QLGN Qualigen Therapeutics, Inc. - 10-K

ITEM 1A. RISK FACTORS

An investment in our Common Stock involves risks. You should carefully consider the risks described below, together with all of the other information included in this Annual Report, as well as in our other filings with the SEC, in evaluating our business. If any of the following risks actually occur, our business, financial condition, operating results and future prospects could be materially and adversely affected. In that case, the trading price of our Common Stock may decline and you might lose all or part of your investment. The risks described below, which are the risks we judge (rightly or wrongly) to be the most significant to investors, are not the only ones we face. Additional risks that we currently do not judge to be among the “most significant” may also impair our business, financial condition, operating results and prospects.

Risks Related to Our Business

We have a history of negative cash flows and will require additional financing to execute our business strategy.

We have incurred recurring losses and experienced negative cash flows from operations. We incurred net loss of $16.9 million for the year ended December 31, 2025. As of December 31, 2025, we remain in a development and investment stage with respect to our digital asset and software initiatives and have not generated material revenue from these initiatives. Our ability to continue developing and deploying our software platforms depends on our ability to obtain additional financing. There can be no assurance that such financing will be available on acceptable terms, or at all. If we are unable to secure sufficient capital when needed, we may be required to delay, reduce, or eliminate development activities, reduce operating expenses, or otherwise materially modify our business plans. Any equity financing may result in substantial dilution to our stockholders, and debt or convertible debt financing may impose restrictive covenants that could adversely affect our operations.

We are in an early-stage development phase under our current business model.

Following the divestiture of our prior diagnostics business , we transitioned to a digital asset–focused software strategy. Our RWA + EAI initiatives remain in development phases and have not generated material revenue. We have limited operating history under our current business model, and investors have limited historical information upon which to evaluate our prospects. Our future success depends on our ability to successfully develop, deploy, and commercialize new software platforms in competitive and evolving markets.

Our future growth may be limited.

Our ability to grow depends on several factors, including successful product development, user adoption, access to capital, technological performance, regulatory developments, and market conditions affecting digital assets. If we are unable to successfully execute our development plans, attract users, or compete effectively, our growth prospects may be limited. Additionally, evolving regulatory frameworks, economic conditions, or declines in digital asset market activity may constrain our ability to expand operations or generate revenue.

Our customer-facing platforms may not achieve user adoption or generate revenue.

The success of BesTrade and our planned RWA + EAI initiatives depends on our ability to attract and retain users. User adoption may be adversely affected by competition, market volatility, technological limitations, regulatory changes, or security concerns. If we are unable to achieve sufficient user engagement, our ability to generate subscription-based or other revenue from these platforms may be materially impaired.

Our software development efforts may be delayed, exceed budget, or fail to perform as intended.

The development of BesTrade and RWA + EAI involves technical complexity, integration challenges, and evolving product requirements. Development timelines may be extended due to technical obstacles, changes in regulatory requirements, resource constraints, or unforeseen operational issues. Internally developed systems may contain errors, defects, or vulnerabilities that could result in operational disruption, reputational harm, or financial loss.

Our AI Blockchain platform is internally developed and may not function as intended.

AI Blockchain is used internally to support digital asset portfolio monitoring, analytics, and operational oversight. As an internally developed and evolving system, it may contain errors, design limitations, or cybersecurity vulnerabilities. Failures or deficiencies in internal systems could impair decision-making, result in inaccurate reporting, or expose us to financial or operational risk.

We are exposed to significant digital asset price volatility.

We maintain digital assets as part of our treasury and investment activities, including our internally managed C10 portfolio. Digital asset markets have historically experienced significant price volatility. Market fluctuations may materially impact the fair value of our holdings and could adversely affect our financial condition and results of operations. Digital asset prices may be influenced by factors beyond our control, including regulatory developments, macroeconomic conditions, market sentiment, technological changes, and security events.

The regulatory environment surrounding digital assets, tokenization, and AI-enabled financial tools is evolving and uncertain.

Digital asset markets and tokenization initiatives are subject to evolving regulatory frameworks in the United States and internationally. Regulatory authorities may impose new or additional requirements relating to securities laws, commodities laws, anti-money laundering compliance, custody requirements, or other regulatory regimes. Changes in applicable regulations or regulatory interpretations could limit our ability to operate our platforms as currently contemplated, increase compliance costs, or require modification of our business model.

Our platforms could be subject to regulatory classification that imposes additional obligations.

BesTrade is designed to provide analytics and informational tools and does not operate as a broker, exchange, custodian, or trading venue. However, regulatory authorities may interpret aspects of our activities differently. If regulators were to determine that our activities require registration, licensing, or compliance with additional regulatory requirements, we could incur substantial costs, face operational limitations, or be required to modify or discontinue certain activities.

We depend on third-party service providers for technology infrastructure and digital asset custody.

We rely on third-party providers for hosting infrastructure, data services, and, where applicable, digital asset custody and related services. The failure, disruption, or insolvency of these providers, or cybersecurity incidents affecting them, could adversely affect our operations, financial condition, and reputation.

Our business and operations could suffer in the event of computer system failures, cyberattacks, or deficiencies in our cybersecurity.

Our operations depend on the secure and reliable performance of our technology systems and infrastructure. Cybersecurity incidents, including unauthorized access, malware attacks, system disruptions, or data breaches, could result in operational interruptions, loss of digital assets, regulatory scrutiny, litigation, or reputational harm. As our platforms develop and potentially expand user engagement, our exposure to cybersecurity risk may increase.

Our “C10” Treasury strategy subjects our financial condition to extreme market volatility.

We hold a concentrated basket of digital assets.  Because our Common Stock may trade as a high-beta proxy for these assets, our stock price may fluctuate significantly based on global crypto market swings, completely independent of our AI infrastructure.

Concentration of Control and Sole Custody of Digital Assets May Expose the Company to Significant Financial and Operational Risks

Crypto-Centric Treasury : Pursuant to the Lead Investor Agreement, the Company is required to adopt a Treasury Reserve Policy that establishes cryptocurrencies as our primary ongoing treasury reserve asset.

Concentrated Operational Control: The Faraday-appointed Co-Chief Executive Officer has been granted sole responsible for all of the Company’s business operations, including crypto-related businesses, with the sole exception of the legacy medical-related business.

Sole Access to Digital Assets: The Lead Investor Agreement states that the Faraday-appointed Co-CEO shall have sole access to all crypto-related accounts of the Company, subject to delegation.

