Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management's discussion and analysis should be read in conjunction with our historical financial statements and the related notes thereto. This management's discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like, and/or future tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under "Risk Factors" in our filings with the Securities and Exchange Commission ("SEC") that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. See "Forward-Looking Statements; Risk Factor Summary."

References in this management's discussion and analysis to "we," "us," "our," "the Company," "our Company" or "StableX" refer to StableX Technologies, Inc. and its subsidiaries.

Overview

Business

We have historically designed and manufactured compact, sustainable electric vehicles. In July 2025, we commenced a strategic transition toward a new business model focused on digital asset initiatives, with a focus on targeting the acquisition of crypto tokens that are directly capitalizing on the rapid growth of the stablecoin industry. We view the stablecoin ecosystem as a rapidly growing segment of the global financial infrastructure and believe that the entry into this market can provide a complementary revenue stream and enhance stockholder value. Our approach is intended to focus on acquiring and holding crypto assets within the stablecoin space and deploying them in a manner designed to generate yield while managing associated risks. In connection with this strategic shift, we announced a target goal of acquiring up to $100 million in crypto assets, subject to available capital, market conditions and regulatory considerations.

Our investment strategy centers on acquiring digital assets (tokens) that provide essential infrastructure and enabling technologies for the stablecoin sector, often referred to as the "picks and shovels" approach. Rather than directly investing in stablecoins themselves (which function as the primary "commodity" in this analogy), we target tokens associated with protocols, networks, and platforms that facilitate the issuance, transfer, custody, compliance, trading, lending, and scalability of stablecoins. We believe this positions our portfolio to capture indirect but amplified exposure to the sector's anticipated expansion.

The Company did not generate revenue during the year ended December 31, 2025. Operating activities during the year primarily consisted of (i) evaluating and implementing the Company's digital asset treasury strategy, (ii) completing financing transactions to support liquidity and capital deployment, and (iii) managing corporate overhead and compliance costs as a public company.

As of December 31, 2025, the Company's primary assets consisted of cash, digital assets and marketable securities. The Company's results of operations for the year were primarily affected by operating expenses, preferred stock dividends and accretion, changes in the fair value of derivative liabilities, and fluctuations in the fair value of digital assets. The Company's financial results may continue to experience volatility due to market conditions affecting digital asset valuations and the accounting treatment of certain financial instruments.

Reverse Stock Split

The Company effected a 1-for-16 reverse stock split ("Reverse Stock Split") of the Company's common stock on June 25, 2025, which began trading on a split-adjusted basis on June 26, 2025, pursuant to which every 16 shares of the Company's issued and outstanding common stock were reclassified as one share of common stock. The Reverse Stock Split had no impact on the par value of the Company's common stock or the authorized number of shares of common stock. Unless otherwise indicated, all share and per share information prior to the Reverse Stock Split are retroactively adjusted to reflect the Reverse Stock Split, prior to the rounding of any fractional shares. Any fractional shares resulting from the Reverse Stock Split were rounded up to the next whole number of shares, upon which 124 shares of common stock were issued in June 2025.

Factors Affecting Results of Operations

The Company did not generate revenue during the year ended December 31, 2025. As a result, the Company's results of operations for the year were primarily driven by operating expenses, preferred stock dividends and accretion, changes in the fair value of financial instruments, and fluctuations in the fair value of digital assets and marketable securities. The following factors materially affected the Company's financial condition and results of operations during the year ended December 31, 2025 and are expected to continue to affect future periods.

Strategic Transition to Digital Asset Treasury Activities

In July 2025, the Company initiated a strategic transition toward digital asset treasury management and capital allocation activities. As part of this transition, the Company deployed capital into digital assets and marketable securities. Because the Company's strategy involves holding and managing assets that are subject to market price volatility, future results of operations may fluctuate significantly based on changes in fair value of these holdings. Gains and losses associated with digital assets and certain financial instruments may materially impact net income (loss) from period to period.

Fair Value of Digital Assets and Financial Instruments

The Company accounts for certain digital assets and derivative financial instruments at fair value. Changes in the fair value of these assets and liabilities are recognized in the Company's consolidated statements of operations. As a result, the Company's reported net loss may vary significantly from period to period due to market-driven price changes rather than changes in underlying operating activity. The valuation of embedded derivatives and other financial instruments requires management judgment and the use of estimates, including volatility assumptions and other inputs, which may materially affect reported results.

