OTC: IONI

In
2025, I-ON continued to develop its digital asset management capabilities, further allowing I-ON to enter multiple revenue producing
third-party agreements. As we now look to grow our revenue generating client base, primarily with the deployment of our legacy IONau
gold-backed digital asset, we will also explore opportunities in new markets and with a greater range of asset classes.

Products
and Services

I-ON
is, at its core, a financial technology company building a secure, transparent, and compliant digital asset ecosystem for institutions
and investors – using its proprietary blockchain, smart contracts, and AI to verify ownership, confirm asset reserves (Proof-of-Reserves/POR),
and ensure responsible handling of digital assets from the point of initial capture through settlement and reporting cycles. I-ON’s
blockchain platform deploys its asset-backed digital certificates, by design, to carry recognized value, and continuously improve liquidity,
while its zero-trust (“never trust, always verify”) security architecture supports the secure digitization of ownership records,
mineral asset and assignment rights for proven gold and other precious metals reserves – converting them into compliant digital
tokens that can be readily transferred or traded in the marketplace.

I-ON
generates revenue through licensing fees, service charges, and transaction fees related to asset digitization, escrow and custody services,
and a growing intellectual property portfolio, with offerings designed for adoption by established institutions in banking, financial
services, and technology. Through strategic partnerships and a continued focus on data privacy and identity security, I-ON is working
to modernize how sensitive digital-based financial data is managed, verified, and protected – further positioning itself as a recognized
leader in secure digital identity solutions for banks, financial institutions, and fintech providers in both U.S. and international markets.

Competition

I-ON
competes with a range of U.S. and global digital solutions providers, many of which have greater brand recognition and financial resources.
As digital products and services become more prevalent across industries, competition is expected to grow. I-ON will need to continuously
differentiate itself by improving its core platforms and staying ahead of industry developments.

4

Research
and Development

Given
the nature of our technology platform – which includes hybrid (public-private) blockchain and digital asset workflow systems –
continuous research and development is a core priority. This is especially important as regulations around digital asset movement, custody,
settlement, and reporting continue to evolve. I-ON will continue to build partnerships with service providers that meet high standards
of integrity, expertise, and capability in developing our products and services. I-ON’s most recent developmental upgrades included
capital investments in cross-chain interoperability designed to ensure data security and integrity across a range of institutional and
agency blockchain-based delivery points.

Sales
and Marketing

Our
sales and marketing strategy focuses on two primary audiences. The first is claim holders with validated rights to proven gold reserves
– gold that has been discovered and is economically viable to mine – who want to create digital representations of their
ownership for buying, selling, trading, or using as collateral.

The
second audience is institutional buyers and high-net-worth investors in banking and financial services who are interested in acquiring
gold-backed digital assets for use in their investment portfolios. Further enhancing the growth potential within the banking and financial
services sectors, is I-ON ability to license I-ON’s Digital Asset Platform for use in developing new digital asset classes, subject
to meeting I-ON Digital’s compliance and servicing protocols.

As
we now move beyond I-ON’s early-stage development, our marketing strategy has transitioned, beyond building awareness, to one of
sharing actual client-user case and real time experiences. Beyond this, we will continue to employ target audience outreach and educational
initiatives via digital channels and social media. We will place particular emphasis on reaching institutional clients with messaging
centered on transparency, trust, compliance and service quality.

Market
and Industry Analysis

In
2025, the digital asset industry continued to grow, driven by greater institutional acceptance and advances in technology. I-ON further
positioned itself at the forefront of this expansion through continuous development of enhanced security, investment in strengthening
and improving the performance of our digital asset architecture, and in focused product development, particularly in gold-backed digital
securities.

The
market for tokenizing real-world assets (RWA) is growing rapidly. Gold digitization is a particularly promising segment: by putting gold
on a blockchain, it becomes easier to originate and settle transactions in real time, invest in and hold fractional amounts, and verify
authenticity. These features are attractive to both institutional and retail investors, especially during periods of economic uncertainty
and inflation.

I-ON
has positioned itself as a leader in this space through its blockchain infrastructure, compliance framework (including identity
verification and anti-money laundering protocols), and its direct gold-backed token model. Each token on our platform is linked to
verified in-situ Gold Reserves with full transparency around custody and audits. Our compliance-first approach and enterprise-grade
security increasingly make I-ON a trusted choice for clients seeking to operate in digital asset markets globally.

5

Intellectual
Property

We
actively protect and license our intellectual property related to digital asset infrastructure, including technologies for gold and precious
metals digitization. Our strategy focuses on building a secure, fast, and institutional-grade ecosystem for digital securitization and
banking. The Company plans to generate revenue from transaction fees and continues to grow its IP portfolio to support new financial
models.

Our
commercial success may increasingly depend in part on obtaining and maintaining patent protection, defending those patents against third-party
challenges, and enforcing them against competitors and infringers. Our intellectual property is protected to the extent it is covered
by valid patents or maintained as trade secrets — though there is no guarantee that pending applications will result in issued
patents or that existing patents will fully protect us from competition.

We
also rely on trade secrets, trademarks, service marks, trade names, copyrights, and licenses from third parties to protect our intellectual
property.

Technology
and Innovation

In
2025, I-ON expanded its foundational Digital Asset Platform to offer new services for banks and financial intermediaries, including improved
asset management, custody, and digital securities reporting. This platform leverages our next generation blockchain technology to improve
transaction security and processing speed.

Our
technology also supports environmental sustainability by enabling gold reserves to be monetized without physical extraction. Through
strategic partnerships, we continue to refine our platform to meet institutional and regulatory standards.

As
the real-world asset tokenization market matures, success will depend on trust, transparency, and regulatory alignment. I-ON aims to
be a first mover and long-term leader in gold digitization by combining blockchain innovation, regulatory compliance, and verified real-world
asset backing in a single, cohesive platform.

Key
differentiators in I-ON’s market position include:

Blockchain
Infrastructure Built for Institutional Trust – I-ON’s platform uses distributed ledger technology with enterprise-grade
infrastructure to create secure, permanent records of asset ownership and movement. This gives institutions and individual investors
alike the confidence they need, particularly in gold markets where authenticity and custody are critical.

Compliance-Embedded
Identity Verification – I-ON has built Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols directly into its
platform. This allows both institutions and individual investors to be onboarded, with related transaction history reported on in a compliant,
verifiable way — addressing one of the biggest risks in the real-world asset instruments sector.

