Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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

The following discussion and analysis should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (this "Quarterly Report") and the audited financial statements and notes thereto as of and for the twelve months ended December 31, 2025, which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 30, 2026. As used in this Quarterly Report, unless the context suggests otherwise, "we," "us," "our," or "AIxC" refer to AIxCrypto Holdings, Inc. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

Cautionary Note Regarding Forward Looking Statements

This Quarterly Report contains forward-looking statements by the Company that involve risks and uncertainties and reflect the Company's judgment as of the date of this Report. These statements generally relate to future events or the Company's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," or "continue" or the negative of these words or other similar terms or expressions that concern the Company's expectations, strategy, plans or intentions. Such forward-looking statements may relate to, among other things, potential future development, testing and launch of products and product candidates. Actual events or results may differ from our expectations due to a number of factors.

Some of the factors that we believe could cause actual results to differ from those anticipated or predicted include:

	●	our digital-asset treasury strategy, including exposure to cryptocurrency price volatility and related market risks
	●	the regulatory landscape applicable to digital assets, blockchain technologies, payments, and settlement arrangements
	●	our ability to operate and scale
	●	RoboShare and related platform-based products and services
	●	the development, commercialization, and market acceptance of our current and future products and services
	●	our reliance on third-party merchants, service providers, and strategic relationships, including key commercial counterparties
	●	expansion into new markets, jurisdictions, and operating modalities, including autonomous or unmanned systems, and receipt of necessary regulatory approvals
	●	competitive conditions, customer demand, and pricing trends affecting our products and services
	●	our ability to design, launch, and enhance products and services that meet customer needs on a timely basis
	●	the performance of counterparties and our exposure to contractual and commercial risks
	●	the stability, security, and performance of our technology systems, infrastructure, and networks, including cybersecurity risks
	●	our ability to attract, retain, and incentivize qualified personnel and manage growth effectively
	●	our ability to obtain additional financing or capital when needed and on acceptable terms
	●	litigation exposure and the potential impact of legal or regulatory proceedings
	●	protection and enforcement of our intellectual property and defense against third-party claims
	●	the ability to maintain the listing of our Common Stock on Nasdaq
	●	our dependence on our relationship with Faraday Future Intelligent Electric Inc., our controlling stockholder, including transactions with it and its affiliates and the related concentration and conflict-of-interest risks
	●	our dependence on Gold King Arthur Holding Limited's performance of its obligations under the Entrusted Investment Agreement, under which our investment in Faraday Future securities is held indirectly on our behalf
	●	material weaknesses in our internal control over financial reporting and our ability to remediate them recent transitions in our executive officers and the composition of our board of directors and audit committee, and our ability to effect an orderly transition

By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent in some future periods with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in other future periods. Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of this Quarterly Report, and we disclaim any intent or obligation to update these forward-looking statements beyond the date of this Quarterly Report, except as required by law. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Future filings with the Securities and Exchange Commission (the "SEC"), future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may also contain forward-looking statements. Because such statements include risks and uncertainties, many of which are beyond our control, actual results may differ materially from those expressed or implied by such forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

Overview

We are a technology company focused on the commercialization of embodied artificial intelligence ("EAI"), also referred to as physical AI - robots and AI-enabled systems that perceive and act in the physical world, together with software infrastructure for the tokenization of real-world assets ("RWA"). Our objective is to provide compliance-oriented software across the infrastructure, protocol and application layers of our platform.

In September 2025, the Company completed an approximately $41 million PIPE financing and subsequently rebranded from Qualigen Therapeutics to AIxCrypto Holdings, Inc. (Nasdaq: AIXC). Following a strategic review, in February 2026 the Company realigned its operations to focus on RWA tokenization, EAI infrastructure and AI Agent products. Subsequent to quarter end, in July 2026, the Company designated RoboShare, an on-demand robot sharing and matchmaking platform, as its top operating priority for the second half of 2026 and began executing a Los Angeles go-to-market plan. RoboShare is expected to be the principal near-term commercialization channel for the Company's physical AI capabilities. The Company's RWA tokenization initiative and its other physical AI programs continue in development, with resources sequenced behind RoboShare.

On May 21, 2026, our Board of Directors approved the structured wind-down of our legacy biotechnology business. The wind-down continued during the quarter and subsequent period, and limited residual costs may continue to be incurred. As of June 30, 2026, the biotech component does not satisfy all held-for-sale criteria under ASC 205-20, and all associated operating costs remain classified within continuing operations of our single reportable segment.

