EXOZ 10-K & 10-Q changes, risk factors and insider trading

eXoZymes was founded in 2019, and was focused on developing our science and technology untilin athe yearfirst ago.5 years. We are a pre-revenue, development development stage synthetic biochemical company, despite now investing significant time and resources into productizing and commercializing our technology according to our Business Overview, Commercialization Strategy and Focus, and Business Model.technology. We have only a limited operating history and only have incurred losses to date. Therefore, there can be no assurance that the development efforts of eXoZymes will produce commercially viable processes or potential products, achieve market acceptance, or generate revenues that will sustain its business, despite that is what we are working hard to achieve. With a limited operating history, no marketing track record, and no commercialized products at this time, it will be difficult for investors to make predictions about the future success or even the viability of eXoZymes, and any predictions may not be as accurate as they could be if the Company had a longer operating history or a history of successfully developed, commercialized products and generating revenue from products.

We may need additional capital to support our growth over time. Additional capital,capital may be difficult to obtain thus restricting our operations and resulting in additional dilution to our stockholders.

Over time, we anticipate that the business will require additional capital to implement the long-term business plan of product development and commercialization. As we require additional funds, we may explore future financing arrangements for the Company as a whole and financing specific segments of our business by using additional private and public offerings of our securities, borrowings, spinouts, joint ventures, licensing, asset sales and merger transactions. We also may seek government research grants, as they may be available. We cannot be sure sure that additional financing from any of these sources will be available when needed or that, if available, the additional financing will will be obtained on terms favorable to us or our stockholders. If we raise additional funds by selling equity basedequity-based securities, the ownership interest of our current stockholders will be diluted. If we are unable to obtain additional funds on a timely basis or on terms favorable to us, we may have to cease or reduce certain research and development projects, to sell some or all of our technology or assets or business units or to merge all or a portion of our business with another entity.

From inception through December 31, 2024,2025, eXoZymes has received grants totaling $13,639,011.$17,697,378, of which $4,058,367 was awarded in 2025 and $1,048,302 was awarded in 2024. In the past government funding and private funding have been an important source of funds for the operations of the Company. There is no assurance that we will continue to be able to draw on any outstanding US government grants or other private grants or be able to obtain new grants. If we are not able to obtain government and other grant funding, we may have to limit our operations or may have to raise additional capital from other sources. Currently, we do not have any identified sources of funding. Other sources of funding may be dilutive to our shareholders or more costly than past sources of funding.

We have not yet demonstrated our ability to generate revenue, and we may never be able to produce material revenues or operate on a profitable basis. We expect to experience operating losses and negative cash flow for the foreseeable future. We expect to expend significant cash resources on hiring personnel, continued scientific and potential product research and development, potential product scaling, intellectual property development and prosecution, marketing and promotion, capital expenditures, working capital, and general and administrative expenses. We expect to incur costs and expenses related to consulting costs, laboratory development costs, hiring of scientists, engineers, science and other operational personnel, and the continued development of relationships with strategic and collaborative partners. We may not be able to obtain financing in a sufficient amount or at all, or on terms that are acceptable to us. We anticipate that our losses will continue to increase from current levels during our continuing development stage.

The viability and benefits of our products in development, which currently include nutraceuticalsneutracuticals and pharmaceutical (e.g.oriented cannabinoids),products, and and isobutanol (a 2G biofuel), may be difficult to assess because they are based on a relatively novel and complex technology. eXoZymes’s technology consists of using cell-free multi-step enzymatic bioconversion systems that we have named exozymes biosolutions. The exozymes platform and the limited number of products that we are developing are currently in various stages of research and development, limited pilot production phase and/or pre-clinical assessment as a therapeutic or product for other uses. It may be an issue that what is possible in the small quantities used at the research level cannot be replicated as production quantities are increased for testing and commercialization. Each product may be required to be progressively scaled up from early research production quantities to show the feasibility of production in larger quantities, whether for clinical evaluation, testing, and ultimately commercial manufacturing amounts before being made available to clients. As eXoZymes continues to develop and optimize its platform and processes to make what it has determined to be the initial potential products in the quantities needed for research, clinical or testing evaluation and manufacturing, there can be no assurance that such products will be understood, approved, or accepted by clients, regulators and potential investors, that the relevant platform and processes can be used for commercial manufacturing, or that it will be able to sell products at competitive prices and with features sufficient to establish demand and generate revenues or any level of profit. Another consideration if a product is a candidate as an an active pharmaceutical ingredient, then it will require FDA and/or other applicable regulatory approvals, including manufacturing approvals, which may not be obtainable. If it is unable to convince potential clients of the utility, approvability and value of its products, it will not be successful in entering the markets that it has identified, and its business and results of operations will be adversely affected.

