AIxCrypto Holdings, Inc. (Nasdaq: AIXC) warns on cash after $10,266,621 loss
AIxCrypto Holdings, Inc. shifted fully from legacy biotechnology into a crypto- and AI-focused model, emphasizing Real-World Asset tokenization and an Embodied AI ecosystem while winding down all historical biopharma programs. For the six months ended June 30, 2026, it recorded a net loss of $10,266,621, driven by operating expenses of $7,293,046, a $2,929,946 net loss on digital assets, and a $375,844 loss on settlement of a Marizyme note.
Balance sheet strength deteriorated sharply: cash fell to $577,328 from $19,332,707 at December 31, 2025, while exchange-traded digital assets stood at $5,212,903 at fair value versus a $10,433,028 cost basis. Total assets declined to $7,402,799 and stockholders’ equity to $5,681,796, with 20,234,993 common shares outstanding after large conversions of Series B preferred stock. Operating activities used $7,939,909 of cash in six months, and financing activities used $12,132,000, including a $12,000,000 parent-company equity investment held at cost.
Management discloses that limited cash, absence of committed financing, volatile digital-asset values, and lack of recurring operating revenue collectively raise substantial doubt about the company’s ability to continue as a going concern for one year after issuance of these financial statements. RoboShare, an on-demand robot sharing marketplace publicly launched in June 2026, has not yet generated revenue; the first rental is targeted for August 2026, subject to execution. After quarter-end, the company advanced $500,000 to majority stockholder Faraday Future Intelligent Electric Inc. under a contemplated credit facility and entered a one-year consulting agreement with Aibot US Operation Inc. requiring $50,000 in monthly fees.
Positive
- None.
Negative
- The company posted a six-month net loss of $10,266,621, including a $2,929,946 net loss on digital assets and a $375,844 loss on settlement of the Marizyme note, while total operating expenses reached $7,293,046.
- Liquidity is severely constrained: cash fell to $577,328, net cash used in operations was $7,939,909, and management states these factors raise substantial doubt about the company’s ability to continue as a going concern.
- Digital-asset exposure is significant and loss-making, with holdings at a $10,433,028 cost basis but $5,212,903 fair value, reflecting large unrealized losses and adding volatility to an already weak liquidity position.
Filing Explained
Potential issuance of 4,203,443 shares remains uncompleted, while the $10.0 million equity facility still requires registration and other conditions.
AIxCrypto Holdings’ unaudited quarterly report confirms
The reserved amount includes 2,976,848 shares underlying outstanding preferred stock and 1,226,595 shares for warrants; 51,199 of the warrants are pre-funded, exercisable at a nominal $0.05 per share. The filing reports no common-stock issuance during the quarter, so the disclosed dilution remains potential rather than completed.
The company also retains a right, but not an obligation, to sell up to
The supplied comparison uses first-quarter cash and operating cash flow as a historical reference, not a funding commitment or forecast.
Watch the company’s next filings for any registration statement, equity-facility draw, preferred-stock conversion, or warrant exercise, because those events would move the disclosed capacity into actual issuance.
Key Figures
Key Terms
Real-World Asset tokenization financial
Embodied Artificial Intelligence technical
current expected credit loss financial
indefinite-lived intangible assets financial
going concern financial
down-round provision financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What was AIxCrypto Holdings (AIXC) net loss for the six months ended June 30, 2026?
What is AIxCrypto Holdings (AIXC) liquidity position as of June 30, 2026?
Does AIxCrypto Holdings (AIXC) disclose a going concern risk?
What digital assets does AIxCrypto Holdings (AIXC) hold and at what value?
What happened with AIxCrypto Holdings (AIXC) Marizyme short-term note receivable?
How has AIxCrypto Holdings (AIXC) changed its business strategy in 2026?
What related-party financing and commitments affect AIxCrypto Holdings (AIXC)?
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
Or
For the transition period from _____________ to _____________
(Exact Name of Small Business Issuer as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| The
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As
of August 7, 2026, there were
TABLE OF CONTENTS
| Page | |||
| PART I. | Financial Information | ||
| Item 1. | Condensed Consolidated Financial Statements (Unaudited) | 3 | |
| Condensed Consolidated Balance Sheets (Unaudited) | 3 | ||
| Condensed Consolidated Statement of Operations (Unaudited) | 4 | ||
| Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) | 5 | ||
| Condensed Consolidated Statements of Cash Flow (Unaudited) | 6 | ||
| Notes to Unaudited Condensed Consolidated Financial Statements | 7 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 30 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 39 | |
| Item 4. | Controls and Procedures | 39 | |
| PART II. | Other Information | 40 | |
| Item 1. | Legal Proceedings | 40 | |
| Item 1A. | Risk Factors | 40 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 41 | |
| Item 3. | Defaults Upon Senior Securities | 41 | |
| Item 4. | Mine Safety Disclosures | 41 | |
| Item 5. | Other Information | 41 | |
| Item 6. | Exhibits | 41 |
| 2 |
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
AIXCRYPTO HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (Unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Digital Assets | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Short-term notes receivable,
net of allowance for credit losses of nil at June 30, 2026 and $ | — | |||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Intangible assets | ||||||||
| Other assets - related party | ||||||||
| Total non-current assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Related Party Payable | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Warrant liabilities | ||||||||
| Convertible debt | — | |||||||
| Total current liabilities | ||||||||
| Commitments and Contingencies (Note 12) | - | - | ||||||
| Stockholders’ Equity | ||||||||
| Preferred stock Series A-2, $ | $ | $ | ||||||
| Preferred stock Series B, $ | ||||||||
| Preferred stock, value | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Parent company equity held at cost | ( | ) | — | |||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities & Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
AIXCRPYTO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| EXPENSES | ||||||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Sales and Marketing | — | — | ||||||||||||||
| Research and development | ||||||||||||||||
| Credit loss expense - short-term note receivable | - | |||||||||||||||
| Total expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER EXPENSE (INCOME), NET | ||||||||||||||||
| Gain on change in fair value of warrant liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on change in fair value of convertible debt | — | ( | ) | ( | ) | ( | ) | |||||||||
| Loss on settlement of short-term note receivable | — | — | ||||||||||||||
| Impairment of intangible assets | — | — | — | |||||||||||||
| Interest expense | — | — | ||||||||||||||
| Interest income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on issuance of convertible debt | — | — | ||||||||||||||
| Net loss on digital assets | — | — | ||||||||||||||
| Total other expense (income), net | ( | ) | ||||||||||||||
| LOSS BEFORE PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deemed dividend arising from warrant down-round provision | — | $ | ( | ) | — | $ | ( | ) | ||||||||
| Net loss attributable to AIxCrypto Holdings, Inc | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Total net loss per common share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average number of shares outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
AIXCRYPTO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | shares | Deficit | Equity | |||||||||||||||||||||||||||||||
| Series
A-2 Convertible Preferred Stock | Series B Convertible Preferred Stock | Common Stock | Additional Paid-In | Parent company equity held | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | at cost | Deficit | Equity | |||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | — | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| Issuance of common stock for the conversion of Series B preferred shares | - | - | ( | ) | ( | ) | — | — | — | |||||||||||||||||||||||||||||||
| Net Loss | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at March 31, 2026 | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Parent company equity held at cost | — | — | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||||||
| Net Loss | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity(Deficit) | ||||||||||||||||||||||
| Series A-2 | ||||||||||||||||||||||||||||
| Convertible | Additional | Total | ||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity(Deficit) | ||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Issuance of common stock for the conversion of Series A-2 preferred shares | ( | ) | ( | ) | — | - | ||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Net Loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2025 | ( | ) | ||||||||||||||||||||||||||
| Balance | ( | ) | ||||||||||||||||||||||||||
| Issuance of common stock for the conversion of Series A-2 preferred shares | ( | ) | ( | ) | — | — | ||||||||||||||||||||||
| Net Loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
AIXCRPYTO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| 2026 | 2025 | |||||||
| For the Six Months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile loss from operations to net cash used in operating activities: | ||||||||
| Stock-based compensation | — | |||||||
| Change in fair value of warrant liabilities | ( | ) | ( | ) | ||||
| Gain on change in fair value of convertible debt | ( | ) | ( | ) | ||||