Single Point of Failure: If the Co-CEO becomes incapacitated, or if there is a security breach, loss of credentials, or misappropriation involving these specific accounts, we do not have an immediate, native backup mechanism to access our own treasury assets. Such an event could result in the total and irretrievable loss of our primary treasury assets, materially harming our financial condition and operational viability.

We may fail to execute our pivot from therapeutics to Web3 .

We are undergoing a transition from a clinical-stage oncology company (Qualigen) to an AI and digital asset infrastructure ecosystem provider. There is no guarantee that our management’s historical experience will translate to success in the decentralized infrastructure space.

We have in the past, and may in the future, enter into partnerships, collaborations, joint ventures, or strategic alliances with third parties. If we are unsuccessful in establishing or maintaining strategic relationships with these third parties or if these third parties fail to deliver certain services, our business, operating results, and financial condition could be adversely affected.

We have in the past, and may in the future, enter partnerships, collaborations, joint ventures, or strategic alliances with third parties in connection with the development, operation, and enhancement of our platform and products and the provision of our services. Identifying strategic relationships with third parties and negotiating and documenting relationships with them may be time-consuming and complex and may distract management. Moreover, we may be delayed, or not be successful, in achieving the objectives that we anticipate as a result of such strategic relationships. For example, we rely on our strategic relationship with Faraday Future to fuel our decentralized AI models and on-chain strategies. If Faraday Future experiences financial distress, supply chain disruptions, or shifts its strategic priorities away from our partnership, we may lose access to the critical data required for our EAIRWA ecosystem. In evaluating counterparties in connection with partnerships, collaborations, joint ventures or strategic alliances, we consider a wide range of economic, legal and regulatory criteria depending on the nature of such relationship, including the counterparties’ reputation, operating results and financial condition, operational ability to satisfy our and our customers’ needs in a timely manner, efficiency and reliability of systems, certifications costs to us or to our customers, and licensure and compliance status. Despite this evaluation, third parties may still not meet our or our customers’ needs, which may adversely affect our ability to deliver products and services to customers, and could adversely affect our business, operating results, and financial condition. Counterparties to any strategic relationship may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals, and may subject us to additional risks to the extent any such third party becomes the subject of negative publicity, faces its own litigation or regulatory challenges, or faces other adverse circumstances. Conflicts may arise with our strategic partners, such as the interpretation of significant terms under any agreement, which may result in litigation or arbitration which would increase our expenses and divert the attention of our management. If we are unsuccessful in establishing or maintaining strategic relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our business, operating results, and financial condition could be adversely affected.

The future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect, our business, operating results, and financial condition could be adversely affected.

Crypto assets built on blockchain technology were only introduced in 2008 and remain in the early stages of development. In addition, different crypto assets are designed for different purposes. The further growth and development of any crypto assets and their underlying networks and other cryptographic and algorithmic protocols governing the creation, transfer, and usage of crypto assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult to evaluate.

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition could be adversely affected if we are unable to compete effectively.

The crypto industry is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, changing customer needs, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to intensify in the future as existing and new competitors introduce new products or enhance existing products. We face significant competition from a variety of companies around the world, in particular those located outside the United States, who at times are and may in the future be subject to significantly less stringent regulatory and compliance requirements in their local jurisdictions. Their business models rely on being unregulated or only regulated in a small number of lower compliance jurisdictions, whilst also offering their products in highly regulated jurisdictions, including the United States, without necessarily complying with the relevant regulatory requirements in such jurisdictions. Given the uneven enforcement by United States and foreign regulators, many of these competitors have been able to operate from offshore while offering large numbers of products and services to consumers, including in the United States, without complying with the relevant licensing and other requirements in these jurisdictions, and historically without penalty. We also have expended significant managerial, operational, and compliance costs to comply with laws and regulations applicable to us in the jurisdictions in which we operate, and expect to continue to incur significant costs to comply with these requirements, which these unregulated or less regulated competitors have not had to incur. As regulations and compliance requirements in the United States become clearer, we may face increased competition from companies based in the United States. Our current and potential competitors may establish cooperative relationships among themselves or with third parties that may further enhance their resources. If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

If we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our net revenue, could decline, which could adversely affect our business, operating results, and financial

Condition.

Our industry has been characterized by many rapid, significant, and disruptive products and services in recent years. We expect new services and technologies to continue to emerge and evolve, which may be superior to, or render obsolete, the products and services that we currently provide. For example, decentralized networks and other disruptive technologies such as generative AI may fundamentally alter the use of our products or services in unpredictable ways. We cannot predict the effects of new services and technologies on our business. However, our ability to grow our customer base and net revenue will depend heavily on our ability to innovate and create successful new products and services, both independently and in conjunction with third-party developers. In particular, developing and incorporating new products and services into our business may require substantial expenditures, take considerable time, and ultimately may not be successful. Any new products or services could fail to attract customers, generate revenue, or perform or integrate well with third-party applications and platforms. In addition, our ability to adapt and compete with new products and services may be inhibited by regulatory requirements and general uncertainty in the law or other factors. Moreover, we must continue to enhance our technical infrastructure and other technology offerings to remain competitive and maintain a platform that has the required functionality, performance, capacity, security, and speed to attract and retain customers. As a result, we expect to incur significant costs and expenses to develop and upgrade our technical infrastructure to meet the evolving needs of the industry. Our success will depend on our ability to develop, scale, and incorporate new offerings and adapt to technological changes and evolving industry practices. If we are unable to do so in a timely or cost-effective manner, our ability to successfully compete, to retain existing customers, and to attract new customers may be impacted and our business, operating results, and financial condition could be adversely affected.

A particular crypto asset, product or service’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset or product offering, we may be subject to regulatory scrutiny, inquiries, investigations, fines, and other penalties, which could adversely affect our business, operating results, and financial condition.

Whether or not an asset, product, or service is a security or constitutes a securities offering under federal securities laws is ultimately determined by a federal court. The legal test for determining whether any given crypto asset, product, or service is an investment contract security was set forth in the 1946 Supreme Court case SEC v. W.J. Howey Co. and whether any given crypto asset, product, or service is a note in the 1990 Supreme Court case Reves v. Ernst & Young . The legal tests for determining whether any given crypto asset, product, or service is a security requires a highly complex, fact-driven analysis. Accordingly, whether any given crypto asset, product or service would be ultimately deemed by a federal court to be a security is uncertain and difficult to predict notwithstanding the conclusions of the SEC or any conclusions we may draw based on our risk-based assessment regarding the likelihood that a particular crypto asset, product or service could be deemed a “security” or “securities offering” under applicable laws.