eXoZymes is operating in a rapidly growing and changing business space within, or as a competitor to, the synthetic biology market. Therefore, Therefore, the market is becoming more developed and highly competitive. eXoZymes may have to continually assess the overall market, and the application markets and what kinds of products will be in demand. If it fails to anticipate market demands or is not able to meet a market demand in a timely fashion, its research and development efforts may not pay off as expected or at all. The intellectual property aspects of this market are constantly evolving, and patents filed several years ago by potential competitors are currently being granted, which may force eXoZymes to license technologies it needs for its processes or to develop a workaround to the valid claims of others. eXoZymes may not be able to obtain any necessary licenses or develop processes that do not infringe on others; in which case its business may be impairedimpaired, and it may be prevented from executing its business plan. The cell-free synthetic biology market in which eXoZymes seeks to compete, is relatively new, and therefore the extent to which it may encounter intellectual property of others that limits or restricts its processes is unpredictable.

Because bio-synthesized compounds are still considered novel, regulators and the public,public may perceive them differently from naturally occurring molecules, notwithstanding the fact that molecules are the same whether synthetically created or naturally occurring. Therefore, eXoZymes may have to provide additional validation related to the science of its compounds in order to obtain regulatory and market approval to gain product adoption. Providing additional validation will cause delays in development and commercialization, which will result in additional funding requirements that may not have been anticipated. eXoZymes may never achieve the required approvals in which case its business model will be impaired, and eXoZymes may not be able to achieve commercial success.

We anticipate anticipate,that, because some of the compounds are unique, that eXoZymes will face all the hurdles of a new technology in athe marketplace. Depending on the use of the compounds, eXoZymes may have to comply with the extensive array of medical and other areas of regulation depending on the use of the particular compound. In addition, it anticipates having to conduct many forms of tests, data generation and analysis to convince regulators, commercialization partners and potential users of the safety, uses, and claim validation to be able to get relevant approvals, commercialize and gain market acceptance for its chemical compounds. If it is unable to successfully justify the efficacy, safety and potential of its compounds, or do so in a timely manner, it will not be able to successfully develop its business and may have to curtail or cease its business. Holders of our shares of Common Stock may lose value in their holdings.

We have observed continuous conversion of input feedstock, the raw material from which a product is made, into the final product for a time period of seven days. Longer running conversions, we believe, will optimize the use of enzymes and co-factor in the platform, making the biochemical process efficient. Targeted feedstock for our current products are primarily sugars or other readily available chemicals. chemicals. We believe we can further optimize our technological systems to continue running for longer times than seven days thus optimizing the the use of our enzymes and co-factors. Co-factors in our processes are energy molecules such as ATP (adenosine triphosphate, which is a molecule that stores and releases energy in cells) or NADPH (nicotinamide adenine dinucleotide phosphate, which is a molecule that is an essential electron donor and provides the reducing power for anabolic reactions and redox balance). If we fail to find competitively priced sources of these inputs and/or if we fail to show long periods of continued reactions at larger scales our system might not prove to be competitive.

We prioritize the products we choose to develop by using a number of parameters including the margin between market pricing or expected market pricing versus our expected production cost. Fluctuations in pricing below our cost to manufacture would make the commercialization of such productproducts unfeasible. The result would be that we would not be able to sustain our business from revenue, and as a result we may have to curtail or cease operations.

