FF EAI Robotics Ecosystem Inc.

Previous wording

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 on Form 10-K gives effect to a 1-for-10 reverse stock split of our common stock that became effective on November 23, 2022, and all references to shares of common stock outstanding and per share amounts give effect to the reverse stock split.

Current wording

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 on Form 10-K 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.

Previous wording

We are an early-clinical-stage therapeutics company focused on developing treatments for adult and pediatric cancer. Our business now consists of one early-clinical-stage therapeutic program (QN-302) and one preclinical therapeutic program (Pan-RAS).

Current wording

We are an early-clinical-stage therapeutics company focused on developing treatments for adult and pediatric cancer. Our business now consists of one early-clinical-stage therapeutic program (QN-302), one preclinical therapeutic program (Pan-RAS), and a co-development agreement with Marizyme, Inc (“Marizyme”).

Previous wording

Our lead program, QN-302, is an investigational small molecule G-quadruplexes (G4)-selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells (such as pancreatic cancer). Such binding could, by stabilizing the G4s against DNA “unwinding,” help inhibit cancer cell proliferation. QN-302 is currently undergoing a Phase 1a clinical trial at START Midwest in Grand Rapids, Michigan, and HonorHealth in Scottsdale, Arizona.

Current wording

Our lead program, QN-302, is an investigational small molecule G-quadruplexes (G4)-selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells (such as pancreatic cancer). Such binding could, by stabilizing the G4s against DNA “unwinding,” help inhibit cancer cell proliferation.

Previous wording

On November 23, 2022, we effected a 1-for-10, 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 on Form 10-K 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.

Current wording

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 on Form 10-K 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.

Previous wording

We do not expect to be profitable before products from our therapeutics pipeline are commercialized. To experience losses while therapeutic products are still under development is, of course, typical for biotechnology companies.

Current wording

We do not expect to be profitable before products from our therapeutics pipeline are commercialized. To experience losses while therapeutic products are still under development is, of course, typical for biotechnology companies. Given our financial situation, the company slowed the development of the aforementioned therapeutic products beginning in the second quarter 2024. We have also implemented dramatic expense controls in an effort to stem the rate of losses. Management and the board are strategically reviewing plans on how to best advance our therapeutics pipeline, and will ramp up development when properly funded through either the capital markets or strategic partnerships.

Previous wording

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. On an ongoing basis, we evaluate our estimates and judgments, including those related to impairment of goodwill and other intangible assets, fair value of warrant liabilities, and stock-based compensation. We base our estimates on historical experience, known trends and events and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Current wording

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. On an ongoing basis, we evaluate our estimates and judgments, including those related to the determination of the allowance for credit losses, fair value of derivative financial instruments and warrant liabilities, and stock-based compensation. We base our estimates on historical experience, known trends and events and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Previous wording

In 2004, Qualigen, Inc. issued Series C preferred stock warrants to investors and brokers in connection with a private placement. These warrants were subsequently extended and survived the May 2020 Ritter reverse recapitalization transaction and are now exercisable for Qualigen Therapeutics common stock. These warrants contain a provision that if the Company issues shares (except in certain defined scenarios) at a price below the warrants’ exercise price, the exercise price will be re-set to such new price and the number of shares underlying the warrants will be increased in the same proportion as the exercise price decrease. For accounting purposes, such warrants give rise to warrant liabilities. Accounting principles gene rally accepted in the United States of America (“U.S. GAAP”) require us to recognize the fair value of these warrants as warrant liabilities on our Consolidated Balance Sheets and to reflect period-to-period changes in the fair value of the warrant liabilities on our Consolidated Statements of Operations. The estimated fair value of these warrant liabilities was approximately $0.1 million and $3.6 million at December 31, 2023 and 2022, respectively. There were 455,623 of these warrants outstanding at December 31, 2023 and 1,349,571 of these warrants outstanding at December 31, 2022.

Current wording

From time to time the Company has issued certain warrants with terms that give rise to warrant liabilities (see Note 8 – Warrant Liabilities). Accounting principles generally accepted in the United States of America (“U.S. GAAP”) require us to recognize the fair value of these warrants as warrant liabilities on our Consolidated Balance Sheets and to reflect period-to-period changes in the fair value of the warrant liabilities on our Consolidated Statements of Operations. The estimated fair value of these warrant liabilities was approximately $0.3 million, and $0.1 million at December 31, 2024 and 2023, respectively. There were liability classified warrants outstanding for 68,712 shares with a weighted average price of $2.00 (of which 52,693 were exercisable with a weighted average price of $0.23) at December 31, 2024 and liability classified warrants outstanding for 9,113 shares (of which all were exercisable) with a weighted average price of $36.50 at December 31, 2023.