The theft, loss, or destruction of private keys required to access any crypto assets held in custody for our own account. If we are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any crypto assets, it could cause regulatory scrutiny, reputational harm, and other losses.

Crypto assets are generally controllable only by the possessor of the unique private key relating to the digital wallet in which the crypto assets are held. While blockchain protocols typically require public addresses to be published when used in a transaction, private keys must be secured and kept private in order to prevent a third party from accessing the crypto assets held in such a wallet. To the extent that any of the private keys relating to our wallets containing crypto assets held for our own account is lost, destroyed, or otherwise compromised or unavailable, and no backup of the private key is accessible, we will be unable to access the crypto assets held in the related wallet. Further, we cannot provide assurance that our wallets will not be hacked or compromised. Crypto assets and blockchain technologies have been, and may in the future be, subject to security breaches, hacking, or other malicious activities.

Due to our limited operating history, it may be difficult to evaluate our business and future prospects, and we may not be able to achieve or maintain profitability in any given period .

We began to transition our operations in 2025 and since then our business model has continued to evolve. Our limited operating history and the volatile nature of our business make it difficult to evaluate our current business and our future prospects. We have encountered and will continue to encounter risks and difficulties as described in this section. If we do not manage these risks successfully, our business, operating results, and financial condition could be adversely affected.

Key business metrics and other estimates are subject to inherent challenges in measurement and change as our business evolves, and our business, operating results, and financial condition could be adversely affected by real or perceived inaccuracies in those metrics or any changes in metrics we disclose.

We regularly review our key business metrics to evaluate our business, measure our performance, identify trends affecting our business, and make strategic decisions. These key business metrics are calculated using internal company data and have not been validated by an independent third-party. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement at the time of reporting, there are inherent challenges in such measurements. If we fail to maintain an effective analytics platform, our key business metrics calculations may be inaccurate, and we may not be able to identify those inaccuracies. Additionally, we may in the future calculate certain key business metrics using third-party data. While we believe the third-party data we have used in the past or may use in the future is reliable, we have not independently verified and may not in the future independently verify the accuracy or completeness of the data contained in such sources and there can be no assurance that such data is free of error. Any inaccuracy in the third-party data we use could cause us to overstate or understate our key business metrics. We generally will not update previously disclosed key business metrics for any such inaccuracies or adjustments that are immaterial. We may change our key business metrics from time to time, which may be perceived negatively. Given the rapid evolution of the crypto markets and our revenue sources, we regularly evaluate whether our key business metrics remain meaningful indicators of the performance of our business. Further if investors or the media perceive any changes to our key business metrics disclosures negatively, our business, operating results, and financial condition could be adversely affected.

We may suffer losses due to abrupt and erratic market movements.

The crypto asset market has been characterized by significant volatility and unexpected price movements, and has experienced significant declines in the past.

Adverse economic conditions could adversely affect our business.

Our performance is subject to general economic conditions, and their impact on the crypto asset markets and our customers. The United States and other key international economies have experienced cyclical downturns from time to time in which economic activity declined resulting in lower consumption rates, restricted credit, reduced profitability, weaknesses in financial markets, bankruptcies, and overall uncertainty with respect to the economy. Adverse general economic conditions have impacted in the past, and may impact in the future, the cryptoeconomy, although the extent of such impacts remains uncertain and dependent on a variety of factors, including market adoption of crypto assets, global trends in the cryptoeconomy, central bank monetary policies, instability in the global banking system, volatility and disruptions in the capital and credit markets, and other events beyond our control. Geopolitical developments, such as trade wars and foreign exchange limitations can also increase the severity and levels of unpredictability globally and increase the volatility of global financial and crypto asset markets. To the extent general economic conditions and crypto assets markets materially deteriorate or decline for a prolonged period, our ability to generate revenue and to attract and retain customers could suffer and our business, operating results and financial condition could be adversely affected. Moreover, even if general economic conditions were to improve following any such deterioration, there is no guarantee that the cryptoeconomy would similarly improve.

If we fail to maintain an effective system of disclosure controls and procedures and internal control over our financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

As a public company we incur significant legal, accounting, and other expenses. The Sarbanes-Oxley Act of 2002 and related rules of the SEC require, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight. If we encounter material weaknesses or deficiencies in our internal control over financial reporting, we may not detect errors on a timely basis and our Consolidated Financial Statements may be materially misstated. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that are required to be included in our periodic reports filed with the SEC. Ineffective disclosure controls and procedures or internal control over financial reporting may adversely affect investor confidence in us and, as a result, negatively impact the price of our common stock and have a material and adverse effect on our business, operating results, and financial condition.

We may require additional capital to support business growth, and this capital might not be available.

We intend to continue to make investments in our business, which investments may require us to secure additional funds. Additional financing may not be available on terms favorable to us, if at all, including due to general macroeconomic conditions, crypto market conditions and any disruptions in the crypto market, instability in the global banking system, increasing regulatory uncertainty and scrutiny or other unforeseen factors. In the event of a downgrade of our credit rating, our ability to raise additional financing may be adversely affected and any future debt offerings or credit arrangements we propose to enter may be on less favorable terms or terms that may not be acceptable to us.

Pending SEC Enforcement Actions Against Our Co-CEO, Chief Advisor, and Lead Investor Could Materially Disrupt Our Operations and Restrict Access to Our Treasury Assets.

In June 2025, FF (the “Lead Investor”), our Co-CEO (Jiawei Wang), and our Chief Advisor (YT Jia) received SEC Wells Notices regarding alleged federal securities law violations. The SEC is considering seeking remedies that include barring Mr. Wang and Mr. Jia from serving as officers or directors of a public company. Pursuant to our Lead Investor Agreement, Mr. Wang is solely responsible for our non-medical business operations. He has also been granted sole access, subject to delegation, to all of our crypto-related accounts. If the SEC successfully pursues a D&O bar against Mr. Wang, we could face an immediate crisis in executive leadership and potential delays or inability to access our primary treasury reserve assets. An SEC enforcement action against Mr. Jia could impair our damage our reputation with institutional partners. Because FF is our Lead Investor and controls significant board and operational appointments, any financial penalties, injunctions, or reputational damage suffered by FF as a result of the SEC’s investigation could materially and adversely affect our business, capital structure, and ability to raise future funding.