We do not have any significant sales, marketing, manufacturing and distribution capabilities or arrangements, and will need to create these as we move towards commercialization of our products.

We do not yet have amanufacturing full sales team, marketing team, manufacturingarrangement or distribution capacity. To date sales and marketing have been conducted by senior management staff, and been a part of their other management obligations. To be able to commercialize our potential products and biosolutions, weWe will need to develop all of the foregoing elements of commercialization. We do not have all relevant corporate experience in establishing these capabilities, and therefore, we may be unsuccessful in achieving commercialization and earning revenues. We believe that setting up the commercialization aspects of a company will take a substantial amount of capital and commitment of time and effort. We plan on seeking development and marketing partners and license our technology to others or develop contract manufacturing partners to avoid our having to provide the full range of go-to-marketing, manufacturing and distribution capabilities within our organization for each of the focus and applications markets. There can be no assurance that we will find any development and go-to-market partners or companies that are interested in licensing our technology. If we are unable to establish and maintain adequate sales, licensing, go-to-market, marketing and distribution capabilities, independently or with others, we will not be able to generate product revenue and may not become profitable.

Considerable efforts have been, and are being,being devoted to engineering living organisms to produce useful chemicals ranging from high-value natural products like cannabinoids to low-value products such as, fuels, plastics, and building block chemicals. Given the broad and growing attention to the environment and the environmental benefits of synthetic biochemistry, many players are attracted to the industry. Currently, there are many companies in the synthetic biology market, including,including well known firms operating in the industry segments of life science and biology solutions, pharmaceuticals, meat, beauty, agriculture, automobile, and fashion. The number of companies and scope of industry segments touched upon demonstrate this is an active, developing industry.

We believe that we will face competition from many companies and research institutions that are currently working in, and will enter,enter the the industry to work on all the many aspects of cell-free synthetic biochemistry. Debut Biotech and Solugen Inc. promote the advantages of cell-free enzymatic systems over cell-based systems, but their processes appear to use simple one to two step pathways. Codexis, Inc. partnered with Tate & Lyle and Merck & Co., Inc. on different, highly specific projects that use multi enzyme pathways, which demonstrate that enzymatic Islatravir synthesis illustrates the potential for complex or longer enzyme cascades of the type used in some of our eXoZymes systems, but their principal mission diverges from the enzymatic manufacturing of more general chemicals. There are many companies that focus on enzyme engineering, such as Codexis, Inc., Allozymes Pte Ltd. (Singapore), Enzymit Ltd. (Israel and US), Zymtronix Catalytic Systems, Inc., Arzeda Corp. and Quantumzyme LLP (India), Adaptyv (Switzerland), Zymvol (Spain). There are other companies that develop enzyme immobilization technologies. There are many companies operating in the biofuels space, such as Valero Energy Corporation, ADM Corporation and Cargill Company and Gevo, Inc. and Butamax Advanced Biofuels LLC that focus on ethanol technologies. There are a number of companies in the nutraceutical and pharmaceutical industries that are pursuing, or may in the future pursue, the same or similar target molecules as those being developed by the Company. For example, Brightseed Bio is focused on the discovery and development of plant-derived bioactive compounds, including molecules such as N-trans-caffeoyltyramine (“NCT”), and such companies may compete directly with the Company’s development and commercialization efforts We believe that a majority of the companies that present some aspect of competition are well established companies that have more experience identifying and carrying out the scientific development required in the research and development of products that will be competitive to those of eXoZymes. Many of these companies have, and others that we anticipate entering the market in the future will have, greater financial and management resources, brand or science name recognition or industry contacts than we possess. A number of the companies are multinational companies, and many are also publicly listed companies, with large market capitalizations.