| Loss on issuance of convertible debt | — | |||||||
| Legal expenses deducted from issuance of convertible debt | — | |||||||
| Loss on settlement of short-term note receivable | — | |||||||
| Provision for credit losses of short-term note receivable | ||||||||
| Impairment of intangible assets | — | |||||||
| Accrued interest income | ( | ) | ( | ) | ||||
| Amortization of penalty on promissory note | — | |||||||
| Net loss on digital assets | — | |||||||
| Other operating activities settled in digital assets | — | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Related party payables | ( | ) | — | |||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Issuance of short-term note receivable | — | ( | ) | |||||
| Purchase of digital assets | ( | ) | — | |||||
| Sales of digital assets | — | |||||||
| Purchase of intangible assets | ( | ) | — | |||||
| Proceeds from settlement of short-term note receivable | ||||||||
| Net cash provided by/ (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Parent company equity held at cost | ( | ) | — | |||||
| Proceeds from the issuance of convertible debt | — | |||||||
| Repayment of convertible debt | ( | ) | ( | ) | ||||
| Proceeds from issuance of promissory notes | — | |||||||
| Net cash (used in)/provided by financing activities | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents - beginning of period | ||||||||
| Cash and cash equivalents- end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | — | $ | — | ||||
| Taxes | $ | — | $ | — | ||||
| NONCASH FINANCING AND INVESTING ACTIVITIES: | ||||||||
| Deemed dividend arising from warrant down-round provision | $ | — | $ | |||||
| Issuance of common stock for the conversion of Series B preferred shares | $ | $ | — | |||||
| Issuance of common stock for the conversion of Series A-2 preferred shares | $ | — | $ | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
AIXCRYPTO HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 — BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
Corporate History
Ritter Pharmaceuticals, Inc. (the Company’s predecessor) was formed as a Nevada limited liability company on March 29, 2004 under the name Ritter Natural Sciences, LLC. In September 2008, this company converted into a Delaware corporation under the name Ritter Pharmaceuticals, Inc. On May 22, 2020, upon completing a “reverse recapitalization” transaction with Qualigen, Inc., Ritter Pharmaceuticals, Inc. was renamed Qualigen Therapeutics, Inc. (the “Company”). Qualisys Diagnostics, Inc. was formed as a Minnesota corporation in 1996, reincorporated to become a Delaware corporation in 1999, and then changed its name to Qualigen, Inc. in 2000. Qualigen, Inc. was a wholly-owned subsidiary of the Company. On July 20, 2023, the Company sold all of the issued and outstanding shares of common stock of Qualigen, Inc. to Chembio Diagnostics, Inc. (“Chembio”), a wholly-owned subsidiary of Biosynex, S.A. (“Biosynex”). Following the consummation of this transaction, Qualigen, Inc. became a wholly-owned subsidiary of Chembio.
In
2022, the Company acquired a
In
September 2025 the Company consummated a Subscription Agreement (the “Subscription Agreement”) with certain investors including
Faraday Future Intelligent Electric Inc. (NASDAQ: FFAI) (the “ Company’s majority stockholder” or “Faraday” or “FFAI”)
pursuant to which the investors purchased $
In January 2026, the Company formed three new wholly owned Delaware subsidiaries: AIxCrypto Token Labs US, Inc., AIxCrypto EAI, Inc., and AIxCrypto C10 ETF, Inc. These entities were formed to provide potential future organizational flexibility. As of June 30, 2026, these subsidiaries have not commenced operations, hold no material assets, and have not been capitalized.
In February 2026, the Company’s board of directors approved a strategic realignment to concentrate exclusively on its Real-World Asset (“RWA”) tokenization and Embodied Artificial Intelligence (“EAI”) ecosystem, discontinuing development of the BesTrade DeAI Agent platform and C10 digital asset portfolio management tools. At that time, management continued to evaluate strategic alternatives for its remaining legacy therapeutic programs, including potential out-licensing or asset sale.
On May 21, 2026, following a comprehensive strategic review, the Board formally approved the discontinuation and structured wind-down of the Company’s entire legacy biotechnology business segment, marking the full termination of all historical biopharmaceutical and therapeutic operations SEC. The Company is currently evaluating the financial impact of the wind-down, including expected asset impairment charges, closure costs and other related expenses.
RoboShare launched at Automate 2026 as an on-demand robot sharing marketplace, with Los Angeles serving as the initial pilot market. The pilot is targeted to begin in August 2026, subject to operational readiness, execution, and applicable revenue-recognition requirements.
Basis of Presentation
Certain information or footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2025 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The interim results for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any future periods.
| 7 |
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In general, the functional currency of the Company is the U.S. dollar. There were no foreign currency transactions in the three and six months ended June 30, 2026 and 2025.
Accounting Estimates
Management uses estimates and assumptions in preparing its consolidated financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company’s estimates relate to the estimated fair value of convertible debt, warrant liabilities, and determination of the allowance for credit losses. Actual results could vary from the estimates that were used.
Related Parties and Related Party Transactions
A related party is a person who has the ability to exert significant influence over the Company and may include executive officers and directors, including members of their immediate families, shareholders owning more than 10% of the Company’s voting securities, or other entities deemed to be affiliates, as defined in ASC 850, Related Party Disclosures. The Company assesses its related parties and applicable disclosures on a quarterly basis, considering all relevant facts and circumstances.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an initial maturity of 90 days or less and money market funds to be cash equivalents.
The Company maintains the majority of its cash in accounts at banking institutions in the U.S. that are of high quality. Cash held in these accounts often exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, the Company could lose all or a portion of amounts held in excess of such insurance limitations. As of June 30, 2026, the Company had not experienced losses on these accounts, and management believes the Company is not exposed to significant risk on such accounts.
Digital Assets
The Company accounts for its digital assets in accordance with ASC 350, Intangibles—Goodwill and Other, as amended by ASU 2023-08, Accounting for and Disclosure of Crypto Assets. The Company adopted ASU 2023-08 effective January 1, 2025. Digital assets held by the Company, including Bitcoin, Cardano, Chainlink, Ethereum, Native BNB, Ripple, Solana, Tether (“USDT”), and Tron, meet the scope criteria of ASU 2023-08 and are recognized as indefinite-lived intangible assets. These assets are initially recorded at cost, including transaction fees, upon obtaining control of the asset, and are measured subsequently at fair value with changes in value recognized in net income or loss. The Company uses a FIFO methodology to assign costs to digital assets for purposes of the digital assets held and realized gains and losses disclosures. Purchases and sales of digital assets that are not revenue arrangements are classified on the statement of cash flows as investing activities. Net loss on digital assets are adjusted in operating activities in the statement of cash flows.
| 8 |
Software Capitalization
The Company accounts for the costs incurred in developing its product offerings under ASC 350-40, Internal-Use Software.
In accordance with the guidance in ASC 350-40, the Company will capitalize costs incurred in connection with the development of the Company’s product offerings during the application development stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Costs incurred in connection with maintenance activities, including training or bug fixes are also expensed as incurred. The Company stops capitalizing qualifying costs once development activities are completed and the project is ready for its intended use.
Capitalized software costs will be amortized on a straight-line basis over a 36-month useful life beginning on the date when the product is ready for its intended use. Management will subsequently test the capitalized software costs for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC 360.
Derivative Financial Instruments and Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed consolidated statements of operations and comprehensive loss. Depending on the features of the derivative financial instrument, the Company uses either the Black-Scholes option-pricing model or a Monte-Carlo simulation to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period (See Note 8 – Warrant Liabilities).
Fair Value Measurements
The Company determines the fair value measurements of applicable assets and liabilities based on a three-tier fair value hierarchy established by accounting guidance and prioritizes the inputs used in measuring fair value. The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:
| ● | Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date; | |
| ● | Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active; and | |
| ● | Level 3 - Inputs that are unobservable. |
| 9 |
Fair Value of Financial Instruments
Cash, prepaid expenses, and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. Short-term notes receivable are valued subject to a current expected credit loss (“CECL”) model (see Note 6 - Short-Term Notes Receivable).