Gold-Backed
Tokens Tied to Proven Reserves – Unlike synthetic tokens or loosely backed financial products, each I-ON token is cryptographically
linked to a specific quantity of physical Gold Reserves, with full transparency around custody, reporting and auditing. Investors can
be confident the digital asset reflects genuine, real-time tangible value.

Flexible
Token Utility – I-ON’s gold-backed tokens are designed to be more than a store of value. By integrating with digital
banking platforms, these tokens can be used in collateralized lending, payments, and foreign and domestic settlements — turning
traditionally static gold holdings into an active financial tool.

Strategic
Partnerships and Ecosystem – Through partnerships with technology providers, custodians, and blockchain infrastructure companies
– including Instruxi and others – I-ON is building a scalable, interoperable, and compliance-focused ecosystem that bridges
traditional commodity markets with modern digital finance.

To
support and ensure confidence in the broader operational structure and execution capacity of I-ON, the company will continue to expand
full-time staff, utilize independent contractors, and technical specialists who are committed provide hands-on support of corporate operations,
blockchain infrastructure, and related IT systems.

6

Government
Regulation

I-ON
operates in a heavily regulated environment and must comply with a range of federal, state, and international regulations covering digital
assets, data security, and privacy. We believe we are currently in compliance with applicable regulations and reporting requirements
and have programs in place to maintain compliance going forward, including audits and monitoring systems designed to identify and address
potential issues proactively.

The
regulatory environment for digital assets and blockchain technology is changing rapidly, and new rules could materially affect our business.
We are closely monitoring legislative and regulatory developments, particularly those related to the security, transferability, and monetization
of digital assets.

To
date, no regulatory actions or notifications have been filed against I-ON. We remain committed to maintaining high compliance standards
and will continue to invest in our compliance capabilities to protect our operations and our shareholders.

Employees

As
of December 31, 2025, I-ON had five total employees, four full-time and one part-time. I-ON’s ability to efficiently mange human
capital expense is materially enhanced by its long-term strategic partnership with Instruxi Limited. Instruxi manages all phases of I-ON’s
Digital Asset Ecosystem, inclusive of I-ON’s Blockchain platform, Smart Contract issuance and Tokenization. ION regularly engages
dedicated professional Project Managers to lead critical business verticals in the areas CRM, Investor Relations, and Mineral Asset Acquisition
& Management.

Our
History and Corporate Information

I-ON
Digital Corp. (the “Registrant” or “Company”), was incorporated under the laws of the State of Delaware in 2013
as ALPINE 3 Inc. Subsequently, the Company’s name was changed to “Evans Brewing Company, Inc.” in 2014, to “I-ON
Communications Corp.” in 2018 and to “I-ON Digital Corp.” in 2019.

Recent
History

On
October 30, 2023, the Company entered into a Contribution and Exchange Agreement (the “Orebits Agreement”) with Orebits Acquisition
Group LLC “(OAG”), a Wyoming limited liability company, which is a special purpose vehicle controlled by Carlos Montoya,
our Chief Executive Officer. In June 2023, OAG had acquired a controlling interest in Orebits Corp., a Delaware corporation whose prior
business operations included deploying proprietary technology to digitize, market and manage gold-backed digital securities. Pursuant
to the terms of the Orebits Agreement, the Company exchanged 910,000 Series C Convertible Preferred Shares of I-ON Digital Corp. in exchange
for 910,000 shares of outstanding common stock of Orebits Corp., representing the 100% controlling interest in Orebits Corp. With the
transaction, the Company assumed ownership of 9,700 Orebits AU certificates which Orebits Corp. referred to as “Orebits.AU Gold
Backed Digital Assets”. The Company further assumed control of trademarks, patent and patent-pending rights previously owned or
controlled by Orebits Corp. In assuming control of the 9,700 Orebits AU certificates when combined with 180 Orebits AU certificates previously
residing on the books of the Company, the total number of all Orebits.AU Gold Backed Digital Assets held by the Company stood at 9,880.
Residing on the Company’s proprietary Hybrid Blockchain Platform, the asset is generally referred to by the Company as an ION.au
Gold Backed Digital Asset.

7

In
2025 I-ON executed multiple Business Services Agreements involving commercial deployment and distribution of ION.au. The subject commercial
agreements involve the use of ION.au as a vault-based asset, licensed in support of gold-backed stablecoins further staked by third-party
issuers, for collateral and pricing support, to I-ON’s Gold-backed Digital Asset. In the support of these contracts, I-ON utilizes
a secure Digital Wallet and Custodial Services platform operated independently by UK-based Fireblocks. Of the principal ION.au backed
token issuers, RAAC.io (pmUSD) and GGBR Goldfish (Goldfish), each compensates I-ON utilizing the London Market (LBMA) Gold Price on either
of a yield-based and/or effective purchase price basis. Under a separate agreement with Toronto based Marshall Zehr, I-ON has authorized
the use of ION.au for collateral hypothecation and/or Surety-based support for international lending transactions.

Other
Information

Our
principal executive offices are located at 1244 N. Stone Street, Unit #3, Chicago, IL 60610 and our telephone number is (866) 440-2278.
We can be contacted by email at info@iondigital.com. Our corporate website address is www.iondigitalcorp.com, to which
we regularly post copies of our press releases as well as links to reports that we have filed with the Securities and Exchange Commission
(“SEC”), which are available free of charge as soon as reasonably practicable after being filed electronically or furnished
to the SEC. Information contained on or accessible through our website is not a part of this Annual Report on Form 10-K or our other
filings with the SEC.

The
public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, Room 1580, NE Washington,
D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that
file electronically with the SEC at http://www.sec.gov.

Item
1.A Risk Factors.

Our
business, financial condition, operating results and prospects are subject to the following risks. Additional risks and uncertainties
not presently foreseeable to us may also impair our business operations. If any of the following risks actually occurs, our business,
financial condition or operating results could be materially adversely affected. In such case, the trading price of our common stock
could decline, and our stockholders may lose all or part of their investment in the shares of our common stock.

Risks
Specific to Our Business

We
have concluded that substantial doubt exists about our ability to continue as a going concern, and if we cannot raise additional capital
or generate sufficient cash flows, we may be forced to significantly curtail or cease operations.

There
is risk that we may be unable to realize our assets and discharge our liabilities in the normal course of business. We have incurred
recurring losses and used significant cash in operations, and we expect to continue to incur losses as we develop and commercialize our
platform. Our plans to raise additional capital, secure related-party funding, and execute additional commercial term sheets may not
be successful or may be available only on terms that are highly dilutive or otherwise unfavorable. If we cannot obtain sufficient financing
or generate adequate cash flows, we may have to significantly curtail, suspend, or cease operations. See “Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and the going concern footnote
to our consolidated financial statements for further details.