Preferred Stock Dividends and Accretion

The Company's outstanding Series I Preferred Stock and Series H-7 Preferred Stock contain dividend and redemption features that impact reported results. The Company records preferred stock dividends and, where applicable, accretion of discounts to redemption value as deemed dividends or interest expense in accordance with applicable accounting guidance. These non-cash charges reduce net income available to common stockholders and may materially impact loss per share.

Market Conditions and Volatility

The Company's financial performance is directly influenced by conditions in the digital asset markets and broader capital markets. Digital asset prices have historically experienced significant volatility. Market fluctuations, regulatory developments, counterparty risk and macroeconomic conditions may materially affect the value and liquidity of the Company's holdings. Such volatility may result in substantial fluctuations in reported earnings or losses in future periods.

Components of Results of Operations

Revenue

The Company did not generate revenue during the year ended December 31, 2025.

Cost of Goods Sold

Cost of goods sold primarily consists of adjustments to inventory related to the adjustments to inventory stock counts resulting from impairment write downs.

Operating Expenses

Operating expenses consist primarily of general and administrative expenses, including compensation and related costs, professional fees, consulting expenses, public company compliance costs and stock-based compensation.

Stock-Based Compensation

We account for stock-based compensation expense in accordance with Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense for share-based awards based on the estimated fair value on the date of grant.

The fair value of each stock option granted to employees is estimated on the date of the grant using the Black-Scholes option-pricing model, and the related stock-based compensation expense is recognized over the vesting period during which an employee is required to provide service in exchange for the award. The fair value of the options granted to non-employees is measured and expensed as the options vest.

Restricted stock grants are stock awards that entitle the holder to receive shares of our common stock as the award vests over time. The fair value of each restricted stock grant is based on the fair market value price of common stock on the date of grant, and it is measured and expensed as the restricted stock vests.

Research and Development Expense

Research and development expense consists primarily of employee compensation and related expenses, prototype expenses, depreciation associated with assets acquired for research and development, amortization of product development costs, product strategic advisory fees, third-party engineering and contractor support costs and allocated overhead. We expect our research and development expenses to increase in absolute dollars as we continue to invest in new and existing products.

Sales and Marketing Expense

Sales and marketing expenses consist primarily of employee compensation and related expenses, sales commissions, marketing programs, travel and entertainment expenses and allocated overhead. Marketing programs consist of advertising, trade shows, events, corporate communications, and brand-building activities. We expect sales and marketing expenses to increase in absolute dollars as we expand our sales force, expand our product lines, increase marketing resources, and further develop potential sales channels.

General and Administrative Expense

General and administrative expenses consist primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, and fees for third-party professional services, and allocated overhead. We expect our general and administrative expense to increase in absolute dollars as we continue to invest in growing our business.

Other (Expense) Income

Other (expense) income consists of income received or expenses incurred for activities outside of our core business. Other (expense) income consists primarily of interest expense, unrealized gain/loss on marketable securities, the changes in fair value of the warrant and the derivative liability, vendor and legal settlements, and write-off of prepaid inventory as a result of vendor bankruptcy.

Provision for Income Taxes

Provision for income taxes consists of estimated income taxes due to the United States government and to the state tax authorities in jurisdictions in which we conduct business. In the case of a tax deferred asset, we reserve the entire value for future periods.

Results of Operations

Year Ended December 31, 2025 Compared with Year Ended December 31, 2024

The following table sets forth our results of operations for each of the years set forth below:

		2025				2024				Change
Revenue		$	-			$	63,777			$	(63,777	)
Cost of goods sold			956,160				6,650,979				(5,694,819	)
Gross loss			(956,160	)			(6,587,202	)			5,631,042
Operating expenses:
Research and development			1,394,905				1,493,202				(98,297	)
Sales and marketing			-				990,471				(990,471	)
General and administrative			8,104,834				8,646,301				(541,467	)
Loss on impairment of long-lived assets			-				1,659,835				(1,659,835	)
Total operating expenses			10,199,739				12,789,809				(2,590,070	)
Loss from operations			(10,455,899	)			(19,377,011	)			8,921,112
Other income (expense):
Interest income			126,620				484,325				(357,705	)
Change in fair value - warrant liability			(11,627,100	)			10,956,900				(22,584,000	)
Change in fair value - derivative liability			2,854,000				6,739,000				(3,885,000	)
Unrealized gain (loss) on marketable securities			(91,936	)			(98,315	)			6,379
Unrealized loss on digital assets			(2,151,001	)			-				(2,151,001	)
Realized gain on marketable securities			409,818				1,322,971				(913,153	)
Legal settlement			-				(1,096,222	)			1,096,222
Vendor settlement			-				(647,833	)			647,833
Consent and waiver fee - Series H-7			(350,000	)			-				(350,000	)
Other income (expense), net			196,353				(39,294	)			235,647
Net loss		$	(21,089,145	)		$	(1,755,479	)		$	(19,333,666	)