We believe that we compete with thosethese firms based on a number of factors, including our founders’ reputation and history, our work work and successes to date since founding, our willingness and ability to strategically partner with other companies, the overall abilities abilities and experience of our management and staff, and our ability to use our technologies to develop new products and create products for potential commercialization opportunities. We also believe we compete based on our unique technological approach. We believe our scientific approach and technology is not as specialized as those of our competitors, thereby opening product pathways for a plethora of more diverse chemical manufacturing applications. We believe that our intellectual property on recycling of essential cofactors will allow us to operate extensive multistep processes outside of a living cell. This represents a competitive advantage over traditional synthetic biochemical companies. In the biofuels sector, because isobutanol is our primary target due to it being widely regarded as a superior biofuel, we do not compete directly with ethanol producers.

As our research develops, we believe the eXoZymeseXoZymes’s inventions and license will be able to cover a wide range of technologies that relate to biomanufacturing. These inventions include new chemical entities, composition of matter intellectual property on novel and engineered individual enzymes with changes in stability, activity, specificity, or a combination thereof, as well as systems of enzymes designed for for pioneering novel manufacturing processes. Additionally, our intellectual property includes cofactor and metabolite management optimized for sustained reaction continuity and advancements in enzyme expression strains and processes. Also, metabolites resulting from the degradation of a molecule, can be used as a fingerprint or to identify those parts of a molecule that can modify the speed of or stop an enzyme reaction, and which we can then use to manage the reaction timing of our platform.

In addition to patents and patent applications in respect of our technology, we rely upon, among other things, unpatented proprietary technology, technology, processes, trade secrets and know-how. Any involuntary disclosure (e.g. bad actors, disgruntled employees, being hacked or simple theft) to or misappropriation by third-parties of our confidential or proprietary information could enable competitors to duplicate or surpass our technological achievements, potentially eroding our competitive position in our market. We seek to protect confidential or proprietary information in part by confidentiality agreements with our employees, consultantsconsultants, and third-parties. While we require all of our employees, consultants, advisors and any third-parties who have access to our proprietary know-how, information and technology to enter into confidentiality agreements, we cannot be certain that this know-how, information and technology will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. These agreements may be terminated or breached, and we may not have adequate remedies for any such termination or breach. Furthermore, these agreements may not provide meaningful protection for our trade secrets and know-how in the event of unauthorized use or disclosure. To the extent that any of our staff were previously employed by other synthetic biology companies, those employers may allege violations of trade secrets and other similar claims in relation to their product development activities for us.

The license we hold from The Regents provides for annual license fees and royalties based on income derived from the licensed patents. It is possible that our fees to The Regents may exceed our income. In such an event, we would have to fund the fees from other sources, such as working capital, financingsfinancing, or other income. If we do not make the payments, as and when required, we would be in breach of the license agreementagreement, and The Regents would be able to terminate the license.

If we or our collaborators experience patent infringement claims, or if we elect to avoid potential claims others may be able to assert, we or our collaborators may choose to seek, or be required to seek, a license from the third-party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property. Ultimately, we could be prevented from commercializing a product or be forced to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms. This could harm our business significantly. The cost to us of any litigation or other proceeding, regardless of its merit, even if resolved in our favor, could be substantial. Some of our competitors may be able to bear the costs of such litigation or proceedings more effectively than we can because ofthey their havinghave greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Intellectual property litigation and other proceedings may, regardless of their merit, also absorb significant management time and employee resources.

Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may file infringement claims, which can be expensive and time consuming.time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or of our licensors is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.

A trademark or trade name may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to our trademarks and trade names or may be forced to stop using our names. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trade names or trademarks that incorporate variations of our unregistered trade names or trademarks. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectivelyeffectively, and our business may be adversely affected.

We will incur increasedsubstantial costs as a result of operating as a public company, and our board of directors will beis required to devote substantial time time to oversight of newour compliance requirements and corporate governance practices.

As a public company listed in the U.S., we will incur significant legal, accounting and other expenses that we did not incur as a private company.expenses. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations impose various requirements on listed public companies, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our board of directors, management and other personnel will need tomust devote a substantial amount of time to these compliance initiatives.requirements. Moreover, these rules and regulations willhave increase oursubstantial legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified members of our board of directors.