8

We
have identified material weaknesses in our internal control over financial reporting; if we fail to remediate them timely and effectively,
we could suffer additional errors in our financial statements, delayed SEC reporting, higher audit costs, and loss of investor confidence.

We
have identified material weaknesses in our internal control over financial reporting related to an inadequate control environment, insufficient
segregation of duties, limited IT controls, and limited accounting resources with U.S. GAAP and SEC reporting expertise. Until these
weaknesses are remediated, there is an increased risk that errors in our financial statements may occur and not be prevented or detected
on a timely basis. Remediation will require time, attention, and resources, including recruiting qualified personnel and enhancing policies
and procedures. If we fail to remediate these weaknesses timely and effectively, we could experience errors in our financial reporting,
delays in our SEC filings, increased audit and compliance costs, and loss of investor confidence. See Item 9A. “Controls and Procedures”
for a discussion of identified material weaknesses and our remediation plans.

If
we fail to successfully execute on our business plan or if digital assets and blockchain do not become widely used on a mass scale, our
results of operations could be adversely affected.

We
currently design, develop, and acquire technologies to deploy fully compliant, institutional-level ecosystems that fuel financial asset
digitization, safe and secure value transfer, and data and identity sovereignty for financial and data-driven transactions. Our ability
to succeed depends on the success of our continued development and expansion of our product and service offerings. There are various
risks related to these efforts, including the risk that these efforts may not provide the expected benefits in our anticipated time frame,
if at all, and may prove costlier than expected; and the risk of adverse effects to our business, results of operations and liquidity
if past and future undertakings, and the associated changes to our business, do not prove to be cost effective or do not result in benefits
at the levels that we anticipate. There is no assurance that a digital asset ecosystem will develop as we anticipate or develop on a
mass scale at all, or that our business model will achieve the expected results. To be successful over time, we may need to change our
business model. Any such efforts may not be successful.

Due
to unfamiliarity and some negative publicity associated with digital asset and blockchain technology, the general public may lose confidence
in digital asset or blockchain technology.

Products
and services that are based on digital assets are relatively new. Many players in the industry are unlicensed, unregulated, operate without
supervision by any governmental authorities, or do not provide the public with significant information regarding their ownership structure,
management team, corporate practices, cybersecurity, and regulatory compliance. As a result, the general public may lose confidence in
digital asset and blockchain technology, including associated data center operations like ours.

Since
the inception of the crypto economy, numerous digital asset and digital asset businesses and platforms have been sued, investigated,
or shut down due to fraud, illegal activities, the sale or issuance of unregistered securities, manipulative practices, business failure,
and security breaches.

In
addition, there have been reports that a significant amount of digital asset trading volume is fabricated and false in nature, with a
specific focus on unregulated platforms, products and services located outside the United States. Such reports may indicate that the
market for products and services utilizing digital assets and other digital assets is significantly smaller than otherwise understood.

Negative
perception, a lack of stability and standardized regulation in the crypto economy, and the closure or temporary shutdown of platforms
utilizing digital assets due to fraud, business failure, hackers or malware, or government mandated regulation may reduce confidence
in the crypto economy and result in greater volatility of the prices of assets, including significant depreciation in value. Any of these
events could have a material and adverse impact on our business, financial condition and results of operations.

9

Market
acceptance of digital assets and blockchain technology is critical to our success and revenue generation.

Our
products and services involve innovative technologies that may not gain widespread adoption among our target user base. Negative public
perception, a lack of understanding of blockchain technologies, or a decline in the use of digital assets due to regulatory, technological,
or competitive factors could significantly limit our ability to attract or retain customers. Furthermore, our growth depends not only
on the acceptance of our current technology but also on our ability to anticipate and develop new technologies that meet evolving market
demands. Failure to achieve broad market acceptance can limit our revenue streams and adversely impact our financial condition and operational
results.

Our
gold-backed digital certificates depend on third-party geological assessments, title records, and regulatory permissions that we do not
control; if those inputs prove inaccurate or are later restricted, certificate values could be impaired and our revenue model could be
materially adversely affected.

The
value and enforceability of our gold-backed digital certificates depend on third-party geological assessments, title and lien searches,
and regulatory permissions relating to underlying mineral rights and reserves that we do not control and may be difficult to verify.
Reserve estimates can change due to updated studies, commodity-price movements, or regulatory or environmental constraints. If reserves
are overstated, encumbered, or become uneconomic to develop, or if underlying rights are disputed, certificates could decline materially
in value, we could face customer or counterparty claims, and we could be required to record impairment charges. We rely on third-party
reports and do not use “proven” in a technical sense under mining disclosure standards applicable to operating mining companies;
we are not a mining issuer and do not control underlying extraction. The concentration of intangible assets recognized from our Orebits-related
AU certificates further increases the potential impact of any adverse change in these assumptions. See the intangible-assets note to
our consolidated financial statements.

Demand
for and the value of our gold-backed certificates are sensitive to the price of gold and to market dislocations that could adversely
affect our revenues and results of operations.

Demand
for and the value of our gold-backed certificates are sensitive to changes in the market price and liquidity of gold. Rapid declines
in gold prices or dislocations between physical markets and digital-asset venues could reduce onboarding and/or require us to adjust
pricing or collateralization terms, any of which could adversely affect our revenues and results of operations. Basis risk between physical
gold markets and any venues on which our certificates may trade could further exacerbate volatility in certificate values. Sudden market
dislocations could also trigger impairment charges related to our AU certificate holdings.

Concerns
about the environmental impacts of blockchain technology could adversely impact usage and perceptions of digital assets or our services
and offerings.

Because
we are unable to influence or predict future regulatory actions taken by federal, state, local or foreign governments, we may have little
opportunity or ability to respond to rapidly evolving regulatory positions which may have a materially adverse effect on our industry
and, therefore, our business and results of operations. If further extreme regulatory action is taken by various government entities,
our business may be negatively affected.

Regulatory
environments across jurisdictions are rapidly evolving, and we are subject to laws and regulations affecting the blockchain and digital
assets industry, which are often complex and contradictory. The lack of harmonization in regulations can create challenges, including
limitations on our operations and increased compliance costs. Future legislative or regulatory actions could severely impact our business
model, requiring extensive changes to our operations and strategies. This uncertainty in the regulatory landscape poses a significant
risk to our ongoing and future business initiatives.

10

Our
reliance on third-party service providers and technology vendors subjects us to risks outside our direct control.