Revenue

Revenue was $0 for the year ended December 31, 2025, as compared to $63,777 for the year ended December 31, 2024, a decrease of 100%, or $63,777. The decrease in revenue was primarily due to a reduction of $43,200 in product sales and a $20,577 decrease in service revenue, mainly due to the pause in manufacturing of the Vanish as the Company focuses on re-engineering the vehicle to optimize its design and improve manufacturing efficiencies.

Cost of goods sold and gross loss

Cost of goods increased by $5,694,819, or 85.6% for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease in cost of goods sold was mainly due to the decrease of $1,001,065 related to overhead allocation, a decrease of $4,209,794 related to adjustments to inventory stock counts and impairment that as the result of the Company's pause on manufacturing of the Vanish.

Research and development expenses

Research and development ("R&D") expense was $1,394,905 for the year ended December 31, 2025, as compared to $1,493,202 for the year ended December 31, 2024, a decrease of $98,297, or 6.6%. The Company had a decrease of $312,376 in salaries and related personnel costs that was offset by assembly costs related to redesign work during the early portion of the year ended December 31, 2025. The overall decrease was primarily due to the Company being substantially complete with the R&D on the Vanish at the end of 2024, offset by the increase in re-engineering work and design changes in the current year associated with the Company's objective of lowering the bill of material and overall manufacturing expenses of the Vanish.

Sales and marketing expense

Sales and marketing expense was $0 for the year ended December 31, 2025, as compared to $990,471 for the year ended December 31, 2024, a decrease of $990,471, or 100%. Due to the Company's decision towards the end of 2024 to pause the manufacturing of the Vanish the Company did not engage in advertising or marketing activities during the year ended December 31, 2025.

General and administrative expenses

The majority of our operating losses from continuing operations resulted from general and administrative expenses. General and administrative expenses consist primarily of costs associated with our overall operations and with being a public company. These costs include personnel, legal and financial professional services, insurance, investor relations, and compliance related fees.

General and administrative expense was $8,104,834 for the year ended December 31, 2025, compared to $8,646,301 for the year ended December 31, 2024, a decrease of $541,467, or 6.3%. Personnel expenses decreased by $283,214 for the year ended December 31, 2025, compared to the year ended December 31, 2024, due to the increase in stock-based compensation $521,674 which was offset by a decrease in headcount associated with the internal restructuring. Consultants and professional services decreased by $437,335 for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to fewer engagements that required external professional services; this was offset by an increase in consulting expense related to warrants of $1,019,114 for the year ended December 31, 2025 as compared to the year ended December 31, 2024. Cost and associated expenses related to the issuance of Series Preferred Stock increased by $773,677 for the year ended December 31, 2025 compared to the year ended December 31, 2024. Depreciation expense decreased by $1,142,352 for the year ended December 31, 2025, compared to the year ended December 31, 2024, due to the Company's property and equipment being fully impaired during the year ended December 31, 2024.

Impairment of long-lived assets

The Company did not record an impairment of long-lived assets during the year ended December 31, 2025.

For the year ended December 31, 2024, the Company recorded an increase of $1,659,835 related to loss on impairment of long-lived assets, consisted of a $1,615,660 loss due to write down of idle fixed assets that were intended to be used in the production of the Vanish, and $44,175 increase in impairment of right-of-use asset due to a remeasurement of the asset's carrying value.

Other income and expense

For the year ended December 31, 2025, the Company recorded a $28,254,778 decrease of net other income. For the years ended December 31, 2025 and 2024, the Company recognized a loss of $11,627,100 and a gain of $10,956,900, respectively, for the change in fair value - warrant liability, a decrease of $22,584,000 primarily due to the decrease in the trading price of the Company's common stock and the increase in the exercise price. For the years ended December 31, 2025 and 2024, the Company recognized a gain of $2,854,000 and $6,739,000, respectively, for the change in fair value - derivative liability, a decrease of $3,885,000 primarily due to the decrease in the trading price of the Company's common stock and the decrease in carrying amount of derivative liability from redemptions of Series H-7 Preferred Stock.