However,These these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we will beare required to furnish a report by our board of directors on our internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engagedengage in a process to document and evaluate our internal controls over financial reporting, reporting, which is both costly and challenging. In this regard, we will need to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe, that our internal controls over financial reporting are effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

eXoZymes is subject to the risk that it has deficiencies in its internal control structure, due to the fact that we are a small company.structure. A deficiency in internal control over financial reporting is one that indicates there is more than a remote likelihood that a material misstatement of the entity’s financial statements will not be prevented or detected by the entity’s internal controls. Effective internal controlcontrols isare necessary to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we could be subject to regulatory action or other litigation and our operating results could be harmed. Our lack of sufficient, appropriate accounting personnel is one such deficiency.

ItIf may be time consuming, difficult, and costly for the Company to develop and implement the internal control and reporting procedures required by the Exchange Act. The Company, at this time, will need to hire additional financial reporting, internal control, and other finance personnel in order to develop and implement appropriate internal control and reporting procedures. If we are unable to comply with the internal control over financial reporting requirements of the Exchange Act, then we may not be able to obtain the required independent accountant certifications, which may preclude us from keeping our filings current with the SEC. Further, a material weakness in the effectiveness of internal control over financial reporting could result in an increased chance of fraud, reduce our ability to obtain financing, and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations, and financial condition.

We rely exclusively on a single laboratory location for our operations, research, and development activities. This concentration of resources presents presents a significant risk to our business continuity. If our primary facility experiences a disruption due to natural disasters, power failures, equipment malfunctions, cyberattacks, regulatory actions, or other unforeseen events, our ability to conduct operations could be severely impacted or completely halted. Any significant downtime at our facility could lead to delays in research, product development, and service delivery, which may adversely affect our financial condition and results of operations. Additionally, customers, investors, and other stakeholders may lose confidence in our ability to provide continuous and reliable services, potentially leading to a loss of business and reputational harm.

WeAlthough, we are actively assessing risk mitigation strategies, including potential secondary locations, partnerships, and contingency planning. However, However, until such measures are implemented, our reliance on a single facility will continue to pose an operational risk.

CertainOur recent initial public offerings of companies with relatively small public floats have experienced extreme volatility that was seemingly unrelated to the underlying performance of the company. Our Common Stock may potentially experience rapid and substantial price volatility, and price decline, which may make it difficult for prospective investors to assess what we believe to be the value of our Common Stock.

In addition to the general volatility risks,risks of the stock market, our Common Stock may be subject to rapid and substantial price volatility and/or a decline in the market price. We may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Common Stock. Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility within athe number stocks of recentemerging initialgrowth public offerings,companies, especially among companies with relatively small public floats. As we anticipate having a relatively small public float, the Common Stock may experience greater stock price volatility, extreme price run-ups, rapid declines in the price, lower trading volume, large spreads in bid and asked prices, and less liquidity than large-capitalization companies. The These aspects of the trading in the Common Stock may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the value of our Common Stock. Because of the low public float and the absence of any significant trading volume, the reported prices may not reflect the price at which an investor would be able to sell shares if it wants to sell any shares or buy shares if it wishes to buy share.wishes.

If the trading volumes of our Common Stock isare low, persons buying or selling in relatively small quantities may easily influence the prices of the Common Stock. A low volume of trades could also cause the price of the Common Stock to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of the Common Stock. The volatility also could adversely affect the ability of the Company to issue additional shares of Common Stock or any other securities and the ability to obtain stock market basedmarket-based financing in the future. No assurance can be given that an active market in our Common Stock will develop or be sustained.

