USBC, Inc. (USBC) 10-Q Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2026. USBC, Inc. is a technology company pivoting from legacy sensor technology to financial services infrastructure, specifically developing a tokenized U.S.-dollar deposit program. The company operates as a smaller reporting company and a non-accelerated filer. On March 27, 2026, the company completed the divestiture of its legacy non-invasive sensor business (Particle, Inc.) to an entity controlled by its former CEO.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(46,343,343) | $(5,107,637) |
| Operating Expenses | $28,097,495 | $3,461,867 |
| Cash and Cash Equivalents | $2,982,232 | $4,092,308 |
| Total Digital Assets (Bitcoin) | $58,113,455 | $86,637,784 |
| Loan Payable (Current) | $15,000,000 | $0 |
| Working Capital | $(15,419,612) | $3,115,857 |
Note: The company reported no operating revenue. The significant increase in net loss is primarily driven by non-cash unrealized losses on digital assets and increased stock-based compensation.
Material Changes vs. Prior Period
- Net Loss Expansion: Net loss increased by approximately $41.2 million year-over-year. This was driven by a $29.7 million non-cash unrealized loss on the change in fair value of digital assets (Bitcoin), a $2.5 million provision for credit losses, and a $10.4 million increase in stock-based compensation.
- Operating Expenses: Selling, General, and Administrative (SG&A) expenses surged to $27.8 million from $2.8 million. This includes $6.3 million in costs related to affiliated service providers for the tokenized deposit program and significant professional fees associated with the strategic transition.
- Debt Financing: The company entered a Master Loan Agreement (MLA) in March 2026, drawing $15.0 million by June 30, 2026. This debt is collateralized by Bitcoin holdings.
- Digital Asset Valuation: The fair value of digital assets decreased from $86.6 million to $58.1 million, reflecting market volatility in Bitcoin prices.
- Divestiture: The legacy sensor business was divested, resulting in a reduction of Research and Development expenses to $276,000 from $657,000 in the prior year.
Guidance, Outlook, and Risks
- Strategic Focus: Management is advancing Phase 2 of the tokenized deposit program delivery strategy, focusing on operational readiness for a commercial launch. The company has formalized partnerships with Vast Bank (issuing bank) and Uphold (platform integration).
- Liquidity: Management concluded there is no substantial doubt about the company's ability to continue as a going concern for the next 12 months, citing cash on hand, unencumbered digital assets, and access to the Bitcoin-collateralized credit facility.
- Reverse Stock Split: A reverse stock split (ratio 1-for-2 to 1-for-5) was approved by the controlling shareholder to maintain NYSE American listing requirements. The exact ratio and timing are to be determined.
- Risks: Key risks include dependence on external financing, volatility in Bitcoin prices affecting both asset valuation and loan collateral ratios, and regulatory uncertainties surrounding digital assets and tokenized deposits.
- Subsequent Event: On July 28, 2026, the company drew an additional $3.0 million under the MLA, bringing total outstanding debt to $18.0 million.
Investor Verification Checklist
- Collateral Coverage: Verify the current Loan-to-Value (LTV) ratio of the $18 million debt against the pledged Bitcoin collateral, given the 130% margin call threshold.
- Related Party Transactions: Review the $10.5 million cap on the Affiliate Services Agreement with Vast Holdings, Inc., and the $5.1 million incurred to date as of July 31, 2026.
- Stock-Based Compensation: Assess the impact of the $11.2 million stock-based compensation expense and the recent repricing of 82 million stock options on future dilution.
- Revenue Timeline: Confirm the regulatory and operational milestones required for the commercial launch of the tokenized deposit program to generate revenue.
- Credit Loss Provisions: Monitor the $2.2 million allowance for credit losses on digital asset receivables and the $180,000 provision on the unfunded note to the divested entity.