HKHC · Read the filing

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the historical consolidated financial statements of HKHC and the related notes included elsewhere in this current report. The historical consolidated financial data discussed below reflect its historical results of operations and financial position. The following discussion and analysis contains forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors, including those included in the section entitled “Risk Factors” contained elsewhere in this current report describing key risks associated with the business, operations and industry of HKHC. Amounts and percentages presented throughout this section may reflect rounding adjustments and consequently totals may not appear to sum. The items discussed below have had significant effects on many items within HKHC’s consolidated financial statements and affect the comparison of the current period’s activity with those of prior periods.

Overview

Horizon Kinetics Holding Corporation (“HKHC” or “the Company”) is a research driven, fundamentals-oriented asset manager serving institutions, individuals and financial professionals. It provides investment management services through its wholly-owned subsidiary and registered investment adviser, Horizon Kinetics Asset Management LLC. Through this subsidiary, it manages a number of strategies, most of which are focused on publicly-traded equity securities, but also private investments and digital assets. To accommodate different investing preferences, HKHC’s offerings can be accessed in a variety of ways, including through mutual funds, ETFs, a closed end fund, separately managed accounts that can be customized to the unique investment objectives and risk tolerances of individual clients, and, for qualified investors, via private proprietary partnerships typically known as alternative investments. HKHC raises capital for and manages these strategies, and it earns a management fee that varies among products. In certain instances, the fee it earns is tied to the performance of the account. HKHC also produces a number of research reports and compendia that are sold mainly to institutions, as it believes that the discipline required to produce written research encourages thorough qualitative and quantitative analysis.

As of December 31, 2025, the Company had regulatory assets under management ("AUM") of $9.6 billion.

HKHC also manages a portfolio of investment securities for its own benefit, which has historically impacted and is expected to impact future results of operations, often significantly so. As of December 31, 2025, we held investment securities (at fair value) of $76.5 million. In addition, we have devoted capital to a variety of the private alternative investment funds it manages. As of December 31, 2025, the fair value of HKHC shareholders’ investment in these private funds is $220.1 million, however, since the private funds are consolidated within these consolidated financial statements this value is not separately presented.

Our financial results may vary due to market conditions and fluctuations in our assets under management that may not necessarily be the result of our long-term investment performance or the long-term demand for our investment services. We believe over long term investment horizons, our investment results will be the primary factor that will generate growth and our financial results.

In addition to investment management and research activities, HKHC operates two wholly-owned, limited purpose broker-dealers, KBD Securities LLC and Kinetics Funds Distributor LLC, both of which are only used for the marketing and promotion of our investment products. We pay a portion of the fees earned to these and other third-party firms who assist in marketing.

Along with investing on behalf of clients, HKHC also uses its own capital to invest along with its clients in many of its private funds and makes direct investments in public and private instruments including digital assets. Certain employees do, from time to time, serve as management or as a member of the board of directors of the companies in which we invest.

Primary Sources of Revenue

Management or advisory fees are our primary source of revenue, most of which are based on a specified percentage of clients’ average assets under management. A majority of our expenses, including most of our compensation expense, vary directly with changes in our revenues.

The management fees for separately managed accounts are generally calculated on the basis of a percentage of the value of each client’s assets (assets under management) and are charged using either an average daily balance or monthly or quarterly ending balance, and either in arrears or advance.

The Company also earns management fees in its mutual funds, ETFs, closed-end funds and private partnerships as compensation for internal fund management and advisory services. The management fees for the private funds vary by fund and investment strategy and are typically approximately between 0.25% and 2.00% of the net asset value of the funds’ underlying investments.

The Company is also entitled to receive incentive fees on private partnerships if certain performance returns have been achieved as stipulated in the governing documents of the applicable fund. Incentive fees are generated when certain returns exceed a previously established high water mark. The incentive fees are calculated as a percentage of the gains experienced, typically 20%, based on the agreement with each partner in the respective fund. Incentive fees are not subject to claw back as a result of performance declines in subsequent periods to the most recent measurement date. Incentive fees, if earned, are recognized upon completion of the contractually determined measurement period, which are generally annually, or when a client redeems their interest. Incentive fees are subject to the uncertainty of market volatility, and as a result, the entire amount of the variable consideration related to incentive fees is constrained until the end of each measurement period when the uncertainty has been resolved. The Company earned incentive fees of $0.7 million and $51.7 million for the years ended December 31, 2025 and 2024, respectively. Management and incentive fees earned from consolidated investment products are eliminated from revenue upon consolidation, however the economic benefit to the HKHC shareholders’ is retained through lower amounts attributable to the redeemable noncontrolling interests. Unearned incentive fees resulting from the performance of the Company’s private funds for the year ended December 31, 2025 were approximately $24.9 million. These unearned incentive fees are subject to change based on market prices and are generally expected to be resolved once it is probable that a significant reversal of revenue will not occur. Certain funds with aggregate unearned incentive fees of $22.6 million are not expected to be resolved until the first quarter of 2026.

A small number of clients with certain separately managed accounts may pay incentive fees in addition to or in lieu of management fees, if their portfolio achieves positive investment returns, in certain cases, in excess of an agreed benchmark or hurdle rate. Typically, such fees are paid annually upon crystallization or when a client closes their investment and are not accrued prior to being earned. These unearned performance fees are subject to change based on market prices and generally expected to be resolved during the fourth quarter once it is probable that a significant reversal of revenue will not occur.

Business Highlights in 2025

Total revenue

•

HKHC’s total revenues grew 30% this year as a result of the higher average AUM during 2025 as compared to 2024 at our mutual funds, ETFs and separately managed accounts due to their favorable 2024 performance.

Assets under management

•

AUM for the year ended December 31, 2025 decreased by approximately $0.2 billion, or 2%, to $9.6 billion. The decline included the impact due to market value changes as there were declines in certain key holdings across the Company’s mutual funds, ETFs and separately managed accounts (“SMAs”). The market value of Texas Pacific Land Corporation (“TPL”), which is widely held across HKHC’s private funds and SMAs, decreased 22.1% during the year. In addition, there were decreases in the market value of Grayscale Bitcoin Trust (“GBTC”), which is also widely held across HKHC’s private funds and SMAs, of 7.6% during the year.

•

The Company added AUM during 2025 as a result of several new investment products, including three new classes of HKEO that total approximately $55 million of AUM, a Japan Owner Operator ETF (Ticker JAPN) currently with $25 million of AUM, and other smaller private funds have become available to investors.

Investment performance

•

HKHC maintains a portfolio for investment purposes and has also invested substantial capital in its private funds alongside client investors. For the year ended December 31, 2025 there was a decrease of $15.6 million in the fair value of this portfolio primarily due to the 22.1% decrease in the TPL securities held directly by HKHC. The change in the fair value of HKHC’s investments is reported in unrealized gain (loss) on investments, net in the accompanying consolidated statement of operations.

•

Several of the Company’s consolidated investment products experienced negative performance in 2025. Specifically, the Polestar Funds, Horizon Kinetics Equity Opportunities Fund and Horizon Multi-Strategy Fund were the largest contributors collectively representing approximately $77 million of net loss for the year ended December 31, 2025.

Results of Operations

Revenues

Management and advisory fees

The Company’s total management and advisory fees increased approximately $16.9 million, or 30%, for the year ended December 31, 2025 compared to the prior year. The increase is due to higher management fees in mutual funds of $10.8 million, or 42%, and ETFs of $4.0 million, or 56%, due to higher average AUM throughout the year.

Other income and fees

Other income and fees also include revenues resulting from the Company’s research services and digital asset mining activities, which increased modestly during the year.