The value of the Company’s warrant liabilities as of June 30, 2026 and December 31, 2025 was determined using the Black-Scholes Model. Significant assumptions used in the valuation include the expected volatility of the Company’s common stock, the contractual term of the warrants, the risk-free interest rate, and an expected dividend yield of zero. Expected volatility is based on a blend of comparable public company data and, as available, the Company’s own historical volatility. The risk-free rate is derived from U.S. Treasury yields with maturities commensurate with the remaining contractual term of the warrants. Fair value measurements associated with the liability-classified warrants represent Level 3 valuations under the fair value hierarchy.
The Company from time to time elects the fair value option to account for certain debt liabilities. Electing the fair value option allows the Company to initially and subsequently measure such liabilities at fair value rather than amortized cost and may be applied to debt liabilities that contain conversion or other features that would otherwise require bifurcation and mark to market accounting. Such debt liabilities will initially be measured using valuation techniques appropriate to the terms and expected life of the note. The Company expects to use level 3 input to measure the fair value in subsequent periods.
Parent Company Equity Held at Cost
The Company maintains an entrusted investment arrangement with Gold King Arthur Holding Limited (“GKA”), an independent third-party fiduciary, pursuant to which GKA acquires, holds and manages equity securities of the Company’s majority stockholder, FFAI, for the Company’s economic benefit. Consistent with EITF Issue No. 98-2 and based on the parent-directed nature of the arrangement, the Company has elected an accounting policy to present its indirect investment in FFAI equity securities, including FFAI’s common stock, preferred stock and warrants, as parent company equity held at cost, a contra-equity account classified within stockholders’ equity and accounted for analogously to treasury stock at historical cost, with no subsequent remeasurement for fair value changes recognized in the condensed consolidated statements of operations; warrants issued in connection with the investment are an integral component of the integrated parent-directed transaction and do not represent a separate unit of account, so no portion of the aggregate subscription proceeds is allocated to the warrants and no separate warrant asset or liability is recognized, and any gain or loss upon future disposition, conversion or settlement of the underlying securities is recognized in the condensed consolidated statements of operations upon disposition.
Sales and Marketing
Sales
and marketing expenses are expensed as incurred and primarily consist of direct costs associated with branding, promotional, co-creation,
and publicity activities. The Company’s marketing initiatives focus on increasing brand awareness for its real-world asset tokenization
and embodied AI Infrastructure activities. For the six months ending June 30 2026 and 2025, the Company’s sales and marketing expenses
were $
Stock-Based Compensation
Stock-based compensation cost for equity awards granted to employees and non-employees is measured at the grant date based on the calculated fair value of the award using the Black-Scholes option-pricing model, and is recognized as an expense, under the straight-line method, over the requisite service period (generally the vesting period of the equity grant). If the Company determines that other methods are more reasonable, or other methods for calculating these assumptions are prescribed by regulators, the fair value calculated for the Company’s stock options could change significantly. Higher volatility, lower risk-free interest rates, and longer expected lives would result in an increase to stock-based compensation expense to employees and non-employees determined at the date of grant.
Income Taxes
Deferred income taxes are recognized for temporary differences in the basis of assets and liabilities for financial statement and income tax reporting that arise due to net operating loss carry forwards, research and development credit carry forwards and from using different methods and periods to calculate depreciation and amortization, allowance for doubtful accounts, accrued vacation, research and development expenses, and state taxes. A provision has been made for income taxes due on taxable income and for the deferred taxes on the temporary differences. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Realization of the deferred income tax asset is dependent on generating sufficient taxable income in future years.
| 10 |
Recently Adopted Accounting Standards
There have been no recently adopted accounting pronouncements by the Company.
Recently Issued Accounting Standards Not Yet Adopted
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, and in January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The amendments require public business entities to disclose, for each relevant expense caption, specified natural expense categories, including purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, together with a qualitative description of remaining amounts. The amendments also require disclosure of the total amount of selling expenses and, in annual periods, the entity’s definition of selling expenses. The amendments are effective for the Company’s annual financial statements for the year ending December 31, 2027, and interim financial statements beginning with the first fiscal quarter of 2028, with early adoption permitted. The amendments are required to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact of the amendments on its disclosures and related processes and controls.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements resulting in a comprehensive list of interim disclosures that are required by GAAP, and includes a disclosure principle that requires the disclosure of events since the end of the last annual reporting period that have a material impact on the Company. ASU 2025-11 is effective for the Company’s interim financial statements beginning with the first fiscal quarter of the year ended December 31, 2028, with early adoption permitted. ASU 2025-11 may be applied either prospectively or retrospectively. The Company is evaluating the disclosure requirements related to the new standard.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which contains 33 narrow technical corrections, clarifications and editorial updates across multiple ASC Topics, including guidance for earnings per share, parent company equity held at cost, leases and financial instruments. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those fiscal years, with early adoption permitted. While most revisions are expected to have an immaterial impact on our condensed consolidated financial statements, the update includes clarifications to diluted EPS calculations for loss periods that will require retrospective application to prior comparative periods upon adoption. The Company is currently evaluating the full effect of this ASU but does not anticipate a material overall impact to its financial position, results of operations or disclosures.
The Company does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on our unaudited condensed consolidated financial statements or disclosures.
NOTE 2 — LIQUIDITY AND GOING CONCERN
The Company’s financial position remains weak.
It has incurred recurring operating losses, with an accumulated deficit of $
As
of June 30, 2026, the Company had approximately $
Total current
liabilities decreased to approximately
$
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 $
Management’s plans to mitigate 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. Accordingly, 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.
| 11 |
NOTE 3 — DIGITAL ASSETS
As part of its strategic realignment completed in the fourth quarter of 2025, the Company began acquiring digital assets for investment purposes and for use within its programmable technology infrastructure platform.
The Company holds digital assets consisting of cryptocurrencies, stablecoins, and other blockchain-based tokens, as detailed below.
Significant Holdings
As of June 30,2026, the Company’s significant digital asset holdings consisted of the following:
SCHEDULE OF CRYPTO ASSET HOLDINGS
| Units Held | Cost Basis | Fair Value | ||||||||||
| Cardano ADA (ADA) | $ | $ | ||||||||||
| Native BNB (BSC) | ||||||||||||
| Bitcoin (BTC) | ||||||||||||
| Ethereum (ETH) | ||||||||||||
| ChainLink (LINK) | ||||||||||||
| Solana (SOL) | ||||||||||||
| Tron (TRX) | ||||||||||||
| USD Tether (USDT) | ||||||||||||
| Ripple (XRP) | ||||||||||||
| Total | $ | $ | ||||||||||
Digital Asset Activity
The following table summarizes digital asset activity for the period indicated, including cost basis, fair value at the time of sale, realized and unrealized losses, and the fair value of outstanding digital assets as of June 30,2026,:
SCHEDULE OF DIGITAL ASSET ACTIVITY
| Balance at December 31, 2025 | $ | |||
| Additions(1) | ||||
| Dispositions(1) | ( | ) | ||
| Gains(2) | ||||
| Losses(2) | ( | ) | ||
| Payments made | ( | ) | ||
| Balance at June 30, 2026 | $ |
| (1) | |
| (2) |
There were no digital assets held during the six months ended June 30, 2025.
The Company measures digital assets at fair value in accordance with ASC 820, Fair Value Measurement.
