eXoZymes首財季虧損擴大至237萬美元 現金大減52% 存持續經營疑慮

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UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549

 

FORM
10-Q

 

 
 ☒
 QUARTERLY
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
 

FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 2026

 

OR

 

 
 ☐
 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
 

Commission
File Number: 001-42204

 

EXOZYMES
INC.

(Exact
name of registrant as specified in its charter)

 

 
 Nevada
  
 83-4550057

 
 (State
 or other jurisdiction of

 incorporation
 or organization)

  
 (I.R.S.
 Employer

 Identification
 No.)

 
  
  
  

 
 750
 Royal Oaks Drive, Suite 106

 Monrovia,
 CA 91016

  
 91016

 
 (Address of principal executive
 offices)
  
 (Zip code)

 
 

(626)
415-1488

(Registrant’s
telephone number, including area code)

 

Securities
registered pursuant to Section 12(b) of the Exchange Act: None

 

 
 Title
 of each class
  
 Trading
 Symbol(s)
  
 Name
 of each exchange on which registered

 
 Common Stock, $.000001
  
 EXOZ
  
 Nasdaq Capital Markets

 
 

Securities
registered pursuant to Section 12(g) of the Act: None

 

Indicate
by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the last 90 days. YES ☒ NO ☐

 

Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). YES ☒ NO ☐

 

Indicate
by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer,”
“non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2
of the Exchange Act.

 

 
 Large Accelerated
 Filer
 ☐
 Accelerated
 Filer
 ☐

 
 Non-accelerated Filer
 ☐
 Smaller Reporting Company
 ☒

 
  
  
 Emerging Growth Company
 ☒

 
 

If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

 

As
of May 14, 2026, the number of outstanding shares of Common Stock was 8,478,992.

 

 

 

  

  

 

 

TABLE
OF CONTENTS

 

 
  
  
  
 Page

 Number

 
 PART
 I
 FINANCIAL INFORMATION
  
 3

 
  
   
  
  

 
 Item 1 - Condensed Unaudited Consolidated Financial Statements
  
 3

 
  
  
  

 
 Condensed Unaudited Consolidated Balance Sheets – March 31, 2026, and December 31, 2025
  
 3

 
  
  
  

 
 Condensed Unaudited Consolidated Statements of Operations – Three months ended March 31, 2026, and 2025
  
 4

 
  
  
  

 
 Condensed Unaudited Consolidated Statements of Changes in Equity – Three months ended March 31, 2026, and 2025
  
 5

 
  
  
  

 
 Condensed Unaudited Consolidated Statements of Cash Flows – Three months ended March 31, 2026, and 2025
  
 6

 
  
  
  

 
 Notes to Condensed Unaudited Consolidated Financial Statements
  
 7

 
  
  
  

 
 Item
 2
 Management’s Discussion and Analysis of Financial Conditions and Results of Operations
  
 21

 
  
  
  
  

 
 Item
 3
 Quantitative and Qualitative Disclosures About Market Risk
  
 26

 
  
  
  
  

 
 Item
 4
 Controls and Procedures
  
 26

 
  
  
  
  

 
 PART
 II
 OTHER INFORMATION
  
 28

 
  
  
  
  

 
 Item
 1
 Legal Proceedings
  
 28

 
  
  
  
  

 
 Item
 1A
 Risk Factors
  
 28

 
  
  
  
  

 
 Item
 2
 Unregistered Sales of Equity Securities and Use of Proceeds
  
 29

 
  
  
  
  

 
 Item
 3
 Defaults upon Senior Securities
  
 29

 
  
  
  
  

 
 Item
 4
 Mine Safety Disclosures
  
 29

 
  
  
  
  

 
 Item
 5
 Other Information
  
 29

 
  
  
  
  

 
 Item
 6
 Exhibits
  
 26

 
 

In
this Quarterly Report, unless otherwise indicated, the “Company”, “eXoZymes,” “we”, “us”
or “our” refer to eXoZymes Inc. and, where appropriate, together with its wholly owned subsidiaries.