Core Operating Focus

EAI and RoboShare

The Company's robotics activities are focused on RoboShare, its commercialization platform through which EAI capabilities are deployed. RoboShare is being developed as an on-demand robot sharing and matchmaking platform intended to connect robot owners with enterprises, educational institutions and other users seeking access to robotic equipment and related services. On June 22, 2026, at Automate 2026, the Company launched RoboShare alongside its Robot Second Life Cycle framework. RoboShare is designed to support on-site robotic service packages, providing customers access to robotic capability without upfront equipment purchases. The broader market for offerings of this type is commonly described as robots-as-a-service; the Company's initial arrangements are expected to be short-term and individual service engagements rather than recurring subscription contracts. Subsequent to quarter end, the Company elevated RoboShare to its top operating priority for the second half of 2026. The Company's physical AI technology stack is being designed to allow robotic assets to be discovered, coordinated, monitored and transacted for across their operating life. Faraday Future Intelligent Electric Inc. ("FFAI"), the Company's majority stockholder, is expected to serve as an initial ecosystem partner; however, no definitive agreement had been executed as of June 30, 2026.

The revenue opportunity the Company has identified from commercialize its physical AI activities is expected to be realized principally through RoboShare. These arrangements are transactional in nature, and the Company has not established recurring or contracted revenue from them. The Company's prioritization of RoboShare reflects a change in the commercialization channel and sequencing of its physical AI initiatives, and was not a determination to reduce the scope of those initiatives. The periods in which revenue from these activities may be realized, and the amount of any such revenue, remain subject to significant uncertainty.

Real-World Asset Tokenization

The Company is evaluating and developing software infrastructure to support the digitization and on-chain administration of traditional financial and real-world assets A portion of the Company's equity investment in FFAI is intended to serve as an asset for the Company's tokenization initiatives. This initiative remains under technical and regulatory evaluation and has not been executed. The Company expects that any near-term revenue from structuring fees, platform licensing or asset administration services would not be material, and has sequenced resources for this initiative behind RoboShare.

Recent Developments

Marizyme

On May 12, 2026, the Company entered into a Note Purchase Agreement to assign all outstanding Marizyme loan and creditor claims. On May 14, 2026, the Marizyme notes, with a gross balance of approximately $5.2 million including accrued interest and a net carrying value of $475,844 after credit-loss allowances, were extinguished for $100,000 in cash. The Company recorded a $375,844 loss on settlement for the three and six months ended June 30, 2026. The note receivable and related allowance were removed from the balance sheet, eliminating the Company's remaining Marizyme note exposure. The assignment did not modify the Company's contingent royalty rights under the 2024 Co-Development Agreement, and no royalty receivable was recorded as of June 30, 2026.

Faraday Investment

Pursuant to amended investment documents executed on April 10 and April 14, 2026, the aggregate investment consideration for the Company's Faraday Future securities position was increased to $12,002,192, and the transaction closed on April 15, 2026. At closing, GKA received 1,926,337 shares of FFAI Class A common stock, 11,502 shares of FFAI Series C Convertible Preferred Stock and a four-year warrant to purchase up to 1,000,000 shares of FFAI Class A common stock on the Company's behalf. The securities held indirectly through GKA were classified as parent company equity held at cost at cost within stockholders' equity as of June 30, 2026. The position is intended to serve as a proof-of-concept asset for the Company's RWA tokenization strategy; partial tokenization remains subject to technical and regulatory evaluation and had not been executed as of June 30, 2026.

Critical Accounting Policies and Estimates

This discussion and analysis is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed consolidated financial statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the unaudited condensed consolidated financial statements. While the Company's significant accounting policies and estimates are further outlined in Note 1 - Business and Summary of Significant Accounting Policies and Estimates of the unaudited condensed consolidated financial statements, management considers the accounting for digital assets at fair value, the valuation of warrant liabilities, and the going concern assessment to be critical accounting estimates. These areas involve significant judgments and assumptions about inherently uncertain matters, and changes in these estimates could materially impact the Company's condensed consolidated financial position and results of operations.