Liquidity and Capital Resources

As of December 31, 2025, we had $4,981,798 in cash and cash equivalents, $110,264 in restricted cash, $3,168,362 in marketable securities and working capital of $7,567,805. As of December 31, 2024, we had $16,035,475 in cash and cash equivalents, and $164,682 in restricted cash, and working capital of $17,100,605. The decrease in cash and cash equivalents and working capital was primarily a result of the payment of Series H-7 preferred stock redemptions and purchases of digital assets. Our sources of cash since inception have been predominately from the sale of equity and debt, including the issuance of the Series H-7 and Series I Preferred Stock.

Our future liquidity requirements or future capital needs will depend on, among other things, capital required to manufacture our products and the operational staffing and support requirements, as well as the timing and amount of future revenue and product costs. Our business is capital-intensive, and future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support development efforts, the results of our strategic review, the timing of new product introductions and the continuing market acceptance of our products and services. We are working to control expenses and deploy our capital in the most efficient manner.

We are evaluating other options for the strategic deployment of capital beyond our ongoing strategic initiatives. We anticipate being opportunistic with our capital, and we intend to explore potential partnerships and acquisitions that could be synergistic with our competitive stance in the market.

We also implemented a multi-token investment strategy, pursuant to which we intend to use capital in excess of working capital requirements to invest in one or more alternative investments or assets, which may include digital assets linked to stablecoin. We intend to target $100 million in crypto tokens that capitalize on the stablecoin industry, and we will continue to monitor market conditions in determining whether to engage in additional financings to purchase such crypto tokens. This overall strategy also contemplates that we may (i) periodically sell the crypto tokens we purchase for general corporate purposes, including to generate cash for treasury management (which may include debt repayment), or in connection with strategies that generate tax benefits in accordance with applicable law, (ii) enter into additional capital raising transactions that are collateralized by our potential digital asset holdings, and (iii) consider pursuing additional strategies to create income streams or otherwise generate funds using potential digital asset holdings.

We are subject to a number of risks similar to those of earlier stage commercial companies, including dependence on key individuals and products, the difficulties inherent in the development of a commercial market, the potential need to obtain additional capital, and competition from larger companies, other technology companies and other technologies. Based on the foregoing, management believes that the existing cash and cash equivalents and marketable securities at December 31, 2025 will not be sufficient to fund operations for at least the next twelve months following the date of this report.

Series H-7 Preferred Stock

On August 7, 2023, the Company entered into the Securities Purchase Agreement with certain accredited investors (the "Investors"), pursuant to which it agreed to sell to the Investors (i) an aggregate of 22,000 Series H-7 Preferred Stock with a stated value of $1,000 per share, initially convertible into up to 171,875 shares of the Company's common stock at an initial conversion price of $128.00 per share, and (ii) warrants ("Warrants") initially exercisable for up to an aggregate of 171,875 shares of common stock.

The shares of Series H-7 Preferred Stock are convertible into common stock (the "Conversion Shares") at the election of the holder at any time at an initial conversion price of $128.00 (the "Conversion Price"), which, following the Company's one-for-eight reverse stock split effected on September 15, 2023 (the "Reverse Stock Split") and pursuant to the stock combination event adjustment provisions in the Certificate of Designations, was subsequently reduced to $32.00. The Conversion Price is subject to adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable Conversion Price (subject to certain exceptions). The Company is required to redeem the Series H-7 Preferred Stock in 12 equal monthly installments from, and including, the applicable Installment Date (as defined in the Certificate of Designations). On February 9, 2024, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment of Certificate of Designations of Series H-7 Preferred Stock, which became effective upon filing, which amended the commencement of the monthly installment dates, to be between May 7, 2024, and August 7, 2025. The first such installment date was May 7, 2024 and August 7, 2024, as elected by the applicable investor.

The amortization payments due upon redemption of the Series H-7 Preferred Stock are payable, at the Company's election, in cash at 105% of the Installment Redemption Amount (as defined in the Certificate of Designations), or subject to certain limitations, in shares of common stock valued at the lower of (i) the Conversion Price then in effect and (ii) the greater of (A) 80% of the average of the three lowest closing prices of the Company's common stock during the thirty consecutive trading day period immediately prior to the date the amortization payment is due and (B) $11.904 (as adjusted for the Company's Reverse Stock Split and subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events) or, in any case, such lower amount as permitted, from time to time, by the Nasdaq Stock Market. The holders of the Series H-7 Preferred Stock have the option to defer amortization payments or, subject to certain limitations as specified in the Certificate of Designations, can elect to accelerate installment conversion amounts.