Operating Expenses

Compensation and related employee benefits

The Company’s operating expenses include employee compensation for investment professionals and other management personnel. HKHC’s compensation costs for the year ended December 31, 2025 decreased by approximately $5.5 million, or 15%, compared to the prior year, due to lower internal commissions and lower bonus pool values in 2025 resulting from the Company’s significantly lower incentive fee results in 2025 as compared to 2024. These decreases were partially offset by compensation increases that reflected additional personnel in certain departments.

Sales, distribution and marketing expenses

For the year ended December 31, 2025, sales, distribution and marketing expenses decreased $3.4 million, or 18%, compared to the prior year, as the result of decreases of approximately $5.1 million resulting from the absence of various commissions payable on the 2024 incentive fees earned by HKHC during the prior year. There was also a decrease of $0.5 million due to FRMO pursuant to its revenue sharing agreement with HKHC. The Company also experienced higher platform fees of $1.9 million and $1.1 million of other management fee commissions earned due to generally increasing AUM and management fees during the year.

Depreciation and amortization

Depreciation and amortization decreased $0.7 million, or 39% for the year ended December 31, 2025 as compared to the prior year due to certain intangible assets becoming fully amortized.

General and administrative expenses

For the year ended December 31, 2025, general and administrative expenses increased by $0.1 million, or 1%, compared to the prior year. The Company experienced certain lower accounting, professional, and legal fees of $0.6 million during 2025 as a result of less activity associated with its 2024 merger and initial listing preparations. The Company also began incurring Director fee costs during 2024 and the full year of 2025 resulting in an additional $0.1 million.

Equity earnings, net

Equity earnings, net decreased by $10.9 million for the year ended December 31, 2025 compared to the prior year. The decrease was due primarily to decreases in the fair value of holdings at Horizon Kinetics Hard Assets, LLC as compared to the prior year.

Interest and dividend income

Interest and dividend income increased by $0.7 million for the year ended December 31, 2025 as compared to the prior year due primarily due to higher average cash balances from incentive fees paid in the current year compared to prior year.

Unrealized (losses) gains on digital assets, net

Unrealized (losses) gains on digital assets, net were ($0.8) million and $7.0 million for the years ended December 31, 2025 and 2024 primarily due to changes in the fair value of Bitcoin during the respective years. The Company increased its holdings of Bitcoin during the year ended December 31, 2025 by 1 Bitcoin from mining activity to 132 Bitcoin worth $11.5 million. During the year ended December 31, 2024, digital assets unrealized gains on digital assets were not recorded pursuant to the accounting standard in effect at the time.

Unrealized gain (loss) on investments, net

For the year ended December 31, 2025 , unrealized (losses) gains on investments were ($15.6) million as compared to $41.3 million in the prior year, a decrease of $56.9 million. The unrealized losses in 2025 were primarily due to unrealized losses on TPL stock, which decreased 22% during the year as compared to a 111% increase in the prior year.

Income tax benefit (expense)

The Company recognizes deferred income taxes related to the tax basis differences for certain assets, principally unrealized gains in various investments, digital assets and indefinite lived intangible assets from the Company’s 2011 merger transaction. During periods prior to June 30, 2024, the Company was an LLC and was generally not subject to federal or state income taxes as its income and losses are included in the tax returns of its members. On July 1, 2024, the Company filed to convert from an LLC to a C-Corp for federal and state income taxes. As a result, the Company recognized a deferred income tax expense of $59.7 million related to the tax basis differences. Due to additional unrealized gains of investment securities and proprietary funds during the third quarter of 2024, the Company recorded an additional $8.9 million of deferred tax expense.

During the year ended December 31, 2025, the Company adjusted its estimated income tax rate used to value deferred income taxes due to certain state apportionment factors, which resulted in the recording of a non-cash deferred income tax benefit during the period of $12.5 million.

The Company has paid $9.2 million and $11.1 million, respectively, in federal and various state and local income taxes during the year ended December 31, 2025, and the six month period ended December 31, 2024, respectively, subsequent to the conversion to a C-Corp.

Redeemable Non-Controlling Interests

Net income attributable to redeemable non-controlling interests in Consolidated Investment Products represents the income attributable to ownership interests that third parties hold in entities that are consolidated within our consolidated financial statements. During 2025 the amounts attributable to noncontrolling interests increased correspondingly to the performance of our proprietary funds, but also includes a reduction with respect to incentive fees earned by Horizon Kinetics as the advisor to the funds.

Consolidated Investment Products

Consolidated Investment Products represented a significant portion of our assets. As of December 31, 2025, we consolidated 16 private funds. The activity of the consolidated investment products is reflected within the consolidated financial statement line items indicated by reference thereto. The impact of consolidation also typically will decrease management fees and incentive fees reported under GAAP to the extent these amounts are eliminated upon consolidation. The assets and liabilities of our Consolidated Investment Products are held within separate legal entities and, as a result, the liabilities of our consolidated investment products are typically non-recourse to us. Generally, the consolidation of our consolidated investment products has a significant gross-up effect on our assets, liabilities and cash flows but has no net effect on the net income attributable to us or our stockholders’ equity.

The following table presents the results of operations of the consolidated investment products:

Year Ended December 31,

Expenses of consolidated investment products $ (10,315 ) $ (10,109 )

Interest and dividend income of consolidated investment products 8,394 20,377

Net income of consolidated investment products (19,689 ) 851,003

The results of operations of the consolidated investment products primarily represent activities from certain funds that we are deemed to control. When a fund is consolidated, we reflect the revenues and expenses of the entity on a gross basis, subject to eliminations from consolidation. Substantially all of our results of operations related to the consolidated investment products are attributable to ownership interests that third parties hold in those funds. The consolidated investment products may not necessarily be the same funds in each year presented due to changes in ownership, changes in limited partners’ rights, and the creation or termination of funds and entities. Accordingly, such amounts may not be comparable for the periods presented, and in any event have no material impact on net income attributable to Horizon Kinetics Holding Corporation.

Segment Analysis

For segment reporting purposes, revenues and expenses are presented before giving effect to the results of our consolidated investment products and the results attributable to non-controlling interests that we consolidate. As a result, segment revenues from management fees, incentive fees and investment income are different than those presented on a consolidated basis in accordance with generally accepted accounting principles. Revenues recognized from consolidated investment products are eliminated in consolidation and those attributable to the non-controlling interests have been excluded by us. Furthermore, expenses and the effects of other income (expense) are different than related amounts presented on a consolidated basis in accordance with GAAP due to the exclusion of the results of consolidated investment products and the non-controlling interests.

Liquidity and Capital Resources

At December 31, 2025, the Company had $36.9 million of cash and cash equivalents. We believe that our cash and cash equivalents at December 31, 2025 will be sufficient to fund operations for at least one year from the date of this report.

The Company also had $76.5 million of investments, at fair value. These investments include $49.7 million held in a single security, approximately 173,000 shares of TPL. The Company may be limited in its ability to sell this security due to the possibility of being deemed an affiliate of TPL.

In the normal course of business, we may engage in off-balance sheet arrangements, including transactions in derivatives, guarantees, commitments, indemnifications, and potential contingent repayment obligations. We do not have any off-financial position arrangements that would require us to fund losses or guarantee target returns to clients.

The Company’s Board of Directors has determined an expected quarterly dividend policy that is based on the Company’s quarterly performance. The Board of Directors may consider other relevant factors that are relevant to the final determination of a quarterly dividend, if any. On March 11, 2026, the Company's Board of Directors declared a cash dividend of $0.121 per share, payable on March 31, 2026 to shareholders of record as of the close of business on March 23, 2026.

