm the status of the $230 million property acquisition by EMHU LLC and the company's ability to fund the remaining $62.1 million capital commitment.
- Venom Receivables: Assess the recoverability of the $2.1 million reserved receivable from Venom EV and the company's ability to liquidate the secured inventory.