The holders of the Series H-7 Preferred Stock are entitled to dividends of 8.0% per annum, compounded monthly, which are payable in cash or shares of common stock at the Company's option, in accordance with the terms of the Certificate of Designations. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Certificate of Designations), the Series H-7 Preferred Stock will accrue dividends at the rate of 15% per annum. Upon conversion or redemption, the holders of the Series H-7 Preferred Stock are also entitled to receive a dividend make-whole payment.

The Certificate of Designations provides that, except as required by applicable law, the holders of the Series H-7 Preferred Stock will be entitled to vote with holders of the common stock on an as converted basis, with the number of votes to which each holder of Series H-7 Preferred Stock is entitled to be determined by dividing the Stated Value by a conversion price equal to $92.16 per share (as adjusted for the Reverse Stock Split), which was the "Minimum Price" (as defined in Nasdaq Listing Rule 5635(d)) applicable immediately before the execution and delivery of the Purchase Agreement, subject to certain beneficial ownership limitations and adjustments for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions, as set forth in the Certificate of Designations.

Notwithstanding the foregoing, the Company's ability to settle conversions and make amortization and dividend make-whole payments using shares of common stock is subject to certain limitations set forth in the Certificate of Designations. Further, the Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of common stock issuable upon conversion of, or as part of any amortization payment or dividend make-whole payment under, the Certificate of Designations or Warrants.

The Certificate of Designations includes certain triggering events including, among other things, the suspension from trading or the failure of the common stock to be trading or listed (as applicable) on an eligible market for a period of five (5) consecutive trading days, the Company's failure to pay any amounts due to the holders of the Series H-7 Preferred Stock when due. In connection with a triggering event, each holder of Series H-7 Preferred Stock will be able to require the Company to redeem in cash any or all of the holder's Series H-7 Preferred Stock at a premium set forth in the Certificate of Designations.

On December 2, 2024, the Company entered into a Waiver and Amendment Agreement (the "Amendment") with the Required Holders (as defined in the Certificate of Designations). Pursuant to the Amendment, the Company and the Required Holders agreed (i) to amend (a) the Certificate of Designations, by filing a Certificate of Amendment to the Certificate of Designations with the Secretary of the State of the State of Delaware (the "Certificate of Amendment"), and (b) the Purchase Agreement, such that, in each case, certain grants made to the Company's directors on December 2, 2024, in the form of RSUs and fully vested restricted shares of common stock (the "Director Equity Grants") under the StableX Technologies, Inc. Long-Term Incentive Plan (as amended, the "Plan"), are deemed to constitute "Excluded Securities" under the Transaction Documents (as such term is defined in the Purchase Agreement), and (ii) that the Required Holders waive the applicability of certain other provisions of the Transaction Documents with respect to such Director Equity Grants.

On March 30, 2025, the Company entered into an Omnibus Waiver and Amendment Agreement ("Waiver and Amendment Agreement") with the Required Holders (as defined in the Certificate of Designations), pursuant to which, the Required Holders agreed (A) to amend (i) the Certificate of Designations, as described below, by filing a Certificate of Amendment to the Certificate of Designations with the Secretary of State of the State of Delaware (the "March 2025 Certificate of Amendment"), and (ii) the Purchase Agreement, to amend the definition of "Excluded Securities" such that the definition includes the issuance of common stock issued after the date of the Purchase Agreement pursuant to an Approved Stock Plan (as defined in the Purchase Agreement), which in the aggregate does not exceed more than 2% of the shares of common stock issued and outstanding on the date immediately prior to the date of the Purchase Agreement (the "Excluded Securities Modification"), and (B) to waive certain restrictive covenants contained in the Purchase Agreement as described therein.