In the normal course of business, we expect to pay dividends to common stockholders that are aligned with a portion of our quarterly operating earnings after an allocation of current income taxes payable. We estimate the taxes by multiplying the statutory tax rate currently in effect by our realized performance. If cash flows from operations were insufficient to fund a calculated dividend, we would suspend or reduce such dividend. In addition, there is no assurance that dividends would continue at the current levels or at all.

The following table and discussion summarize our consolidated statement of cash flows:

Year Ended December 31,

Operating cash flows

Net cash provided by operating activities decreased by $54.9 million for the year ended December 31, 2025 compared to the prior year. The decrease was primarily the result of decreased earnings and other operating cash adjustments of $833 million and a decrease of net of working capital changes during the period of approximately $87 million. This decrease was primarily offset by approximately $865 million increase of operating cash flows allocable to non-controlling interests in consolidated funds.

Investing cash flows

Net cash provided by investment activities increased by $23.1 million for the year ended December 31, 2025 as compared to the prior year. The increase was primarily the result of approximately $32.3 million increased proceeds from sale of investments and partially offset by $5 million of a deconsolidation of a consolidated investment product and $2.8 million of cash provided from the prior year merger with the consumer products division.

Financing cash flows

Net cash provided by financing activities increased $66.3 million for the year ended December 31, 2025 as compared to the prior year. The Company paid $6.3 million of dividends during the year ended December 31, 2025, which was an increase of $5.3 million than the prior year. However, the Company also paid $4.1 million of distributions in 2024 prior to the conversion to a C-Corp on July 1, 2024. The increase of cash provided by Financing activities was primarily due to an increase of approximately $60.0 million of cash contributions from redeemable noncontrolling interests in consolidated investment products and $10.2 million less cash redemptions from our noncontrolling interests in consolidated investment products.

Contractual Cash Obligations and Other Commercial Commitments

The Company’s contractual cash obligations and other commercial commitments is limited to certain operating leases for office space as summarized below:

Payments Due by Period

Contractual Cash Obligations:

As part of the merger in 2024, the Company acquired an operating lease with annual cash outflows of approximately $0.4 million through 2030 and a sublease agreement with annual expected cash inflows of approximately $0.3 million through 2027. During 2025, the Company entered into two non-cancelable operating leases that have not yet commenced for replacement and additional office space for seven to 15 years. The table above excludes $27.1 million of legally binding lease payments for these leases signed but not yet commenced.

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions that in certain circumstances affect amounts reported in the audited consolidated financial statements. In preparing these financial statements, our estimates and judgments are based on historical experience, information from third-party valuation professionals and various other assumptions, giving due consideration to materiality. We consider the accounting estimates discussed below to be critical to the understanding of our consolidated financial statements. Actual results could differ from our estimates and assumptions, and any such difference could be material to our consolidated financial statements.

Revenue recognition

Horizon Kinetics recognizes revenues when its obligations related to the services are satisfied and it is probable that a significant reversal of the revenue amount would not occur in future periods. Horizon Kinetics enters into contracts that can include multiple services, which are accounted for separately if they are determined to be distinct. Management’s judgment is required in assessing the probability of significant revenue reversal and in identification of distinct services.

Horizon Kinetics derives a substantial portion of its revenue from investment management and advisory fees which are recognized as the services are performed over time because the customer is receiving and consuming the benefits as they are provided by Horizon Kinetics. Fees are primarily based on agreed-upon percentages of AUM and recognized for services provided during the period, which are distinct from services provided in other periods. Such fees are affected by changes in AUM, including market appreciation or depreciation and net inflows or outflows. AUM represents the broad range of financial assets Horizon Kinetics manages for clients on a discretionary basis pursuant to investment management agreements. In general, reported AUM reflects the valuation methodology that corresponds to the basis used for determining revenue (for example, net asset values).

Horizon Kinetics receives investment management and advisory fees, including incentive allocations from certain actively managed investment funds and certain SMAs. These incentive fees are dependent upon exceeding investment return thresholds, which may vary by product or account, and could include varying measurement periods.

Incentive fees are generated on certain management contracts when performance hurdles are achieved, such as returns exceed a previously established high water mark. Such incentive fees are recognized when the contractual performance criteria have been met and when it is determined that they are no longer probable of significant reversal. Given the unique nature of each fee arrangement, contracts with customers are evaluated on an individual basis to determine the timing of revenue recognition. Significant judgment is involved in making such determination. Incentive fees typically arise from investment management services that began in prior reporting periods. Consequently, a portion of the fees recognized may be partially related to the services performed in prior periods that meet the recognition criteria in the current period. At each reporting date, the Company considers various factors in estimating incentive fees to be recognized. These factors include but are not limited to whether: (1) the amounts are dependent on the financial markets and, thus, are highly susceptible to factors outside Horizon Kinetics’ influence; (2) the ultimate payments have a large number and a broad range of possible amounts; and (3) the funds or SMAs have the ability to (a) invest or reinvest their sales proceeds or (b) distribute their sales proceeds, and determine the timing of such distributions.

Principles of Consolidation

In addition to its wholly-owned subsidiaries, generally accepted accounting principles in the United States of America (“GAAP”) requires that the assets, liabilities and results of operations of a variable interest entity (“VIE”) be consolidated into the financial statements of the enterprise that has a controlling interest in the VIE. The determination as to whether an entity qualifies as a VIE depends on the facts and circumstances surrounding each entity, and therefore certain of the investment vehicles managed by Horizon Kinetics may qualify as VIEs under the variable interest model, whereas others may qualify as voting interest entities (“VOEs”) under the voting interest model.

The determination of whether to consolidate a VIE under US GAAP requires a significant amount of judgment concerning the degree of control over an entity by its holders of variable interests. To make these judgments, we conduct an analysis, on a case-by-case basis, of whether we are the primary beneficiary and are therefore required to consolidate an entity. We continually reconsider whether we should consolidate a VIE. Upon the occurrence of certain events, such as modifications to organizational documents and investment management agreements of our products, we will reconsider our conclusion regarding the status of an entity as a VIE. Our judgment when analyzing the status of an entity and whether we consolidate an entity could have a material impact on individual line items within our consolidated financial statements, as a change in our conclusion would have the effect of grossing up the assets, liabilities, revenues and expenses of the entity being evaluated. In light of certain direct and indirect investments into our products, the likelihood of a reasonable change in our estimation and judgment could result in a change in our conclusions to consolidate or not consolidate any VIEs to which we have exposure.

Fair Value Measurement

GAAP establishes a hierarchical disclosure framework prioritizing the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or where fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

•Level I—Quoted prices in active markets for identical instruments.

•Level II—Unadjusted quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model-derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rate, yield curve, volatility, prepayment risk, loss severity, credit risk and default rate.

•Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into multiple levels of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. Our assessment of the significance of an input requires judgment and considers factors specific to the instrument. See “Note 4. Fair Value,” within our consolidated financial statements included in this Annual Report on Form 10-K for a summary of our valuation of investments and other financial instruments by fair value hierarchy levels.

Income Taxes

The Company is taxed as corporation for U.S. federal and state income tax purposes. We use the liability method of accounting for deferred income taxes pursuant to GAAP. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the carrying value of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the statutory tax rates expected to be applied in the periods in which those temporary differences are settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized during the year the change is enacted. A valuation allowance is recorded on our net deferred tax assets when it is more likely than not that such assets will not be realized or when timing is unknown. When evaluating the realizability of our deferred tax assets, all evidence, both positive and negative, is evaluated. Items considered in this analysis include the ability to carry back losses, the reversal of temporary differences, tax planning strategies and expectations of future earnings.