All decisions with respect to the management of the Company will be made by our board of directors and our officers. MDB Capital Holdings, Holdings, LLC, as of the date of this reportreport, beneficially owns 48.38%47.63% of our common stock. Mr. Christopher Marlett and MrMr. Anthony Digiandomenico, Digiandomenico, directors of the Company, are principals of MDB Capital Holdings, LLC. Mr. Edgardo Rayo, who is an employee of Public Ventures, LLC, a wholly owned subsidiary of MDB Capital Holdings, LLC, is a director of the Company. Mr. Christopher Marlett, our Chairman of the Board Board is also a Director of MDB Capital Holdings, LLC and has significant voting authority over the securities owned by MDB Capital Holdings, LLC. As of the date of this report, management beneficially owns approximately 70.94% of our issued and outstanding shares of Common Stock, which includes 28.38% of MDB Capital Holdings, LLC ownership. LLC. It is expected that these persons will have aligned interests, and, therefore, these stockholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors, the management team, amendment amendment of our articles of incorporation and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of the company or changes in management, in each case, which other stockholders might find favorable, and will make the approval of certain transactions difficult or impossible without the support of these significant stockholders.

Certain of our current stockholdersstockholders’ holdingholdings of our outstanding shares of Common Stock may be eligible to sell all or some of their shares of Common Stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six monthsmonths’ hold,hold subject only toand the currentexpiration public informationof requirement (which disappears after one year) and any contractual lock up. In general, pursuant to Rule 144, affiliated stockholders may sell subject to a number of volume and method of sale limitations after six months. In addition, our largest stockholder, MDB Capital Holdings, LLC, has beenregistration provided a resale prospectus,rights which will permit it to sell 4,013,769 shares freely in the public market. Any substantial sale of our Common Stock pursuant to Rule 144 or pursuant to any resale prospectus may have a material adverse effect on the market price of our Common Stock and liquidity of the market for our Common Stock.

NowWe that we are a publicly traded company, we may have an increased risk of securities class action litigation.litigation as a result of our being a public reporting company and trading in the public market.

Historically, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because the public securities market for small cap companies such as ours have experienced significant share share volume and price volatility in recent years. If we were to be sued, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

Overview eXoZymes is a biotechnology, pre-revenue, development stage company. Management believes that eXoZymes’s technology is a differentiated and unique synthetic biology platform. Management believes the platform will enable scalable production of chemical molecules found in nature in a process that is alternative to and more environmentally friendly and sustainable than the typical methods used today, such as chemical synthesis, natural extraction, and synthetic biology. eXoZymes believes its technology could significantly change biomanufacturing through leveraging cell-free, multi-step enzyme-based systems that will be able to transform natural or renewable resources into sought after chemicals. The objective withAs the eXoZymes synthetic biology platform,platform ascontinues to develop over time, it is developedexpected overto time,enable forthe production of a diverse range of selectselected chemicalschemicals, will enable the production ofincluding pharmaceuticals, fuels, materials, food additives, and novel compounds.compounds

The Company has determined its reporting units in accordance with ASC (Accounting Standards Codification) 280, Segment Reporting. The Company has one reportable segment for eXoZymes as a whole. A single management team that reports to the Chief Executive Officer comprehensively manages the business. Accordingly, the Company does not have separatelyseparate reportable segments.

For the year ended December 31, 2024, there was an increase of $1,341,286 in2025, research and development costs increased by $1,838,225 compared to the same period in 2024, primarily due to anhigher increasesalary, inbonus salaryaccruals, stock-based compensation and lablaboratory expensesexpenses, andas well as a decreasereduction in grant funding. It is important to note that the upswingdecrease in grant funding was not linkedattributable to any specific event.

The increase decrease in assets was due to changes in several asset classes, but mainlyprimarily in cash and cash equivalents after closing IPO.equivalents. The decrease in grants receivable was driven by completion of certain grants and timing of grant drawdowns. The increase in prepaid expenses was duemainly explained by the increase of prepaid related to prepaymentsoftware of the D&O insurance policy.acquisition. The increasedecrease in property and equipment was due to the purchaseongoing accumulated depreciation of lab equipment.fixed assets. The decrease in operating lease right-of-use assets resulted from the usage and payments of office space during the period.

On December 31, 2024,2025, the Company had working capital of $9,487,137,$2,372,687, as compared to working capital of $(1,201,680)$9,487,137, on December 31, 2023,2024, reflecting ana increasedecrease in working capital of $10,688,817.$(7,114,450). This increasedecrease in working capital was primarily the result of anusage increase inof cash and cash equivalents due to thefund closing of the initial public offering.operations. On December 31, 2024,2025, the Company had cash of $9,719,310 $3,039,343 available to fund its operation.