Previous wording

Because the fair value of the above liability classified warrants willbe determined each quarter on a “mark-to-market” basis , significant variability in our future quarterly and annual Consolidated Statement of Operations and Consolidated Balance Sheets could occur based on changes in our public market common stock price. Pursuant to U.S. GAAP, a quarter-to-quarter increase in our stock price would result in an increase in the fair value of the warrant liabilities and a quarter-to-quarter decrease in our stock price would result in a decrease in the fair value of the warrant liabilities.

Current wording

Because the fair value of the above liability classified warrants will be determined each quarter on a “mark-to-market” basis, significant variability in our future quarterly and annual Consolidated Statement of Operations and Consolidated Balance Sheets could occur based on changes in our public market common stock price. Pursuant to U.S. GAAP, a quarter-to-quarter increase in our stock price would result in an increase in the fair value of the warrant liabilities and a quarter-to-quarter decrease in our stock price would result in a decrease in the fair value of warrant liabilities.

Previous wording

General and administrative expenses decreased from $10.3 million for the year ended December 31, 2022 to $6.1 million for the year ended December 31, 2023. This decrease was due to a $3.8 million decrease in stock-based compensation expense, a $0.4 million decrease in payroll related expenses, a $0.3 million decrease in insurance expenses, and a $0.2 million decrease in license fees, offset by an increase of $0.5 million in professional fees. (The foregoing comparison, and all other comparisons presented in this Item, exclude Qualigen, Inc. and NanoSynex, Ltd. results for both years.)

Current wording

General and administrative expenses decreased from $6.1 million for the year ended December 31, 2023 to $4.2 million for the year ended December 31, 2024. This decrease was primarily due to a $0.8 million decrease in stock-based compensation expense, a $0.9 million decrease in payroll related expenses due to a reduction in force, and a $0.3 million decrease in insurance expenses, offset by an increase of $0.1 million in professional fees.

Previous wording

Research and development expenses increased from $4.5 million for the year ended December 31, 2022 to approximately $5.2 million for year ended December 31, 2023. This increase in research and development expenses for the year ended December 31, 2023 compared to for the year ended December 31, 2022 was primarily due to a $2.1 million increase in pre-clinical and clinical research costs for QN-302, offset by a $1.0 million decrease in pre-clinical research costs for QN-247 a $0.3 million decrease in preclinical research costs for Pan-RAS, and a $0.1 million decrease in preclinical research costs for QN-165.

Current wording

Research and development expenses decreased from $5.2 million for the year ended December 31, 2023 to $1.2 million for year ended December 31, 2024. This decrease was primarily due to a $2.9 million decrease in preclinical, clinical research, and licensing costs for QN-302, a $1.0 million decrease in preclinical research, and licensing costs for Pan-RAS, a $0.6 million decrease in payroll related expenses due to a reduction in force, a $0.1 million decrease in stock-based compensation expense, and a $0.1 million decrease in professional fees, offset by a $0.7 increase in expenses related to the Marizyme Co-Development Agreement.

Previous wording

During the year ended December 31, 2023 we experienced a $2.0 million gain in other income because of the change in fair value of the warrant liabilities arising from our liability classified warrants described above. The estimated fair value of these warrant liabilities decreased to $0.1 million as of December 31, 2023 from $3.6 million as of December 31, 2022 due to a reduction in fair value of the warrant liabilities resulting from an associated decrease in the market price of our common stock, and the reclassification at fair value of a liability classified warrant to equity of $1.6 million. For the year ended December 31, 2022, the gain on change in fair value of warrant liabilities was $0.9 million due to an associated decrease in the market price of our common stock. 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.

Current wording

During the year ended December 31, 2024 we experienced a $0.4 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 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.

Previous wording

The remaining liability classified warrants expire on June 26, 2024. Because the fair value of the warrant liabilities will be determined each quarter on a “mark-to-market” basis, this item is likely to, until then, 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 warrants outstanding at the end of each quarter.

Current wording

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.

Previous wording

There was $1.5 million in net interest expense during the year ended December 31, 2023 compared to net interest income of $34,000 during the year ended December 31, 2022. The increase was due to the interest on the 2022 Debenture.

Current wording

There was $0.9 million in net interest expense during the year ended December 31, 2024 compared to net interest expense of $1.5 million during the year ended December 31, 2023. The decrease was due to lower outstanding balances on convertible debt during the current year compared to the prior year.