Results of Operations

Comparison of the three months ended June 30, 2026 and 2025:

		For the Three Months Ended June 30,
		2026				2025
EXPENSES
General and administrative		$	2,868,537			$	1,394,932
Sales and Marketing			85,715				-
Research and development			5,073				17,815
Credit loss expense - short-term note receivable			-				271,000
Total expenses			2,959,325				1,683,747
LOSS FROM OPERATIONS			(2,959,325	)			(1,683,747	)
OTHER EXPENSE (INCOME), NET
Gain on change in fair value of warrant liabilities			(4,965	)			(15,974	)
Gain on change in fair value of convertible debt			-				(37,874	)
Loss on settlement of short-term note receivable			375,844				-
Interest expense			-				106,052
Interest income			(126,963	)			(142,477	)
Loss on issuance of convertible debt			-				91,943
Net loss on digital assets			984,364				-
Total other expense (income), net			1,228,280				1,670
LOSS BEFORE PROVISION FOR INCOME TAXES			(4,187,605	)			(1,685,417	)
PROVISION FOR INCOME TAXES			-				-
NET LOSS			(4,187,605	)			(1,685,417	)
Total net loss per common share, basic and diluted		$	(0.21	)		$	(1.00	)
Weighted-average number of shares outstanding, basic and diluted			20,286,192				1,683,881

Expenses

General and Administrative Expenses

General and administrative expenses increased from $1.4 million for the three months ended June 30, 2025 to $2.9 million for the three months ended June 30, 2026. This was primarily due to a $529,000 increase in gross wages resulting from increased headcount, a $395,000 increase in director resignation fees, a $393,000 increase in consulting fees, and a $134,000 increase in legal fees. The increase in general and administrative expenses was primarily a result of the deployment of the Company's change in strategy following the Faraday investment.

Sales and Marketing Costs

Sales and Marketing expenses increased from zero for the three months ended June 30, 2025, to approximately $86,000 for the three months ended June 30, 2026. This increase was primarily driven by brand-building and commercialization expenditures in support of the Company's RWA and EAI initiatives, including resource reallocation toward RoboShare operations, as no sales or marketing activities were conducted during the three months ended June 30, 2025.

Research and Development Costs

Research and development expenses decreased from approximately $18,000 for the three months ended June 30, 2025, to approximately $5,000 for the three months ended June 30, 2026. This decrease was primarily driven by the Board-approved wind-down of legacy biotechnology research and development activities during fiscal 2026, which left only minimal residual expenses recorded for the three months ended June 30, 2026.

Credit Loss Expense - Short-Term Note Receivable

Credit loss expense - short-term note receivable decreased from $271,000 for the three months ended June 30, 2025, to zero for the three months ended June 30, 2026. This decrease was attributable to the settlement of all outstanding Marizyme notes effective May 14, 2026. The Company measures its allowance for credit losses related to Marizyme's promissory notes under the CECL model based on the expected collectability of outstanding debt balances. Following the full settlement of the Marizyme notes in May 2026, the Company held no remaining exposure to this debt asset during the current quarter, resulting in no credit loss expense recognized for the three months ended June 30, 2026.

Other Expense (Income), Net

Gain on Change in Fair Value of Warrant Liabilities

During the three months ended June 30, 2026 the Company experienced a $5.0 thousand gain in other income due to the change in fair value of the warrant liabilities described above. The estimated fair value of warrant liabilities decreased to approximately $67,000 as of June 30, 2026 from approximately $72,000 as of March 31, 2026 primarily due to changes in our stock price and expiration of warrants during the prior period.

Gain on Change in Fair Value of Convertible Debt

The Company recorded no gain or loss on change in fair value of convertible debt for the three months ended June 30, 2026. All outstanding convertible debt instruments were fully settled and extinguished in the prior fiscal quarter.

Loss on settlement of short-term note receivable

The Company recorded a $375,844 loss on settlement of short-term note receivable in the three months ended June 30, 2026. In May 2026, all Marizyme promissory notes were fully settled for $100,000 cash. After CECL credit allowances, the net carrying amount of the notes totaled $475,844. The loss represents the gap between the asset's net carrying value and settlement proceeds. This was a one-time loss arising from the complete divestment of the Marizyme debt position.

Interest Expense

Interest expense decreased from $0.1 million for the three months ended June 30, 2025 to zero for the three months ended June 30, 2026. This change was driven by the full settlement of all convertible debt obligations in the prior quarter.

