QUANTUM X LABS INC.

ITEM 1A. RISK FACTORS

Our business faces many risks, a number of which are described under the caption Risk Factors in our Annual Report. Other than as set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report. The risks described in our Annual Report and below may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our Annual Report or described below occurs, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our Annual Report and below, and the information contained under the caption Forward-Looking Statements and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.

Management has concluded that there is substantial doubt about our ability to continue as a going concern, and our consolidated financial statements for the quarter ended March 31June 30, 2026 include an explanatory paragraph a going concern disclosure as to our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable terms or at all.

Because we have had recurring losses and negative cash flows from operating activities, substantial doubt exists regarding our ability to remain as a going concern at the same level at which we are currently performing. Accordingly, our consolidated financial statements for the quarter ended March 31June 30, 2026 include an explanatory paragraph as to our potential inability to continue as a going concern. The doubts regarding our potential ability to continue as a going concern may adversely affect our ability to obtain new financing on reasonable terms or at all.

We may not realize the anticipated benefits of the acquisitions of Quantum X Labs Ltd. or Metagramm.

In March 2026, we acquired Quantum Israel, a company that focuses on developing and promoting quantum algorithms for the transportation, drug discovery and security segments as well as developing quantum- based GPS replacement and quantum atom accuracy solutions, and security whose mission is to research, develop, and own quantum technology intellectual property that addresses major challenges emerging as the quantum revolution scales into commercial and industrial use. In March 2025, we acquired Metagramm, a company that specializes in developing advanced writing assistance tools and licenses its products on a subscription basis. Quantum Israels and Metagramms products and revenue models differ from those of our current platforms. We may not be able to assimilate or integrate the acquired personnel, operations, products, services, and technologies of Quantum Israel or Metagramm successfully or effectively manage the business of Quantum Israel or Metagramm and our management may be distracted from operating our business. We also may not achieve the anticipated benefits from the acquisition of Quantum Israel or Metagramm due to a number of factors, including, without limitation, unanticipated costs or liabilities associated with the acquisition and difficulty of incorporating Quantum Israels or Metagramms technologies into our platforms. If the acquisition of Quantum Israel or Metagramm fails to meet our expectations, our operating results, business, and financial condition may suffer.