We
depend on third-party service providers for critical components of our operations, including cloud infrastructure, blockchain indexers
and node operators, key-management providers, data-room and storage providers, KYC/AML vendors, payment processing, and custody or escrow
agents. Any disruption, degradation, or breach affecting these providers could materially impair our ability to deliver services to our
customers. Unilateral pricing changes, service deprecations, or compliance-program failures by these vendors could cause outages or compliance
violations for us. We cannot guarantee that our third-party providers will maintain adequate security protocols, remain financially viable,
or continue to offer their services on commercially reasonable terms. Many of our vendor agreements contain termination rights that could
be exercised with limited notice, and our audit rights over vendor operations may be limited. A failure by any key vendor could result
in service interruptions, financial losses, regulatory scrutiny, and reputational harm that could have a material adverse effect on our
business, financial condition, and results of operations. Industry experience demonstrates that vendor compromises can result in indirect
losses for companies in our sector. Substituting vendors may require material re-engineering and regulatory approvals, which cannot be
completed rapidly.

Our
ability to maintain banking relationships and broker-dealer partnerships is critical to our business, and termination or de-risking by
key partners could materially disrupt our operations.

Our
business model contemplates providing a digital front-end for banks and broker-dealers, and we rely on banking relationships for fiat
on- and off-ramps. Partner de-risking, changes in risk appetite, or supervisory guidance could interrupt these relationships, delay integrations,
or impose new control expectations that increase costs. Termination by a single key banking or broker-dealer partner could have disproportionate
effects on our operations and ability to serve customers. Replacing such partners can be time-consuming and may not be available on comparable
terms. Regulatory actions discouraging banks from doing business with digital-asset companies could further limit our access to critical
financial services.

We
face intense and growing competition from well-funded companies and established financial institutions entering the digital asset space.

The
digital asset and blockchain technology industry is intensely competitive and rapidly evolving. We compete with a range of companies,
from early-stage startups to large, well-capitalized technology companies and established financial institutions that have significantly
greater financial, technical, marketing, and other resources than we do. Several major financial institutions, including banks, broker-dealers,
and asset managers, have announced initiatives to offer digital asset trading, custody, and tokenization services. Additionally, previously
unregulated digital asset platforms are increasingly seeking regulatory approvals to operate as licensed broker-dealers and exchanges.
These competitors may be able to devote greater resources to research and development, marketing, and customer acquisition, and may be
able to offer products and services at lower prices or with more attractive features. If we are unable to compete effectively, our market
share, revenue, and growth prospects could be materially and adversely affected.

We
depend on key personnel, and the loss of key executives or inability to attract qualified talent could adversely affect our business.

Our
success depends in significant part upon the continued service of our senior management team and key technical personnel, who have specialized
knowledge of our products, technologies, and industry. The loss of one or more of these individuals, or the inability to attract and
retain additional qualified personnel, could delay or prevent the successful development and commercialization of our products and services.
Competition for skilled employees in the blockchain and digital asset industry is intense, and we may not be able to attract or retain
sufficient qualified personnel on acceptable terms. We do not maintain key-person life insurance policies on any of our executive officers.
Any loss of key personnel could have a material adverse effect on our business, financial condition, and results of operations.

11

Cybersecurity
breaches and data privacy violations could significantly disrupt our operations and expose us to financial liability and reputational
harm.

Cybersecurity
and data privacy are critical aspects of our operations, given our reliance on digital technologies to provide services and interact
with clients. We face significant risks related to security breaches, data loss, and other cyber incidents that could compromise the
integrity and confidentiality of our proprietary and customer data. Such incidents could expose us to legal penalties, financial losses,
and reputational damage. Despite our efforts to enhance our cybersecurity measures and comply with applicable data protection laws, the
inherent risks associated with cybersecurity breaches continue to pose a significant threat to our operations. As we expand our digital
offerings, the potential vectors for attacks increase. A breach could result in substantial financial and reputational damage, including
legal liabilities and erosion of customer trust. Our incident-response and disaster-recovery capabilities have limitations, including
the possibility that data restoration points may not capture in-flight transactions or recent changes, creating a risk of partial data
loss even after recovery. Third-party security audits and penetration tests reduce but do not eliminate residual risk, and adversaries
may exploit zero-day vulnerabilities in widely used libraries or tools beyond our control. Our continued investment in advanced security
measures and training is critical to mitigate these risks.

Additionally,
the management and security of private cryptographic keys is essential to our operations and the safeguarding of any digital assets under
our control or custody. If private keys are lost, destroyed, or compromised by third parties, we or our customers may be unable to access
the associated digital assets, and such assets may be permanently unrecoverable. Unlike traditional financial assets, transactions on
blockchain networks are generally irreversible, meaning that digital assets transferred as a result of a security breach cannot be recovered
through conventional means. We do not currently maintain insurance coverage that would fully compensate us or our customers in the event
of a loss of digital assets resulting from a cybersecurity incident, theft, or operational error. The absence of comprehensive insurance
protection could expose us to significant financial losses in the event of a breach or other adverse event. Digitization is currently
limited to unextracted in-ground gold reserves.

If
we or our third-party custodians fail to safeguard customer digital assets, or if a custodian becomes insolvent and customer assets are
not treated as bankruptcy-remote, we and our customers could suffer losses that our insurance would not cover, and we could face regulatory
action and significant reputational harm.

If
we hold or control customer digital assets or keys, we may be required to recognize corresponding safeguarding assets and liabilities
and to maintain policies, procedures, and capital to support such obligations. We also rely on third-party custodians and wallet providers.
In the event of a custodian failure or insolvency, customer assets may not be treated as bankruptcy-remote and could be delayed, frozen,
or lost. Digital assets are not protected by FDIC insurance, SIPC, or similar regimes. Losses from a security breach, operational error,
or insolvency event could exceed our insurance coverage, if any, and could result in customer claims, regulatory scrutiny, and reputational
harm.

Rapid
advancements in technology may outpace our current cybersecurity measures.

The
technology sector continues to evolve at a rapid pace, with significant advancements in areas such as quantum computing and AI. These
technologies, while offering numerous benefits, also pose new security challenges that could potentially compromise our existing cybersecurity
measures. Quantum computing, in particular, could render traditional encryption methods obsolete, exposing us to increased risks of cyber-attacks
and data breaches. Our ability to continually update our cybersecurity infrastructure in line with these advancements is critical to
protecting our assets and maintaining customer trust. Failure to effectively adapt to these technological changes could result in significant
operational disruptions and financial losses.