Interest Income

Interest income decreased from $142.5 thousand for the three months ended June 30, 2025 to $127.0 thousand for the three months ended June 30, 2026. The decrease was primarily attributable to the full settlement of the Marizyme Notes in May 2026.

Loss on issuance of convertible debt

Loss on issuance of convertible debt decreased from $0.1 million for the three months ended June 30, 2025 to zero for the three months ended June 30, 2026. The loss was attributable to the issuance of the 2025 Convertible Note during the three months ended June 30, 2025. No new convertible debt instruments were issued during the three months ended June 30, 2026, resulting in no loss on issuance of convertible debt for the current period.

Net Loss on Digital Assets

During the three months ended June 30, 2026 the Company experienced an approximately $1.0 million loss on digital assets, compared to no change for the three months ended June 30, 2025. The Company did not purchase or sell digital assets during the three months ended June 30, 2026; the change in the digital asset treasury during the quarter was attributable to fair value movements. The Company did not hold any digital assets in the three months ended June 30,2025.

Comparison of the six months ended June 30, 2026 and 2025:

		For the Six Months Ended June 30,
		2026				2025
EXPENSES
General and administrative		$	6,416,390			$	3,889,464
Sales and Marketing			723,937				-
Research and development			10,145				50,982
Credit loss expense - short-term note receivable			142,574				468,000
Total expenses			7,293,046				4,408,446
LOSS FROM OPERATIONS			(7,293,046	)			(4,408,446	)
OTHER EXPENSE (INCOME), NET
Gain on change in fair value of warrant liabilities			(74,625	)			(55,199	)
Gain on change in fair value of convertible debt			(10,236	)			(37,874	)
Loss on settlement of short-term note receivable			375,844				-
Impairment of intangible assets			182,619				-
Interest expense			-				179,667
Interest income			(429,973	)			(255,430	)
Loss on issuance of convertible debt			-				91,943
Net loss on digital assets			2,929,946				-
Total other expense (income), net			2,973,575				(76,893	)
LOSS BEFORE PROVISION FOR INCOME TAXES			(10,266,621	)			(4,331,553	)
PROVISION FOR INCOME TAXES			-				35
NET LOSS			(10,266,621	)			(4,331,588	)
Total net loss per common share, basic and diluted		$	(0.73	)		$	(2.76	)
Weighted-average number of shares outstanding, basic and diluted			14,030,150				1,570,925

Expenses

General and Administrative Expenses

General and administrative expenses increased from $3.9 million for the six months ended June 30, 2025 to $6.4 million for the six months ended June 30, 2026. This was primarily due to a $1.2 million increase in gross wages, a $712,000 increase in seminar and marketing fees, and a $553,000 increase in master service fees. The increase in general and administrative expenses was primarily a result of the deployment of the Company's change in strategy following the Faraday investment.

Sales and Marketing Costs

Sales and Marketing expenses increased from zero for the six months ended June 30, 2025, to approximately $724,000 for the six months ended June 30, 2026. In 2026 the Company began marketing campaigns related to increasing brand awareness for its real-world asset tokenization and embodied AI Infrastructure activities, including commercialization support for RoboShare, whereas no sales or marketing activities were conducted during the six months ended June 30, 2025.

Research and Development Costs

Research and development expenses decreased from approximately $51,000 for the six months ended June 30, 2025, to approximately $10,000 for the six months ended June 30, 2026. Legacy biotechnology research and development activities were already scaled back in 2025 due to insufficient funding. The Board-approved wind-down of such development work in fiscal 2026 contributed to minimal residual R&D expenses for the six months ended June 30, 2026.

Credit Loss Expense - Short-Term Note Receivable

Credit loss expense - short-term note receivable decreased from $468,000 for the six months ended June 30, 2025, to approximately $143,000 for the six months ended June 30, 2026. This decrease is attributable to the settlement of all outstanding Marizyme notes effective May 14, 2026. The Company measures its allowance for credit losses related to Marizyme's promissory notes under the CECL model based on the expected collectability of outstanding debt balances. The Company recorded incremental credit loss expense in the early portion of the current six-month period prior to the May 14, 2026 settlement. Once the Marizyme notes were fully settled mid-period, no additional credit loss accruals were required for the remainder of the six months ended June 30, 2026, lowering total credit loss expense for the six months ended June 30, 2026.

