Empery Digital (EMPD) FY2025 10-K Risk Factors: 32 New, 17 Dropped

What the changes say

Empery Digital adopted a Bitcoin treasury strategy, holding 3,359 Bitcoin backed by $95.0 million in debt.
Operating results now fluctuate heavily based on Bitcoin market prices and unrealized losses.
Reliance on the manufacturer PXID for E-Bikes exposes the company to tariff and supply chain risks.

What changed since the prior 10-K

New

NewRisks Related to Our Business in General
Our operating results, revenues, and expenses have varied in the past and may vary significantly in the future from period to period. These fluctuations could have an adverse effect on the market price of our common stock
Our operating results fluctuate due to Bitcoin price changes, Bitcoin sales gains or losses, regulatory developments, and debt interest charges.
NewRisks Related to Our Business in General
Our expenses are fixed and we have a limited ability to adjust expenses
Our fixed expenses exceed expected cash generation, requiring additional debt or equity financing or Bitcoin sales to meet our obligations.
NewRisks Related to Our Business in General
A significant decrease in the market value of our Bitcoin holdings could adversely affect our ability to satisfy our financial obligations or liquidity needs and could have an adverse effect on the market price of our common stock
Declines in Bitcoin prices caused a $14.1 million unrealized loss in Q3 2025 and a $108.6 million unrealized loss in Q4 2025.
NewRisks Related to Our Business in General
We cannot guarantee that we will be able to implement our share repurchase programs or that they will achieve their objectives
We cannot guarantee that our share repurchase program will achieve its objectives or be fully funded by cash flow and indebtedness.
NewRisks Related to Our Bitcoin Strategy and Holdings
The concentration of our Bitcoin holdings enhances the risks inherent in our Bitcoin strategy
Our concentration of 3,359 Bitcoin with an aggregate purchase price of $395.4 million increases our vulnerability to price drops.
NewRisks Related to Our Bitcoin Strategy and Holdings
The Company’s repurchases of its common stock may not be successful in increasing NAV per share
Despite repurchasing stock to increase net asset value per share, our shares continue to trade at a discount.
NewRisks Related to Our Bitcoin Strategy and Holdings
Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under our debt instruments when they come due
We have $95.0 million in debt under a $100.0 million master loan agreement and a $50.0 million repo facility collateralized by Bitcoin.
NewRisks Related to Our Bitcoin Strategy and Holdings
Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty, which could materially adversely affect the Company’s financial position, operations and prospects
Regulatory uncertainty regarding digital assets under U.S. and foreign laws could adversely impact Bitcoin prices and transferability.
NewRisks Related to Our Bitcoin Strategy and Holdings
The liquidity of Bitcoin may also be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for Bitcoin and other digital assets
Unregulated digital asset trading venues may experience fraud or security failures, reducing market confidence and Bitcoin liquidity.
NewRisks Related to Our Bitcoin Strategy and Holdings
Digital asset holdings are less liquid than cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents
Our Bitcoin holdings are less liquid than cash and lack FDIC or SIPC deposit protections.
NewRisks Related to Our Bitcoin Strategy and Holdings
The irreversibility of digital asset transactions exposes us to risks of theft, loss and human error, which could negatively impact our business
Digital asset transactions are irreversible, exposing us to permanent financial loss from human error, theft, or cyberattacks.
NewRisks Related to Our Bitcoin Strategy and Holdings
Although we plan to regularly transfer digital assets to or from vendors, consultants and services providers, it is possible that, through computer or human error, or through theft or criminal action, such assets could be transferred in incorrect amounts or to unauthorized third parties
Errors or theft during digital asset transfers to vendors and service providers cannot be reversed or recovered.
NewRisks Related to Our Bitcoin Strategy and Holdings