The
potential impact of rapid advancements in technology includes operational disruptions, increased compliance costs, and potential loss
of revenue. Additionally, failure to adequately address this risk could harm our reputation and investor confidence. We are actively
monitoring these developments and are committed to implementing strategies designed to mitigate these risks, including investing in advanced
security technologies.

12

Smart
contracts and blockchain protocols on which we rely may contain vulnerabilities or defects that could result in loss of assets or operational
disruption.

Our
products and services may interact with or rely upon smart contracts and blockchain protocols developed by us or by third parties. Smart
contracts are self-executing code deployed on blockchain networks that, once deployed, typically cannot be modified. If a smart contract
contains coding errors, design flaws, or unforeseen vulnerabilities, it could be exploited by malicious actors, resulting in the loss,
theft, or freezing of digital assets, or the disruption of platform operations. The immutable nature of blockchain technology means that
such errors may be difficult or impossible to correct once deployed. Furthermore, smart contract audits and code reviews, while valuable,
cannot guarantee the identification of all vulnerabilities. We intend to follow a stated governance process for material smart-contract
changes, but emergency patches may be deployed without advance notice. Unexpected network forks or splits could disrupt operations, and
we may suspend certain activities pending clarity, which could cause delays or losses for customers. Any exploitation of smart contract
vulnerabilities could result in significant financial losses, regulatory scrutiny, and reputational harm, and could have a material adverse
effect on our business and results of operations.

Blockchain
networks on which we operate are susceptible to attacks, including 51% attacks, double-spend attacks, and other forms of manipulation.

The
integrity of blockchain networks depends on the decentralized consensus mechanisms that validate transactions. These networks are potentially
vulnerable to various forms of attack, including 51% attacks (in which a single entity gains control of a majority of the network’s
computing or staking power), double-spend attacks, selfish mining, and race condition attacks. A successful attack on a blockchain network
could allow malicious actors to reverse transactions, prevent new transactions from being confirmed, or otherwise compromise the integrity
of the network. Although certain blockchain networks have implemented measures to reduce the likelihood of such attacks, no assurance
can be given that such measures will be effective. Any successful attack on a blockchain network that we rely upon could result in the
loss or theft of digital assets, a loss of confidence in the network, and a material adverse effect on our business, financial condition,
and results of operations.

Risks
Related to Securities Markets and Investments in Our Securities

Our
executive officers and certain stockholders possess the majority of our voting power, and through this ownership, control our Company
and our corporate actions.

Our
current executive officers, directors and largest stockholders of the Company, held approximately 51% of the voting power of the outstanding
shares of our capital stock as of December 31, 2024. These officers, directors and certain stockholders have a controlling influence
in determining the outcome of any corporate transaction or other matters submitted to our stockholders for approval, including mergers,
consolidations and the sale of all or substantially all of our assets, election of directors, and other significant corporate actions.
This concentrated ownership enables them to control strategic transactions, the timing of capital raises, and board composition. The
interests of our executive officers and certain shareholders may give rise to a conflict of interest with the Company and the Company’s
other stockholders. Concentrated ownership may also reduce public float, limit trading liquidity, and make our common stock less attractive
to certain institutional investors, which could constrain our ability to raise capital on favorable terms. For additional details concerning
voting power please refer to the section below entitled “Description of Securities.”

We
have engaged in transactions with related parties, and these transactions may not reflect arm’s-length terms; conflicts of interest
could arise that our policies may not fully address.

We
have engaged in transactions with related parties, including the contribution and valuation of AU certificates, and expect to continue
to rely on related-party funding. These transactions may not reflect terms that would be available from unaffiliated third parties, and
conflicts of interest could arise in the negotiation, valuation, or approval of such transactions. Although we maintain policies and
intend to enhance board oversight of related-party matters, these measures may not eliminate actual or perceived conflicts, and we could
face regulatory scrutiny or litigation. Future financing or asset transfers with affiliates could trigger heightened scrutiny and potential
litigation risk.

13

Issued
and outstanding series of convertible preferred shares, which if exercised, could significantly dilute existing stockholders.

We
have historically undertaken and may in the future need to undertake equity, equity-linked or debt financings to secure additional funds.
In such prior financings, we have created and issued several series of convertible preferred stock with rights, preferences and privileges
superior to those of holders of our common stock. If we raise additional funds through the creation and future issuances of equity, warrants,
convertible preferred stock or convertible debt securities, our existing stockholders could suffer significant dilution, and any new
equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Similarly,
if the existing holders of those issued and outstanding series of convertible preferred stock were to exercise their rights and convert
those shares to common stock, our existing stockholders could suffer significant dilution.

Liquidity
of our common stock has been limited.

Our
common stock is quoted on OTC Markets under the symbol “IONI”. The liquidity of our common stock is very limited and is affected
by our limited trading market. The OTC Market is an inter-dealer market much less regulated than the major exchanges, and is subject
to abuses, volatilities and shorting. There is currently no broadly followed and established trading market for our common stock. An
established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and
more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded. These
trading limitations may also constrain our ability to raise capital on favorable terms, limit investor-relations engagement with institutional
investors, and reduce the price stability that counterparties may require for integration partnerships.

The
trading volume of our common stock may be limited and sporadic. This situation is attributable to a number of factors, including the
fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the
investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they may tend
to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares
until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity
in our shares is minimal, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally
support continuous sales without an adverse effect on share price. We cannot give any assurance that a broader or more active public
trading market for our common stock will develop or be sustained, or that current trading levels will be sustained. As a result of such
trading activity, the quoted price for our common stock while on the OTC Markets may not necessarily be a reliable indicator of its fair
market value.

Because
we became public by means of a “reverse business combination,” we may not be able to attract the attention of major brokerage
firms.

There
may be risks associated with us becoming public through a “reverse business combination.” Securities analysts of major brokerage
firms and securities institutions may not provide coverage of us because there were no broker-dealers who sold our stock in a public
offering that would be incentivized to follow or recommend the purchase of our common stock. The absence of such research coverage could
limit investor interest in our common stock, resulting in decreased liquidity. No assurance can be given that established brokerage firms
will, in the future, want to cover our securities or conduct any secondary offerings or other financings on our behalf. This lack of
coverage may further constrain our ability to meet minimum investor-relations expectations of prospective institutional partners and
limit our access to growth capital.

14

Our
stock price may be volatile.