On November 11, 2024, the Company signed a firm commitment underwriting agreement for its IPO, in which it sold an aggregate of 1,987,666 shares of Common Stock, including 112,666 shares pursuant to the underwriter overallotment option, for gross proceeds of $15,901,328, and and net proceeds of approximately $15,206,543. The Company used approximately $4,243,022 to repay loans from MDB Capital Holdings, LLC shortly after the closing of the IPO. The balance of the proceeds areas plannedof December 31, 2025, will continue to be used,used throughout 2025, in the expansion of its production capabilities, staffing, R&DD, and other working capital requirements, and repayment of approximately $4,243,022 in loans from MDB Capital Holdings, LLC.requirements.

In October 2024, the Company received an additionala cost share grant from the Department of Defense (DOD) BioMADE initiative to help fund next steps toward cell-free biomanufacturing of isobutanol in the amount of approximately $1,000,000 against our own required expenses of an equal amount. The Company intends to pursue additional grants which will further improve its working capital position.

For the year ended December 31, 2023,2025, operating activities utilizedused cash of $1,180,870,$6,502,040 whichprimarily wasdue driven by a combination ofto increased research and development activity,costs and as well as increasedhigher general and administrative costs.expenses.

RecentAccounting Pronouncements AccountingIssued Pronouncementsand Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Disaggregation of Income Statement Expenses (DISE) (“ASU 2024-03”), which requires disclosure of certain categories of expenses such as the purchase of inventory, employee compensation, depreciation, and intangible asset amortization that are components of existing expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual periods beginning after 15December December15, 2026 and interim periods beginning after 15December December15, 2027, with early adoption permitted. ASU 2024-03 should be applied prospectively; however, retrospective application is permitted. We are currently evaluating the impact of ASU 2024-03 to determine the impact it may have on ourits disclosures.consolidated financial statements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires all public entities, including public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures. The Company adopted ASU 2023-07 effective December 31, 2024, on a retrospective basis. The adoption of 2023-07 did not change the way that the Company identifies its reportable segments and, as a result, did not have a material impact on the Company’s segment-related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (ASU 2023-09), which is intended to enhance the transparency of income tax matters within consolidated financial statements, providing stakeholders with a clearer understanding of an entity’s operations and the associated tax risks. ASU 2023-09 requires public business entities to disclose, disclose, on an annual basis, specific categories in the rate of reconciliation and provide additional information for reconciling items that meet a specific quantitative threshold. There is a further requirement that public business entities will need to disclose a tabular reconciliation, reconciliation, using both percentages and reporting currency amounts. ASU 2023-09 is effective for fiscal years beginning after 15December December 15, 2024. The adoption of ASU 2023-09 will resultresulted in modifications to our income tax disclosures beginningfor inthe fiscal year ended December 31, 2025.

Grants that operate on a reimbursement basis are recognized on the accrual basis as revenues to the extent of disbursements and commitments that are allowable for reimbursement of allowable expenses incurred as of December 31, 20242025 and 20232024 and expected to be received from funding sources in the subsequent year. Management considers such receivables aton December 31, 20242025 and 2023,2024, respectively, to be fully collectable, due to the historical experience with the Federal Government of the United States of America. Accordingly, no allowance allowance for grants receivable was recorded in the accompanying consolidated financial statements.

Consolidated Results of Operations for the ThreeSix months Ended MarchJune 31,30, 2026 and 2025

For threethe six months ended MarchJune 31,30, 2026, and 2025, respectively, several factors contributed to changes in various expense categories:

For the threesix months ended MarchJune 31,30, 2026, research and development costs increased by $545,992 compared to the same period in 2025, primarily due to higher salary, bonus accruals, stock-based compensation and laboratory expenses, as well as a reduction in grant funding. It is important to note that the decrease in grant funding was not attributable to any specific event.