Fair value is determined using quoted prices in active markets for identical assets (Level 1 inputs). The Company utilizes pricing information provided by the principal market, which is based on observable market prices from active trading exchanges.
| 12 |
NOTE 4 — FAIR VALUE MEASUREMENTS
Below is the summary of our assets and liabilities measured at fair value on a recurring basis and categorized using the fair value hierarchy as of June 30, 2026:
SCHEDULE OF FAIR VALUE MEASUREMENTS
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| Assets | ||||||||||||||||
| Money Market funds | $ | — | — | $ | ||||||||||||
| Digital Assets | — | — | ||||||||||||||
| Total Assets | $ | — | — | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Convertible Debt | ||||||||||||||||
| Warrant Liabilities | — | — | $ | $ | ||||||||||||
| Total Liabilities | — | — | $ | $ | ||||||||||||
Below is the summary of our assets and liabilities measured at fair value on a recurring basis and categorized using the fair value hierarchy as of December 31, 2025:
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| Assets | ||||||||||||||||
| Money Market funds | $ | — | — | $ | ||||||||||||
| Digital Assets | — | — | ||||||||||||||
| Total Assets | $ | — | — | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Convertible Debt | — | — | $ | $ | ||||||||||||
| Warrant Liabilities | — | — | ||||||||||||||
| Total Liabilities | — | — | $ | $ | ||||||||||||
NOTE 5 — PREPAID INVESTMENT, PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following at June 30, 2026 and December 31, 2025:
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Prepaid consulting | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Prepaid legal | ||||||||
| Other current assets | ||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
| 13 |
NOTE 6 —SHORT-TERM NOTES RECEIVABLE
Short term notes receivable - consisted of the following at June 30, 2026 and December 31, 2025:
SCHEDULE OF SHORT-TERM NOTE RECEIVABLE
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Short-term note receivable - Marizyme | $ | - | $ | |||||
| Less allowance for credit losses | - | ( | ) | |||||
| Short-term notes receivable | $ | - | $ | |||||
As
of December 31, 2025, the Company had advanced an aggregate of $
Under
ASC 326-20, known as the current expected credit loss (“CECL”) model, the Company was required to estimate credit losses
expected over the life of an exposure (or pool of exposures) based on historical information, current information, and reasonable and
supportable forecasts. The Company is unable to use its historical data to estimate losses as it has no relevant loss history to date.
To determine the estimate of expected credit losses, the Company used a probability-weighted approach that incorporates multiple settlement
scenarios, including recovery of amounts due upon an acquisition of the debtor, and recovery in different liquidation scenarios, and
determines the expected recoverable amount of the loan in each scenario. This model requires management to make certain assumptions including
the likelihood of each outcome, the estimated value of the debtor’s assets, and the Company’s expected claim and recovery
rate on the debtor’s assets in the event of an insolvency or a liquidation proceeding. During the six months ended June 30, 2026,
the Company recorded an additional allowance for credit losses of $
On May 12, 2026, the Company entered into a Note Purchase Agreement with
CABG Acquisition Corp., pursuant to which the Company sold all of its right, title, and interest in certain loans and related creditor
rights relating to Marizyme, Inc. In consideration, the Company received $
The Company is also party to a Co-Development Agreement with Marizyme, the divestiture of debt claims does not alter the Company’s contractual rights under the Co-Development Agreement, including its right to future royalty-style payments once the contractual sales and launch milestones are met. (see Note 13 - Research and License Agreements).
NOTE 7 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following at June 30, 2026 and December 31, 2025:
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| License fees | $ | - | $ | |||||
| Credit card | ||||||||
| Professional fees | ||||||||
| Employee benefits | - | |||||||
| Accrued expenses and other current liabilities | $ | $ | ||||||
| 14 |
NOTE 8 – WARRANT LIABILITIES
On
November 20, 2024, the Company closed its private placement transaction resulting in the issuance of newly designated Series A-2 Preferred
Stock (see Note 14 – Stockholders Equity). As a result of the issuance of a new class of voting securities, the Company evaluated
its equity classified warrants’ respective terms, and concluded that warrants for
The following table summarizes the activity in liability classified warrants for the six months ended June 30, 2026:
SCHEDULE OF WARRANTS ACTIVITY
| Common Stock Warrants | ||||||||||||||||
| Shares | Weighted– Average Exercise Price | Range of Exercise Price | Weighted– Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2025 | $ | $ | * | |||||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Reclassified from equity | — | — | — | — | ||||||||||||
| Reclassified to equity | — | — | — | — | ||||||||||||
| Expired | — | — | — | — | ||||||||||||
| Total outstanding – June 30, 2026 | $ | $ | * | |||||||||||||
| $ | $ | * | ||||||||||||||
| * |
The following table summarizes the activity in liability classified warrants for the six months ended June 30, 2025:
| Common Stock Warrants | ||||||||||||||||
| Shares | Weighted– Average Exercise Price | Range of Exercise Price | Weighted– Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2024 | $ | $ | * | |||||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Expired | ( | ) | $ | $ | — | |||||||||||
| Total outstanding – June 30, 2025 | $ | $ | * | |||||||||||||
| Exercisable | $ | $ | * | |||||||||||||
| * |
| 15 |
The following table presents the Company’s fair value hierarchy for its warrant liabilities measured at fair value on a recurring basis as of June 30, 2026:
SCHEDULE OF FAIR VALUE OF HIERARCHY FOR WARRANT LIABILITIES
| Quoted Market | Significant | |||||||||||||||
| Prices for | Other | Significant | ||||||||||||||
| Identical | Observable | Unobservable | ||||||||||||||
| Assets | Inputs | Inputs | ||||||||||||||
| Common Stock Warrant liabilities | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
| Balance as of December 31, 2025 | $ | — | $ | — | $ | $ | ||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Gain on change in fair value of warrant liabilities | — | — | ( | ) | ( | ) | ||||||||||
| Balance as of June 30, 2026 | $ | — | $ | — | $ | $ | ||||||||||
The following table presents the Company’s fair value hierarchy for its warrant liabilities measured at fair value on a recurring basis as of December 31, 2025:
| Quoted Market | Significant | |||||||||||||||
| Prices for | Other | Significant | ||||||||||||||
| Identical | Observable | Unobservable | ||||||||||||||
| Assets | Inputs | Inputs | ||||||||||||||
| Common Stock Warrant liabilities | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
| Balance as of December 31, 2024 | $ | — | $ | — | $ | $ | ||||||||||
| Balance | $ | — | $ | — | $ | $ | ||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Gain on change in fair value of warrant liabilities | — | — | ( | ) | ( | ) | ||||||||||
| Gain loss) on change in fair value of warrant liabilities | — | — | ( | ) | ( | ) | ||||||||||
| Balance as of December 31, 2025 | $ | — | $ | — | $ | $ | ||||||||||
| Balance | $ | — | $ | — | $ | $ | ||||||||||
There were no transfers of financial assets or liabilities between category levels for the six months ended June 30, 2026 or the year ended December 31, 2025.
The value of the warrant liabilities was based on valuations internally generated Black Scholes valuations. Due to the nominal exercise price of the 2024 Pre-Funded Warrants and indefinite term, the Company calculated an implied value of the 2024 Pre-Funded Warrants based on the underlying common stock price on the valuation date, less the exercise price. For volatility, the Company considers comparable public companies as a basis for its expected volatility to calculate the fair value of common stock warrants and transitions to its own volatility as the Company develops sufficient appropriate history as a public company. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected term of the common stock warrant. The Company uses an expected dividend yield of zero based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the foreseeable future. Any significant changes in the inputs may result in significantly higher or lower fair value measurements.
| 16 |
The following are the weighted average and the range of assumptions used in estimating the fair value of warrant liabilities (weighted average calculated based on the number of outstanding warrants on each issuance) as of June 30, 2026 and 2025:
SCHEDULE OF ASSUMPTIONS OF WARRANT LIABILITIES
| June 30, 2026 | June 30, 2025 | |||||||
| Range | Range | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility (peer group) | % | % | ||||||
| Term of warrants (years) | ||||||||
| Expected dividend yield | % | % | ||||||
NOTE 9 — CONVERTIBLE DEBT
2025 Convertible Note
On
April 28, 2025, the Company entered into a Secured Convertible Note (the “2025 Convertible Note”) with Alpha Capital Anstalt
(“Alpha”, or “Holder”), pursuant to which the Company issued to Alpha a non-interest-bearing note with a principal
of $
The
Company determined the 2025 Convertible Note does not contain a substantial premium and therefore the Company elected to account for
the Convertible Note under the fair value option in accordance with ASC 825-10-15-4. The Company determined the fair value of the Convertible
Note was $
On
June 4, 2025 the Company paid down $
NOTE 10 — PROMISSORY NOTES
During
the year ended December 31, 2025, the Company issued short term notes payable totaling $
There were no outstanding promissory notes outstanding as of June 30, 2026 or December 31, 2025.
| 17 |
NOTE 11 — LOSS PER SHARE
Basic loss per share (“EPS”) is computed by dividing net loss including deemed dividends by the weighted-average number of common shares outstanding plus unexercised pre-funded warrants. Diluted EPS is computed based on the sum of the weighted-average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable from preferred stock, convertible debt, stock options and warrants.