We have been involved, and may continue to be involved, in disputes, claims or proceedings arising from our operations or class actions from time to time, which could result in significant liabilities and reputational harm and could materially and adversely affect our business, financial condition and results of operations

We may be involved in disputes, claims or proceedings arising out of our operations. In addition, we may have disagreements with regulatory bodies in the course of our operations, which may subject us to administrative proceedings and unfavorable orders, directives or decrees that may result in financial losses. Ongoing disputes, claims or proceedings may divert our management’s attention and consume their time and our other resources.

In the past, shareholders of public companies have often brought securities class action suits against an issuer following periods of instability in the market price of an issuer’s securities, or after the publication of third-party research reports. As of the date of this Annual Report, we are not aware of any lawsuits threatened or filed against us based on any alleged violation of securities laws. We cannot assure you that there would not be any future claims against us or that we would successfully defend against them. Any such suit, whether or not successful, could harm our reputation, result in share price volatility and a loss of customers, and restrict our ability to raise capital in the future. Even if claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and require significant expenditures, which could prevent us from competing effectively and could have an adverse effect on our business, operating results, and financial condition. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations. Furthermore, any disputes, claims or proceedings which are initially not of material importance may escalate and become important to us, due to a variety of factors, such as the facts and circumstances of the cases, the likelihood of loss, the monetary amount at stake and the parties involved. As of the date of this Annual Report, we are not able to quantify the likelihood or amount of exposure from any of these potential actions.

Negative publicity arising from disputes, claims or proceedings may damage our reputation and adversely affect the image of our brands and products. In addition, if any verdict or award is rendered against us, we could be required to pay significant monetary damages, assume other liabilities and even to suspend or terminate the related business ventures or projects. Consequently, our business, results of operations and financial condition may be materially and adversely affected.

Risks Related to Our Intellectual Property

If we are unable to obtain, maintain, and enforce adequate intellectual property protection for our core technologies, our competitors could develop and commercialize similar products, which would materially and adversely affect our business.

Our success depends in large part on our ability to protect our proprietary technology, brand, trade secrets, and institutional knowledge globally. We rely on a combination of patents, trademarks, copyrights, trade secrets, and confidentiality and license agreements to protect our artificial intelligence and blockchain-based innovations. These critical assets include our protocol, infrastructure, and application layer technologies , as well as current and future developments related to our RWA and EAI ecosystem.

However, the patent prosecution process is expensive, time-consuming, and complex, particularly within the rapidly evolving Web3 and cryptocurrency environments. We may not be able to file, prosecute, maintain, or enforce all necessary patent applications globally at a reasonable cost or in a timely manner. It is possible that our pending or future patent applications will not result in issued patents, or that our intellectual property rights could be challenged, narrowed, invalidated, or circumvented by competitors developing alternative decentralized protocols. Furthermore, changes in U.S. patent law and ongoing patent reform may increase the uncertainty and costs associated with obtaining and defending patents.

Claims by third parties that we infringe upon their intellectual property rights could be costly, time-consuming, and materially and adversely affect our business.

The artificial intelligence, cryptocurrency, and blockchain industries are characterized by rapid technological advancement, a proliferation of patents, and frequent, complex litigation regarding intellectual property rights. As we execute our strategy, we may become subject to adversarial proceedings if competitors or non-practicing entities assert that our products or technologiesinfringe upon their proprietary rights.

Defending against any such claims of infringement could cause us to incur substantial legal costs, divert the attention of our management and technical personnel, and substantially increase our operating losses. If we are found to infringe a third party’s valid intellectual property rights, we could be subject to significant monetary damages, enjoined from developing or commercializing the infringing technologies, or forced to obtain costly licenses, which may not be available on commercially reasonable terms.

We heavily rely on trade secrets and confidentiality agreements to safeguard our competitive advantage, and these measures may not adequately protect our proprietary information.

In addition to patent protection, we rely on the protection of trade secrets, know-how, and confidential proprietary information to safeguard our AI-driven trading infrastructure and decentralized technology protocols. To maintain the confidentiality of these assets, including the algorithms powering the [___] ’s execution, we rely in part on non-disclosure agreements with our employees, outside developers, and partners within the AIxC Labs ecosystem.

Despite these precautions, these agreements may not effectively prevent the unauthorized disclosure of confidential information. Enforcing a claim of misappropriation is inherently difficult and expensive. Because we expect to rely on third parties, such as global stablecoin issuers, the need to share confidential information increases the risk that our trade secrets could become known by competitors. If we lose protection for our trade secrets, the value of our technology would be greatly reduced, severely harming our ability to build a global leading ecosystem that integrates AI, crypto, and blockchain.

Limitations on intellectual property protection in certain jurisdictions outside the United States could adversely affect our global competitive position.

Filing, prosecuting, and defending our intellectual property across our global digital ecosystem is prohibitively expensive. We face significant difficulties in obtaining and enforcing our rights in jurisdictions outside the United States, where legal systems may not favor the enforcement of such rights. Competitors may use our technology in these regions to develop competing products. Efforts to enforce our rights abroad can be time-consuming and expose us to risks of invalidation or counterclaims, potentially reducing our commercial advantage in key foreign markets.

General Risks

The requirements of being a public company may strain our resources and divert management’s attention.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations. The Exchange Act requires, among other things, that we file annual and current reports with the SEC with respect to our business and operating results. Compliance with these rules and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming, or costly, and increases demand on our systems and resources.

As a result of disclosure of information in this Annual Report and in filings required of a public company, our business and financial condition is more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert resources of our management and harm our business and operating results.

Periods of rapid growth and expansion could place a significant strain on our resources, including our employee base, which could negatively impact our operating results.

Our recent strategic transition into the Web3 and AI sectors to become a gateway to the AI Web3 world places a significant strain and demands on our management, our operational and financial resources, customer operations, research and development, sales and marketing, administrative, and other resources. To manage our possible future growth effectively, we will be required to continue to improve our management, operational and financial systems. Future growth would also require us to successfully hire, train, motivate and manage our employees. In addition, our continued growth and the evolution of our business plan will require significant additional management, technical and administrative resources. If we are unable to manage our growth successfully, we may not be able to effectively manage the growth and evolution of our current business and our operating results could suffer.

Macroeconomic and financial market disruptions may adversely affect our liquidity, operations, and results.