The lack of legal recourse and insurance for digital assets increases the risk of total loss in the event of theft or destruction
NewRisks Related to Our Bitcoin Strategy and Holdings
We are subject to significant competition in the growing digital asset industry and the Company’s business, operating results, and financial condition may be adversely affected if the Company is unable to compete effectively
NewRisks Related to Our Bitcoin Strategy and Holdings
The emergence or growth of other digital assets, including those with significant private or public sector backing, including by governments, consortiums or financial institutions, could have a negative impact on the price of Bitcoin and adversely affect the Company’s securities
NewRisks Related to Our Bitcoin Strategy and Holdings
The availability of spot exchange-traded products for Bitcoin and other digital assets may adversely affect the market price of our common stock and our ability to execute our Bitcoin strategy
NewRisks Related to Our Bitcoin Strategy and Holdings
Our Bitcoin strategy exposes us to risk of non-performance by counterparties
NewRisks Related to Our Bitcoin Strategy and Holdings
Digital asset lending arrangements may expose us to risks of borrower default, operational failures and cybersecurity threats
NewRisks Related to Our Bitcoin Strategy and Holdings
We may have exposure to greater than anticipated tax liabilities
NewRisks Related to Our Bitcoin Strategy and Holdings
Unrealized fair value gains on our Bitcoin holdings could cause us to become subject to the corporate alternative minimum tax under the Inflation Reduction Act of 2022
NewRisks Related to Our Bitcoin Strategy and Holdings
The Company’s Bitcoin strategy subjects the Company to enhanced regulatory oversight and could have accounting, regulatory and other impacts
NewRisks Related to Our Bitcoin Strategy and Holdings
Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns
NewRisks Related to Our Bitcoin Strategy and Holdings
If Bitcoin or any of the digital assets that we may purchase are classified as a security, we may be subject to extensive regulation, which could result in significant costs or force us to cease operations
NewRisks Related to Our Bitcoin Strategy and Holdings
The classification of Bitcoin that we hold, or any digital asset we may purchase in the future, as a commodity could subject us to additional CFTC regulation, resulting in significant compliance costs or the cessation of certain operations
NewRisks Related to Our Bitcoin Strategy and Holdings
We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers
NewRisks Related to Our Bitcoin Strategy and Holdings
Intellectual property disputes related to the open-source structure of digital asset networks exposes us to risks related to software development, security vulnerabilities and potential disruptions to digital asset technology could threaten our ability to operate
NewRisks Related to Our E-Bike and Inventory Financing Business Strategy
We are subject to risks associated with our reliance on foreign manufacturing, suppliers and imports for our products
NewRisks Related to Our E-Bike and Inventory Financing Business Strategy
We sell the Brat and accessories through a network of third-party dealers and international distributors in addition to our website, and there is no assurance that we will be able to successfully build out this network
NewRisks Related to Our E-Bike and Inventory Financing Business Strategy
We have a limited history of financing inventory purchases and parties to inventory financing agreements may default on amounts owed to us which could materially adversely affect our business, results of operations or financial condition
NewRisks Related to our Common Stock
Anti-takeover provisions in our governing documents and a stockholder rights plan adopted in February 2026 may discourage, delay or prevent a change of control of our company
NewRisks Related to our Common Stock
Our business and operations could be negatively affected if we become subject to stockholder activism, which could cause us to incur significant expense, hinder execution of our business and growth strategy, and impact our stock price
NewRisks Related to our Common Stock
For fiscal 2026, we will no longer qualify as an emerging growth company and will be required to comply with of all of these reporting requirements and lose the exemptions under §107 of the JOBS Act

