NOTE 2 — 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 — approximately $700,000 purportedly claimed by 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 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.