Disruptions in global financial markets, including volatility in equity and digital asset prices and reduced availability of capital, could limit our access to financing, increase our cost of capital, and disrupt our customers and partners. Stress affecting banks and payment partners, as well as crypto market intermediaries such as exchanges, lenders, stablecoin issuers, and custodians, could impair our liquidity, reduce customer activity, and negatively impact our operations.

Furthermore, persistent inflation, interest rate changes, geopolitical instability, sanctions and supply chain constraints may reduce customer spending, trading volumes, and demand for our products and services. These conditions can also lengthen payment cycles, increase credit losses and write-offs, and constrain working capital. If capital markets tighten, we may be unable to raise funds on acceptable terms or at all, limiting our ability to fund operations, invest, or pursue growth opportunities, including the necessary funding to pursue our strategic investments in the technology infrastructure or completion of our RWA tokenization initiatives involving FFAI stock. Any of these factors could materially and adversely affect our business, financial condition, results of operations, and prospects.

Heightened public scrutiny and negative publicity could damage our reputation and adversely affect our business and prospects.

Characteristics of the crypto ecosystem, including decentralization, cross-border activity, and pseudonymous transactions, can attract heightened attention from the public, regulators, and the media. As our business expands to include the Web3 Store and RWA + EAI ecosystem development, we may face increased scrutiny from regulators in existing and new markets. Allegations or negative publicity regarding platform failures, security incidents, or regulatory actions in the broader crypto industry, whether or not accurate, can lead to government inquiries, increased oversight, and reputational harm. This scrutiny could deter customers and partners from utilizing our AI-driven trading infrastructure, dampening demand for our services. Responding to inquiries or litigation can be costly and divert management’s attention, and adverse perceptions could negatively impact the market price of our securities.

Certain data and information in this Annual Report were obtained from third-party sources and were not independently verified by us.

This Annual Report includes data and information from publicly available third party publications and reports. These sources often include projections based on assumptions that may not materialize, and markets relevant to our business, including digital asset and financial technology markets, may not grow at the rates projected or at all. Broader macroeconomic, regulatory, and industry specific factors discussed in this report introduce uncertainty that could cause actual outcomes to differ materially from projections.

We have not independently verified the third party data and information included here. Such data may have been collected using methodologies different from our own, and while these publications often state that their information is believed to be reliable, accuracy and completeness are not guaranteed. You should not place undue reliance on third party data or projections in this report.

Risks Related to the Ownership of Our Securities

We have a large number of authorized but unissued shares of our common stock which will dilute existing ownership positions when issued.

At December 31, 2025, our authorized capital stock consists of 225 million shares of common stock, of which approximately 219.8 million remain available for issuance, including shares of common stock issuable upon the exercise of outstanding derivative securities. Our management will continue to have broad discretion to issue shares of our common stock in a range of transactions, including capital-raising transactions, mergers, acquisitions and other transactions, without obtaining stockholder approval, unless stockholder approval is required under law or the rules of Nasdaq or any other trading market on which our common stock may be listed. If our management determines it be appropriate to issue shares of our common stock from the large pool of authorized but unissued shares for any purpose in the future and is not required to obtain stockholder approval, your ownership position would be diluted without your further ability to vote on that transaction.

Our common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock.

Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market prices of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the market prices of our common stock and warrants to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock and warrants will be stable or appreciate over time.

We may need, but be unable, to obtain additional funding on satisfactory terms, which could dilute our stockholders or impose burdensome financial restrictions on our business.

We have relied upon cash from financing activities, and, in the future, we hope to rely on revenues generated from operations to fund the cash requirements of our activities. However, there can be no assurance that we will be able to generate any significant cash from our operating activities in the future. Future financing may not be available on a timely basis, in sufficient amounts or on terms acceptable to us, if at all. Any debt financing or other financing of securities senior to the common stock will likely include financial and other covenants that will restrict our financing and/or operational flexibility. Any failure to comply with these covenants would have a material adverse effect on our business, prospects, financial condition and results of operations because we could lose our existing sources of funding, and our ability to secure new sources of funding could be impaired.

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

You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this Annual Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or in other parts of this Annual Report. See “Cautionary Note Regarding Forward-Looking Statements” for additional information. Unless otherwise indicated, all information in this Annual Report gives effect to a 1-for-50 reverse stock split of our common stock that became effective on November 5, 2024, and all references to shares of common stock outstanding and per share amounts give effect to the reverse stock split.

Recent Developments

Marizyme

On April 11, 2024, the Company entered into a Co-Development Agreement (the “Co-Development Agreement”) with Marizyme. Under the Co-Development Agreement (as amended), we agreed to pay Marizyme a Funding Payment of up to $1,750,000 and an Exclusivity Fee of $200,000. The Exclusivity Fee of $200,000 and a Funding Payment of $500,000 was paid to Marizyme on April 12, 2024. The Exclusivity Fee entitled us to an exclusivity period until May 31, 2024 for purposes of proposing and outlining a broader strategic relationship with Marizyme with regard to Marizyme’s DuraGraft business. The Funding Payment is designed to provide financial support for commercialization of Marizyme’s DuraGraft™ vascular conduit solution, which is indicated for adult patients undergoing coronary artery bypass grafting surgeries and is intended for the flushing and storage of the saphenous vein grafts used in coronary artery bypass grafting surgery. In return for the Funding Payment, we will receive quarterly a 33% payment in the nature of royalties on any Net Sales (as defined with a meaning tantamount to gross profit on net sales) of DuraGraft, capped at double the amount of the Funding Payment cash provided. No such payments-in-the-nature-of-royalties would accrue until after DuraGraft has been launched in the United States and a cumulative total of $500,000 of DuraGraft Net Sales have been made in the United States.

In addition, during the year ended December 31, 2025, the Company advanced a total of $4,166,900  to Marizyme, against which Marizyme had previously delivered demand promissory notes to the Company of like principal amounts (the “Marizyme Notes”). The Marizyme Notes bear interest the rate of eighteen percent (18%) per annum. Marizyme may pre-pay all or any part of the outstanding principal or interest of the Marizyme Notes at any time and from time to time, in whole or in part, without premium or penalty, until its maturity on August 21, 2026. Throughout the fourth quarter of 2025, the Board reassessed its interest in further pursuing a transaction with Marizyme given the Faraday Investment (as described further below) and Marizyme’s continued need for funding support, and, as such, management updated its expected credit loss (“CECL”) estimate under ASC 326 as of December 31, 2025.