Previous wording

Loss on Voluntary Conversion of Convertible Debt

Current wording

(Gain) Loss on Voluntary Conversion of Convertible Debt into Common Stock

Previous wording

During the year ended December 31, 2023 we issued 841,726 shares of common stock upon Alpha’s partial voluntary conversion of the 2022 Debenture at $1.32 per share for a total of $1,111,078 principal converted. Upon conversion, we recognized a loss on voluntary conversion of convertible debt of approximately $1.1 million.

Current wording

During the year ended December 31, 2023 we issued 16,835 shares of common stock upon Alpha’s partial voluntary conversion of the 2022 Debenture at $66.00 per share for a total of $1,111,078 principal converted. Upon conversion, we recognized a loss on voluntary conversion of convertible debt of approximately $1.1 million.

Previous wording

During the year ended December 31, 2023, we issued 309,665 shares of common stock in lieu of cash for the October and December 2023 monthly redemptions, for a total of $220,000 principal redeemed, pursuant to the terms of the 2022 Debenture at a weighted average share price of $0.71. Upon redemption in shares, we recognized a loss on partial debt extinguishment of $34,315. The modification of the 2022 Debenture during the year ended December 31, 2023 met the criteria to be accounted for as a debt extinguishment in the amount of $591,338. Accordingly, we recognized an additional loss on partial debt extinguishment of that amount.

Current wording

During the year ended December 31, 2023, we issued 6,193 shares of common stock in lieu of cash for the October and December 2023 monthly redemptions, for a total of $220,000 principal redeemed, pursuant to the terms of the 2022 Debenture at a weighted average share price of $35.52. Upon redemption in shares, we recognized a loss on partial debt extinguishment of $34,315. The modification of the 2022 Debenture during the year ended December 31, 2023 met the criteria to be accounted for as a debt extinguishment in the amount of $591,338. Accordingly, we recognized an additional loss on partial debt extinguishment of that amount.

Previous wording

During the year ended December 31, 2023, we incurred a $21,747 loss on fixed asset disposal due to disposal of research and development equipment previously used for QN-165.

Current wording

During the year ended December 31, 2024 there was no loss on fixed asset disposal. During the year ended December 31, 2023, we incurred a $21,747 loss on fixed asset disposal due to disposal of research and development equipment previously used for QN-165.

Previous wording

Our financial position is weak. As of December 31, 2023, we had approximately $0.4 million in cash and net accounts payable of over $2.2 million. We are in arrears on accounts payable to important partners. We have incurred recurring losses from operations and have an accumulated deficit of $116.8 million at December 31, 2023. We expect to continue to incur losses subsequent to the consolidated balance sheet date of December 31, 2023. For the years ended December 31, 2023 and 2022, we used cash of $10.3 million and $13.2 million, respectively, in operations. We sold our Qualigen, Inc. FastPack® diagnostics products business in 2023.

Current wording

Our financial position is weak. As of December 31, 2024, we had approximately $1.2 million in cash and net accounts payable of over $1.6 million. We are in arrears on accounts payable to important partners. We have incurred recurring losses from operations and have an accumulated deficit of $123.1 million at December 31, 2024. We expect to continue to incur losses subsequent to the consolidated balance sheet date of December 31, 2024. For the years ended December 31, 2024 and 2023, we used cash of $6.5 million and $10.3 million, respectively, in operations. We sold our Qualigen, Inc. FastPack® diagnostics products business in 2023.

Previous wording

Our current liabilities at December 31, 2023 include $2.2 million of accounts payable, $0.6 million of accrued expenses and other current liabilities, $0.1 million in warrant liabilities, and $1.3 million of convertible debt to a related party.

Current wording

Our current liabilities at December 31, 2024 include approximately $1.6 million of accounts payable, $170,000 of accrued expenses and other current liabilities, and $269,000 in warrant liabilities.

Previous wording

We currently expect our cash balances to fund operations only into the second quarter of 2024. We expect to continue to have net losses and negative cash flow from operations, which will challenge our liquidity. 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.

Current wording

We currently expect our cash balances to fund operations only into the third quarter of 2025. We expect to continue to have net losses and negative cash flow from operations, which will challenge our liquidity. 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.

Previous wording

Historically, our principal sources of cash have, in addition to revenue from FastPack product sales and license revenues (see Note 5 - Discontinued Operations), included proceeds from the issuance of common and preferred equity and proceeds from the issuance of debt. In December 2022 and February 2024 we raised approximately $3.0 million and $0.5 million, respectively from the sale of convertible debentures to Alpha. There can be no assurance that further financing can be obtained on favorable terms, or at all. If we are unable to obtain funding, we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, and we could be unable to continue operations.