The March 2025 Certificate of Amendment amends the Certificate of Designations to (i) amend the restrictive covenant of the Certificate of Designations such that the Company is required from January 1, 2025 until no shares of Series H-7 Preferred Stock are outstanding, to maintain unencumbered, unrestricted cash and cash equivalents on hand in amount equal to at least 120% of the aggregate Stated Value (as defined in the Certificate of Designations) of the Series H-7 Preferred Stock then outstanding, (ii) amend the definition of "Excluded Securities" substantially similar to the Excluded Securities Modification, and (iii) remove the restrictive covenant provision relating to the Segregated Cash (as defined in the Certificate of Designations) requirement. The March 2025 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of March 31, 2025.

On August 4, 2025, the Company entered into an Omnibus Waiver, Consent, Notice and Amendment (the "Series H-7 Agreement") with the Required Holders. Pursuant to the Series H-7 Agreement, the Required Holders agreed to (i) amend the Series H-7 Purchase Agreement to amend the definition of "Excluded Securities" as set forth in the Series H-7 Amendment, (ii) waive certain rights under the Series H-7 Purchase Agreement, Series H-7 Warrants and Series H-7 Certificate of Designations in respect of the issuance of the Preferred Stock and entrance by the Company into the Purchase Agreement, and (iii) consent to the issuance of the Preferred Stock, as required pursuant to certain terms of the Series H-7 Certificate of Designations, the Series H-7 Purchase Agreement and the Series H-7 Warrants, as applicable. In consideration of the foregoing, the Company agreed to pay to the Required Holders an aggregate of $350,000 by September 30, 2025, which may be paid in the form of cash, or, at the holders' sole election, added to the outstanding aggregate stated value of the Series H-7 Preferred Stock.

The Company and the Required Holders further agreed pursuant to the Series H-7 Agreement to amend the Series H-7 Certificate of Designations by filing a Certificate of Amendment to the Series H-7 Certificate of Designations (the "Certificate of Amendment") with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the Series H-7 Certificate of Designations to (i) extend the maturity date to February 4, 2027, (ii) revise the applicable payment dates and corresponding payable amounts of Dividends and Installment Amounts (each as defined in the Series H-7 Certificate of Designations), (iii) modify the definition of "Excluded Securities" and (iv) modify the schedule of Installment Dates (as defined in the Series H-7 Certificate of Designations). The Certificate of Amendment to the Series H-7 Certificate of Designations was filed with the Secretary of State for the State of Delaware on August 6, 2025.

Series I Preferred Stock

On August 4, 2025, the Company entered into the Series I Purchase Agreement with certain accredited investors, pursuant to which it agreed to sell (i) an aggregate of 7,000 shares of the Company's newly-designated Series I Convertible Preferred Stock, with a par value of $0.0001 per share and a stated value of $1,000 per share, initially convertible into up to 875,000 shares of the Company's common stock at an initial conversion price of $8.00 per share and (ii) warrants to acquire up to an aggregate of 875,000 Series I Warrants at an exercise price of $8.00 per share. The closing of the Private Placement occurred on August 8, 2025. The aggregate gross proceeds from the Private Placement were $7,000,000.

Among other covenants, the Series I Purchase Agreement requires the Company to hold a meeting of its stockholders not later than October 3, 2025, to seek approval for the issuance of shares of common stock in excess of 19.99% of the Company's issued and outstanding shares of common stock at prices below the "Minimum Price" (as defined in Rule 5635 of the Rules of the Nasdaq Stock Market) on the date of the Series I Purchase Agreement pursuant to the terms of the Series I Preferred Stock and the applicable Series I Warrants.

In connection with the Private Placement, pursuant to (A) an engagement letter (the "GPN Agreement") with GP Nurmenkari Inc. ("GPN") and (B) an engagement letter (the "Palladium Agreement," and collectively with the GPN Agreement, the "Engagement Letters") with Palladium Capital Group, LLC ("Palladium," and collectively with GPN, the "Placement Agents"), the Company engaged the Placement Agents to act as non-exclusive placement agents in connection with the Private Placement, pursuant to which, the Company agreed to (i) pay each Placement Agent a cash fee equal to 4% of the gross proceeds of the Private Placement (including any cash proceeds realized by the Company from the exercise of any outstanding warrants of the Company), (ii) reimbursement and payment of certain expenses, and (iii) issue to each of the Placement Agents on the closing date, warrants to purchase up to an aggregate number of shares of common stock equal to 4% of the aggregate number of shares of common stock underlying the securities issued in the Private Placement, including upon exercise of any outstanding warrants of the Company, with terms identical to the Series I Warrants (the "Series I Placement Agent Warrants" and, together with the Series I Warrants and the Consultant Warrants the "Private Placement Warrants").