 

 2

  

 

  

PART
I – FINANCIAL INFORMATION

 

CONDENSED
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

CONDENSED
UNAUDITED CONSOLIDATED BALANCE SHEETS

 

 
   
 March 31, 2026  
 December 31, 2025 

 
 ASSETS 
     
    

 
 Cash and cash equivalents 
 $1,444,562  
 $3,039,343 

 
 Grants receivable 
  302,863  
  517,359 

 
 Prepaid expenses and other current assets 
  342,545  
  382,886 

 
 Total current assets 
  2,089,970  
  3,939,588 

 
 Property and equipment, net 
  747,858  
  764,401 

 
 Operating lease right-of-use asset, net 
  981,092  
  1,053,641 

 
 Finance lease right-of-use asset, net 
  94,716  
  108,682 

 
 Tax receivable 
  105,205  
  105,205 

 
 Total assets 
 $4,018,841  
 $5,971,517 

 
   
     
    

 
 LIABILITIES AND EQUITY 
     
    

 
 Accounts payable 
 $1,234,080  
 $1,235,337 

 
 Due to affiliates 
  13,406  
  5,330 

 
 Operating lease liabilities – Current 
  289,804  
  281,979 

 
 Finance lease liabilities – Current 
  45,095  
  44,255 

 
 Total current Liabilities 
  1,582,385  
  1,566,901 

 
 Deferred grant reimbursement 
  78,373  
  90,365 

 
 Operating lease liabilities - Long term 
  777,150  
  852,575 

 
 Finance lease liabilities - Long term 
  52,833  
  64,427 

 
 Total liabilities 
 $2,490,741  
 $2,574,268 

 
 Stockholders’ Equity: 
     
    

 
 Preferred stock, $0.000001 par value, 5,000,000 shares authorized; no shares issued and outstanding on March 31, 2026, and December 31, 2025, respectively. 
  -  
  - 

 
 Common shares, 100,000,000 authorized shares at $0.000001; 8,478,992 and 8,406,681 shares issued and outstanding as of March 31, 2026, and December 31, 2025, respectively 
  8  
  8 

 
 Additional Paid-in-capital 
  25,003,031  
  24,501,933 

 
 Accumulated deficit 
  (23,474,939) 
  (21,104,692)

 
 Total equity 
  1,528,100  
  3,397,249 

 
 Total liabilities and equity 
 $4,018,841  
 $5,971,517 

 

 

See
accompanying notes to the condensed unaudited consolidated financial statements.

 

 3

  

 

 

CONDENSED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 
   
 2026  
 2025 

   
 Three Months ended

 March 31,
 

 
   
 2026  
 2025 

 
 Total operating income 
 $-  
 $- 

 
   
     
    

 
 Operating costs: 
     
    

 
 General and administrative costs: 
     
    

 
 Compensation 
  830,724  
  613,924 

 
 Professional fees 
  277,679  
  532,235 

 
 Information technology 
  10,305  
  25,317 

 
 General and administrative-other 
  147,258  
  204,236 

 
 Total general and administrative costs 
  1,265,966  
  1,375,712 

 
 Research and development costs 
  1,121,008  
  575,016 

 
 Total operating costs 
  2,386,974  
  1,950,728 

 
 Net operating loss 
  (2,386,974) 
  (1,950,728)

 
 Other income/(expense): 
     
    

 
 Interest income/ (expense), net 
  13,716  
  94,307 

 
 Other income/(expense) 
  3,011  
  - 

 
 Loss before income taxes 
  (2,370,247) 
  (1,856,421)

 
 Income tax expense 
  -  
  - 

 
 Net loss 
 $(2,370,247) 
 $(1,856,421)

 
   
     
    

 
 Net loss per common share – basic and diluted 
 $(0.28) 
 $(0.22)

 
 Weighted average of common shares outstanding – basic and diluted 
  8,458,847  
  8,367,810 

 

 

See
accompanying notes to the condensed unaudited consolidated financial statements.