Current wording

Historically, our principal sources of cash have, in addition to previous revenue from product sales and license revenues from the FastPack product of line of Qualigen, Inc. (which we divested in July 2023), included proceeds from the issuance of common and preferred equity and proceeds from warrant exercises and the issuance of debt. There can be no assurance that further financing can be obtained on favorable terms, or at all. If we are unable to obtain funding, we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, and we could be unable to continue operations.

Previous wording

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. In addition, any future financing (depending on the terms and conditions) may be subject to the approval of Alpha under the terms of the Debentures and/or trigger certain adjustments to the Debentures or warrants held by Alpha.

Current wording

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.

Previous wording

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements do not include any adjustments that would be necessary should the Company 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.

Current wording

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.

Previous wording

We have obligations under various license and sponsored research 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.

Current wording

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.

Previous wording

We have multiple license and sponsored research agreements with ULRF. Under these agreements, we have taken over development, regulatory approval and commercialization of various drug compounds from ULRF and are responsible for maintenance of the related intellectual property portfolio. We agreed to reimburse ULRF for sponsored research expenses of up to $2.7 million and prior patent costs of up to $112,000 for Pan-RAS. As of December 31, 2023, there were no remaining un-expensed amounts under this sponsored research agreement for Pan-RAS. Under the terms of these agreements, we are required to make patent maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property. The maximum aggregate milestone payments we may be obligated to make per product are $5 million. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits. The royalty is subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits. We have the right to sublicense our rights under these agreements, but we will be required to pay ULRF a percentage of any sublicense income.

Current wording

We have multiple license and sponsored research agreements with University of Louisville Research Foundation ULRF. Under these agreements, we have taken over development, regulatory approval and commercialization of various drug compounds from ULRF and are responsible for maintenance of the related intellectual property portfolio. Under the terms of these agreements, we are required to make patent maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property. The maximum aggregate milestone payments we may be obligated to make per product are $5 million. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits. The royalty is subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits. We have the right to sublicense our rights under these agreements, but we will be required to pay ULRF a percentage of any sublicense income.

Previous wording

On January 13, 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. 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 is included in accounts payable in our consolidated balance sheet.

Current wording

On January 13, 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. 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.

Previous wording

During the year ended December 31, 2023, operating activities used $10.3 million of cash, primarily resulting from a loss from continuing operations of $12.5 million. Cash flows from operating activities for the year ended December 31, 2023 were positively impacted by adjustments for a $1.1 million non cash loss on voluntary conversion of convertible debt, a $0.6 million non cash loss on convertible debt extinguishment, accretion of discount of $1.5 million on convertible debt, a $1.6 million increase in accounts payable, and $1.1 million in non cash stock-based compensation expense. Cash flows from operating activities for the year ended December 31, 2023 were negatively impacted by adjustments for a $2.0 million decrease in fair value of warrant liabilities, a $0.3 million increase in prepaid expenses and other assets, a $0.2 million decrease in accrued expenses and other current liabilities, and cash used in discontinued operations of $1.2 million.

Current wording

During the year ended December 31, 2023, operating activities used $10.3 million of cash, primarily resulting from a loss from continuing operations of $12.5 million. Cash flows from operating activities for the year ended December 31, 2023 were positively impacted by adjustments for a $1.1 million non-cash loss on voluntary conversion of convertible debt, a $0.6 million non-cash loss on convertible debt extinguishment, accretion of discount of $1.5 million on convertible debt, a $1.6 million increase in accounts payable, and $1.1 million in non-cash stock-based compensation expense. Cash flows from operating activities for the year ended December 31, 2023 were negatively impacted by adjustments for a $2.0 million decrease in fair value of warrant liabilities, a $0.3 million increase in prepaid expenses and other assets, a $0.2 million decrease in accrued expenses and other current liabilities, and cash used in discontinued operations of $1.2 million. There was no charge for provision for credit losses on short-term notes receivable during the year ended December 31, 2023.

Previous wording

Net cash provided by financing activities for the year ended December 31, 2023, was approximately $0.6 million, due to monthly redemption payments which we made in the form of stock (rather than in the form of cash) on the 2022 Debenture.

Current wording

Net cash provided by financing activities for the year ended December 31, 2023, was approximately $0.6 million, due to monthly redemption payments on the 2022 Alpha Debenture.