Other Expense (Income), Net

Gain on Change in Fair Value of Warrant Liabilities

During the six months ended June 30, 2026 the Company experienced a $0.1 million gain in other income due to the change in fair value of the warrant liabilities described above. The estimated fair value of warrant liabilities decreased to approximately $67,000 as of June 30, 2026 from $142,000 as of December 31, 2025 primarily due to changes in our stock price and expiration of warrants during the prior period.

Gain on Change in Fair Value of Convertible Debt

During the six months ended June 30, 2026 the Company experienced an approximately $10,000 gain on change in fair value of convertible debt as a result of repayment of the outstanding debt, compared an approximately $38,000 gain for the six months ended June 30, 2025.

Loss on settlement of short-term note receivable

The Company recorded a $375,844 loss on settlement of short-term note receivable in the six months ended June 30, 2026. In May 2026, all Marizyme promissory notes were fully settled for $100,000 cash. After CECL credit allowances, the net carrying amount of the notes totaled $475,844. The loss represents the gap between the asset's net carrying value and settlement proceeds. This is a one-time loss arising from the complete divestment of the Marizyme debt position.

Impairment of intangible assets

There was approximately $183,000 in impairment of intangible assets during the six months ended June 30, 2026 compared to no impairment recorded during the six months ended June 30, 2025. During 2026 the Company wrote off some software development costs that had been capitalized, which did not occur in 2025.

Interest Expense

Interest expense decreased from $0.2 million for the six months ended June 30, 2025 to zero for the six months ended June 30, 2026. This change was driven by the full settlement of all convertible debt obligations in the prior quarter.

Interest Income

There was $0.4 million in interest income during the six months ended June 30, 2026 compared to $0.3 million in interest income during the six months ended June 30, 2025. The increase was due to interest accrued on the Marizyme Notes, which increased significantly in the year ended December 31, 2025, as well as interest recorded on our money market accounts.

Loss on issuance of convertible debt

Loss on issuance of convertible debt decreased from $0.1 million for the six months ended June 30, 2025 to zero for the six months ended June 30, 2026. The loss was attributable to the issuance of the 2025 Convertible Note during the six months ended June 30, 2025. No new convertible debt instruments were issued during the six months ended June 30, 2026, resulting in no loss on issuance of convertible debt for the current period.

Net Loss on Digital Assets

During the six months ended June 30, 2026 the Company experienced an approximately $2.9 million loss on digital assets, compared to no change for the six months ended June 30, 2025. The Company did not hold any digital assets in the six months ended June 30, 2025.

Liquidity and Going Concern

The Company's financial position remains weak. It has incurred recurring operating losses, with an accumulated deficit of $150.3 million as of June 30, 2026, and expects to continue incurring losses subsequent to the balance sheet date. Net cash used in operating activities was $7.9 million for the six months ended June 30, 2026 and $7.0 million for the year ended December 31, 2025.

As of June 30, 2026, the Company had approximately $0.6 million in cash and cash equivalents. In addition to cash and cash equivalents, the Company held exchange-traded digital assets with an aggregate carrying value of approximately $5.2 million. These exchange-traded digital assets may be monetized over time to support operations, but are subject to significant market price volatility and are not classified as cash equivalents.

Total current liabilities decreased to approximately $1.7 million as of June 30, 2026 from approximately $3.3 million as of December 31, 2025. The balance consists of approximately $1.3 million in accounts payable - primarily $700,000 owed to the University of Louisville Research Foundation, $140,000 to Faraday Futures, and $100,000 to FF Global Partners LLC, with the remainder relating to professional services and other vendors - plus approximately $0.2 million of related-party payables, approximately $129,000 of accrued expenses and other current liabilities, and approximately $67,000 in warrant liabilities. Total operating expenses declined to approximately $3.0 million for the three months ended June 30, 2026 from approximately $4.3 million in the first quarter of 2026, as management continues to execute cost normalization measures to preserve liquidity. The Company had no outstanding indebtness for borrowed money at June 30, 2026.

We expect to continue to have net losses and negative cash flow from operations, which will challenge our near-term liquidity. Our digital-asset treasury strategy and RoboShare operations are newly established, and there are no guarantees that either will generate revenue or provide sufficient liquidity. Notwithstanding the June 22, 2026 public launch of RoboShare, the Company has not yet generated operating revenue from the platform. Our nearest commercial milestone is the first RoboShare rental delivery, targeted for August 2026; the timing of delivery and associated revenue recognition remain subject to execution risk.