 

 4

  

 

 

CONDENSED
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 

Three
Months Ended March 31, 2026

 

 
   
 Shares  
 Amount  
 Capital  
 Deficit  
 Total 

   
 Common Stock  
 Additional 
 Paid-in  
 Accumulated  
   

 
   
 Shares  
 Amount  
 Capital  
 Deficit  
 Total 

 
 Balance, December 31, 2025 
  8,406,681  
 $8  
 $24,501,933  
 $(21,104,692) 
 $3,397,249 

 
 Stock based compensation 
  -  
  -  
  501,098  
  -  
  501,098 

 
 Issuance of common stock due to vesting of RSU 
  10,002  
  -  
  -  
  -  
  - 

 
 Issuance of Common stock for exercise of options 
  62,309  
  -  
  -  
  -  
  - 

 
 Net loss 
  -  
  -  
  -  
  (2,370,247) 
  (2,370,247)

 
 Balance, March 31, 2026 
  8,478,992  
 $8  
 $
25,003,031  
 $(23,474,939) 
 $1,528,100 

 

 

Three
Months Ended March 31, 2025

 

 
   
 Common Stock  
 Additional 
 Paid-in  
 Accumulated  
   

 
   
 Shares  
 Amount  
 Capital  
 Deficit  
 Total 

 
 Balance, December 31, 2024 
  8,367,810  
 $8  
 $
22,366,725  
 $(11,945,958) 
 $10,420,775 

 
 Stock based compensation 
  -  
  -  
  317,277  
  -  
  317,277 

 
 Net loss 
  -  
  -  
  -  
  (1,856,421) 
  (1,856,421)

 
 Balance, March 31, 2025 
  8,367,810  
 $8  
 $22,684,002  
 $(13,802,379) 
 $8,881,631 

 

 

See
accompanying notes to the condensed unaudited consolidated financial statements.

 

 5

  

 

 

CONDENSED
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 
   
 2026  
 2025 

   
 Three Months ended

 March 31,
 

 
   
 2026  
 2025 

 
 CASH FLOWS FROM OPERATING ACTIVITIES: 
     
    

 
 Net loss 
 $(2,370,247) 
  (1,856,421)

 
   
     
    

 
 Adjustments to reconcile net loss to net cash used in operating activities: 
     
    

 
 Amortization of Deferred Grant Reimbursement 
  (11,992) 
  (13,455)

 
 Depreciation of property and equipment 
  74,147  
  70,503 

 
 Non-cash lease expense 
  20,897  
  7,314 

 
 Stock-based compensation 
  501,098  
  317,277 

 
 Changes in operating assets and liabilities: 
     
    

 
 (Increase) decrease in - 
     
    

 
 Grants receivable 
  214,496  
  142,122 

 
 Prepaid expenses and other current assets 
  40,341  
  51,580 

 
 Increase (decrease) in - 
     
    

 
 Accounts payable and accrued expenses 
  (1,257) 
  147,547 

 
 Due to related party 
  8,076  
  - 

 
 Net cash (used in) operating activities 
 $(1,524,441) 
  (1,133,533)

 
   
     
    

 
 CASH FLOWS FROM INVESTING ACTIVITIES: 
     
    

 
 Purchases of property and equipment 
  (57,604) 
  (31,046)

 
 Net cash (used in) investing activities 
 $(57,604) 
  (31,046)

 
   
     
    

 
 CASH FLOWS FROM FINANCING ACTIVITIES: 
     
    

 
 Related Party Note 
  -  
  (43,254)

 
 Payments on finance lease obligations 
  (12,736) 
  - 

 
 Net cash (used in) financing activities 
 $(12,736) 
  (43,254)

 
   
     
    

 
 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS 
  (1,594,781) 
  (1,207,833)

 
   
     
    

 
 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 
  3,039,343  
  9,719,310 

 
   
     
    

 
 CASH AND CASH EQUIVALENTS - END OF PERIOD 
 $1,444,562  
  8,511,477 

 
 Supplemental disclosures of cash flow information: 
     
    

 
 Interest Expense 
  1,981  
  - 

 

 

See
accompanying notes to condensed unaudited consolidated financial statements.

 

 6

  

 

 

EXOZYMES
INC.