The
market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors,
many of which are beyond our control, including the following:

●
the
concentration of the ownership of our shares by a limited number of affiliated stockholders may limit interest in our securities;

●
limited
“public float” with a small number of persons whose sales or lack of sales could result in positive or negative pricing
pressure on the market price for our common stock;

●
additions
or departures of key personnel;

●
loss
of a strategic relationship;

●
variations
in operating results that fall below the expectations of securities analysts or investors;

●
announcements
of new products or services by us or our competitors;

●
reductions
in the market share of our products;

●
announcements
by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

●
investor
perception of our industry or prospects;

●
insider
selling or buying;

●
investors
entering into short sale contracts;

●
regulatory
developments affecting our industry; and

●
changes
in our industry;

●
competitive
pricing pressures;

●
our
ability to obtain working capital financing;

●
sales
of our common stock;

●
our
ability to execute our business plan;

●
revisions
in securities analysts’ estimates or reductions in security analysts’ coverage; and

●
economic
and other external factors.

Many
of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance.
We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including
as to whether our common stock will sustain current market prices, or as to what effect that the sale of shares or the availability of
common stock for sale at any time will have on the prevailing market price.

In
addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of
our common stock.

15

Our
common stock is subject to price volatility unrelated to our operations.

Our
operations are significantly influenced by the economic conditions and the stability of the financial markets. Fluctuations in these
markets, especially those impacting digital assets, can adversely affect our investment value, operational costs, and revenue streams.
Economic downturns, increased market volatility, and adverse financial market conditions could have a disproportionate impact on our
strategic operations and financial performance.

A
decline in the price of our common stock could affect our ability to raise working capital and adversely impact our ability to continue
operations.

A
prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in
our ability to raise capital. A decline in the price of our common stock could be especially detrimental to our liquidity, our operations
and strategic plans. Such reductions may force us to reallocate funds from other planned uses and may have a significant negative effect
on our business plan and operations, including our ability to develop new services and continue our current operations. If our common
stock price declines, we can offer no assurance that we will be able to raise additional capital or generate funds from operations sufficient
to meet our obligations. If we are unable to raise sufficient capital in the future, we may not be able to have the resources to continue
our normal operations.

Concentrated
ownership of our common stock creates a risk of sudden changes in our common stock price.

The
sale by any shareholder of a significant portion of their holdings could have a material adverse effect on the market price of our common
stock.

Sales
of our currently issued and outstanding stock may become freely tradable pursuant to Rule 144 and may dilute the market for your shares
and have a depressive effect on the price of the shares of our common stock.

A
substantial majority of the outstanding shares of Common Stock are “restricted securities” within the meaning of Rule 144
under the Securities Act of 1933, as amended (the “Securities Act”) (“Rule 144”). As restricted shares, these
shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides in essence that
a non-affiliate who has held restricted securities for a period of at least six months may sell their shares of common stock. Under Rule
144, affiliates who have held restricted securities for a period of at least six months may, under certain conditions, sell every three
months, in brokerage transactions, a number of shares that does not exceed the greater of 1% of a company’s outstanding shares
of common stock or the average weekly trading volume during the four calendar weeks prior to the sale. A sale under Rule 144 or under
any other exemption from the Securities Act, if available, or pursuant to subsequent registrations of our shares of common stock, may
have a depressive effect upon the price of our shares of common stock in any active market that may develop.

We
do not plan to declare or pay any dividends to our stockholders in the near future.

We
have not declared any dividends in the past, and we do not intend to distribute dividends in the near future. The declaration, payment
and amount of any future dividends will be made at the discretion of the board of directors and will depend upon, among other things,
the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of
directors considers relevant. Additionally, any debt financing that we secure in the future could involve restrictive covenants relating
to our capital raising activities and other financial and operational matters, including the ability to pay dividends. There is no assurance
that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.

16

The
requirements of being a public company may strain our resources and distract management.

As
a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the Securities Act. These rules, regulations
and requirements are extensive. We may incur significant costs associated with our public company corporate governance and reporting
requirements. This may divert management’s attention from other business concerns, which could have a material adverse effect on
our business, financial condition and results of operations. We also expect that these applicable rules and regulations may make it more
difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult
for us to attract and retain qualified individuals to serve on our board of directors or as executive officers.

Future
changes in financial accounting standards or practices may cause adverse unexpected financial reporting fluctuations and affect reported
results of operations.

A
change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of
transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements
have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our
reported financial results or the way we conduct business. In particular, we expect to adopt new accounting guidance that will require
certain crypto assets to be measured at fair value with changes recognized in earnings. This change may increase the volatility of our
reported results and require additional valuation controls, data sources, and resources. If we hold AU certificates or other crypto assets
on our balance sheet, our period-to-period results may fluctuate materially due to fair-value changes. If our controls and processes
related to crypto-asset valuation are not effective, we could experience financial-reporting errors or delays.

The
carrying amount of our intangible assets may be subject to impairment, which could result in material non-cash charges and impair our
access to capital.

The
carrying amount of our intangible assets—particularly AU certificates and acquired intellectual property—may be impaired
if cash-flow assumptions, marketability, or legal enforceability change. Our financial statements and independent auditor’s report
highlight intangible-asset impairment as a critical audit matter given the concentration of these assets. Impairment charges could be
material and non-cash but could also impair our access to capital by reducing reported equity and signaling uncertainty to investors
and lenders. See the significant-accounting-policies and intangible-assets notes to our consolidated financial statements for further
information on the assumptions underlying our intangible asset valuations.

The
federal and state tax treatment of our certificates and related transactions may be uncertain, and changes or clarifications could impose
new withholding or information-reporting obligations.

The
federal and state tax treatment of our certificates and related transactions may be uncertain, and changes or clarifications could impose
new withholding, backup-withholding, or information-reporting obligations on us or distribution partners. Penalties can apply for failures
even where interpretive uncertainty exists. Potential broker-reporting rules for digital assets could impose significant operational
and compliance costs. If we expand into non-U.S. markets, we may face cross-border withholding or VAT/GST exposures. Any adverse tax
determination or new reporting requirements could increase our costs, reduce customer demand, and have a material adverse effect on our
business and results of operations.

“Penny
Stock” rules may make buying or selling our common stock difficult.

Trading
in our common stock has previously been subject to the “penny stock” rules. The SEC has adopted regulations that generally
define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These
rules require that any broker-dealer that recommends our common stock to persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written
agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny
stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage
broker-dealers from affecting transactions in our common stock, which could severely limit the market price and liquidity of our common
stock. These constraints may also limit our ability to raise capital on favorable terms and support the price stability that prospective
institutional partners or counterparties may require for commercial engagements.

17

Adverse
macroeconomic conditions, interest rate fluctuations, and geopolitical instability could negatively impact our business and the broader
digital asset market.

