Nakamoto Inc (NAKA) Risk Analysis

Our Common Stock must satisfy Nasdaq's continued listing requirements, including the requirement that its closing bid price be at least $1.00 per share. We are currently in compliance with Nasdaq's other continued listing requirements, but there is no assurance we will remain so in the future. On December 10, 2025, Nasdaq notified us that we were not in compliance with the minimum bid price requirement. After we effected a 1-for-40 reverse stock split on May 22, 2026, Nasdaq notified us on June 9, 2026, that we had regained compliance and that the matter was closed. As of August 10, 2026, the closing bid price of our Common Stock was $5.04 per share. If our Common Stock again fails to satisfy the minimum bid price requirement at a time when the May 22, 2026 reverse stock split falls within the one-year period preceding that failure, we will not be eligible for any compliance period otherwise available under Nasdaq's rules, and under Nasdaq Listing Rule 5810(c)(3)(A)(iv), Nasdaq's Listing Qualifications Department will be required to issue a Staff Delisting Determination, subject to our right to appeal to a Nasdaq Hearings Panel. The same rule also makes us ineligible for a compliance period if, during the two-year period preceding a failure to meet the minimum bid price requirement, we effected one or more reverse stock splits with a cumulative ratio of 250-to-1 or more. Because we effected a 1-for-40 reverse stock split on May 22, 2026, an additional reverse stock split with a ratio of 1-for-6.25 or greater, effected while the May 2026 split remains within that two-year look-back period, would cause the cumulative ratio to reach or exceed 250-to-1. These restrictions may limit our ability to use a further reverse stock split to regain compliance if we become noncompliant again. If we are unable to maintain or regain compliance, obtain relief from Nasdaq, or successfully appeal a delisting determination, our Common Stock could be suspended or delisted. A suspension or delisting could adversely affect the liquidity and market price of our Common Stock, could cause our Common Stock to become subject to the SEC's penny stock rules, and could impair our ability to raise capital, including under our currently effective shelf registration statement and at-the-market offering program, both of which require continued listing on a national securities exchange to remain available to us. In addition, such suspension or delisting could require us to comply with additional covenants under the Master Loan Agreement.

We are an "emerging growth company" under the JOBS Act and a "smaller reporting company" under SEC rules. As such, we may rely on exemptions from certain disclosure requirements, including not being required to comply with auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board ("PCAOB") regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements, reduced executive compensation disclosures, exemptions from nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the information we provide stockholders will be different than the information that is available with respect to some other public companies. We have also elected to use the extended transition period for complying with new or revised accounting standards, which means our financial statements may not be comparable to companies that comply as of public company effective dates. We cannot predict if investors will find our stock less attractive as a result. If some investors do, there may be a less active trading market for and more volatile price of our Common Stock. We cannot predict if investors will find our common stock less attractive if we rely on emerging growth company or smaller reporting company exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our Common Stock and our Common Stock price may be more volatile.

Our amended certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: - any derivative claim or action or proceeding brought on our behalf; - any action asserting a breach of fiduciary duty owed by any current or former director, officer, other employee or stockholder of our Company to us or our stockholders; - any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law ("DGCL"), our amended certificate of incorporation, or amended and restated bylaws (as either may be further amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; - any action asserting a claim governed by the internal affairs doctrine. This provision would not apply to suits brought to enforce a duty or liability created by the Securities Act or the Exchange Act. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended certificate of incorporation further provides that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. This exclusive federal forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, executive officers, or other employees, which may discourage lawsuits against us and our directors, executive officers, and other employees. Although the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive federal forum provisions. Although we will vigorously assert the validity and enforceability of our exclusive federal forum provision in any future litigation in other jurisdictions, this may require significant additional costs associated with resolving the action and there can be no assurance that the federal forum provision will be enforced by a court in the future or in other jurisdictions.

Our amended certificate of incorporation, amended and restated bylaws, and Delaware law contain provisions that may have the effect of discouraging, delaying, or preventing a change in control of us or changes in our management that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of Common Stock. Our amended certificate of incorporation and amended and restated bylaws include provisions that: - authorize "blank check" preferred stock, which could be issued by our Board without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our Common Stock; - established a classified Board whose members serve staggered three-year terms; - specify that special meetings of our stockholders can be called only by our Board or the secretary upon receipt of written demand of stockholders holding at least 25% of the voting power continuously for at least one year prior to the request; - prohibit stockholder action by written consent except for approval of an amendment to the certificate of incorporation to effect a forward or reverse stock split; - establish an advance notice procedure for stockholder matters to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board; - provide that vacancies on our Board may be filled only by a majority of directors then in office, even though less than a quorum; - provide that our directors may be removed only for cause; and - expressly authorized our Board to make, alter, amend, or repeal our amended and restated bylaws. These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. These provisions could also limit the price that investors might be willing to pay in the future for shares of our Common Stock, thereby depressing the market price of our Common Stock. Any provision of our amended certificate of incorporation, amended and restated bylaws, or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock, and could also affect the price that some investors are willing to pay for our Common Stock.