 

NOTES
TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Three
Months Ended March 31, 2026 and 2025

 

1.
Organization and Description of Business

 

eXoZymes
Inc., formerly known as Invizyne Technologies Inc., was formed in Nevada in 2019 and its wholly owned subsidiary eXoZymes (CA) Inc.,
formerly known as Invizyne Technologies Inc., was formed in California in 2014, together (“eXoZymes”) eXoZymes was formed
with the vision of taking nature’s building blocks to make molecules of interest, effectively simplifying nature. eXoZymes’
technology is a differentiated and unique synthetic biology platform which would enable the scalable exploration of large number of molecules
and properties found in nature. eXoZymes was a majority owned technology development subsidiary of MDB Capital Holdings, LLC (“MDB”)
until the November 2024 initial public offering, when the holdings by MDB were diluted to a current 46.4% minority interest as of March
31, 2026.

 

On
May 5, 2025, the Company established a wholly owned subsidiary NCTx LLC, a Delaware Limited Liability Company. NCTx LLC is a special
purpose subsidiary company focused on the development and production of N-trans-caffeoyltyramine - a very rare, plant-derived compound
with emerging relevance in the areas of metabolic health, gut integrity, and liver function. The entity has had no business activities
to date.

 

Going
Concern

 

These
condensed unaudited consolidated financial statements have been prepared on a going concern basis, which implies that the Company will
continue to realize its assets and discharge its liabilities in the normal course of business. The Company incurred net losses of $2,370,247
and $1,856,421 during the three months ended March 31, 2026 and 2025, respectively, and used cash for operations of $(1,524,441) and
$(1,133,533) for the three months ended March 31, 2026 and 2025, respectively. Although the Company believes it has sufficient working
capital for the near term, management believes that there remains substantial doubt about its ability to continue as a going concern
due to anticipated funding shortfalls and the Company’s pre-revenue status. The Company’s ability to meet its long-term liabilities
and obligations depends on securing additional financial support, whether through continued shareholder funding, raising equity or debt
financing, or ultimately achieving profitable operations. These financial statements do not include any adjustments to the recoverability
and classification of recorded asset amounts or the classification of liabilities that may be necessary should the Company be unable
to continue as a going concern.

 

2.
Summary of Significant Accounting Policies

 

Basis
of Presentation and Principles of Consolidation

 

The accompanying condensed unaudited consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.
GAAP”) for interim financial information, the instructions to Form 10-Q, and the rules and regulations of the Securities and Exchange
Commission. All intercompany accounts and transactions have been eliminated in consolidation. Accordingly, these interim financial statements
do not include all disclosures required by U.S. GAAP for complete annual financial statements. In the opinion of management, the accompanying
condensed unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary
for a fair presentation of the Company’s financial position as of March 31, 2026, and its results of operations, cash flows, and
changes in stockholders’ equity for the periods presented. Interim results are not necessarily indicative of the results that may
be expected for the full year ending December 31, 2026.

 

These
condensed unaudited consolidated financial statements and other information presented in this Form 10-Q should be read in conjunction
with the consolidated financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2025 filed with the SEC.

 

Use
of Estimates

 

The
preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period, as well as the disclosure of contingent assets and liabilities.
Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under
different assumptions or conditions. Management bases its estimates on historical experience and on various assumptions that are believed
to be reasonable in relation to the financial statements taken under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly
evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted
accordingly. Actual results could differ from those estimates. Significant estimates include those related to assumptions used in the
calculation of right-of-use asset and lease liabilities, accruals for potential liabilities, accounting for research grants and stock-based compensation.

 

 7

  

 

 

Recent
Accounting Pronouncements

 

ASU
2024-03

 

In
November 2024, the FASB issued 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 December 15, 2026 and interim periods beginning after December 15, 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 on our disclosures.

 

Emerging
Growth Company

 

The
Company is an “emerging growth company,” or “EGC” as defined in Section 2(a) of the Securities Act of 1933, as
amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging
growth companies.

 

Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act) are required to
comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended
transition period and comply with the requirements that apply to non-emerging growth companies but any such choice to opt out is irrevocable.
The Company has elected to opt out of the extended transition periods.

 

Concentration
of Risk

 

The
Department of Energy has contributed 83.2% and the NIH has contributed 16.8% of all grant reimbursements for the three months ended March
31, 2026. The Company believes it is not exposed to significant credit risk on government grant funding, based on the nature of eXoZymes’
grant receivables.