Dropped

DroppedRisks Related to the Company’s Business, Operations, and Industry
Our transition to an outsourced manufacturing, design and development business model may not be successful, which could harm our ability to deliver products and recognize revenue
DroppedRisks Related to the Company’s Business, Operations, and Industry
Our reliance on third parties reduces our control over the manufacturing, design and development processes, including reduced control over timing to release products, quality, product costs and product supply. We experienced delays in the design and development of previous vehicles we were seeking to develop
DroppedRisks Related to the Company’s Business, Operations, and Industry
We are an early-stage company and we have delivered a limited number of vehicles to customers
Risks of transitioning to an outsourced manufacturing model with a Chinese vendor.
DroppedRisks Related to the Company’s Business, Operations, and Industry
The conflict with Russia and the Ukraine could have an impact on the availability of components used in the manufacturing of lithium ion batteries that we use to power our vehicles
DroppedRisks Related to the Company’s Business, Operations, and Industry
Although Super Sonic has an incentive to refer customers to purchase units through us and Venom has incentives to place orders, there are no minimum order quantities in their agreements therefore we may not realize significant sales from these agreements
Reliance on single external manufacturers reducing control over production timelines and quality.
DroppedRisks Related to the Company’s Business, Operations, and Industry
As of March 25, 2025, we have 117 active powersports dealers, 8 golf cart dealers and 13 bicycle dealers to sell our vehicles and accessories. We have hired a new sales team in 2024 to continue to expand this network of dealers
DroppedRisks Related to the Company’s Business, Operations, and Industry
Orders for vehicles are cancellable and there can be no assurance that all orders will result in revenue being recognized
DroppedRisks Related to the Company’s Business, Operations, and Industry
The estimated fulfillment of all orders we have received assumes our third party manufacturers can successfully increase their production capacity in the future, of which there is no assurance. If we are unable to satisfy pending orders on a timely basis, customers may cancel their orders
DroppedRisks Related to the Company’s Business, Operations, and Industry
We have limited experience servicing our vehicles, we intend to primarily utilize third parties to service our vehicles, and if we are unable to address the service requirements of our customers, our business could be materially and adversely affected
DroppedRisks Related to the Company’s Business, Operations, and Industry
Our success is dependent upon the success of the off-road vehicle industry and upon consumers’ willingness to adopt electric vehicles
Early-stage company status with limited vehicle deliveries and historical financial data.
DroppedRisks Related to the Company’s Business, Operations, and Industry
Higher inflation and interest rates, volatile financial markets, unemployment and consumer confidence may cause consumers to defer or not purchase our products
Impact of the Russia-Ukraine conflict on nickel availability for lithium-ion batteries.
DroppedRisks Related to the Company’s Business, Operations, and Industry
We currently operate in an area of the vehicle sector that is not heavily regulated, and future changes in government oversight may subject us to increased regulations, which may increase our expenses
DroppedRisks Related to our Common Stock
We are party to certain agreements with a founder of the Company and certain executive officers that may create a conflict of interest for our board of directors in evaluating a potential change of control transaction
DroppedRisks Related to our Common Stock
If securities or industry analysts do not publish research or reports about us, or if they adversely change their recommendations regarding our common stock, then our stock price and trading volume could decline
DroppedRisks Related to our Common Stock
On July 17, 2024, we received a letter from the Nasdaq Office of General Counsel confirming the decision of the Panel that we had demonstrated compliance with the requirements for continued listing on The Nasdaq Capital Market, but that we will be subject to a Discretionary Panel Monitor for a period of one year
Lack of minimum order quantities in agreements with distributors Super Sonic and Venom.
DroppedRisks Related to our Common Stock
In an effort to regain compliance with Nasdaq listing rules, we completed reverse stock splits during 2024. We cannot predict whether we will need to complete an additional reverse stock split and the effect that such reverse stock split will have on the market price for shares of our common stock
DroppedRisks Related to our Common Stock
We intend to take advantage of all of these reduced reporting requirements and exemptions, other than the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act

