Empery Digital Inc. 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to__________

Commission file number: 001-40867

Empery Digital Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		84-4882689
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2512 W Pecan St, Unit 230, Pflugerville, TX		78660
(Address of Principal Executive Offices)		(Zip Code)

(512) 400-4271

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	EMPD	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☒	Smaller Reporting Company ☒
	Emerging Growth Company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 28,110,111 shares of common stock outstanding at August 6, 2026.

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 (unaudited)	4
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 (unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30, 2026 and 2025 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (unaudited)	8
	Notes to the Condensed Consolidated Financial Statements (unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	46

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55
Signatures		57

WHERE YOU CAN FIND MORE INFORMATION

Investors and others should note that we announce material financial information to our investors using our investor relations website, which can be found at https://ir.EmperyDigital.com, as well as press releases, our filings with the Securities and Exchange Commission, SEC, and public conference calls and webcasts. We also use other mediums, including the following social media channels as a means of disclosing information about the company, our products, our planned financial and other announcements and attendance at upcoming investor and industry conferences, and other matters and for complying with our disclosure obligations under Regulation FD:

Website Homepage: https://www.emperydigital.com/

X (f/k/a Twitter) Account: https://x.com/EMPD_BTC

Instagram Account: https://www.instagram.com/empd_btc

YouTube Account: https://www.youtube.com/@emperydigital

These channels may be updated from time to time on our investor relations website. The information we post through these channels may be deemed material. Accordingly, investors should monitor them in addition to following our investor relations website, press releases, SEC filings, and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EMPERY DIGITAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2026 AND DECEMBER 31, 2025

(Unaudited)


	June 30, 2026			December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	3,589,598		$	8,963,856
Restricted cash		105,000			105,000
Certificate of deposit		–			2,049,413
Accounts receivable, net of allowance for doubtful accounts of $95,530 and $71,869 at June 30, 2026 and December 31, 2025, respectively		49,992			312,106
Inventory and inventory deposits		334,053			346,175
Prepaid expenses and other current assets		968,865			2,479,310
Total current assets		5,047,508			14,255,860
Long-term assets:
Digital assets		80,521,703			126,926,895
Digital assets restricted by lenders as collateral for loans		90,122,335			230,048,488
Investment in EMHU LLC		2,900,000			–
Property and equipment and intangible assets, net		240,961			271,560
Other long-term assets		106,705			155,056
Right-of-use assets - operating leases		593,433			778,235
Total assets	$	179,532,645		$	372,436,094

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	748,294		$	745,466
Related party payable		7,828,001			–
Accrued liabilities		1,529,697			560,761
Vendor settlements		368,905			1,189,184
Term loan		–			49,890,972
Right-of-use operating lease liabilities - short-term		161,803			322,103
Other current liabilities		108,065			76,177
Total current liabilities		10,744,765			52,784,663

Long-term loan		54,960,747			49,945,046
Notes payable, net of current portion		–			20,485
Right-of-use operating lease liabilities - long-term		436,558			471,683
Total liabilities		66,142,070			103,221,877

COMMITMENTS AND CONTINGENCIES		–

Stockholders’ equity:
Preferred stock: $0.00001 par value, 5,000,000 shares authorized, 100,000 shares designated as Series A and, no shares issued and outstanding as of June 30, 2026 and December 31, 2025		–			–
Common stock: $0.00001 par value, 250,000,000 shares authorized, 28,110,111 shares outstanding as of June 30, 2026 and 33,800,951 shares outstanding as of December 31, 2025		544			475
Treasury stock: 26,310,005 shares as of June 30, 2026 and 13,771,094 shares as of December 31, 2025		(150,252,502	)		(96,282,082	)
Additional paid-in capital		708,449,448			681,864,757
Accumulated deficit		(444,806,915	)		(316,368,933	)
Total stockholders’ equity		113,390,575			269,214,217

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	179,532,645		$	372,436,094

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

EMPERY DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)


	Three Months Ended						Six Months Ended
	June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025

Revenue	$	80,019		$	190,173		$	305,721		$	652,505
Cost of goods sold		(148,203	)		(387,271	)		(310,827	)		(891,863	)
Gross margin		(68,184	)		(197,098	)		(5,106	)		(239,358	)

Operating expenses:
Sales and marketing		2,382,844			368,718			2,706,480			664,942
Product development		170,505			69,250			295,451			303,902
General and administrative expenses		3,705,607			2,844,661			8,277,389			4,393,941
Related party legal fees		7,828,001			–			7,828,001			–
Loss on digital asset		27,913,227			–			106,267,263			–
Total operating expenses		42,000,184			3,282,629			125,374,584			5,362,785

Loss from operations		(42,068,368	)		(3,479,727	)		(125,379,690	)		(5,602,143	)

Other income		31,751			5,094			585,180			59,115
Loss on repayment of term loan		–			–			(568,142	)		–
Gain (loss) on change in fair value of financial liabilities		20,117			(63,242	)		(41,900	)		(34,810	)
Interest income		44,725			104,521			87,264			157,292
Interest expense		(1,062,659	)		(74,464	)		(3,120,694	)		(163,647	)
Total other income (expense)		(966,066	)		(28,091	)		(3,058,292	)		17,950