During the six months ended June 30, 2026, the Company fully repaid the remaining $132,000 principal balance of its convertible debt. There were no new financing activities during the three months ended June 30, 2026, and the Company issued no new common shares during the quarter.

Management's plans to manage liquidity constraints include continued operating expense discipline, targeted monetization of digital asset holdings as needed, the planned commercialization of the Company's physical AI activities through RoboShare, and prudent utilization of the equity purchase facility only upon satisfaction of all applicable conditions. However, the Company's limited current cash balance, the absence of committed alternative financing, volatility in digital asset valuations, and the lack of recurring operating revenue collectively raise substantial doubt regarding our ability to continue as a going concern for the one-year period following the date that condensed consolidated financial statements were issued.

The accompanying financial statements have been prepared assuming that we will continue as a going concern. The financial statements do not include any adjustments that would be necessary should we be unable to continue as a going concern, and therefore be required to liquidate our assets and discharge our liabilities in other than the normal course of business and at amounts that may differ from those reflected in the accompanying financial statements.

Contractual Obligations and Commitments

We have no material contractual obligations that are not fully recorded on our unaudited condensed consolidated balance sheets or fully disclosed in the notes to the financial statements.

Cash Flows

The following table sets forth the significant sources and uses of cash for the periods set forth below:

		For the Six Months Ended
		June 30,
		2026				2025
Net cash (used in) provided by:
Operating activities		$	(7,939,909	)		$	(2,687,507	)
Investing activities			1,316,530				(1,518,500	)
Financing activities			(12,132,000	)			3,363,000
Net decrease in cash		$	(18,755,379	)		$	(843,007	)

Net Cash Used in Operating Activities

During the six months ended June 30, 2026, operating activities used approximately $7.9 million of cash, primarily resulting from a net loss of $10.3 million. Cash flows from operating activities were positively impacted by adjustments including $2.9 million net loss on digital assets, an approximately $112,000 decrease in prepaid expenses and other assets, $0.4 million loss on settlement of short-term note receivable, $0.3 million payments made using digital assets, $0.2 million impairment of intangible assets, a $0.1 million provision for credit losses on short-term notes receivable, and an approximately $27,000 increase in accounts payable. Cash flows from operating activities were negatively impacted by adjustments including a $1.4 million decrease in related party payables, accrued interest on short-term notes receivable of $0.3 million, an approximately $75,000 favorable change in the fair value of warrant liabilities, a gain on the change in fair value of convertible debt of approximately $10,000, and a negligible $7,000 decrease in accrued expenses and other liabilities.

During the six months ended June 30, 2025, operating activities used approximately $2.7 million of cash, primarily resulting from a net loss of $4.3 million. Cash flows from operating activities were positively impacted by adjustments including a $1.2 million decrease in prepaid expenses and other assets, a $0.5 million provision for credit losses of short-term notes receivable, a $0.2 million increase in accrued expenses and other current liabilities, $0.2 million amortization of penalty on promissory note, $0.1 million loss on issuance of convertible debt, $20,000 legal expenses related to convertible debt issuance, and immaterial stock-based compensation. Cash flows from operating activities were negatively impacted by adjustments including accrued interest on short-term notes receivable of $0.3 million, a $0.2 million decrease in accounts payable, and a $55,000 gain on change in fair value of warrant liabilities.

Net Cash Provided by/(Used in) Investing Activities

During the six months ended June 30, 2026, net cash provided by investing activities was approximately $1.3 million. The inflows were primarily driven by $2.1 million proceeds from sales of digital assets and $0.1 million cash received from settlement of short-term note receivable. These cash inflows were partially offset by $0.6 million spent on the purchase of intangible assets and $0.3 million used to purchase digital assets.

During the six months ended June 30, 2025, net cash used in investing activities totaled $1.5 million, arising entirely from the issuance of short-term note receivable.

Net Cash (Used in)/Provided by Financing Activities

Net cash used in financing activities for the six months ended June 30, 2026 was approximately $12.1 million, which was primarily driven by $12.0 million parent company equity held at cost and $132,000 the repayment of convertible debt.

Net cash provided by financing activities for the six months ended June 30, 2025 was $3.4 million. The majority of inflows came from $3.3 million proceeds generated by issuance of promissory notes, supplemented by $0.2 million proceeds from convertible debt issuance. These cash inflows were partially offset by $0.1 million cash outflows for convertible debt repayment.