Some institutional investors, including certain mutual funds, pension funds, and insurance companies, may be prohibited or discouraged by their investment policies, guidelines, or mandates from investing in companies with significant exposure to digital assets, including Bitcoin. Other institutional investors may choose not to invest in our Common Stock due to concerns about the regulatory uncertainty, volatility, or perceived risks associated with digital assets. As a result, the pool of potential investors in our Common Stock may be more limited than for companies without significant digital asset exposure. This reduced demand could adversely affect the market price of our Common Stock and may limit our ability to raise capital through equity offerings in the future. Additionally, if regulatory developments or changes in market perception cause more institutional investors to avoid companies with digital asset exposure, the market price of our Common Stock could decline.

Sales of substantial amounts of our Common Stock by our directors, officers, or significant stockholders in the public market, or the perception that such sales may occur, could adversely affect the market price of our Common Stock. In addition, the existence, or even the potential of, a significant sale by any of our large stockholders could cause the market price of our Common Stock to decline. Moreover, our directors and officers may establish pre-arranged trading plans under Rule 10b5-1 of the Exchange Act, and sales under these plans could be perceived negatively by the market, whether or not there is any actual adverse information about us. We cannot predict the effect, if any, that sales of shares by our insiders or the availability of shares for future sale will have on the market price of our Common Stock.

We maintain equity compensation plans under which we grant stock options, restricted stock units, and other equity-based awards to our directors, officers, and employees. We have previously and may also in the future assume equity compensation plans in connection with acquisitions we complete. The issuance of shares pursuant to these equity awards will dilute existing stockholders' ownership interests and may adversely affect the market price of our Common Stock. In addition, the exercise of stock options and the vesting of restricted stock units will increase the number of shares of Common Stock outstanding, which may put downward pressure on our Common Stock price. The dilutive effect of equity compensation may also reduce our earnings per share. Furthermore, we may need to increase the number of shares available for issuance under our equity compensation plans to attract and retain talented employees, which could result in additional dilution to our stockholders.

Short selling occurs when an investor borrows shares and immediately sells them, hoping that the share price will decline and the investor can repurchase the shares at a lower price for return to the lender. Short selling has been prevalent in securities of companies with significant exposure to digital assets, including Bitcoin. The significant short selling of our Common Stock, or the perception that such short selling may occur, may create downward pressure on the price of our Common Stock and may amplify the effect of any negative developments. Additionally, so-called "short and distort" campaigns could target our Company, where short sellers spread negative information about a company to drive down its stock price and profit from their short positions. Any such campaign could damage our reputation and adversely affect the market price of our Common Stock, regardless of the accuracy of the information disseminated. Conversely, if our Common Stock price increases rapidly, short sellers may be forced to cover their positions quickly, leading to a "short squeeze" that could result in extreme price volatility.

Options on our Common Stock are traded on securities exchanges and over-the-counter markets. Activity in these markets, including hedging, arbitrage, and speculative strategies, can lead to significant buying or selling pressure and contribute to price volatility. Option expirations, changes in implied volatility, and variations in options market liquidity can exacerbate volatility in our Common Stock price. Increased volatility related to options trading could negatively affect investor confidence, impair liquidity, and adversely affect our Common Stock price regardless of operating performance.

As of March 23, 2026, we had (i) 61,704,975 prefunded warrants outstanding, (ii) 384,936 tradeable warrants outstanding, and (iii) 203,565 non-tradable warrants outstanding (collectively, the "Warrants"). Each of these securities are exercisable for shares of Common Stock at various prices. If exercised, these warrants will dilute existing stockholders and increase shares eligible for resale, which could adversely affect our Common Stock price. Our tradeable warrants are quoted on the OTC Pink Market, which is significantly more limited than Nasdaq or NYSE and may result in reduced liquidity and depressed trading prices for our warrants.

The trading market for our Common Stock may be impacted by research and reports that analysts publish about us. There is no assurance that analysts will cover us or provide favorable coverage. If analysts downgrade our stock, change their opinion, or cease coverage, we could lose visibility in the financial markets and our Common Stock price or trading volume could decline.

To raise additional capital, we may offer shares of Common Stock or other securities through our ATM Program or other means. Securities we issue may have rights, preferences, or privileges senior to those of existing stockholders. The price per share in future transactions may be higher or lower than existing stockholders paid. Exercise or conversion of options, warrants, or convertible securities will result in additional dilution.