 

Revenue
Recognition

 

The
Company primarily generated revenues from its strategic alliances. The strategic alliances with strategic collaborators typically contain
multiple elements, including research and other licenses, research and development services, obligations to develop and manufacture pre-commercial
and commercial material, and options to obtain additional research and development services. Such arrangements provide for various types
of payments to us, including upfront fees, and funding of research and development services. Such payments are often not commensurate
with the timing of revenue recognition and therefore result in deferral of revenue recognition.

 

 8

  

 

 

The
Company analyzes the collaboration arrangements to assess whether they are within the scope of ASC Topic 808, Collaborative Arrangements
(ASC 808) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants
in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. To the
extent the arrangement is within the scope of ASC 808, the Company assesses whether aspects of the arrangement between the Company and
the collaboration partner are within the scope of other accounting literature. If the Company concludes that some or all aspects of the
arrangement represent a transaction with a customer, the Company accounts for those aspects of the arrangement within the scope of ASC
606. If the Company concludes that some or all aspects of the arrangement are within the scope of ASC 808 and do not represent a transaction
with a customer, the Company recognizes its allocation of the shared costs incurred with respect to the jointly conducted activities
as a component of the related expense in the period incurred. Pursuant to ASC 606, a customer is a party that has contracted with an
entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration. Under
ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the
consideration which the entity expects to receive in exchange for those goods or services.

 

To
determine the appropriate amount of revenue to be recognized for arrangements that the Company determines are within the scope of ASC
606, the Company performs the following steps: (i) identify the contract(s) with the customer; (ii) identify the performance obligations
in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract;
and (v) recognize revenue when (or as) each performance obligation is satisfied. ASC 606 requires significant judgment and estimates
and results in changes to, but not limited to: (i) the determination of the transaction price, including estimates of variable consideration,
(ii) the allocation of the transaction price, including the determination of estimated selling price, and (iii) the pattern of recognition,
including the application of proportional performance as a measure of progress on service-related promises and application of point-in-time
recognition for supply-related promises.

 

Cash
and Cash Equivalents

 

The
Company considers highly liquid investments with original maturities or remaining maturities upon purchase of three months or less to
be cash equivalents.

 

The
Company’s policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured
by the Federal Deposit Insurance Corporation (the “FDIC”) and/or by the Securities Investor Protection Corporation (the “SIPC”).
The Company may periodically have cash balances in financial institutions in excess of the FDIC and SIPC insurance limits of $250,000
and $500,000, respectively.

 

The
Company periodically reviews the financial condition of the financial institutions and assesses the credit risk of such investments.
The Company did not experience any credit risk losses during the three months ended March 31, 2026 and 2025.

 

The
Company periodically reviews the financial condition of the financial institutions and assesses the credit risk of such investments.
The Company may periodically have cash balances in financial institutions more than the FDIC insurance limits of $250,000. On March 31,
2026, the Company had approximately $823,448 of cash and unrestricted cash in financial institutions exceeding FDIC insured limits. The
Company did not experience any credit risk losses during the three months ended March 31, 2026, and the year ended December 31, 2025.

 

 9

  

 

 

Fair
Value Measurements

 

Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

 

 
  
 ●
 Level 1, defined as observable
 inputs such as quoted prices (unadjusted) for identical instruments in active markets;

 
  
  
  

 
  
 ●
 Level 2, defined as inputs
 other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments
 in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 
  
  
  

 
  
 ●
 Level 3, defined as unobservable
 inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations
 derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 
 

In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.