Consolidated Balance Sheet asResults of MarchOperations 31,for three months Ended June 30, 2026 and December 31, 2025

The decreaseincrease in assets was due to changes in several asset classes, but primarily in cash and cash equivalents.equivalents, reflecting the net proceeds of the June 2026 offerings. The decrease in property and equipment was mostly explained by the depreciation for the period. These increases were partially offset by a decrease in grants receivable wasreceivable, driven by completion of certain grants and timing of grant drawdowns.drawdowns; Thea decrease in prepaid expenses wasexpenses, due to ongoing amortization of prepaids to expenses.expenses; Thea decrease in property and equipment was due to the ongoing accumulated depreciation of fixed assets. The decrease in operating lease right-of-use assetsassets, resulted resulting from the usage and payments of office space during the period.period; Theand a decrease in finance lease right-of-use assetsassets, resultedresulting from the periodic amortization of the asset and the lease payments made during the period Total liabilities decreased for the three months ended March 31, 2026, primarily due to lower long-term operating lease liabilities and a reduction in finance lease liabilities as scheduled lease payments reduced outstanding balances. The decrease was partially offset by higher amounts due to affiliates.period.

Liquidity and Capital Resources – MarchJune 31,30, 2026, and 2025

On MarchJune 3,30, 2026, the Company had working capital of $507,586,$4,550,841, as compared to working capital of $2,372,687 on December 31, 2025, reflecting aan decreaseincrease in working capital of $1,865,101.$2,178,154. This decreaseincrease in working capital was the result of the net proceeds of the June 2026 offerings, partially offset by the usage of cash and cash equivalents to fund operations. On MarchJune 31,30, 2026, the Company had cash of $1,444,562$5,652,696 available to fund its operations.

AsGiven of March 31, 2026, the Company had working capital of approximately $507,586. Given itsCompany’s current operating cash burn, the Company’sits existing working capital as of June 30, 2026, is not sufficient to fund operations for fortwelve months from the date these condensed unaudited consolidated financial statements are issued, and management has concluded that substantial doubt exists about the Company’s ability to continue as a fullgoing twelve-monthconcern. period, determined as of March 31, 2026. In addition toBeyond the proposedofferings publiccompleted offeringin of common stock,June 2026, the Company also will continue to pursue non-dilutive funding opportunities, including grants, and may seek additional offerings under its shelf registration statement, institutional or bank financing, and the sale or licensing of intellectual property. The Company does not have any committed sources of additional financing, and there is no assurance that such funding will be available on commercially reasonable terms, if at all. The Company’s ability to continue its operations and meet its long-term obligations will depend on securing additional financial resources or ultimately achieving profitable operations.

For the threesix months ended MarchJune 31,30, 2026, and 2025, operating activities utilized cash of $1,524,441,$3,164,719 whichand $2,671,532, respectively. The increase in cash used in operations was primarily driven by an increased research and development activity, aspartially welloffset asby increasedlower general and administrative costs.

For the threesix months ended MarchJune 31,30, 2026, and 2025, investing activities primarily consistedrelated of the purchase ofto laboratory equipment.equipment purchases.

For the threesix months ended MarchJune 31,30, 2026, financing activities provided net cash of $5,835,675, consisting of net proceeds of $5,861,147 from the CompanyJune made2026 offerings, partially offset by cash payments of $12,736$25,472 related to itsthe Company’s finance lease obligations.

For the threesix months ended MarchJune 31,30, 2025, the Company madehad no cash paymentsflows offrom $43,254financing related to a note payable to a related party.activities.

Grants that operate on a reimbursement basis are recognized on the accrual basis and are recorded as offsets to expenses, to the extent of disbursements and commitments for allowable expenses incurred as of MarchJune 31,30, 2026, that are expected to be reimbursed in the subsequent period. Management considers the grants receivable as of MarchJune 31,30, 2025,2026, to be fully collectible, based on historical experience with the Federal Government of the United States of America. Accordingly, no allowance for credit losses on grants receivable was recorded in the accompanying condensed unaudited consolidated financial statements.