In connection with the Purchase Agreement, the Company and the investors entered into a Registration Rights Agreement (the "Registration Rights Agreement"), pursuant to which the Company is required to file a resale registration statement (the "Registration Statement") with the SEC to register for resale 200% of the shares of common stock issuable upon conversion of the Series I Preferred Stock and upon exercise of the Series I Warrants promptly following the closing date, but in no event later than 30 calendar days after the closing date, and to have such Registration Statement declared effective by the Effectiveness Deadline (as defined in the Registration Rights Agreement). On September 8, 2025, the Company filed the Registration Statement with the SEC and subsequently amended the Registration Statement on October 10, 2025. On January 9, 2026, the SEC declared the Registration Statement effective.

The terms of the Series I Preferred Stock are as set forth in the form of Certificate of Designations of the Series I Convertible Preferred Stock ("Series I Certificate of Designations") which was filed with the Secretary of State for the State of Delaware on August 6, 2025. All shares of capital stock of the Company rank junior to shares of the Series I Preferred Stock, with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company. Further to the foregoing, the shares of Series I Preferred Stock rank junior to shares of Series H-7 Convertible Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company.

The shares of Series I Preferred Stock are convertible into shares of common stock at the election of the holder at any time at an initial conversion price of $8.00 per share (the "Series I Conversion Price"). The Series I Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like and dilutive issuances (in each case, subject to certain exceptions). The Company is required to redeem the Series I Preferred Stock in equal installments, commencing on November 30, 2025, and thereafter on the last trading day of the third calendar month immediately following the previous Installment Date, until the maturity date of February 4, 2027.

The Installment Amount (as defined in the Series I Certificate of Designations) due upon such redemption are payable, at the Company's election, in cash at 107% of the applicable Installment Redemption Price (as defined in the Series I Certificate of Designations).

The holders of the Series I Preferred Stock are entitled to dividends of 7% per annum, compounded each calendar quarter, which are payable in arrears (i) quarterly on each Installment Date (as defined in the Series I Certificate of Designations), in cash out of funds legally available therefor and, (ii) prior to the first Installment Date, payable by way of inclusion of the dividends in the Conversion Amount (as defined in the Series I Certificate of Designations) on each conversion date occurring prior to the first Installment Date. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Series I Certificate of Designations), the Series I Preferred Stock accrue dividends at the rate of 15% per annum. The holders of the Series I Preferred Stock are entitled to vote with holders of the common stock on an as-converted basis, with the number of votes to which each holder of Series I Preferred Stock is entitled to be calculated assuming a conversion price of $7.628 per share, which was the Minimum Price (as defined in Rule 5635 of the Rules of the Nasdaq Stock Market) applicable immediately before the execution and delivery of the Series I Purchase Agreement, subject to certain beneficial ownership limitations as set forth in the Series I Certificate of Designations.

Notwithstanding the foregoing, the Company's ability to settle conversions using shares of common stock is subject to certain limitations set forth in the Series I Certificate of Designations. Further, the Series I Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Series I Preferred Stock under the Series I Certificate of Designations.

The Series I Certificate of Designations includes certain Triggering Events, including, among other things, the Company's failure to pay any amounts due to the holders of the Series I Preferred Stock when due. In connection with a Triggering Event, each holder of Series I Preferred Stock will be able to require the Company to redeem in cash any or all of the holder's Series I Preferred Stock at a premium set forth in the Series I Certificate of Designations.

The Company is subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Series I Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters. In addition, the Company is required to maintain at all times unencumbered, unrestricted cash and cash equivalents on hand in amount equal to at least 50% of the aggregate Stated Value of the outstanding shares of Series I Preferred Stock then outstanding.

The Series I Warrants are exercisable for shares of common stock immediately, at an exercise price of $8.00 per share and expire five years from the date of issuance. The exercise price of each Series I Warrant is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like and dilutive issuances (in each case, subject to certain exceptions).