On August 26, 2025, we entered into a sales agreement pursuant to which we may offer and sell Common Stock from time to time through our ATM Program. We have discretion to vary the timing, prices, and numbers of shares sold, and investors who purchase at different times will likely pay different prices. Future sales pursuant to the ATM Program are not guaranteed and will depend on market conditions. The issuance of new shares of Common Stock, or the perception that such sales may occur, could depress the market price of our Common Stock. Additionally, sales of a substantial number of shares of Common Stock in the public market by our stockholders could adversely affect the market price and impair our ability to raise capital through future equity offerings.

The market value of our Common Stock is closely tied to investor perceptions of the attractiveness and viability of our Bitcoin-focused strategy. In recent years, corporate adoption of Bitcoin has been influenced by trends and market sentiment, with some companies acquiring Bitcoin to enhance their public profiles, attract investor attention, or pursue speculative strategies unrelated to their core businesses. If market enthusiasm for corporate Bitcoin adoption wanes, or if investors view our strategy as less compelling or sustainable, demand for our stock could decline significantly. Negative publicity, regulatory scrutiny, or adverse developments affecting other companies with similar strategies could further reduce investor interest and result in a significant decline in our Common Stock value, regardless of the underlying performance of our Bitcoin holdings.

The trading price of our Common Stock has fluctuated widely and may continue to fluctuate due to factors largely outside our control, including: variations in operating results; changes in market interest rates, earnings estimates, or market valuations; actions by competitors; market reaction to indebtedness; changes in key personnel; stockholder actions; speculation in media or investment communities; and our ability to maintain Nasdaq listing. This volatility may affect the price at which you could sell shares, and you may not be able to sell at or above your purchase price. The stock market, and particularly digital asset and blockchain technology companies, have experienced extreme price and volume fluctuations often unrelated to operating performance. Such volatility could also subject us to securities class action litigation, resulting in substantial costs and diversion of management attention.

In connection with our efforts to regain compliance with Nasdaq's minimum bid price requirement, we may effect a reverse stock split of our Common Stock. Even if a reverse stock split is implemented, there can be no assurance that our Common Stock price will increase proportionally to the reverse split ratio or that any increase in our Common Stock price will be sustained. A reverse stock split may decrease the liquidity of our Common Stock by reducing the number of shares outstanding, which could result in a less active trading market. Additionally, the reverse stock split may be perceived negatively by the market, and investors may view it as an indication of financial distress, which could further depress our Common Stock price. The reduction in the number of shares outstanding may also leave our stockholders with "odd lots" of shares, which may be more difficult to sell and may result in greater brokerage costs. A reverse stock split will also increase the number of stockholders who own "odd lots" of fewer than 100 shares of Common Stock, which may be more difficult to sell and may increase transaction costs. There can be no assurance that a reverse stock split, if effected, will result in the intended benefits.

If we use a clearing broker to help manage financial transactions - such as buying or selling Bitcoin futures contracts to hedge against Bitcoin price swings - then we will be exposed to the clearing broker's credit risk. Under the CEA and CFTC regulations, futures contracts must be cleared through a clearing broker known as a registered futures commission merchant ("FCM"). FCMs hold a certain amount of the customer collateral that customers deposit in connection with their futures trading, and are responsible for posting that collateral to the clearinghouse on the customer's behalf when the clearinghouse issues a margin call. FCMs are required to maintain such collateral and all customer assets in a segregated account. If the FCM fails to do so, or is unable to satisfy a substantial deficit in a customer account, its customers (including us) may be subject to risk of loss of their funds in the event of the FCM's insolvency. In such event, under the current U.S. Bankruptcy Code, the FCM's customers (including us) are entitled to recover only a proportional share of all property available for distribution to all of that FCM's customers. We may therefore be exposed to material losses in the event of an FCM's or fellow FCM customer's default or insolvency.

The announcement, pendency, or completion of future transactions-including mergers, acquisitions, divestitures, joint ventures, or other strategic initiatives-may result in significant fluctuations in the market price of our Common Stock, regardless of actual operating performance. In addition, following an acquisition such as the BTC Merger and UTXO Merger, the market price of our Common Stock may be influenced by factors that differ from those that historically impacted our stock. Our business operations, financial condition, and prospects may differ significantly from those prior to any such acquisition. Market participants may react to transactions based on expectations regarding potential benefits, risks, integration challenges, or exposure to new markets or regulatory environments. The terms of future transactions, such as issuance of additional shares as consideration, could result in dilution to existing stockholders. Announced transactions may be delayed, challenged by regulators, or not completed at all, and there can be no assurance that anticipated benefits will be realized.