Under GAAP, the amount of tax benefit to be recognized is the amount of benefit that is more likely than not to be sustained upon examination. We analyze our tax filing positions in all of the U.S. federal, state, local and foreign tax jurisdictions where we are required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, we determine that uncertainties in tax positions exist, a liability is established. As of December 31, 2025, we have not identified any uncertain tax positions.

Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP.

Recently Issued Accounting Standards

For information on recently issued accounting standards, see Note 2 (v), “Recently Issued Accounting Standards,” to our consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our primary exposure to market risk is related to our role as general partner or investment adviser to our funds and the sensitivity to movements in the fair value of their investments, including the effect on management fees, incentive fees and investment income.

Market Risk.The market price of investments or digital assets may significantly fluctuate during the period of investment. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of an investment may decline due to general market conditions, which are not specifically related to such investment, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in

interest or currency rates or adverse investor sentiment generally. It may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

Effect on Management Fees. Management fees are generally based on a defined percentage of fair value of assets under management we manage. Management fees are generally calculated based on the fair value of assets under management. The overall impact of a short-term change in market value may be mitigated by a number of factors including, but not limited to, the calculation being calculated based on average market value including daily, monthly or quarterly averages as well as monthly or quarterly payment terms.

Effect on Incentive Fees. We earn incentive fees from certain of our funds when such funds achieve specified performance criteria. Our incentive fees will be impacted by changes in market risk factors. As a result, the impact of changes in market risk factors on carried interest and incentive fees could vary widely from fund to fund. An overall increase of 10% in the general equity markets would not necessarily drive the same impact on our funds’ ability to generate income or its asset valuations, as a significant portion of our incentive fees are from concentrated portfolios of investments. Additionally, as a percentage of our incentive fees are paid to employees as performance related compensation, the overall net impact to our income would be partially mitigated by compensation payments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

HORIZON KINETICS HOLDING CORPORATION

Index to Consolidated Financial Statements

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID 199) 23

Report of Independent Registered Public Accounting Firm (PCAOB ID 688) 24

Consolidated Statements of Financial Condition 25

Consolidated Statements of Operations 26

Consolidated Statements of Shareholders’ Equity 27

Consolidated Statements of Cash Flows 28

Notes to Consolidated Financial Statements 29

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Horizon Kinetics Holding Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial condition of Horizon Kinetics Holding Corporation (the “Company”) as of December 31, 2025, the related consolidated statements of operations, shareholders’equity and cash flows for the year endedDecember 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our auditprovides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

We have served as the Company’s auditor since 2025(such date takes into account the acquisition of the attest business of Marcum llp by CBIZ CPAs P.C. effective November 1, 2024).

Costa Mesa, CA

March 12, 2026

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Horizon Kinetics Holding Corporation

Opinion on the Financial Statements

We have audited the accompanyingconsolidated statement of financial condition of Horizon Kinetics Holding Corporation (the “Company”) as of December 31, 2024, the related consolidated statements of operations, shareholders’ equity and cash flows for the year endedDecember 31, 2024, and the related notes(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

/s/ Marcum llp

Marcum llp

We served as the Company’s auditor from 2024 through 2025.

Costa Mesa, California

March 31, 2025

HORIZON KINETICS HOLDING CORPORATION

Consolidated Statements of Financial Condition

(in thousands, except par value amounts)

December 31, December 31,

Assets

Assets of consolidated investment products

Operating lease right-of-use assets 6,382 5,105

Property and equipment, net 395 99

Prepaid expenses and other assets 8,603 1,728

Due from affiliates 10 27

Assets of discontinued operations - 4,364

Liabilities, Noncontrolling Interests, and Shareholders’ Equity

Liabilities:

Accounts payable, accrued expenses and other $ 12,149 $ 21,547

Accrued third party distribution expenses 578 6,522

Liabilities of consolidated investment products

Accounts payable and accrued expenses 1,596 1,486

Liabilities of discontinued operations - 464

Commitments and contingencies (Note 15)

Shareholders' equity

The accompanying notes are an integral part of these Consolidated Financial Statements.

HORIZON KINETICS HOLDING CORPORATION

Consolidated Statements of Operations

(in thousands, except per share data)

Year Ended December 31,

Revenue:

Operating expenses:

Compensation and related employee benefits 32,028 37,550

Depreciation and amortization 1,116 1,816

Expenses of consolidated investment products 2,742 2,319

Other income (expense):

Equity earnings (losses), net (4,866 ) 6,037

Interest and dividend income of consolidated investment products 8,394 20,377

Unrealized (losses) gains on digital assets, net (796 ) 6,984

Realized gain on investments, net 2,398 432

Unrealized gain (losses) on investments net (15,554 ) 41,329

Income (loss) from continuing operations before income taxes (15,919 ) 899,563

Income (loss) from continuing operations, net of tax 7,300 795,182

Income (loss) from discontinued operations, net of tax (1,300 ) (371 )

Basic and diluted net income (loss) per common shares:

Net income (loss) from continuing operations $ 0.39 $ 43.56

Net income (loss) from discontinued operations $ (0.07 ) $ (0.02 )

Weighted average shares outstanding:

The accompanying notes are an integral part of these Consolidated Financial Statements.

HORIZON KINETICS HOLDING CORPORATION

Consolidated Statements of Shareholders’ Equity

(in thousands)

Common Stock

Shares Amount Capital in Excess of Par Retained Earnings Total

Contributions of investment securities, net - - 25,512 - 25,512

Restricted stock unit vesting 1 1 4 - 5

The accompanying notes are an integral part of these Consolidated Financial Statements.

HORIZON KINETICS HOLDING CORPORATION

Consolidated Statements of Cash Flows (in thousands)

Year Ended December 31,

Operating activities:

Depreciation and amortization 1,116 1,919

Equity earnings (losses), net 4,866 (6,037 )

Net realized and unrealized (gains) losses on investments 15,554 (41,761 )

Deferred income tax provision (benefit) (29,338 ) 92,148

Amortization of operating lease right-of-use assets 2,114 (739 )

Net change in unrealized gain on digital assets 796 (6,984 )

Allowance for current expected credit losses 1,150 3,069

Other non-cash amounts 812 (104 )

Net realized and unrealized gains on investments 21,472 (840,735 )

Net proceeds from securities sold short 415 -

Cash flows due to changes in operating assets and liabilities:

Prepaid expenses and other assets, net (6,784 ) (1,066 )

Accounts payable, accrued expenses and other liabilities (17,986 ) 24,915

Net cash (used in) provided by operating activities (43,067 ) 11,836

Investing activities:

Issuance of notes receivable to related party (1,150 ) (165 )

Repayment of note from related party 80 -

Proceeds from sale of investments 32,816 506

Purchases of property and equipment (315 ) (47 )

Deconsolidation of a consolidated investment product (5,000 ) -

Purchases of investments (1,205 ) (976 )

Cash acquired from acquisition - 2,823

Net cash provided by investing activities 25,226 2,141

Financing activities:

Distributions - (4,079 )

Cash contributions from affiliates - 2,666

Net cash provided by (used in) financing activities 41,466 (24,819 )

Net increase (decrease) in cash and cash equivalents 23,625 (10,842 )

Supplemental disclosure of cash flow information:

Cash paid during the year for income taxes $ 9,241 $ 11,087

Supplemental disclosure of non-cash investing activities:

Net assets acquired in acquisition $ - $ 10,969

Supplemental disclosure of non-cash financing activities:

Contributions of investment securities from affiliates $ - $ 22,846

Shares issued for acquisition $ - $ 13,792

The accompanying notes are an integral part of these Consolidated Financial Statements.