 

The
following tables set forth the fair value of the Company’s consolidated financial instruments that were measured at fair value
on a recurring basis as of March 31, 2026 and December 31, 2025:

 

Schedule
of Financial Instruments Measured at Fair Value on Recurring Basis

 
   
 Level 1  
 Level 2  
 Level 3  
 Total 

   
 March 31, 2026 

 
   
 Level 1  
 Level 2  
 Level 3  
 Total 

 
 Cash
 and cash equivalents 
  1,271,430  
  -  
  -  
  1,271,430 

 
   
     
     
     
    

 
 Total fair value 
  1,271,430  
  -  
  -  
  1,271,430 

 

 

 
   
 Level 1  
 Level 2  
 Level 3  
 Total 

   
 December 31, 2025 

 
   
 Level 1  
 Level 2  
 Level 3  
 Total 

 
 Cash
 and cash equivalents 
  2,917,721  
  -  
  -  
  2,917,721 

 
   
     
     
     
    

 
 Total fair value 
  2,917,721  
  -  
  -  
  2,917,721 

 

 

The
fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value
Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying condensed unaudited consolidated
balance sheets. The fair values of cash and cash equivalents, prepaid expenses and other, accounts payable and accrued expenses, and
due to related party are estimated to approximate the carrying values as of March 31, 2026, and December 31, 2025.

 

Property
and Equipment

 

Property
and equipment are recorded at cost. Major improvements are capitalized, while maintenance and repairs are charged to expense as incurred.
Gains and losses from disposition of property and equipment are included in the statement of operations when realized. Depreciation is
provided using the straight-line method over the following estimated useful lives:

 

Schedule
of Property and Equipment Estimated Useful Lives 

 
 Laboratory equipment 
 5 years

 
 Furniture and fixtures 
 7 years

 
 Leasehold improvements 
 Lesser of the lease duration or the life of the improvements

 

 

Property
and equipment consist of the following as of March 31, 2026, and December 31, 2025, respectively:

 

 Schedule of Property and Equipment

 
   
 March 31,

 2026
  
 December 31,

 2025
 

 
 Laboratory equipment 
 $1,455,543  
 $1,397,939 

 
 Furniture and fixtures 
  54,338  
  54,338 

 
 Leasehold improvements 
  328,786  
  328,786 

 
 Total property and equipment 
  1,838,667  
  1,781,063 

 
 Less: Accumulated depreciation 
  (1,090,809) 
  (1,016,662)

 
 Property and equipment, net 
 $747,858  
 $764,401 

 

 

 10

  

 

 

Research
Grants

 

eXoZymes
receives grant reimbursements from the Federal government, which are offset against research and development expenses in the consolidated
statements of operations. In addition to actual reimbursements, eXoZymes also receives indirect expense grants (which are not reimbursement-based)
and fees (typically of minor significance). It is important to note that there may be instances where the grants received for indirect
costs exceed the actual costs, resulting in a negative impact. For capitalized assets, grant reimbursements are recognized over the useful
life of the assets. Any portion of the grant not yet recognized is recorded as deferred grant reimbursements and included as a liability
in the consolidated balance sheet.

 

Grants
that operate on a reimbursement basis are recognized on the accrual basis and are offsets to expenses to the extent of disbursements
and commitments that are reimbursable for allowable expenses incurred as of the three months ended March 31, 2026, and 2025, and respectively,
expected to be received from funding sources in the subsequent year. Management considers such receivables on March 31, 2026, and 2025,
respectively, to be fully collectable due to the historical experience with the Federal Government of the United States of America. Accordingly,
no allowance for credit losses on the grants receivable was recorded in the accompanying condensed unaudited consolidated financial statements.

 

Summary
of grants receivable activity for the three months ended March 31, 2026, and 2025, is presented below:

 Schedule of Grants Receivable Activity

 
   
 2026  
 2025 

   
 Three Months ended

 March 31,
 

 
   
 2026  
 2025 

 
 Balance at beginning of period 
 $517,359  
 $737,282 

 
 Grant costs expensed 
  337,196  
  571,822 

 
 Grant fees 
  3,724  
  3,959 

 
 Grant funds received 
  (555,416) 
  (717,903)

 
 Balance at end of period 
 $302,863  
 $595,160 

 

 

eXoZymes
has received three grants provided by the National Institutes of Health, the Department of Defense and the National Institutes of Health
through June 30, 2028. The first grant was awarded on May 15, 2024, and the latest of these grants was set to expire on June 30, 2028,
however grants can be extended, or new phases can be granted, extending the expiration of the grant. None of the grants has commitments
made by the parties, provisions for recapture, or any other contingencies, beyond complying with the terms of each research and development
grant. Research grants received from organizations are subject to the contract agreement as to how eXoZymes conducts its research activities,
and eXoZymes is required to comply with the agreement terms relating to those grants. Amounts received under research grants are nonrefundable,
regardless of the success of the underlying research project, to the extent that such amounts are expended in accordance with the approved
grant project. eXoZymes is permitted to draw down the research grants after incurring the related expenses.