SCHEDULE OF DILUTIVE SECURITIES EXCLUDED FROM DILUTED NET LOSS PER SHARE
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss used for basic earnings per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | |||||
| Basic weighted-average common shares outstanding | ||||||||||||||||
| Dilutive potential shares issuable from preferred stock, convertible debt, stock options and warrants | — | — | — | — | ||||||||||||
| Diluted weighted-average common shares outstanding | ||||||||||||||||
These potentially dilutive securities have been excluded from diluted net loss per share as of June 30, 2026 and 2025 because their effect would be anti-dilutive:
SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES
| 2026 | 2025 | |||||||
| As of June 30, | ||||||||
| 2026 | 2025 | |||||||
| Shares of common stock subject to outstanding options | — | |||||||
| Shares of common stock subject to outstanding warrants (excluding pre-funded warrants) | ||||||||
| Shares of common stock subject to outstanding preferred stock | ||||||||
| Shares of common stock subject to outstanding convertible debt | — | |||||||
| Total common stock equivalents | ||||||||
NOTE 12 — COMMITMENTS AND CONTINGENCIES
On July 19, 2026, a special committee
of the Board of Directors approved an initial advance of $
As of the date of these financial statements,
$
On
July 29, 2026, the Company entered into a consulting agreement with Aibot US Operation Inc. (“Aibot”), effective July 16,
2026, pursuant to which Aibot will provide finance, capital markets, and human resources/legal coordination support services. The agreement
has a one-year term ending July 15, 2027 and requires monthly consulting payments of $
| 18 |
NOTE 13 — RESEARCH AND LICENSE AGREEMENTS
UCL Business Limited
In
January 2022, the Company entered into a License Agreement with UCL Business Limited (“UCLB”) to obtain an exclusive worldwide
in-license of a genomic quadruplex (G4)-selective transcription inhibitor drug development program which had been developed at University
College London, including lead and back-up compounds, preclinical data and a patent estate. (UCLB is the commercialization company for
University College London.) The program’s lead compound is now being developed at the Company under the name QN-302 as a candidate
for treatment for pancreatic ductal adenocarcinoma, which represents the vast majority of pancreatic cancers. The License Agreement required
a $
On May 21, 2026, the Board of Directors approved the discontinuation and structured wind-down of the Company’s legacy biotechnology business segment following management’s evaluation of strategic alternatives for the segment, including a potential sale of the business. In connection with the wind-down of its legacy biotechnology business, the Company entered into a Deed of Termination and concurrent Assignment Agreement with UCLB, each effective July 9, 2026, pursuant to which: (i) the license agreement dated January 13, 2022, as amended, relating to G-Quadruplex binding molecules and the QN-302 program, was terminated in its entirety; and (ii) the Company assigned to UCLB all related intellectual property rights, including pre-clinical and clinical data, regulatory submissions, and the Investigational New Drug Application filed with the FDA, for a nominal consideration of £1.
There
were
QN-302 Phase 1 Study
In June 2023, the Company entered into a Master Clinical Research Services Agreement with Translational Drug Development, LLC (“TD2”) whereby TD2 agreed to perform certain clinical research and development services for the Company including but not limited to trial management, side identification and selection, site monitoring/management, medical monitoring, project management, data collection, statistical programming or analysis, quality assurance auditing, scientific and medical communications, regulatory affairs consulting and submissions, strategic consulting, and/or other related services. From time to time, the Company may enter into statements of work with TD2 for the performance of specific services under this Master Clinical Research Services Agreement.
In June 2023, the Company entered into a Master Laboratory Services Agreement with MLM Medical Labs, LLC (“MLM”) whereby MLM agreed to perform certain clinical research and development services for the Company including but not limited to laboratory, supply, testing, validation, data management, and storage services. From time to time, the Company may enter into work orders with MLM for the performance of specific services under this Master Laboratory Services Agreement.
In June 2023, the Company entered into a Master Services Agreement with Clinigen Clinical Supplies Management, Inc. (“Clinigen”) whereby Clinigen agreed to provide certain pharmaceutical products and/or services. From time to time, the Company may enter into statements of work with Clinigen for the performance of specific services under this Master Services Agreement.
In July 2023, pursuant to the above agreements, the Company entered into work orders and statements of work for clinical trial services for the conduct of the QN-302 Phase 1 study. Given our financial situation, the company slowed the development of the QN-302 Phase 1 Study beginning in the second quarter of 2024.
On May 21, 2026, the Board of Directors approved the discontinuation and structured wind-down of the Company’s legacy biotechnology business segment following management’s evaluation of strategic alternatives for the segment, including a potential sale of the business. The QN-302 Phase 1 study is included within the scope of this discontinued legacy biotechnology business wind-down, and no further developments related to this clinical program have occurred as of June 30, 2026.
| 19 |
Marizyme
On
April 11, 2024, the Company entered into a Co-Development Agreement with Marizyme, Inc. (the “Co-Development Agreement”),
As of the June 30, 2026 and 2025, neither of the above triggering conditions had been satisfied, and no royalty-related payments were payable or receivable by the Company. Separately, in May 2026, the Company completed the sale and full assignment of all its outstanding loan and creditor interests in Marizyme pursuant to a Note Purchase Agreement dated May 12, 2026; this divestiture of debt claims does not alter the Company’s contractual rights under the Co-Development Agreement, including its right to future royalty-style payments once the contractual sales and launch milestones are met.
NOTE 14 — STOCKHOLDERS’ EQUITY
As of June 30, 2026 and 2025, the Company had two classes of authorized capital stock: common stock and preferred stock.
Common Stock
Holders of common stock generally vote as a class with the holders of the preferred stock and are entitled to one vote for each share held. Subject to the rights of the holders of the preferred stock to receive preferential dividends, the holders of common stock are entitled to receive dividends when and if declared by the Board of Directors. Following payment of the liquidation preference of the preferred stock, any remaining assets will be distributed ratably among the holders of the common stock and, on an as-if-converted basis, the holders of any preferred stock upon liquidation, dissolution or winding up of the affairs of the Company. The holders of common stock have no preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions.
At
June 30, 2026 the Company has reserved
SCHEDULE OF RESERVED SHARES
| Conversion of Series A-2 preferred stock | ||||
| Conversion of Series B preferred stock | ||||
| Exercise of stock warrants | ||||
| Total |
| 20 |
Faraday Subscription Agreement
As
described in Note 1 – Business and Summary of Significant Accounting Policies and Estimates, on September 29, 2025, the Company
consummated the Subscription Agreement with certain investors, including Faraday pursuant to which the Company issued and sold
Additionally,
in connection with the closing of the Subscription Agreement, the Company issued
Further,
in connection with the closing of the Subscription Agreement,
2024 Common Stock Purchase Agreement
On
November 19, 2024, the Company entered into a Common Stock Purchase Agreement (the “Common Stock Purchase Agreement”) with
Horberg Enterprises LP (the “Investor”), pursuant to which the Company in its sole discretion has the right, but not the
obligation, to issue and sell to the Investor up to $
No upfront fees were paid to the Investor at the execution of the arrangement. As of June 30, 2026, no registration statement had been filed and thus the Commencement Date permitting the sale of shares under the Common Stock Purchase Agreement had not yet occurred.
The Company evaluated the Common Stock Purchase Agreement under ASC 815-40 Derivatives and Hedging-Contracts on an Entity’s Own Equity as it represents the right to require the Investor to purchase shares of Common Stock in the future, similar to a put option. The Company concluded the Common Stock Purchase Agreement represents a freestanding derivative instrument that does not qualify for equity classification and therefore requires fair value accounting. The Company analyzed the terms of the contract and concluded the derivative instrument had no value at inception, as of June 30, 2026, or as of December 31, 2025.