Summary of Cash Flows

The following table summarizes the Company's cash flows:

		For the Years Ended December 31,
		2025				2024
Cash Flows:
Net cash used in operating activities		$	(7,695,572	)		$	(13,315,402	)
Net cash used in investing activities		$	(2,860,648	)		$	(3,064,499	)
Net cash used in financing activities		$	(551,875	)		$	(10,860,809	)

Operating Activities

During the year ended December 31, 2025, we used $7,695,572 in cash from operating activities, a decrease in use of $5,619,830 compared to the cash used in operating activities of $13,315,402 during the year ended December 31, 2024. During the year ended December 31, 2025, the Company recognized net loss after non-cash adjustments of $7,253,585, a $2,278,201 improvement compared with a $9,531,786 adjusted net loss during the same period in 2024. During the year ended December 31, 2025, cash used in inventory was $0 as compared to $1,794,806 for the same period in 2024, a decrease of $1,1794,806, mainly due to the temporary pause on procurement of material and manufacturing activities while re-engineering the Vanish. For the year ended December 31, 2025, cash used in accrued expenses and other current liabilities was $317,227 as compared to $1,149,677 for the same period in 2024, a decrease of $832,450, mainly due to the Company not purchasing inventory related to the Vanish and a decrease in headcount due to the Company's 2024 internal restructuring.

Our ability to generate cash from operations in future periods will depend in large part on completing our re-engineering of the Vanish product and being able to market the Vanish again to generate revenue and our ability to manage other areas of working capital.

Investing Activities

During the year ended December 31, 2025, we used $2,860,648 in cash from investing activities, a decrease of $203,851 compared to the cash used in investing activities during the year ended December 31, 2024. We used $31,500,546 to invest in marketable securities and received $32,739,898 in proceeds from the sale of marketable securities, as compared to $68,997,205 to invest in marketable securities and received $66,132,029 in proceeds from the sale of marketable securities during the year ended December 31, 2024. The Company purchased $4,100,000 in digital assets during the year ended December 31, 2025, as compared to $0 during the year ended December 31, 2024.

Financing Activities

During the year ended December 31, 2025, we used cash of $551,875 in financing activities as compared to $10,860,809 of cash used in financing activities for the year ended December 31, 2024, a decrease of $10,308,934. The decrease in cash used was due to cash redemptions of the Series H-7 Preferred Stock of $7,881,528 in 2025, a decrease of $2,317,401 as compared to 2024 and proceeds of $6,314,297 and $1,015,356 from the sale of Series I Preferred Stock and exercise of Series H-7 Preferred warrants, respectively, during the year ended December 31, 2025 as compared to $0 and $0, respectively, during the year ended December 31, 2024.

Known Trends, Events, and Uncertainties

The emergence and effects of public health crises, such as pandemics and epidemics, along with geopolitical conflicts, including the consequences of the ongoing war between Russia and Ukraine and between Israel and various factors in the Middle East, including related sanctions and countermeasures, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations.

Other than as discussed above and elsewhere in this report, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition.

Critical Accounting Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses and related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions.

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors.

Digital Assets

The Company accounts for its digital assets, which currently are comprised of various cryptocurrencies, as indefinite-lived intangible assets in accordance with ASC Topic 350-60, "Intangibles - Goodwill and Other - Crypto Assets." The Company has ownership of and control over its digital assets and may use third-party custodial services to secure it. The Company's digital assets are initially recorded at cost and are subsequently remeasured on the balance sheet at fair value.

The Company determines the fair value of its digital assets on a recurring basis in accordance with ASC 820 based on quoted prices on the active exchange that the Company has determined is its principal market for such digital assets (Level 1 inputs). The Company determines the cost basis of digital assets using the specific identification of each unit received. Realized and unrealized gains and losses from changes in the fair value of digital assets are recognized in the consolidated statements of operations.

The Company purchases various digital assets for long-term investment. It intends to hold its digital assets for long-term gains and treats them as long-term capital assets for tax purposes. Unrealized gains/losses are treated as capital gains/losses for tax purposes. See Note 6. Digital Assets for additional information regarding the Company's purchases and sales of digital assets.

Fair Market Value

Digital assets are measured at their fair market values using the last close price of the day in the Coordinated Universal Time zone at each reporting period end on the balance sheet. The Company's digital assets are presented as current assets.

Fair Value of Financial Assets and Liabilities - Derivative Instruments

We measure the fair value of financial assets and liabilities in accordance with GAAP, which defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. We do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, we have entered into certain financial instruments and contracts, such as debt financing arrangements, the issuance of preferred stock with detachable common stock warrants features that are either i) not afforded equity classification, ii) embody risks not clearly and closely related to host contracts, or iii) may be net-cash settled by the counterparty. These instruments are required to be carried as derivative liabilities, at fair value.

Warrant Liabilities

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own common stock and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, or date of modification, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.