Reworded

84% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
Our business success will depend in large part on PXID’s ability to economically produce our products at sufficient capacity to meet the demands of our customers
Updated manufacturer references from general third parties to specific partner PXID and added unexpected increases in tariffs as a supply chain risk.
Was: Our business success will depend in large part on our third party manufacturers’ ability to economically produce our vehicles at sufficient capacity to meet the demands of our customers
81% rewrittenRisks Related to our Common Stock
If our stock price fluctuates, you could lose a significant part of your investment
Updated historical stock closing price from $0.9601 to $4.35 and added the market value of Bitcoin as a stock volatility driver.
78% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
Our third-party manufacturer may be unable to meet our growing sales and delivery plans, which could harm our business and prospects
Narrowed vehicle delivery and production risk discussions specifically to E-Bikes and manufacturer PXID.
Was: Our third party manufacturers may be unable to meet our growing sales and delivery plans, which could harm our business and prospects
73% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
Increased tariffs or a global trade war could increase the costs of products for the customers we finance inventory purchases, and could increase the costs of our products, which could adversely impact the competitiveness of theirs or our products and our financial results
Expanded tariff risks to include Venom's international manufacturer and potential trade restrictions involving China and other countries.
Was: Increased tariffs or a global trade war could increase our costs and could further increase the cost of our products, which could adversely impact the competitiveness of our products and our financial results
72% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
An adverse determination in any significant product liability claim against us could materially adversely affect our business, results of operations or financial condition
Minor stylistic and phrasing adjustments regarding product liability claims without altering core liability exposures.
60% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
Our third-party manufacturer operates outside of the U.S., subjecting us to risks of international operations
Explicitly named PXID as the international manufacturer operating outside the United States.
Was: Our third party manufacturers operate outside of the U.S., subjecting us to risks of international operations
59% rewrittenRisks Related to Our Business in General
To date we have funded operations through equity and debt offerings. As of December 31, 2025, we have an accumulated deficit of $321.8 million
Replaced specific 2025 equity offering details with a broader discussion of cash sufficiency, debt repayment, and ongoing internal control material weaknesses.
Was: To date we have funded operations through equity and debt offerings. As of December 31, 2024, we have an accumulated deficit of $166.3 million
40% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs
Made minor hyphenation adjustments regarding third-party intellectual property infringement claims.
32% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
We are currently taking orders for the Brat E-Bike and if the Brat fails to perform as expected, our reputation could be harmed and our ability to develop, market and sell our E-Bikes could be harmed
Was: We are currently taking orders for the Brat E-Bike, MN1s and HF1, and if these vehicles fail to perform as expected, our reputation could be harmed and our ability to develop, market and sell our vehicles could be harmed
31% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
Increases in costs, disruption of supply, or shortage of materials could harm our business
31% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
We may not succeed in establishing, maintaining and strengthening our brand, which could materially and adversely affect customer acceptance of our products, which could in turn materially affect our business, results of operations or financial condition
22% rewrittenRisks Related to Our E-Bike and Inventory Financing Business Strategy
We have and could continue to experience delays and other complications in the design, manufacture, launch and production ramp of our vehicles and our future planned vehicles, which could harm our brand, business, prospects, financial condition and operating results

All 51 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Business in General

01To date we have funded operations through equity and debt offerings. As of December 31, 2025, we have an accumulated deficit of $321.8 million59% rewritten
02While we believe these efforts have improved the internal control over financial reporting, they did not fully remediate the material weaknesses as we have not fully documented all of our policies or procedures and we have not performed any testing of our internal controls
03Our operating results, revenues, and expenses have varied in the past and may vary significantly in the future from period to period. These fluctuations could have an adverse effect on the market price of our common stockNew
04Our expenses are fixed and we have a limited ability to adjust expensesNew
05A significant decrease in the market value of our Bitcoin holdings could adversely affect our ability to satisfy our financial obligations or liquidity needs and could have an adverse effect on the market price of our common stockNew
06We cannot guarantee that we will be able to implement our share repurchase programs or that they will achieve their objectivesNew

Risks Related to Our Bitcoin Strategy and Holdings

07The concentration of our Bitcoin holdings enhances the risks inherent in our Bitcoin strategyNew
08The Company’s repurchases of its common stock may not be successful in increasing NAV per shareNew
09Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under our debt instruments when they come dueNew
10Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty, which could materially adversely affect the Company’s financial position, operations and prospectsNew
11The liquidity of Bitcoin may also be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for Bitcoin and other digital assetsNew
12Digital asset holdings are less liquid than cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalentsNew
13The irreversibility of digital asset transactions exposes us to risks of theft, loss and human error, which could negatively impact our businessNew
14Although we plan to regularly transfer digital assets to or from vendors, consultants and services providers, it is possible that, through computer or human error, or through theft or criminal action, such assets could be transferred in incorrect amounts or to unauthorized third partiesNew
15The lack of legal recourse and insurance for digital assets increases the risk of total loss in the event of theft or destructionNew
16We are subject to significant competition in the growing digital asset industry and the Company’s business, operating results, and financial condition may be adversely affected if the Company is unable to compete effectivelyNew
17The emergence or growth of other digital assets, including those with significant private or public sector backing, including by governments, consortiums or financial institutions, could have a negative impact on the price of Bitcoin and adversely affect the Company’s securitiesNew
18The availability of spot exchange-traded products for Bitcoin and other digital assets may adversely affect the market price of our common stock and our ability to execute our Bitcoin strategyNew
19Our Bitcoin strategy exposes us to risk of non-performance by counterpartiesNew
20Digital asset lending arrangements may expose us to risks of borrower default, operational failures and cybersecurity threatsNew
21We may have exposure to greater than anticipated tax liabilitiesNew
22Unrealized fair value gains on our Bitcoin holdings could cause us to become subject to the corporate alternative minimum tax under the Inflation Reduction Act of 2022New
23The Company’s Bitcoin strategy subjects the Company to enhanced regulatory oversight and could have accounting, regulatory and other impactsNew
24Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdownsNew
25If Bitcoin or any of the digital assets that we may purchase are classified as a security, we may be subject to extensive regulation, which could result in significant costs or force us to cease operationsNew
26The classification of Bitcoin that we hold, or any digital asset we may purchase in the future, as a commodity could subject us to additional CFTC regulation, resulting in significant compliance costs or the cessation of certain operationsNew
27We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisersNew
28Intellectual property disputes related to the open-source structure of digital asset networks exposes us to risks related to software development, security vulnerabilities and potential disruptions to digital asset technology could threaten our ability to operateNew