Our
business and the digital asset industry are sensitive to macroeconomic conditions, including inflation, rising interest rates, recession,
and geopolitical instability. Periods of economic uncertainty may reduce investor appetite for speculative and emerging-technology investments,
decrease trading volumes and digital asset valuations, and limit our ability to raise capital on favorable terms. Changes in interest
rates may affect the attractiveness of digital assets relative to traditional fixed-income investments. Geopolitical events, including
international conflicts, trade restrictions, and sanctions regimes, may disrupt financial markets and create volatility that could have
a disproportionate impact on smaller companies such as ours. Any prolonged deterioration in macroeconomic conditions could have a material
adverse effect on our business, financial condition, and results of operations.

Risks
Related to Our Intellectual Property Rights

It
may be difficult and costly to protect our intellectual property rights, and we cannot ensure the protection of these rights.

Our
commercial success depends, in part, on obtaining and maintaining patent protection for our technologies, products and processes, successfully
defending these patents against third-party challenges and successfully enforcing these patents against third-party competitors. Proprietary
rights relating to our current and potential products will be protected from unauthorized use by third parties only to the extent that
they are covered by valid and enforceable patents or are effectively maintained as trade secrets. Patents owned by or licensed to us
may not afford protection against competitors, and pending patent applications now or hereafter filed by us or our licensors may not
result in patents being issued.

Our
patents or patent applications, or those licensed to us, if issued, may be challenged, invalidated or circumvented, and the rights granted
thereunder may not provide proprietary protection or competitive advantages to us against competitors with similar technology. Furthermore,
our competitors may independently develop similar technologies or duplicate any technology developed by us.

If
we cannot maintain the confidentiality of our proprietary technology and other confidential information, our ability to receive patent
protection and our ability to protect valuable information owned by us may be imperiled. Litigation may be necessary to assert claims
of infringement, to enforce patents issued to us, to protect trade secrets or know-how owned by us, or to determine the scope and validity
of the proprietary rights of others. In addition, interference, derivation, post-grant oppositions, and similar proceedings may be necessary
to determine rights to inventions in our patents and patent applications. Litigation or similar proceedings could result in substantial
costs to and diversion of effort by us and could have a material adverse effect on our business, financial condition and results of operations.
These efforts by us may not be successful.

We
also rely on our know-how, trade secrets, and continuing technological innovation to develop and maintain our proprietary and competitive
position. However, know-how and trade secrets are difficult to protect. While we require and continue to intend to require employees,
academic collaborators, consultants and other contractors to enter into confidentiality agreements, we may not be able to adequately
protect our trade secrets or other proprietary or licensed information. There can be no assurance that these agreements will not be breached,
that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or be independently discovered
by competitors. To the extent that our employees, consultants or contractors use intellectual property owned by others in their work
for us, disputes may also arise as to the rights in related or resulting know-how and inventions.

18

We
may not be able to protect our intellectual property rights throughout the world.

Filing,
prosecuting and defending patents on product candidates in all countries and jurisdictions throughout the world would be prohibitively
expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those offered
in the United States. Consequently, we may not be able to prevent third parties from appropriating our inventions in all countries outside
the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.

Competitors
may use our technologies in jurisdictions where we do not have, or where we do not pursue and obtain, patent protection to develop their
own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is
not as strong as that in the United States. These products may compete with our product, and our patents or other intellectual property
rights may not be effective or sufficient to prevent them from competing. Even if we pursue and obtain issued patents in particular jurisdictions,
our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from competing.

Further,
the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many
companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions.
The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual
property protection. This could make it difficult for us to stop the infringement of our patents, if obtained, or the misappropriation
of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner
must grant licenses to third parties. Additionally, many countries limit the enforceability of patent against third parties, including
government agencies or government contractors. In these countries, patents may provide limited or no benefit. Further, patent protection
must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly,
we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

Moreover,
proceedings to enforce our patent rights, or those of our licensors or partners, in foreign jurisdictions could result in substantial
costs and divert our efforts and attention from other aspects of our business, could put our in-licensed patents, or any patents that
we may own in the future, at risk of being invalidated or interpreted narrowly, could put our owned or in-licensed patent applications
at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate,
and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual
property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we
develop or license.

If
we fail to obtain or maintain patent protection or trade secret protection for our product candidates or our technologies, third parties
could use our proprietary information, which could impair our ability to compete in the market and adversely affect our ability to generate
revenues and attain profitability.

We
may also rely on the trademarks we may develop to distinguish our products from the products of our competitors. We cannot guarantee
that any trademark applications filed by us or our business partners will be approved. Third parties may also oppose such trademark applications,
or otherwise challenge our use of the trademarks. In the event that the trademarks we use are successfully challenged, we could be forced
to rebrand our products, which could result in loss of brand recognition, and could require us to devote resources to advertising and
marketing new brands. Further, we cannot provide assurance that competitors will not infringe the trademarks we use, or that we will
have adequate resources to enforce these trademarks.

19

We
may be subject to claims of intellectual property infringement by third parties, which could be costly and disruptive.

Third
parties may assert patent, copyright, trademark, or other intellectual property claims against us, alleging that our technologies, products,
or services infringe on their proprietary rights. The digital asset and blockchain technology industry has experienced an increase in
intellectual property litigation as the sector matures and the number of issued patents grows. Defending against infringement claims,
regardless of their merit, can be time-consuming and expensive and could divert management’s attention from our core business operations.
If we are found to have infringed on a third party’s intellectual property rights, we may be required to pay substantial damages,
obtain licenses, modify our products, or cease certain operations. Any of these outcomes could have a material adverse effect on our
business, financial condition, and results of operations.

Risks
Related to Governmental Regulation and Enforcement

Regulatory
changes or actions may alter the nature of an investment in us or restrict the use of digital assets in a manner that adversely affects
our business, prospects, or operations.

As
digital assets have grown in both popularity and market size, governments around the world have reacted differently to digital assets;
certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while some jurisdictions,
such as the United States, subject the mining, ownership and exchange of digital assets to extensive, and in some cases overlapping,
unclear and evolving regulatory requirements.

For
example, in January 2023, the Federal Reserve, Office of the Comptroller of the Currency, and FDIC issued a joint statement effectively
discouraging banks from doing business with clients in digital-asset industries, which could potentially create challenges regarding
access to financial services. In January 2023, the Federal Reserve also issued a policy statement broadening its authority to cover state-chartered
institutions. Moreover, in January 2023, the White House issued a statement cautioning deepening ties between digital-assets and the
broader financial system. Meanwhile, the SEC has announced several actions aimed at curtailing activities it deems sales of unregistered
securities.