HORIZON KINETICS HOLDING CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except per share data)

Note 1. Organization and Nature of Business

Horizon Kinetics Holding Corporation, a Delaware Corporation (along with its wholly-owned subsidiaries, collectively referred to as the “Company”, “HKHC” or in the first-person notations of “we”, “us” and “our”) executed a merger agreement on March 15, 2011 between Horizon Kinetics LLC (“Horizon Kinetics”), Horizon Asset Management LLC (“HAM”), Kinetics Asset Management LLC (“KAM”), Kinetics Funds Distributor LLC (“KFD”), Kinetics Advisers LLC (“KA”), KBD Securities LLC (“KBD”) resulting in a Class A-1 membership group. Certain other investors’ contributed cash in return for Class A-2 units. During 2019, HAM, KAM and KA were merged forming Horizon Kinetics Asset Management (“HKAM”). The Company is an investment advisory and independent research firm. The Company earns revenues principally from fees earned for providing investment advisory services to separately managed investment accounts, mutual funds, ETFs and proprietary funds.

HKAM (the “Investment Adviser”) is a wholly-owned subsidiary of HKHC and is registered with the Securities and Exchange Commission (“SEC”) as an investment adviser under the Investment Advisers Act of 1940.

KBD LLC and KFD LLC are also wholly-owned subsidiaries and are registered broker-dealers under the Securities Exchange Act of 1934 and are members of the Financial Industry Regulatory Authority (“FINRA”). KFD LLC acts as the principal underwriter and distributor of shares of the Kinetics Mutual Funds, Inc. and does not receive or hold funds of subscribers or securities of issuers. KBD LLC acts as a limited purpose broker-dealer involved with the marketing and wholesaling of various products offered by Horizon Kinetics and its subsidiaries. KBD LLC does not receive or hold customer’s funds or securities.

The Company and its wholly owned subsidiaries manage or control certain entities that have been consolidated in the accompanying financial statements. These entities include our private funds (collectively, “consolidated investment products”). Including the results of the consolidated investment products significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows within the accompanying consolidated financial statements. However, the consolidated investment products’ results included herein have no direct effect on the net income attributable to HKHC or to its Stockholders’ Equity. Instead, economic ownership of the investors in the consolidated investment products are reflected as redeemable non-controlling interests in consolidated investment products. Further, cash flows allocable to redeemable non-controlling interests in consolidated investment products are specifically identifiable within the consolidated statement of cash flows.

Note 2. Summary of Significant Accounting Policies

(a) Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission. The consolidated financial statements include the accounts of HKHC and all of its wholly-owned subsidiaries. The Company’s consolidated investment products are investment companies under GAAP based on the following characteristics: the consolidated investment products obtain funds from one or more investors and provide investment management services and the consolidated investment products’ business purpose and substantive activities are investing funds for returns from capital appreciation and/or investment income. Therefore, investments of consolidated investment products are recorded at fair value and the unrealized appreciation (depreciation) in an investment’s fair value is recognized on a current basis within the consolidated statements of operations. In the preparation of these consolidated financial statements, the Company has retained the investment company accounting for the consolidated investment products under GAAP. All intercompany balances and transactions have been eliminated in consolidation.

(b) Principles of consolidation

In addition to its wholly-owned subsidiaries, GAAP requires that the assets, liabilities and results of operations of a variable interest entity (“VIE”) be consolidated into the financial statements of the enterprise that has a controlling interest in the VIE. The determination as to whether an entity qualifies as a VIE depends on the facts and circumstances surrounding each entity, and therefore certain of the investment vehicles managed by the Company may qualify as VIEs under the variable interest model, whereas others may qualify as voting interest entities (“VOEs”) under the voting interest model. The Company first evaluates whether it holds a variable interest in an entity. Fees that are customary and commensurate with the level of services provided, and where the Company

does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be considered a variable interest. The Company factors in all economic interests including proportionate interests through related parties, to determine if such interests are considered a variable interest.

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect amounts reported in the financial statements and accompanying notes. Actual results may differ from these estimates. These estimates include the evaluation of the recoverability of the Company’s ownership interests and advances, the recoverability of deferred tax assets, and commitments and contingencies. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances.

(d) Cash and cash equivalents

Cash and cash equivalents include cash on hand and short-term, highly liquid investments (those purchased with an original maturity of three months or less) held at banks or other financial institutions. Management periodically assesses the financial condition of the banks and believes that any potential credit loss is minimal. Cash on deposit with financial institutions may exceed federally insured limits.

(e) Liquidity

The Company believes that its cash and cash equivalents will be sufficient to fund operations past one year from the issuance of these consolidated financial statements.

(f) Fees and other receivables

Fees and other receivables consist of fees receivable from separately managed accounts, mutual funds, ETFs, and private investment funds, research revenue and other miscellaneous receivables.

Other receivables are recorded when they are due and are presented in the consolidated statement of financial condition, net of any allowance for doubtful accounts. Allowances for expected credit losses or doubtful accounts is estimated based on the Company’s historical losses, existing conditions in the industry, and the financial stability of those individuals or entities that owe the receivable. As of December 31, 2025 and 2024, the Company established an allowance for expected credit losses for certain amounts due from an affiliate of $1.2 million and $3.1 million, respectively.

(g) Property and equipment

Property and equipment are recorded at cost. Depreciation is computed using a straight-line method based on the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized on a straight-line basis over the lesser of the economic useful life of the improvement or the term of the lease.

(h) Digital assets

The Company measures digital assets at fair value with changes recognized in earnings in each reporting period. The Company tracks its cost basis of digital assets in accordance with first-in-first-out method of accounting. The Company measures mining rewards and its Level 1 fair value of digital assets based on the quoted price of the digital asset at the Company’s principal market.

(i) Intangible assets

Intangible assets were primarily recorded at the Company’s formation and the 2024 acquisition. Intangible assets with a useful life are amortized and expensed on a straight-line basis over their estimated useful lives. The weighted average amortization period of our intangible assets subject to amortization is approximately 14 years. Management periodically evaluates the remaining useful lives of definite-lived intangible assets and carrying values of all intangible assets to determine whether events or changes in circumstances indicate a change in the useful life or an impairment.

Indicators of impairment monitored by management include a decline in the level of managed assets, changes to contractual provisions underlying certain intangible assets and reductions in underlying operating cash flows. Should there be an indication of a change in the useful life or impairment in value of the definite-lived intangible assets, we compare the carrying value of the asset to the projected undiscounted cash flows expected to be generated from the underlying asset over its remaining useful life to determine whether impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to its fair value determined using discounted cash flows. The Company writes off the cost and accumulated amortization balances for all fully amortized intangible assets. The Company recorded a goodwill impairment of $0.9 million in discontinued operations during the year ended December 31, 2025. There were no impairments recorded during the year ended December 31, 2024.

Indefinite-lived intangible assets represent contracts for mutual fund advisory services where the Company expects to, and has the ability to, continue to manage these funds indefinitely, the contracts have annual provisions, and there is a high likelihood of continued renewal based on historical experience. Indefinite-lived intangible assets are reviewed annually using a qualitative approach which requires that positive and negative evidence collected as a result of considering various factors be weighed in order to determine whether it is more likely than not that an asset is impaired.

(j) Goodwill

For goodwill impairment testing purposes, the Company has determined it is a single reporting units entity. The Company tests goodwill for impairment on an annual basis, or more frequently if facts and circumstances indicate that goodwill may be impaired. Factors that could trigger an impairment review include underperformance relative to historical or projected future operating results, significant changes in the Company’s assets managed, and significant negative industry or economic trends. An impairment charge is recorded if the carrying amount of a reporting unit exceeds its fair value.

(k) Investments, at fair value

The Company invests in securities which are valued at fair value with unrealized gains and losses included in the consolidated statement of operations. Realized gains and losses are determined on the basis of specific identification.