Faraday Investment

In September 2025 we consummated a Subscription Agreement (the “Subscription Agreement”) with certain investors including Faraday Future Intelligent Electric Inc. (NASDAQ: FFAI)(the “Lead Investor” or “Faraday”) pursuant to which the investors purchased $40.7 million (the “Offering”) of our Common Stock and shares of a newly created Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”). Up to $6.8 million  of the net proceeds from the Offering were used to pay existing debt and fund our existing business operations, and the balance of the cash proceeds and contributed currency will be used for the establishment of our cryptocurrency treasury operations, using AlxCrypto. AIxCrypto (AIxC) is committed to building a world-leading ecosystem that integrates Artificial Intelligence (AI) and blockchain, bridging Web2 and Web3. This ecosystem unites a decentralized protocol, distributed network, AI DePIN and EAI RWA value regeneration, and a DeAI Agent product and technology platform designed to achieve optimal trading performance. Its core products include the BesTrade DeAI Agent and the AIxC ecosystem products.

Reverse Stock Split

On November 5, 2024, the Company effected a 1-for-50, reverse stock split of our outstanding shares of common stock (the “Reverse Stock Split”). The Reverse Stock Split reduced our shares of outstanding common stock, stock options, and warrants to purchase shares of our common stock. Fractional shares of common stock that would have otherwise resulted from the Reverse Stock Split were rounded down to the nearest whole share and cash in lieu of fractional shares was paid to stockholders. All share and per share data for all periods presented in this Annual Report have been adjusted retrospectively to reflect the Reverse Stock Split. The number of authorized shares of common stock and the par value per share remains unchanged.

Series B Preferred Stock Conversions

Subsequent to December 31, 2025, and through the date of this filing, 33,858 shares of the Company’s Series B Preferred Stock were converted into 15,074,611 shares of common stock at a conversion price of $2.246 per share.

The following table summarizes the conversion activities:

Month (2026)

Series B Shares Converted

Common Shares Issued

January

February

March

Total

As a result of these conversions, the Company’s outstanding common stock increased by approximately 192%, which will result in a dilution to existing common stockholders.

Critical Accounting Policies and Estimates

This discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these 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 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 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 consolidated financial statements, Management believes that none of these give rise to critical accounting policies or estimates in these consolidated financial statements.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024:

For The Years Ended December 31,

EXPENSES

General and administrative

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 derivative liabilities

Gain on change in fair value of convertible debt

Interest expense

Interest income

Loss on issuance of convertible debt

Net loss on digital assets

Gain on voluntary conversion of convertible debt into common stock

Loss on debt extinguishment

Loss on monthly redemptions of convertible debt into common stock

Gain on settlements of accounts payable

Other expense (income), net

Total other expense (income), net

LOSS BEFORE PROVISION FOR INCOME TAXES

PROVISION FOR INCOME TAXES

NET LOSS FROM CONTINUING OPERATIONS

DISCONTINUED OPERATIONS

Loss on disposal of discontinued operations, net of tax

LOSS FROM DISCONTINUED OPERATIONS

NET LOSS

Deemed dividend arising from preferred stock and warrant down-round provision

Net loss attributable to shareholders

Total net loss per common share, basic and diluted

Net income (loss) per common share, basic and diluted - discontinued operations

Total net loss per common share, basic and diluted

Weighted-average number of shares outstanding, basic and diluted (after stock split)

Expenses

General and Administrative Expenses

General and administrative expenses increased from $4.2 million for the year ended December 31, 2024 to $8.8 million for the year ended December 31, 2025. This is primarily due to an increase in investor relation fees of $1.4 million as we paid consultants to help raise capital, plus $3.0 million increase in consultant fees and $0.9 million in master service fees offset by a decrease in payroll expenses of $1.0 million and decrease in insurance expense of $0.2 million.

Research and Development Costs

Research and development expenses decreased from $1.2 million for the year ended December, 2024, to $0.2 million for the year ended December 31, 2025. This was primarily due to all research and development being slowed down in 2025 due to lack of funding, resulting in decreases in QN-302 program expenses of approximately $200,000 and a decrease in Marizyme research expense of $700,000.

Credit Loss Expense – Short-Term Note Receivable

Credit loss expense – short-term note receivable increased from $0.4 million for the year ended December, 2024, to $4.2  million for the year ended December 31, 2025. This is due to Marizyme’s debt increasing from $2.4 million for the year ended December 31, 2024 to $4.9 million for the year ended December 31, 2025, as well as the likelihood of our being able to collect being assessed at a significantly lower rate than prior year.

Other Expense (Income), Net

Gain on Change in Fair Value of Warrant Liabilities

During the year ended December 31, 2025 we experienced a $0.2 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 $0.1 million as of December 31, 2025 from $0.3 million as of December 31, 2024 primarily due to changes in our stock price and expiration of warrants during the prior period.

During the year ended December 31, 2024 we experienced a $0.4 million gain in other income because of the change in fair value of the warrant liabilities. The estimated fair value of warrant liabilities increased to $0.3 million as of December 31, 2024 from $0.1 million as of December 31, 2023 due to the issuance of new liability classified warrants with an initial fair value of $0.6 million, the reclassification at fair value of equity classified warrants to warrant liabilities of $0.3 million, offset by the reclassification at fair value to equity of liability classified warrants of $0.2 million, and the $0.4 million gain on the change in fair value of the warrant liabilities due to an associated decrease in the market price of our common stock and the expiration of liability classified warrants during the year.

Typically, a decline in our stock price would result in a decline in the fair value of our warrant liabilities, generating a gain, while an increase in our stock price would result in an increase in the fair value of our warrant liabilities, generating a loss. Because the fair value of the warrant liabilities will be determined each quarter on a “mark-to-market” basis, this item is likely to continue to result in variability in our future quarterly Consolidated Statements of Operations based on unpredictable changes in our public market common stock price and the number of liability classified warrants outstanding at the end of each quarter.

Gain on Change in Fair Value of Derivative Liabilities

During the year ended December 31, 2024, we experienced a gain of approximately $0.2 million on change in fair value of derivative liabilities due to the issuance and subsequent extinguishment of the 2024 Alpha Debenture and 2024 Chen Debenture during the year. There were no derivative liabilities at December 31, 2025.