Preferred Stock
There
are a total of
As
described in Note 1 – Organization and Summary of Significant Accounting Policies and Estimates, on September 29, 2025, the Company
consummated the Subscription Agreement pursuant to which the Company issued
| 21 |
On
July 28, 2025, in a private placement transaction, the Company sold and issued to certain institutional and accredited investors
On
November 20, 2024 in a private placement transaction, the Company sold and issued to certain institutional and accredited investors
SCHEDULE OF OUTSTANDING PREFERRED STOCK
| Authorized Shares | Outstanding Shares | Conversion Price | Common Stock Equivalent | |||||||||||||
| Series A-2 | $ | |||||||||||||||
| Series B | $ | |||||||||||||||
The shares of Series A-2 Preferred Stock, Series A-3 Preferred Stock, and Series B Preferred Stock have the rights, preferences, powers, restrictions and limitations as set forth below.
Conversion
Rights – Each share of Preferred Stock is convertible at any time, at the option of the holder, into a number of shares of common
stock equal to $
The
Conversion Prices of the Series A Preferred Stock are also subject to down-round adjustments if the Company at any time while the Series
A Preferred Stock is outstanding issues common stock or common stock equivalents at a lower effective price per share than the then-effective
Conversion Price, in all cases subject to a floor price of $
Liquidation Preference – Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the holders of Series A Preferred Stock shall be entitled to an amount equal to the Stated Value for each share of Series A-2 Preferred Stock before any distribution or payment shall be made to the holders of common stock. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the holders of Series B Preferred Stock shall be entitled to an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon before any distribution or payment shall be made to the holders of common stock.
| 22 |
Voting Rights – The holders of Series A Preferred Stock are entitled to vote, together as a single class with the common stock, on all matters presented to the common stockholders for a vote. Each share of Preferred Stock is entitled to a number of votes equal to the number of shares into which such share of Preferred Stock would be convertible, as of the record date for determination of stockholders entitled to vote as to such matter, if the conversion price was equal to the “Minimum Price” (as defined in Nasdaq Listing Rule 5635(d)) as of the original issue date of the Series A Preferred Stock, taking into account for such purposes the beneficial ownership limitation as then in effect. The holders of Series B Preferred stock will vote together with common stock on an as-converted basis.
Dividends – The holders of Series A Preferred Stock and Series B Preferred Stock are entitled to receive dividends, if and when such dividends are paid to holders of common stock, in the same form and at the same time on an as-converted to common stock basis.
Protective Provisions – At all times while the Series A Preferred Stock and Series B Preferred Stock are outstanding, without the consent of the holders of at least 67% of the Stated Value of each series of the then-outstanding Series A Preferred Stock and holders of at least 75% of the Stated Value of the then-outstanding Series B Preferred Stock, (the “Required Consent”), the Company is prohibited from amending its charter documents in any manner that adversely affects the rights of the Series A Preferred Stock and Series B Preferred Stock, repurchase junior securities of the Company, pay cash dividends or distributions on junior securities of the Company, or enter into a material transactions with an affiliate of the Company (unless it is at arm’s length and expressly approved by a majority of the disinterested directors). Without the Required Consent of the Series B Preferred Stock, the Company is prohibited from entering into, creating, assuming or guaranteeing any new indebtedness or liens of any kind.
In addition, as long as any shares of Series B Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series B Preferred Stock directly and/or indirectly (a) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock or alter or amend this Certificate of Designation, (b) authorize or create any class of stock ranking as to redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or otherwise pari passu with, the Series B Preferred Stock or, authorize or create any class of stock ranking as to dividends senior to, or otherwise pari passu with, the Series B Preferred Stock, (c) amend its Articles of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series B Preferred Stock, (d) increase the number of authorized shares of Series B Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.
Upon
any subsequent issuance by the Company or any of its subsidiaries of common stock or common stock equivalents for cash consideration,
indebtedness or a combination of units thereof (a “Subsequent Financing”), holders of Series B Preferred Stock may elect,
in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of Series B Preferred Stock then
held for any securities or units issued in a Subsequent Financing on a $
Stock Options and Warrants
Stock Options
The Company recognizes all compensatory share-based payments as compensation expense over the service period, which is generally the vesting period.
In April 2020, the Company adopted the 2020 Stock Incentive Plan (the “2020 Plan”), which provides for the granting of incentive or non-statutory common stock options and other types of awards to qualified employees, officers, directors, consultants and other service providers.
In
October 2025, the Company adopted the 2025 Equity Incentive Plan (the “2025 Plan”), which provides for the granting of incentive
or non-statutory common stock options and other types of awards to qualified employees, officers, directors, consultants and other service
providers. As of June 30, 2026,
| 23 |
Equity Classified Compensatory Warrants
As
part of the May 2020 reverse recapitalization transaction, the Company issued equity classified compensatory common stock warrants to
an advisor and its designees. In addition, various service providers hold equity classified compensatory common stock warrants issued
in 2017 and earlier (originally exercisable to purchase Series C convertible preferred stock, and now instead exercisable to purchase
common stock). These are to be differentiated from the Series C Warrants described in Note 8 - Warrant Liabilities. As of June 30, 2026,
warrants to purchase
The following table summarizes the equity classified compensatory warrant activity for the six months ended June 30, 2026:
SCHEDULE OF COMPENSATORY WARRANT ACTIVITY
| Common Stock | ||||||||||||||||
| Shares | Weighted–Average Exercise Price | Range of Exercise Price | Weighted– Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2025 | $ | $ | ||||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Expired | ( | ) | - | - | ||||||||||||
| Forfeited | — | — | — | — | ||||||||||||
| Total outstanding – June 30, 2026 | $ | $ | ||||||||||||||
| Exercisable | $ | $ | ||||||||||||||
| Non-Exercisable | — | — | — | — | ||||||||||||
The following table summarizes the equity classified compensatory warrant activity for the six months ended June 30, 2025:
| Common Stock | ||||||||||||||||
| Shares | Weighted– Average Exercise Price | Range of Exercise Price | Weighted– Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2024 | $ | $ | ||||||||||||||
| Exercised | - | - | - | |||||||||||||
| Expired | ( | ) | $ | $ | ||||||||||||
| Forfeited | - | - | ||||||||||||||
| Total outstanding – June 30, 2025 | $ | $ | ||||||||||||||
| Exercisable | $ | $ | ||||||||||||||
| Non-Exercisable | - | - | - | |||||||||||||
| 24 |
There
were no compensation costs related to outstanding warrants for the six months ended June 30, 2026 and 2025. As of June 30, 2026 and 2025,
there was
Noncompensatory Equity Classified Warrants
On
December 22, 2022, in conjunction with the issuance of a debenture to Alpha (see Note 9 – Convertible Debt), the Company issued
to Alpha a warrant to purchase
On
February 27, 2024 the Company entered into a new Securities Purchase Agreement with Alpha for the purchase of the February 2024 Debenture
(see Note 9 – Convertible Debt). This Securities Purchase Agreement resulted in the reduction of the exercise price of the December
22, 2022 warrant and the May 2020 warrant from $
On
September 6, 2024 as a result of the down-round provision triggered by shares sold in a public offering, the above warrants were repriced
from $
On
April 12, 2024, in connection with the issuance of a convertible debenture to Chen (see Note 9 – Convertible Debt), the Company
issued a liability classified warrant to Chen to purchase
On
September 6, 2024 as a result of the down-round provision triggered by shares sold in a public offering, the above warrants were repriced
from $
As
a result of a partial voluntary conversion of the 2024 Alpha Debenture on September 9, 2024, the Company no longer had sufficient shares
to settle the 2024 Alpha Warrant in full until shareholder approval was obtained, and a portion (
| 25 |
On
September 6, 2024, upon the closing of a public offering, the Company issued pre-funded warrants to purchase
On
September 6, 2024, upon the closing of a public offering,
On
November 20, 2024, the Company closed its private placement transaction resulting in the issuance of newly designated Series A-2 Preferred
Stock. As a result of the issuance of a new class of voting securities, the Company evaluated its equity classified compensatory warrants’
respective terms, and concluded that compensatory warrants to purchase
On
April 28, 2025 as a result of the down-round provision triggered by the issuance of the 2025 Convertible Note (see Note 9 - Convertible
Debt), warrants for
As
discussed above, on September 29, 2025,
The following table summarizes the noncompensatory equity classified warrant activity for the six months ended June 30, 2026:
SCHEDULE OF NON COMPENSATORY WARRANT ACTIVITY
| Common Stock | ||||||||||||||||
| Shares | Weighted– Average Exercise Price | Range of Exercise Price | Weighted– Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2025 | $ | $ | ||||||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Expired | — | — | — | — | ||||||||||||
| Forfeited | — | — | — | — | ||||||||||||
| Total outstanding – June 30, 2026 | $ | $ | ||||||||||||||
| Exercisable | $ | $ | ||||||||||||||
| Non-Exercisable | — | — | — | — | ||||||||||||
The following table summarizes the noncompensatory equity classified warrant activity for the six months ended June 30, 2025:
| Common Stock | ||||||||||||||||
| Shares | Weighted– Average Exercise Price | Range of Exercise Price | Weighted– Average Remaining Life (Years) | |||||||||||||
| Total outstanding – December 31, 2024 | $ | $ | ||||||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | — | — | — | ||||||||||||
| Expired | — | — | — | — | ||||||||||||
| Forfeited | — | — | — | — | ||||||||||||
| Total outstanding – June 30, 2025 | $ | $ | ||||||||||||||
| Exercisable | $ | $ | ||||||||||||||
| Non-Exercisable | — | — | — | — | ||||||||||||
| 26 |
NOTE 15 — PARENT COMPANY EQUITY HELD AT COST
In January 2026, the Company established an entrusted investment arrangement with GKA, acting as fiduciary, to indirectly acquire equity securities of FFAI, the Company’s majority stockholder. The transaction was completed through staged agreement executions and fund contributions, with final closing occurring on April 15, 2026.