(l) Assets and liabilities of consolidated investment products

Investment assets and liabilities of consolidated investment products primarily consist of equity securities, exchange traded funds, debt instruments, mutual funds, digital asset trusts, preferred stocks, private real estate investments, private placements, digital assets and derivatives. The carrying value of the investment assets and liabilities is also their fair value. Changes in the fair value of the investments are recognized as gains and losses in earnings. Equity securities, exchange traded funds, debt instruments, mutual funds, digital asset trusts, preferred stocks are generally valued based upon closing market prices of the security on the principal exchange on which the security is traded. Fixed income securities include corporate bonds, convertible bonds and bank loans.

(m) Redeemable noncontrolling interests

Redeemable noncontrolling interests represent third-party investors’ ownership interest in consolidated investment products. Third-party investors in consolidated investment products generally have the right to withdraw their capital, subject to certain conditions. Noncontrolling interests of consolidated investment products that are currently redeemable at the option of the holder are classified as temporary equity.

(n) Other investments

For investments in entities over which the Company exercises significant influence, but which do not meet the requirements for consolidation and for which the Company has not elected the fair value option, the Company uses the equity method of accounting, whereby the Company records its share of the underlying income or loss of such entities. The Company’s share of the underlying net

income or loss of such entities is recorded in equity in earnings of affiliated investments on the consolidated statement of operations. As the underlying entities that the Company manages and invests in are primarily investment companies accounted for under Accounting Standards Codification (“ASC”) Topic 946 which reflect their investments at estimated fair value, the carrying value of the Company’s equity method investments in such entities approximates fair value.

We account for certain other investments that are not accounted for under the equity method that do not have a readily determinable fair value under the fair value measurement alternative. Under the fair value measurement alternative, these investments are based on our original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar interests of the same issuer. Under this method, our share of the income or losses of such companies is not included in our Consolidated Statements of Operations, however, the result of observable price changes, if any, are reflected in Other income (loss), net. We include the carrying value of these investments in Other Investments on the consolidated balance sheets.

(o) Fair value measurements

The Company values certain of its financial assets and liabilities based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance emphasizes that fair value is a market-based measurement that should be determined based on the assumptions market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, accounting guidance establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) the reporting entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). Valuation techniques used to measure fair value shall maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:

Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments are not applied to Level 1 investments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these investments does not entail a significant degree of judgment.

Level 2 Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The fair value hierarchy guidance gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

(p) Revenue recognition

The Company recognizes revenue under Financial Accounting Standards Board's (FASB) Accounting Standards Update (ASU) 2014-09, Revenue From Contracts With Customers (Topic 606). The Company recognizes revenue when the performance obligation is satisfied, which is the point at which control of the promised goods or services are transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services.

Management fees, which are generally calculated as a percentage of assets under management, are recognized when earned and collection is probable. Certain contracts for management services also provide for performance-based fees (“Incentive Fees”).

Incentive Fee revenue is recorded when earned by the fund managers of those managed funds to the extent that Return Thresholds have been met and it is probable that a significant reversal of revenue will not occur. These customer contracts require the Company to provide investment management services over a period of time, which represents a performance obligation that the Company satisfies over time. Management fees are a form of variable consideration because the fees that the Company is entitled to vary based on fluctuations in the basis for the management fee. The amount recorded as revenue is generally determined at the end of the period because these management fees are payable on a regular basis (typically monthly) and are not subject to claw back once paid. Management and advisory fees, including Incentive Fees, from consolidated investment products are eliminated in consolidation. The Company earned $0.2 million of Incentive Fees for the year ended December 31, 2025 from private funds that are not consolidated, which is included in the Private funds line item in the table below. The Company earned $0.5 million of Incentive Fees, and $7.6 million of management fees, for the year ended December 31, 2025 from private funds that were eliminated as a result of the consolidation of the respective funds.

The following table disaggregates our management and advisory fees by type:

Year Ended December 31,

Separately managed account management fees 22,145 19,845

Total management and advisory fees $ 72,388 $ 55,486

The following table presents balances of management fees receivable by type:

Mutual fund management fees $ 2,605 $ 3,233

Separately managed account management fees 2,277 2,220

Private fund management fees 263 1,866

(q) Other revenue

The Company produces investment research reports for individual and institutional research clients. In addition, the Company retains a third-party marketing firm to market and distribute its research reports. Clients subscribe at a monthly, annual or multi-annual level. Income is accrued monthly based on current subscription base.

(r) Third party distribution

The Company has agreements in place with several third-party distribution firms and individual marketers (“Marketers”). Generally, each party to the agreement may terminate the agreement in a short notice period. Third party distribution expenses are earned by the Marketers based on revenue earned from some of the Company’s investment products generated by the respective Marketers. Accrued third party distribution expenses represent expenses that have been accrued but not paid. In the event that related fees receivable are deemed uncollectible, both related fees receivable and accrued third party distribution expenses will be written off.

The Company has also agreed to pay to certain professionals a portion of incentive fees earned from certain funds, including income from consolidated investment products that are eliminated in consolidation. Performance related compensation is recognized in the same period that the related incentive fees are recognized.

(s) Income taxes

Income taxes reflect the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is established when it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits or expense. There are no liabilities for uncertain tax positions as of December 31, 2025 and 2024. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the Consolidated Statements of Operations or accrued on the Consolidated Balance Sheets.

(t) Concentrations of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, accounts receivable and investments. Exposure to credit risk is reduced by placing such deposits or other temporary investments in high-credit quality financial institutions.

The concentration of credit risk with respect to accounts receivable is generally limited due to the short payment terms extended by the Company. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, if necessary, based on a history of past write-offs and collections and current credit conditions.

The Company has the following major customers who are each related parties:

Mutual Funds:

Mutual Fund A 27 % 27 %

Mutual Fund B 10 % 9 %

ETFs:

(u) Recently adopted accounting pronouncements

In December 2023, the FASB issued ASU No. 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Topic 350-60). ASU No. 2023-08 requires that an entity measure crypto assets at fair value with changes recognized in net income at each reporting period and present crypto assets separately from other intangible assets in the balance sheet and changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement. ASU No. 2023-08 is effective for annual periods beginning after December 15, 2024 and interim periods within annual periods beginning after December 15, 2024. The Company adopted ASU 2023-08 as of January 1, 2024 resulting in certain expanded disclosures about digital assets and we recorded an increase to our digital assets and shareholders’ equity of approximately $4.4 million, net of tax.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU No. 2023-09 established incremental disaggregation of income tax disclosures pertaining to the effective tax rate reconciliation and income taxes paid. This standard is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. The Company adopted this standard prospectively in our Annual Report on Form 10-K for the year ending December 31, 2025.

(v) Recently issued accounting pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the accompanying consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure of disaggregated information about specific categories underlying certain income statement expense line items in the footnotes to the financial statements for both annual and interim periods. Subsequently in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”) to clarify the effective date of ASU 2024-03. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.

Note 3. Consolidated Investment Products

Consolidated investment products (“CIPs”) consist primarily of private investment funds which are sponsored by the Company. The Company has no right to the CIPs’ assets, other than its direct equity investments in them and investment management

and other fees earned from them. The liabilities of the CIPs have no recourse to the Company’s assets beyond the level of its direct investment, therefore the Company bears no other risks associated with the CIPs’ liabilities.