Loss from continuing operations before provision for income taxes		(43,034,434	)		(3,507,818	)		(128,437,982	)		(5,584,193	)
Provision for income taxes		–			–			–			–
Loss from continuing operations		(43,034,434	)		(3,507,818	)		(128,437,982	)		(5,584,193	)
Loss from discontinued operations		–			(392,079	)		–			(776,134	)
Net loss	$	(43,034,434	)	$	(3,899,897	)	$	(128,437,982	)	$	(6,360,327	)

Earnings per common share
Loss from continuing operations per common share - basic	$	(1.53	)	$	(6.81	)	$	(4.21	)	$	(13.06	)
Loss from continuing operations per common share - diluted	$	(1.53	)	$	(6.81	)	$	(4.21	)	$	(13.06	)
Loss from discontinued operations per common share - basic	$	–		$	(0.76	)	$	–		$	(1.82	)
Loss from discontinued operations per common share - diluted	$	–		$	(0.76	)	$	–		$	(1.82	)

Net loss per common share – basic	$	(1.53	)	$	(7.57	)	$	(4.21	)	$	(14.88	)
Net loss per common share – diluted	$	(1.53	)	$	(7.57	)	$	(4.21	)	$	(14.88	)

Weighted average common shares outstanding – basic		28,060,806			515,490			30,527,749			427,361
Weighted average common shares outstanding – diluted		28,060,806			515,490			30,527,749			427,361

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

EMPERY DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2026

(Unaudited)


	Common stock					Treasury stock					Additional
	Number of Shares			Amount		Number of Shares		Amount			paid-in capital			Accumulated deficit			Total

Balance at January 1, 2026		33,800,951		$	475		13,771,094	$	(96,282,082	)	$	681,864,757		$	(316,368,933	)	$	269,214,217

Issuance of common stock for exercises of pre-funded warrants		4,289,649			43		–		–			(3	)		–			40

Issuance of common stock and pre-funded warrants, net of issuance costs of $212,322		2,558,422			26		–		–			24,787,653			–			24,787,679

Repurchases of common stock for treasury stock		(12,538,911	)		–		12,538,911		(53,970,420	)		–			–			(53,970,420	)

Stock-based compensation		–			–		–		–			1,797,041			–			1,797,041

Net loss		–			–		–		–			–			(128,437,982	)		(128,437,982	)

Balance at June 30, 2026		28,110,111		$	544		26,310,005	$	(150,252,502	)	$	708,449,448		$	(444,806,915	)	$	113,390,575

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

EMPERY DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2025

(Unaudited)


	Common stock					Treasury stock					Additional
	Number of Shares			Amount		Number of Shares		Amount			paid-in capital			Accumulated deficit			Total

Balance at January 1, 2025		78,859		$	–		–	$	–		$	166,357,208		$	(166,316,447	)	$	40,761

Issuance of common stock for exercises of pre-funded warrants		226,117			2		–		–			(2	)		–			–

Issuance of common stock from the At the Money offering, net of issuance costs of $320,867		220,515			3		–		–			8,846,758			–			8,846,761

Issuance of common stock and pre-funded warrants, net of issuance costs of $1,296,118		53,750			1		–		–			10,703,881			–			10,703,882

Issuance of common stock for disputed shares from November 2024 reverse stock split (see Note 2)		23,617			–		–		–			–			–			–

Purchase fractional shares		(179	)		–		–		–			(941	)		–			(941	)

Exchange of common stock for pre-funded warrants		(4,323	)		–		–		–			–			–			–

Stock-based compensation		–			–		–		–			1,100,670			–			1,100,670

Repurchases of common stock for treasury stock		(65,348	)		–		65,348		(510,907	)		–			–			(510,907	)

Net loss		–			–		–		–			–			(6,360,327	)		(6,360,327	)

Balance at June 30, 2025		533,008		$	6		65,348	$	(510,907	)	$	187,007,574		$	(172,676,774	)	$	13,819,899

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

EMPERY DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)


	June 30, 2026			June 30, 2025
Cash flow from operating activities:
Net loss	$	(128,437,982	)	$	(6,360,327	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on digital asset		106,267,263			–
Stock-based compensation		1,797,041			1,100,670
Loss on change in fair value of financial liabilities		41,900			34,810
Loss on write down of inventory		84,011			73,824
Loss on write off of intangible asset		27,195			–
Write-off of unamortized issuance costs on repayment of term loan		68,142			–
Bad debt expense		2,146,476			9,294
Non-cash interest expense/(income), net		13,603			(7,083	)
Amortization of right-of-use assets		211,676			209,645
Depreciation and amortization		27,153			160,503
Changes in operating assets and liabilities:
Accounts receivables		(1,884,362	)		(120,878	)
Inventory and inventory deposits		(71,889	)		(219,846	)
Prepaid expenses, other current and long-term assets		1,558,796			(11,389	)
Accounts payable		2,828			(193,894	)
Related party payable		7,828,001			–
Accrued liabilities and vendor settlements		148,657			(1,496,856	)
Right-of-use liabilities - operating leases		(222,299	)		(215,423	)
Other current liabilities		(1,965	)		(193,974	)
Net cash used in operating activities		(10,395,755	)		(7,230,924	)

Cash flow from investing activities:
Investment in EMHU LLC		(2,900,000	)		–
Purchase of property and equipment		(23,746	)		(204,927	)
Proceeds from sale of digital assets		80,064,079			–
Purchase of certificate of deposit		–			(2,000,000	)
Proceeds from maturity of certificate of deposit		2,092,397