As of June 30, 2026, the total carrying value of the
Company’s indirect investment in FFAI’s common and preferred shares was $
NOTE 16 — RELATED PARTY TRANSACTIONS
Lead Investor Agreement
In
connection with the Subscription Agreement, the Company and Faraday Future Intelligent Electric Inc. entered into a Lead Investor Agreement.
Pursuant to this agreement, Faraday committed to invest a minimum of $
| ● | Treasury Reserve & Crypto Custody: The Company will adopt a Treasury Reserve Policy establishing cryptocurrencies as its primary ongoing treasury reserve asset. | |
| ● | Executive Appointments: Concurrent with the closing, Faraday appointed Jiawei Wang as CoChief Executive Officer and Koti Meka as Chief Financial Officer. The Faraday-appointed Co-CEO is solely responsible for all non-legacy business operations and has been granted sole access to all crypto-related accounts of the Company, subject to delegation. On June 20, 2026, Koti Meka resigned as Chief Financial Officer, and effective June 21, 2026, Jie (Jay) Sheng was appointed as President and Chief Financial Officer. Jerry Wang continues to serve as Chief Executive Officer of the Company. | |
| ● | Board Restructuring: The Board size was initially reduced to five members, with Faraday appointing two initial directors to fill vacancies. Following stockholder approval, the Board will expand to seven members, granting Faraday the right to appoint up to two additional directors. Faraday retains the right to proportional board representation so long as it maintains at least 5% beneficial ownership of the Company’s Common Stock. | |
| ● | Transitional Governance Controls: Prior to receiving stockholder approval, the Faraday-appointed Co-CEO will manage all new business affairs and holds the exclusive authority to approve and execute new agreements on behalf of the Company. Legacy business affairs continue to be managed by the current CEO. |
Actual
proceeds from the Lead Investor Agreement from Faraday as well as several members of Faraday’s executive management team amounted
to $
As
part of the Lead Investor Agreement, YT Jia, the Global Chief Executive Officer of Faraday, contributed $
As
part of the Lead Investor Agreement, Jerry Wang, the Global Executive Chairman of Faraday and Chief Executive Officer of AIXC, contributed $
There were no material changes to the Lead Investor Agreement during the three months ended June 30, 2026.
Transition Services Agreement
On
September 30, 2025 the Company entered into a Transition Services Agreement with Faraday to provide support and management services.
During the six months ended June 30, 2026, the Company was charged approximately $
The balance of charges dues under this agreement was
$
Master Services Agreement
On June 3, 2026, the Company entered into a Master Services Agreement (“MSA”) with FFAI, a related party, pursuant to which the Company may provide consulting, advisory, operational, capital markets, technical, legal, and other support services to FFAI under separately executed statements of work. The MSA has an initial term of one year and automatically renews for successive one-year periods unless terminated in accordance with its terms. Compensation for services provided under the MSA is to be determined pursuant to individual statements of work and generally consists of reimbursement of direct personnel costs, allocated overhead, an 18% service fee, and certain direct expenses. No revenue was recognized under the MSA during the three and six months ended June 30, 2026.
| 27 |
Related Party Accrued Expenses
On
October 2, 2025, the Company entered into an advisory agreement with Yueting (YT) Jia, a related party and significant stockholder, pursuant
to which Mr. Jia serves as Chief Advisor. The agreement provides an annual advisory fee of $
On
January 28, 2026, the Company entered into a consulting services agreement with FF Global Partners LLC effective as of November 1, 2025,
a related party, under which FF Global provides strategic planning, capital markets advisory, blockchain and technology consulting, and
operational support services. The agreement expires on December 31, 2026 and provides for a monthly consulting fee of $
Parent Equity Held at Cost
During the six months ended June 30, 2026, the Company
invested an aggregate of approximately $
Warrants
On
May 22, 2020, as a commitment fee, the Company issued warrants to Alpha for the purchase of common stock. As of December 31, 2024, 141
of these warrants remained outstanding and exercisable, and were able to be exercised in whole or in part, at any time before May 22,
2025. These warrants expired, and as of December 31, 2025, none of these warrants remain outstanding and exercisable. During years ended
December 31, 2025 and 2024 there were
On
December 22, 2022, in conjunction with the issuance of a debenture to Alpha, the Company issued to Alpha a warrant to purchase
On
February 27, 2024, in conjunction with the issuance of a debenture to Alpha, the Company issued to Alpha, a warrant to purchase
On
September 6, 2024 as a result of the down-round provision triggered by shares sold in a public offering, the above warrants were repriced
from $
As
a result of a partial voluntary conversion of the 2024 Alpha Debenture on September 9, 2024, the Company no longer had sufficient shares
to settle the 2024 Alpha Warrant in full until shareholder approval was obtained, and a portion (
During the three months ended June 30, 2026, there were no exercises of this warrant. This warrant is included in equity on the Company’s unaudited consolidated balance sheets (see Note 14 – Stockholders’ Equity).
As
of June 30, 2026, the exercise price of the 2022 Alpha Warrant was $
On
April 12, 2024, in connection with the issuance of a debenture to Chen (see Note 9 – Convertible Debt), the Company issued a
liability classified warrant to Chen to purchase
| 28 |
NOTE 17 — SEGMENT INFORMATION
The Company operates as a single operating and reportable segment. This determination is consistent with the manner in which the Company’s Chief Operating Decision Maker (“CODM”) evaluates performance, allocates resources, and reviews financial results.
The CODM consists of the Company’s Chief Executive Officer and its Chief Financial Officer. The CODM reviews consolidated financial information and does not receive discrete financial information for separate business components. Prior to the Offering (see Note 1 – Organization and Summary of Significant Accounting Policies and Estimates), the CODM consisted of the sole Chief Executive Officer.
In
accordance with ASC 280, Segment Reporting, the Company has concluded that it has
The Company’s operations primarily consist of the development and commercialization of AI-enabled technology products and services, including AI-based trading tools, digital-asset tokenization and embedded AI services, and AI-powered cryptocurrency portfolio management solutions. Prior to the Offering, the Company was an early-stage clinical therapeutics company focused on developing treatments for adult and pediatric cancer.
On May 21, 2026, the Board of Directors approved the permanent discontinuation of the Company’s legacy biotechnology business. Prior to finalizing the wind-down plan, management comprehensively evaluated all reasonable strategic alternatives for the biotechnology operations, including a potential outright sale of the related business and intellectual property assets, and determined a staged internal wind-down is in the best long-term interests of the Company and its stockholders. Under ASC 205-20, the legacy biotechnology component fails to satisfy all six mandatory held-for-sale classification criteria as of June 30, 2026, and therefore does not qualify for separate discontinued operations presentation on the consolidated statements of operations. All costs, operating results, assets and liabilities associated with the ongoing wind-down of legacy biotechnology activities remain classified within continuing operations of the Company’s single reportable segment.