The following supplemental condensed financial information illustrates the consolidating effects of the CIPs on the Company’s financial condition and results of operations as of and for the years ended December 31, 2025 and 2024, respectively:

Assets

Cash and cash equivalents $ 36,884 $ - $ - $ 36,884

Assets of consolidated investment products

Operating lease right-of-use assets 6,382 6,382

Property and equipment, net 395 395

Prepaid expenses and other assets 8,603 8,603

Due from affiliates 20 (10 ) 10

Liabilities, Noncontrolling Interests, and Shareholders’ Equity

Liabilities:

Accounts payable, accrued expenses and other $ 12,149 $ - $ - $ 12,149

Accrued third party distribution expenses 578 - - 578

Deferred revenue 66 - - 66

Liabilities of consolidated investment products

Accounts payable and accrued expenses - 1,606 (10 ) 1,596

Management fee payable - 1,580 (1,580 ) -

Operating lease liability 8,248 - - 8,248

Commitments and contingencies

Revenue:

Other income and fees 458 - - 458

Operating expenses:

Compensation and related employee benefits 32,028 - - 32,028

Sales, distribution and marketing 15,703 - - 15,703

Depreciation and amortization 1,116 - - 1,116

General and administrative expenses 10,174 - - 10,174

Expenses of consolidated investment products - 10,315 (7,573 ) 2,742

Other income (expense):

Other income (expense) (1,185 ) - - (1,185 )

Interest and dividend income of consolidated investment products - 8,394 - 8,394

Unrealized (loss) gain on digital assets, net (796 ) - - (796 )

Realized gain on investments, net 2,398 - - 2,398

Unrealized gain (loss) on investments net (15,554 ) - - (15,554 )

Income (loss) from discontinued operations, net of tax (1,300 ) - - (1,300 )

Assets

Cash and cash equivalents $ 14,446 $ - $ - $ 14,446

Assets of consolidated investment products - - - -

Assets of discontinued operations 4,364 - - 4,364

Liabilities, Noncontrolling Interests, and Shareholders’ Equity

Liabilities:

Accounts payable, accrued expenses and other $ 21,547 $ - $ - $ 21,547

Accrued third party distribution expenses 6,522 - - 6,522

Liabilities of consolidated investment products - - - -

Accounts payable and accrued expenses - 1,494 (8 ) 1,486

Liabilities of discontinued operations 464 - - 464

Operating lease liability 7,379 - - 7,379

Commitments and contingencies

Revenue:

Other income and fees 322 - - 322

Operating expenses:

Sales, distribution and marketing 19,093 - - 19,093

Depreciation and amortization 1,816 - - 1,816

Expenses of consolidated investment products - 10,215 (7,896 ) 2,319

Other income (expense):

Other income (expense) (2,985 ) - - (2,985 )

Unrealized (loss) gain on digital assets, net 6,984 - - 6,984

Realized gain on investments, net 432 - - 432

Unrealized gain (loss) on investments net 41,329 - - 41,329

Income (loss) from discontinued operations, net of tax (371 ) - - (371 )

Note 4. Investments, at Fair Value

As of December 31, 2025 the Company owned investments in marketable securities with a fair value of $76,535.

The following summarizes the Company’s investments accounted for at fair value at December 31, 2025 using the fair value hierarchy:

Total Level 1 Level 2 Level 3

Money market cash equivalents $ 32,362 $ 32,362 $ - $ -

Investments:

Texas Pacific Land Corporation common stock $ 49,714 $ 49,714 $ - $ -

Kinetics Market Opportunities Fund 8,024 - 8,024 -

All other market traded equity securities 3,454 3,454 - -

Kinetics Mutual Funds and ETFs 2,396 - 2,396 -

Kinetics Global Fund No Load Class 2,479 - 2,479 -

FRMO Corporation common stock 1,432 - 1,432 -

Liabilities:

Market traded equity securities - sold short $ (46 ) $ (46 ) $ - $ -

Total liabilities $ (46 ) $ (46 ) $ - $ -

The following summarizes the Company’s investments accounted for at fair value at December 31, 2024 using the fair value hierarchy:

Total Level 1 Level 2 Level 3

Money market cash equivalents $ 7,561 $ 6,214 $ - $ -

Investments:

Texas Pacific Land Corporation common stock $ 63,797 $ 63,797 $ - $ -

Kinetics Market Opportunities Fund 8,302 - 8,302 -

All other market traded equity securities 2,900 2,900 - -

Kinetics Mutual Funds and ETFs 2,419 - 2,419 -

Kinetics Global Fund No Load Class 2,416 - 2,416 -

FRMO Corporation common stock 1,916 - 1,916 -

Liabilities:

Market traded equity securities - sold short $ (32 ) $ (32 ) $ - $ -

Total liabilities $ (32 ) $ (32 ) $ - $ -

As of December 31, 2025 and 2024, there are no investments categorized within Level 3.

The following summarizes CIPs measured at fair value on a recurring basis were as follows as of December 31, 2025 using the fair value hierarchy:

Total Level 1 Level 2 Level 3 NAV as a practical expedient

Money market cash equivalents $ 31,469 $ 31,469 $ - $ - $ -

Investments:

Private equity funds 462 - - - 462

Liabilities:

Securities sold short $ (415 ) $ (415 ) $ - $ - $ -

Total liabilities $ (415 ) $ (415 ) $ - $ - $ -

The following summarizes CIPs measured at fair value on a recurring basis were as follows as of December 31, 2024 using the fair value hierarchy:

Total Level 1 Level 2 Level 3 NAV as a practical expedient

Money market cash equivalents $ 28,466 $ 28,466 $ - $ - $ -

Investments:

Preferred equity and other private investments 22,471 - - 22,471 -

Private equity funds 220 - - - 220

Liabilities:

Securities sold short $ (566 ) $ (566 ) $ - $ - $ -

Total liabilities $ (566 ) $ (566 ) $ - $ - $ -

Changes in Level 3 Assets were as follows:

Change in unrealized appreciation (depreciation), net (98 ) - 19,943 19,845

Sales - - - -

*Miami International Holdings, Inc., previously a private company held as a Level 3 private placement, went public in August 2025.

Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows:

Debt securities $ 1,551 Market Approach Probability of Recovery (21%)

Debt securities $ 1,649 Market Approach

Preferred equity and other private investments $ 22,471

7,078 Market Approach Offered quotes

157 Income Approach Capitalization rate range (7.3% - 7.5%)

Note 5. Other Investments

The Company’s other investments consist of the following as of December 31, 2025 and 2024, respectively:

Consensus Mining & Seigniorage Corporation 717 737

Other miscellaneous investments 3,926 1,231

Note 6. Digital Assets

The following tables present additional information about the Company’s digital assets as of December 31, 2025 and 2024, respectively:

Units Held Cost Basis Fair Value Units Held Cost Basis Fair Value

Bitcoin

Litecoin

Ethereum

Bitcoin Cash

All others

The following tables present additional information about digital assets held in CIPs as of December 31, 2025 and 2024, respectively:

Units Held Cost Basis Fair Value Units Held Cost Basis Fair Value

Bitcoin

Bitcoin Cash

Ethereum

Litecoin

Ripple

All others

Note 7. Discontinued Operations

During the third quarter of 2025, the Company entered into and consummated an asset purchase agreement with a buyer, pursuant to which we agreed to sell our right, title and interest in and to certain assets related to the Company’s consumer brands. Cash consideration paid on the date of the agreement was $0.4 million, which related to product inventories. Additional consideration for inventories is expected to be received during the fourth quarter. The Company will also receive royalty payments related to net sales ranging between 5% to 15% for all net sales of the brands through the year 2035 (“Consumer Products Royalties”). Consumer Products Royalties payments are subject to a minimum amount of $1.5 million and maximum amount of $5.25 million, notwithstanding any other clawbacks or indemnity claims.

