USBC, Inc. (USBC) 10-K Transition Period Summary
Business Context and Reporting Period
This filing is a Transition Report on Form 10-K for the three-month period from October 1, 2025, to December 31, 2025. USBC, Inc. (formerly Know Labs, Inc.) changed its fiscal year-end from September 30 to December 31 to align with industry peers. The company has pivoted from non-invasive sensor technology to a digital financial technology platform, focusing on a Bitcoin treasury strategy and the development of a tokenized U.S. dollar deposit offering ("USBC").
Key strategic developments include a controlling-interest acquisition by Goldeneye 1995 LLC (affiliated with CEO Greg Kidd) in August 2025, resulting in the receipt of 1,000 Bitcoin and $15 million in cash. The company has formalized partnerships with Vast Bank (issuing bank) and Uphold (platform integration) for its tokenized deposit program, initiating an internal pilot (Phase 1) in March 2026.
Key Financial Metrics
| Metric | Transition Period (3 Months Ended Dec 31, 2025) | Prior Period (3 Months Ended Dec 31, 2024) |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(27.5) million | $(4.7) million |
| Operating Expenses | $17.1 million | $2.8 million |
| Cash and Cash Equivalents | $4.1 million | $1.0 million |
| Working Capital | $3.1 million | N/A |
| Digital Assets (Bitcoin) Fair Value | $86.6 million | N/A (Acquired Aug 2025) |
| Accumulated Deficit | $(190.5) million | $(163.1) million |
Note: The company reported no operating revenue during the period. The significant increase in net loss is primarily driven by a $27.2 million unrealized loss on the fair value of digital assets and $11.9 million in stock-based compensation.
Material Changes vs. Prior Period
- Strategic Pivot: The company transitioned from a legacy sensor business to a digital asset and fintech model. R&D expenses decreased by $0.5 million due to the winding down of legacy science division activities.
- Expense Surge: Selling, General, and Administrative (SG&A) expenses increased by $14.9 million to $16.9 million, driven largely by non-cash stock-based compensation ($11.9 million) and professional fees related to the strategic transition.
- Digital Asset Volatility: The company recorded a $27.2 million loss due to the decline in the fair value of its Bitcoin holdings during the transition period. This was partially offset by a $15.7 million income tax benefit related to the reversal of a valuation allowance on deferred tax assets.
- Capital Structure: The company eliminated all outstanding preferred equity and convertible debt during the prior fiscal year (ended Sept 30, 2025) via the Goldeneye transaction, simplifying its capital structure.
Guidance, Outlook, Risks, and Unusual Items
Outlook and Guidance: Management expects to continue incurring operating losses as it funds the development of the tokenized deposit program. The company believes existing liquidity (cash and Bitcoin) is sufficient to fund operations for at least 12 months. Future capital needs may be met through equity/debt financings, Bitcoin sales, or Bitcoin-collateralized loans.
Recent Financing: In March 2026 (subsequent to the reporting period), the company entered into a Master Loan Agreement allowing borrowings up to $25 million secured by Bitcoin collateral. A $5 million term sheet at 8.5% interest was executed.
Risks and Contingencies:
- Bitcoin Volatility: The company's financial results are highly sensitive to Bitcoin price fluctuations. A decline in Bitcoin value could trigger margin calls on collateralized loans or force asset liquidation.
- Regulatory Uncertainty: The tokenized deposit program is subject to evolving regulations regarding digital assets, banking partnerships, and money transmission. Launch timelines depend on regulatory approvals.
- Listing Compliance: The company is operating under a plan to regain compliance with NYSE American listing standards. Failure to maintain compliance could result in delisting.
- Related Party Transactions: Significant relationships exist with Goldeneye 1995 LLC (controlling shareholder), Vast Holdings (bank partner), and Uphold. An affiliate services agreement with Vast Holdings caps reimbursements at $10.5 million.
Investor Verification Checklist
- Bitcoin Valuation: Verify the current market price of Bitcoin against the $86.6 million carrying value reported as of December 31, 2025, to assess potential unrealized gains or losses in subsequent periods.
- Liquidity Runway: Confirm the company's ability to meet the 12-month liquidity projection given the high burn rate ($27.5M loss in 3 months) and reliance on volatile asset sales or borrowing.
- Tokenized Deposit Launch: Monitor the progress of the Phase 1 pilot and the timeline for regulatory approval required for the public retail launch of the USBC tokenized deposit.
- NYSE Compliance: Track the company's status regarding the NYSE American compliance plan to avoid delisting risks.
- Related Party Agreements: Review the terms of the Affiliate Services Agreement with Vast Holdings and the Master Loan Agreement with Payward to understand potential cash outflows and collateral risks.