 

On
July 1, 2025, the Company was awarded a key industrial partnership, with a $3 million share of a $9.2 million grant. U.S. National Science
Foundation (NSF) funded the project under the CFIRE program aimed at transforming the scalability and accessibility of cell-free systems
to expand real-world applications. The grant is led by Georgia Tech with a coalition of top academic and industry groups.

 

Amounts
received under research grants are offset against the related research and development costs in the consolidated statements of operations.
For the three months ended March 31, 2026, and 2025, respectively, grants amounting to $337,196 and $571,822 were offset against the
research and development costs. Grant drawdowns, which includes grants costs expensed, grants for equipment purchased, and grant fees,
for the three months ended March 31, 2026, and 2025, respectively, totaled $340,920 and $575,781.

 

Research
and Development Costs

 

Research
and development costs are expensed as incurred. Research and development costs consist primarily of compensation costs, fees paid to
consultants, and other expenses relating to the development of eXoZymes’s technology. For the three months ended March 31, 2026,
and 2025, research and development costs prior to offset of the grants amounted to $1,461,928 and $1,150,797 respectively, which includes
grant costs expensed, grants fees, and research and development costs, net of the grant received.

 

 11

  

 

 

Patent
and Licensing Legal and Filing Fees and Costs

 

Due
to the significant uncertainty associated with the successful development of one or more commercially viable products based on the research
efforts and related patent applications, all patent and licensing legal and filing fees and costs related to the development and protection
of its intellectual property are charged to operations as incurred.

 

Patent
and licensing legal and filing fees and costs were $65,027 and $82,248 for the three months ended March 31, 2026, and 2025, respectively.
Patent and licensing legal and filing fees and costs are included in general and administrative costs in the consolidated statements
of operations.

 

Related
Party and Due to Affiliates Expenses

 

The
Company had outstanding payables to MDB Capital Holdings, LLC of $13,406 and $5,330 as of March 31, 2026, and December 31, 2025, respectively.
These payables are non-interest bearing and will be settled in accordance with standard payment terms.

 

Segment
Reporting

 

We
manage and operate the business as a single reportable operating segment, with the Company’s sole focus on the research
and commercialization of exozyme biosolutions. Our business is led by our chief executive officer, who is our Chief Operating Decision
Maker (“CODM”). The Company is required to apply the guidance in ASC 280 and identify significant segment expenses and other
segment items for its single reportable segment. Because the CODM receives detailed financial reports at a lower level than is included
on the Company’s consolidated income statement, the Company identifies which of those expenses qualify as significant segment expenses.
The CODM manages the business on a consolidated basis and uses consolidated net income as reported on its income statement to allocate
resources and assess performance. In accordance with ASC 280, eXoZymes concludes that consolidated net income is the measure of segment
profit or loss that is required to be reported because it is the measure determined in accordance with measurement principles most consistent
with GAAP. We do not prepare discrete financial information with respect to separate products. Accordingly, we view our business as one
reportable operating segment.

 

3.
Equity

 

Equity

 

In
April 2022, pursuant to an equity subscription agreement the Company sold a total of 2,052,931 shares of eXoZymes’s Common Stock
for $5,000,000 at $2.44 per share. In connection with the equity subscription agreement, the Company issued warrants (“Funding
Warrants”) to purchase 205,293 shares of eXoZymes Common Stock. Through March 31, 2026, and December 31, 2025, respectively, 205,293
and 205,293 of Funding Warrants have vested. Total value of the warrants as March 31, 2026, and December 31, 2025, was $320,790.