Risks Related to Our E-Bike and Inventory Financing Business Strategy

29Our business success will depend in large part on PXID’s ability to economically produce our products at sufficient capacity to meet the demands of our customers84% rewritten
30Our third-party manufacturer operates outside of the U.S., subjecting us to risks of international operations60% rewritten
31We are subject to risks associated with our reliance on foreign manufacturing, suppliers and imports for our productsNew
32Our third-party manufacturer may be unable to meet our growing sales and delivery plans, which could harm our business and prospects78% rewritten
33Increases in costs, disruption of supply, or shortage of materials could harm our business31% rewritten
34We have and could continue to experience delays and other complications in the design, manufacture, launch and production ramp of our vehicles and our future planned vehicles, which could harm our brand, business, prospects, financial condition and operating results22% rewritten
35We are currently taking orders for the Brat E-Bike and if the Brat fails to perform as expected, our reputation could be harmed and our ability to develop, market and sell our E-Bikes could be harmed32% rewritten
36Significant product repair and/or replacement due to product warranty claims or product recalls could have a material adverse impact on our business, results of operations or financial condition
37An adverse determination in any significant product liability claim against us could materially adversely affect our business, results of operations or financial condition72% rewritten
38We sell the Brat and accessories through a network of third-party dealers and international distributors in addition to our website, and there is no assurance that we will be able to successfully build out this networkNew
39We may be unable to improve our existing products and develop and market new products that respond to customer needs and preferences and achieve market acceptance
40We may not succeed in establishing, maintaining and strengthening our brand, which could materially and adversely affect customer acceptance of our products, which could in turn materially affect our business, results of operations or financial condition31% rewritten
41We have a limited history of financing inventory purchases and parties to inventory financing agreements may default on amounts owed to us which could materially adversely affect our business, results of operations or financial conditionNew
42Increased tariffs or a global trade war could increase the costs of products for the customers we finance inventory purchases, and could increase the costs of our products, which could adversely impact the competitiveness of theirs or our products and our financial results73% rewritten
43We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs40% rewritten
44We could be negatively impacted by cybersecurity attacks and are subject to evolving privacy laws in the U.S. and other jurisdictions that could adversely impact our business and require that we incur substantial costs

Risks Related to our Common Stock

45Anti-takeover provisions in our governing documents and a stockholder rights plan adopted in February 2026 may discourage, delay or prevent a change of control of our companyNew
46Our business and operations could be negatively affected if we become subject to stockholder activism, which could cause us to incur significant expense, hinder execution of our business and growth strategy, and impact our stock priceNew
47Your ownership may be diluted if additional capital stock is issued to raise capital, to purchase digital assets, repay outstanding debt, finance our operations, to complete acquisitions or in connection with strategic transactions
48If our stock price fluctuates, you could lose a significant part of your investment81% rewritten
49We do not intend to pay dividends in the foreseeable future
50As an “emerging growth company” under the Jumpstart Our Business Startups Act, or JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements
51For fiscal 2026, we will no longer qualify as an emerging growth company and will be required to comply with of all of these reporting requirements and lose the exemptions under §107 of the JOBS ActNew

Other Empery Digital 10-Ks

FY2024 10-K risk factors
36 risks
Empery Digital faces going concern risks with a $166.3 million accumulated deficit and reliance on third-party manufacturers in China.
Filed Mar 31, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.