Gain on Change in Fair Value of Convertible Debt

During the year ended December 31, 2025 we experienced an approximately $38,000 gain on change in fair value of convertible debt, compared to no change for the year ended December 31, 2024. We did not hold any convertible debt in 2024.

Interest Income

There was $0.7 million in interest income during the year ended December 31, 2025 compared to $0.1 interest income during the year ended December 31, 2024. The increase was due to interest accrued on the Marizyme Notes, which increased significantly in the year ended December 31, 2025.

Interest Expense

There was $1.0 million in interest expense during the year ended December 31, 2025 compared to interest expense of $0.9 million during the year ended December 31, 2024. The increase was due to the short term promissory notes carrying higher interest rates than the convertible debt carried in the year ended December 31, 2024.

Loss on Issuance of Convertible Debt

During the year ended December 31, 2024 we incurred a loss on issuance of convertible debt of approximately $358,000 due to the fair value of the 2024 Alpha Debenture and derivative liabilities exceeding the cash proceeds. During the year ended December 31, 2025 we incurred a loss on issuance of convertible debt of approximately $92,000 due to the fair value of the 2025 Convertible Note and derivative liabilities exceeding the cash proceeds.

Net Loss on Digital Assets

During the year ended December 31, 2025 we experienced an approximately $3.6 million loss on digital assets, compared to no change for the year ended December 31, 2024. We did not hold any digital assets in 2024.

Gain on Voluntary Conversion of Convertible Debt into Common Stock

During the year ended December 31, 2024, we recognized a gain of approximately $56,000 on the voluntary conversion of convertible debt into common stock, due to the issuance of 58,378 shares of common stock with a fair value of approximately $674,000 upon partial voluntary conversion of the 2022 Alpha Debenture at a weighted average share price of $13.00, resulting in a gain of approximately $85,000, offset by a loss of approximately $29,000 from the issuance of 7,842 shares of common stock with a fair value of approximately $61,000 upon Alpha’s partial voluntary conversion of the 2024 Alpha Debenture at a weighted average share price of $6.50. There was no debt conversions in the year ended December 31, 2025.

Loss on Debt Extinguishment

During the year ended December 31, 2024, we recognized a loss on debt extinguishment of approximately $57,000. In connection with the closing of the Company’s private placement transaction and issuance of Series A-2 Preferred Stock, we used approximately $531,000 of the proceeds to repay the outstanding principal and accrued interest on the 2024 Alpha Debenture, in full settlement of the obligation, resulting in a debt extinguishment loss of approximately $68,000. This loss was offset by a debt extinguishment gain of approximately $13,000 from the issuance of 1,154 shares of newly designated Series A-2 Preferred Stock, in full settlement of the obligation of $1,154,000 in outstanding principal and interest on the 2024 Chen Debenture. There was no debt extinguished in the year ended December 31, 2025.

Loss on Monthly Redemptions of Convertible Debt into Common Stock

During the year ended December 31, 2024, we issued 45,496 shares of common stock with a fair value of approximately $903,000, in lieu of cash for monthly redemptions of $660,000 principal and approximately $34,000 accrued interest redeemed, pursuant to the terms of the 2022 Alpha Debenture at a weighted average share price of $14.51. Upon redemption in shares, we recognized a loss on monthly redemptions of convertible debt into common stock of approximately $209,000. There was no redemptions of convertible debt in the year ended December 31, 2025.

Gain on Settlements of Accounts Payable

During the year ended December 31, 2024, we settled $395,000 of our outstanding accounts payable for a gain of approximately $348,000. There were no such settlements during the year ended December 31, 2025.

Other Income, Net

Other income, net was immaterial during the years ended December 31, 2025 and 2024.

Discontinued Operations

The Company recorded a loss of approximately $0.1 million on disposal of discontinued operations during the year ended December 31, 2024, which was generated due to the early settlement of an escrow account from the sale of Qualigen, Inc. There were no such discontinued operations in the year ended December 31, 2025.

Liquidity and Going Concern

Our financial position is weak. As of December 31, 2025, we had approximately $19.3 million in cash and accounts payable of $1.3 million. We are in arrears on accounts payable to important partners. We have incurred recurring losses from operations and have an accumulated deficit of $140.0 million at December 31, 2025. We expect to continue to incur losses subsequent to the consolidated balance sheet date of December 31, 2025. For the years ended December 31, 2025 and 2024, we used cash of $7.0 million and $6.3 million, respectively, in operations.

Our current liabilities at December 31, 2025 include approximately $1.3 million of accounts payable, $1.6 million of related party payables, approximately $123,000 of accrued expenses and other current liabilities, approximately $142,000 of short term convertible debt, and approximately $142,000 in warrant liabilities.

We expect to continue to have net losses and negative cash flow from operations, which will challenge our liquidity. While we are establishing cryptocurrency treasury operations, it is newly established and there are no guarantees it will generate revenue. These factors raise substantial doubt regarding our ability to continue as a going concern for the one-year period following the date that the financial statements in this Annual Report were issued.

During the year ended December 31, 2025 we raised approximately $45.7 million in new equity consisting of $3.3 million from nine investors as short-term borrowings, $0.2 million from Alpha Capital Anstalt upon the issuance of a short-term convertible promissory note maturing in January 2026, $0.1 million from an investor in exchange for a short-term promissory note with zero interest due six months after issuance, $4.3  million (net of issuance costs) upon closing of a private placement transaction resulting in the sale of 4,500 shares of newly designated Series A-3 Preferred Stock at a purchase price of $1,000 per share, and $37.7 million (net of issuance costs) upon closing of a subscription agreement (the “Subscription Agreement” or “Offering”) with Future Intelligent Electric Inc. (“Faraday”) resulting in the sale of 337,432 shares of the Company’s common stock and 39,943 shares of a newly created Series B Convertible Preferred Stock. Additionally, during the twelve months ended December 31, 2025, the Company repaid approximately $4.5 million of outstanding promissory notes. These equity and debt capital raises resulted in approximately $45.5 million in cash provided by financing activities during the year ended December 31, 2025, compared to $9.0 million in new equity and debt issued during the year ended December 31, 2024.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through third-party funding, commercialization, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

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 its assets and discharge its liabilities in other than the normal course of business and at amounts that may differ from those reflected in the accompanying financial statements.