 

 12

  

 

 

In
November 2024, the Company completed a private placement (“Concurrent Private Offering”) concurrently with the IPO, the Company
sold to accredited investors an aggregate of 93,750 warrants to purchase up to 93,750 shares of Common Stock (the “Private Warrants”).
The Private Warrants were sold at a purchase price of $0.125. The Private Warrants have an exercise price of $8.00 per share, are exercisable
beginning six months after issuance, and expire five years from the date of issuance. The Private Warrants have a cashless exercise provision
and registration rights for the underlying shares of Common Stock. The gross proceeds from the Concurrent Private Offering were approximately
$11,719, and if the Private Warrants are fully exercised, for cash, the Company will receive up to $750,000.

 

In
November 2024, the Company issued warrants to underwriters in connection with the IPO. The Company issued 52,485 warrants with an exercise
price of $10.00 per share. The warrants are exercisable, beginning six months after issuance, and expire five years from the date of
issuance. The underwriter warrants have a cashless exercise provision and registration rights for the underlying shares of Common Stock.

 

The
warrants outstanding, issued, exercised, and expired, along with their respective exercise prices and expiration dates, as of December
31, 2025, and for the three months ended March 31, 2026, are presented below:

 Schedule of Warrant Outstanding Issued Exercised and Expired

 
 Description 
 Number of Warrants  
 Exercise Price  
 Expiration Date

 
 Balance at 12/31/2025 
  351,528  
  4.75  
 Various (2029)

 
 Issued 
  -  
  -  
  

 
 Exercised 
  -  
  -  
  

 
 Expired 
  -  
  -  
  

 
 Balance at 3/31/2026 
  351,528  
 $4.75 (weighted avg)  
 Various (2029)

 

 

4.
Stock-Based Compensation

 

eXoZymes’
2020 Equity Incentive Plan (the “2020 Plan”), which was approved by the eXoZymes shareholders, permits grants to its officers,
directors, and employees for up to 938,832 shares of eXoZymes’ Common Stock. On May 1, 2023, the board and shareholders approved
an increase of 1,558,175 shares under the plan. The 2020 Plan authorizes the issuance of stock options, shares of restricted stock, and
restricted stock units, among other forms of equity-based awards. On July 25, 2025, the Company’s shareholders approved, by a majority,
the “2025 equity incentive plan”. The new plan allows for an additional 1,250,000 shares to be added to the equity incentive
pool.

 

 13

  

 

 

The
Company measures the fair value of stock option awards using the Black-Scholes model, which requires the use of certain subjective assumptions,
including expected term, expected volatility, and risk-free interest rate. These inputs are based on historical data and market conditions
at the time of grant. The assumptions used for stock option grants during the periods presented are summarized in the table below:

 

 Schedule
of Stock Option Grants

 
 Grant Date 
 Shares Granted  
 Exercise Price ($)  
 Vesting Term 
 Expected Life (Years)  
 Risk-Free Rate  
 Expected Volatility 

 
 07/01/25 
  235,817  
  12.40  
 4 years 
  4  
  3.99% 
  88.47%

 
 07/30/25 
  20,000  
  9.48  
 12 months 
  1  
  3.87% 
  88.08%

 
 10/30/25 
  40,000  
  12.65  
 4 years 
  4  
  3.71% 
  87.12%

 
 01/14/26 
  146,437  
  9.49  
 4 years 
  4  
  3.72% 
  83.40%

 

 

Note:
Contractual term (7 years), dividend yield ($0), and valuation methodology were identical for all grants and therefore are not included
in the table.

 

On
November 15, 2025, an option holder exercised 15,000 vested stock options through a cashless exercise at an exercise price of $3.31 per
share. A total of 3,439 shares were withheld to cover the exercise consideration, resulting in the issuance of 11,561 shares. No unvested
options remained following this transaction.

 

During
the three months ended March 31, 2026, option holders exercised a total of 89,742 vested stock options through cashless exercises. Of
this amount, 81,951 options were exercised at an exercise price of $3.31 per share, and 7,791 options were exercised at an exercise price
of $2.44 per share. In connection with these exercises, a total of 27,433 shares were withheld to cover the exercise consideration, resulting
in the issuance of 62,309 shares. All options exercised during the period were fully vested, and no unvested options remained following
these transactions.

 

As
of March 31, 2026, stock options to purchase 971,797 shares of Common Stock were vested, the weighted average exercise price is $5.93,
the aggregate intrinsic value is $2,351,078 and the