The CODM evaluates performance and allocates resources based on consolidated net income (loss). The CODM reviews the Company’s significant segment expenses, which are its consolidated operating expenses, including research and development, general and administrative, and interest and other expenses, broken out as follows:
SCHEDULE OF SEGMENT INFORMATION
| 2026 | 2025 | |||||||
For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| EXPENSES | ||||||||
| General and administrative | $ | $ | ||||||
| Sales and Marketing | — | |||||||
| Research and development | ||||||||
| Credit loss expense - short-term note receivable | ||||||||
| Total expenses | ||||||||
| Total other expense (income), net(1) | ( | ) | ||||||
| NET LOSS | $ | $ | ||||||
| (1) |
The CODM evaluates the Company’s financial position based on the consolidated balance sheet and does not review segment-level asset information. Accordingly, no separate segment asset disclosures are presented.
NOTE 18 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these financial statements were available to be issued. The Company is not aware of any other events requiring recognition or disclosure in these financial statements.
In connection with the wind-down of its legacy biotechnology business, the Company entered into a Deed of Termination and concurrent Assignment Agreement with UCL Business Limited (“UCLB”), each effective July 9, 2026, pursuant to which: (i) the license agreement dated January 13, 2022, as amended, relating to G-Quadruplex binding molecules and the QN-302 program, was terminated in its entirety; and (ii) the Company assigned to UCLB all related intellectual property rights, including pre-clinical and clinical data, regulatory submissions, and the Investigational New Drug Application filed with the FDA, for a nominal consideration of £1.
On
July 19, 2026, a special committee of the Board of Directors approved an initial advance of $
As
of the date of these financial statements, $
On
July 29, 2026, the Company entered into a consulting agreement with Aibot US Operation Inc. (“Aibot”), effective July 16,
2026, pursuant to which Aibot will provide business operations support services, including finance, capital markets, and human resources/legal
coordination functions. The agreement has an initial one-year term ending July 15, 2027. In consideration of the services provided, the
Company will pay Aibot a monthly consulting fee of $
| 29 |
ITEM 2. 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 |
| 30 |
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.
| 31 |
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.
| 32 |
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.
| 33 |
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.
| 34 |
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.
| 35 |
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.
| 36 |
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.
| 37 |
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.
| 38 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
With the participation of our principal executive officer and principal financial officer, management evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of June 30, 2026. Based on this evaluation, management concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of that date.
Management identified the following material weaknesses:
| ● | An insufficient number of accounting personnel to adequately segregate duties. | |
| ● | Lack of designed and implemented effective Information Technology General Controls (“ITGC”) related to access controls for our financial accounting system. | |
| ● | Absence of formalized documentation of processes and controls that could be evaluated for proper design and implementation. |
Due to resource constraints, we are currently unable to employ additional personnel to remediate these material weaknesses. We do not expect remediation until we obtain additional funding to strengthen our accounting department.
Changes in Internal Control Over Financial Reporting
Effective June 20, 2026, Koti Meka resigned as Chief Financial Officer, and effective June 21, 2026, Jie (Jay) Sheng was appointed as Chief Financial Officer. The composition of the audit committee also changed during the quarter, including the appointment of a new chair. Because the Chief Financial Officer and the audit committee have significant roles in the Company’s internal control over financial reporting, these changes are reasonably likely to affect its internal control over financial reporting. These changes did not remediate the material weaknesses described above, which continued to exist as of June 30, 2026.
Other than as described above, there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 39 |
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 27, 2025, our Chief Executive Officer, Jiawei (Jerry) Wang, received a “Wells Notice” from the staff of the Securities and Exchange Commission (the “SEC” ). Subsequently, on June 30, 2025, Mr. YT Jia, who has been appointed as our Chief Advisor, also received a Wells Notice from the SEC.
The notices state that the SEC staff has made a preliminary determination to recommend filing an enforcement action against Mr. Wang and Mr. Jia in their individual capacities. The alleged violations involve various anti-fraud provisions of the federal securities laws pertaining to purported false or misleading statements in connection with Faraday Future Intelligent Electric Inc.’s 2021 PIPE and SPAC listing, relating to (i) related party transactions, and (ii) Mr. Jia’s role.
The staff’s recommendation for an enforcement action may seek an injunction or cease-and-desist order, civil monetary penalties, disgorgement, or other equitable relief. The SEC may also seek a formal bar preventing Mr. Wang and Mr. Jia from serving as an officer or director of a public company.
A Wells Notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law. It is a preliminary determination by the SEC staff to recommend to the Commissioners of the SEC that a civil enforcement action or administrative proceeding be brought. If the SEC determines to seek an enforcement action, it must proceed through a formal legal process, during which the individuals could defend themselves.
In September 2025, both Mr. Wang and Mr. Jia submitted formal responses to the SEC outlining why they believed an enforcement action is unwarranted. On March 18, 2026, the SEC’s Division of Enforcement issued letters directly to Faraday Future Intelligent Electric, Inc., Mr. Wang and Mr. Jia stating that it does not intend to recommend an enforcement action. The Division of Enforcement noted that the letters must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation.
ITEM 1A. RISK FACTORS
The Company’s business, reputation, results of operations and financial condition, as well as the price of its stock, can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 under the heading “Risk Factors.” When any one or more of these risks materialize, the Company’s business, reputation, results of operations and financial condition, as well as the price of its stock, can be materially and adversely affected.
Except as set forth below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 under the heading “Risk Factors.” The following risk factors should be read together with those previously disclosed risk factors. Additional risks and uncertainties not currently known to the Company, or that the Company currently deems immaterial, may also materially and adversely affect its business, financial condition, and results of operations.
A substantial portion of our capital is committed to an investment in Faraday Future Intelligent Electric Inc., which is also our majority stockholder and which we hold indirectly, exposing us to concentration and counterparty risk.
We have committed a substantial portion of our capital to an investment in the securities of Faraday Future Intelligent Electric Inc. (“FFAI”), which is also our Lead Investor and controls significant board and operational appointments. We hold this investment indirectly through a third party, Gold King Arthur Holding Limited (“GKA”), which we have entrusted to purchase, hold, and dispose of FFAI securities on our behalf under an Entrusted Investment Agreement. As a result, our financial condition and results of operations are materially dependent on a single investee that is also our controlling Lead Investor, and we do not hold the invested securities directly.
Because we hold this investment through GKA rather than directly, we depend on GKA’s performance under the Entrusted Investment Agreement and do not hold a direct security interest in the underlying FFAI securities. If GKA or FFAI fails to perform, or if the value of the FFAI securities declines, we may be unable to recover our investment, which could have a material adverse effect on our business, financial condition, and results of operations.
Our recently launched RoboShare platform is new and unproven, and may not achieve market adoption or generate revenue.
In June 2026, we launched RoboShare, a platform for on-demand robot rentals, as part of our embodied AI and robot ecosystem strategy. This offering is newly introduced and has not yet generated material revenue or established a user base. Its success depends on market adoption, technological performance, and evolving regulatory conditions, none of which can be assured. If RoboShare does not achieve sufficient adoption, or if its development or operation encounters technical, commercial, or regulatory obstacles, our ability to generate revenue from it may be materially impaired, which could adversely affect our business, financial condition, and results of operations.
| 40 |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangement
During
the three months ended June 30, 2026, no director or officer of the Company
ITEM 6. EXHIBITS
| Exhibit No. | Description | |
| 31.1 | Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. | |
| 31.2 | Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. | |
| 32.1 | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| 41 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| August 7, 2026 | AIXCRYPTO HOLDINGS, INC. | |
| By: | /s/ Jie Sheng | |
| Name | Jie Sheng | |
| Title: | President and Chief Financial Officer and (Principal Financial and Accounting Officer) |
| By: | /s/ Jerry Wang | |
| Name | Jerry Wang | |
| Title: | Chief Executive Officer (Principal Executive Officer) |
| 42 |