In determining the amount of the variable consideration related to Consumer Products Royalties, the Company used the ‘expected value’ method for estimating the variable consideration due to the Company due to the large number of possible scenarios. The Company has estimated the fair value of the variable consideration at $2.5 million. The variable consideration amount will be reduced as royalty payments are received over the term of the agreement and subject to other adjustments to reflect the financing element and other estimates within the transaction. The Company has reflected the assets, liabilities, and results of operations of the consumer products as discontinued operations.

Our Consolidated Statements of Financial Position and Consolidated Statements of Operations report discontinued operations separate from continuing operations. Our Consolidated Statements of Equity and Statements of Cash Flows combine the results of continuing and discontinued operations. A summary of financial information related to discontinued operations is as follows:

Reconciliation of Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Consolidated Statements of Financial Position as of:

December 31,

Fees receivable, net $ 326

Prepaid expenses and other assets 624

Intangible assets, net 2,362

Assets of discontinued operations $ 4,364

Accounts payable, accrued expenses and other $ 464

Liabilities of discontinued operations $ 464

There were no assets or liabilities of discontinued operations as of December 31, 2025.

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations in the Consolidated Statements of Operations for the twelve months ended December 31:

Year Ended December 31,

Operating expenses

Compensation, related employee benefits, and cost of goods sold 1,271 1,029

Sales, distribution and marketing 799 417

Depreciation and amortization 164 103

General and administrative expenses 896 293

Impairment of goodwill 900 -

Operating income (loss) from discontinued operations (1,859 ) (469 )

Gain on sale of discontinued operations 214 -

Income tax (expense) benefit 345 98

Income (loss) from discontinued operations, net of tax $ (1,300 ) $ (371 )

Net cash used in operating activities from discontinued operations were $277 and $52for the year ended December 31, 2025 and 2024, respectively. The Company’s loss from discontinued operations for the year ended December 31, 2025 includes an impairment of goodwill of $0.9 million. There were no capital expenditures, depreciation expense, or significant operating investing noncash items related to discontinued operations during the nine months ended December 31, 2025 and 2024, respectively.

Note 8. Related Party Transactions

As of December 31, 2025 and 2024, amounts due to or due from the Company to related party affiliates is summarized as follows:

Receivable Payable Receivable Payable

Horizon Common Inc. $ - $ 6,902 $ - $ 6,948

Proprietary funds 5 - 27 -

For the years ended December 31, 2025 and 2024, amounts recognized from related party affiliates is summarized as follows:

Year Ended December 31,

Revenues Expenses Revenues Expenses

Proprietary funds $ 762 $ - $ 2,012 $ -

Consensus Mining & Seigniorage Corp 14 - 12 -

HM Tech - 9 - 14

Certain co-founders of HK LLC are also shareholders of FRMO Corporation (“FRMO”). FRMO has a right to a 4.2% share of the Company’s gross revenue (prior to any commission sharing agreements) and a 4.4% ownership interest. The Company’s expenses under this agreement are included with Sales, distribution and marketing expenses in the consolidated statement of operations.

The Company has waived, or provides discounted management and advisory fees, for assets under management in private funds or separately managed accounts for Shareholders’ and their direct families, FRMO, Horizon Common Inc., Kinetics Holding Corporation and employees of the Company.

The Company owns an equity interest and has advanced funds in exchange for notes receivable to HM Tech, a service provider for digital asset mining operations. The Company has also recently agreed to guarantee a $0.3 million Promissory Note receivable from HM Tech LLC issued to Consensus Mining & Seigniorage Corporation in the event of default.

Note 9. Intangible Assets

The following is a summary of the Company’s intangible assets as of December 31:

Advisory hedge fund contracts $ - $ 11,900

Retail SMA contracts - 1,700

Amortization expense for the years ended December 31, 2025 and 2024 was $1,060 and $1,708, respectively.

Estimated amortization expense for 2025 and subsequent years is as follows:

Thereafter -

Note 10. Lease Liability

As part of the merger in 2024, the Company acquired an operating lease with annual cash outflows of approximately $0.4 million through 2030 and a sublease agreement with annual expected cash inflows of approximately $0.3 million through 2027. During 2025, cash paid for amounts included in the measurement of operating lease liabilities was approximately $2.5 million for the year. Further, the Company entered into two non-cancelable operating leases that have not yet commenced for replacement and additional office space for seven to 15 years. The table above excludes $27.1 million of legally binding lease payments for these leases signed but not yet commenced.

The Company’s expected future minimum annual lease payments are as follows:

Total minimum lease payments $ 9,640

Less: imputed interest (1,392 )

Total operating lease liability $ 8,248

The discount rates used to calculate the Company’s initial lease liability ranged from 0.69% - 5.1%, which were the present value of the lease payments and were equal to the treasury bond rates on the dates the respective leases were signed or acquired. The treasury bond rate used was based on the number of years on the lease including any potential extensions included in the agreements. This risk-free rate applied is a permittable practical expedient under ASC 842.

The Company recognized amortization expense related to all their operating leases in the consolidated statements of operations for the periods ending December 31, 2025 and 2024. This expense represents the amortization of the right-of-use asset associated with the operating leases.

Note 11. Income Taxes

Prior to July 1, 2024, the Company was not subject to federal or state income taxes as its income and losses are includable in the tax returns of its members. The Company was required to file returns and pay tax in various state and local jurisdictions as a result of its operations or residency. Accordingly, the Company was subject to New York City unincorporated business income tax (“UBT”) and annual limited liability company fees in New York and Delaware.

On July 1, 2024, the Company filed to convert from an LLC to a C-Corp for federal and state income taxes. As a result, the Company recognized a deferred income tax expense of $59.7 million related to deferred taxes associated with the basis differences for certain assets, principally unrealized gains in various marketable securities, private funds and digital assets. The provision for income tax for the years ended December 31, 2025 and 2024 are as follows:

Current provision:

Deferred provision (benefit):

Total deferred provision (benefit) (29,338 ) 92,148

Provision (benefit):

Total (benefit from) provision for income taxes $ (23,219 ) $ 104,381

Income tax expense at the statutory tax rate is reconciled to the overall income tax expense for the year ended December 31, 2025 is as follows:

% $

State income taxes, net of federal tax effect 103.7 % (16,506 )

Non-deductible permanent items:

Executive compensation (1.2 )% 199

Other permanent differences 0.7 % (109 )

Other:

Income passed through to non-controlling interests 1.2 % (185 )

Provision for (benefit from) income taxes 145.9 % $ (23,219 )

The state income tax rate reconciliation category primarily reflects taxes imposed by the states in which the Company operates, primarily attributable to Wisconsin and other state jurisdictions.

Income tax expense at the statutory tax rate is reconciled to the overall income tax expense for the year ended December 31, 2024 is as follows:

Federal income tax from continuing operations at statutory rates 21.0 %

Income prior to C-Corporation conversion (1.1 )%

Income passed through to non-controlling interests (16.4 )%

State income taxes, net of federal tax effect 1.6 %

Permanent differences 0.0 %

Conversion to C-Corporation status 6.6 %

Other (0.1 )%

Provision for income taxes 11.6 %

The net deferred tax assets and liabilities as of December 31, 2025 and 2024 are comprised of the following:

Deferred tax assets:

Net operating loss carryforwards $ 4,412 $ 3,827

Deferred tax liabilities:

Operating lease right-of-use assets 1,453 1,219

The Company has the following tax carryforward attributes:

Gross Amount Expiring

Federal net operating loss carryforwards $ 16,650 $ -

The following table presents income taxes paid by jurisdiction for the year ended December 31, 2025 and 2024, including

U.S. Federal and state income taxes. The States presented make up the majority of the effects of state taxes included in the

provision for income taxes.

New Jersey - 417

HKHC US Equity

HKHC · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

HKHC US Equity☆

HKHC · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

HKHC US Equity