However,
also during January 2023, the U.S. House of Representatives announced its first ever Financial Services Subcommittee on Digital Assets
and the intention to develop a regulatory framework for the use and trade of digital assets and related financial services products in
the United States. Bipartisan leadership of the Senate Banking Committee announced a similar objective.

Given
the difficulty of predicting the outcomes of ongoing and future regulatory actions and legislative developments, it is possible that
they could have a material adverse effect on our business, prospects or operations.

Our
gold-backed digital certificates, related rights, or aspects of our platform could be deemed “securities” under U.S. federal
or state securities laws, which could require registration, impose transfer restrictions, or require that certain activities be conducted
by registered broker-dealers.

Our
gold-backed digital certificates, related rights, or aspects of our platform could be deemed to involve “securities” under
U.S. federal or state securities laws, which could require registration or qualification of offerings, impose transfer restrictions,
or require that certain activities be conducted by registered broker-dealers or on registered or exempt trading systems. The regulatory
analysis of whether a digital asset constitutes a security is complex, fact-specific, and continues to evolve. If regulators determine
that any of our activities should have been registered or conducted differently, we could be subject to investigations, enforcement actions,
rescission or damages claims, and penalties, and we might be required to suspend offerings or modify our products, distribution channels,
or platform features, any of which could be costly and time-consuming. Delays or denials of necessary approvals from the SEC, FINRA,
or state regulators could materially delay commercialization. We distinguish between our role and the roles of any broker-dealers or
alternative trading systems with whom we may partner, but these distinctions may not be accepted by regulators.

20

Our
interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons and new legislation
or regulation could adversely impact our business or the market for digital assets.

We
are subject to economic and trade sanctions administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control
(“OFAC”). OFAC requires us to comply with its sanctions program and not conduct business with persons named on its Specially
Designated Nationals (“SDN”) list. Because blockchain transactions can obscure the identity of transacting parties through
pseudonymity, there is a residual risk that we could, despite screening controls, inadvertently engage in a prohibited transaction with
persons named on OFAC’s SDN list or other blocked or sanctioned parties. Our Company’s policy prohibits any transactions
with such SDN individuals, and we take commercially reasonable steps to avoid such transactions through sanctions screening, but we may
not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to our digital asset
activities. Detection of a prohibited transaction can trigger frozen assets, disclosure obligations, and penalties even where intent
is absent. Moreover, there is a risk that some bad actors will continue to attempt to use digital assets as a potential means of avoiding
federally imposed sanctions, such as those imposed in connection with the Russian invasion of Ukraine. If a prohibited transaction occurs,
we could be required to block or reject transactions, make regulatory reports, and face civil or criminal penalties, any of which could
be costly and damage our reputation.

We
are unable to predict the nature or extent of new and proposed legislation and regulation affecting the digital asset industry, or the
potential impact of the use of digital assets by SDN or other blocked or sanctioned persons, which could have material adverse effects
on our business and our industry more broadly. Further, we may be subject to investigation, administrative or court proceedings, and
civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation
and affect the value of our common stock.

Certain
activities we contemplate, including facilitating the movement of fiat currency into and out of wallets, converting between digital assets
and fiat currency, and transmitting value among customer accounts, may require us or our vendors to register as a money services business
with FinCEN and to obtain money transmitter or similar licenses in multiple U.S. states and territories, and failure to obtain or maintain
required licenses could force us to suspend operations in particular states.

Certain
activities we contemplate, including facilitating the movement of fiat currency into and out of wallets, converting between digital assets
and fiat currency, and transmitting value among customer accounts, may require us or our vendors to register as a money services business
(“MSB”) with the Financial Crimes Enforcement Network (“FinCEN”) and to obtain money transmitter or similar licenses
in multiple U.S. states and territories. State licensing requirements vary, can be triggered by control or transmission of value even
when done through vendors, and can include examinations, net-worth and bonding requirements, change-of-control approvals, and per-state
product reviews. Licensing is complex, costly, and time-consuming, and requirements differ by jurisdiction. Failure to obtain or maintain
required licenses could result in enforcement actions, fines, penalties, and the cessation of operations in certain jurisdictions. Additionally,
the regulatory classification of digital asset activities continues to evolve, and activities that are not currently subject to licensing
requirements may become so in the future, which could materially increase our compliance costs and affect our ability to offer certain
products and services.

Our
activities could be deemed to require registration under the Investment Company Act of 1940 or compliance with custody rules under the
Investment Advisers Act of 1940, which could impose significant regulatory obligations and require us to restructure our operations.

21

Depending
on how we structure our holdings and services, we could be deemed to be an investment company under the Investment Company Act of 1940
or to have custody under the Investment Advisers Act of 1940, which would impose significant registration, custody, capitalization, and
compliance obligations. Given our concentration of intangible assets, our contemplated fee models, and the potential to hold digital
assets on behalf of customers or partners, there is a risk that our activities could be characterized as investment company activity
or that our relationships could bring us or our affiliates within the Advisers Act custody or qualified custodian rules. If our activities
are found to require such registrations or compliance, we may be required to restructure or limit our operations, which could be costly
and delay or reduce our growth.

We
are exposed to counterparty and credit risk, and the failure of significant counterparties could adversely affect our financial condition.

In
the course of our business, we may enter into agreements and transactions with various counterparties, including financial institutions,
technology providers, digital asset exchanges, and other market participants. The failure of any significant counterparty to fulfill
its contractual obligations could result in financial losses and disruption to our operations. The digital asset industry has experienced
several high-profile counterparty failures, including the collapses of major exchanges and lending platforms, which have resulted in
billions of dollars in losses across the industry. We may not be able to adequately assess the creditworthiness or financial stability
of our counterparties, and the lack of comprehensive regulatory oversight in certain segments of the digital asset industry may increase
counterparty risk. Any counterparty default could have a material adverse effect on our business, financial condition, and results of
operations.

Failure
to maintain effective internal controls could result in regulatory sanctions, loss of investor confidence, and a decline in the market
price of our common stock.

As
a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such
controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected
on a timely basis. As disclosed in Item 9A. “Controls and Procedures,” we have identified material weaknesses in our internal
controls. If we are unable to remediate these weaknesses effectively, we may be unable to produce accurate financial statements on a
timely basis, which could result in regulatory sanctions, loss of investor confidence, and a decline in the market price of our common
stock. Remediation of any material weakness could require significant time and resources. Several of our peer companies in the digital
asset industry have disclosed material weaknesses in their internal controls, underscoring the heightened risk faced by smaller public
companies operating in a rapidly evolving technological and regulatory environment.