Contractual Obligations and Commitments

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

License and Sponsored Research Agreements

We have obligations under various license agreements to make future payments to third parties that become due and payable on the achievement of certain development, regulatory and commercial milestones (such as the start of a clinical trial, filing for product approval with the FDA or other regulatory agencies, product approval by the FDA or other regulatory agencies, product launch or product sales) or on the sublicense of our rights to another party. We have not included these commitments on our balance sheet because the achievement and timing of these events is not determinable. Certain milestones are in advance of receipt of revenue from the sale of products and, therefore, we may require additional debt or equity capital to make such payments.

In January 2022, we entered into a License Agreement with UCL Business Limited 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. (UCL Business Limited is the commercialization company for University College London.) We are further developing the program’s lead compound under the name QN-302, and this work is currently still underway. The License Agreement requires (if and when applicable) tiered royalty payments in the low to mid-single digits, clinical/regulatory/sales milestone payments, and sharing of a percentage of any non-royalty sublicensing consideration paid to the Company. In November 2023, we became obligated to pay $100,000 to UCL Business Limited upon the first patient dosing of QN-302, which was paid in January 2024.

Marizyme

On April 11, 2024, we entered into a Co-Development Agreement with Marizyme, Inc. (“Marizyme”). Under the Co-Development Agreement (as amended on August 6, 2024), we agreed to pay Marizyme a Funding Payment of up to $1,750,000 and an Exclusivity Fee of $200,000. The Exclusivity Fee of $200,000 and a Funding Payment of $500,000 was paid to Marizyme on April 12, 2024. The Exclusivity Fee entitled us to an exclusivity period until May 31, 2024 for purposes of proposing and outlining a broader strategic relationship with Marizyme with regard to Marizyme’s DuraGraft business. The Funding Payment is designed to provide financial support for commercialization of Marizyme’s DuraGraft™ vascular conduit solution, which is indicated for adult patients undergoing coronary artery bypass grafting surgeries and is intended for the flushing and storage of the saphenous vein grafts used in coronary artery bypass grafting surgery. This work is still currently underway. In return for the Funding Payment we will receive quarterly a 33% payment in the nature of royalties on any Net Sales (as defined with a meaning tantamount to gross profit on net sales) of DuraGraft, capped at double the amount of the Funding Payment cash provided. No such payments-in-the-nature-of-royalties would accrue until after DuraGraft has been launched in the United States and a cumulative total of $500,000 of DuraGraft Net Sales have been made in the United States.

Other Service Agreements

We enter into contracts in the normal course of business, including with clinical sites, contract research organizations, and other professional service providers for the conduct of clinical trials, contract manufacturers for the production of our product candidates, contract research service providers for preclinical research studies, professional consultants for expert advice and vendors for the sourcing of clinical and laboratory supplies and materials. These contracts generally provide for termination on notice, and therefore are cancelable contracts.

Cash Flows

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

For the Years Ended

December 31,

Net cash (used in) provided by:

Operating activities

Investing activities

Financing activities

Net decrease in cash

Net Cash Used in Operating Activities

During the year ended December 31, 2025, operating activities used $7.0 million of cash, primarily resulting from a loss from continuing operations of $16.9 million. Cash flows from operating activities for the year ended December 31, 2025 were positively impacted by adjustments for stock based compensation of approximately $300, legal expenses that were deducted from the issuance of convertible debt of $20,000, $0.3 million worth of common stock issued to a consultant, a $4.2 million provision for credit losses on short term notes receivable, $1.0 million of amortization of premium on promissory notes, $2.7 million in losses on the change in fair market value of digital assets, approximately $40,000    in payments made using digital assets, a loss on issuance of convertible debt of $0.1 million, changes in prepaid expenses and other current assets of $0.5 million, and changes in accrued expenses and other liabilities of $1.  4 million. Cash flows from operating activities for the year ended December 31, 2025 were negatively impacted by adjustments for a $0.1 million change in the fair value of warrant liabilities, accrued interest on short term notes receivable of $0.6 million, change in accounts payable of $0.3 million and a loss on the change in fair value of convertible debt of approximately $37,000.

During the year ended December 31, 2024, operating activities used $6.3 million of cash, primarily resulting from a net loss of $6.3 million. Cash flows from operating activities for the year ended December 31, 2024 were positively impacted by adjustments for accretion of discount on convertible debt of $0.6 million, a loss on issuance of convertible debt of approximately $0.4 million, a loss on debt extinguishment of approximately $57,000, change in provision for non-cash credit losses on short-term notes receivable of $0.4 million, a loss on monthly redemptions of convertible debt into common stock of $0.2 million, and stock based compensation of $0.1 million. Cash flows from operating activities for the year ended December 31, 2024 were negatively impacted by adjustments for a gain on change in fair value of warrant liabilities of $0.4 million, a $0.3 million gain on settlement of accounts payable, a $0.4 million decrease in accounts payable, a $0.2 million increase in prepaid expenses and other assets, a $0.2 million gain on change in fair value of derivative liabilities, a $0.1 million decrease in accrued expenses and other current liabilities, accrued interest receivable on the Marizyme notes of $0.1 million, and a gain on voluntary conversion of convertible debt of approximately $56,000.

Net Cash Provided By Investing Activities

During the year ended December 31, 2025, net cash used by investing activities was approximately $15.8 million resulting from the issuance of $1.9 million in notes receivable to Marizyme, purchases of intangible asstes of approximately $93,000, and purchases of digital assets of $16.5 million, offset by $2.6 million in proceeds from the sale of digital assets.

During the year ended December 31, 2024, net cash used by investing activities was approximately $1.9 million resulting from the issuance of $2.3 million in notes receivable to Marizyme, offset by $0.4 million in proceeds from the disposal of discontinued operations, due to the release of escrow from the sale of Qualigen, Inc.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $41.0 million, which resulted from the issuance of short-term debt in the amount of $3.4 million, the issuance of convertible debt in the amount of $0.2 million, the issuance of preferred shares in the amount of $38.9 million, the issuance of common stock and warrants in the amount of $3.1 million, offset by repayment of convertible debt of $0.1 million and the repayment of promissory notes of $4.4 million.

Net cash provided by financing activities for the year ended December 31, 2024, was approximately $9.0 million, resulting from $4.6 million in proceeds from the sale of Series A-2 Preferred Stock, approximately $3.1 million in proceeds from the sale of common stock and prefunded warrants, $2.0 million in proceeds from the issuance of short term debt, $1.5 million from the issuance of convertible debt, $0.4 million in proceeds from warrant exercises, offset by $2.0 million in short term debt repayments, and $0.5 million in convertible debt repayments.